***Official*** 2011 Stock Market Thread

[Pliablemoose]

For value investors:

SD is nearing sub $7 levels. I'm keepign an eye on that one. might make a move if it gets below $6.

USG .... bought more at $7.50. Last time I bought was in the $13s so it was time to dollar cost averge. Love it when nothing fundmaentally changes with a companies outlook and the stock price drops in half. So, big opportunity there.

You've lost ~50% on USG?

That explains a lot...

 

[Ns1]

Oh shite, AGAIN! DOW is -450ish last I checked. Was kind of expecting it, just hoping that it wouldn't.

Oh well, waiting for the +300 pop tomorrow, then the inevitable panic sell-off again the day after.

that's why i got out monday.

i think I'm just gonna play the dow 11k game with half of my investment money.

sub dow 10k and allll of my investment money is going in.

 

[Tequila]

For value investors:

SD is nearing sub $7 levels. I'm keepign an eye on that one. might make a move if it gets below $6.

USG .... bought more at $7.50. Last time I bought was in the $13s so it was time to dollar cost averge. Love it when nothing fundmaentally changes with a companies outlook and the stock price drops in half. So, big opportunity there.

I don't get the attraction of a perennial money loser like USG? I stay far away from stocks like that. I still remember when some of the Fast Money guys were pumping Evergreen Solar when it was losing money hand over fist. Ouch..just ouch.

Value stocks are good, healthy companies down for no good reason. USG is like going to a casino and putting your money on red or black.

 

[IHateMyJob2004]

Let's see how Gold/silver do today. I expect more of this bad news for the next 2 years in the least.

That's ironic. I expect gold, which is trading at or near an all time high after adjusting for inflation, to tank within 2 years as the housing recovery begins and unemplyment levels drop below 7.5% and maybe even get under 7%.

 

[IHateMyJob2004]

I don't get the attraction of a perennial money loser like USG? I stay far away from stocks like that. I still remember when some of the Fast Money guys were pumping Evergreen Solar when it was losing money hand over fist. Ouch..just ouch.

Value stocks are good, healthy companies down for no good reason. USG is like going to a casino and putting your money on red or black.

1) This is not evergreen solar so don't try to anchor to it.
2) I do not rely on sensationalization based media (Fast Money) for advice.

Attraction is that they are a company that can generate FCFs to the tune of maybe $200 million in a normal economy and they represent a near majority of all drywall sales in the US. That FCF number is a pesimistic number though. They will probably gerenate more. Probably in the $300-$400 million range. Reasoning being inovation, patents and a new factory or two that are much more efficient than the older ones. Not bad for a company with a market cap of $900 million. Keep shareholder dilution in mind though. Some is likely because of some convertable debt.

Maybe the attraction is that most people think USG is a perennial money looser when it is not.

If you back out the year with all the asbestos claims factored in, they have generated $184 million in FCF annually.

Anyways, not sure how a company that typically generates about $200m in free cash flow is a perenial money looser. I would agree that it is cyclical though. The next paragraph adresses the "when" part of this cyclical company.

USG is boring. I would not call it a gamble. That's like saying cement companies are gambling. Far from it. Cement is needed by society. Boring sure. Gambling, far from it. I've highlight why USG will do well in the next 1-2 yeas in this thread already. Consider the data I already provided. I find gambling to be things related to things that change frequently and/or are high priced consumer goods. I still remember when a DVD players could not be had for $200. Oh, how times have changed. The end winner costly consuimer products tend to be the consume, not the investor. Even Blue Ray players can be had for $75 today.

 

[PimpJuice]

That's ironic. I expect gold, which is trading at or near an all time high after adjusting for inflation, to tank within 2 years as the housing recovery begins and unemplyment levels drop below 7.5% and maybe even get under 7%.

Not going to happen, you can quote me in 2 years.

 

[TheSlamma]

Not going to happen, you can quote me in 2 years.

I want to be added to this.

IMO 8%+ is going to be the new norm, the jobs we shipped off are not ever going to come back and our last dips into really low unemployment rates were just bubbles that should have never existed.

 

[Imp]

that's why i got out monday.

i think I'm just gonna play the dow 11k game with half of my investment money.

sub dow 10k and allll of my investment money is going in.

I was going to start going long, but what's the point? "No one" (out of my ass) goes long anymore, and I'd be up $2.5k if I just sold last week, expecting the impending doom caused by terrible job numbers, European debt, or whatever the hell investors apparently "focus" on one day.

 

[Pliablemoose]

I want to be added to this.

IMO 8%+ is going to be the new norm, the jobs we shipped off are not ever going to come back and our last dips into really low unemployment rates were just bubbles that should have never existed.

Count me on board as well...

The economy has about as much bounce in it as a tomato.

 

[IHateMyJob2004]

You've lost ~50% on USG?

That explains a lot...

I'd have to check my cost basis, but down ~40%.

When USG corrects (it will), I stand to make a nice profit. Last time this happened I made probably 30-40% as the final outcome.

What does this explain exactly?

 

[IHateMyJob2004]

Not going to happen, you can quote me in 2 years. (7.5% unemplyment)

2 years from now, we'll forget this conversation happened.

But curious, what is your rational behind current and future unemplyment levels? I'm always interested in taking a look at other's thesis, data and conclusion to see where my thesis, data and conclusion could be lacking or incorrect.

 

[IHateMyJob2004]

So:

PimpJuice 2 year target for unemployment is 7.5%+
TheSlamme 2 year target for unemployment is 8%+
Pliablemoose 2 year target for unemployment is 8%+

IHateMyJob2004 2 year target 7.5%-

And one more:
Warren Buffett 15 month target 7.2%- (he recently hinted that it might be a "little longer" than that but this is where his friendly $1 bet is anchored. - Charlie Rose interview)
Warren Buffett "a few years" target ~6% (a few at the time seemed like July 2014)

UPDATE:
manlymatt83 - 12-15% in two years

 

[manlymatt83]

So:

PimpJuice 2 year target for unemployment is 7.5%+
TheSlamme 2 year target for unemployment is 8%+
Pliablemoose 2 year target for unemployment is 8%+

IHateMyJob2004 2 year target 7.5%-

And one more:
Warren Buffett 15 month target 7.2%- (he recently hinted that it might be a "little longer" than that but this is where his friendly $1 bet is anchored. - Charlie Rose interview)
Warren Buffett "a few years" target ~6% (a few at the time seemed like July 2014)

Add me: Unemployment closer to 12-15% in 2 years.

 

[IHateMyJob2004]

Count me on board as well...

The economy has about as much bounce in it as a tomato.

I view the economy as a giant compressed spring with all the people from the home construction sector standing on it.

 

[manlymatt83]

Anyone going long now for the "upswing" tomorrow?

 

[SunnyD]

I'd have to check my cost basis, but down ~40%.

When USG corrects (it will), I stand to make a nice profit. Last time this happened I made probably 30-40% as the final outcome.

What does this explain exactly?

USG is going to be downgraded shortly... I see it going lower in the coming weeks.

 

[TheNinja]

I'd honestly be better off choosing a stock that goes down. From what I've read 60% or more of stocks go down (not up) over time. You are much more likely to pick a loser than you are to pick a winner.

 

[IHateMyJob2004]

USG is going to be downgraded shortly... I see it going lower in the coming weeks.

Upgrade, downgrade, no cahnge ... either way, I win.

Price goes up to $20, I make 50%.
Price goes down to $4, I buy more and drop my cost basis to maybe $10. Price goes up to $20, I make 100%.

I hope your short term guess is correct or incorrect! Either way, I win.

 

[manlymatt83]

Upgrade, downgrade, no cahnge ... either way, I win.

Price goes up to $20, I make 50%.
Price goes down to $4, I buy more and drop my cost basis to maybe $10. Price goes up to $20, I make 100%.

I hope your short term guess is correct or incorrect! Either way, I win.

Why do you like USG so much?

 

[bamacre]

2 years from now, we'll forget this conversation happened.

But curious, what is your rational behind current and future unemplyment levels? I'm always interested in taking a look at other's thesis, data and conclusion to see where my thesis, data and conclusion could be lacking or incorrect.

You'll end up being incredibly wrong if Business Cycle Theory is true, regardless of how it is perceived. In simple terms, Hayek > Keynes.

 

[SP33Demon]

That's ironic. I expect gold, which is trading at or near an all time high after adjusting for inflation, to tank within 2 years as the housing recovery begins and unemplyment levels drop below 7.5% and maybe even get under 7%.

Optimists are good for the world, however, realists are the ones getting rich.

 

[IHateMyJob2004]

Why do you like USG so much?

People have a misconception about housing. Specifically new housing construction. People think 400,000 new homes a year is the new norm. It's not. It is a result of a surplus that grew from 2002-2006. In 2007 about 100% (about is a key word here) of that surplus has been corrected due to an about equally sized deficit (key word is about). The surplus in new home construction was about 1.5 million homes.

The time that we need to start building 900,000 homes a year again is around the corner (key word need). Some say 1.2 million is what the normal level should be. I don't really care which scenario is the correct one. I jsut want to be approximately right instead of precisely wrong.

I've actually supplied data in this thread to show how the 1.5 million new home surplus was created and where I see the 1.5 million deficit. Harvard collects the data that is needed to see where things have gone since 1959 I think. And it is all publicly available.

See the other posts in this thread to learn more.

Oh, and why USG? They make most of their money in drywall. When new home construction goes up by say 600,000 new homes from current levels ... they might stand to benefit. And from years of reading about USG.

A good question I did not look into is. If the average new home is 2100 sqft, how much drywall is needed to build it. Multiple that by units of drywall. And approximate FCF per unit and you can probably get a damned good FCF estimate for when the correction does occur.

 

[the DRIZZLE]

So:

PimpJuice 2 year target for unemployment is 7.5%+
TheSlamme 2 year target for unemployment is 8%+
Pliablemoose 2 year target for unemployment is 8%+

IHateMyJob2004 2 year target 7.5%-

And one more:
Warren Buffett 15 month target 7.2%- (he recently hinted that it might be a "little longer" than that but this is where his friendly $1 bet is anchored. - Charlie Rose interview)
Warren Buffett "a few years" target ~6% (a few at the time seemed like July 2014)

UPDATE:
manlymatt83 - 12-15% in two years

Which unemployment number are we talking about? The U3 will probably drop because people will just give up looking, or it could go up as discouraged workers start looking again. The US workforce is about 150 million and grows by about 1.5 million a year. In order to get to 7.5 in two years we would need to add around 5.55 million jobs, this doesn't even count the shadow unemployed that would start looking again and drive the numbers up.

Ignoring the shadow unemployed adding 232k jobs per month over two years gets us to 7.5%, which seems doable. However when you consider that the U6 is 7% higher than the U3, it looks a lot uglier.

 

[IHateMyJob2004]

Optimists are good for the world, however, realists are the ones getting rich.

People are paying alot for something that costs less than $400-$800 per ounce to mine depending on location.

And after inflation, we are pretty much past or about to pass the all time high price for gold. I don't even care about this as it is "charting". But it should set off little bells and whistles in the heads of many. Market sells offs can happen fast and it is not something limited to the stock market.

People playing the gold game are playing a game of greatest fool. I just don't wish to be the greatest fool. After all, rule #1 is don't loose money. Obey that rule and your losses are limited and your gains are the majority.

Anyway, I could see buying gold at less than $800/ounce. But I wouldn't. If it got to $400 per ounce, I might dabble a little.

 

[IHateMyJob2004]

Drizzle, U3.

Reality is that somewhere between the U3 and U6 is probably reality. What has hte historical spread between U3 and U6 been?

UPDATE:
Took some time to track this one down. U6 seems to be about 80% higher than U3 historically. Not much deviation in this correlation. Looks like a rising tide/lowering tide correlation. Not sure how to think about this data. Right now I see it as knowable but not that important. if the tide lowers, one or the other will not all of a sudden drop without the other dropping. Maybe if one is way out of whack against historical norms, that one would correct first? Anyway, I stand by my U3 number. Sure the news can sensationalize this data. get people to be emotional about it. Yadda, yadda, yadda I just see it as data that so far has behaved exactly as it has historically.

Either way, an hour well spent looking into something I have not looked into before. BLS.GOV sucks for finding anything.

ASIDE:
Drove around alot this summer. It's amazing how much infrastructure work is being done in this country. Bridges in need of repair or replacement finally being replaced or fixed. Stimulus at work I guess. Gotta love socialistic safety nets. I can't imagine where we would be without those people working, but i can only imagine rationally that unemployment could be much worse.

MEDIA:
Why I ignore the media.... headlines like this:
Stocks: 'It's a war zone out there' - really?
Stocks get demolished
Sensationalized much?

Why not:
Stocks go on sale - Not once have I read that headline.

The answer of course is that if the media gets you emotional about something, you are more likely to read it.