Tuesday, January 7, 2014
1/7/14 Old Man
2014 is unfolding in characteristically inscrutable fashion.
(a) EEM attempted to break >40, only to meet a wave of supply. Now bidding 39.88.
(b) EWZ (Brazil) gapped to open +1.7% (no idea why), and now trading in the red. I really don't get this one- I had to squint hard to confirm it was bidding 43.67 premarket + at the open (it was).
(c) FXI (China) opened in the red, now flat.
(d) EPI (India) opened red, still red.
(e) Miners sold off hard at the open, and trying hard to climb back.
(f) Bonds trading unevenly, on very low volume.
So we’re back to a 2013 pattern, with the DJIA up >100 points, at the expense of everything else. HDGE is down about -0.6% at 12.80. I have no ‘take’ on this market right now, nor any ego invested in being ‘right.’ Just watching the dice rolls with a slight bias toward ‘Don’t Pass.’
Reading about plays like PLUG has me second-guessing my ultra-conservative strategies. Kind of like watching the crowd hitting the Horn bet multiple times on successive rolls. That's when I need to cover my chips and take a stroll.
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Nice play on DATE, Brad. Nice play on PLUG by your homie, tof.
ReplyDeleteBB's comment reference to letting positions sit is apropos. I remember when EPI opened premarket at 13 last summer. 13! I did a double take, looked around for reasons (there weren't any), said wtf and bid. Someone hit the bid immediately. No way! I bid again. Someone hit again! Now I'm worried. So I wait for the regular session, and it's still bidding around that price.
I (smugly) closed for puny gains. That's the only word that fits- maybe 6-8% gains. The ----er went on to hit 16.50 less than a month later. And we're talking about an India ETF! Is Livermore right or what?
I still can't believe PLUG. He went from a millionaire to a $10+ millionaire in 6 months on that bet. Incredible
DeleteDid he put the bulk of his portfolio into this one stock or was it a small position for him?
DeleteAlso, I'd be curious to know how you do with all of your in and out trading that you do on stocks (like BALT) as opposed to just buy and hold for a few months. My theory is if you do enough fundamental work to put a million dollars into a stock, you don't want to trade around it as the bigger risk is being out when something good happens.
Or, as Jessie Livermore more appropriately said regarding excessive trading:
Delete1. “Money is made by sitting, not trading.”
2. “It takes time to make money.”
3. “It was never my thinking that made the big money for me, it always was sitting.”
4. “Nobody can catch all the fluctuations.”
5. “The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”
6. “Buy right, sit tight.”
7. “Men who can both be right and sit tight are uncommon.”
8. “Don’t give me timing, give me time.”
and finally, the most important thing:
9. “There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.”
Yeah, DATE was a good one, but only a small position, unfortunately..
DeleteGreat Livermore quotes. No doubt the big money is made sitting tight. The key is to have conviction and wait (especially in a bull market!). I have a position in ING and I have conviction there as well and I have been holding for a couple of years now and it is working out well although I was underwater for a long time on it also. By the way, I think they pay back the Dutch government by the end of 2014 after which they can reinitiate dividends, which I think will give a further boost to the stock.
The TZOO ship is coming in fellas. Hotel booking platform is launching this year.
ReplyDeletehttp://business.financialpost.com/2014/01/03/david-rosenberg-u-s-market-high-but-theres-still-room/
ReplyDeleteRosenburg has been bullish for the better part of a year I'd say now. He was wrong about the initial bounce out of 2009 being fake, but got to give him credit for saying "hey I was wrong, it's time to go the other way".
DeleteYou can have more faith in guys like that than permabears (Hussman) or permabulls (many of these).
Didn't get ONP today. Put in the top bid at the time at $2.70, but had to go out for the day and it never got filled.
ReplyDeleteWhoa. Exactly 40 years from January '74. Quite possibly the nadir of my life.
ReplyDeleteWhereas May through September '74 was one of the best periods of my life.
DeleteMake that May '74 through February '75.
DeleteI was fired up the winter (Jan-May) semester of 1975 @ UM. Among other things, I recall acing an essay exam by memorizing my responses to 5 of the 8 questions we were told to prepare for-> 4 of them would appear on the actual exam. I remember pacing around my Dad's study listening to classic rock while mentally rehearsing paragraphs at a time. That's the kind of 'feat' that seems insurmountable when you're down, but effortless when you're high.
DeleteThat would have been a fun time to be trading, I'm sure. As long as you were smart enough to get long and stay long!
DeleteWhich would have been tough to do after the long bear which had just ended.
DeleteThis is right in line with my thinking for 2014 being a good year:
ReplyDeletehttp://www.nytimes.com/2014/01/04/business/2014-is-looking-a-lot-like-2013.html?_r=0
I think a lot of people are overthinking what will happen this. It could be as simple as more of the same as 2013, but not quite as good.
I don't disagree. I'm just hoping for at least one decent entry point. Like someone else we all know, I'm a pullback guy. I only buy on pullbacks or retracements.
Delete2nd,
DeleteHow did you trade the late 1990's market? It was another upward trending market with few pullbacks like we are seeing the last while.
Do you remember I shorted DELL? That was based on a Herb Greenberg interview with Fleck. ----! I had a few winners, like buying AMAT on the drop in '98 or buying and selling PlanetRx before it tanked. There's no way I bought and held. How was I to know we were on our way to the bull market to end all bull markets?
DeleteSpeaking of which. How do I know we're not on our way right now to the bull market to end all bull markets? I don't know. We don't know. No one knows.
So, am I accurate in thinking your approach tends to outperform in choppy markets, but underperforms in trending markets?
Delete"Also, I'd be curious to know how you do with all of your in and out trading that you do on stocks (like BALT) as opposed to just buy and hold for a few months. My theory is if you do enough fundamental work to put a million dollars into a stock, you don't want to trade around it as the bigger risk is being out when something good happens."
ReplyDeleteBB - I can't speak for the guy I know that put his money into PLUG.
As for me...I typically hold a max of 4 or 5 stocks at a time. If I have enough conviction in a stock I am willing to put the majority or even all of my money in it and hold it. For whatever reason, I am usually able to catch a stock fairly shortly before it moves (if it moves against me I'll bail if it hits a mental pain threshold) which makes my holding periods fairly short. I guess I've held some of my bigger winners over the past 2 years about 2 to 5 months.
I'm constantly assessing the valuation vs my original projections and also assessing my conviction level as well as how easy it is to understand the business model and the path to profits. I don't have an exact formula it's just a matter of almost obsessing over this (which is also part of why I only invest in a handful of companies at most because I research everything as much as possible). To me if the potential upside is still high enough vs others I'm looking at then I'll continue holding. Otherwise I have no problem bailing even if I think it has more upside room because it may not have enough in my opinion to offset the added risk after it moves up. BALT is a good example of this. My cost basis is $4.85 I believe. Typically a 35% move in 2.5 months (313% annualized) is more than enough for me and I would bail. However, I think there's at least a small chance it can get up to $30 within 18 months and I can't find anything with that kind of upside with as easy of a business model to understand. So I'm still holding. But I won't marry myself to any stock because of the volatility / seasonality of each company.
I've looked back at some of the biggest longer term winners I was able to find over the past 10 years and in almost every single case I've been able to outperform them with my method so it works for me. The downside is I have to consistently find new winners. But I like doing that...and its also easy to forget that a lot of these end up being dogs.
by the way when I was talking about the day trading on BALT it was actually just 5% of my total position and it was on margin which if I do anything on margin it's very small and I close it out quickly. I still have a very large position that I've been holding since October.
DeleteGood to hear your approach works so well for you - it's important to review your trades and actual results - too many guys just go by feel on their success, but it's amazing how your trades actually did when you look at the hard numbers.
DeleteI guess another advantage of focussing on a few stocks is you really get to understand their trading patterns and know when to get in and out.
yeah I prefer having only a handful for that reason. I feel like I do understand a business much better that way. plus, when i have big positions i find that i remember it much better and am able to use that knowledge for future investments....especially when it comes to trading patterns and entry / exit positions. lately i've been printing out charts and adding my own personal notes on things that i've noticed to use for future reference. there's a lot of shit that goes into this and it's hard to keep track of all of them.
Deletespeaking of which, i still don't think there's anything out there that offers a good enough platform for tracking your own personal research / notes. someone has to come up with a solution...
BB - every once in a while I think about how nice it would be to go with your style of investing...it's fairly similar in one big aspect: trying to find companies with value greater than the current price. i definitely respect the fact that it's less maintenance after you find your investments and allows you to just check in from time to time.
Delete2nd - that's cool stuff man. crazy how quickly time passes huh?
ReplyDeleteDudes - CSIQ. Look at this thing!
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=CSIQ&p=W&b=5&g=0&id=p05792179984
Nice! :) I guess solar is here to stay, considering the scientific evidence.
DeleteDamn! Bill MIller:
ReplyDelete" Mr. Miller, who runs the Legg Mason Opportunity Trust, returns to this column for the third consecutive year. He was also accurate in his forecast for 2013, and as a mutual fund manager, he put his money behind his forecast: His fund rose a remarkable 67 percent in 2013 on the heels of a 40 percent gain in 2012, helping him regain his sterling reputation for stock-picking, which was briefly tarnished by the financial crisis. (Before 2008, Mr. Miller’s fund outperformed the S.&P. 500 for a record 15 consecutive years.) "
That's not easy to do with that many assets under mgmt. He's back!
TOF- Can you do a quick check for TZOOs competitor's multiple? There's a donut in it for you.
ReplyDeleteTZOO does look like it's ready to move on up.
DeleteSpeaking of solar and energy in general, CREE is rising.
ReplyDeleteMark:
ReplyDeleteSYMBOL Revenues Gross Margin Operating Margin
TZOO 158.00 0.89 0.16
PCLN 6,443.00 0.83 0.35
EXPE 4,594.00 0.78 0.05
TRIP 901.00 0.98 0.35
OWW 839.00 0.81 (Can't figure this one out)
SYMBOL P/FCF (TTM)
DeleteTZOO 12.67
PCLN 27.55
EXPE 9.37
TRIP 60.30
OWW 12.64
SYMBOL P/S
DeleteTZOO 4.80
PCLN 9.28
EXPE 2.03
TRIP 13.39
OWW 0.90
Here are the most trafficked sites:
Deletehttp://www.internetretailer.com/2013/09/10/expedia-priceline-southwest-most-visited-travel-mobile-sites
Here is a look at valuation in terms of traffic coming to each site:
SYMBOL P / Monthly Visitors
TZOO 131.54
PCLN 7,974.67
EXPE 763.11
TRIP 783.12
OWW 189.63
Looks like the market really rewards the companies with good operating margins. TZOO had its highest operating margins in 2010 as it was rolling out its local deals (a la Groupon style) and not surprisingly the stock ran to $100. Operating margins reached 21% then. I still think there's a potential for a buyout by one of the larger players looking to grab their traffic. If not then you have to make the assumption that the hotel booking platform ramps up revenues. This is a momo stock and if this does happen then $100+ is definitely possible again. The argument for this happening is that they have been diverting traffic to their site and mobile site to their partners rather than keeping people on their own platform. I know when I shop and get diverted to another site I most likely won't continue with my purchase. I think that's human nature. So I think there's a good chance they capture some of those sales by launching this platform. Any evidence of growth will spark the stock.
From the last conf call:
Delete"Turning to slide 20, I’d like to review the progress of our hotel booking platform. We are building the booking platform to make it easier for subscribers to search when hotel deals are available on web and on mobile and to streamline that booking experience.
Today, as I mentioned, I have to go to thousands of websites to make the booking and in many cases that doesn’t work on mobile. If you look at this picture here, you can see for this particular hotel, it’s not possible to make a booking on a mobile phone, you would have to do it on web or you would have to make a telephone call.
The new platform will also provide hotels with a more flexible approach to access Travelzoo -- Travelzoo’s audience. We are nearing completion of the hardcore development and integration work with our existing systems and are currently expecting a beta launch in Q1.
I’ve seen the product and I’m very excited about it. We can actually make bookings internally today if we want to. We take the time necessary to build a high quality product for consumers’ that fits within our existing portfolio and meets our high quality brand tenants."
TOF,
ReplyDeletesaw a smart investor on TV a few years ago and he basically said:
Try trading with 10% of your money and see how you make out. Almost all people will lose money as the market makes this way harder than it looks, but if you are good at it, great, be a trader and you can do very, very well.
For everyone else, the best way to make money is to buy cheap stocks using a value approach and just hold them till they get close to fair value and then sell. Made sense to me and I like it.
But people do say that you either get value investing or you don't, so if you can't trade and don't get value oriented investing, I guess the best thing is just dollar cost average into an index ETF and try and make more money on your real job.
Yeah I think for the average person indexing is the best way. I've tried to explain how I value some investments I'm in to family/friends and I see their eyes gloss over.
DeleteThere are some good financial advisors out there - my dad has one from Merrill Lynch and I've reviewed what he has been doing and he actually has done a good job of matching his investments to his needs and rotating through industries as the market cycles have changed. $300 a trade, but worth it for him and he needs the service.
DeleteOn the other hand, my brother has a mutual fund guy (who is also his biggest customer), but he is mainly interested in generating commissions and is full of bad advice - eg. still buying bond funds in 2013, putting his kid's education fund into risky investments the year before they start university, convincing him not to cash out of gold in the $1,800's. But the worst is how he constantly rotates him through funds to increase his commissions.
Brad, I own ING as well.
ReplyDeleteI think it is set up well for the next few years with the payback of the government and dividend reinstatement as you mentioned, but also the spinoff of the insurance division will help simplify the company in investors eyes and probably give a higher valuation to both sides.
PLUG up another 10% pre-market - just another million for your friend!
ReplyDeleteENPH - Wow, up 7% yesterday!
ReplyDeleteAverage hedge fund up 7.4% last year - maybe big investors give up on hedge funds and go more long only which helps the market?
ReplyDeletehttp://www.businessweek.com/news/2014-01-07/hedge-funds-rise-7-dot-4-percent-in-2013-to-trail-s-and-p-500-for-fifth-year
Hard to say, I thought big investors with access to insider insight and vast research data were up huge.....
DeleteMCP- Off @ 5.82.
ReplyDeleteBut.. What about gold and silver???????
ReplyDeleteIGN - Classic breakout huh?
ReplyDeleteNVDA - Broke out to upside
ReplyDeleteBALT - They sure rip this one around.
ReplyDeleteIf you're a bottom fisher, then doesn't that mean you buy deep dips like THD/IDX?
ReplyDeletePLUG - I don't get it, obviously.
ReplyDeleteCPST - Bang!
ReplyDeleteFizzzzzzz.......
DeleteBALT - Picked up a partial order at $6.55
ReplyDeleteIt was as cold here last night as the North Pole was.
ReplyDeleteTSX Venture Exchange on track for 11th straight up day in a row. Junior miners seem to be leading.
ReplyDeleteMaybe the start of something or just another bounce in the downtrend.
Must be in anticipation of some kind of event, wonder what the outcome might be?
DeleteEXTR - Once again testing resistance
ReplyDeleteTZOO news. Can anyone figure it out? Not sure what they are referring to in 'search'...is that everything?
ReplyDeleteI guess the mobile search isn't working, can't monetize it?
Delete"A key component of Mr. Garcia’s role will be to monetize search on the mobile platform, which currently lags behind the results seen from desktop."
They should name it SouperSearch.
Deletewhat % of revs are from search? I know it used to be small
DeleteTOF- They said it was 'business search' 25% reduction lost to mobile of course
DeleteCXO - Will a big buyer step in again tomorrow at the open?
ReplyDelete(a) EEM down -0.6%. Opened a position @ 39.67. Will reopen RYWVX at the close.
Delete(b) GDX down >-1%. Opened a position @ 21.72. Will open RYPMX at the close.
(c) JCP management is ‘pleased with the holiday season,’ and investors sell the stock off -8.5%. Reopening a position @ 7.41.
(d) Adding EWZ (Brazil) @ 42.43.
Buying at/near the close.
ReplyDelete(a) EEM down -0.6%. Opened a position @ 39.67. Will reopen RYWVX at the close.
(b) GDX down >-1%. Opened a position @ 21.72. Will open RYPMX at the close.
(c) JCP management is ‘pleased with the holiday season,’ and investors sell the stock off -8.5%. Reopening a position @ 7.41.
Ummmm ZGNX?
ReplyDeleteToo much insider buying!
Deletehttp://www.popmatters.com/review/177524-neil-young-live-at-the-cellar-door/
ReplyDeleteWhat a fantastic album. A must buy for you Neil Young fans.
Dude- You just handed me the only thing I could have surprised my younger brother with for next Christmas. (He's the HK-based M&A attorney who pretty much has everything he wants, and it's always difficult to find the right gift.)
DeleteBSBR - Our volume has been increasing a bit lately.
ReplyDeleteNSPH- http://finance.yahoo.com/news/enphase-energy-nexia-home-intelligence-175000370.html
ReplyDeleteThese type of deal's are what will drive this going forward.
IR has had a nice increase since the spinoff, wonder if they might want to but ENPH?
Deletebuy, not but
DeleteNQ - Turned back down, are we still interested?
ReplyDeleteI can't do it bro....just can't.
DeleteEUO looks to be lifting.
ReplyDeleteLIVE - How about this one?
ReplyDeleteRobot is long from 1/7/14, @ 1837
ReplyDeleteYRCW down 25% premarket on news the union may vote down the contract - what a wild stock to trade!
ReplyDeleteBrad, ING announced the end of pension fund obligations with a big $1.6B payment, but the stock up about the same as the market, so must have been priced in.
YRCW - Looks like the gap up was closed, so it's gap buyer's day I guess.
DeleteJCP off earlier premarket @ 7.66.
ReplyDeleteNice trade, 2nd ! :)
DeleteWhat I really mean is, you're astute. I wasn't even aware JCP had been smashed.
DeleteBDI - This index has been dropping this year, makes me wonder when/if the shippers take a nap.
ReplyDeleteThanks BB. Saw that news, looks like long-term good news, but short-term not so good. As you say, priced in.
ReplyDeleteBSBR - This chart looks like bear food to me, so it's probably going to fly..... or crater.
ReplyDeletePAL - Our old buddy just isn't doing well at all, is he?
BALT - Off @ $6.70, trying to teach myself to take gains.
ReplyDeleteCXO - Again, some morning buyers showed up. Will they get creamed again this time?
ReplyDeleteI'm thinking the downside slope could be an extended one if oil producers shoot themselves in the foot by producing as much below-cost oil as they possibly can.
DeleteGroundhog day, so far.
DeleteEXTR/CPST - Still lookin' good?
ReplyDeleteBSBR - Looks like tweezer bottom on the 5 minute chart, probably have seen the low of day.
ReplyDeleteNope, that didn't last long.
DeleteBMY - Here's a large cap that never performs, as an example.
ReplyDeleteANGO - This one never seems to crash 50% overnight, just keeps climbing, unlike one such as NQ
ReplyDeleteBALT - Yesterday's move was orchestrated for the purpose of sucking in as many new longs as possible (they even continued the move into this morning) in order to shake them all down today.
ReplyDeletePLUG - Has the hydrogen escaped, someone pulled the stopper????????
ReplyDeleteChris Christie under fire for stopping traffic so he could get donuts
ReplyDeleteYeah, and I thought he was a good guy. Should'a known, but the only confirming clue I had was his lips were flapping.
DeleteKudos to whoever figured it all out, bet it wasn't the NSA? The blockade must've been obvious, not sure how long it was erected, maybe someone has a wee bit too much Viagra in their regular diet. Politicians are scumbags man, with more tricks up their sleeve than any used car salesman could ever devise.
DeleteCALM - Did you catch that move to $60, it didn't last long, for some reason.
ReplyDeleteCP, I still think BSBR is a good long term one, although it would have been smarter to sell it over $7.00 and buy back now, but unless the Brazil economy tanks, I think we see around a double in a couple of years.
ReplyDeleteOkay, I'm trying to figure out where to add. If only it would take another leg down then I'd wait for a bounce to peter out and try there.
DeleteSold a couple of my long term holdings - WMT and UL today - they had just gotten too small in my portfolio as other stuff had gone up a lot more and I decided to either add or sell and didn't want to add to safe stocks in the current environment, so just sold. Nothing wrong with them, but think other things can do better.
ReplyDeleteBALT - Reloaded some at $6.30
ReplyDeleteWell played sir
DeleteFRO - Somebody must be expecting a gush of oil arriving soon? CXO and the oilers overproducing, apparently?
ReplyDeleteShouldn't we be short oil? Kinda missed the boat, probably.
Looking forward to my $0.25 gasoline, will definitely load up in preparation for summer fun.
LIVE - This one has a localized geographic feature the others apparently don't, seems like an advantage. One of those "Why didn't I think of that" phenomenon?
ReplyDeleteAn Aside:
Today's Betamax movie recommendation: "Buck and The Preacher" and Gunsmoke season 10, episode 11: "Chicken"
NVDA - Is this the knockout move?
ReplyDeleteRemember when AMD was trading mid $2 ?
DeletePM's - Looks like PM's might benefit if the market decides to take a swan dive.
ReplyDeletePXD- Look at the sweet 200EMA kiss and go.
ReplyDeleteIt sure is tempting, CXO as well. Okay so, this gush of oil is great for refiners that are running at capacity now, shipping product overseas, what about oil producers, are they shooting themselves in the foot producing a land-locked product, or is this stuff going to get sent directly to global markets fill the spread?
DeleteI think a percentage is always going to fill the spread until it's cheaper to keep it west.
DeleteI forget if MOG told us these would rally before they did, now it looks like they're getting sold. MOG may not have guessed Wall Street's perception or Wall Street is FOS and trying to fool us?
DeleteMCP- Man, did I really sell that @ 5.80ish the other day???
ReplyDeleteYep, you nailed the gap close bounce for sure, but what caused the gap-up in the first place, some kind of BS upgrade pump, or what?
DeleteNothing I saw which was why I sold it.
DeleteOkay now we get to see where the rubber meets the road. Is the pavement slick with ice?
ReplyDeleteBALT - Got an add @ $6.08, in case an excess of shares hits the wires going into close.
ReplyDeleteYRCW vote today. Traded to 12 AH's but I can't find it yet.
ReplyDeleteLooks like initially at least, it's rejected:
Deletehttp://teamster.org/news/2014/01/yrcw-teamsters-reject-extending-modifying-current-restructuring-agreement
I've heard of this guy, thought he was missing?
Delete"“Our members have sacrificed billions of dollars in wages and pension benefits over the past five years and yet the company has been unable to recover from the disastrous policies of the previous management,” said Jim Hoffa, Teamsters General President and Co-Chairman of TNFINC. "
TBZ - 12x volume??
ReplyDeleteEmerging markets and miners continue to pull back today. I generally will add to positions only on strength (rarely on weakness). So maintaining current holdings, and in ‘wait and see’ mode. JCP off earlier, and HDGE taken off @ 12.87 (opened a few days ago @ 12.90 as a ‘Don’t Pass’ play) for a minor loss.
ReplyDeleteTomorrow will be the monthly jobs report. Usually a market mover. I won't try to predict which way.
Not a good day for me.
DeleteHard to know from one instant to the next and perhaps a slim chance but, maybe we get a clue from Dr. Copper?
DeleteZGNX - Vermont governor says his state and neighboring states have rampant problems with pill-mill opiates due in large degree to legitimate pain medications having become unavailable through medical professionals.
ReplyDeleteYRCW- There you have it. Back below my last sale price a few months ago. Unreal.
ReplyDelete