We've all been through this. A muted reaction immediately following an announcement (which conveniently leads disappointed traders to sell), followed by the 'expected' rally a day or two later. No worries.
Anyone noticed how much NBG and GREK have rallied over the past month? Awesome rallies. Everything Europe is on fire. Throw in some beaten down stocks that have rallied 50%+ and you have some awesome gains in place while lots of people (myself included for a few days) have worried about Europe etc. Focus on the little picture (ie companies) and let the mob worry about the big picture and you will make lots of money.
Personally, I don't think the market gives a ---- what the Fed says/does tomorrow> it rallies regardless. This is a market looking for an excuse to rally.
ha. no i was just kidding. it's a joke that the media cares so much about it. apple's growth going forward will not come from the iphones since about 50% of smart phone owners in the us probably own them. it will come from macbooks. but apple is irrelevant going forward.
re MGIC, they are giving a $0.10 for the first half of the year. The plan is to: According to this policy, each year the Company will distribute a dividend of up to 50% of its annual distributable profits. It is possible that the Board of Directors will decide, subject to the conditions stated above, to declare additional dividend distributions.
Current trailing 12 months earnings is $0.44, so $0.10 for the second half should be easily doable. Plus, they did do a $0.50 special dividend back in 2009 (I think it was).
It's not clear if they would take the US approach and try to keep the dividend constant at $0.10 per half year or the European way whereby it changes up and down each year based on profits.
Thanks for pointing out NBG - I knew I shouldn't look at it as I held it from 2010 and lost a ton percentage wise and I kind of have a rule to not look at a stock after I sell it, but I couldn't resist. I was out in June at $1.89 and it looks like $2.85 after hours today. Luckily the had-reversed split my position down to a very small one, so the missed gain is not that big (thank God).
BB - regarding not looking back...it's such a great thing to do because it will really mess with you. but it's not human instinct to forget about lost opportunities. we all think about them when it comes to the market. i can't tell you how many times i've missed out on bigger gains this year. the latest is selling UGAZ last Wednesday at $24. but if you dwell on it you will miss the next big ones.
MGIC looks awesome from a long term perspective. love that they're kicking in dividends but my first thought is always: do they see biz growth slowing?
by the way, from time to time i always think about how possible it would have been for people to have the foresight to buy WMT 40 years ago and stick with it. did you know they paid a dividend all the way back in their early days? granted the thinking toward dividends was different then. but who is to say that a company like AMNF couldn't one day be the next KFT? they pay a 5% dividend which has increased for the past 10 years. they are growing at 10 to 15% annually and their balance sheet is solid. or what about BKJ?
If you can identify those long term, steady growers, and get them at a fair price, they are the real ones to buy and hold.
The hard thing these days is they often get bid up too high too quickly that you can't make money on them. Look at MSFT which came public with a market cap of around $750 million and now is $250 billion versus Facebook which came public at around $70 billion and already one of the top 10 market cap companies in the U.S.
I still like the rails as long term growers as there are 5 in North America, no new ones are coming out and they have a long term sustainable advantage in lower fuel usage.
if it wasn't for investors perception of money printing impacting its price, i don't think oil would be anywhere near where it is right now. i bet within 5 years the price slumps quite a bit and provides the impetus for the market to go higher. why? supply continues to expand. inventory reports have been bearish for the price of oil and there continues to be new discoveries. plus the chart just looks weak. like at wtic to nat gas. it's officially in the post bubble decline. oil at $50 and nat gas at $5? that's definitely possible.
i think we need to consider for longer term which sectors will benefit from lower oil prices...and which will get hurt. i would steer clear of anything energy. i think that bull market is over.
I'm pretty sure we don't see $50 oil ever again unless it is crisis of some sort like 2008 or they do actually come up with a cheaper fuel substitute that renders all current fuels obsolete.
The reasons for oil to stay high are:
1. 90% or thereabouts of oil usage is in transport and there isn't a viable large scale alternative, so demand is not decreasing in the developed world and is increasing Asia, etc. 2. Pretty much all new supply coming to market requires expensive oil. Whether it is the Canadian oil Sands, the Brazil deep water or the Dakota shale oil, all require huge investments to get the oil to market and if oil drops to $50, companies will stop drilling and investing.
There are lots of stories out there on this, but here is one: http://ftalphaville.ft.com/blog/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/
So, unless oil demand drops to the point where the few countries who still can produce cheap oil (like Saudi Arabia), prices have to stay high.
I am almost giving up on posting right now. Had computer failure two weeks ago and am on newer laptop (Win 7). Touch Pad is too sensitive (Dell). Blows away replys, etc.
NSPH is a long term hold for me and my eldest granddaughter. We were up 25% recently , now 19%. Not trading on this or anything lately. It's not often that one will get a news alert on any micro cap.
"Personally, I don't think the market gives a ---- what the Fed says/does tomorrow> it rallies regardless. This is a market looking for an excuse to rally."
That may be true about S&P, but not about gold miners. If the Fed does not announce any new QE tomorrow, then I may take some profits in AUMN/PNPFF. If, however, the Fed *does* announce QE3 and AUMN will still be below $7, then I'll buy more call options on it.
BB, you said: "The hard thing these days is they often get bid up too high too quickly that you can't make money on them. Look at MSFT which came public with a market cap of around $750 million and now is $250 billion versus Facebook which came public at around $70 billion and already one of the top 10 market cap companies in the U.S."
I agree that more people are involved and do the research these days but there are plenty of IPOs that start off weak and explode over time. The majority of them aren't in the tech sector which people will always be enamored with for whatever reason.
Yeah, tech sector is not the place to look for these types of companies as too many analysts and too much coverage. For the last number of years, up until a couple of years ago, junior resource companies was a great place to look. Not sure what would be good area now - perhaps biotech, but that always seems so binary to me and too risky.
Picked up some NSPH at $3.2 this morning. Based on Stochastics and MACD it looks like this is a decent spot to go long. Also 50 DMA is just below and OBV is confirming the uptrend.
Closed INTC @ 23.14 with no damage. Next time I'll wait for the expected analysts downgrades to kick in (usually well after any sell off, of course) before buying. It's amazing how analysts love to kick a stock when it's down- freaking mob behavior.
Listening to analysts pileon to beaten down stocks has made me miss so many opportunities - COST at $28, DIS at $29, etc. I could go on, but now I just ignore them.
Hard to see that the market is getting close to a top based on investor over-enthusiasm, so unless we get a strong fundamental reason for stocks to go down, we should continue higher as valuations are still cheap and money is easy.
LOL, yeah, I'm painfully aware of how this game is played, which is why I plan on adding gradually in the event of pullbacks as a strategy for increasing my position.
What's that? Fed announced QE3 while I was sleeping??? I thought they always make statements at 11:15 pacific time...
Oh well, missed a good entry point into GDXJ for my friend, whom I asked to add some more money to his account prior to the Fed statement, so as to snatch some bargains in case QE3 is announced.
Still, with GDXJ trading basically at its December low, I still think that the current price is a bargain. So I just bought in my friend's account 1000 shares at $23.94, with the intention of holding that for a year and then collecting a long-term capital gain.
As for myself, I don't see anything absurdly cheap anymore, as I did in May. Of course, you may ask why I am not buying GDXJ for myself if I think it will be much higher a year from now. The answer is simple -- I have already loaded up with AUMN and PNPFF on margin, and right now it is probably wise for me to start thinking in the direction of gradually taking profits on strength, raising cash, paying out the margin debt, paying out the credit card debts, and preparing to make a downpayment on a house. Hence, I am not buying anything today...
My sell limit order for 10 contracts of October $7.50 AUMN calls has just been hit at $0.50. You may want to ask why I am selling call options in the face of QE3? Well, this action will not be optimal if AUMN rises above $8 by October OpEx. In that case, however, I'll be sitting on HUGE profits on all the January and April $2.50/$5.00 calls I purchased when AUMN was under $5, so I'll be OK. :) In effect, I am appeasing market gods by sacrificing a few $7.50 calls, so that they might give me a profit on all my other calls and shares. :)
So, we are getting the ramp Jeff Saut has been calling for and have reached the bottom of his target of 1450 - 1477. He's saying the next day or two will be the top for this run, a 4-6 week pullback and then rally to new highs into year-end.
Let's see what the next few days brings. I think the QE announced was larger than the market expected. It was more than I thought they would do for sure.
Is today a breakout for a larger move upwards or a blowoff top?
For those who have mortgages or investments in PMs -- yes (the first category will pay out their mortgages in worthless dollars in 5 years, the second category will become even richer, since gold/silver will go up in percentage terms faster than dollar declines). For poor folks life will become much harder, since all prices will rise faster than their salaries...
The poor folks won't be able to consume in previously established quantity due to their salary cut in the form of a weaker currency, thus commodities prices that must be higher due to higher production costs demand destruction factor is increased.
Thus no net result aside from possibly rescuing all those bad bets HB%B made on their MBS's, the private losses are socialized.
Too bad so many decided to sell their PM's while knowing full well which way things were headed, I can no longer place my trust PM's as a mechanism for preserving wealth any more than I can trust the FED.
So David, you'll be happy to know that I am joining you back into the mining space.
Decided to play it broader by going for a mining driller as opposed to an actually commodity owner to give me a little less metal-specific exposure. All of the mining services companies are down a lot from recent highs (50% average) and at 52 week lows, so the market is out of favour and has high leverage to the metals market. I think that with today's QE news, metal prices aren't going to be falling dramatically any time soon, so the junior miners should be able to continue to get financing and keep drilling.
The one I decided to buy is Cabo Drilling (CBEEF). Assuming metals don't crash or funding for small miners doesn't completely disappear, it should do well. It is trading at 25% of book value, P/E of 2, so very cheap. It grew during the initial mining boom in 2004 and 2005, but took on too much debt and got into troubles when things turned down. They've since focused on paying down their debt and now have a pretty reasonable balance sheet and are profitable.
I'd say the knock against them is they are mainly a North American company and North America is very competitive and margins tough, but they have done a pretty good job of expanding into South America where margins are much better.
The other way of valuing drillers is to look at their Enterprise Value / Drilling Rig and their valuation is about $90K per rig compared to $1,200 per rig for market leader Major Drilling. Some of Cabo's rigs are older, so there should be some discrepancy, but this is way out of line.
Stock is $0.08. I expect them to be profitable this quarter and could get a good move out of the stock in the short term. These drillers are not buy and hold type stocks, but can really move when times are good.
It's dumb, but you're right. Low priced stocks can move much faster. One very successful investor I know won't pay over $10 per stock. Seems to exclude a lot of stocks, but he does very well.
EZU closed @ 31.3x FXI closed @ 34.2x CAF closed @ 19.1x TBT closed @ 16.2x Plan to exit ICHKX and VEURX at market close.
Historically, a 4-5% gain in the global markets over a period of 5 trading days is unlikely to continue much longer. Of course, these are not normal times- Europe, China and the US have all announced global stimulus measures in the past week. But once a decent return is achieved, continuing to play the game can backfire!
Bernanke structured ‘QE3’ with no dollar ceiling and no time limit. If it’s a poker game, then he went all-in. It will be interesting to see where this all leads!
That's the pattern I'm seeing across the board in beaten down stocks. I don't have a large position in it but DMND is going to make an exact same move. Since I can't time when it will happen I'd rather just own some. I think a 70%+ move in two weeks is possible when it moves.
It's also one of the reasons I own YRCW. Getting a $5 Billion company in the midst of a turnaround for $50 Million is what I call upside potential.
"You already know what I plan to say next: Get the ---- out now! Buy back in later! Sleep at night!"
2nd_ave, if I get "the ---- out now", then I DEFINITELY won't be able to sleep well at night, imagining how AUMN gaps up 20% a few days in a row (like it did after QE2 was announced) and I get totally left behind.
2nd_ave -- I am 100% sure that AUMN is going to be MUCH higher 1 year from now, both due to their own production growth and to gold/silver soaring much higher. So why should I get "the ---- out now"?
Well, I can't argue with your recent performance. Keep in mind it's possible to duplicate the kinds of returns you're hoping for by trading around the position.
It is starting to look like the unexplainable drop in PM miners between May 2011 and May 2012 to a 30-year low valuation, while I was heavily invested in them, was the best thing that could have happened to my portfolio, as it motivated me to borrow money from all sources and double my holding of AUMN, at the average price of around $5. Now I have 36K shares, and when AUMN reaches its previous high of $28 (which will most likely happen within a year from now), my AUMN position alone will be worth ONE MILLION BUCKS. Assuming, of course, that I don't chicken out and sell a large part of it along the way. :)
This is the TOG, impossible to know if this is the real McCoy or another false start but the FED's doing their best to make it work for ya! The words I heard again today loud and clear came from Ben's mouth, he said the progress wasn't fast enough, concerning employment. This is probably code for tax receipts aren't improving fast enough!
Major Drilling, the leader in the mining drilling space turned out to be one of the top 10 TSX stocks up 5.5% today. Like to see that as usually the big guys move first, then the small ones, like Cabo Drilling move more. And at 25% of book and 2 P/E, easy to see a lot of upside.
Anyone noticed how much NBG and GREK have rallied over the past month? Awesome rallies. Everything Europe is on fire. Throw in some beaten down stocks that have rallied 50%+ and you have some awesome gains in place while lots of people (myself included for a few days) have worried about Europe etc. Focus on the little picture (ie companies) and let the mob worry about the big picture and you will make lots of money.
ReplyDeletePersonally, I don't think the market gives a ---- what the Fed says/does tomorrow> it rallies regardless. This is a market looking for an excuse to rally.
ReplyDeleteCheck out this time table, courtesy of TDAmeritrade:
ReplyDeletehttp://research.tdameritrade.com/public/fixedincome/fedBrief.asp
Get your iPhone 5, tof?
ReplyDeleteha. no i was just kidding. it's a joke that the media cares so much about it. apple's growth going forward will not come from the iphones since about 50% of smart phone owners in the us probably own them. it will come from macbooks. but apple is irrelevant going forward.
DeleteTOF,
ReplyDeletere MGIC, they are giving a $0.10 for the first half of the year. The plan is to:
According to this policy, each year the Company will distribute a dividend of up to 50% of its annual distributable profits. It is possible that the Board of Directors will decide, subject to the conditions stated above, to declare additional dividend distributions.
Current trailing 12 months earnings is $0.44, so $0.10 for the second half should be easily doable. Plus, they did do a $0.50 special dividend back in 2009 (I think it was).
It's not clear if they would take the US approach and try to keep the dividend constant at $0.10 per half year or the European way whereby it changes up and down each year based on profits.
Thanks for pointing out NBG - I knew I shouldn't look at it as I held it from 2010 and lost a ton percentage wise and I kind of have a rule to not look at a stock after I sell it, but I couldn't resist. I was out in June at $1.89 and it looks like $2.85 after hours today. Luckily the had-reversed split my position down to a very small one, so the missed gain is not that big (thank God).
BB - regarding not looking back...it's such a great thing to do because it will really mess with you. but it's not human instinct to forget about lost opportunities. we all think about them when it comes to the market. i can't tell you how many times i've missed out on bigger gains this year. the latest is selling UGAZ last Wednesday at $24. but if you dwell on it you will miss the next big ones.
DeleteMGIC looks awesome from a long term perspective. love that they're kicking in dividends but my first thought is always: do they see biz growth slowing?
by the way, from time to time i always think about how possible it would have been for people to have the foresight to buy WMT 40 years ago and stick with it. did you know they paid a dividend all the way back in their early days? granted the thinking toward dividends was different then. but who is to say that a company like AMNF couldn't one day be the next KFT? they pay a 5% dividend which has increased for the past 10 years. they are growing at 10 to 15% annually and their balance sheet is solid. or what about BKJ?
If you can identify those long term, steady growers, and get them at a fair price, they are the real ones to buy and hold.
DeleteThe hard thing these days is they often get bid up too high too quickly that you can't make money on them. Look at MSFT which came public with a market cap of around $750 million and now is $250 billion versus Facebook which came public at around $70 billion and already one of the top 10 market cap companies in the U.S.
I still like the rails as long term growers as there are 5 in North America, no new ones are coming out and they have a long term sustainable advantage in lower fuel usage.
if it wasn't for investors perception of money printing impacting its price, i don't think oil would be anywhere near where it is right now. i bet within 5 years the price slumps quite a bit and provides the impetus for the market to go higher. why? supply continues to expand. inventory reports have been bearish for the price of oil and there continues to be new discoveries. plus the chart just looks weak. like at wtic to nat gas. it's officially in the post bubble decline. oil at $50 and nat gas at $5? that's definitely possible.
ReplyDeletei think we need to consider for longer term which sectors will benefit from lower oil prices...and which will get hurt. i would steer clear of anything energy. i think that bull market is over.
look at the long term chart of XLE...three lower highs now. SLV looks the same too.
DeleteI'm pretty sure we don't see $50 oil ever again unless it is crisis of some sort like 2008 or they do actually come up with a cheaper fuel substitute that renders all current fuels obsolete.
DeleteThe reasons for oil to stay high are:
1. 90% or thereabouts of oil usage is in transport and there isn't a viable large scale alternative, so demand is not decreasing in the developed world and is increasing Asia, etc.
2. Pretty much all new supply coming to market requires expensive oil. Whether it is the Canadian oil Sands, the Brazil deep water or the Dakota shale oil, all require huge investments to get the oil to market and if oil drops to $50, companies will stop drilling and investing.
There are lots of stories out there on this, but here is one: http://ftalphaville.ft.com/blog/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/
So, unless oil demand drops to the point where the few countries who still can produce cheap oil (like Saudi Arabia), prices have to stay high.
I am almost giving up on posting right now. Had computer failure two weeks ago and am on newer laptop (Win 7). Touch Pad is too sensitive (Dell). Blows away replys, etc.
DeleteNSPH is a long term hold for me and my eldest granddaughter. We were up 25% recently , now 19%. Not trading on this or anything lately. It's not often that one will get a news alert on any micro cap.
awesome illini. i agree that NSPH is a long term winner.
Delete"Personally, I don't think the market gives a ---- what the Fed says/does tomorrow> it rallies regardless. This is a market looking for an excuse to rally."
ReplyDeleteThat may be true about S&P, but not about gold miners. If the Fed does not announce any new QE tomorrow, then I may take some profits in AUMN/PNPFF. If, however, the Fed *does* announce QE3 and AUMN will still be below $7, then I'll buy more call options on it.
BB, you said:
ReplyDelete"The hard thing these days is they often get bid up too high too quickly that you can't make money on them. Look at MSFT which came public with a market cap of around $750 million and now is $250 billion versus Facebook which came public at around $70 billion and already one of the top 10 market cap companies in the U.S."
I agree that more people are involved and do the research these days but there are plenty of IPOs that start off weak and explode over time. The majority of them aren't in the tech sector which people will always be enamored with for whatever reason.
Yeah, tech sector is not the place to look for these types of companies as too many analysts and too much coverage. For the last number of years, up until a couple of years ago, junior resource companies was a great place to look. Not sure what would be good area now - perhaps biotech, but that always seems so binary to me and too risky.
DeletePicked up some NSPH at $3.2 this morning. Based on Stochastics and MACD it looks like this is a decent spot to go long. Also 50 DMA is just below and OBV is confirming the uptrend.
ReplyDeleteSQNM - Back yo $4, something going on with this one?
ReplyDeleteClosed INTC @ 23.14 with no damage. Next time I'll wait for the expected analysts downgrades to kick in (usually well after any sell off, of course) before buying. It's amazing how analysts love to kick a stock when it's down- freaking mob behavior.
ReplyDeleteListening to analysts pileon to beaten down stocks has made me miss so many opportunities - COST at $28, DIS at $29, etc. I could go on, but now I just ignore them.
DeleteThis is a good chart as to why the rally should continue:
ReplyDeletehttp://bespokeinvest.squarespace.com/thinkbig/2012/9/13/investors-turn-slightly-more-bullish.html
Hard to see that the market is getting close to a top based on investor over-enthusiasm, so unless we get a strong fundamental reason for stocks to go down, we should continue higher as valuations are still cheap and money is easy.
NSPH - Does this one look like a bull flag to you?
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=NSPH&p=W&b=5&g=0&id=p90507343409
DeleteLooks like it on a weekly. Look at OBV...looks like it's gearing up for another big move up....just in time to turn down and surprise us all.
"just in time to turn down and surprise us all."
DeleteLOL, yeah, I'm painfully aware of how this game is played, which is why I plan on adding gradually in the event of pullbacks as a strategy for increasing my position.
BOIL - Out at $45.50
ReplyDeleteNSPH - In at $3.23
ReplyDeleteWDC - Weren't we trying to buy this around $30 ?!?
ReplyDeleteGMO - Well..........
ReplyDeletePlatinum production stopped at IMPLATS, due to labor strikes.
Adding YRCW at $6.94 to $7.
ReplyDeleteWith my buying over the past few days I'm officially all in on the long side, which is probably dumb as hell. I am holding YRCW, NSPH, DMND.
ReplyDeleteDDMG has become DDMGQ. Now that is one example of buying panic that went wrong.
ReplyDeleteDMND - Had been coming to me, then BOOM! Will we see a full $1 swing for this one today?!?!?
ReplyDeleteCrazy __it! ;)
Bears thrown under the bus yet again, this movie just keeps getting better...
ReplyDeleteTVIX - Down 10%, LOL!
ReplyDelete$USD - Suddenly the dollars I worked hard for and have been saving all my life take a huge haircut!?!?!?
ReplyDeleteWhat's that? Fed announced QE3 while I was sleeping??? I thought they always make statements at 11:15 pacific time...
ReplyDeleteOh well, missed a good entry point into GDXJ for my friend, whom I asked to add some more money to his account prior to the Fed statement, so as to snatch some bargains in case QE3 is announced.
Still, with GDXJ trading basically at its December low, I still think that the current price is a bargain. So I just bought in my friend's account 1000 shares at $23.94, with the intention of holding that for a year and then collecting a long-term capital gain.
As for myself, I don't see anything absurdly cheap anymore, as I did in May. Of course, you may ask why I am not buying GDXJ for myself if I think it will be much higher a year from now. The answer is simple -- I have already loaded up with AUMN and PNPFF on margin, and right now it is probably wise for me to start thinking in the direction of gradually taking profits on strength, raising cash, paying out the margin debt, paying out the credit card debts, and preparing to make a downpayment on a house. Hence, I am not buying anything today...
You've done a great job of removing your tits from being caught in the ringer!
DeleteMy sell limit order for 10 contracts of October $7.50 AUMN calls has just been hit at $0.50. You may want to ask why I am selling call options in the face of QE3? Well, this action will not be optimal if AUMN rises above $8 by October OpEx. In that case, however, I'll be sitting on HUGE profits on all the January and April $2.50/$5.00 calls I purchased when AUMN was under $5, so I'll be OK. :) In effect, I am appeasing market gods by sacrificing a few $7.50 calls, so that they might give me a profit on all my other calls and shares. :)
ReplyDeleteSilver - $34.48 is the magic long term price, now above it... Wonder if she can hold this price this time?
ReplyDeleteSo, we are getting the ramp Jeff Saut has been calling for and have reached the bottom of his target of 1450 - 1477. He's saying the next day or two will be the top for this run, a 4-6 week pullback and then rally to new highs into year-end.
ReplyDeleteLet's see what the next few days brings. I think the QE announced was larger than the market expected. It was more than I thought they would do for sure.
Is today a breakout for a larger move upwards or a blowoff top?
I dunno, but I wanna short at some point so as to play the other side of the coin for once.
DeleteSDS is on my screen right now.
DeleteUNG - This game ain't rigged! Inaccurate data again, FINVIZ reports a low of $17.99, $2 from the real low.
ReplyDeletehttp://www.finviz.com/quote.ashx?t=ung&ty=c&ta=1&p=d
Can all of this really work out OK?
ReplyDeleteFor those who have mortgages or investments in PMs -- yes (the first category will pay out their mortgages in worthless dollars in 5 years, the second category will become even richer, since gold/silver will go up in percentage terms faster than dollar declines). For poor folks life will become much harder, since all prices will rise faster than their salaries...
DeleteWell, I have 1/2 of it right!
DeleteI guess Bernanke doesn't have a high confidence that Congress will avert the fiscal cliff effect?
DeleteAnyway, I guess time will tell. We get this run up to some level(guess your best) then back down into December?
The poor folks won't be able to consume in previously established quantity due to their salary cut in the form of a weaker currency, thus commodities prices that must be higher due to higher production costs demand destruction factor is increased.
DeleteThus no net result aside from possibly rescuing all those bad bets HB%B made on their MBS's, the private losses are socialized.
Too bad so many decided to sell their PM's while knowing full well which way things were headed, I can no longer place my trust PM's as a mechanism for preserving wealth any more than I can trust the FED.
Had to share this. This guy is funny...
ReplyDeleteDowntown Josh Brown @ReformedBroker
I like my QE like I like my women - unsterilized and open-ended.
Everyone loves their artificially fertile Myrtle!
DeleteDowntown Josh Brown @ReformedBroker
DeleteThe New Rules http://dlvr.it/28XTJx
http://www.thereformedbroker.com/2012/09/13/the-new-rules/?utm_source=dlvr.it&utm_medium=twitter
So David, you'll be happy to know that I am joining you back into the mining space.
ReplyDeleteDecided to play it broader by going for a mining driller as opposed to an actually commodity owner to give me a little less metal-specific exposure. All of the mining services companies are down a lot from recent highs (50% average) and at 52 week lows, so the market is out of favour and has high leverage to the metals market. I think that with today's QE news, metal prices aren't going to be falling dramatically any time soon, so the junior miners should be able to continue to get financing and keep drilling.
The one I decided to buy is Cabo Drilling (CBEEF). Assuming metals don't crash or funding for small miners doesn't completely disappear, it should do well. It is trading at 25% of book value, P/E of 2, so very cheap. It grew during the initial mining boom in 2004 and 2005, but took on too much debt and got into troubles when things turned down. They've since focused on paying down their debt and now have a pretty reasonable balance sheet and are profitable.
I'd say the knock against them is they are mainly a North American company and North America is very competitive and margins tough, but they have done a pretty good job of expanding into South America where margins are much better.
The other way of valuing drillers is to look at their Enterprise Value / Drilling Rig and their valuation is about $90K per rig compared to $1,200 per rig for market leader Major Drilling. Some of Cabo's rigs are older, so there should be some discrepancy, but this is way out of line.
Stock is $0.08. I expect them to be profitable this quarter and could get a good move out of the stock in the short term. These drillers are not buy and hold type stocks, but can really move when times are good.
Welcome to the club, BB! At the stock price of $0.08, you might quadruple your money much faster than I will do with AUMN. :)
DeleteIt's dumb, but you're right. Low priced stocks can move much faster. One very successful investor I know won't pay over $10 per stock. Seems to exclude a lot of stocks, but he does very well.
DeleteZSL - Looking oversold......
ReplyDeleteEZU closed @ 31.3x
ReplyDeleteFXI closed @ 34.2x
CAF closed @ 19.1x
TBT closed @ 16.2x
Plan to exit ICHKX and VEURX at market close.
Historically, a 4-5% gain in the global markets over a period of 5 trading days is unlikely to continue much longer. Of course, these are not normal times- Europe, China and the US have all announced global stimulus measures in the past week. But once a decent return is achieved, continuing to play the game can backfire!
Bernanke structured ‘QE3’ with no dollar ceiling and no time limit. If it’s a poker game, then he went all-in. It will be interesting to see where this all leads!
So, are you back to flat then or still holding something?
DeleteFlat.
DeleteCongratulations, David!
ReplyDeleteYou already know what I plan to say next: Get the ---- out now! Buy back in later! Sleep at night!
HEK - This turd's unsinkable...
ReplyDeleteUh, I meant beach ball.
DeleteThat's the pattern I'm seeing across the board in beaten down stocks. I don't have a large position in it but DMND is going to make an exact same move. Since I can't time when it will happen I'd rather just own some. I think a 70%+ move in two weeks is possible when it moves.
DeleteIt's also one of the reasons I own YRCW. Getting a $5 Billion company in the midst of a turnaround for $50 Million is what I call upside potential.
Ha, no doubt Ben knows things we don't, aside from his past antics of having popped the real estate bubble.
ReplyDeleteHe's on thinner ice now I'd say, and perhaps a little less popular amongst emerging country governments.
"You already know what I plan to say next: Get the ---- out now! Buy back in later! Sleep at night!"
ReplyDelete2nd_ave, if I get "the ---- out now", then I DEFINITELY won't be able to sleep well at night, imagining how AUMN gaps up 20% a few days in a row (like it did after QE2 was announced) and I get totally left behind.
2nd_ave -- I am 100% sure that AUMN is going to be MUCH higher 1 year from now, both due to their own production growth and to gold/silver soaring much higher. So why should I get "the ---- out now"?
Well, I can't argue with your recent performance. Keep in mind it's possible to duplicate the kinds of returns you're hoping for by trading around the position.
DeleteCheck out the drop in Portugal spreads over the past year:
ReplyDeletehttp://www.bloomberg.com/quote/.PORGER10:IND/chart
That's what we like to see to keep the markets going up.
DeleteIt is starting to look like the unexplainable drop in PM miners between May 2011 and May 2012 to a 30-year low valuation, while I was heavily invested in them, was the best thing that could have happened to my portfolio, as it motivated me to borrow money from all sources and double my holding of AUMN, at the average price of around $5. Now I have 36K shares, and when AUMN reaches its previous high of $28 (which will most likely happen within a year from now), my AUMN position alone will be worth ONE MILLION BUCKS. Assuming, of course, that I don't chicken out and sell a large part of it along the way. :)
ReplyDeleteThis is the TOG, impossible to know if this is the real McCoy or another false start but the FED's doing their best to make it work for ya! The words I heard again today loud and clear came from Ben's mouth, he said the progress wasn't fast enough, concerning employment. This is probably code for tax receipts aren't improving fast enough!
DeleteMajor Drilling, the leader in the mining drilling space turned out to be one of the top 10 TSX stocks up 5.5% today. Like to see that as usually the big guys move first, then the small ones, like Cabo Drilling move more. And at 25% of book and 2 P/E, easy to see a lot of upside.
ReplyDelete