I'm as introspective as they come, and I arrive at conclusions/make decisions via extended self-analysis. 'Sleeping on it' then allows the subconscious to provide clarity in the morning.
So I'm sticking with my current positions:
(a) 6% each in AA/CSCO/GE/INTC/WFC.
(b) 70% in OAKBX.
The take:
(a) Skate to where the puck will be. I think that's large-cap value.
(b) Change (from ST to LT, in this case) is always accompanied by discomfort. I'll just need to deal with it.
(c) In a twist on Livermore ("It always was my sitting. Got that? My sitting tight!")- the key to making real money in the stock market does indeed lie in the 'sitting-' go long and stay put.
(d) In a twist on Dylan's 'Ballad of a Thin Man' ("Am I here all alone?" Because something is happening here But you don't know what it is Do you, Mister Jones?)- Yeah, I am all alone (but that's my thing), and I don't know what's happening. But something is happening, and I don't think the crowd is playing it correctly. I think the market is telling us the economy is getting a lot better down the road. If it was easy to make that bet, we'd all be doing it. It's not easy, so there's money to be made on that bet.
(e) Faith. If I don't play it the way I see it, what's the point in playing?
I'll have plenty of time to reflect on the above the next 1,825 posts or so. If you have any questions, they'll likely be dealt with. More than once, and in excruciating detail.
Right now, I'm following David out to the breakfast tables. He's got plenty of protection with the 'comrades.' I'm going to have to find a place in the corner and lay low. In fact, I've applied for solitary confinement, and they'll let me know later this week. No better place for endless introspection.
Good luck to all you traders. I'm ready to do time.
The pullback is over in my opinion...its up and onward.linkedin goes public later this week. Groupon will follow then possibly the big enchilada (facebook).
ReplyDeleteI haven't shorted this market in a while and for good reason.
Pretty simple portfolio 2nd_ave (not that it is a bad thing - I own 86 stocks and keep trying to reduce).
ReplyDeleteIs that your entire investment strategy or do you have other stocks outside this portfolio?
lmao, leo is tossing hurd under the bus on the hpq earnings call right now.
ReplyDeletebitter? yeah, probably, so to avoid hurting myself I'm not going to touch hpq or dell
Some positive note and a forecast raise from BMO:
ReplyDeleteRaising Earnings Forecasts and S&P 500 Target
Better-than-expected Q1 earnings, as well as a firming up of the global growth outlook for 2012, have raised our earnings forecasts. The revisions are more significant for the S&P 500 and have raised our one-year target price for this index by 50 points to 1,500. Our target price for the S&P/TSX holds at 14,500. We continue to favour the S&P 500 for a higher one-year return in the context of an extension of the bull market.
For both the S&P/TSX and the S&P 500, Q1 earnings growth is estimated at a healthy 19%. This growth is 7% higher than initially expected
for the S&P 500 and 1% higher for the S&P/TSX. Our S&P 500 earnings forecast has been revised up by $3 to $97 for 2011 and by $5 to $105 for
2012. The weaker-than-expected U.S. dollar has contributed to the brighter outlook for U.S. multinationals and thus for S&P 500 earnings. For the S&P/TSX, the currency is a headwind and our 2011 earnings forecast holds steady at $870. Our 2012 forecast edges up $15 to $945.
Richer valuation of the S&P/TSX is weighing on its relative performance. The S&P/TSX has corrected by 6% from its April high and is flat year to date, while the S&P 500 is only less than 3% from its high and is up 6% year to
date. On our 2011 earnings forecast, the S&P/TSX is trading at a multiple of 15.4x, compared to 13.7x for the S&P 500. Our target prices imply a further narrowing of this valuation premium.
Rising prices for energy, notably gasoline, have raised investor concerns for another consumer-led downturn in the economy. While such increases always engender headlines and a storm of populist protest, several trends that
are positive for consumer spending gather little attention. In addition to the modest upturn in employment in recent quarters, the debt service burden on consumers is easing. Thanks to refinancing at lower interest rates, mortgage defaults and loan modifications, debt service payments as a share of U.S. personal disposable income have dropped by roughly 2% from their peak. By comparison, energy consumption as a share of U.S. PDI has risen
by less than 2% from its recession trough and is still well below levels reached in the early 80’s. In the absence of other shocks, crude oil prices might have to reach US$150/barrel before causing a global recession.
BB- That's my entire investment strategy.
ReplyDeleteDJIA -81. Let's rock!
ReplyDeleteSPY down 0.22% UUP up 0.23%.
ReplyDeleteIn my opinion, stocks are just churning and moving up and down against the dollar so it gives trades something to do, but in reality it is working off the overbought condition and reducing bullish expectations for the next move higher.
Funny BB...:). Hope your right!
ReplyDeleteWhy you have to read past the headlines:
ReplyDeleteFT headline- Walmart sales fall for eighth straight quarter
Reality - Revenue rose 4.4% to $104.19 billion.
Nowhere is it stated in the FT article that Wal-mart revenues went up, only that US same store sales were down.
"stocks are just churning and moving up and down against the dollar so it gives trades something to do"
ReplyDeleteIt certainly seems that way to me as well, dollar can't seem to move past 76 yet the market sells off. Until oversold. Round and round we go!
Missed the entry for GMO this morning. To busy reading news...
ReplyDeleteThe nice phenomenon is finally, my account isn't being sold off hard this morning. Maybe they're waiting for the end of the morning retail session?
ReplyDeleteJust put me on the add signal memo distribution...
Looking at the global picture don't you all think it is likely to go higher? The question is will the negative correlation with equities continue.
ReplyDeletePure plays on Consumer credit card debt are at breakout levels while FINIS are about to go belly up. watch DFS COF AXP
ReplyDeleteCADC - Boy I'm fortunate to have taken my profits there, even though I gave most of them back...
ReplyDeleteI can put up with oatmeal and sling hash for 5 years.
ReplyDelete2nd why dont't you buy 100 shares of TZA. kind of like a nicorette.
ReplyDeleterb- The only thing that trades in here is tobacco.
ReplyDelete"don't you all think it is likely to go higher?"
ReplyDeleteIf you mean the market, that's what I'm hoping will happen. Cash does no one any good, it's all about timing and I wouldn't cry if the value of the dollar experienced a 50% haircut, which I think would be fair given the circumstances.
The rest of the world doesn't want the dollar to fall, we've been caught in this quagmire for over two decades now where foreign governments have been propping the dollar with the goal of tapping into the economic vitality of the US at the expense of kicking the can down the road.
I've never been a buyer of government debt b/c I've seen what they do with it... Quite unproductive, IMO.
HEK is starting to get interesting. I'd hop in but the damn warrants got me spooked.
ReplyDeleteI meant the dollar go higher. Euro is trash the Yen is going to be held back. QE2 is ending. Osama is dead.
ReplyDeleteThere's got to be something going on at that senate energy thing. Some stuff I follow is selling off really hard.
ReplyDelete2000 BEXP @ 26.50. Trading shares.
ReplyDeleteGot to hop... GL ladies.
2nd, Bernanke could easily create liquidity in the yard by helicoptering in some Pall Malls and Marlboro Lights. The yard bulls will not like it, but the deflationary enviorment will be solved.
ReplyDeleteBAC - Seems to be hanging in there, looks like my $3 handle isn't coming today.
ReplyDeleteLove this sell-off, man. Cheap entertainment in the cell block.
ReplyDelete"I meant the dollar go higher."
ReplyDeleteI suppose it's possible, but looking at the chart from just about every perspective I can think of points to 76 as a peek. Maybe Bernanke keeps knocking it back down as it approaches this level?
I hope it doesn't move higher. It's been too damn high for over twenty years, the price has been American jobs.
TLT at year to date highs.
ReplyDeleteThe dollar is fairly to undervalued against the Euro and most free currencies.
ReplyDeleteThe big issue is China. in January 1981 the Renminbi was changing hands at $0.6551 basis the U.S. dollar (RMB/USD). In 1Q94, following their devaluation, the RMB/USD exchange rate stood at $0.1144. It currently trades at $0.153889. On an absolute purchasing power basis many savvy seers believe the Renminbi is 60% undervalued.
"many savvy seers believe the Renminbi is 60% undervalued."
ReplyDeleteAgreed, which makes me wonder about the sanity of trading PM's b/c if the Renminbi is revalued to it's true level then I'd anticipate a rush or acceleration of PM selling from that corner of the pond.
"TLT at year to date highs."
ReplyDeleteThe dollar damn sure isn't, bondies must be anticipating a rising dollar.
Ready for take-off: SPX is bouncing off 1320. Makes me feel better.Hopefully that was the final low. This week is option expiration we can't end it on a down note.
ReplyDelete2nd: Thanks for your posting. We all need encouragement once in a while to stay the course.
I guess I will have HPQ for a while now....
HRZ - Red sky in morning, sailor's warning?
ReplyDeleteThe last time BEXP was trading at these prices, back in Jan., WTIC was trading @ 86ish.
ReplyDeleteHmmm, usually the equities lead the price of the underlying commodity.
Toe hold for HEK here. Wow.
ReplyDeleteBooking the $420 bucks in BEXP @ 26.74. Chicken scratch I know, but it makes me feel better :).
ReplyDeleteBEXP - Good work, that $420 is $420 you didn't have this morning. ;)
ReplyDeleteThanks CP :)
ReplyDeleteMan, I need to expand my news coverage. Did the Terminator get caught with his laser gun pointing at the wrong person?
ReplyDeleteGreat trend day for WFC.
ReplyDeleteMark - I did the very same thing with GMO while it was falling, I'd buy a morning sale then take gains when they were there, several to five hundred at a pop.
ReplyDeleteIt kinda took the sting outta giving up gains on my core position and actually worked out pretty well considering. Now it looks like GMO is resting for a while so I'll just wait and see which direction it decides to move. Last summer it moved down the $3, not sure if that'll happen again but the pattern seems to be repeating...
We might hear more on the water permit issue next month, so I've gotta keep monitoring it closely. Those farmers out in the high dessert are kinda defensive over their water since they pump more than their allotment. GMO has already bought sufficient rights in Kobeh valley but they have yet to be reclassified for mining purposes.
The Terminator shot his laser gun hitting the target without trying, apparently.
ReplyDeleteCP- Yeah, I'm kinda coping you on that one. Pretty easy to do if you don't really care if the trade goes against you. So far I've booked $3,200 bucks on that one. Granted, I'm down about $10K on the position now, but in reality, it's really more like $6.8K.
ReplyDeleteBEXP - Maybe the equity did lead the commodity on the way up, it's just that profit taking added more downside than was justified?
ReplyDeleteI'd love to participate in another 60% repeat rally from here.
Remind me to sell at some point though! ;)
Nice volume trades in MITK here.
ReplyDeleteMark - Just be careful that GMO doesn't take a giant dump in your port, it could happen. Everyone seems so convinced that permits are in the bag I'd almost consider it a miracle.
ReplyDeleteWho knows, maybe they'll be proven right...
GMO’s Grantham talked about how we have had a paradigm shift in commodity prices, David highlighted this article a little while ago here. Interesting in this article Grantham questions his long held assumption of reversion to the mean.
ReplyDeleteHe states, “It is far more likely that for most commodities the trend has changed, just as it did for oil back in 1974.” Of course Jim Rodgers was saying this seven years ago. Grantham’s and our dilemma is that commodities are very extended here and what to do if you view his thesis as correct. His solution is to take a third of a position now and buy more as prices move down, ( a classic value investor approach) and if you are wrong about prices correcting at least you have 33% participating going forward.
The letter titled time to wake up was published Aprill 2011 is mandatory reading for investors, especially resource focused. We are having a good correction now which is creating future opportunity.
A have a started position in AGRO today. Yesterday’s earnings report, Adecoagro (AGRO) recorded Adjusted EBITDA of $10.3 million in 1Q11, representing a 69.2% increase compared to 1Q10.
Summary of Company
Adecoagro S.A., through its subsidiaries, engages in the agricultural and agro-industrial businesses in South America. The company primarily engages in the farming of crops and other agricultural products; cattle and dairy operations; production of sugar, ethanol, and energy; and land transformation activities. It produces a range of agricultural commodities, including soybeans, corn, wheat, sunflower, and cotton. The company also produces irrigated rice in the northeast provinces of Argentina; and coffee in the western part of the state of Bahia and Brazil. In addition, it produces raw milk in South America. As of September 30, 2010, the company owned a total of 287,884 hectares, comprised of 21 farms in Argentina, 15 farms in Brazil, and 2 farms in Uruguay; and owned and operated various agro-industrial production facilities, including 3 rice processing facilities in Argentina, a dairy operation in Argentina, 2 coffee processing plants in Brazil, 7 grain and rice conditioning and storage plants in Argentina, and 2 sugar and ethanol mills in Brazil. Adecoagro S.A. was founded in 2002 and is based in Luxembourg.
CP- CLR is a very similar play to BEXP. Let's hope she follows.
ReplyDeleteHEK - Looks like profit taking following a positive earnings response?
ReplyDeleteMark - I'm watching IMO as well, almost wnet with it but BEXP looks like more potential upside.
ReplyDeleteThanks for bringing that one up Joe. I hadn't really looked at it after the IPO.
ReplyDeleteIt'll be interesting to see if MITK can chew through the 6.50 offer here.
ReplyDeleteThe buy limit order for 1000 shares of GMO at $4.02 was hit for me this morning. So now I have 2000 shares and I am also short 20 puts total (10 June $5 puts and 10 September $7 puts). Hopefully, GMO will hang around below $5 for another month, so that my June puts will get assigned to me and my share count will get bumped up to 3000.
ReplyDelete"Everyone seems so convinced that permits are in the bag I'd almost consider it a miracle."
How do you figure that, CP? I think the ONLY reason why a company that will be making $6/share (at the current moly prices) if its permits are granted is trading at $4 as opposed to $60 is that the big investors (those who can move the stock) are still very afraid about GMO not receiving the permits.
I just saw that the bullish percentage in the latest AAII survey dropped below the bearish percentage, for the first time since last summer's correction. Well, we all know the path that stocks took from that point on. So I think that TOF might very well turn out to be correct saying that the pullback is over, as it has already accomplished what it is supposed to accomplish (bring the number of bulls below the number of bears).
ReplyDeleteMaybe the whole pullback originated because too many smart assesses shorted treasuries ahead of QE2 expiration, no more sellers remained, the treasuries rallied, and the crowd started following the money flow and moving money from stocks into treasuries. Now the crowd will look around, realize that the treasury yield is actually pretty low and economically stimulating, and will start piling the money back into stocks.
This is my speculation about the broad market, but at this point I don't care much about the broad market, with 75% of my port being in ECUXF. :) As for commodities, I've seen plenty of evil-looking pullback in the last 5 years, and ALL of them were for buying. Anyone who bets that this pullback is not for buying is betting on the fact that RIGHT NOW a very-long term phenomenon will reverse, and this is a VERY dangerous bet. So I am totally cool with my positions right now and I am actually looking forward to my account value doubling by year end and then doubling again by the end of 2012, assuming, of course, that I'll be able to just sit on my hands.
I just started reading the second part of Jeremy Grantham's quarterly letter, and here is a great quote that perfectly describes my experience with ECU:
ReplyDelete"A word on being too early in investing: if you are a value manager, you buy cheap assets. If you are very “experienced,” a euphemism for having suffered many setbacks, you try hard to reserve your big bets for when assets are very cheap. But even then, unless you are incredibly lucky, you will run into extraordinarily cheap, even bizarrely cheap, assets from time to time (like ECUXF under $0.7 this morning), and when that happens you will have owned them for quite a while already and will be dripping in red ink."
Another great excerpt from Grantham:
ReplyDelete"So, I have had a long and ignoble history of being early on market calls, and on two occasions damaged the financial well-being of two separate companies – Batterymarch and GMO. On the other hand, at long and bloody last (in the figurative, not the British, sense), the big bets we made have all been won, with quality and cash still pending. But, as I like to say, we often arrive at the winning post with good long-term results and less absolute volatility than most, but not necessarily with the same clients that we started out with."
The same thing will surely happen with ECUXF now -- my bet will eventually pay off, but I won't have the same following as I had last summer, which I first started promoting ECUXF at $0.6. I know that some friends who decided to join me a few months ago are already out of ECUXF...
The long-term recommendation from Grantham:
ReplyDelete"My very long-term personal recommendations remain the same: forestry and good agricultural land, “stuff in the ground,” and resource effi ciency plays. The caveats on entry point risk have recently been mentioned. Should commodities crash in the near term because of good weather, problems in China, or both, I think it will create another “investment opportunity of a lifetime,” much like the several we have had in recent years."
I wonder what's up with ECU.TO today -- up 9% now, while the other junior production stocks I am following for comparison (GPR, FVI.TO) are down today. Has somebody sniffed out the early results from the massive sulphide drilling they are doing now?
ReplyDeleteIt could also be just a friend of mine buying ECU -- he said that he wanted to invest around 100K into it, and I told him last night that NOW is the time to do it. :)
ReplyDeleteDavid, there's a gold miner that's up today as well, ANV is the ticker. Not sure why though.
ReplyDelete"big investors (those who can move the stock) are still very afraid about GMO not receiving the permits."
Maybe Grantham can give GMO a nudge?
I hope today's spike in ECUXF is nothing more than some impatient investor jumping in. I really want it to drop back below $0.7, as I found another source of cash for buying yet more shares! I got some promotional checks from Citibank that have 0% rate until August 2012, with only a 3% upfront transaction fee. ECUXF will surely rise by more than 3% if I buy it below $0.7.
ReplyDeleteI have already used my credit cards as a source of cash, buying WGW in 2008 for $0.5. WGW doubled within a month. Too bad I put only a few grands into it at $0.5. I won't make the same mistake with ECU and will pile the whole $17K into it (my credit line with Citibank) if it drops to, say, $0.65.
DELL - I vote take the money and run, there's a gap at $15 that needs to fill...
ReplyDeleteMDW - Closed green as well. My interest in PM's is waning now, so it's probably time to go all in.
ReplyDeleteCP - I'm on the Dell call right now, bland so far, I'm not high on them but that usually means that their stock is going to rock.
ReplyDeletere Dell - they did a much better job setting low expectations than HP did, however it seems that some of the under the cover issues (weak comsumer demand, weak growth in developed economies), so I still think they are in a real tough spot given that pc's drive 70%+ of their biz
ReplyDeleteDavid - I just today received an offer from my bank identical to the one you describe.
ReplyDeleteDELL - They should give Bill Gates a call and plead for a fully functional and bug free operating system. If a new car performed as badly as windows does, the manufacturer would be out of business in no time.
ReplyDeleteJohn Mauldin published today a great piece from Garry Shilling on the state of the housing market:
ReplyDeletehttp://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2011/05/16/still-home-sick.aspx
Here are some excerpts:
"In housing, as in every goods-producing sector, excess inventories are the mortal enemy of prices. It’s that simple. ... Consequently, it will take four or five years to absorb the 2 million to 2.5 million housing units, over and above normal working inventory, that we believe exist at a minimum. Four or five years is plenty of time for the inventory overhang to depress prices another 20% as we’ve been forecasting. ... Other forecasters are coming into agreement with our forecast, dire as it is. The Dallas Federal Reserve Bank states that a 23% decline is needed to return house prices to their long-run trend."
2nd_ave -- you have a great intuition about the stock market, but I think you might be confusing the continuing bull market in equities with a necessary bull market in housing price. The housing prices fell since 2009, while S&P has doubled. If anything, the trend of falling housing prices and rising equities is likely to continue.
"David - I just today received an offer from my bank identical to the one you describe."
ReplyDeleteIf you pile those funds into GMO (or ECUXF for diversification), you won't go wrong. :)
David, Maybe just getting a mortage is not a bad idea after all.
ReplyDeleteCP - windows being a crap product certainly doesn't help.....btw - the analysts are asking some tough questions, sounds like they don't believe the current margin #'s nor are they believing the forecast, Dell is expecting a ramp up in spending by local gov't - WTF???
ReplyDeleteDELL - Well maybe it will rally, I sure hope so.
ReplyDeleteDavid - I wonder if the market wasn't counting on the rate of decline in housing prices to begin leveling off by now? Homes are the one largest asset most people own and they're not gonna be too happy about falling prices, it sounds disinflationary to me? Maybe good for corporate profits though as the workforce shrinks? A shrinking workforce might create demand destruction for commodities as well?
ReplyDeleteThere are just too many ways to look at it for me to get my arms around, not sure if a declining housing market is good for equities, perhaps it could be from the perspective capital that otherwise might go into housing investment moves instead into equities (The trend you're referring to)?
PMI - Sheesh, another 7% of loss there today... A string of new 52wk lows daily for months on end.
ReplyDeleteRB - It seems like housing is underperforming PM miners? At least the miners aren't putting in new lows daily?
ReplyDeleteJoe, if you want to build up some investment in commodities, why not buy some ECUXF so as to hedge our Nadurra bet? :) In that case, you will be EXTRA happy to send me that bottle of Nadurra. :))
ReplyDeleteAt least the copper index closed green.
ReplyDeleteAt least the copper index closed green.
ReplyDeletenew post
ReplyDeleteDavid, that's too funny, I was thinking about doing that hedge just today regarding the Naduura caper. I want to see if it holds the 4ths .6590 low which it did with gusto today, nice sign. When the markets get turbulent like the metals have been lately, I'm happy not to be first. There was a lot of forced selling when the CME had multiple margin raises. Most likely will do at some point.
ReplyDeleteAbout 10% of my net worth is in commodities now, but not the agriculture side which is what I'm interested in building up. Regardless of all the ups and down this is a fascinating business.
BTW, I find Grantham such a pleasure to read and look forward to cyber drinking Naduura with everyone Jan 2013 regardless of the outcome.
PM miners - seem to be showing initial signs of a reversal?
ReplyDelete