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geokills
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Registered: 05/08/01
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Stock Update for April 13, 2011 - Don't Be a Hero... But Keep Some Skin in the Game! [Re: geokills]
#14282894 - 04/13/11 09:35 AM (12 years, 9 months ago) |
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The market is tenuously attempting to hang on to the S&P's 50 day moving average by the skin of its teeth. JPMorgan reported good earnings and the retail report came in OK, which gave us an early morning pop after four consecutive down days prior. However, there isn't much follow through thus far. I think we have more work to do on the down side, but there will of course be bumps and jumps here and there along the way. We *may* even bounce right here off the 50, though I wouldn't place any big bets on that scenario.
But after having sold out of nearly everything I was holding, I came to the epiphany that while it's a relief to jettison the crap that ain't working, it's still important to stay involved. So rather than sit out the market entirely, I put 10% of my cash reserves back to work this morning (bringing my aggregate cash position down to around 65% after accounting for the longer term high yield stocks I hold, namely KMP, PSEC, and NLY). I decided to put some cash to work this morning not because I love to lose money, but because it makes it a lot easier for me to stay in sync with the market when I have active positions in play, that ultimately provide me with empirical feedback on a daily basis (when you have skin in the game, you pay a lot closer attention!). Accordingly, I am managing my risk by keeping the positions small.
I wanted to primarily purchase stocks that yesterday were actually closing higher even though the aggregate market was down heavy (though I did also purchase a few stocks that are still under pressure but at some semblance of support). That relative out-performance is often a very important tell that should not be ignored (likewise, one should not ignore the message conveyed by stocks that are down sharply on otherwise up days). With that being said, here are the stocks that I took equal weighted, very tiny positions in, just to keep track of what's going on so that I can more readily pounce on opportunity as it presents itself. These are not speculative companies, even though their stocks will gyrate upon the whims of the market, all of these companies are proven money makers.
- VeriFone Systems (PAY) - I have watched this stock (as I have with several of these I'm discussing today) for months on end, always hesitating to pull the trigger... and always regretting it -- no more! This is a secure payment processing company, responsible for a lot of those credit card swiping machines (and the background processing/software) that you see at almost every point of sale retail register. The trend towards plastic isn't going anywhere, and PAY as a stock hasn't been going anywhere but higher, so it's about time I got involved. Not to mention, it was up sharply yesterday (exhibiting what technical traders like to refer to as a bullish engulfing pattern), on a day that the aggregate market was down sharply. The position continues to outperform the aggregate market today. Enough said.
- Chipotle Mexican Grill (CMG) - I mentioned this quickly yesterday, also noting how I wanted to wait to see what happens since I think there will be better opportunities to buy. Nevertheless, the launch of an entirely new restaurant line by these guys should signal to money managers that the massive growth capability of CMG will continue. These guys sell the food people want, at a price people are willing to pay, in an efficient and profitable way, and will be able to benefit from even greater economies of scale by having a second restaurant line that can likely utilize many of the same basic food stuffs (i.e. chicken, beef, rice, et al). Like PAY, CMG was up sharply yesterday, and continues the trend today, setting a new all time high. I don't want to let this one get away from me, so I'm in with a starter position that I will be thrilled to add to at lower levels.
- Silver Wheaton (SLW) - The world's largest silver mining company. With silver on a tear and no signs that it should end soon given the backdrop of inflationary threats, I took a nibble here since the stock is showing some signs of stabilization and generally doesn't pull back very often. Looking at the chart, you'll note that the 50 day moving average is rapidly rising to the current price, which should lend further support to the upside.
- Teck Resources (TCK) - This Canadian metal mining outfit, in which the Chinese government has taken a 20% some odd stake, should benefit from inflationary pressures in addition to any pickup in the worldwide economy. The fact that its major products include metallurgical coal (important for steel production), copper and zinc, is supported by the need for reconstruction in Japan and worldwide steel shortages in general.
- Riverbed Technologies (RVBD) - Here's a company I've mentioned several times on this forum. Involved in the communications equipment and networking space, they just pre-announced quarterly earnings that were well above expectations, indicating that they are are maintaining their dominant position in a rapidly growing market. This is a high flying company that is priced to perfection, but since their earnings pre-announcement lends support to the valuation expectations, I will hop on board for the ride (even as the stock was up over 12% on the day at the time of my purchase). Remember, position size is a methodology of risk management, so I didn't buy a lot!
- Peabody Energy (BTU) - One of the world's largest coal companies, owning majority interests in 28 coal mining operations in the US and Australia. They also market, broker and trade coal. Given that the outlook for nuclear energy has been threatened by the Fukushima Daiichi plant disaster in Japan, and that some countries have already spoken about taking certain older nuclear capability offline for testing and review, not to mention that Japan will need to start importing more of its energy, a portion of which is likely to come from coal; the fundamentals here are good. The stock has undergone a 10%+ correction in the last three weeks, and is this morning showing some life in bouncing at its support line drawn beginning at the early November breakout, and through the subsequent January and March lows.
As you should be able to tell from the above analysis, I am focusing largely on macro-economic ideas, and the stocks of the strongest and most well-capitalized companies that fit into those themes (particularly inflationary themes in the cases of BTU, TCK, and SLW). This is not a time to be dicking around with speculative small-cap momentum plays in stocks of companies with no real earnings history. The market is weakening (i.e. pricing in more risk), and this is an important time to make sure that your portfolio carries a level of risk that you can personally tolerate, and that you quickly cut out losing positions. I am preparing myself with the honest belief that we could be setting up for a drop that could potentially extend down to 1200 on the S&P within the next two to three months. That's another 10% lower than where we are presently perched. Of course, it may be that we only hit 1250, or 1300, or we start moving higher today and never look back; but given what the market has told us by stalling out at resistance over the last couple of weeks and now threatening to break below the 50 day moving average, it is important to stay cautious but vigilant for opportunity.
I am still maintaining a modest put position on the SPY in order to hedge against aggregate market weakness so that I won't panic out of these starter positions in the companies I've noted above. Important levels I will be watching on the S&P are: 1345, 1308, 1293, 1275, 1250, and 1200. You can bet that if we break below the 1308 and 1293 levels, I will be adding to my bearish SPY puts.
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ben_dover0802
shroom addict



Registered: 09/21/08
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Re: Stock Update for April 13, 2011 - Don't Be a Hero... But Keep Some Skin in the Game! [Re: geokills]
#14292073 - 04/14/11 07:22 PM (12 years, 9 months ago) |
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Well, I was going to follow your lead Geo and just convert primarily to cash and take the loss in hopes of getting a better deal in a few months but decided not to and ended about neutral...I likely will start the process if stocks drop more tomorrow.
However, Google's returns were less than expected today and the CEO sold some shares- as a result the stock is down 5.5% in the after hours. It will be less than it has been since October.
I personally believe this is a company with ever growing profitability opportunities as they make money by simple clicks of a mouse, and would like to find a good entry point. Probably won't buy tomorrow but I am going to keep an close eye on it.
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koeddel


Registered: 04/15/11
Posts: 15
Loc: Germany
Last seen: 10 years, 2 months
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Re: Stock Picks for January 3rd, 2008 - STJ, SGP, CVS [Re: ben_dover0802]
#14294286 - 04/15/11 05:48 AM (12 years, 9 months ago) |
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Forex, the market is fat for us honeys.. pls see my post on "projecto" yours so far...
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geokills
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Registered: 05/08/01
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Stock Update for April 15, 2011 - CRUS [Re: ben_dover0802]
#14294699 - 04/15/11 09:21 AM (12 years, 9 months ago) |
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This market is TOUGH. Practically every time I've stepped in for a trade this week, I've been burned. Thankfully I have acknowledged the heightened risk of this trading environment and kept my positions small with disciplined stops to allow me to trade another day, but damn it if this action doesn't still wear on me when it seems like I'm bleeding a little bit of money each and every day! It's like death by a thousand paper cuts. Each cut itself isn't so bad, but when you add 'em up over time, sheesh.
Well, I'm not giving up, but I'm not feeling very enthusiastic either! 
Here's an idea that I took this morning, that so far is (no surprise) not working out. Fortunately, the nature of this trade is to let the time value or option premium work in my favor, so it doesn't really matter too much that it isn't working quite yet. All the same, it is still disconcerting to see short-term losses piling up!
SOLD (short) CRUS May 21 2001 $14 PUTS @ $0.45. This gives me an immediate credit of $45 per contract sold, but also gives someone else the right to "put" 100 shares of CRUS to me at $14 anytime through May 21st for each contract I sold to them. Of course, no one would give me their CRUS shares @ $14 a pop unless CRUS was trading at less than $14.
The stock is hovering just under $16 and down over 13% on the day as I type this (and was down around 10% when I initiated this trade). The stock has already been falling heavily, now down nearly 40% from its high set only two months ago! The sharp move lower today was as a result of an announcement from the company that a production problem for one of their audio related chips resulted in a higher failure rate than is acceptable, and thus will crimp margins on the current quarter as they'll likely have to re-build those chips or possibly even lose the contract. No doubt, this is a serious problem for the company and the shares deserve to be down on the news. However, a 40% decline in market value is also pretty serious, and (I would hope) has priced in this latest failure.
By selling the May $14 puts, I am essentially betting that CRUS will not fall below $14 in the next month, which is another 13% from where the stock currently sits. If CRUS stays above $14, I get to keep the entire credit of $45 per put contract that I sold. Furthermore, the time value of the option will bleed out with each passing day. So even if the stock stays relatively flat to slightly down over the next week, the put options I sold will become more profitable for me (the seller) as their time value decreases. Therefore, if I think the market is about to swoon and ultimately might take CRUS down to the $14 strike price, I can choose to exit the position by buying back the puts before expiration hits. At the time of this writing, I am planning to hold this position through expiration on the belief that CRUS will not be below $14 and the puts will expire worthless, thereby allowing me to keep the full credit I received for the sale.
It is important to understand the risks. Because I received a credit of $0.45 per share for selling these puts, I will be profitable so long as CRUS stock is above $13.55 at expiration. This is because even though I will be "put" 100 shares per contract if the stock is at or below $14, I can immediately sell them at the market rate, and because I have already received $0.45 per share for selling the put, anything above $14 - $0.45 at expiration would have me in the green. In the meanwhile, the put position can (and does) show an unrealized loss as CRUS moves below the price that I sold these puts at, thus making the puts more valuable which would require me to pay more if I were to buy them back right now. But as noted, time value will erode the value of the put each day and the chart shown here shows that the stock has support from an uptrend line on the monthly chart beginning around November 2008, as well as secondary support from the monthly lows in August, September and December 2009 at around $15. Below $15, and I start to get nervous. I'll probably buy these puts back if CRUS moves below $15 and the market is showing weakness. The absolute maximum loss would occur if CRUS went bankrupt within a month and I was still holding the short put position, in which case I would lose $1355 per contract ($14/share strike x 100 shares - $45 credit received = $1355).

With respect to the stocks I noted in my last post, CMG continues to show lots of strength, PAY, BTU, and SLW are also sticking to support. RVBD has been more volatile and is down slightly (which is to be expected after its 10%+ move after pre-announcing earnings). TCK is also a bit more tenuous but appears to be carving out support right here above $52. The 200 day moving average is also not far away just under $50. While it looks like the market is staging a bounce, I'm still hanging on to SPY puts, as the lower highs in early April do not bode well for the intermediate term health of this market. If we start to lose support here at the S&P's 50 day moving average, I will be adding to my put position as fast as I can. On the other hand, a close above 1322 would have me exiting my puts for a loss.
To the long side, the Oil & Gas Exploration sector looks to be bouncing off support (check the sector ETF: XOP). CVX in particular looks to be bouncing nicely and forming a volatility squeeze. I'm a little gun shy, since I really feel like the market should have trouble making its way through 1320 on the S&P, therefore, I think I'll probably sit this one out.
As a note to bendover: I would personally prefer to be involved in BIDU (the Chinese Google) over GOOG itself, as BIDU appears to have better growth prospects ahead of them (same business model as Google, but with a bigger market and also earlier in their development). Not to mention, their stock has plain been performing a lot better.
Stay cautious!.. and now to lighten up a bit, some musical entertainment:
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-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
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koeddel


Registered: 04/15/11
Posts: 15
Loc: Germany
Last seen: 10 years, 2 months
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Re: Stock Update for April 15, 2011 - CRUS [Re: geokills]
#14294775 - 04/15/11 09:45 AM (12 years, 9 months ago) |
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hi geokills, look honey, just to let u know this stuff is curious: try currency pairs like EURUSD, EURJPY ect. eg on forex4you.com or any broker suitable. spot on M1, M5 charts first, type in MA333/1200, Zigzag and Fractal information. next to do is WilliamsPR333/535/1200. Within this enviroment we could scalp farywell... Okish second setup is on D1 only Fractal information. We use trailing stops and scalp in the direction of the inital position. A break of Fractals on this timeframe indicates the direction of the trend. To build up position we use lower timeframe Fractal+zigzag hits. sidus strategy works well with MA8/21 RSI17...there are good opportunities in silver, lithium or/and brazilian, turkish fonds... we will cut out some good scalping strategies as well as a automated strategy on M30. if you are curious to mesh up with kinda stuff, pls dont hesitate to contact me via email, in order to coordinate some workflow still to do (reverse trading, unfolding strategies and secure ours to progam code) buy LOVE
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geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
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Re: Stock Update for April 15, 2011 - CRUS [Re: koeddel]
#14294810 - 04/15/11 09:58 AM (12 years, 9 months ago) |
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First of all, I have zero experience trading currency. I don't want to spread myself too thin, and wish to work with instruments I've already gained some familiarity with. Second, you used a whole bunch of words in your post that I frankly have no idea what you're talking about. If you want to explain a specific strategy for a specific trade, I'm all ears, but you also need to explain your terminology or at least hyperlink to a web page that does. However, if you seriously want to discuss currency trading on an ongoing basis, that type of discussion would definitely merit its own separate thread.
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koeddel


Registered: 04/15/11
Posts: 15
Loc: Germany
Last seen: 10 years, 2 months
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Re: Stock Update for April 15, 2011 - CRUS [Re: geokills]
#14294879 - 04/15/11 10:21 AM (12 years, 9 months ago) |
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ok, when you feel magic about it, i can introduce you within some hours via teamviewer (see google). this program will provide the interface necessary to show you exactly what i'm going to do... first of all, i need someone in touch with trading tools and fundamentals in order to mesh up our trading network. i can provide you all Ebooks, training videos and further information related, so yours won't spent money gathering knowhow. we could use audio connectivety to coordinate our actions lately. but we will have to work intensively for several couple of weeks to get through the details in here. to avoid loss of time and damage, we need anyone in here related, in order to compress the time of information transfere. information pool is already realized by this directory..ok so far..
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shr
all hail discordia


Registered: 08/12/10
Posts: 557
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Re: Stock Update for April 13, 2011 - Don't Be a Hero... But Keep Some Skin in the Game! [Re: geokills]
#14299009 - 04/16/11 12:28 AM (12 years, 9 months ago) |
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im in on this thread, i trade a bit but due to lack of income i don't have much extra money to be puttin in.
anyways....as of late i've been trading acas. i've been following it for 2 years, its a good buy @ 9.4-9.5 range right now. check it out if you want to make some sure money
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geokills
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Registered: 05/08/01
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Re: Stock Update for April 13, 2011 - Don't Be a Hero... But Keep Some Skin in the Game! [Re: shr]
#14299873 - 04/16/11 07:44 AM (12 years, 9 months ago) |
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Quote:
shr said: check it out if you want to make some sure money
I have a really hard time with statements like these. Unless you're trading off of insider information, there is no such thing as "sure money" in the stock market. I'm not saying this to berate or poke fun, but in my experience, those who would make such statements are likely to lack experience. That said, ACAS has a very strong chart (since the 2008 crash); I wouldn't be surprised to see it go higher.
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teknix
𓂀⟁𓅢𓍝𓅃𓊰𓉡 𓁼𓆗⨻


Registered: 09/16/08
Posts: 11,953
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Re: Stock Update for April 13, 2011 - Don't Be a Hero... But Keep Some Skin in the Game! [Re: geokills]
#14301315 - 04/16/11 02:14 PM (12 years, 9 months ago) |
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Well, I am going to buy about 100 shares of this stock. SAC.TO
http://www.soamsilver.com/
I would like to hear your input Mr. geokills, if you would be so kind.
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shr
all hail discordia


Registered: 08/12/10
Posts: 557
Last seen: 6 years, 6 days
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Re: Stock Update for April 13, 2011 - Don't Be a Hero... But Keep Some Skin in the Game! [Re: geokills]
#14301874 - 04/16/11 04:01 PM (12 years, 9 months ago) |
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Quote:
geokills said:
Quote:
shr said: check it out if you want to make some sure money
I have a really hard time with statements like these. Unless you're trading off of insider information, there is no such thing as "sure money" in the stock market. I'm not saying this to berate or poke fun, but in my experience, those who would make such statements are likely to lack experience. That said, ACAS has a very strong chart (since the 2008 crash); I wouldn't be surprised to see it go higher.
it wasn't to be taken literal, i realize nothing is a sure thing in the stock market....just saying, good chance you'll make money trading this stock at the right price and simply suggesting to check it out
Edited by shr (04/16/11 04:02 PM)
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geokills
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Registered: 05/08/01
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Re: Stock Update for April 13, 2011 - Don't Be a Hero... But Keep Some Skin in the Game! [Re: teknix]
#14305180 - 04/17/11 09:06 AM (12 years, 9 months ago) |
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Quote:
teknix said: Well, I am going to buy about 100 shares of this stock. SAC.TO
http://www.soamsilver.com/
I would like to hear your input Mr. geokills, if you would be so kind.
SAC.TO does not interest me. This company only has two primary resource assets, the Malku Khota silver-indium project in Bolivia and the Escalones copper-gold project in Chile. Because these properties are not yet developed, they aren't yet producing anything, thus the company isn't making any money. At this stage, the company is bleeding money in attempts to prove the value and viability of their land resources. While it could ultimately payoff, there is nothing immediate that should result in the company's continued stock performance aside from pure speculation derived from increasing commodity prices in the metals market. For that matter, there are better opportunities in this sector, for example by placing your bets upon mining operations that have existing proven and profitable resources, a portion of the profits of which can be used to continue purchasing new or develop existing unproven land assets. If you were to invest in SAC.TO, I would only invest a small % of your overall portfolio value (< 5%), due to the increased risk of investing in companies that are relying strictly on debt and operating without profit.
If you believe in the price of silver and want to overweight yourself to that metal, I would instead suggest picking up some AGQ, which is an ETF that seeks to provide daily investment results (before fees and expenses) that correspond to twice (200%) the daily performance of silver bullion as measured by the U.S. Dollar fixing price for delivery in London. There's your leveraged play for silver. If you want to invest in a mining operation, I'd recommend SLW, which I own a chunk of.
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geokills
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Registered: 05/08/01
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Stock Update for April 18, 2011 - Volatility [Re: geokills]
#14311441 - 04/18/11 11:21 AM (12 years, 9 months ago) |
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Standard & Poor's notes their negative outlook on United States sovereign debt (who'd of thought? ), also threatening to lower the nations credit rating. It's a pretty big deal, and the market is down quite heavy on the news. This is precisely why I've been advocating higher levels of caution over the past couple of weeks, as it's seemed like nothing could bring this market down strong, which is inevitably a precursor to the market taking a spill. When everyone's been buying for so long, there just aren't as many potential buyers left to push the market higher; on the contrary, there's a lot of folks invested that have instead become potential sellers. Well we're seeing some of that selling today indeed!
My SPY put options that have been helping me sleep at night (as well as some VXX call options that I bought on friday) have effectively hedged me against losses on my long positions today. Some stops have been hit, and I am adding to my call options on the VXX May $28 strike. The VXX is the ETF that tracks what is referred to as the "VIX", which is the volatility index - or put another way, it gauges how much of a premium investors are willing to pay for insurance against downside in the market (specifically, the cost premium on S&P index put options).
There's an old saying that "When the VIX is high, it's time to buy; but when the VIX is low, look out below." Well, the VXX hit a 52-week low on Friday, which is precisely why I took a nibble on those options. Seeing them up over 30% this morning, I am doubling down, and keeping a stop below Friday's (also the 52-week) low on VXX. The market failed hard at the 50 day moving average and I don't see volatility declining anytime soon, especially as we are getting into the thick of earnings season. Buying calls on the VXX is an excellent way to garner some profits from increasing levels of concern and uncertainty in the market. If there's a real panic and we see a major selloff over several days, the VXX will spike tremendously. And because the 52-week low is only some 5% below where the VXX is currently trading, this is an excellent opportunity to go long the VXX with a well defined stop just below the 52-week low! Hence, why I doubled down on those calls.
Positions (largest to smallest):
60% CASH 29% Long Stock: KMP, PSEC, NLY, BTU, SOA, CMG, PAY 8% Long Unsecured Debt via LendingClub.com @ ~12.4% APY 4% Long Options: VXX May $28 Calls, SPY May $130 Puts, C Jan 2012 $5 Calls, CRUS Sept $17 Calls -1% Short Options: CRUS May $14 Puts
And finally, some groovy tunes care of Billy Preston to lighten the mood on a heavy day... 
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teknix
𓂀⟁𓅢𓍝𓅃𓊰𓉡 𓁼𓆗⨻


Registered: 09/16/08
Posts: 11,953
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Re: Stock Update for April 13, 2011 - Don't Be a Hero... But Keep Some Skin in the Game! [Re: geokills]
#14312846 - 04/18/11 03:24 PM (12 years, 9 months ago) |
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Quote:
geokills said:
Quote:
teknix said: Well, I am going to buy about 100 shares of this stock. SAC.TO
http://www.soamsilver.com/
I would like to hear your input Mr. geokills, if you would be so kind.
SAC.TO does not interest me. This company only has two primary resource assets, the Malku Khota silver-indium project in Bolivia and the Escalones copper-gold project in Chile. Because these properties are not yet developed, they aren't yet producing anything, thus the company isn't making any money. At this stage, the company is bleeding money in attempts to prove the value and viability of their land resources. While it could ultimately payoff, there is nothing immediate that should result in the company's continued stock performance aside from pure speculation derived from increasing commodity prices in the metals market. For that matter, there are better opportunities in this sector, for example by placing your bets upon mining operations that have existing proven and profitable resources, a portion of the profits of which can be used to continue purchasing new or develop existing unproven land assets. If you were to invest in SAC.TO, I would only invest a small % of your overall portfolio value (< 5%), due to the increased risk of investing in companies that are relying strictly on debt and operating without profit.
If you believe in the price of silver and want to overweight yourself to that metal, I would instead suggest picking up some AGQ, which is an ETF that seeks to provide daily investment results (before fees and expenses) that correspond to twice (200%) the daily performance of silver bullion as measured by the U.S. Dollar fixing price for delivery in London. There's your leveraged play for silver. If you want to invest in a mining operation, I'd recommend SLW, which I own a chunk of.
geokills,
Thanks for the reply and input!
I'm trying to get a better understanding before I allocate any investment in stocks. I'm looking for more of a long-term investment, that I can put money into now, to help pay off the loans that are at an interest rate of 4.5 % apr.
I do pay the interest each month to prevent any compounding.
Does SAC.TO own the right to mine the minerals at the proven site whenever they decide to?
Thanks for your advice and tips!
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geokills
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Registered: 05/08/01
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Re: Stock Update for April 13, 2011 - Don't Be a Hero... But Keep Some Skin in the Game! [Re: teknix]
#14313346 - 04/18/11 07:18 PM (12 years, 9 months ago) |
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I can't imagine that SAC.TO doesn't own the mineral rights to the land they are attempting to develop into a viable mining operation. But that's a moot point, the land hasn't yet been proven to be viable for commercial mining and the company is not profitable. It's an extremely risky (i.e. speculative) investment because of this. I told you my piece on that stock, and there's nothing there to motivate me to dig any deeper into that specific company's operations.
If you have a loan at 4.5% APR, why don't you consider investing your money in high yielding stocks like NLY (~14% yield), PSEC (~10% yield), KMP & CPNO (~6% yield), AGNC (~19% yield), VZ & T (~5% yield). You could also lend directly to other peers at sites like LendingClub.com and Prosper.com in order to receive yields between 7 - 12% with fairly low risk. All of these investments will provide the income necessary to cover your interest expense, and most of them will give you a lot more income than that. Seems a lot safer to invest in a company that pays you a cash distribution on a regular basis, which you can turn around to cover your loan interest; rather than a company that doesn't pay a dividend and isn't even profitable!
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Hotnuts
old hand



Registered: 02/26/05
Posts: 3,436
Loc: Wild Blue Yawnder
Last seen: 25 days, 9 hours
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Re: Stock Update for April 13, 2011 - Don't Be a Hero... But Keep Some Skin in the Game! [Re: geokills]
#14318351 - 04/19/11 04:18 PM (12 years, 9 months ago) |
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Keep the pedal to the metal, bro! That S&P downgrade, was flat out laughable. And BTFD'able. Should test 1380/1400 and we'll see if recession fears start creeping in!
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ben_dover0802
shroom addict



Registered: 09/21/08
Posts: 648
Last seen: 7 years, 8 months
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Re: Stock Update for April 18, 2011 - Volatility [Re: geokills]
#14320391 - 04/19/11 10:43 PM (12 years, 9 months ago) |
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Quote:
The VXX is the ETF that tracks what is referred to as the "VIX", which is the volatility index - or put another way, it gauges how much of a premium investors are willing to pay for insurance against downside in the market (specifically, the cost premium on S&P index put options).
Wow I had no idea this type of thing even existed. I was assuming that if you wanted to profit from a bear (or unsure) market and weren't ready to dive into options you had to short. Lol
I was planning to "sell in May and go away", but I am glad you mentioned this. Sweet deal I added VXX to my watch list.
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geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
Last seen: 2 hours, 48 minutes
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There's a trade for everything, it's just a matter of finding it, and then timing the trade correctly. Unfortunately, my timing has been pretty poor lately! Thankfully, I comfort myself while liking my wounds with the fact that I have been holding a good long term chunk of gold, which has more than offset this short term pain in my portfolio. I am also reminding myself not to get more aggressive in attempts to "make up" for these past few weeks of pain, as that will probably result in me taking even larger losses! Instead, I'll stay focused and do what I always do, keeping my mind on investing for my lifetime, and not just for April.
I was stopped out of my VXX calls yesterday when the stock made a new low. Today, VXX is down another whopping 4% (emphasis on the importance of stops!). United Technologies (UTX), a large conglomerate that has its hands in several parts of the economy, reported good earnings which is signaling to the market that the aggregate landscape may not be so bad. I'm still having a hard time trusting the move, and until we break above 1345 on the S&P or below 1295, I'm probably not going to be doing too much. If I absolutely had to buy something this morning, it would probably be Boeing (BA), which is in a volatility squeeze and close to breaking out. All eyes will be on AAPL's earnings after the close.
ben_dover: Here (click) are some other instruments that can help you capitalize off of weakness in the market (just be careful, they are leveraged and embody a "time decay" component which causes them to perform poorer on a relative basis, the longer that you hold them in your portfolio.
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sofa_king_happy
Stranger

Registered: 01/29/10
Posts: 227
Last seen: 9 years, 1 month
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Re: Stock Update for April 20, 2011 [Re: geokills]
#14329620 - 04/21/11 07:46 PM (12 years, 9 months ago) |
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geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙


Registered: 05/08/01
Posts: 23,417
Loc: city of angels
Last seen: 2 hours, 48 minutes
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Stock Update for April 24, 2011 [Re: geokills]
#14346511 - 04/24/11 11:08 PM (12 years, 9 months ago) |
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Some interesting charts to ponder as we head into a new week...

The above depicts a matrix (i.e. a whole bunch) of moving averages. You can see that they are all starting to converge, which indicates that the market is forming somewhat of a base or support zone. When the ribbons start to expand, it is indicating an increasingly overbought (or oversold) condition. Now that we are tightening up, this is becoming an increasingly important level that could catapult us to higher levels.

The above depicts the Volatility Index superimposed with the S&P 500, clearly illustrating the whole "when the VIX is high, it's time to buy; when the VIX is low, look out below" mantra. I tried to take this for a bounce last week, but was stopped out as the market seems determined to go higher. While it is important to note that a low VIX does merit some caution due to the complacency it indicates in the market, it is also important to understand that this complacency indicates major money managers are expecting more upside and therefore are not paying up for the "insurance premium" that would otherwise drive the Volatility Index higher. This is supported by the fact that the volume has been fairly low on the bounce off of the March 16th lows, thus telling us that there simply isn't a lot of supply, instead people are just holding what they got as buyers continue to trickle in. Plenty of the hot money hedge funds have no doubt been moving into cash in anticipation of the S&P falling even lower since the breakdown in February... so if the recent high at 1344 is broken on heavy volume, there will likely be an even bigger rush of buying pressure, as hedge funds are pressured to outperform the market and will have to put their client's money to work (or else have a bunch of angry clients wondering why their money isn't invested in a market that is going higher).

Here you see the relationship between oil and the US dollar. Clearly, it is an inverse relationship with an underlying bid in oil, as can be inferred from the period during the first half of 2010, where the dollar started to spike higher, but oil stayed relatively flat. Since our monetary policy is only helping to make our dollar even weaker, it is to be expected that inflation will continue, as indicated by oil's resumption of its uptrend, including the well defined uptrend in other commodities such as gold and silver.

This last chart illustrates what can be called an inverse Head and Shoulders pattern on the S&P 500. In a nutshell, this pattern indicates that the market should continue to move substantially higher once we see a decisive move above the neckline (~1350). A minimum target would be an equivalent distance from the neck-line to the top of the head, or roughly 100 points. If you've been trading a while, none of this is news to you. But if you're relatively inexperienced, this is the type of stuff big money pays attention to, and you need to know it if you want to stay on the right side of the trend.
Watch that 1344 - 1350 level on the S&P. If we break above that on good volume, and especially if the Dow Jones Transportation Index (which has been leading this market for quite some time) also follows through with a breakout above its last high at 5405, we should expect a lot of follow on buying by under-invested hedge fund managers who were expecting more downside, and whom are now going to need to play catch up. The backdrop of inflation also lends further support to more upside, though 1344 is still resistance, so we may not chew through it right away and you shouldn't just go buying everything in sight tomorrow. Nevertheless, with the convergence of the moving averages, the inverse head & shoulders pattern and the macro inflationary environment, I am going to be poised for increasing my long exposure on any strength above 1344.
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