Stock Picker Thread-2007

What, you take a single day's events to be meaningful? I though all you day traders died years ago. If you bought JPM a month ago, or three months ago, or six months ago, you would be down now.

Because it isn't affecting only people with subprime mortgages. There has been a host of financial misapplications in the last decade because of cheap money, and as much as people partied on the way up, they are going to pay for it on the multi-year road down.

 

It was you who advised me to "short", which is what day traders do. If anything, youre the day trader. not me.

Another thing is that I planned on purchasing JPM BECAUSE it came down since two months ago, or six months ago. 6 months ago, they were selling at around 13 times earnings, but despite its increase in earning and revenue, the stock price came down.

I was just mentioning what Warren Buffet did. THe exact same day you proposed to short those financial stocks, Warren Buffet went to purchase. And if you short, 3.5% gain in one day should alarm you, although 3.5% decrease in a day shouldnt set-off anyone who purchases stocks for long-term.

Now if you can get this kind of things correct 100% of the time, you could become a billionnaire, buy up bigsoccer, and ban me forever. But the truth is, nobody can tell for sure when the overall market will go up and down based on economic factors. Alan Greenspan said the U.S. market will take off couple weeks before the fall in the early 90s. George Soros got nearly wiped out buying up US and shorting japanese securities.

I believe the best thing for investors to do is to purchase safe, healthy stocks and forget about the DJIA or S&P indexes.

i have a friend in the real estate contracting business in los angeles, and all he said was "yeah the mortgage problem is bugging us a little bit. Good times to purchase foreclosures though." Its not as bad as media is making it out to be.

 

The equity markets have been responding to the debt markets over the last month. I'm waiting for another month, personally. With a SIV-lite blowing up over the past two days, this ride isn't over yet.

 

Structured Investment Vehicle - Lite
Essentially its a CP conduit that takes leveraged positions on assets, except that where a regular SIV (whose senior tranches are very highly rated) has leverage at reasonable levels a SIV-lite can have leverage up to 60.

 

Whats stunning to me is that most people don't realize that the subprime ride hasn't even started to get enjoyable from an equity market perspective.

The reason its been so volatile is that no one really knows what kind of exposure the majority of holders are facing.

All subprime loans are not made equal, and in the face of stagnating origination volumes, some of these servicers went nuts and took absolutley ridiculous stances on credit quality/LTV (loan to value) ratios to help origination volume at least maintain some semblance of the volume they were enjoying (and that investors came to expect) with rates low and refinancing booming.

The first shoe has dropped as some of the smaller players who were bullied into inserting buyback provisions into their pool sales to the agencies and other securitizers couldn't handle to volume of buybacks as their poor quality loans began to default.

The second shoe is for the financial institutions holding these loans on their books either as an investment or as returned via a buyback provision to mark these to market. When these adjustments are finally pushed through, you'll see markdowns of up to 90% on some subprime portfolios.

Really, people investing in major financial players are throwing darts at the board. A lot more reading needs to be done on SFAS 115's definition of impairment and then a lot more consideration needs to be considered upon the market's interpretation of that guidance and historically the stance of marking down HTM assets (not often enough). Generally firms wait until its crisis time to start disclosing what is actually on their books.

 

My BEST move so far this year has been an option on BIDU. +BDUAZ. Picked it up last Thursday at 11.70 and it was as high as 31.50 so far this AM.

I've just started adding options as well as stocks. I'm looking for companies that are big movers and have a lot of momentum. Then I look a few months out (I'm looking at January now) and a strike price about 20% above the current.

 

Made another move into the Chinese internet stocks yesterday by buying XFML. It has been kind of beaten up but by sheer luck, it was up 1.40 (almost 21%) today.

Sure it'll probably tank tomorrow, but today I am enjoying it!

Oh, and +BDUAZ was as high as 44.50 yesterday, although it fell back some today as BIDU lost 3.48 to 299.93. I'm out of the money by 7 cents now! The loss was more than offset by +APVAI (AAPL with a 140 strike for Jan delivery) going up.

 

well, we crossed 13,000 on Aug 15, and a full 1.5 months later, we're up nearly 7.5%. god i love margin.

United Tech (UTX) has been on a tear in the last year. I've been buying the industrials over the last year like crazy (see UnitedTech, P&G, Honeywell, 3M, GM, Textron). three of those hit record highs today alone.

 

BIDU 320.58 +35.77

+BDUAZ 52.40 +20.10!!

Life is good. (And yes, I know I'll pay for this tomorrow, but as I said before one has to enjoy days like today.)

 

Well, I paid for it today (at least a little bit!)
+bduaz 50.10 -2.40

 

I think I have completely lost my ability to use Google. Can someone tell me what the hours are for the pre-market and if it is nasdaq only? If I finally find it I will post it as well.

 

Thanks to all for the info. I've added call options on GOOG, AAPL, SIGM and SHLD to the BIDU. BIDU is up about 490%. A good run so far.

As for stocks, XFML has been doing pretty good (although not today!)

I also have my eye on energy stocks. Shell and Conoco-Phillips look like good choices, but they are near their 52-week highs and oil is $80/bbl, so I'm thinking to wait a while and just monitor the situation.

 

That's a great move in TTM. I've been tracking them but haven't bought in (yet!). Right now I have been picking up some cheap stocks in the financial sector. CFC looks ready to take another hit today, so I see a buying opportunity-but it won't really pay off for a while.

 

You're not kidding. A 58 point intra-day range. I don't think I've seen anything like it in a long time. GOOG and AAPL took hits today too.

I'm still up overall thought (although looking at the after hours trading is not very encouraging!).

 

Some up and down the last few days. Hoping for a smoother ride today. So far the pre-pre-market is looking good for the techs.

So are any of you trying to use any particular strategy for this period? Most of my stock is in the "buy-and-hold" category and I typically set a limit buy order for things I am interested in. This way I buy at low points relative to the 52-week price point. From a practical standpoint, this has meant that in the last couple of months I have picked up a lot of financial stocks at what appear to be bargain prices relative to their historical values. Most if not all have been beat up by the mortgage crunch and as long as they keep making their adjustments correctly I'll probably hang on to them. I have a little bit of TMA and I see that they have suspended the dividend. This was expected so I think the stock is probably already discounted for it.

The other thing I picked up lately is US Geothermal (UGTH), an alternative energy play. It is still inexpensive but well beyond the penny-stock regime. Good jump the last few session but once again I look at this as a long hold.

I still have most of my speculation in tech calls, although I am considering some puts to cover the short term downside potential of the financials.

Any comments on strategy would be welcome. I am very curious as to what others have used and how it worked out in good and bad markets.

 

My best day ever. Up 15.8% overall based on BIDU, GOOG and AAPL calls.

Life is good. At least until the market dumps on me tomorrow!