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geokills
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Re: Stock Update for September 12, 2008 - MCD, GS, NOV [Re: geokills]
#8932859 - 09/15/08 11:39 AM (15 years, 4 months ago) |
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Quote:
geokills said:
- Random thoughts...
Citigroup (C) could make a good short here. I attempted to purchase the September 15 puts (for $0.17) as my first excursion into options trading, but realized that I hadn't filled out the necessary paperwork to enable option privilages on my account. Whoops...
Whoops indeed. If I had been able to make that trade, I would be up over 450% in one weekend's time! Those September 15 puts are now trading for $0.95 a piece. Damn.
With the weakness in financials, I am still going to do something by adding to my Goldman Sachs (GS) position today.
Edit: Made two purchases on Goldman, at $145 ... and again right before the close at $132. They will report their quarterly results this week and they probably won't be pretty - but shares have taken a huge hit, so I am betting that most of the downside has been priced in.
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Edited by geokills (09/15/08 02:55 PM)
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Baeosistine
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Re: Stock Update for September 12, 2008 - MCD, GS, NOV [Re: geokills]
#8943596 - 09/17/08 10:33 AM (15 years, 4 months ago) |
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Quote:
geokills said:
Edit: Made two purchases on Goldman, at $145 ... and again right before the close at $132. They will report their quarterly results this week and they probably won't be pretty - but shares have taken a huge hit, so I am betting that most of the downside has been priced in.
I think you are crazy. I wouldn't touch an investment bank's stock with someone else's barge pole right now. The risks are just too high. In this kind of environment you could wake up to find the price had dropped to zero. There are surely better risk/reward ratios out there you could find?
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pothead_bob
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Re: Stock Update for September 12, 2008 - MCD, GS, NOV [Re: Baeosistine]
#8945213 - 09/17/08 04:56 PM (15 years, 4 months ago) |
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Well the market has really been beat to hell as of late, and so I'm thinking of putting 2k into an index fund. Everybody always says that when there's blood in the streets, it's time to buy. I can't think of the best stock to throw money into, so I thought an index fund would be a good catch-all. Do you think this is a good idea? Do you think I should hold off a little longer? I'm thinking the DOW will probably find support around 10k.
-------------------- No knowledge can be certain, if it is not based upon mathematics or upon some other knowledge which is itself based upon the mathematical sciences. -Leonardo da Vinci (1425-1519) Speak well of your enemies. After all, you made them.
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geokills
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Stock Update for September 17, 2008 - GS [Re: Baeosistine]
#8945344 - 09/17/08 05:19 PM (15 years, 4 months ago) |
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- Goldman Sachs (GS) - Bought 15 shares @ $109.89 and another 15 shares @ $99.70
Crazy I might be, but what's really crazy is that Goldman Sachs is now trading at book value, something that has never occured in its history as a public company. Add to this the fact that Goldman reported a profitable quarter on Monday (something that nearly every other investment bank except for Morgan Stanley couldn't do), and that they are well capitalized, have a liquidity pool of $102 billion, a strong balance sheet, a proven management team, best-in-class businesses in fixed income, underwriting, advisory and prime brokerage... and what you're left with is really a crisis of confidence - capitulation - not to mention hedge fund redemptions and ETF selling, that had Goldman down over 30% at one point today. Well I feel like I've done my homework on this name, and I have conviction that Goldman will emerge from the current financial crisis stronger than before. They will use this time to take share from weaker competitors, and for a long term investment this should be one of the finest. However, discipline still holds that we likely have farther to fall in this market. The AIG bailout is a huge positive, but this will take some time to work through. So even though I was able to pick up 30 shares of Goldman today at an average cost of $105, and the stock ended the day closer to $115... I will probably be selling some of these shares in the near future as I trade around this core position and aim to preserve capital.
- Random thoughts...
With the market now 26% off of its 2007 highs, we are working our way through the trouble. Thankfully, the SEC has as of tonight (finally) restricted naked short selling, which should help somewhat with the relentless declines in heavily shorted stocks, and may even help catalyze a short squeeze in some of the most heavily shorted names. Now if only the SEC could reinstate that uptick rule! On that note, I am going to look to sell some stock over the coming days. Even though I am currently carrying a 25% cash position, we could see this market down another 25% in the coming weeks or months. With that in mind, I want to make sure I have a very strong cash position, so that I can do more buying if and when the shit really takes a slide.
Discretionary Portfolio as of 9/17/2008:- 24.6% Cash
- 15.4% Goldman Sachs (GS)
- 8.9% Walmart (WMT)
- 8.5% Proctor & Gamble (PG)
- 8.1% National Oilwell Varco (NOV)
- 7.6% Altria (MO)
- 6.4% Deere (DE)
- 5.6% CPFL Energia (CPL)
- 5.0% Freeport McMoran (FCX)
- 3.6% McDonalds (MCD)
- 3.2% Apple (AAPL)
- 3.1% Schering Plough (SGP)
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geokills
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Re: Stock Update for September 12, 2008 - MCD, GS, NOV [Re: pothead_bob]
#8945368 - 09/17/08 05:22 PM (15 years, 4 months ago) |
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If you have $2000 to invest into an index fund, buy $500 tomorrow. Then, if we continue to see heavy selling pressure, put in another $500. Save the remaining $1000 until next month, when you should buy another $500 block, and finally either the following month, or on any significant weakness, put to work that last $500 chunk of cash. Though tempting to throw it all in at once (lord knows I bring this up and STILL at times fail to follow my own advice), it is smarter to do your buying and selling incrementally. You yourself admit that you think the Dow could fall another 600 points before it finds support... so take your time and buy incrementally!
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pothead_bob
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Re: Stock Update for September 12, 2008 - MCD, GS, NOV [Re: geokills]
#8946219 - 09/17/08 08:11 PM (15 years, 4 months ago) |
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That sounds good to me... Since I don't have the $3,000 to open up a Vanguard S&P 500 index fund, I was thinking of buying the ETF SPY. Aside from not being able to buy fractional shares and having to pay your brokerage fee every time you buy no matter how big or small the order, it seems pretty much the same to me.
These are really some exciting times to be living in, despite the fact that I'm losing my shirt right now in this shitty market. Who knows, our generation might live through Great Depression 2.0. On that same note, though, there's a lot of money to be made buying into the dips.
-------------------- No knowledge can be certain, if it is not based upon mathematics or upon some other knowledge which is itself based upon the mathematical sciences. -Leonardo da Vinci (1425-1519) Speak well of your enemies. After all, you made them.
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geokills
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Re: Stock Update for September 12, 2008 - MCD, GS, NOV [Re: geokills]
#8948261 - 09/18/08 08:11 AM (15 years, 4 months ago) |
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Goldman (GS) is trading back up to $110 - $115 this morning, I'm going to dump those 30 shares I picked up at an average of $105 yesterday. I've also sold 20 shares of National Oilwell Varco (NOV) on the heels of a 5% move around $54 this morning. Though I believe in both of these names long term, I want to use relative strength to shore up my cash reserves in the event that the market continues to move lower in the near term (which it certainly seems it might).
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geokills
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Stock Update for September 18, 2008 - GS, NOV, MCD, DE [Re: geokills]
#8951564 - 09/18/08 08:31 PM (15 years, 4 months ago) |
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Wow, just wow. What a wild day. I'd have to say this was my most exciting day in the stock market. From being down almost $3,000 at one point, I finished the day up $1,000. Those are better than 10% swings in a day given my invested capital! 
I used some of the strength today to build up my cash, since this market is just so darn dicey right now. There has even been speculation that real-life bona-fide TERRORISTS may have been responsible for some of the short-selling brutality that was beating down the last two investment banks (Goldman Sachs and Morgan Stanley). The idea of course, would be to force the downgrade of these bank's credit rating by slamming their stocks, thereby fulfilling the negative feedback cycle of willfully putting a financial company out of business in the way that Lehman Brothers or AIG experienced earlier in the week. Some crazy stuff indeed, and a little scary! Read the article I've included at the end of this post for professional commentary that may better explain these issues.
- Goldman Sachs (GS) - Sold 30 shares at $110
These are the 30 shares I picked up yesterday at $105. If I were a little more spry, I could have picked them back up below $90 midday, but I had taken a lunch break away from my desk and missed the opportunity. I was at my desk when I saw the stock revisit $95 towards the end of the day, right before it was leaked that the treasury department is in talks with congress about setting up a Resolution Trust Corporation, which would be able to remove the bad assets from our banks, thereby allowing them to maintain good credit ratings and lend again, thereby lubricating the financial landscape with capital once again. Of course, as soon as that news broke, the market took off like a rocket, and Goldman was promptly trading around its highs of the day again (~$115). That would've been a nice trade, but given the wild swings, I was hesitant to throw my capital in, and that's OK. Of course, now that we have new rules in place that have eliminated naked short selling, as well as the confidence beheld by the government's intention to temporarily assume our banking system's bad assets (though this will take time to work through), Goldman Sachs looks even more like a screaming long term buy. If it can revisit the $100 level, I will load up... but in the midst of today's craziness, I stand by my decision to lighten up for a quick $150 profit - even if its a drop in the bucket compared to the $1,245 I am currently down on this position!
- National Oilwell Varco (NOV) - Sold 23 shares at $54.10
In early morning strength (likely a short squeeze), I decided to reduce my exposure here. I still like NOV for the long term, but in keeping with my above comments about how crazy and unpredictable this market has become, I thought it prudent to take advantage of the 5% move to the upside, and sell these shares for a 23% average loss. With the way things were going, had the treasury not stepped in, we could have faced a serious CRASH of massive magnitude, and that is something I want to be prepared for, with lots of cash! If NOV falls below $50, I will aim to repurchase these shares.
- McDonalds (MCD) - Close position at $64.01
Again, with the idea of a potential crash in mind and continued volatility, I want to shore up my cash reserves. This position was closed for a 17% average gain, not too shabby! I still believe MCD will be a stable company to own, but given its relative strength over the past month, I do not want to get greedy, and I figure that locking in these gains to build up my cash was a wise move. If shares retrace their move and fall back below $60, I will look to repurchase.
- Deere (DE) - Sold 20 shares at $61
Just trimming back the position here. With fears of global recession, the perception shadowing heavy equipment manufacturers such as Deere is very negative. These shares were sold for an average loss of around 25% and that is OK. Sometimes it is OK to sell down. Afterall, if things change, you can buy 'em right back! So what if you miss a few points? Better the peace of mind, having a hoard of cash on the sidelines during unpredictable times like these, than gambling with all your coin in attempts to catch the bottom.
Discretionary Portfolio as of 9/18/2008:- 37.7% Cash
- 9.1% Walmart (WMT)
- 9.0% Goldman Sachs (GS)
- 8.5% Proctor & Gamble (PG)
- 7.7% Altria (MO)
- 6.2% National Oilwell Varco (NOV)
- 5.8% CPFL Energia (CPL)
- 5.1% Freeport McMoran (FCX)
- 4.5% Deere (DE)
- 3.4% Apple (AAPL)
- 3.1% Schering Plough (SGP)
With that, I would like to share an article that I believe eloquently captures the sentiment of the day and the past week. For those who are wondering what in the hell is going on, peep this:Quote:
No More Ganging Up on Stocks By Jim Cramer RealMoney.com Columnist 9/18/2008 8:38 PM EDT We know that today's action was ridiculous. But it was ridiculously bullish, and now we are going to see the real impact of the re-enforcement of one part of the old short-selling protection from naked shorting. Oh, and let's hope that the story The Wall Street Journal is reporting right now, that the SEC wants a temporary shorting ban, isn't true, that would be ludicrous.
All we need, all we have ever needed, is a return to the old rules, unless we found out that there was a terrorist behind the destruction, as I postulated earlier in the day.
The legal short-selling that has plagued us is about knocking stocks down. Unfortunately, the SEC wizards still don't understand the uptick rule, more on that in a moment, but now stocks have made up some ground and they can build on those gains if hedge funds can't just recklessly short without borrowing, and brokerage houses don't recklessly provide liquidity to buy puts without checking first.
Let's use the case of Citigroup. This stock rallied hard, just like it did after the SEC decided to enforce the law after July 15. Now you can see how important, again, the enforcement is because even on the whiff of something that is good, the resolution mortgage trust, you can cause a short-panic.
Remember, in this market what happens is that the shorts push stocks down, and then when there is good news, the stocks come back. There really isn't as much pure long-side activity as there is endless short-covering, true bear market behavior where everyone gets whipsawed.
But the thing that will now be tough to do -- which is to gang up on a stock by selling endless amounts short after buying endless numbers of puts and then spreading endless rumors about the companies -- will be made harder to do because the short-sellers have to take a break and find if they can borrow stock, and borrowing's going to be tougher.
If you can slow the process down, what the uptick and the borrow rules were intending to do, you can actually find real-life actual buyers. If you added the plus-tick rule, the only people who would be able to bang down stocks would be legit owners, and they are probably not wanting to do so if they just bought the darned thing and did the work.
Now as everyone says, I have nothing wrong with short-sellers. I just have something wrong with the incredibly ridiculous decision to get rid of these rules, a decision, by the way, that was wholly supported by the brokerage industry, particularly Dick Fuld, who had the temerity to scoff at me when I suggested bringing back the uptick rule to him.
If we had put on these points and then had that plus-tick rule, the points will not be so easily repealed as they were without it. Of course, all bets are off when you have a Lehman failure and an AIG collapse, but with a resolution mortgage trust, the brokers will not be as pressed for solvency and the shorting of them will seem pretty dangerous again. It hasn't been dangerous at all lately,
So, a rally makes the rules better. They don't help that much in a selloff.
I think that one of the reasons why the rally had legs was because people were afraid to short into it.
Why does this really matter? OK, let's go back to Citigroup.
Right now, the stocks, not the companies, are in charge. You bang down the stock, the ratings agencies freak out and they downgrade and then the stock gets banged down some more.
Fear of ratings-agency downgrades has driven this market, and the agencies are simply reacting to the stocks, whether it be AIG or LEH or FNM or FRE. So, if you can bang down the stocks, spread the word through the media that something is wrong and panic people, the agencies downgrade you and it is over. That's what these raids have been all about and we all know it.
By breaking the raids, you give companies a chance to raise capital as Citigroup should, which then keeps the ratings agencies from downgrading good companies and we restore some rationality.
Yep, it all starts with the stock. And if the stock isn't manipulated down, the company can tap the equity markets and live to play again.
When the book is written on this era, what you will see is this: Cabals that shorted stocks without borrowing the stock (legal) and then drove the stocks down without plus ticks (legal), and then pull their money out of the banks and brokers (legal) and tell the media about it (legal), which then causes the media to report the redemptions and the runs on the banks (legal), which then causes the ratings agencies to downgrade out of fear (legal), and then the companies go belly up or get seized or nationalized (legal).
You break off the head -- the ability to knock down a stock by selling more stock than there is stock outstanding (until yesterday legal) -- you give the capital markets a chance to function and we don't wipe out whole great institutions that didn't do anything wrong (MS and GS) even as others lose their independence because of recklessness, although even those latter ones could have made it if the rules had just been enforced.
And another fine piece from the madman of mad money, Jim Cramer:Quote:
Without Conviction, You Will Get Slaughtered By Jim Cramer RealMoney.com Columnist 9/18/2008 6:57 PM EDT
At a certain point, it is too crazy. Consider that at one point last week Goldman was supposed to be buying Wachovia and at one point this week Wachovia's going to buy Goldman, I mean come on! That Morgan Stanley could be at $11 and then at $22? This is not any kind of market that I have ever seen before, except once, in 1987, right around the crash when stocks traded in 10-point increments. That's right, 10 points, and we were trading without any knowledge of where things were.
I once gave an order to buy Caterpillar with a $50 top and it was at $45! Sounds like today!
Or how about Panera ? a stock heavily manipulated by the shorts. Here's a stock that at one point was up 20 points from where it was before the change in the SHO rules. It has finished up 10. So much for the downgrade last week.
I think that Sears could go up another 10 on the same rule.
This is powerful bear market action. Meanwhile, the new banks, the Pepsis and the General Mills' go on their way up.
Oddly, the growth stocks, the Gileads and the Research In Motions don't do well; probably owned by too many hedge funds.
There's too much happening right now. Unless you have ultimate and tremendous conviction in what you own and are willing to buy it 25% lower simply on the off chance that the market keeps going like this, then do not touch this market.
It'a a live wire, a third rail of pain for when you get it wrong.
But if you have conviction, you might get a bargain beyond belief. Without conviction, you will get slaughtered, of that I can guarantee.
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AroundtheSon
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Re: Stock Update for September 18, 2008 - GS, NOV, MCD, DE [Re: geokills]
#8953569 - 09/19/08 06:03 AM (15 years, 4 months ago) |
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That's why I don't really believe in shorting American stocks. Yeah, you can make money, but what are we doing? We are "voting" against the American economy.
More people need to invest in these companies long-term.
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pothead_bob
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Re: Stock Update for September 18, 2008 - GS, NOV, MCD, DE [Re: AroundtheSon]
#8953700 - 09/19/08 07:25 AM (15 years, 4 months ago) |
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Should be a wild ride today!! Govt buying up bad debt. FNM up 109% in premarket, FRE up 94%. Thank God I averaged down on this downturn. I might actually make some money on these pigs after all.
-------------------- No knowledge can be certain, if it is not based upon mathematics or upon some other knowledge which is itself based upon the mathematical sciences. -Leonardo da Vinci (1425-1519) Speak well of your enemies. After all, you made them.
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Cowgold
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Re: Stock Update for September 18, 2008 - GS, NOV, MCD, DE [Re: geokills]
#8953961 - 09/19/08 09:22 AM (15 years, 4 months ago) |
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Today is nice. Picked up some GS yesterday at 100.
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geokills
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Stock Update for September 19, 2008 - GS, NOV [Re: Cowgold]
#8956246 - 09/19/08 07:07 PM (15 years, 4 months ago) |
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Nice job Cowgold, I'd suggest that you may want to sell half of your position. You've scored a handsome 30% gain overnight, and that is not something you should take lightly. Protect those profits! With that in mind...
- Goldman Sachs (GS) - Sold 20 shares at $126.04
Near my average cost basis and up 20% on the day, I decided to lighten up on my sole financial position. There is a lot of euphoria on Wall Street on account of the Treasury/Fed/Congress discussing a potential $1 trillion bailout for the financial industry, and many banks are up 20 - 50% overnight. Goldman is no exception, and I believe the prudent thing to do is scale back the position. I still believe Goldman presents real value as the best managed investment bank in the world, but you cannot ignore the wild swings we've had, and the general distress that the market still faces. Yes, everyone is dancing in the street at the moment and the gains are fast and furious, but even if congress approves the proposed Resolution Trust Corporation, that is not an immediate fix to all of the problems we have right now. A coordinated rate cut between the global banking system would help fuel this upside catalyst, but I don't see that happening... and in a week or two (I don't know for sure, it could be Monday or it could be in a month), this euphoric frenzy will die down and I wouldn't be surprised to see these financial stocks under pressure again. I'm playing this one safe, though still holding a chunk of GS as recent socialist government intervention has indeed been a huge confidence booster to the system... oddly enough!
- National Oilwell Varco (NOV) - Sold 17 shares at $60
Up 14% on the day, and though it is still 15% below my cost basis, shares are well off of their lows. I believe those of us with long positions caught a big break last night, and I will not let this opportunity pass me by to build up some cash - for no doubt, we are not through the crisis yet. For the moment we have positive sentiment and an upward bias, but I do believe we will see more pressure over the coming months. I want to have a huge chunk of cash on hand to further diversify my portfolio and take advantage of future weakness - and with these sales, I do!
Discretionary Portfolio as of 9/19/2008:- 42.0% Cash
- 8.5% Walmart (WMT)
- 8.0% Proctor & Gamble (PG)
- 7.5% Altria (MO)
- 6.3% CPFL Energia (CPL)
- 6.3% Goldman Sachs (GS)
- 5.4% Freeport McMoran (FCX)
- 5.1% National Oilwell Varco (NOV)
- 4.4% Deere (DE)
- 3.4% Apple (AAPL)
- 3.1% Schering Plough (SGP)
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-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
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automan
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Re: Stock Update for September 19, 2008 - GS, NOV [Re: geokills]
#8958814 - 09/20/08 12:53 PM (15 years, 4 months ago) |
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geo, quick question if you dont mind me asking... out of the original money invested, where do you stand as the value of cash + investment values as of today?
-------------------- No, no, you're not thinking, you're just being logical. ~ Niels Bohr
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geokills
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Re: Stock Update for September 19, 2008 - GS, NOV [Re: automan]
#8961040 - 09/20/08 11:04 PM (15 years, 4 months ago) |
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Not a quick answer unfortunately, as I have periodically added and withdrawn funds from my portfolio - so I can't just look at the difference between the beginning and ending value over a given time frame. The following numbers are a bit misleading as I received a gift of stock last year, the bulk of which was sold earlier this year, and these values do not include unrealized (unsold) positions, but they are the best I can dig up on short notice. Unfortunately, I do not have the % return values available at the moment either. Following are my realized annual gain/loss values which I have reported to the IRS (except for 2008 of course, which will be reported next year).
In 2005, I carried a realized loss of $734 In 2006, I carried a realized loss of $1,856 In 2007, I carried a realized gain of $16,745 So far in 2008, I carry a realized gain of around $5,000
In reality, I have lost about $17,000 so far this year (about 21%). The discrepancy between my assessment and my realized gain arises because I sold the majority of the gifted stock earlier this year, which carried an insignificant cost basis and therefore almost all of the proceeds were considered profit. I also have a few considerable unrealized losses from my open positions in Deere (DE), National Oilwell Varco (NOV), Freeport McMoran (FCX), and CPFL Energia (CPL), which I am including in my $17,000 loss assessment.
At present, my discretionary portfolio is valued at $62,000. My performance has not been great (with the exception of 2007 thanks to some serious gains in Apple/Google/Gamestop), but I am improving my knowledge of the game with each passing day, and though it can be distressing at times, I believe in the future potential of stocks - given the historical fact that they are the highest yielding asset class over any 20 year period.
When all is said and done, it's only money - and if I go broke, I'll have the rest of my life to make up for it.
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geokills
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STOCKS - Plan for the Week Ahead - September 22, 2008 [Re: geokills]
#8963244 - 09/21/08 12:15 PM (15 years, 4 months ago) |
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Here is a list of what I will be focusing on Monday, and into the following week.
- Increase my healthcare exposure. I made a fine bet with Schering Plough (SGP), but that company is still plagued by bad press, and having been up 30 - 50%, I have been scaling out of the position. I would like to replace this name with something a bit more promising, as the healthcare sector has recently proven to be one of the few safe zones in this market, and have my eye on Celgene (CELG). They are a high growth biotech company with a cancer drug known as Revlimid that provides a 96% survival benefit, and that fact alone will continue to drive usage and growth. Healthcare was under a bit of profit taking this past week, and I believe this will present a good opportunity to scale into a position in order to help diversify my portfolio.
- Sell more Goldman Sachs (GS) incrementally. Though I honestly believe that Goldman is one of the best banks out there, that doesn't make it immune from the negative cycle of short-selling, put-buying and rumor mongering that drove Lehman to failure and has Morgan Stanley looking to merge up with a deposit bank. I want to take advantage of the current ban on short-selling this financial, for I believe that once the ban is lifted, Goldman will again be under unwarranted negative pressure, but negative pressure nevertheless.
- Watch the big deposit banks that will stand to take a dominant position in the world financial market IF a comprehensive Resolution Mortgage Trust is approved and implemented by congress. The RMT will allow these banks to divide themselves into good and bad portions, and unload the bad portions to the Federal Government so that they can begin lending again. The following banks seem to be the strongest: US Bancorp (USB), JP Morgan (JPM), Bank of America (BAC), Wells Fargo (WFC). Wachovia (WB) would be on the list, if they hadn't purchased Golden West and added all GW's bad loans to their portfolio, but if the RMT comes to pass as intended, it will also be a big winner. Let me make clear that I do not intend to put money into these banks right here, as they have been driven up by the short-selling ban along with optmism regarding the RMT, and are therefore richly valued here given the fact that the RMT will take time to implement and work through. No hurry, but these banks are interesting for the long-term and I will be eying for weakness over the coming months.
- Add to Altria (MO). This domestic tobacco company recently purchased UST, which manufactures smokeless tobacco. This was a very smart move for Altria and should quickly add to the company's earnings going forward. Add to this the 6% dividend yield, and this stable investment deserves a larger spot in my portfolio. I would have liked to get shares closer to $20, and indeed has a buy order in on Thursday for that target, but it was not reached. I may be willing to pay a bit more, as I believe this is a safe place to put capital for the time being.
- Scale into the HGX. The HGX is the housing index, and while I am not terribly comfortable picking a specific home builder because the large ones have already run up so much (Pulte for example), I would like some housing exposure now that we are working our way through the current crisis. The catalyst here is the fact that new home starts are extremely low in conjunction with pent up demand from people sitting on the sidelines over the past year waiting for the housing market to stabilize. Combine that with increasing population and the potential for banks to begin lending more readily thanks to the RMT idea that will likely make its way through congress soon, and we have a recipe for upside.
- Scale into the SDS. If we continue to rally off of the heightened optimism that we saw on Thursday night and all through Friday, I will open a position in this Ultrashort S&P500 fund, which returns two times the inverse of the S&P 500 index. It seems people may be getting ahead of themselves. We went up very hard and fast on Thursday and Friday, and nothing has even been implemented by congress yet. Yes, there are talks and there is the foundation for a plan, but this will take time - and after the euphoria dies down and short-selling is unrestricted, I believe there will remain negative pressure on the overall market for some time.
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geokills
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Registered: 05/08/01
Posts: 23,417
Loc: city of angels
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Stock Update for September 22, 2008 - SGP, CELG, MO, GS [Re: geokills]
#8969108 - 09/22/08 05:30 PM (15 years, 4 months ago) |
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I wish I had made a purchase for the UltraShort S&P500 ProShares fund (SDS) at the market open this morning. I was however able to make some of the other moves I had planned on, continuing to take a defensive posture.
- Schering Plough (SGP) - Closed Position at $18.35 per share
Dumped my last 100-odd shares of this drug maker for a 26% gain. SGP is likely to have a lid kept on it from all the negative press surrounding its cholesterol drug Vytorin, and I believe this money could be put to better use in an alternative healthcare play.
- Celgene (CELG) - Bought 30 shares at $64.99 per share
This biotechnology / biopharmaceutical company dominates the cancer market with its drug Revlimid which provides a 96% survival benefit to patients. This offers great growth visibility, in conjunction with 100 different studies under way for different indications. I plan to build this position over time as biotech stocks can be a little jumpy, especially on account of the overall negative pressure in the market. On the plus side, this type of stock is driven by strong fundamentals and not the aggregate economy.
- Altria (MO) - Bought 65 shares at $20.25 per share
As noted in my previous post, I like the fact that Altria acquired UST, a smokeless tobacco producer earlier this month. Altria has pricing power and holds the dominant share of the US tobacco market. I also dig the greater than 6% dividend yield and will plan to continue building this position by making purchases in small increments over time, especially if shares can find their way toward $19.
- Goldman Sachs (GS) - Sold 10 shares at $122.04
Just lightening up a little more, and would like to buy these shares back lower if possible. I plan to hold Goldman for the long-term, but the market is crazy and financials are seeing some of the most volatility at the present moment. I will aim to buy these shares back at or below $112.
Discretionary Portfolio as of 9/22/2008:- 42.2% Cash
- 9.5% Altria (MO)
- 8.5% Walmart (WMT)
- 7.9% Proctor & Gamble (PG)
- 6.5% CPFL Energia (CPL)
- 5.3% Freeport McMoran (FCX)
- 5.2% National Oilwell Varco (NOV)
- 4.5% Deere (DE)
- 4.0% Goldman Sachs (GS)
- 3.2% Apple (AAPL)
- 3.1% Celgene (CELG)
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geokills
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Registered: 05/08/01
Posts: 23,417
Loc: city of angels
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Stock Update for September 26, 2008 - MO, SDS [Re: geokills]
#8999637 - 09/28/08 07:38 PM (15 years, 4 months ago) |
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Staying Defensive...
- Altria (MO) - Bought 55 shares at $19.75 (last Wednesday)
This was and continues to be my largest position for reasons previously stated in recent posts, namely smart acquisitons, dominant market share, pricing power, and a high dividend.
- UltraShort S&P500 ProShares ETF (SDS) - Bought 60 shares at $66.99 (last Friday)
This UltraShort fund has held a space in my portfolio before, and for whatever bone-headed reason I didn't hold onto it! It returns two times the inverse of the S&P500 index, thereby acting as a hedge against any downside that the overall market may experience going forward (if for example, Congress fails to pass the mortgage resolution next week). I may have to close this position quickly if a resolution is passed -- but I'll probably open it back up after the initial euphoria of the deal wears off, as it will still take time for the market to repair itself.
Discretionary Portfolio as of 9/26/2008:- 44.9% Cash
- 10.9% Altria (MO)
- 8.1% Walmart (WMT)
- 7.3% Proctor & Gamble (PG)
- 6.4% CPFL Energia (CPL)
- 6.0% UltraShort S&P500 ProShares ETF (SDS)
- 4.4% National Oilwell Varco (NOV)
- 4.3% Freeport McMoran (FCX)
- 4.2% Goldman Sachs (GS)
- 3.6% Deere (DE)
- 3.2% Celgene (CELG)
- 3.1% Apple (AAPL)
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geokills
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Registered: 05/08/01
Posts: 23,417
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Stock Update for September 29, 2008 - AAPL, CAT, CELG [Re: geokills]
#9003166 - 09/29/08 02:55 PM (15 years, 3 months ago) |
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Congress failed to pass the bill which would have helped to unlock the credit markets by allowing banks to take bad mortgage paper off of their balance sheets, and as a result of the federal purchase, assign actual value to them. As a result of the failed vote, the market is down huge and will probably continue to go down in the near future. I am thankful that I decided to put on the UltraShort hedge (SDS) right before the close last Friday, which brought in about $600 of profit (14%+) in a day... even though my portfolio is down over $2,400 (or 4%). Seeing that the average market (S&P500) was down over 8% today, I feel like I did pretty darn good. With that, some moves were made.
- Apple (AAPL) - Closed Position at $107
This was the last piece of a position I started years ago (before the release of the iPhone), and was sold today for a 25% average gain. I really like Apple's dominant market position, products and management, but I cannot deny that they produce discretionary items which people will not buy as often if our economy gets slammed with a severe recession. It's a real bummer to sell on a day that sees the stock down some 20%... but the fear out there is thick, and I want to take my remaining profits off of the table before they evaporate completely.
- Caterpillar Inc (CAT) - Sold Short 65 shares at $60
With the failure of Congress to issue a credit rescue plan, it is becoming more and more likely that our economy will be facing significant contraction and a rise in foreclosures and unemployment. It also seems likely given bank bailouts overseas in Europe last night, that the problem is not contained to the US. Though news of the "bailout" plan took all the headlines, last week also brought bad numbers in home sales, GDP, industrial demand and employment. With worldwide growth slowing, it will be very difficult for Caterpillar to be able to sustain demand, and I believe this international industrial manufacturer will continue to take a hefty hit. This is one of the few short sales I've engaged, with the idea to buy these shares back at a lower price, thereby pocketing the difference. If we do not see some sort of plan passed in the coming weeks, I believe CAT can break below $50.
- Celgene (CELG) - Trying to buy
Shares of this biotechnology/drug company were relatively stable all day, trading between $64 - 65... then in the last minutes of trading fell as low as $56. Very strange this quick drop on seemingly no news. I have an active buy order for 30 shares at $58, but it seems my buy order is too small to catch a seller in the after hours market. I will keep the order open for the morning, as this rapid downside move seems unwarranted. This could be a gift, as I have been waiting for an opportunity to continue to build my "safe" (read: less economically sensitive) positions over the past week.
Discretionary Portfolio as of 9/29/2008:- 41.9 % Cash
- 10.9% Altria (MO)
- 8.4% Walmart (WMT)
- 7.7% Proctor & Gamble (PG)
- 7.5% UltraShort S&P500 ProShares (SDS)
- Margin SHORT Caterpillar (CAT) equiv ~ 6.7%
- 5.6% CPFL Energia (CPL)
- 3.9% National Oilwell Varco (NOV)
- 3.9% Goldman Sachs (GS)
- 3.9% Freeport McMoran (FCX)
- 3.4% Deere (DE)
- 2.9% Celgene (CELG)
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geokills
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Registered: 05/08/01
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Just wanted to include a li'l essay I wrote this afternoon regarding the bill that failed to pass earlier today:
Quote:
I know that the vast majority of Americans have not supported the bill proposed by Treasury secretary Paulson, which would have authorized the government to spend up to $700 billion of taxpayer money to purchase illiquid assets from our nation's banks, thereby improving their balance sheets and allowing them to lend money again. I know this plan was proposed and marketed as a bailout, which I think is one of the primary reasons there was such vocal opposition to it and why it ultimately failed to receive the required votes today in Congress. I am taking the contrarian approach and expressing my belief that this bill would likely have provided much more benefit for the average citizen and taxpayer than it would have for any fat cat CEO. It seems a lot of people don't understand that the "bailout" was more of an "investment" on behalf of the taxpayer. Now I'm not saying that it's the most wonderfully cheery excellent plan ever, but it does make the most sense given where we have come from and arrived at this very moment. If government could purchase the illiquid assets (i.e. mortgage backed securities) from banks to allow them to start lending again, a few things could happen. First and foremost, it would help unlock the credit markets, thereby allowing businesses to secure capital and for the economy to continue growing. This in turn allows people to stay in their homes, reducing foreclosures and preventing widespread unemployment. It would prevent the already rich and huge corporate banks from stealing all these temporarily illiquid assets for themselves, and instead allow the taxpayer the long-term benefit of these now troubled assets.
What is happening now is that you have well-capitalized banks such as Bank of America and JP Morgan taking advantage of the failures in other banks and giving nothing back to individual citizens. They are buying banks such as Washington Mutual for incredibly cheap values. In turn, anyone who held uninsured deposits or investments in the failed banks get screwed, while the acquiring bank scores the deal of a lifetime by purchasing in the midst of a crisis, and then being able to wait it out and capitalize on the inevitable value that still exists in many of these mortgage backed securities. Think about it, if there were no value there, you wouldn't have so many smart banks stepping in to buy the failing banks so eagerly. CEO James Diamond at JP Morgan is genious (and soon to be much richer!) for having swept up the assets of Washington Mutual and Bear Sterns from the FDIC at bargain basement prices.
What SHOULD be happening, is not allowing our already huge banks to get even bigger by buying the assets of failing banks at HUGE discounts, but instead to allow the government to hold these assets on behalf of the taxpayer, and thereby allow the taxpayer to benefit once the market regains its liquidity. The gov't would be buying troubled assets that cannot currently sell. In doing this, the gov't can then allow extensions on the troubled homeowner's mortgages which then allows people to stay in their homes instead of facing foreclosure. Keeping people in their homes and paying their mortgages will inevitably increase the value of the mortgage backed securities that have no market currently (because they keep getting foreclosed on!), and ultimately over time these securities can be sold for a profit which would benefit both home-owners and taxpayers alike. Not to mention the aggregate benefit of keeping credit available to businesses all over the country, thereby helping to preserve both jobs and economic growth.
Obviously, it may not work out SO perfectly... and would depend greatly upon how the government decided to price their purchases of the mortgage backed securities. But if we don't get some sort of deal going, the only people who are going to benefit are the HUGE BANKS. The rest of us get screwed as businesses cannot obtain capital, unemployment skyrockets and foreclosures continue or even worsen. It was stupid of the Treasury secretary to refer to the proposed plan as a bailout... I think if people understood the true intention behind it, and what it could actually do and help prevent, they would be more likely to support it. I know you may not agree with me (I am indeed still a bit torn myself), and I welcome your opinion as it is through open discussion and an increase in available knowledge that we become better equipped to make smart decisions. I'm not saying my position is air tight, far from it... but I think a lot of people made a quick decision based upon emotion here. In the end, I'm not worried for myself, but I know that there are plenty of people out there that should be! People who are struggling to stay in their homes, who are at risk of losing their jobs and whose retirement accounts are getting absolutely destroyed. Yes, this plan would have helped some of the people who made irresponsible decisions and who do not deserve any help, but the overall utility would have been overwhelmingly positive for the average citizen and well worth the sacrifice of inadvertently helping a few undeserving risktakers.
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Cowgold
Bullshit


Registered: 04/04/05
Posts: 12,486
Loc: .
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Re: 228-to-205 [Re: geokills]
#9004068 - 09/29/08 06:09 PM (15 years, 3 months ago) |
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