Monday, July 11, 2011
07/11/11 The Art of Handling Paper Losses
The road that takes me from Twain Harte to the Sonora Pass is filled stretches that soar uphill, but also steep downhill grades. Ultimately, I know I'll end up at an altitude of 9000+ feet. And I enjoy the hell out of both.
Why should downhill moves in the market be any less enjoyable? Actually, I do enjoy most of it- if I'm able to detach myself from the emotional baggage associated with paper losses.
What I end up telling myself is this- there's a purpose behind the minus 6% grades. It's the experience of the sell-offs that allow me to hold for peak gains. Is there any truth to any of this? I don't know, but I believe it, so it works for me.
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Karma is a funny thing. It's real, and people refer to it all the time, yet no one 'trusts' it.
ReplyDeleteJust read in the Rolling Stone magazine with Zach Galafianakas (Spelling?) that Buffalo Springfield is touring again...first time since 1968; my mom, God bless her, used to listen to them all of the time when I was growing up. I love their music:
ReplyDeletehttp://www.youtube.com/watch?v=XXrjHZnTEKE&playnext=1&list=PL3A04CCB2E4DF39A0
'Why in crowds just a trace
ReplyDeleteof my face
could seem so pleasin'
I'll cop out to the change,
but a stranger
is putting the tease on'
Vintage Young.
The market from my perspective has been in a range the entire year between 1250 and 1350. It is only july we have hit 1250 ish three times and have hit 1350 ish three times. Play the channel accordingly.
ReplyDeletehttp://www.youtube.com/watch?v=TbXKEjIApac&feature=relatedBUF SPRING. What a stiff crowd full of straights and squares. I'm sure they didnt know what to think when Stills and young turned the pretty melody into ragged dissonance!
http://www.youtube.com/watch?v=TbXKEjIApac&feature=related
ReplyDeleteThe link.
Great article in the Globe and Mail which highlight the difference between the economy and the market in Toronto and the US. Similar will apply to U.S., but I think is really important in understanding why the stock market can do well even if the economy is not great.
ReplyDeleteDespite poor growth, corporate profits soar:
http://www.theglobeandmail.com/report-on-business/economy/despite-poor-growth-corporate-profits-soar/article2092732/
2nd - "It's the experience of the sell-offs that allow me to hold for peak gains. Is there any truth to any of this? I don't know, but I believe it, so it works for me."
ReplyDeleteYou have much truth there except when market is headed for a big losing streak, 20-30% or more. That's really why I bought into the S&T algo. I wanted to be on the right side of the market when bad things happen. Currently SPY is still a Bull 10 at 131.97 (-2.43) with weakness in the short term. There is a Top Spotter at 137.18 at that dreadful date of May 2.
RBY - I'm starting to get the feeling it's not going to retest the 52wk low ($3.18) where plenty of bids are probably waiting to fill. That gap down from $4.54 to $4.20 still needs to fill and it's the only one I see on the chart...
ReplyDeleteI'm getting the feeling this is all 'arranged' guys. You've all followed the market longer than me, but this is action is crazy. Seriously, who in their right mind wold look at the past month and say, 'Yep, I want to be an investor'. Cuzz I tell you, the % of people who do what we do is almost ZIP.
ReplyDeleteCP- You live near the den of thieves. Get on this!
ReplyDeleteTGT - I think I would've sold the gap up a couple days ago.
ReplyDeleteMark - I live wwwaaaayyy to close to the den of thieves for peace of mind. Everything here is just peachy-keen, except everywhere I go real estate seems to be getting more desperate.
ReplyDeleteThis week I hope to look over a cleared 64 acre lot listed for $145k. Must be a fire sale based on pictures, aside from it's kinda a long way from anywhere.
http://www.bloomberg.com/news/2011-07-11/cisco-may-cut-about-5-000-jobs-in-august-gleacher-analyst-says.html
ReplyDeleteI have the feeling cisco see's $10 before it see's $20
Damn, these people must be professional foot dragers, I thought they already took care of Greece?
ReplyDelete"Eurozone weighs more powers for bailout fund- AP
Eurozone finance ministers opened the door to using the currency union's bailout fund to buy up distressed Greek bonds, thereby cutting the country's overall debt load as they scrambled to stop the region's debt crisis from spreading to larger economies like Italy and Spain."
NBG - Sitting on the bottom trend line again, I guess tomorrow it rallies on this news?
ReplyDeletePMI - Did you guys catch today's flash crash low?
"GM to sell diesel Chevy Cruze in US"
ReplyDeleteIt's about freekin time a US manufacturer offered a diesel, I bet the Cruze is a butt-ugly vehicle.
CP you called the bottom in LNKD I agreed and both of us sat on our hands I think. A mere 100 share and we would be up $4000 in a month. Be more emphatic on your bottom calls. Add exclamation points. Pound the table more.Have some confidence and push me into these reversals, please.
ReplyDelete6E is getting hammered, could be a very red day today
ReplyDeleteOne of my larger holdings, Material Sciences Corp (MASC on Nasdaq) reported earnings of $0.33 for the quarter. They are a small, but leading provider of material-based solutions for acoustical and coated applications. That's $1.32 annualized and it would be 6% higher on current share count as they have bought back 800,000 shares this quarter and have entered into a plan to purchase another 1,000,00 shares this year.
ReplyDeleteAt $7.30, it's a 5.5 P/E. They have $32 million in cash on a $90 million market cap.
Sales down $6 million due to the sale of a division last year, but profit slightly up for the year. Also hurt by auto slowdown from Japan supply chain issues.
Main risks are:
1. Small company (but solid balance sheet)
2. Exposure to cyclical industries (automotive, construction) which could get hit in an economic downturn
3. Customer concentration - top 3 customers are 50% of business, but this is common in auto parts companies
Other small auto parts companies I follow also seem to be moving out of a long, tough period and also generating excellent results, but it was a long, tough down period, so i don't expect a lot of new competition will enter the industry quickly.
Target for the next year or three (no Greece problems or Greece problems?) is $12 - $14
MITK starts trading on the Nasdaq Thur.
ReplyDeletethanks BB - I'll check it out. Kinda of interesting/diverse customer base and I like that in today's economy.
ReplyDeleteCrap. I'm 'this close' to getting stopped out of STEC.
ReplyDeleteSTEC - There's a gap up from $15.15 to 15.96 which needs to close. There's another open gap from $17.64 to $19.9 which should eventually fill.
ReplyDeleteWFR - How low can she go?
ReplyDeleteI like STEC, confluence of indicators right near $17.70, so I've got a limit long in at $17.71
ReplyDeleteOpen gaps don't count when something fundamental happens which causes the gap.
ReplyDeleteAmateur hour didn't last long, I guess some folks didn't get the memo re: the 15,000th Greek bailout decision.
ReplyDeleteMITK! Wow. What a beast. Everything the CEO has promised has come true. If their bill pay solution catches traction it has a lot of room to run. In the short term it is a bit extended but then again we have seen plenty of stocks run much much higher than expected.
ReplyDeleteTTM - Still looking like a potential breakout in the works. There was news floating around that developing country auto sales forecasts are being cut, could be an accumulation sham story?
ReplyDeletegreat call on MITK tof, wish I had a bunch more shares!
ReplyDeleteU$D - 77.10 was the ABC up target for the current formation, which was met this morning 04:00 when U$D reached 77.20...
ReplyDeleteFRO - Capitulation?
ReplyDeleteBALT - Do you recall a couple of months ago the media was singing the praises of BALT and how it was ready for liftoff?
ReplyDeleteHmm, smelled like a setup.
FTWR - Breakout above descending trendline.?.?.?
ReplyDeleteCLNE/WPRT cranking on CHK news from yesterday.
ReplyDeleteGMR?
ReplyDeleteAlright...closed my DE short at $82.09. That is one dog of a stock right now.
ReplyDeleteJust took a large position in BGZ for a short term trade...I think today is setting up as a bull trap. Long at $34.2 to $34.35
ReplyDeleteInstantly underwater on the ultras! Now I know why permabears are so frustrated.
ReplyDeleteI think downgrades to longer term earnings will be coming as people recognize that we're in slowdown mode. We're cheap historically now at 13.5 times earnings, but I think people are beginning to come to the conclusion that earnings will not grow going forward.
ReplyDeleteCSCO - Looks like they're working on containing their overhead costs, which could help perhaps?
ReplyDeleteYea i guess the 10000 employees were sitting in their cubicles doing Origami.
ReplyDeleteSWC - Is $18 gonna hold, kinda looks that way...
ReplyDeleteSo 2nd, what did you think of the Alcoa earnings? Not much market reaction.
ReplyDeleteIts weird how weak BRK/B is in spite of what buffett said last week.
ReplyDeletePAL vs SWC - So far, PAL is blowing SWC's doors off.
ReplyDeleteI guess market believes PAL has a large and pure palladium deposit?
Alcoa - My amateur impression is it's impressive AA did this well considering Clause has been betting on a stronger dollar.
ReplyDeleteAhhh looks like QE3 is now on the table...probably a good time to close my ultra short.
ReplyDeleteCSCO - "Yea i guess the 10000 employees were sitting in their cubicles doing Origami."
ReplyDeleteYou should see the size of their San Jose, Ca. complex, the first thing I thought to myself when it was complete was: "I can see this thing getting top heavy real quick."
I kid you not, this really was my first thought b/c I had seen the same thing happen so many times before to much smaller companies. The Cisco complex rivals that of any corporate complex in the Bay Area.
Whether or not I'm right remains to be seen, I'm just expressing my personal observations, FWIW.
CSCO - 70,700 employees
ReplyDeleteJNPR - 8,400 employees
How many rocket scientists does it take to design a telephone switch?
Deciding to hold on to my ultrashort for now. My thinking is this talk of QE3 probably has to get a ton of backlash from the politicians at some point here (not to mention the public), making the odds of it highly unlikely. That is clearly the reason for the spike in the market.
ReplyDelete"This thing's going down"
ReplyDeleteNow it's flopping around on the floor as if in an epileptic seizure.
It took me a while to figure out what happened, I wasn't the first to know based on the cryptic comments here and there until someone possessing command of diction managed to type a few meaningful words.
ReplyDeleteAnyway, I especially liked Obama's comment about SS checks not going out Aug 3, that was truly classic.
I bet that's fine with Reps, so as long as their first order of business once reassuming their majority, tax cuts for their wealthy campaign contributors remain in place.
NWLI which I wrote about before has now moved up 10% off the June lows to about $165.
ReplyDeleteMy last buy was at $162 in March and I still believe it is still very good value here.
It is now back in the trading range of $164 to $176 that it was in October through March and I think we get back to the top of this reasonable soon. I still think $300 - $350 in a year or two as it returns to its more traditional valuation metrics.
We should have a date with sub 1,250 at some point here. We got a whiff of QE3 today and China backstopping Europe and yet we're lower after a big move down yesterday. That seems to be bearish to me.
ReplyDeleteJust got back.
ReplyDeleteI think we see a good move up over the next month. Earnings will be good again this quarter. We are still looking at 12% growth in q2 over q2 in the S&P, plus we'll likely exceed this.
ReplyDeleteI think this good news will override the macro drama for a while. Also, with so many people focused on the macro, a resolution of some sort will be found and that certainty (regardless of the solution) will get people back to looking at earnings.
SPY right at a pivot. I say bounces here. 131.35
ReplyDeleteERTS news good be good for COOL tomorrow.
ReplyDeleteRBY - Nice day there today, hopefully it continues.
ReplyDeletenew post
ReplyDeleteVE - What the HECK is going on with this one?
ReplyDelete