***Official*** 2011 Stock Market Thread

[Pliablemoose]

Heh, just looked it up, I've bought & sold Apple 32 times this year, am up $50K

 

[Imp]

Heh, just looked it up, I've bought & sold Apple 32 times this year, am up $50K

In the last year, I think I've watched Apple go up to $350-$360, then crash down to $310-$320 at least 3 or 4 times. That's a 10% spread each time. Never had the balls to play AAPL. Whether true or not, I personally see it as faddy with fad priced in. Being the "biggest" company, even above Exxon Mobil (in and out) at this point, I'm obviously way off. Next time?

 

[manly]

Of all large banks, WFC was far from bankruptcy. Buffett has gone as far as to say that if companies started going bankrupt in the US, that WFC would have been one of the last if not the last to go bankrupt. This includes JNJ, PG, BAC, you name it.

No idea what Buffett said but any (leveraged) bank is more vulnerable during a severe crisis than a blue-chip firm sitting on cash. IIRC WFC was actually the mega-bank that barely "passed" the stress testing of a couple years ago (regulators knew they couldn't actually fail any bank because it could become a self-fulfilling prophesy).

Would love to buy AAPL on another dip, hoping for closer to $340 but it doesn't feel likely. Didn't realize beating earnings for umpteen straight quarters is just a "fad".

 

[IHateMyJob2004]

No idea what Buffett said but any (leveraged) bank is more vulnerable during a severe crisis than a blue-chip firm sitting on cash. IIRC WFC was actually the mega-bank that barely "passed" the stress testing of a couple years ago (regulators knew they couldn't actually fail any bank because it could become a self-fulfilling prophesy).

Would love to buy AAPL on another dip, hoping for closer to $340 but it doesn't feel likely. Didn't realize beating earnings for umpteen straight quarters is just a "fad".

The stress test was a political tool more than anything else. WFCs fate is not dependent upon a hypothetical situation.

I'll be blunt. If things are to get so bad that WFC is to fail, you better have invested in a garden and some guns. What your favorite blue chip is doing will be the least of your worries.

If WFC drops to under $10, I'll put every penny I can into it. I already have 25% of my pennies there. Another 25% won't worry me. I'll sleep quite well at night.

I think I am skipping the point. The reason I say what I say about WFC is due to what I have seen WFC do over the past 5+ years. They are there for shareholders. They are not a bunch of greedy morons like over at BAC. They are in the simplest business possible. Borrow at 3%, lend at 6%. I find it sad that some banks can not get this right. the ones that borrow at 3% and lend at 5% will eventually die off, giving their market share to the smarter banks like WFC.

I have been saying to ignore BAC for years and to consider WFC.
http://www.google.com//finance?chdn...ne&cmpto=NYSE:BAC&cmptdms=0&q=NYSE:WFC&ntsp=0

Seems like I was right. Go figure.

AAPLs time will come. Making bets (effectively what people are doing) is a loosing proposition. Instead of reading about behavioral finance, many will fall victim to it's effects and kiss all those gains good bye. And if not on AAPL, it will be the next company that comes by. The speculators hall of fame consists of an empty room.

 

[Pliablemoose]

No idea what Buffett said but any (leveraged) bank is more vulnerable during a severe crisis than a blue-chip firm sitting on cash. IIRC WFC was actually the mega-bank that barely "passed" the stress testing of a couple years ago (regulators knew they couldn't actually fail any bank because it could become a self-fulfilling prophesy).

Would love to buy AAPL on another dip, hoping for closer to $340 but it doesn't feel likely. Didn't realize beating earnings for umpteen straight quarters is just a "fad".

The thing with Apple is you have to have your timing just right, I missed once this year and lost $1700... But overall, I've been insanely lucky. The other thing with Apple is that it's on it's way to being a $500-$600 stock, so if you can play it right, you can ride it up while playing the peaks and troughs...

 

[IHateMyJob2004]

In the last year, I think I've watched Apple go up to $350-$360, then crash down to $310-$320 at least 3 or 4 times. That's a 10% spread each time. Never had the balls to play AAPL. Whether true or not, I personally see it as faddy with fad priced in. Being the "biggest" company, even above Exxon Mobil (in and out) at this point, I'm obviously way off. Next time?

Ya, far from unique.

http://www.google.com//finance?chdn...&cmpto=NYSE:AA&cmptdms=0&q=NASDAQ:AAPL&ntsp=0

Confirmation bias may be to blame for what you think you are seeing. Who would think that an aluminum producer could produce the same swings as a tech stock. This is not a unique stock I picked. There are many that follow the same pattern you are seeing.

 

[IHateMyJob2004]

The thing with Apple is you have to have your timing just right, I missed once this year and lost $1700... But overall, I've been insanely lucky. The other thing with Apple is that it's on it's way to being a $500-$600 stock, so if you can play it right, you can ride it up while playing the peaks and troughs...

Why do you think that?

If you really think that you can navigate the swings, why not take advantage of the Jan 2013 calls at the 200 strike? Why not just control more shares at the same cost? Seems like a slam dunk to me. After all, why make 10% on those dips when one can make 20%?

PS: Regarding AAPL, I always find it amazing how the people playing this dips are participating in a zero sum game yet everyone here seems to be winning the game... interesting ...

 

[goog40]

Why do you think that?

If you really think that you can navigate the swings, why not take advantage of the Jan 2013 calls at the 200 strike? Why not just control more shares at the same cost? Seems like a slam dunk to me. After all, why make 10% on those dips when one can make 20%?

PS: Regarding AAPL, I always find it amazing how the people playing this dips are participating in a zero sum game yet everyone here seems to be winning the game... interesting ...

I'd be surprised if AAPL doesn't break $500 next year. As well as they've performed, the future is even brighter.

Their smartphone market share has been hindered by the fact that they're offered on limited carriers, both in the US and internationally. They've been adding a ton of carriers and that's going to continue. China is already huge for them (600% YoY growth), and it's just getting started (currently iPhones are available to around 200 million cell subscribers in China, that # will likely jump to 900 million in 2012 with the addition of China Mobile and China Telecom).

The tablet market is still in its infancy, and the iPad will likely continue to dominate it. Most competing tablets have been a total failure up to this point (see Xoom, Playbook, HP TouchPad). Other tablets will sell eventually, but they'll be competing for the scraps basically due to being forced to sell at reduced prices. HP has already been forced to drop the price $100 within a month of release. It's pretty clear at this point that competitors can't price their tablets at the same price as an iPad and expect it to sell.

And lastly, there's a lot of room for Mac sales to grow, not that they aren't already growing at a rapid pace compared to the rest of the PC industry. The halo effect is very real. People who own iPods want iPhones, people who own iPhones want iPads/Macs.

I haven't sold any AAPL in the last two years, only added shares periodically.

 

[the DRIZZLE]

Many are concerntrated. I can think of one that has only 7 stocks. Granted they do not have to report everything they own (private companies, etc).

I have no objection to concentrated funds and have owned one of them in the past. But owning 10-20 stocks is very different from 2. You are basically ignoring the issue of uncertainty in financial analysis. Every assumption and projection you make an uncertainty associated with it. You might now have a way to know what the standard deviation of that uncertainty is, but that doesn't mean it's not there. Owning a few more stocks reduces the cumulative uncertainty of the portfolio. This is basic statistics

You could argue that expanding the portfolio to say 20 securities from 2 will decrease the expected return because the 18 additional ones are not quite as a attractive as the first 2, but realistically you should be able to find enough attractive stocks.

Think of it this way. I have a coin that has a 60% chance of coming up heads. If it lands on heads you double your money, if it lands on tails you lose the money you wagered. Would you rather bet your life savings on one flip? Or would you rather bet 10% of your life savings 10 times in a row. Both have the same expected payoff.

 

[KingstonU]

The thing with Apple is you have to have your timing just right, I missed once this year and lost $1700...

The few times that I have tried buying actual stocks, I always get bit by the fact that there is a huge delay between when I click "Buy" or "Sell" and when the transaction actually goes through, and in that time the stock has already done a 180 and I've lost.

How people do it so that it's "instantaneous", how do you buy and sell with minimal delay?

 

[KingstonU]

"The uncertainty is preyed upon by the so-called high-frequency traders who can buy and sell stocks thousands of times a minute based on computer-programmed algorithms. These traders get particularly involved when stocks are moving quickly to take advantage of rapid price changes, amplifying them in the process.

High-frequency traders can account for 60% of all stock trading during tumultuous market conditions like those seen in the past week, according to Tabb Group."

Source

How can I expect to compete against people who can single handedly push the markets temporarily into the direction they want, sell, then single handedly push it the other way, buy, then rinse and repeat, milking huge profits in a single day?

So many people are saying that buying and holding, despite having been preached for years and years by many professionals as being a sound long term solution, is not longer going to work.

 

[Imp]

The few times that I have tried buying actual stocks, I always get bit by the fact that there is a huge delay between when I click "Buy" or "Sell" and when the transaction actually goes through, and in that time the stock has already done a 180 and I've lost.

How people do it so that it's "instantaneous", how do you buy and sell with minimal delay?

What trading platform are you using? I wouldn't know the difference between any, since I'm not in your country, and only have experience with one, but my trades go through instantaneously (1-10 seconds) if I don't put in a limit price).

Looks like market is deciding to dump today. Nice start up, but ever so slow, confused and erratic drop downward since. It's a long trading day...

Still have money on side in case it takes another huge dump (one day panic from France downgrade?). Think I'm going to start going long with 4/6 or even 5/6 of my portfolio and collect me some dividends. Seriously, zero sum game from playing the dips for the past year. Made 10%, lost 10%, made 3%, lost 3%... My broker's rich though.

 

[SP33Demon]

Your "logic" is far from logical. You are using emotion and leaving out facts.

1) WFC has paid significant dividends in the last 5 years. About $4/share. So in 5 years it went from $35.14 to $24.29 + $4 in dividends. Net loss: 19.5% not the 28% you are incorrectly stating.

2) Buying low is a good value. You don't want to buy a stock once it is at its peak, you wait until price drops. That is the biggest reason to stear clear of most metals now. You already missed the boat.

3) You are cherry picking numbers, 5 years ago WFC was about its all time high. So you tout a loss since its peak. Well lets try more than just your cherry picked time frame. If you bought 10 years back you'd be up 5.6% plus dividends which would be quite a nice gain when the stock market has been essentially flat. If you bought 15 years back, you'd be up 158% plus dividends. If you bought 20 years back, you'd be up 510% plus dividends. If you bought 25 years back, you'd be up 1437% plus dividends.

4) Lets try that with gold. 10 years back: up 483%, 15 years back: up 338%, 20 years back: up 367%, 25 years back: up 289% (which isn't that much better than inflation). No dividends.

Gold only wins when you look at the recent rise (which will most likely eventually fall). Gold lost all longer term comparisons even if you don't count dividends.

Now time for my cherry picked data: If you followed IHateMyJob's advice this morning, you'd be up 6.16%. With gold, you'd be down quite a bit.

You didn't read the entire post where I went 10 years back, that's not cherry picking at all. Look at your numbers, gold is up "483% vs 5.6%" by those metrics. I didn't miss any boat on gold, I've had it since the subprime crisis and made 25X more than I would have made with WFC. I'm not using emotion, but fact which says to play off of others' emotions to derive big gains. Fact: In recessionary times, gold will hit its highs because of low CC.

I stand by my statement that you'd be a fool not to invest in gold and silver. Yes, even now. Analysts are predicting 2K for gold and 75 for silver. In this economy, are you willing to bet against that? While this may not be "long term investing", it still falls under smart investing. We aren't coming out of this spiral anytime soon, pad your gains with precious metals. I'm not saying you shouldn't own WFC, but using IHateMyJob's theoretical scenario (all money in WFC vs metals in a recession), it's obvious which will come out on top. Leverage in both is the best advice I can give, what % to allocate is up to you and your risk tolerance.

 

[IHateMyJob2004]

SP3,

I am speechless. And not in a good way. I did not pick a 5 year time span. Is it hard to understnad that 5 years ago might not have been a good time to buy WFC? All I know is that I paid $14 for it and sold it for $32. And I am now back in at $27. I can not speak for those that paid $40 so maybe people should stop making up hyptotheticals that favor their sentiment. Here, I'll pick somethign tha favors my sentiment. Go to 1980 and see what has happened in the past 30 years with gold and WFC.

Many here simply do not get it. Many here really need to pick up a book on behavioral investing. Most here seem to be falling victim to it's concepts or lack of knowledge of those concepts.

What is most interesting to me is that no one has answered my question. What is gold worth and why? Trend analysis as a reason only supports the idea that one does not understand ones cognative nature and the weaknesses that it introduces to invstment. So, talk dollars and cents. What is golds end uses? What is the breakdown of those end uses? What is the mining costs? Refining? If imported from other countries, what countries? How do currency exchange rates effect things? What about future currency exchange rates? Political and civil unrest? You should know all this if you are convinced that gold is going to $500.

 

[Ns1]

I stand by my statement that you'd be a fool not to invest in gold and silver. Yes, even now. Analysts are predicting 2K for gold and 75 for silver. In this economy, are you willing to bet against that?

i distinctly remember similar arguments for the housing market

"the bubble can't burst, people gotta live somewhere!"
"you can't make more land!"

 

[El Guaraguao]

I literally logged on ATOT to look for this thread, not even 10 min ago. Sure enough, it got bumped. Why is gold so high?

 

[Ns1]

I literally logged on ATOT to look for this thread, not even 10 min ago. Sure enough, it got bumped. Why is gold so high?

fear

 

[sunzt]

I literally logged on ATOT to look for this thread, not even 10 min ago. Sure enough, it got bumped. Why is gold so high?

You are in the wrong place for any investment advice btw.

Gold is high due to dollar, fear, europe, speculation, Fed

 

[darkewaffle]

I literally logged on ATOT to look for this thread, not even 10 min ago. Sure enough, it got bumped. Why is gold so high?

Because it's all mine and I decided to only let a little out this year.

 

[Imp]

You are in the wrong place for any investment advice btw.

Gold is high due to dollar, fear, europe, speculation, Fed

You deserve to be shot if you take any advice from an internet forum directly.

No thanks on gold. It probably will go high, but I like to know where the potential bottom is for things I buy high.

 

[SP33Demon]

SP3,

I am speechless. And not in a good way. I did not pick a 5 year time span. Is it hard to understnad that 5 years ago might not have been a good time to buy WFC? All I know is that I paid $14 for it and sold it for $32. And I am now back in at $27. I can not speak for those that paid $40 so maybe people should stop making up hyptotheticals that favor their sentiment. Here, I'll pick somethign tha favors my sentiment. Go to 1980 and see what has happened in the past 30 years with gold and WFC.

Many here simply do not get it. Many here really need to pick up a book on behavioral investing. Most here seem to be falling victim to it's concepts or lack of knowledge of those concepts.

What is most interesting to me is that no one has answered my question. What is gold worth and why? Trend analysis as a reason only supports the idea that one does not understand ones cognative nature and the weaknesses that it introduces to invstment. So, talk dollars and cents. What is golds end uses? What is the breakdown of those end uses? What is the mining costs? Refining? If imported from other countries, what countries? How do currency exchange rates effect things? What about future currency exchange rates? Political and civil unrest? You should know all this if you are convinced that gold is going to $500.

Yep, I agree with you, many do fall victim to behavioral investing which is where you can pad your returns. Why not profit off stupid peoples' fear? They will never change. Gold will most likely crash back down to earth when the economy picks back up (see unemployment rate lower than 8&#37 and consumer confidence is higher. Right now, I think CC is at an all time low, which is great for gold/silver traders.

Gold is up 45% on the year:
http://www.kitco.com/charts/popup/au0365nyb.html

Silver is stuck at the 39 but anymore bad news and it should hold steady above 40. Earlier this summer it was 34ish, which is around a 15% solid gain in a couple months. Not sure what it was a year ago.

 

[IHateMyJob2004]

i distinctly remember similar arguments for the housing market

"the bubble can't burst, people gotta live somewhere!"
"you can't make more land!"

Ya, the tech bubble was not a bubble in 2000. it was a "paradigm shift". in 2001 though, they were calling it a bubble.

 

[IHateMyJob2004]

SP3,

I don't profit off of emotions and the perceived emotions of others. I find companies trading at discounts to intrinsic value and buy them. Price will eventually follow value. But assuming things will go up because they have in the past is simply a game of greater fool. Who is the greater fool? The fool that bought or the fool that bought because the person before him bought? People repeat this pattern and in the end, you have the greatest fool. Don't worry though, bevhaioral finance dictates that people don't admit their mistakes. So 100% of the people posting here about gold when it eventually tanks will say that they sold at the top. Of course, those that didn't will remain silent due to embarassment (social stigma).

I can play the value investing game hte same way for the next 50 years. I don't have to figure out a new guessing game every 2-3 years. Winning at guessing games repeatedly for years and years is not possible. A 500% gain is not impressive when it is followed up by a 50% loss. Especially when taxes and commissions are figured in. I'll happily opt for positve annually returns for 50 years that beat out low/no risk invesmtents. Granted i have much higher expectations than that.

Eh, here it is. All my holdings:
ABH - took a long time to figure out why Prem Watssa bought this. BOught about a month ago.
FBN
GD
GE - should buy more right now to get cost basis lower.
LEE - kinda worried about this one. Could be a big payoff though.
MAS - very old holding that I regret.
SWY
USG - big holding
WFC - 25% or so of portfolio

WANT: SD options but SD has to get under $7 first.

 

[SP33Demon]

SP3,

I don't profit off of emotions and the perceived emotions of others. I find companies trading at discounts to intrinsic value and buy them. Price will eventually follow value. But assuming things will go up because they have in the past is simply a game of greater fool. Who is the greater fool? The fool that bought or the fool that bought because the person before him bought? People repeat this pattern and in the end, you have the greatest fool. Don't worry though, bevhaioral finance dictates that people don't admit their mistakes. So 100% of the people posting here about gold when it eventually tanks will say that they sold at the top. Of course, those that didn't will remain silent due to embarassment (social stigma).

I can play the value investing game hte same way for the next 50 years. I don't have to figure out a new guessing game every 2-3 years. Winning at guessing games repeatedly for years and years is not possible. A 500% gain is not impressive when it is followed up by a 50% loss. Especially when taxes and commissions are figured in. I'll happily opt for positve annually returns for 50 years that beat out low/no risk invesmtents. Granted i have much higher expectations than that.

Eh, here it is. All my holdings:
ABH - took a long time to figure out why Prem Watssa bought this. BOught about a month ago.
FBN
GD
GE - should buy more right now to get cost basis lower.
LEE - kinda worried about this one. Could be a big payoff though.
MAS - very old holding that I regret.
SWY
USG - big holding
WFC - 25% or so of portfolio

WANT: SD options but SD has to get under $7 first.

It's pretty simple, sell when you're comfortable with your profit. If emotions dictate a selloff, then get out. Basically follow consumer confidence when it comes to things like precious metals. Things like the current recession are a homerun... not going to post how much I've made but it's a lot more than the 5-15% index funds. Once I hit a certain limit (usually 300% depending on what I'm trading), I pull out and reinvest half of that back into trading. My gains are permanent since the other half goes back into my mutual funds (yes, a few of them are holding WFC).

That's a decent portfolio for long term investing. Just better hope Wells Fargo doesn't pull an Enron on you and isn't cooking its books. But at least you didn't put all your eggs in one basket like your earlier scenario. Although you'd probably be fine if it's only a 25% portfolio hit, I thought you had like over half allocated to WFC.

 

[lothar]

I think 7% is a little optimistic for JNJ. If you look closely at a most big companies earnings over the past few years all the earnings growth is from cutting costs. There is almost no top line growth. You can't grow year over year just by cutting costs. US GDP is still below 2007 levels in real terms. (although usually DCFs are done in nominal terms)

JNJ is one of the few megacaps I know of that has managed to grow on average 7-10% per year. There are very few
Unrealistic? I'd say far from it.

Have you looked at JNJ specifically or are you just overgeneralizing from the other big companies you've look at?
JNJ has a 5yr median FCF growth of 8.4%, 10yr is 9.7%.
JNJ has a 5yr median Owner Earnings growth of 7.3%, 10yr is 10.9%.

There is no top line growth in JNJ? Really? Please, post the figures you're looking at.
Thanks.