Stocks?

mystik610

jflail2 wrote: »

And there it is. Those key ratios tell the true story. Debt/Total Cap, EV/EBITDA, various NOIs, dividend payout ratios, liquidity ratios; all tell a good story about how sound the company's books are. Forward pricing multiples, credit ratings, yield calcs, earnings growth; so much good information to take in. And necessary if you want to make good valuations as a whole.

+1



If you're trading stock, it's more important to pay attention to these metrics than to look for trends and try to time the market. How do you know if a stock is a 'good buy' unless you have some sort of basis of what the stock should be worth? If the underlying metrics indicate that a stock is under or over valued, the stock price will eventually correct...and if you position yourself appropriately, there's money to be made no matter what the market as a whole is doing. Market trends often dictate how/when stock prices move, but its far less reliable to try to follow market trends and time the market (the problem is this is what a lot of people do). The hard part is stomaching the volatility and focusing on these metrics for cues on when to buy and sell...and also knowing when to cut your losses and walk away from a position.

All that being said, it takes a lot of time to continually research stocks to find gems and to continually monitor these metrics...which is why I stopped actively trading stocks when I switched to a career that gave me far less time to do so.

audio_alan

slammin86 wrote: »

Yes it was AIG.

My picks were
LVS (paid less than 2.50, has hit 55 recently)
C (paid less than 2.00, has hit 5)
Siri (paid like 19 cents, has hit $1.80)
PIR (paid 60 cents, has hit 11.20)
AIG (lost money)
GM (bankrupt)
Some small crap bank (bankrupt)

To follow up on this, these returns are not normal. Slammin86 obviously invested right after the crash a couple years ago. Finding bargains like this, for so many picks, would be very difficult now since the market has mostly recovered from it's recent extreme lows. The DOW is only about 20% below it's all-time highs... but it has lots of room to move down again.

The stock market is no longer a guarantee. Actually, it never was, but as other people have pointed out, it's even more of a "gamble" now. True, investing in companies with solid fundamentals helps and is normally safe, but when the market swings wildly, these solid companies can get tossed around just as badly as poor companies. Study/compare the charts from 2008-2009 of just about any company and you'll see what I mean. Great companies crashed along with everything else. If you held during that time, you got your a$$ handed to you. You need a strong stomach to stay in the game these days, and you have to know when to get out... and that's tricky.

Something else to consider. As a couple people touched on, investing $50 at a time will eat your lunch. You need to invest chunks of money where the commisions to the brokers is only a small fraction. If you can, try to get the trade commisions down to 1% or less of the trade amount. So, if the commision you pay is $10 per trade, you better be investing at least $1000. Don't forget, you have to pay that $10 again when you sell. So $10 in, $10 out on a $1000 investment means you need to make 2% just to break even. If you have to pay $10 in/out on a $100 investment, you'd need to make 20% just to break even! An average stock doesn't return 20% in a year.

If you don't like to lose money, you better just stay away from the stock market. It's not "if", but "when" you'll lose big on a stock. Even the pros make bad picks and pay for their mistakes. If you can't stomach it, it's probably best not to play.

It often takes months or years to make some good gains in the stock market, but only a couple minutes (or a day, or a week) for you to lose big. Stocks usually go down MUCH faster than they go up. If you aren't near a computer when it's going down, you could login to your account to find that you lost a substantial amount in your portfolio. Those loses can take months/years to regain, and often requires more capital to help "break even".

Having said that, the stock market can be a great place to build wealth. But, you need to actively pay attention to your investments, be aware of what's going on with the general economy, and have knowledge of current events that could impact your investments. If you aren't willing to put in the time, you will most likely lose money.

My advice: Only invest what you can afford to lose. For the average Joe, Mutual Funds are the way to go.

Tour2ma

slammin86 wrote: »

Yes it was AIG.

My picks were
LVS (paid less than 2.50, has hit 55 recently)
C (paid less than 2.00, has hit 5)
Siri (paid like 19 cents, has hit $1.80)
PIR (paid 60 cents, has hit 11.20)
AIG (lost money)
GM (bankrupt)
Some small crap bank (bankrupt)

And you turned $1000 into $5300... well done.. and you were pretty well diversified to boot. If you'd only bought Ford (which I bought at $2.25 or so) in place of GM... Hopefully 2008 was a once in my lifetime experience/ opportunity. Once I'm gone if you want another, have at it...

FYI... Old GM may still be trading "pinks", so if you're still holding it you might be able to clear enough to clear the commission hurdle... Ditto for the bank "with no name".

Now please don't take this personally, but I fear you are holding onto the past. Not just talking about which stocks you are holding, but the way you quoted "has hit" prices. Especially in the case of LVS which has now sunk to near $37 (I've owned it and am beginning to consider buying again). You have some losses, so you can offset gains from selling bits of one or more winners. Then take the proceeds and maybe go for a dividend yielder???

shack wrote: »

I have never been a fan of technical (trend) analysis when looking at stocks. Fundamental analysis is a completely different exercise. There was a time when history was considered an excellent predictor of future movements...but the influencing factors were fewer and more preditable. Now, too many unrelated "things" affect the stock that never existed in the past. Even "back when" there were questions as to the viability of technical analysis as a tool. We played a game where one group picked a few stocks based on the trends and the other picked by throwing darts at a Wall Street Journal quotes page and followed them the entire semester. The dart bunch won decidedly.

I would rather look at the key ratios of the company to determine the underlying value of the stock...not the trends.

Yes, but.... and there's always a butt...

While I select stocks based upon fundamentals, I buy and sell based upon technicals. In my selection process I also determine whether the stock is an investment candidate or a trade candidate.

The biggest thing I see that has changed since "back when" is that now, so much money trades on technicals that it has become a self-fulfilling prophecy. I (along with a few million others) chart the SPX for general guidance on my investments and chart specific stocks for trades.

IMO... While the technicals are a must for traders, investors should at minimum be aware of them.

slammin86

Tour2ma wrote: »

And you turned $1000 into $5300... well done.. and you were pretty well diversified to boot. If you'd only bought Ford (which I bought at $2.25 or so) in place of GM... Hopefully 2008 was a once in my lifetime experience/ opportunity. Once I'm gone if you want another, have at it...

FYI... Old GM may still be trading "pinks", so if you're still holding it you might be able to clear enough to clear the commission hurdle... Ditto for the bank "with no name".

Now please don't take this personally, but I fear you are holding onto the past. Not just talking about which stocks you are holding, but the way you quoted "has hit" prices. Especially in the case of LVS which has now sunk to near $37 (I've owned it and am beginning to consider buying again). You have some losses, so you can offset gains from selling bits of one or more winners. Then take the proceeds and maybe go for a dividend yielder???



Yes, but.... and there's always a butt...

While I select stocks based upon fundamentals, I buy and sell based upon technicals. In my selection process I also determine whether the stock is an investment candidate or a trade candidate.

The biggest thing I see that has changed since "back when" is that now, so much money trades on technicals that it has become a self-fulfilling prophecy. I (along with a few million others) chart the SPX for general guidance on my investments and chart specific stocks for trades.

IMO... While the technicals are a must for traders, investors should at minimum be aware of them.

If I needed the money for anything I would have sold it back once it went above $7000. As of now if I were to sell there isn't anything on my radar to buy and I would likely just put it into my savings and let it earn 0.6 percent...lol.

Tour2ma

Got ya...

As long as you realize you still have your money in high risk stocks (there's a reason they were so cheap) and are comfortable with that, more power to you...

shack

Tour2ma wrote:

While I select stocks based upon fundamentals, I buy and sell based upon technicals. In my selection process I also determine whether the stock is an investment candidate or a trade candidate.

See...there's the difference. I don't trade stocks...I invest in stocks. When I buy and sell has very little to do with technical analysis.

slammin86

Tour2ma wrote: »

Got ya...

As long as you realize you still have your money in high risk stocks (there's a reason they were so cheap) and are comfortable with that, more power to you...

Yeah as of now I am very fine with it. The initial investment wasn't that much, and the chances of me actually dropping back down below that amount are very very very slim. If I would have just kept this in my savings account for the past few years I might have made 10 dollars interest on it.
I am pretty sure if LVS drops below 35 a share I am going to sell half of my shares (only have 100)

I finally pulled the plug today on some silver...bought 60 oz to go with my small amount I already had.

Maybe not the best short term idea, but long term i'm sure I will come out just fine.

shack

slammin86 wrote:

I finally pulled the plug today on some silver...bought 60 oz to go with my small amount I already had.

Maybe not the best short term idea, but long term i'm sure I will come out just fine.

You do realize you have purchased silver at it's all time high (even inflation adjusted) except for a brief period in the late 70s early 80s when the Hunt Brothers were attempting to manipulate the silver market?

slammin86

shack wrote: »

You do realize you have purchased silver at it's all time high (even inflation adjusted) execpt for a brief period in the late 70s early 80s when the Hunt Brothers were attempting to manipulate the silver market?

yessir I am aware of that. actually it's down from the all time high but I know what you are saying.

hockeyboy

I too am very long silver both physical and in SLV along with a number of miners. I have been successfully swing trading SLW both long and short.

Tour2ma

gdb wrote: »

I think/have read that the contents of the book outlines the way to lessen the need for such analyses. It is after all "The Answer" !!:biggrin: The wait que at my library......88 ahead of me:eek: you'd think it was a Sue Grafton fer crapsake.:rolleyes:

Picked it up Friday... brand, spanking new copy... and no Holds behind me...

Read it in about 15 minutes... OK, I skimmed it.

Very basic... very prescriptive. The one-page appendix is the book's "money-shot" (pun intended). It contains a table with the authors' prescribed investment blend. All the reader has to do is figure out their risk tolerance. Then you invest and periodically rebalance based upon gains/ losses. And as you situation changes reassess your risk tolerance and adjust.

Authors' main objective is to get the reader to avoid the pitfalls of panicing out of the market at bottoms and gleefully chasing the market at peaks. They support this with a chart of how far your long-term rate of return falls, if you'd missed varying numbers of the market's biggest one-day gains between Jan 1970 and Aug 2009.

tonyb

jflail2 wrote: »

And there it is. Those key ratios tell the true story. Debt/Total Cap, EV/EBITDA, various NOIs, dividend payout ratios, liquidity ratios; all tell a good story about how sound the company's books are. Forward pricing multiples, credit ratings, yield calcs, earnings growth; so much good information to take in. And necessary if you want to make good valuations as a whole.

Couldn't agree more, well said.

slammin86

C is now calling for a 10-1 reverse split. This is not really something I want to wait around for. LVS is now on the rise...I am considering selling it all and looking into a few mutual funds or something.

Tour2ma

tony,
Are/ were you with the CME or CBOE? Just curious...

decal

I think perfectcreature is confused and in hibernation now!!!!

tonyb

Tour2ma wrote: »

tony,
Are/ were you with the CME or CBOE? Just curious...

If you mean did I have a seat on the exchange,nope, wish I did though. I have a few friends who do. Way Over my head money wise. Learned alot from the dudes who have been doing it all their lives. You know the old saying, find successfull traders and copy what they do. That only works to a point, you still have to have a good understanding of what drives prices in whatever industry your into.
The thing I like about the currency markets are you don't hold long positions. I mean time wise. Your in and out sometimes in 30 minutes, sometimes 2 hours, you know if you made money or lost the nest egg right then. I also like commodities, since price swings are seasonal with so many, it's almost a gimme if you chart them well.