I see your point, but as you said the purpose of owning stocks is to make money, and in order to make money effectively you need learn how to follow the big money. If those money managers/fund managers want to pump up FB stock (or any other stock), the stock will rise 30, 50, 100% regardless of having a PE of 50, 100 or 200. The stock market is rigged - it's an unfortunate truth. To be successful in the stock market fundamental alone is not enough, chart reading is very important - a picture is worth a thousand words.
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Stock market - look up above
- Thread starter Ultraman
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I see your point, but as you said the purpose of owning stocks is to make money, and in order to make money effectively you need learn how to follow the big money. If those money managers/fund managers want to pump up FB stock (or any other stock), the stock will rise 30, 50, 100% regardless of having a PE of 50, 100 or 200. The stock market is rigged - it's an unfortunate truth. To be successful in the stock market fundamental alone is not enough, chart reading is very important - a picture is worth a thousand words.
Ultraman - I was the big money. The firm I started at with a handfull of securities traders traded over 1% of all NYSE volume on several occasions (daily) during the 2008 financial crisis. Trading 100k-250k shares daily was average.
I know charts very well and use them for every single trade I make. In many ways charts are the most factual input in the decision making process. The charts, however, are for entry and exit points. Relying on them to decide what to trade will ruin you. You, nor anyone else, just "happened" upon FB because its chart met your parameters.
Another quick point if I may, but the "big" money is in extremely fierce competition with each other. Yes the profitability of various bank trading divisions is highly correlated, but they are all going after the same opportunity. The "big" money is engaged in a constant war among each other. The idea of following the big money is a misnomer (in my humble opinion) - it's going in all different directions. Every rally has trading floors of guys cheering because they were long and dead silent trading floors hemorrhaging losses from being short and covering at the top.
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I saw a Ted talk(I think it was Ted talk) about a theory of procrastination being a good thing(lame talk, but anyway).
One of his examples is a trading firm who found that when they moved their servers from a datacenter in Cali to NY(a few feet away from NYSE servers) they started losing money on every automated trade.
They then purposely slowed down their server(microseconds) and then started making good money again.
The theory was there's a 'war' with the first automated trades into the system, and if they simply avoided that 'war' they came out with more money.
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Any thoughts on the ECB meeting and Draghi's comments ?
I'll give an analysis later in the week but overall it was toothless.
Here is a breakdown on FB I think most FB investors are not aware of (my guess, <1%).
Many, many sources of market data are wrong about Facebook's valuation.
Yahoo Finance, for example, says that at today's trading price, ~$21, Facebook is valued at "$39 billion."
Google Finance says exactly the same thing.
And so do many other sources.
This is incorrect.
These sources appear to be using a share count for Facebook of about 1.9 billion. (1.9 billion X $21 = $39 billion)
Meanwhile, Wall Street analysts are all over the map. Some analysts are using share counts for Facebook that are under 2 billion. Others are using the same counts as Yahoo and Google: 2.1-2.2 billion. Still others are using the correct share count (per the company) of about 2.74 billion.
The disparity of share counts was making me crazy, so I double-checked with the company. Facebook confirmed that the correct share count is about 2.74 billion.
This means that, at ~$21 per share, Facebook is currently valued at $58 billion.
Why is there so much confusion about this?
Because Facebook has lots of "share-equivalents" outstanding that should be included in the "fully diluted" shares outstanding calculation, which is the correct metric to use when you're trying to determine the value the market is placing on the company.
Specifically:
In Facebook's most recent SEC filing, the company reported that it had 2.14 billion shares outstanding, including both Class A shares and Class B shares.
That is the "basic" number of shares outstanding, which shows the number of shares that are actually issued and outstanding at this moment.
In addition to these shares, however, Facebook has also promised to deliver an additional ~600 million shares that should be included in the fully-diluted share count.
These include:
•~400 million shares to be issued to employees in connection with Restricted Stock Units (RSUs),
•~150 million stock options, and
•23 million shares to be issued in the purchase of Instagram.
Add all those together, and you get the 2.74 billion.
Facebook explains this here, in a public FAQ:
As of June 30, 2012, we had approximately 2,141,600,000 shares of common stock (which includes both Class A and Class B common stock) outstanding and approximately 576,900,000 shares of common stock subject to outstanding equity awards. In addition, at June 30, 2012 we had approximately 23,000,000 shares of common stock issuable upon the closing of our proposed acquisition of Instagram.
In any event... with the stock at $21, Facebook is valued at about $58 billion.
Super Mario Draghi didn't live up to his promise to the world. If we get another weak job report tomorrow, I think it's time to short the market once again.
I'm a little nervous holding on to stocks too close to the debt ceiling debate which is only a few months out. Probably better to get out too soon than too late, but who knows...
Looks like both DJIA and S&P500 broke short term resistance today.
The market has momentum but I am thinning my bigger winners. I have a limit sell out on AAPL I will be hit on if the market opens up even modestly.
I will be in 50-60% cash when the market tops. I'm not far from that right now. The macro head wins are becoming over whelming. EPS estimates going forward are so out of alignment with historical averages I just can't be confident. This is putting aside Europe's collapse, record corporate profit margins (huge factor IMO), and the numerous signs the global economy is at least entering a strong recession as we speak.
The end of an era..
I'm officially out of AAPL. The (few) shares I sold today had an average cost of $92 and I got out on a quick pop this morning at $624.45.
Despite my seemingly 'bearish' stance I have stayed long every since the depths of the depression, but it's time for a final round of trimming positions. Excluding cash, my average portfolio yield is 4.5-5% after selling AAPL so I will hold on to most of it unless the market climbs significantly higher.
I think there is a .5 probability AAPL breaks through and hits the $650-$700 range, but one of the few cliches about finance I think sticks is..
bears make money
bulls make money
pigs get slaughtered
I think we are blessed to have a market this strong at this point in time and those that are seeing DJIA 15-18k (why else would you still be in the market if you didn't think this was happening in the next 5-10 years?) are not seeing what I'm seeing.
I'm officially out of AAPL. The (few) shares I sold today had an average cost of $92 and I got out on a quick pop this morning at $624.45.
Despite my seemingly 'bearish' stance I have stayed long every since the depths of the depression, but it's time for a final round of trimming positions. Excluding cash, my average portfolio yield is 4.5-5% after selling AAPL so I will hold on to most of it unless the market climbs significantly higher.
I think there is a .5 probability AAPL breaks through and hits the $650-$700 range, but one of the few cliches about finance I think sticks is..
bears make money
bulls make money
pigs get slaughtered
I think we are blessed to have a market this strong at this point in time and those that are seeing DJIA 15-18k (why else would you still be in the market if you didn't think this was happening in the next 5-10 years?) are not seeing what I'm seeing.
This is already public information (not that anyone cares) so I don't mind sharing it about my firm, but we have much higher cash allocations than normal among the client accounts under the ~2,000 advisers I help advise in some capacity.
I believe our 2Q figure is 17% higher than normal which is likely defined as a rolling 5 or 10 year average of 2Q's in the past. The reason I bring this up is it suggests the rally still has legs. It's quite rare for a significant downturn to initiate when firms are holding significantly above average cash positions.
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Congrats on your AAPL holding! I have a trailing stop on AAPL, I think it has about 20 - 30 points to the upside but that's optimistic. Taking profit is never the wrong thing to do.
I've also started trimming my portfolio since last week to raise some cash, will probably continue to do so if the market continues to go higher. However, like you said, I'm surprised the market can be this strong at this point in time, especially with what's going on in Europe and the fiscal cliff here in the U.S. This make me to think there still could be some upside, especially now the S&P 500 has closed above 1,400 (however, I don't like the way it closed today with that tail). Nasdaq 100 still looks very strong, I think some of the high tech got way oversold in the past couple months and they are seeing a strong rebound right now.
Good luck !
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Sahtt (and any other knowledgable posters for that matter!)... Any recommendation amongst strong dividend paying stocks to stash a little bit of money in right now?
Like most of you have been saying, I can see the trend continue at least for a while longer, but I feel like I missed the (latest) bulk as I was not in a financial position two years to get money in around or below the 10k level. Now I'm gun shy / overly cautious, but sitting on the sidelines is painful. :redface:
Like most of you have been saying, I can see the trend continue at least for a while longer, but I feel like I missed the (latest) bulk as I was not in a financial position two years to get money in around or below the 10k level. Now I'm gun shy / overly cautious, but sitting on the sidelines is painful. :redface:
Thanks Doc! Was a nice little run up on DLR! reits..hmmm. lol
Chado,
I know it's a bit of a pain but look through my posts in this thread. I think I even listed the majority of my bids in a detailed fashion for robr not too long ago.
Simply knowing a "good" stock can be dangerous. Without understanding the risks associated with a particular security, you are asking for trouble (and you'll get it eventually).
For instance, I tell you I like LINE at $35 and below because of XYZ (it's hedged well, I'm bullish on the sector, their dividend payout ratios are good, etc.). Will you have the confidence to buy more at $20 when you are suffering catastrophic losses, your wife thinks your insane, etc. or will you be throwing up at night for weeks due to stress before finally selling all of it at the absolute rock bottom? Without knowing the risks you'll be guessing, and your "enemies," while still working with incomplete information, will not be guessing.
Haha, thanks for the response sahtt. Believe me my knowledge is nowhere near the level of most in this thread, but I do understand the "dynamics" (in regards to stock tips lol) and all too well that the feelings of the rollercoaster known as the "market" get the best of most.. especially when unprepared. I've been there before.
Wish I had even half the knowledge guys like yourself have in regards to trading.. (amongst my current goals for improvement)
As you alluded to above I did not have the ability (financially) to do what is always necessary and hedge a few years back when I wanted to jump in, therefore I stayed disciplined and sat it out... and now the market is at peak levels not seen since it was inflated back in 07.
Was just looking for some starting points as I begin my research into some long plays.
I will go back and read through the thread and check out what you posted for others!
Might end up sitting it out through 2012/elections as well, at least until I am fully prepared and confident :smile:
Sahtt, do you think that someone like us little guys, never in the financial industry who don't have more than a few hours a week to devote to trading and research, who really know squat about how the market works, can be successful at trading? I don't mind putting my nose to the books and investing time into learning, but would it pay off? I hate looking at how much money there is to be made, but simply not knowing how to work the black box. Perhaps more with long term investments with decent dividends vs day trading?
In my experience, 60-90% of professionals (securities licensed, received professional training of some kind, thousands in software technology at their disposal (monthly), minimum $500k buying power, very lost cost trading platforms, etc.) and 98-99.99% of non-professionals fail, often miserably, at day trading or whatever you want to call it.
The ranges occur because of the different definitions of failing. If you trade full time and make $1k a month is that success or failure? $2k? Could be either depending on what you learn in the process. With a solid understanding of probability (also known as risk) how much money you make becomes irrelevant. Case in point - I know a trader who made 5 figures for 6 months in a row. Most people would say hell yeah that's successful. Wrong. He was taking massive risk and had a simple strategy that wouldn't last. He ended up leaving the firm $50k in the hole. We call it picking up pennies in front of the steam roller and it's a good analogy. This understanding is what separates real traders from people who buy and sell stocks and try to make money. Risk is everything.
Long term investing on the other hand is not all that difficult. People, however, tend to take the completely wrong approach and let their emotions control their decision making process instead of their minds.
90% of your thought process should be dedicated to managing risk. 10% on evaluating reward. Most people are the exact opposite. A subset of that which I've touched on several times is gaining a strong understanding of how a company is going to pay you for owning their stock. Most people say "well their stock will go up." Okay, and when are you going to sell it? All at once? What if it happens before a year is up, will you pay massive capital gains? What if it never gets to your price? Worse, what if it goes down? Down a lot? Most people have no answers to these questions.
Both as a trader and an investor, I know all these answers in excruciating detail on all my positions. I know exactly where I scale in and out and even have the limit sells waiting. I recommend dividends because they help answer most of those questions AND at least half of all stock market gains are from dividends. If a stock is truly "rock solid" and it goes down, the dividend payout as a % only increases. You load the boat and smile as your position declines while 'professionals' jump out of windows (literally) and the masses sell their retirement funds at the rock bottom.
The less you know, the more simple your strategy needs to be and with MORE focus on risk. Unfortunately, the opposite tends to occur; the tech crash is a perfect example.
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Thanks, brilliant as usual
Anyone have thoughts on the 15% dividend tax potentially tripling to 40%?
Apparently it's part of the 'fiscal cliff' if congress can't AGREE on a cuts in a few months.
Seems like shorting a dividend stock like KO or PG might be a good play?
$78.79 -> $70?
Apparently it's part of the 'fiscal cliff' if congress can't AGREE on a cuts in a few months.
Seems like shorting a dividend stock like KO or PG might be a good play?
$78.79 -> $70?
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Anyone have thoughts on the 15% dividend tax potentially tripling to 40%?
Apparently it's part of the 'fiscal cliff' if congress can't AGREE on a cuts in a few months.
Seems like shorting a dividend stock like KO or PG might be a good play?
$78.79 -> $70?
A better play (IMO) for future tax increases is to get long muni bonds. I prefer funds; NUV and NXP are conservative with good yield. For those unfamiliar, in states like TX with no state income tax an individual pays NO tax on muni bond interest.
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