***Official*** 2011 Stock Market Thread

[The-Noid]

Good thing to know. Thanks.
However, I always try to avoid the one with less than 100K average.

Generally that is a good strategy.

I will no longer be discussing individual names even with disclosure. If anyone needs market data, wire data, news, ratios etc let me know. Otherwise, I will continue to post fun charts and that is about it.

 

[lothar]

Generally that is a good strategy.

I will no longer be discussing individual names even with disclosure. If anyone needs market data, wire data, news, ratios etc let me know. Otherwise, I will continue to post fun charts and that is about it.

Why?...I don't think anyone here is going to sue you.
Maybe a mod should put a disclaimer in the first post of the thread about financial/stock advice offered in this thread and that one should consult their financial adviser before investing?

I think you're taking this a little bit too seriously...

 

[SSSnail]

Bought some KTCC today on the dip, don't know why it dropped that much. Even with revised guidance, their P/E is still too low. Positive cash flow, increased YOY revenue, don't know what the deal is.

I mean, they have $14mil cash on hand, and only 10mil shares OS...

 

[SunnyD]

Whats up with F? I haven't been paying attention, but there's been a fairly substantial drop over the last week, but all I see if GOOD market news for them.

 

[rcpratt]

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[IHateMyJob2004]

Bought some KTCC today on the dip, don't know why it dropped that much. Even with revised guidance, their P/E is still too low. Positive cash flow, increased YOY revenue, don't know what the deal is.

I mean, they have $14mil cash on hand, and only 10mil shares OS...

I took a look at this one. Has anything changed? Historically, their FCF numbers look bad. The 10 year FCF average is about $1.2M. If you drop the best 2 and worse 2 FCF numbers from the past 10 years, the average is $0.09M ($90K). It's hard to even justify that the future free cash flows are worth more than $10M.

Current Assets - Total Liabilities is in the $50M ballpark. You can tack on 50-75% of that number to value. So $37.5M optimistically.

So, optimistically, this thing is worth about $47.50M. It has a $47.8M market cap.

Just saying, at glance I see no reason to invest in it, even optimistically. I would not pay anything more than $25M for this company which means that I would not pay more htan $2.25. That boat came and went in 2009.
http://www.google.com/finance?client=ob&q=NASDAQ:KTCC

Having said all this, I have not even cracked open the annual report. I was just looking at the numbers. Is there any reason to think things will change? Restructuring? Sale of a bad business unit? Market conditions changing (beyond the improving economy)? What is the thing that everyone else is missing?

More bad news could be convertable debt. The 10-K and 10-Qs tell you about that. USG for example has a risk of diluting shareholders by 33%.

 

[rcpratt]

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[lothar]

Just put in an order for my first mutual fund, MRVEX. How exciting.

Average risk, average performance, high expense ratio does not an exciting mutual fund make.
Maybe if the expense ratio was 0.75% or lower, then I'll say looks okay.

 

[snoopdoug1]

Just put in an order for my first mutual fund, MRVEX. How exciting.

try something at www.vanguard.com

 

[thepd7]

Whats up with F? I haven't been paying attention, but there's been a fairly substantial drop over the last week, but all I see if GOOD market news for them.

Revenue/profits released last week were less than expected. I still think it's a great stock, solid company at a discounted price.

 

[rcpratt]

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[IHateMyJob2004]

We'll see I'll let you know how it goes. I wouldn't call the performance average, though.

You mean past performance.

You should jsut do an index fund if you don't know how to invest yet. Or a savings account even.

 

[rcpratt]

edit: Forget it. Not sure why I bothered. Everyone knows best on the interweb.

***

 

[thepd7]

You mean past performance.

You should jsut do an index fund if you don't know how to invest yet. Or a savings account even.

as soon as this thread starts getting going again (died in 2010) you start being an asshole? Great work.

 

[SSSnail]

edit: Forget it. Not sure why I bothered. Everyone knows best on the interweb.

***

Schwab had some pretty good ETFs with no fees, might want to look into that.

 

[wayliff]

I am currently sitting in a combination of things.

AMD
C
DOW
TOT
SANM
GE

and other funds in these ETFs

VTI
VNQ
VWO

I had F and sold it several weeks ago and made the mistake to hold JTX for a few days and had to dump that.

Overall it has been working out pretty well.

 

[IHateMyJob2004]

as soon as this thread starts getting going again (died in 2010) you start being an asshole? Great work.

I was curt, but honest. BTW: Way to take the moral high ground.

What I should have said. Over 90% of funds under-perform the markets. Mostly due to outrageous fees. Your best bet is to do an index fund which takes a minimal management fee.

I'm not sure how my comment about past performance not being an indicator of future returns was misconstrued.

 

[lothar]

I've had similar problems in the past. I understand how frustrating it can be.

One follow up. If you had a screener would any of the following be useful to you?
(total liabilities)/(5 year FCF average)
(total liabilities)/(1 year or TTM FCF)
(total debt)/(5 year FCF average)
(total debt)/(1 year or TTM FCF)

I look at those two ratios all the time. It's not common (to the avarage investor) but it does tell you a bit about how fiscally conservative a company is. Instead of FCF, Earnings or EBITDA could be used since most people are more familiar with those terms.

All those are certainly useful. I always do FCF to Debt...One of my required ratios on all stock analysis.
Some may be more useful than others depending on certain situations.
Ex: 1 year or TTM may be more useful if you don't expect a company to return to it's "glory" days and such.

Don't waste time using Earnings or EBITDA...Those figures are pretty much meaningless and are not considered "real" earnings.
Either stick with FCF or use Owner Earnings.

 

[IHateMyJob2004]

Lothar,

I think we are on the same page in regards to how to properly look at debt. A future screener at a site we both know about will probably have these available in some manner.

 

[lothar]

We'll see I'll let you know how it goes. I wouldn't call the performance average, though.

Step 1:
MRVEX Prospectus (pay attention to the bolded part):
The investment seeks capital appreciation. The fund invests at least 80% of assets in value-oriented common stocks of medium-sized companies similar in size to those within the Russell Midcap® Value Index. The Adviser selects companies that exhibit traditional value characteristics, such as a price-to-earnings ratio less than the S&P 400® Index, higher-than-average dividend yields or a lower-than-average price-to-book value. In addition, these companies may have under-appreciated assets, or be involved in company turnarounds or corporate restructurings.

Step 2:
Google "Russell Midcap Value Index" and you'll find the iShares version.
Click on the MorningStar link which is the 5th one.
http://quote.morningstar.com/etf/f.aspx?t=IWS&region=USA (MorningStar is a great source)

Step 3:
Compare them.
MRVEX vs. IWS 1 year performance:
http://www.google.com/finance?chdnp...=98532&cmpto=NYSE:IWS&cmptdms=0&q=MUTF:MRVEX&
MRVEX: +31.14% (Actual performance with management fees taken into account: +29.5%)
IWS: +31.25% (Actual performance with management fees taken into account: +30.92%)

MRVEX vs. IWS 5 year performance:
http://www.google.com/finance?chdnp...493051&cmpto=NYSE:IWS&cmptdms=0&q=MUTF:MRVEX&
MRVEX: -10% (Yes, that is a negative...Bolded for emphasis)
IWS: +9.42%

Expense ratio:
MRVEX: 1.25%
IWS: 0.25%

Also, note that performance results doesn't include management fees.

"Actual" 1 year performance with management fees taken into account:
MRVEX: +29.5% is left for you after the managers take their cut.
IWS: +30.92% is left for you after the managers take their cut.

"Actual" 5 year performance with management fees taken into account:
MRVEX: -11.13%(Yes...That AGAIN is a negative) is left for you after the managers take their cut.
IWS: +9.15% is left for you after the managers take their cut.


Conclusion:
You are paying 5x more fees to your fund manager to get the same(at best) or worse performance given they hold mostly the same stocks in the Russell Midcap Value Index.

How do I know this?
Because I used to be a holder of PRLAX many years ago until I found the iShares Latin American ETF version which charged ~0.3% expense vs 1.25% for PRLAX. I was stupid 5 years ago. I am less stupid now.
Management fees are hidden if you're someone who doesn't know where to look. If a fund is charging a 1+% management fee, they better prove to me that they're well versed in the art of stock picking. Don't pay a 1.25% expense ratio for a fund that tracks or "mimics" an index, or attempts to do either.

Protip: Don't even bother comparing performance from 2002 to today, because you'll shoot yourself in the foot after you see it.
http://www.google.com/finance?chdnp...899972&cmpto=NYSE:IWS&cmptdms=0&q=MUTF:MRVEX&

If after all this, you still feel "Everyone knows best on the interweb"...Well, I don't know what else to tell you.

 

[VinylxScratches]

why are you guys erasing your replies?? I can't reference anything in here. Were you guys wrong or something???

 

[FelixDeCat]

Just chiming in here. Been selling $10 coverered calls on 500 shares of TIVO every 2 months since June '10. Been making me pretty happy.

Good man. Tis better to be a call seller than call buyer!

You can easily generate $2500 a month on $100,000 worth of QQQQ. Diversified and relatively safe if you dont mind checking it daily. Just be careful not to become a speculator as opposed to call seller. And dont use margin either - thats the devil's tempation along with greed. Both will kill you.

Ps. Buying $100,000 worth of Tivo today @ 10.77 and selling the March $10s would generate roughly $6000 a month. The risk however is that Tivo drops 50% overnight due to an accounting scandal or some other unknown risk and YOU LOSE BIG TIME if not EVERYTHING. Thats why I think doing this with indexes is better.

 

[thepd7]

I was curt, but honest. BTW: Way to take the moral high ground.

What I should have said. Over 90% of funds under-perform the markets. Mostly due to outrageous fees. Your best bet is to do an index fund which takes a minimal management fee.

I'm not sure how my comment about past performance not being an indicator of future returns was misconstrued.

You were an arrogant asshole, exactly like I said. I'm not stooping to your level by calling you out. Stooping to your level would be this:

"Since you're so stupid you don't understand how interest works you should just put your money under your mattress."

why are you guys erasing your replies?? I can't reference anything in here. Were you guys wrong or something???

I'm going to guess it has something to do with IHateMyJob2004 telling people they don't know anything about investing when they were just trying to participate in a discussion on a tech forum.

 

[rcpratt]

***

If after all this, you still feel "Everyone knows best on the interweb"...Well, I don't know what else to tell you.

I appreciate your feedback and your time. What I do not appreciate is condescending, insulting, and useless “advice,” which really contains no advice at all.

I am aware of the management fees and I know where to find expense ratios. However, I suppose my understanding was that the fees were already factored into the return of the funds. If not, when does the investor actually see those fees affect them?

 

[The-Noid]

NAV value will already take into account management fees. No need to subtract again.

NAV is reported net of fees including both management (published) and trading fees and impact costs which are not published.

lothar: Unfortunately Google Finance has problems calculating returns of things that pay dividends and capital gains like a mutual fund.

Net asset value = Assets @ day end - management fees for the day. The costs will generally be annualized as a percentage. Easiest way to see management fees is to buy separate accounts where you can set the expense ratio however.

Management fees do however not show what the cost is for best execution or trading costs and market impact. There are often soft dollars paid for research and other services, which generally comes out of a wider bid/ask spread, the impact on total return is the same but fee is not shown in management fees. However when you see the NAV you do not need to subtract the fee again. The actual performance of the fund would be an addition of the fee.

Hence the reason SPY doesn't track SPX 1:1 is the .10% expense ratio.

If you are looking for an example on Google Finance search for the retain of a high yield fund, which pay large dividends sometimes even returning capital. Google Finance has negative numbers over a 10 year period and often the return is significantly positive including reinvested dividends.