Saturday, January 7, 2012
1/8/12 One Way Out
There's more than one way out, bro.
(a) Wife and I will be looking at homes in the Vacaville area for purchase as income property. We drive by the city (50 miles NE of San Francisco) all the time on our way to the Delta or points east, and like the growth in the area. One example is Genentech's 33-acre manufacturing facility, which opened in 2000. We were also surprised to learn the city made the list of Money's 100 Best Places to Live three years in the past decade.
(b) Ultrabooks. Not even on my radar screen until jesse brought it up: www.computerworld.com/s/article/9223219/Ultrabooks_expected_to_be_hot_at_CES_could_be_boon_for_enterprise_IT Another example of the blog as a trading edge. INTC going into earnings + CES> the combination could boost the entire sector- as jesse points out.
(c) Back a welterweight. Money can be made on small caps like DANG while waiting for the heavyweight headliners.
In the end, it matters not where you placed your bets. The card tables, the slots, or craps- walking out a winner feels the same.
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Interesting timing on the income property idea. I'm having dinner tonight with a friend who is an attorney in that field. I was going to pick his brain anyway.
ReplyDeleteHey Mark. If you don't mind, ask him:
ReplyDeleteWhether any first-time homebuyer credits are still available (for my oldest son). Along the same lines, whether any Federal or State stimulus programs would apply- better yet, whether any HUD-type funds are available.
The leverage available in real-estate is an attraction. Options and margin trading aside, it's hard to beat. If the SPX goes up +10% this year, most retirement funds will return +10%. Whereas 5% down on a home would return closer to +200% if home values go up +10%.
ReplyDeleteIf real estate values double in Vacaville over the next 10-15 years, and renters have made our mortgage/tax payments over that time, then we will have made 200k on a 10k chip (assuming a starting home price of 200k). That's a freaking 20-bagger within the context of a very reasonable scenario.
ReplyDeleteIf only my oldest had graduated two years ago- the 8k homebuyer's credit would have been an awesome deal.
ReplyDeleteRents in Vacaville for a 3BR range from 1400-2000/month. That more than covers the mortgage payment + (possible) PMI + property tax + maintenance on a 190k loan.
ReplyDeleteIf tof were to cancel one doctor's visit, he would have the down payment on a 300k rental property in San Diego.
ReplyDeleteAnother possibility. Sit in cash while waiting for the next market sell off that coincides with an extreme spike in the VIX. We get one almost every year. Then buy in. Sell when prices recover, and the VIX drops back to normal.
ReplyDeleteRe the INTC/CES play- I'm more inclined to buy ahead of earnings, and sell the news. Any thoughts?
ReplyDeleteI'll ask. But am pretty sure the answer is no.
ReplyDeleteSo the rest of the family is having dinner at my sister-in-law's, while I stay home to catch up on my NFLX queue. Just finished 'Sangre de mi sangre,' (Blood of my blood), about two Mexican immigrants in NYC, one of whom steals the other's identity during the ride from Tijuana. Great film, great acting.
ReplyDeleteSince this is DT, I'm also weighing in on a bottle of IPA, which I just happened to find in the back of the fridge. Boatswain Double IPA, Twin Screw Steamer. Available as a 650 mL bottle. I can't recall when/where I bought it. But it's doing a good job of washing down a footlong Subway Club.
ReplyDelete2nd!! The playoffs are on!!
ReplyDeletePlayoffs? What playoffs?
ReplyDeleteAlright. I'm not as interested in watching your uncle as you are.
ReplyDeleteI'm starting 'Once Fallen.'
2nd- Its the biggest no-brainer in history.
ReplyDeleteI think I posted this a long time ago but I was lucky enough to take an MBA REIT course under one of the founders of a major public REIT co. who sold to ING at the exact top in 2005 for over $3 billion.
A year and a half ago, he said that was the only time in history that he would feel comfortable telling his students to make a massive bet in real estate. He told us to take on as much leverage as banks would possibly give us for rental properties...whether that be for 2 or 50 homes.
In hindsight, his advice has turned out to be spot on for his recommended markets. Even if prices haven't skyrocket, rents have gone up BIG time.
Damn- 'Kill the Irishman,' the story of Cleveland's Danny Greene, now available for instant play on NFLX. I wouldn't miss it.
ReplyDeletejesse- Thanks, that gives me added confidence in the plan.
ReplyDeleteBB Canada -- I have just remembered why I started buying into SORL! Someone complained about WATG having A LOT of "intangible assets" on their balance sheet. I then looked at other companies in the sector and saw that SORL (at that time) had almost no intangible assets.
ReplyDeleteFrom http://www.calculatedriskblog.com/ support for getting into rentals.
ReplyDelete• Reis: Apartment Vacancy Rate falls to 5.2% in Q4, Lowest since 2001
Reis reported that the apartment vacancy rate (82 markets) fell to 5.2% in Q4 from 5.6% in Q3. The vacancy rate was at 6.6% in Q4 2010 and peaked at 8.0% at the end of 2009.
This graph shows the apartment vacancy rate starting in 2005.
Reis is just for large cities, but this decline in vacancy rates is happening just about everywhere.
TTM - This thing's gonna break out before filling the gap up? Oh the pain, say it ain't so!
ReplyDelete1/5/12
ReplyDelete"The U.S. economy is gaining strength in the new year, Bullard said.
“We had a surprisingly weak first half for 2011 but a lot of the temporary factors that kept the first half of 2011 down reversed in the second half of 2011,” he said. “Now the most logical prediction for 2012 is to say that that increase will continue and we’ll see more strength in 2012 than we saw in the second half of 2011. Like a GDP growth rate of 3 to 3.5 percent.”
http://www.bloomberg.com/news/2012-01-05/bullard-says-fed-very-close-to-consensus-on-inflation-target-tom-keene.html
Interesting article, BB. Another quote from the same article:
ReplyDelete“I think we’re very close to having inflation targeting in the U.S.,” Bullard said in a Bloomberg Radio interview today. “This may be the opportunity to get something done that everyone on the committee can rally around.”
So could it be that they announce some form of QE3 despite the recent drop in unemployment because the inflation is still below their target? They can easily cite US debt issues and conclude that the desired inflation rate is close to 3% now (so as to make it easier for them to inflate away the US debt).
I have been following INHX closely since Stephen Stewart profiled it at the end of November. It closed at $9.87 on Friday. It will open at $26 on Monday.
ReplyDelete11/22- "Here is the deal Rockstars. I do not profile biotechs due to unforseen headline risk that you can never handicap. However, I am profiling this because at the moment this chart of INHX is a textbook POP (Picture of Power)profile. This is what we want to see everytime. So very powerful for price momo. Study all of the components of this chart."
DANG: Just to inform....
ReplyDeleteLook at Stewart's chart of DANG. I think it is bullish and can go up big, but see the inset, which essentially says:
JOB's set ups can be slow to gain momentum due to overhead supply (true of the overall U.S. indices too), so don't expect big POP price action as it takes time to work through the overhead.
To me that would mean to keep position size manageable, trade around the action which will tend to be choppy. IOW, buy on weakness, sell on strength. With a smallish position, trading around the position and patience this could be a seven bagger (or more).
I like some biotechs at lower levels if the chart is in a persistent uptrend, but they are subject to news, so tight stops are a good idea, although news on thse tends to come out at times that result is big gaps up or down, which can be it's own issue. From 9.87 to 26 would be welcome news indeed.
Craig- Agreed. I had the same thoughts this weekend. Keep position size manageable- small enough to keep emotions flat with a high beta stock, and to avoid being shaken out. At the same time, take advantage of the high beta and trade around it. It almost doesn't matter which stock you pick, as long as volume is decent. Sure, it could go lower, but so what? Bad, bad news is already priced in- even the trash-talking CEO has been priced in. It's an informed bet on a site that does real business every day in China- founded in 1999, and went public in 2010.
ReplyDeletehttp://www.atimes.com/atimes/China_Business/LJ27Cb01.html
My uneducated guess for the week for the Nasdaq:
ReplyDeleteMonday- Close near the lod -35 at 2640 (NDX futes -8)
Tuesday- Turnaround Tuesday: +40 to +50
Wed-Fri- Slow and steady climb based on tech news trickling out of CES +10 to +15 per day.
I'm seeing a ton of bearish charts on the net.
ReplyDeleteAs long as the Dow stays above its 13wma around 12,000, I remain firmly in the 2012 bullish camp.
Per previous 13/34 week crossovers, the index should not close below the 13wma for at least 6 months.
"However, I am profiling this because at the moment this chart of INHX is a textbook POP (Picture of Power)profile. This is what we want to see everytime. So very powerful for price momo. Study all of the components of this chart."
ReplyDeleteI believe in charts and stuff, but it is hard for me to believe that the POP profile would predict a desperate company overpaying by 2.5X for some drugs.
Man, I like the Turnaround Tuesday scenario.
ReplyDelete2nd- The only thing maybe available would be some HUD programs...but they are really hard to get.
ReplyDeleteMark- Thanks for asking.
ReplyDeleteShanghai up as much as 2% this evening.
ReplyDelete"I believe in charts and stuff, but it is hard for me to believe that the POP profile would predict a desperate company overpaying by 2.5X for some drugs."
ReplyDeleteHence Landry's web site: http://dontconfusetheissuewithfacts.com/
Stocks trending higher or lower tend to continue higher or lower regardless of so-called "facts".
with the caveat being the biotechs for the reasons stated.
Here is a quote from Hussman about the recession risk: "Lakshman Achuthan of the Economic Cycle Research Institute (ECRI) has noted if the U.S. gets through the second quarter of this year without falling into recession, "then, we're wrong." Frankly, I'll be surprised if the U.S. gets through the first quarter without a downturn."
ReplyDelete"Three basic issues are at play. One is that analysts aren't making distinctions between leading, coincident and lagging data. The second issue is that there is little effort to measure the predictive strength of a given economic data point (or set of data points) in explaining subsequent movements in the economy. The third is that analysts seem to be forming expectations report-by-report (what I call a "stream of anecdotes" approach) instead of taking those reports in context of the full ensemble of data that is available at each point in time.
Let's examine the seemingly most "compelling" data point first - the fact that December payrolls grew by 200,000. Surely that sort of jobs number is inconsistent with an oncoming recession. Isn't it? Well, examining the past 10 U.S. recessions, it turns out that payroll employment growth was positive in 8 of those 10 recessions in the very month that the recession began. These were not small numbers. The average payroll growth (scaled to the present labor force) translates to 200,000 new jobs in the month of the recession turn, and about 500,000 jobs during the preceding 3-month period. Indeed, of the 80% of these points that were positive, the average rate of payroll growth in the month of the turn was 0.20%, which presently translates to a payroll gain of 264,000 jobs.
Likewise, in 5 of the past 10 recessions, the ISM Purchasing Managers Index was greater than 50 just weeks before the recession began, and the new orders component of that index was greater than 50 in most cases, immediately prior to the recession."
I suppose that when the GDP growth averages 3% in 2012, Hussman will say that starting from the fourth year after the previous recession, in 50% of the cases the economy went into a recession in the next 1 year. :)
ReplyDeleteStill, quite interestingly Hussman observes: "Notice in particular that in the month a recession starts, payroll job growth has not only been positive in 80% of cases, but has actually been higher, on average, than the three preceding months. Neither the level of job growth nor its short-term trend had any "leading" information content at all about the subsequent direction of the economy."
ReplyDeleteBest thing I read on the weekend about the US Economy:
ReplyDeleteU.S. manufacturing has become increasingly competitive in the past five years as the U.S. dollar has fallen and productivity surged.
While a rebounding U.S. economy is good news for Canadian exporters, Canadian labour and domestic suppliers of goods and services must rise to the challenge of the newly crowned “low-cost producer” south of the border.
Who would ever have thought that the US would be called the "low cost producer" in manufacturing?
Bb u need to get out more often...this is the best thing I read all weekend:
ReplyDeletehttp://www.theonion.com/articles/all-of-area-mans-hard-work-finally-pays-off-for-em,26957/
HIG @ 16.47
ReplyDeleteHIG nice weekly chart 2nd.
ReplyDeleteDANG looks really nice on the weekly as well.
AA chart looks too promising heading into earnings tonight. Starting to think we may see a decent selloff in the materials sector tomorrow.
ReplyDeleteI like to see some good ol' negativity in AA prior to their kickoff to earnings season.
Spike bottom low for CVV on the weekly and daily charts set on Friday. Good entry for those who like the name.
ReplyDeleteAA - ($9.42+.28) Earnings after the close. Its already broken out of a well established downward trend line and put in a double bottom. Anyone placing bets?
ReplyDeleteGood morning, still headed in the right direction! I guess those cheap, and getting cheaper euros must be funding our rally. ;)
ReplyDeleteDANG- Out @ 5.15
ReplyDeleteHIG- Out @ 16.74
Will be looking to get back in.
CSTR - Looks like a good entry to me...
ReplyDeleteYou first CP!
ReplyDeleteMark - I've still got my unfilled SDOW stop-limit bid in at $25.70, not enough faith to increase long positions... (show me!)
ReplyDeleteOK :)
ReplyDeleteSee you guys later.
Not looking bullish right now- leaning towards jesse's original scenario.
ReplyDeleteGood exits 2nd. Excellent trading for a buy and holder:)
ReplyDeletePicked up some UNG 6.50 here. Still like the bottoming process over the past week.
ReplyDeletePOWT.OB - Whiz-bang internet-capable electric meters?
ReplyDeleteHard to believe the likes of GE or ABB wouldn't be way out in front...
I like Geoff's morning comments at CC.
ReplyDeleteGE - They are practically a financial company nowadays. They do not "light up the world" anymore. Thus, they have no interest in " Whiz-bang internet-capable electric meters".
ReplyDeleteFolks, prepare for a rally in PEIX -- I just sold my position at the bid of $1.02, for a $700 loss...
ReplyDeleteInstead, just bought 1000 more shares of AUMN at $6.21. After the initial surge on Tuesday last week on high volume, AUMN had 3 days of decline on lower and lower volume. Today SLV and GDXJ are rallying, and AUMN cannot be far behind...
ReplyDeleteExited HSOL for 4%. Wanted to free up some cash for a couple other things.
ReplyDeleteKyle - I liked Geoff's comments too, especially "This is not a time to place big bets". I am 80% cash now, having sold out of PHYS last Thursday at a good profit. Will reload on that one if it dips.
ReplyDeleteillini - was just listening to Grasso on the cnbc halftime show -- FWIW
ReplyDelete"SPX is at ~1275 level now (Egypt bottom) if it can't break above 1295 (Libya bottom) then we may be headed lower to retest 1200."
Good Lord, when does it stop?
ReplyDeletehttp://www.youtube.com/watch?v=7ayint66IUs
For the past couple of weeks, I've been watching unfold what I believe to be the best chart pattern in the market.
ReplyDeleteI'm doing a ton of research on it, but it looks like it could be the biggest value play in the market selling for 1/4 book.
I'll continue looking at it and will post my notes.
The CAAS thing keeps surging like crazy. Can SORL be far behind?
ReplyDeleteJust bought 1000 more shares of SORL at $2.46
ReplyDeleteI am not the only one watching SORL:
ReplyDeletehttp://www.inthemoneystocks.com/rant-and-rave-blog/item/92083-stock-chart-alert-caas-continues-surge-watch-sorl
What does it tell us? That SORL has to break down first before it can start rallying?
Or maybe all of those folks are just *watching* SORL now, waiting to jump on the train as soon as it takes off, implying that when it DOES take off, it will run like crazy?
ReplyDeletePlaced buy limit order for 1000 shares of SORL at $2.40, so as to catch a spike down like the one it had today.
ReplyDeleteMoved my buy limit order for SORL down to $2.35 -- I think it will have a large spike down...
ReplyDeleteThe CAAS chart looks very impressive, though. When will AUMN have such a chart? :)
ReplyDeleteSupposedly, the top in a security usually occurs on a gap up (like $USD had on Sunday night) and then a steady sell-off (like it had since then, dropping below the plateau it established on Friday afternoon. If this is indeed an intermediate-term top for $USD, then the 1-month charts of SLV and GDXJ should break out to the upside instead of the downside (have you guys seen those charts???). Such a breakout could make AUMN look like CAAS...
ReplyDeleteDANG is gonna go here in the next couple of days.
ReplyDeleteI have a feeling that DANG drops to $4.80 or below before rallying to a new high, and so I am hesitant to buy it now. However, in case it starts rallying without such a drop, I just borrowed $5K more from a credit card and placed a buy stop limit order for 1000 shares of DANG at $5.30/$5.35, so as to catch it on the way up.
ReplyDeleteBeen watching SORL off and on all day. Hard to get a buy when you have to go up to $2.50 just to get 1,000 shares. Perhaps I should take your tack David and just lowball a bid. I also wouldn't be surprised to get a pullback in the low $2.30's, so I'm biding my time a bit as well and working on some other things.
ReplyDeleteSee PWRD today? Chinese gaming company down 25% on basically fraud - thought we might see the other Chinese stocks down in sympathy, but not so much.
"See PWRD today? Chinese gaming company down 25% on basically fraud - thought we might see the other Chinese stocks down in sympathy, but not so much."
ReplyDeletePeople are probably tired of worrying about this stuff and are focused now on picking up the winners. A definite change in sentiment.
"Supposedly, the top in a security usually occurs on a gap up (like $USD had on Sunday night) and then a steady sell-off (like it had since then, dropping below the plateau it established on Friday afternoon. If this is indeed an intermediate-term top for $USD, then the 1-month charts of SLV and GDXJ should break out to the upside instead of the downside (have you guys seen those charts???). Such a breakout could make AUMN look like CAAS..."
ReplyDeleteDavid- Excellent observation. I couldn't agree w/ you more. I've been watching the dollar action all day. Dollar topping and Euro bottoming at these price levels.
CME - Yee-ha!!!
ReplyDeleteOK, grabbed a quarter position of SORL at $2.46. Think I will be able to get the average cost down from here, but at least will be along for the ride if we do start to move like CAAS.
ReplyDeleteAll right guys. Trying to join you in SORL. Need a more stable/low beta position to balance out MITK :)
ReplyDeleteCSTR - The low is no longer!
ReplyDeleteLast chance to load up on AUMN, folks, before it takes off like SVM did today...
ReplyDeleteThose of you who are risk averse can go for GDXJ -- it was stuck in a very narrow range for days now, and once it breaks out, the rally should be huge.
ReplyDeleteWhenever I had a feeling that a flattened chart would breakout to the upside, it almost always broke down instead...
JVA setting up.
ReplyDeleteBeen working on IRE for most of the day. Keeps popping up as a "junk off the bottom" pattern. Love the pattern. After today's research, I'm lovin' the fundys as well. I have pages and pages of notes. Here is a brief summary.
ReplyDeleteIRE research
*Weekly "Flame-Out Pattern" - Stock coming down from a high volatility, high price point to a very low volatility, low price point where on the weekly chart, it looks like stock has stopped trading altogether (w/ very low volume).
*13 week "volume flag pattern" on the weekly. Volume has trended down in a straight line week after week from 8 million 13 weeks ago to 1 million last week.
*Trades at 1/4 book
*Capital levels in place to survive 60% drop in residential real estate and 70% drop in commercial RE.
*Former volatile "trading stock" trading 10-20 million shares per week. (Traders tend to return to known names in time- PEIX, SMSI)
*Wilbur Ross and Fairfax capital took 20% stake in July when stock traded @ $10.
*Irish bond yields have trended down from 14% to 8%.
*"The Soros Plan"- Long Term Repo "LTRO" plan. Access to unlimited 3 year ECB capital at 1% and lends at 7.7% through Irish gov. 2 year bonds. This should provide a big boost to earnings similar to U.S. bank lending programs begun in 2009.
*10 week base- Dan Zanger's 10 week base pattern http://www.youtube.com/watch?v=CUf6zozkNGc&feature=BFa&list=UUPxRe11xWPB0qEWgie5TQtw&lf=plcp
GuruFocus had an opportunity to speak with Prem Watsa (took out a 10% stake in IRE), chairman and chief executive of Fairfax Financial Holdings, a $7.7 billion Toronto-based firm, where he has delivered a 5-year cumulative return of 176%, compared to 12.2% of the S&P 500. In 2008, when the market was spiraling to a loss of 37%, he achieved a 21% return for his clients.
Fairfax has a worldwide insurance/reinsurance company operating in over 100 countries with $5 billion of premiums and about $8 billion of shareholders’ capital. Book value per share has compounded by 25% per year to $379 per share. Its return on equity has compounded 25% since 1985.
Watsa: The real book value right now is running a little below .30 euros, maybe .27-.28 (trading around .08 in Europe now) and then in the next few years it might be static, maybe it will go down a little, but it will be dependent on the economy's performance, and it will be dependent on the Bank of Ireland in terms of what it does, in terms of earnings.
SORL -- "Watched kettle never boils." Stop watching it and let it rally!
ReplyDeleteAA earnings look to be non-event. Good:)
ReplyDeleteBeat on revenue by $300 million. (Wrote a bunch of stuff off which is good going forward.)
Outlook:
"For 2012, we expect global aluminum demand to grow 7 percent and are forecasting a global deficit in primary aluminum supply."
Alcoa's growth projection is ahead of the 6.5 percent rate required to meet the Company's forecast of a doubling in global aluminum demand between 2010 and 2020. Aluminum demand grew 10 percent in 2011 on top of 13 percent growth seen in 2010.
Alcoa also projects that growing demand for aluminum, combined with market-related production cutbacks, will result in a global aluminum industry deficit of 600,000 metric tons in 2012."
The 2nd half of my IRE post was posted and now gone. Here it is again:
ReplyDeleteIf you look at Bank of Ireland's track record in the past, it's done very well, and now it's well capitalized, it has a terrific CEO, it has a good management team, so over time, it should do very well for its shareholders. They are focused on doing well for their shareholders.
In our due diligence, we talked to them, we went through the individual portfolios; it's a well-regarded bank, with centuries of experience, and has a history of being conservative, but in a country where real estate prices fell off the bottom, no bank with their leverage and lots of mortgages could survive that. But we feel really good about it.
Interview- http://bit.ly/wbt3bk
The ECB's decision to allow banks to access unlimited loans for 3 years at 1% through its Long-term Repo Operation (LTRO) is essentially the start of the Soros plan. The Soros plan is discussed in more detail here.
Banks will be able to post government bonds as collateral to get loans; this means banks will be able to have enough liquidity to remain in business. The LTRO is essentially a guarantee of the banking system. Bank runs will not occur because the banks will always be able to come up with the money needed. In return for this "gift," the ECB seems to have implied that banks will be forced to at least stop selling sovereign bonds if not actually buy them. The decision to buy bonds is a no-brainier for the banks, because they can then repost the bonds as collateral at the ECB to get more loans. This plan is very similar to what Soros proposed. The plan seems to be working already.
This plan essentially puts an end to the ugly de-leveraging that we have already seen. Banks now have unlimited liquidity which will be used to let governments borrow at a reasonable rate. This in turn will mean that the governments will not have to impose as much austerity as previously thought. Now that ECB has saved the banks, the EFSF can become much more effective in helping weaker nations
IRE also benefits from the new ECB 3 yr lending program LTRO... IRE can now borrow for 3 yrs at 1% and lend buy Irish govt 2yr bonds yielding 7.7%
TBSI gonna have a 50-60% one day move sometime very soon.
ReplyDeleteDANG may go tomorrow
ReplyDeleteFormer momos really moving to the upside: NFLX REE GMCR SFLY JVA CVV today's big movers. Professional traders really starting to come back.
ReplyDeleteMy guess is we get a big move up in the indexes in the next 2-3 sessions
Solars are next. FSLR and others look primed.
David's AUMN gonna be a big mover.
ReplyDeleteREDF, SIFY gonna go soon following India bottom.
ReplyDeleteChina has seen bottom for many years to come imo
http://chart.ly/uploads/stream_g48xrhc.png?1326107477
TBT gonna break
http://chart.ly/uploads/stream_juluxfm.png?1326082125
ANR and coals will break
http://chart.ly/uploads/stream_avnxgla.png?1326086513
IRE moved 850% in 3 months from 3/01/09 and 1,350% in 6 months.
ReplyDeleteIts definitely a big mover coming out of a crisis. Hopefully, that's all for me today.