Well, since the annual Berkshire Hathaway Chairman's letter came out on Saturday, it's time for everybody and his brother to comment on Warren Buffett. I've been thinking about this post for a couple days, but what spurred me to do it was Paul Kedrosky's post here. Paul basically takes the "Buffett is a mess of contradictions" line and runs with it. With all due respect to Paul, I'm not sure that "mess of contradictions" is really true, but I do agree with the title-"The Half-told Story of Warren Buffett" because I think there is MUCH more to the Buffett story than is commonly realized, and more dimensions to the man than commonly admitted.
First, I think it's easy for most Buffett-ologists to slide into either obsequious sycophantism or thinly veiled envy. I'll try not to do either. Buffett is enormously talented but only human, after all. I believe what makes him so unusual is that he is a world class talent in three areas. First is in what he would call "capital allocation"-- he knows both the price and the value of everything, and when p is much less than v, he buys. Second is as a business leader and judge of people. These two areas overlap a little, but are largely different skillsets. It is unusual to have a CEO who is merely good in both areas, let alone world class. Third, most underappreciated and in my view most important is as a salesman. The dude can sell, and I say that with respect and admiration. As a twentysomething he was able to convince midwestern doctors and lawyers and such to place their hard earned money with him. They were of course richly rewarded. Much of the conventional wisdom about Buffett comes from what he has sold to us through his annual letters, his annual meeting q and a, and other public pronouncements. Has he sold us a false picture--absolutely not, just an incomplete one. Has he given the masses bad advice?--no, but maybe he hasn't always done as he says.
Buffett basically started as a hedge fund operator with hefty performance fees and everything. He got out of that game largely because he's running too much money now for the techniques he used then. But, again, that's what makes him singular--how many hedge fund operators wind up successfully managing a $100 billion conglomerate? It would be as if Michael Jordan made it to Cooperstown, instead of stopping in the minors.
I don't pretend to give a comprehensive review of Buffett. There are many on the web that can give a more thorough picture than I have. There are a number of books worth looking into. Personally, I am eager to look at the Altucher book. Above all, I have enormous respect and admiration for the man, and feel there is a lot to learn from watching him and listening to him.
If you haven't yet, check out my use of Buffett's own words in an attempt to value Berkshire Hathaway. Part I is here and the update is here.
Tuesday, March 08, 2005
Loser List for March 8, 2005
For entertainment and/or education only. I may be long, short or out of any of these stocks, and positions may change in a flash. . .
COMPQ is bumping at resistance at 2090
CREE still looks like a short with a stop at 23.5
FINL long with a stop about 21
GSOL long, stop 13?
OCR maybe a long, stop 35
ROV still looking like range contraction, might be a long, stop about 42
TKF a way to play change in the Middle East, long, stop about 19-20
HAL long above 43
CNR still looks like it might be a long above 1.75
SMH pretty good resistance at 35
How to use this list. And don't forget the disclaimer . . .
COMPQ is bumping at resistance at 2090
CREE still looks like a short with a stop at 23.5
FINL long with a stop about 21
GSOL long, stop 13?
OCR maybe a long, stop 35
ROV still looking like range contraction, might be a long, stop about 42
TKF a way to play change in the Middle East, long, stop about 19-20
HAL long above 43
CNR still looks like it might be a long above 1.75
SMH pretty good resistance at 35
How to use this list. And don't forget the disclaimer . . .
Monday, March 07, 2005
Loser List for March 7, 2005
For entertainment and/or education only. I may be long, short or out of any of these stocks, and positions may change in a flash. . .
ALGN if you want to bottom fish, try this one with a stop at 7.34
CREE Tom you were right about this one. I'm saying short, stop about 23.5
DESC long, stop about 3.8
FINL long, stop about 21.1
RICK probably not that good a long, stop 3.5, mostly it's an excuse to link to some table dances.
RMI might take a flyer, long, stop at 4.4
ROV range contraction stop about 42
TGA maybe a long, stop at 7
F if you want to short a breakdown, this is one, stop at 12.5
KKD nice move up. I'm gonna go WAY out on a limb, and say this one goes to 12-14 and then reverses--lots of volume at those levels--those bagholders will all dump it and be glad to be out if it makes it back to those levels
MRK has an "air pocket" between about 33 and 42, i.e. very little volume at those levels--if it gets above 33-34, it could go far, fast. Think about it.
CNR--I say think about at long, stop about 1.75
WILCF long stop at 6.9?
Pennies. Pure casino stuff. Remember to tip your waitresses.
MRKL may have put in a bottom at 0.42?
MZT breakout and pullback--only if it stays above 1.28
MUCL support at 0.39?
How to use this list. And don't forget the disclaimer . . .
ALGN if you want to bottom fish, try this one with a stop at 7.34
CREE Tom you were right about this one. I'm saying short, stop about 23.5
DESC long, stop about 3.8
FINL long, stop about 21.1
RICK probably not that good a long, stop 3.5, mostly it's an excuse to link to some table dances.
RMI might take a flyer, long, stop at 4.4
ROV range contraction stop about 42
TGA maybe a long, stop at 7
F if you want to short a breakdown, this is one, stop at 12.5
KKD nice move up. I'm gonna go WAY out on a limb, and say this one goes to 12-14 and then reverses--lots of volume at those levels--those bagholders will all dump it and be glad to be out if it makes it back to those levels
MRK has an "air pocket" between about 33 and 42, i.e. very little volume at those levels--if it gets above 33-34, it could go far, fast. Think about it.
CNR--I say think about at long, stop about 1.75
WILCF long stop at 6.9?
Pennies. Pure casino stuff. Remember to tip your waitresses.
MRKL may have put in a bottom at 0.42?
MZT breakout and pullback--only if it stays above 1.28
MUCL support at 0.39?
How to use this list. And don't forget the disclaimer . . .
Sunday, March 06, 2005
Sunday Night Charts for March 6, 2005
Let's start with an old favorite.
Nasdaq. Weekly chart.
Courtesy of stockcharts.com
Hasn't yet broken that trendline. Might be thinking about it, but not yet.
Next is one I've done a lot of handwringing about--CME
Courtesy of stockcharts.com
Trying to break that uptrend, eh? If it does, all the volume overhead ("the bagholders") will likely provide either overhead resistance, or fuel for a downtrend. It'll have to show some strength, soon, for me to want to be long this one.
Now contrast the CRB
Courtesy of stockcharts.com
Uptrend, pretty strong move the last couple weeks. Maybe the CME is no longer a good proxy for this one?
Next is gold.
Courtesy of stockcharts.com
Still a nice uptrend. (Keep the Krugerrands buried in the backyard, maw!)
Dow Utilities
Courtesy of stockcharts.com
Still hot. Next test will be the overhead resistance about 400, or 10% higher.
Finally, Warren Buffett's favorite short, the USD
Courtesy of stockcharts.com
The downtrend continues to play out as expected.
Have a great week everyone!
Nasdaq. Weekly chart.
Courtesy of stockcharts.com
Hasn't yet broken that trendline. Might be thinking about it, but not yet.
Next is one I've done a lot of handwringing about--CME
Courtesy of stockcharts.com
Trying to break that uptrend, eh? If it does, all the volume overhead ("the bagholders") will likely provide either overhead resistance, or fuel for a downtrend. It'll have to show some strength, soon, for me to want to be long this one.
Now contrast the CRB
Courtesy of stockcharts.com
Uptrend, pretty strong move the last couple weeks. Maybe the CME is no longer a good proxy for this one?
Next is gold.
Courtesy of stockcharts.com
Still a nice uptrend. (Keep the Krugerrands buried in the backyard, maw!)
Dow Utilities
Courtesy of stockcharts.com
Still hot. Next test will be the overhead resistance about 400, or 10% higher.
Finally, Warren Buffett's favorite short, the USD
Courtesy of stockcharts.com
The downtrend continues to play out as expected.
Have a great week everyone!
Roundtable XOM
This weeks roundtable stock is XOM. Other roundtable members are Levi Bauer, Tom at Sixth World, Ron Sen, Bill Cara, and Kaushik Gala.
Exxon Mobil right now is one of the largest publicly traded companies, with a market cap of over 400 billion. The simple fundamental metrics are that it has a PE of 16, compared to ChevronTexaco's 10 and the industry's 13. Its P/Sales is 1.35, compared to CVX 0.87 and the industry's 1. Its PEG is 2.3, compared to 2.4 and 1.7 respectively. Nothing jumps out at me there. I'm sure my colleagues will do a better job with strict fundamental analysis than I could--thus I want to look at this stock in a little different way.
I used a tool that I talked about here, when I was appropriately challenged on canadian royalty energy trusts, and whether their prices were related more to oil prices, or interest rates. I did a simple correlation between the price of XOM and the price of crude, specifically West Texas Intermediate Crude oil. The results confirm what one would expect--the share price of XOM correlates well with the price of crude. Over the past 2 years, the correlation is 0.91 (remember, 1 is perfect correlation, and 0 is no correlation, i.e. random). Over the past year, however, the correlation is 0.75, and over the past month it is 0.69. The point, of course, is that even two instruments that correlate can get out of whack from time to time. (I realize there are lots of potential problems with this sort of correlation analysis--I'm using only a period with an up oil market, sometimes things correlate until they don't, etc. Still I think it is useful.)
So what do the technicals look like?
Weekly chart
courtesy of stockcharts.com
An uptrend, with a big parabolic move in the past few weeks. Besides the normal common sense that a move like that is unsustainable, look at the high volume spike the last week, without any real move in the price. Distribution? Maybe/maybe not, but it does make one a little more wary. (In the 20/20 hindsight department, note also the big volume spike in July 02 with a long-tailed candlestick--in retrospect, a sure sign of a bottom).
In summary, XOM over the long term tracks the price of crude oil pretty well. If you think crude will continue up, XOM is an easy way to play that--but not right now! Wait for a major correction, and then this may be a good way to be long crude oil.
Exxon Mobil right now is one of the largest publicly traded companies, with a market cap of over 400 billion. The simple fundamental metrics are that it has a PE of 16, compared to ChevronTexaco's 10 and the industry's 13. Its P/Sales is 1.35, compared to CVX 0.87 and the industry's 1. Its PEG is 2.3, compared to 2.4 and 1.7 respectively. Nothing jumps out at me there. I'm sure my colleagues will do a better job with strict fundamental analysis than I could--thus I want to look at this stock in a little different way.
I used a tool that I talked about here, when I was appropriately challenged on canadian royalty energy trusts, and whether their prices were related more to oil prices, or interest rates. I did a simple correlation between the price of XOM and the price of crude, specifically West Texas Intermediate Crude oil. The results confirm what one would expect--the share price of XOM correlates well with the price of crude. Over the past 2 years, the correlation is 0.91 (remember, 1 is perfect correlation, and 0 is no correlation, i.e. random). Over the past year, however, the correlation is 0.75, and over the past month it is 0.69. The point, of course, is that even two instruments that correlate can get out of whack from time to time. (I realize there are lots of potential problems with this sort of correlation analysis--I'm using only a period with an up oil market, sometimes things correlate until they don't, etc. Still I think it is useful.)
So what do the technicals look like?
Weekly chart
courtesy of stockcharts.com
An uptrend, with a big parabolic move in the past few weeks. Besides the normal common sense that a move like that is unsustainable, look at the high volume spike the last week, without any real move in the price. Distribution? Maybe/maybe not, but it does make one a little more wary. (In the 20/20 hindsight department, note also the big volume spike in July 02 with a long-tailed candlestick--in retrospect, a sure sign of a bottom).
In summary, XOM over the long term tracks the price of crude oil pretty well. If you think crude will continue up, XOM is an easy way to play that--but not right now! Wait for a major correction, and then this may be a good way to be long crude oil.
Weekend Wazzup for March 6, 2005
My roundup of the Fox News Channel' s "Cost of Freedom" Saturday Morning shows-- is here.
Weighing in on the Roundtable so far are Ron Sen, and Levi Bauer; other Roundtable members are Tom at Sixth World, Bill Cara, Kaushik Gala, and yours truly.
Speaking of my Roundtable brothers, Ron Sen has his usual weekend plethora of posts, with six so far. Galatime pointed to another good resource on options. Tom Ott at Sixth World brings us up to date on some changes at his site. Bill Cara once again presents an outstanding review of the week. Read it for yourself, but just a hint--he thinks there is more downside risk than upside potential in most US equities at this point. And Levi links to the other Soothsayer of Omaha.
Speaking of Buffett, Taylor Tree made mention of an interesting book--that examines the trading of Warren Buffett, not the "favorite holding period is forever"Buffett, but the buying and selling Warren Buffett. Looks like good stuff.
Chairman MaoXian whose newsletter came out yesterday, also had some great excerpts from the other Chairman's letter. Check out his chat (Mao's, not Warren's) every weekday 8:30-9:30 Eastern time.
Stockcoach bemoans his lack of a position in energy stocks.
Stephen Castellano at Reflections on Equity Research had a couple interesting notes--asking for any suggested questions for a hedge fund panel, and suggesting that others on the internet may want to join in an open source equity research project.
TraderMike read a couple charts--NVT and THQI.
Byrne's Marketview gave in and said the "M" word. Well, I guess somebody had too.
Material Change linked to a free, open-source VoIP platform for embedded devices. (gotta show my geek side every now and then.)
Random Roger made a great suggestion that we should read, and let CNBC know how to improve their programming. Failing that, I just may have to get satellite TV!
Ugly at uglychart has a running "survivor" contest for stock market blogs. (Jaloti is coming up fast--while I'm not sure I want to get voted off the island, I notice that in the real survivor, getting voted off often led to TV appearances, so maybe its not so bad!)
And finally, another new blog for my list--the Alchemy of Trading, which was featured in Barron's this week. Looks like another one I'll have to follow!
Weighing in on the Roundtable so far are Ron Sen, and Levi Bauer; other Roundtable members are Tom at Sixth World, Bill Cara, Kaushik Gala, and yours truly.
Speaking of my Roundtable brothers, Ron Sen has his usual weekend plethora of posts, with six so far. Galatime pointed to another good resource on options. Tom Ott at Sixth World brings us up to date on some changes at his site. Bill Cara once again presents an outstanding review of the week. Read it for yourself, but just a hint--he thinks there is more downside risk than upside potential in most US equities at this point. And Levi links to the other Soothsayer of Omaha.
Speaking of Buffett, Taylor Tree made mention of an interesting book--that examines the trading of Warren Buffett, not the "favorite holding period is forever"Buffett, but the buying and selling Warren Buffett. Looks like good stuff.
Chairman MaoXian whose newsletter came out yesterday, also had some great excerpts from the other Chairman's letter. Check out his chat (Mao's, not Warren's) every weekday 8:30-9:30 Eastern time.
Stockcoach bemoans his lack of a position in energy stocks.
Stephen Castellano at Reflections on Equity Research had a couple interesting notes--asking for any suggested questions for a hedge fund panel, and suggesting that others on the internet may want to join in an open source equity research project.
TraderMike read a couple charts--NVT and THQI.
Byrne's Marketview gave in and said the "M" word. Well, I guess somebody had too.
Material Change linked to a free, open-source VoIP platform for embedded devices. (gotta show my geek side every now and then.)
Random Roger made a great suggestion that we should read, and let CNBC know how to improve their programming. Failing that, I just may have to get satellite TV!
Ugly at uglychart has a running "survivor" contest for stock market blogs. (Jaloti is coming up fast--while I'm not sure I want to get voted off the island, I notice that in the real survivor, getting voted off often led to TV appearances, so maybe its not so bad!)
And finally, another new blog for my list--the Alchemy of Trading, which was featured in Barron's this week. Looks like another one I'll have to follow!
Saturday, March 05, 2005
Anatomy of a bad trade
I want to dissect a bad trade I made this week. What I hope most of all is that by posting this, I will learn from it. If someone else does too, that's great, but my reason for doing this blog has been to help my own trading; my results would suggest that it has, but I still have a lot of room for improvement. In the words of Alexander Elder "I reserve the right to be smarter tomorrow than I am today." Alright, enough bloviating, on to the trade.
On my Loser List for March 3, I said BZH might be a long, if it showed some strength, with a stop about 170. On the 4th, I bought after it had risen above 171. I looked at the chart a little more, and got a little spooked by the daily ATR, or average true range of 5, which basically means that 50% of the time, the stock's movement from high to low is >5 points. I thought, jeez, if I put my stop at 170, I'm gonna get stopped out for sure--so I put my stop at 168. Well, you know what happened--BZH went down to just below 168, stopping me out just above the low of the day, and then on Friday climbed to over 175.
Now, this is NOT a bad trade because it was a losing trade. It's not a bad trade because I essentially bought near the high and sold at the low. It's not even a bad trade because it ran down to my stop, then turned around and rose above my buy point. No, it's a bad trade because 1) I had a sound plan based on a sound methodology, but 2) I didn't follow my plan. Let's look at the hourly chart below, mostly because that shows the support best. Remember that I was looking at the chart on March 2 and buying on March 3. (Note also that the ATR on this chart is the hourly ATR, not the daily)
courtesy of stockcharts.com
Based on the chart, I think you can make a pretty good case that about 170, or maybe 169.5, depending on how precise you want to make these numbers, was resistance, based on 2 prior highs, and then had become support after the resistance had broken. There are good reasons to be respectful of the ATR; certainly, if you consistently set stops within the daily ATR, and hold for a couple days or more, you have a good chance of being stopped out just by daily fluctuations. However, if that's the case, then a realistic stop outside the ATR might have been 165, or even 160, but 168 was just pulled out of the air--in fact, it was still within the ATR.
In retrospect, if I had stuck with 170, I would have still be stopped out, but at a loss of 1 point rather than 3. And if I really thought ATR was an issue, the stop should have gone lower, probably 160--although that would significantly change the risk/return on the trade.
The lesson: Plan your trade, then trade your plan.
On my Loser List for March 3, I said BZH might be a long, if it showed some strength, with a stop about 170. On the 4th, I bought after it had risen above 171. I looked at the chart a little more, and got a little spooked by the daily ATR, or average true range of 5, which basically means that 50% of the time, the stock's movement from high to low is >5 points. I thought, jeez, if I put my stop at 170, I'm gonna get stopped out for sure--so I put my stop at 168. Well, you know what happened--BZH went down to just below 168, stopping me out just above the low of the day, and then on Friday climbed to over 175.
Now, this is NOT a bad trade because it was a losing trade. It's not a bad trade because I essentially bought near the high and sold at the low. It's not even a bad trade because it ran down to my stop, then turned around and rose above my buy point. No, it's a bad trade because 1) I had a sound plan based on a sound methodology, but 2) I didn't follow my plan. Let's look at the hourly chart below, mostly because that shows the support best. Remember that I was looking at the chart on March 2 and buying on March 3. (Note also that the ATR on this chart is the hourly ATR, not the daily)
courtesy of stockcharts.com
Based on the chart, I think you can make a pretty good case that about 170, or maybe 169.5, depending on how precise you want to make these numbers, was resistance, based on 2 prior highs, and then had become support after the resistance had broken. There are good reasons to be respectful of the ATR; certainly, if you consistently set stops within the daily ATR, and hold for a couple days or more, you have a good chance of being stopped out just by daily fluctuations. However, if that's the case, then a realistic stop outside the ATR might have been 165, or even 160, but 168 was just pulled out of the air--in fact, it was still within the ATR.
In retrospect, if I had stuck with 170, I would have still be stopped out, but at a loss of 1 point rather than 3. And if I really thought ATR was an issue, the stop should have gone lower, probably 160--although that would significantly change the risk/return on the trade.
The lesson: Plan your trade, then trade your plan.
Berkshire chairman's letter
The letter is out.
I'm going to post something more comprehensive when I've had a chance to review it, but I did glance at Buffett's valuation. He states that book value of BRK grew by about 10% in the past year. He repeated his previous general statement that book value is useful as a slightly understated estimate of growth in intrinsic value. He made no specific statement about this past year. So, once again I'll adjust my previous estimate of valuation. I'll say that if book grew 10%, I'll use 11-13% as a range for increase in IV. Thus, I'll take my previous estimate of $59633 to $64120/A and $1988 to $2137 /B for March 2004 and increase it by 11 to 13%. This gives a new March 2005 estimate of $66192.63 to $72455.60/A and $2206.42 to $2415.19/B.
I'll also adjust my previous statement to say that I'll look seriously at buying more Berkshire below $84000 A/$2800 B, and I'll be jumping in with both feet below $72500 A/2417 B.
I'm going to post something more comprehensive when I've had a chance to review it, but I did glance at Buffett's valuation. He states that book value of BRK grew by about 10% in the past year. He repeated his previous general statement that book value is useful as a slightly understated estimate of growth in intrinsic value. He made no specific statement about this past year. So, once again I'll adjust my previous estimate of valuation. I'll say that if book grew 10%, I'll use 11-13% as a range for increase in IV. Thus, I'll take my previous estimate of $59633 to $64120/A and $1988 to $2137 /B for March 2004 and increase it by 11 to 13%. This gives a new March 2005 estimate of $66192.63 to $72455.60/A and $2206.42 to $2415.19/B.
I'll also adjust my previous statement to say that I'll look seriously at buying more Berkshire below $84000 A/$2800 B, and I'll be jumping in with both feet below $72500 A/2417 B.
Fox Saturday Morning "Business Bloc" for March 5, 2005
Fox News Channel' s "Cost of Freedom" Saturday Morning shows--
All four shows can be summed up in three words-Martha, Martha, Martha. Who cares, and how does this make me any money?
Bulls and Bears started with some macro talk about social security reform. I think this is one of the few macro issues worth listening to, simply because what happens will likely have a significant effect on the markets over the medium to long term. Very few new points were made, and unfortunately things pretty much broke down along partisan lines.
Bob Olstein recommended several beaten down stocks: TAP presently at 71, he says is worth 90, DBD presently at 53, he says worth 65-70 (because they are going to upgrade all ATMs--everybody else liked it as well), RSH presently at 29, he says worth 38-39; DLM presently 11.30 and he says worth 15.
Gary B. Smith showed some charts (of course). PFE --broke a downtrend line, says it's going up. Next was WAG --broke above a resistance line, and became a buy. CLX is in a beautiful uptrend. SYMC is in a clear downtrend, maybe a short at the top of the channel. Strangely he was asked for a dividend chart, and he came up with INTC, which broke a downtrend and is about to break resistance.
Pat Dorsey says the BIIB sell off is overdone. Scott Bleier says sell AAPL.
Cavuto had the usual cast of characters. Gregg Hymowitz recommended GE as a buy, but Jim Rogers said its balance sheet is a sham that "nobody understands". Gary Kaltbaum said YUM is looking tasty. Jim Rogers liked VWSYF(windmills), but Hymowitz slammed it. Ben Stein mentioned EEM (emerging markets fund) as a good play.
More Martha.
Jon Najarian predicted a big fall in crude oil prices but Jim Rogers said that's "balderdash"(I appreciate it when he talks like Daddy Warbucks) and oil will be over $100 in five years.
Forbes on Fox had, as usual, a lot of pointless macro talk. Bring back Random Roger!
The group talked about whether it's time to invest in China. Mentioned were SNDA because of online gaming, which is apparently big in China, and its purchasing of SINA; NTES, and PRU because of insurance, even though it isn't in China yet. Also mentioned was the China ETF FXI.
Chris Russo from "The Apprentice" and Glen Allen Financial recommended ENR and BTU.
And there was, of course, more Martha.
Cashin' In had Charles Payne giving some picks: MXIM, (Wayne Rogers liked it and owns TSRA in this sector), FDX--(break out thru a double top), and ODFL (Wayne and Jonathan Hoenig also mentioned TP, SWFT, KNX, YELL saying trucking is strong, and protected from fuel price increases because of surcharges). Dave Nelson recommended LGF, saying in part its a takeover target.
Still yet MORE Martha!
All four shows can be summed up in three words-Martha, Martha, Martha. Who cares, and how does this make me any money?
Bulls and Bears started with some macro talk about social security reform. I think this is one of the few macro issues worth listening to, simply because what happens will likely have a significant effect on the markets over the medium to long term. Very few new points were made, and unfortunately things pretty much broke down along partisan lines.
Bob Olstein recommended several beaten down stocks: TAP presently at 71, he says is worth 90, DBD presently at 53, he says worth 65-70 (because they are going to upgrade all ATMs--everybody else liked it as well), RSH presently at 29, he says worth 38-39; DLM presently 11.30 and he says worth 15.
Gary B. Smith showed some charts (of course). PFE --broke a downtrend line, says it's going up. Next was WAG --broke above a resistance line, and became a buy. CLX is in a beautiful uptrend. SYMC is in a clear downtrend, maybe a short at the top of the channel. Strangely he was asked for a dividend chart, and he came up with INTC, which broke a downtrend and is about to break resistance.
Pat Dorsey says the BIIB sell off is overdone. Scott Bleier says sell AAPL.
Cavuto had the usual cast of characters. Gregg Hymowitz recommended GE as a buy, but Jim Rogers said its balance sheet is a sham that "nobody understands". Gary Kaltbaum said YUM is looking tasty. Jim Rogers liked VWSYF(windmills), but Hymowitz slammed it. Ben Stein mentioned EEM (emerging markets fund) as a good play.
More Martha.
Jon Najarian predicted a big fall in crude oil prices but Jim Rogers said that's "balderdash"(I appreciate it when he talks like Daddy Warbucks) and oil will be over $100 in five years.
Forbes on Fox had, as usual, a lot of pointless macro talk. Bring back Random Roger!
The group talked about whether it's time to invest in China. Mentioned were SNDA because of online gaming, which is apparently big in China, and its purchasing of SINA; NTES, and PRU because of insurance, even though it isn't in China yet. Also mentioned was the China ETF FXI.
Chris Russo from "The Apprentice" and Glen Allen Financial recommended ENR and BTU.
And there was, of course, more Martha.
Cashin' In had Charles Payne giving some picks: MXIM, (Wayne Rogers liked it and owns TSRA in this sector), FDX--(break out thru a double top), and ODFL (Wayne and Jonathan Hoenig also mentioned TP, SWFT, KNX, YELL saying trucking is strong, and protected from fuel price increases because of surcharges). Dave Nelson recommended LGF, saying in part its a takeover target.
Still yet MORE Martha!
Friday, March 04, 2005
Christmas Eve
The Berkshire Hathaway annual report/chairman's letter will be posted at the website tomorrow, typically about 8 AM eastern. This makes tonight like Christmas Eve for people like me.
Yeah, I know supposedly I'm a trader and he's in it for the "long term." But make no mistake, he's traded with the best of them.
And me, I'll make money any way that I can.
Even by buying and holding Berkshire Hathaway :>)
If you haven't already, check out my BRK valuation. I'll update it tomorrow after the AR is out.
Yeah, I know supposedly I'm a trader and he's in it for the "long term." But make no mistake, he's traded with the best of them.
And me, I'll make money any way that I can.
Even by buying and holding Berkshire Hathaway :>)
If you haven't already, check out my BRK valuation. I'll update it tomorrow after the AR is out.
Loser List for March 4, 2005
BZH mea culpa--I set the stop too tight, talking myself into support at 170 . 165-166 would have been better, and may still be, if it bounces from here.
KBH bounce from here?
CEDC looks like it found support at 35
MDTL a breakout, gotta stay above 20
QSII long, stop at 82?
RICK if it can stay above 3.4, might go a bit. Of course, there's always the table dances.
RMI a breakout above 4.5
ROV does range contraction lead to . . . stop at 41
TIN pullback, long stop at 80
X still might be a look above 58 WWLD? (what would Livermore do?)
How to use this list. And don't forget the disclaimer . . .
KBH bounce from here?
CEDC looks like it found support at 35
MDTL a breakout, gotta stay above 20
QSII long, stop at 82?
RICK if it can stay above 3.4, might go a bit. Of course, there's always the table dances.
RMI a breakout above 4.5
ROV does range contraction lead to . . . stop at 41
TIN pullback, long stop at 80
X still might be a look above 58 WWLD? (what would Livermore do?)
How to use this list. And don't forget the disclaimer . . .
Thursday, March 03, 2005
Open Source Equity Research
Check out Stephen Castellano's Reflections on Equity Research. He has a very intriguing proposal for an open source equity research project. I think anybody with any equity analysis or industry specific "skillz" as he describes in the post ought to think about it.
Loser List for March 3, 2005
ASTM-- a lot of people stuck at 4 on this one--I wouldn't touch it till its above 4.4--i.e. the fork comes out
BZH a buyable pullback if it shows a little strength, stop at 170
CEDC a gap down, but came up off the lows, to above a previous swing high. Might be a buy, stop at 35
DSTI might be a second chance, long above 6.1
GSOL ditto, long above 13.39
SNHY a breakout above 19
X buy it like Livermore and Wyckoff, long stop at 58.5
ASA a trabable pullback stop at 40?
SSRI bounced off the 200d, long stop at 13
SU long stop at 37.5
Pennies
MUCL, long stop at 0.40
CTCHC stop at 0.55
CGREF long if it can stay above 1.5
and keep an eye on BGT and WILCF
How to use this list(other than just fading me). And don't forget the disclaimer . . .
BZH a buyable pullback if it shows a little strength, stop at 170
CEDC a gap down, but came up off the lows, to above a previous swing high. Might be a buy, stop at 35
DSTI might be a second chance, long above 6.1
GSOL ditto, long above 13.39
SNHY a breakout above 19
X buy it like Livermore and Wyckoff, long stop at 58.5
ASA a trabable pullback stop at 40?
SSRI bounced off the 200d, long stop at 13
SU long stop at 37.5
Pennies
MUCL, long stop at 0.40
CTCHC stop at 0.55
CGREF long if it can stay above 1.5
and keep an eye on BGT and WILCF
How to use this list(other than just fading me). And don't forget the disclaimer . . .
Wednesday, March 02, 2005
Loser List for March 2, 2005
KO looks like it might be a good time to pick this one up "for the long term"
ditto for MRK???
ISCA long, stop at 53
NAT--definitely a pullback, to about the prior high, might think about going long again, but only if it shows some strength, stop at 53
RIG--same deal as NAT--if strength, long with a stop about 46
SYMC-maybe a short, if you have to short something, stop about 22.5
X-if it bounces, might be a long
ASA might be a buy if it stays above 40
LAB long above 9
SU pullback, long with a stop about 36.5-37
PVX--a buyable pullback at 9.5 ?
PWI--ditto at 24 ?--of course they are canroys
CNR--impressive recovery. Not really sure where to stop this one--probably best not to chase
pennys
MRKL support at 0.50
MUCL the buyers come in at 0.4
How to use this list(besides just ignoring it). And don't forget the disclaimer . . .
ditto for MRK???
ISCA long, stop at 53
NAT--definitely a pullback, to about the prior high, might think about going long again, but only if it shows some strength, stop at 53
RIG--same deal as NAT--if strength, long with a stop about 46
SYMC-maybe a short, if you have to short something, stop about 22.5
X-if it bounces, might be a long
ASA might be a buy if it stays above 40
LAB long above 9
SU pullback, long with a stop about 36.5-37
PVX--a buyable pullback at 9.5 ?
PWI--ditto at 24 ?--of course they are canroys
CNR--impressive recovery. Not really sure where to stop this one--probably best not to chase
pennys
MRKL support at 0.50
MUCL the buyers come in at 0.4
How to use this list(besides just ignoring it). And don't forget the disclaimer . . .
Tuesday, March 01, 2005
Check out Stockcoach
Check out Stockcoach. He says he eschews technical analysis, but I like him anyway.
He's got his portfolio (long and short) out there for the whole world to see--its worth looking at, who knows, one or two of them might have a good-looking chart ;>)
He's got his portfolio (long and short) out there for the whole world to see--its worth looking at, who knows, one or two of them might have a good-looking chart ;>)
CNBC, real estate, retailers, and Ben Graham
I caught a little bit of CNBC this AM--somebody was on talking about valuations of retailers. I didn't catch who it was. He cited three specific examples--Dillards(DDS), Shopko(SKO), and Winn-Dixie(WNDXQ), of retailers in which the value of the real estate owned by the companies alone was supposedly worth 2-3x or more times the present value of the stock in the marketplace. This is a repeat of the Kmart story. There are several names I've accumulated over the past couple years at least in part on a variation of this story as well. (TRC, JOE, ALEX, TPL, PCL--but in these cases the land is mostly undeveloped)
I got to thinking a little more "big picture" and maybe I'm off base. Maybe somebody can point out where I'm wrong, or where I don't get it. It seems strange that there could be a whole group of large companies like this, where their real estate holdings alone are more worth to somebody else for something else than the value of their business as a going concern. That's Ben Graham cigar butt stuff, but writ very large. And typically that scenario, of companies selling for less than their breakup value is something you see in either 1) the occasional small- or micro-cap, or 2) at the bottom of a bear market--think 1937 or 1977.
I can think of only a handful of explanations for this--1) the info is flat out wrong. Somebody is screwing up their estimates of the value of the land, or this inefficiency is not nearly as widespread as it is being made to seem, etc. 2) there is some sort of "barrier" to using the land for something other than the present retail store--legal, regulatory, administrative, environmental, etc. or 3) the stocks are not undervalued, but the land is overvalued because we are in a real estate bubble, and if all that property really came on the market the prices would tank. I guess that's the one I'm leaning toward. What am I missing?
I got to thinking a little more "big picture" and maybe I'm off base. Maybe somebody can point out where I'm wrong, or where I don't get it. It seems strange that there could be a whole group of large companies like this, where their real estate holdings alone are more worth to somebody else for something else than the value of their business as a going concern. That's Ben Graham cigar butt stuff, but writ very large. And typically that scenario, of companies selling for less than their breakup value is something you see in either 1) the occasional small- or micro-cap, or 2) at the bottom of a bear market--think 1937 or 1977.
I can think of only a handful of explanations for this--1) the info is flat out wrong. Somebody is screwing up their estimates of the value of the land, or this inefficiency is not nearly as widespread as it is being made to seem, etc. 2) there is some sort of "barrier" to using the land for something other than the present retail store--legal, regulatory, administrative, environmental, etc. or 3) the stocks are not undervalued, but the land is overvalued because we are in a real estate bubble, and if all that property really came on the market the prices would tank. I guess that's the one I'm leaning toward. What am I missing?
Loser List for March 1, 2005
Just an anecdote--I go thru 250-300 charts to make the loser list every day, and going through these I saw a bunch of overextended/overbought/parabolic/whatever you want to call them. Time to tighten up the stops, and don't chase anything. (That's mainly directed at me, not you.)
ADAM still looking to go long on this, stop at 5.3 or so
FRO--do you buy breakouts? cause this is a breakout, stop at 57
GTRC here's another breakout, stop at 60
GLOW--keep watching this one, cause its not just a pullback, its range contraction. Long, stop at 2
OCR--failed breakout, if you can short it in the 34.5 range, stop at 35, can probably get to at least the 200d at 33.
PENN, uptrend, pullback, buy, stop at 59
TGA--pullback to support?? maybe, be careful with this one
a penny
CTCHC--still looks to me like its going to pop one of these days.
How to use this list. And what would it be without the disclaimer?
ADAM still looking to go long on this, stop at 5.3 or so
FRO--do you buy breakouts? cause this is a breakout, stop at 57
GTRC here's another breakout, stop at 60
GLOW--keep watching this one, cause its not just a pullback, its range contraction. Long, stop at 2
OCR--failed breakout, if you can short it in the 34.5 range, stop at 35, can probably get to at least the 200d at 33.
PENN, uptrend, pullback, buy, stop at 59
TGA--pullback to support?? maybe, be careful with this one
a penny
CTCHC--still looks to me like its going to pop one of these days.
How to use this list. And what would it be without the disclaimer?
Monday, February 28, 2005
OT-Hunter S. Thompson
I suppose I'm probably kinda late to the party on this one, and I'm not sure it has much too with money or markets, but I read this article today on the suicide of Hunter S. Thompson, and I can't help it.
The Money Quote:
Anita Thompson, 32, said her husband had discussed killing himself in recent months . . .His suicidal talk put a strain on their relationship, she said.
"He wanted to leave on top of his game. I wish I could have been more supportive of his decision," she said. "It was a problem for us."
"I wish could have been more supportive of his decision"?????!!!!!?????
I truly don't know whether to laugh or cry at this one. A spouse's suicidal ideation is a "problem" for the relationship? The other spouse doesn't think it's a good idea, but is actually regretful that she can't be more "supportive" of his pathology?
"It's not you, dear, it's me; I wish I could support you in your misguided desire, but I can't, and I hate myself for it. I'm not really sure how our relationship is going to survive your wish to kill yourself."
I guess all I can say is that if you or someone you love needs help please seek it.
The Money Quote:
Anita Thompson, 32, said her husband had discussed killing himself in recent months . . .His suicidal talk put a strain on their relationship, she said.
"He wanted to leave on top of his game. I wish I could have been more supportive of his decision," she said. "It was a problem for us."
"I wish could have been more supportive of his decision"?????!!!!!?????
I truly don't know whether to laugh or cry at this one. A spouse's suicidal ideation is a "problem" for the relationship? The other spouse doesn't think it's a good idea, but is actually regretful that she can't be more "supportive" of his pathology?
"It's not you, dear, it's me; I wish I could support you in your misguided desire, but I can't, and I hate myself for it. I'm not really sure how our relationship is going to survive your wish to kill yourself."
I guess all I can say is that if you or someone you love needs help please seek it.
Valuing Berkshire Hathaway
Warren Buffett is one of the great value investors, and his Berkshire Hathaway company is a great company. But is it always a great stock? Over the past 5 years, buyers of BRK have done well or badly depending on when they bought—at 45,000 or 95,000. Valuing this company is tricky—although its main business is insurance, it owns furniture stores, gas pipelines, jewelers, World Book Encylopedia, and has major stockholdings including American Express, Coke, etc. I'm not nearly smart enough to value this company, but I know one guy who is--Warren Buffett himself. Buffett talks a great deal about intrinsic value (IV) of Berkshire, or what the company is really worth based on the net present value of future cash flows.
At the 1998 Berkshire Hathaway annual meeting, Mr. Buffett defined intrinsic value as follows: "In order to calculate intrinsic value, you take those cash flows that you expect to be generated and you discount them back to their present value - in our case, at the long-term Treasury rate. And that discount rate doesn't pay you as high a rate as it needs to. But you can use the resulting present value figure that you get by discounting your cash flows back at the long-term Treasury rate as a common yardstick just to have a standard of measurement across all businesses."
A value investor like Buffett would want to buy companies, even a great company like Berkshire, at some discount, a margin of safety (MOS) to intrinsic value.
Though he's never publicly stated what he thought Berkshire's IV was, at one point in the recent past, however, Buffett telegraphed, with a big wink and nudge, just what he thought IV-MOS was.From the 1999 Chairman's letter (March 2000), "Recently, when the A shares fell below $45,000, we considered making repurchases. . . we will make them if and when we believe that they represent an attractive use of the Company's money."I believe one can safely infer that Buffett believed IV-MOS in March 2000 was $45,000 per A share and thus $1500 per B share(the shares are convertible at a rate of 30:1). What is it now? Assuming MOS is a constant percentage of IV, the question becomes how much has IV changed since then. As always, we return to scripture for the answer. From the 2000 Chairman's letter (March 2001), "we believe Berkshire's gain in per-share intrinsic value moderately exceeded its gain in book value"--and book value gain was 6.5%. Moderately exceeded means 7%, 8%? This gives a range of $48,150 to $48,600 per A share and $1605 to $1620 per B share in March 2001.
From the 2001 Chairman's letter (March 2002), "Per-share intrinsic grew somewhat faster than book value during these 37 years, and in 2001 it probably decreased a bit less"--and book value decrease was 6.2%. Is decreased a bit less 6%, 5%? This results in a range of $45260 to $46170 per A share and $1508 B to $1539 per B share in March 2002.
From the 2002 Chairman's letter (March 2003) no statement regarding increase in intrinsic value is found, but book value grew by 10%. Using 8% to 12% as upper and lower estimates results in $48880 to $51710/A share and $1629 to $1723 /B in March 2003.
From the 2003 Chairman's letter (March 2004) the more generic statement "Despite their shortcomings, book value calculations are useful at Berkshire as a slightly understated gauge for measuring the long-term rate of increase in our intrinsic value." Book value increased by 21%. Using 22-24% for increase in intrinsic value gives an IV-MOS estimate of $59633 to $64120/A and $1988 to $2137 /B for March 2004.
What about since then? As a WAG, I'll add 0.25%-0.5% per month to estimate IV gains till the next chairman's letter. This is roughly $150 to $300/month for A's and $5 to $10/month for B's. Thus, for February 2005, I get a range of $61283 to $67420/A and $2043 to $2247 /B. Remember this is a "fire sale" price that is so much below IV that even a tightwad like Buffett would spend shareholders' cash to buy back stock. It would represent a "back up the truck" opportunity.
For me, I'll look at buying more BRK below $75000 A/$2500 B; below $67500A/ $2250 B that beep-beep-beep is my truck in reverse; below $63000A/ $2100 B, its margin, home equity loans, hock the kids, put it all down on Buffett. Will we see these prices again? My view is that if other great companies can get put on sale in a market decline, so can BRK--I don't think it is any more immune to the vagaries of Mr. Market than any other publicly traded entity. I think the opportunity will present itself.
This Saturday, March 5 will be the release date of the 2004 Berkshire Annual Report and Chairman's letter. In all likelihood, some statement about intrinsic value/book value will be made, and I will update my assessment accordingly.
At the 1998 Berkshire Hathaway annual meeting, Mr. Buffett defined intrinsic value as follows: "In order to calculate intrinsic value, you take those cash flows that you expect to be generated and you discount them back to their present value - in our case, at the long-term Treasury rate. And that discount rate doesn't pay you as high a rate as it needs to. But you can use the resulting present value figure that you get by discounting your cash flows back at the long-term Treasury rate as a common yardstick just to have a standard of measurement across all businesses."
A value investor like Buffett would want to buy companies, even a great company like Berkshire, at some discount, a margin of safety (MOS) to intrinsic value.
Though he's never publicly stated what he thought Berkshire's IV was, at one point in the recent past, however, Buffett telegraphed, with a big wink and nudge, just what he thought IV-MOS was.From the 1999 Chairman's letter (March 2000), "Recently, when the A shares fell below $45,000, we considered making repurchases. . . we will make them if and when we believe that they represent an attractive use of the Company's money."I believe one can safely infer that Buffett believed IV-MOS in March 2000 was $45,000 per A share and thus $1500 per B share(the shares are convertible at a rate of 30:1). What is it now? Assuming MOS is a constant percentage of IV, the question becomes how much has IV changed since then. As always, we return to scripture for the answer. From the 2000 Chairman's letter (March 2001), "we believe Berkshire's gain in per-share intrinsic value moderately exceeded its gain in book value"--and book value gain was 6.5%. Moderately exceeded means 7%, 8%? This gives a range of $48,150 to $48,600 per A share and $1605 to $1620 per B share in March 2001.
From the 2001 Chairman's letter (March 2002), "Per-share intrinsic grew somewhat faster than book value during these 37 years, and in 2001 it probably decreased a bit less"--and book value decrease was 6.2%. Is decreased a bit less 6%, 5%? This results in a range of $45260 to $46170 per A share and $1508 B to $1539 per B share in March 2002.
From the 2002 Chairman's letter (March 2003) no statement regarding increase in intrinsic value is found, but book value grew by 10%. Using 8% to 12% as upper and lower estimates results in $48880 to $51710/A share and $1629 to $1723 /B in March 2003.
From the 2003 Chairman's letter (March 2004) the more generic statement "Despite their shortcomings, book value calculations are useful at Berkshire as a slightly understated gauge for measuring the long-term rate of increase in our intrinsic value." Book value increased by 21%. Using 22-24% for increase in intrinsic value gives an IV-MOS estimate of $59633 to $64120/A and $1988 to $2137 /B for March 2004.
What about since then? As a WAG, I'll add 0.25%-0.5% per month to estimate IV gains till the next chairman's letter. This is roughly $150 to $300/month for A's and $5 to $10/month for B's. Thus, for February 2005, I get a range of $61283 to $67420/A and $2043 to $2247 /B. Remember this is a "fire sale" price that is so much below IV that even a tightwad like Buffett would spend shareholders' cash to buy back stock. It would represent a "back up the truck" opportunity.
For me, I'll look at buying more BRK below $75000 A/$2500 B; below $67500A/ $2250 B that beep-beep-beep is my truck in reverse; below $63000A/ $2100 B, its margin, home equity loans, hock the kids, put it all down on Buffett. Will we see these prices again? My view is that if other great companies can get put on sale in a market decline, so can BRK--I don't think it is any more immune to the vagaries of Mr. Market than any other publicly traded entity. I think the opportunity will present itself.
This Saturday, March 5 will be the release date of the 2004 Berkshire Annual Report and Chairman's letter. In all likelihood, some statement about intrinsic value/book value will be made, and I will update my assessment accordingly.
Warren Buffett, Richard Russell, and the Web
Chairman MaoXian had a great link the other day to notes from a Warren Buffett q and a with some Vanderbilt business students. These notes are all over the web--here, here and here. There's great stuff in there, everyone should read them and cogitate on them, and that's the way the web should work.
What's also interesting to me is that apparently, they also appeared here, in Richard Russell's $250/year newsletter. Now, Russell is a smart old guy who's been around forever and forgotten more about markets than Jaloti is likely to ever know. However, Russell lamented (and I quoted, here, back when only Trader Mike was reading me) that with the Internet giving stuff away for free, how could fee based newsletters survive? Again, with him putting non-origianl non-proprietary content in his newsletter that other people are giving away for free, the question is still relevant.
How, indeed?
What's also interesting to me is that apparently, they also appeared here, in Richard Russell's $250/year newsletter. Now, Russell is a smart old guy who's been around forever and forgotten more about markets than Jaloti is likely to ever know. However, Russell lamented (and I quoted, here, back when only Trader Mike was reading me) that with the Internet giving stuff away for free, how could fee based newsletters survive? Again, with him putting non-origianl non-proprietary content in his newsletter that other people are giving away for free, the question is still relevant.
How, indeed?
Going from 90 to 100, and confirmation bias
There has been a very nice multi-blog discussion, started here by Random Roger, and advanced by Michael Taylor of Taylor Tree, as well as Anumati, about the Tom Dorsey idea that once a stock gets to 90, its a buy because it will continue to 100. (Arguably, Ugly foreshadowed this idea here.)
To recap, Roger put the idea on the table, quoting Dorsey. Michael looked at the numbers, and said, while it's a little difficult to get comprehensive data because of splits, etc, it appears to happen "only" 55-60% of the time. Anumati then said this makes it an example of confirmation bias. All true, but let me put the Jaloti spin on it.
If this were a simple 50/50 bet, i.e. goes to 100/doesn't go to 100, and the odds were 55-45, you'd take that bet all day long--right? The casinos make billions on tighter odds than that. What is really be asked with this one, is how long does it take to get from 90 to 100, AND what are the chances it goes to 0 first? The way to make money off of this one is to ask, once a stock hits 90, how often does it get to 100, before it gets to 80 (or 85, or whatever margin of safety you want, to pervert the value investors' catchphrase). If, for instance, there was good data over time that after 90, 55% go to 100 before they go to 85, I'd take that one in a heartbeat.
Cut your losers short, and let your winners run, right?
To recap, Roger put the idea on the table, quoting Dorsey. Michael looked at the numbers, and said, while it's a little difficult to get comprehensive data because of splits, etc, it appears to happen "only" 55-60% of the time. Anumati then said this makes it an example of confirmation bias. All true, but let me put the Jaloti spin on it.
If this were a simple 50/50 bet, i.e. goes to 100/doesn't go to 100, and the odds were 55-45, you'd take that bet all day long--right? The casinos make billions on tighter odds than that. What is really be asked with this one, is how long does it take to get from 90 to 100, AND what are the chances it goes to 0 first? The way to make money off of this one is to ask, once a stock hits 90, how often does it get to 100, before it gets to 80 (or 85, or whatever margin of safety you want, to pervert the value investors' catchphrase). If, for instance, there was good data over time that after 90, 55% go to 100 before they go to 85, I'd take that one in a heartbeat.
Cut your losers short, and let your winners run, right?
Random Roger makes me think
Loser List for February 28, 2005
ADAM-- nice chart, pullback in an uptrend, stop about 5.3, though volume is marginal.
BOOM-exploded out(sorry). If you're into breakouts, this is one, stop at the breakout--17.5
CALM--a short if it stays below 10.
DDDC--might be a buyable pullback above 4.2 or so.
EENC--breakout and pullback--long above 20.
IINT--long above 2.25
BGO--if gold's running, this one might, stop at 3
LAB might be a buyable pullback above 9.2
the Pennies--
MUCL--ok, that's it, the last time for this one--if it bounces off 0.40 its a buy with a stop at 0.38
CTCHC--if you have to buy a penny, this is as good as any--stop at 0.6
PMU--another on the penny list--long stop at 0.6
How to use this list. And what would it be without the disclaimer?
BOOM-exploded out(sorry). If you're into breakouts, this is one, stop at the breakout--17.5
CALM--a short if it stays below 10.
DDDC--might be a buyable pullback above 4.2 or so.
EENC--breakout and pullback--long above 20.
IINT--long above 2.25
BGO--if gold's running, this one might, stop at 3
LAB might be a buyable pullback above 9.2
the Pennies--
MUCL--ok, that's it, the last time for this one--if it bounces off 0.40 its a buy with a stop at 0.38
CTCHC--if you have to buy a penny, this is as good as any--stop at 0.6
PMU--another on the penny list--long stop at 0.6
How to use this list. And what would it be without the disclaimer?
Sunday, February 27, 2005
Sunday Night Charts for February 27, 2005
I'm gonna mix it up a little bit.
But first let's start with an old favorite.
The US Dollar Index. Weekly chart.
Courtesy of stockcharts.com
Still a downtrend. Interestingly, it broke my trendline, and is sitting just above it, but then it has done this before.
Next is the XOI oil index
Courtesy of stockcharts.com
Bill Cara is calling this a melt-up top in the oils. Sure looks like it will come down, but when? Bill's a lot smarter at this stuff than I am, and he may well be right--but timing is everything--it may drop on Monday, or it may run another 15% and 15 days before it drops. "Markets can remain irrational longer than you can remain solvent." (John Maynard Keynes).
Next, a new one--the IYR (REIT iShares) Weekly
Courtesy of stockcharts.com
To me, looks like support at 110 from the previous high, and a lot of volume in the low 110s. (Although I'm less sure of what volume means in ETFs.) This makes it look like a buyable pullback in REITs.
But let's look at the monthly IYR chart.
Courtesy of stockcharts.com
REITs have been running for a long time, is this Elliot's 5th wave? Perhaps not, if we can stay above 110? What's that saying, "A man with a watch knows what time it is, a man with two watches is never sure". Substitute "chart" for "watch" and that's me!
Have a great week everyone!
But first let's start with an old favorite.
The US Dollar Index. Weekly chart.
Courtesy of stockcharts.com
Still a downtrend. Interestingly, it broke my trendline, and is sitting just above it, but then it has done this before.
Next is the XOI oil index
Courtesy of stockcharts.com
Bill Cara is calling this a melt-up top in the oils. Sure looks like it will come down, but when? Bill's a lot smarter at this stuff than I am, and he may well be right--but timing is everything--it may drop on Monday, or it may run another 15% and 15 days before it drops. "Markets can remain irrational longer than you can remain solvent." (John Maynard Keynes).
Next, a new one--the IYR (REIT iShares) Weekly
Courtesy of stockcharts.com
To me, looks like support at 110 from the previous high, and a lot of volume in the low 110s. (Although I'm less sure of what volume means in ETFs.) This makes it look like a buyable pullback in REITs.
But let's look at the monthly IYR chart.
Courtesy of stockcharts.com
REITs have been running for a long time, is this Elliot's 5th wave? Perhaps not, if we can stay above 110? What's that saying, "A man with a watch knows what time it is, a man with two watches is never sure". Substitute "chart" for "watch" and that's me!
Have a great week everyone!
Roundtable stock--CMCSA
This weeks roundtable stock is CMCSA. Other roundtable members are Levi Bauer, Tom at Sixth World, Ron Sen, Bill Cara, and Kaushik Gala.
CMCSA has drawn a lot of interest lately with the news that Warren Buffett's Berkshire Hathaway has doubled its stake in the cable provider. A lot of people have been sort of scratching their heads, trying to figure out what the value angle is that the Sage of Omaha sees in Comcast. Let me end the suspense and give the answer at the end of this post;>).
First, I will offer a couple observations--1) A big chunk of Berkshire's equity portfolio is actually managed by Lou Simpson at Geico, with little/no input from Buffett. Simpson is no slouch himself as a stock picker, but the point is this may not be a Buffett pick per se. 2) Whether it is a Buffett pick or not, Buffett and Berkshire in the past have done very well with local newspapers and television stations--the Buffalo News, Washington Post, and Cap Cities/ABC. The thinking has been that these local media represent businesses with some sort of a "moat" --Buffett-speak for some sort of barrier, be it regulatory or whatever, to entry of competitors in the space. Cable television providers certainly fit into that category.
That having been said, Buffett has always maintained that you can't just buy a great business, you have to pay a good-to-great price for it. This is where the head scratching comes in, because any way you slice it, its hard to find the great valuation on CMCSA. The comparisons are a little difficult, since a lot of the broadcast/cable TV entities are privately held, but a quick review of the yahoo!finance stats shows a PE of 75 (!) compared to Echostar's 91 and the industry's 35, a P/Sales of 3.6 compared to Echostar's 2 and the industry's 1.7, and a PEG of 4, compared to Echostar's 2 and the industry's 2.5.
My summary of the fundies is that I don't see the screaming value here, but apparently somebody (Buffett and/or Simpson) a lot smarter than me does.
Now, let's look at the charts. As always, it depends on your time frame.
First, the daily charts, if you're looking for a swing trade of a few days duration.
courtesy of stockcharts.com
Well, its a nice uptrend, I guess you could look for a swing trade a couple different ways. There is pretty good support at 32, from prior lows and the uptrend line, but there is resistance from the old highs at 33. I guess if it dropped to 32 and bounced, you could buy it on a tight stop, with an expected run to 33, so maybe you could squeeze a risk return of 3/1 out of it, but you'd have to be pretty nimble--that's really more of a day trade than a swing trade, frankly.
The other way to play this is to buy a breakout of the old high at 33.6. I think if you have to swing trade this one that's what I'd do. There are probably better plays out there.
Next let's look at the weekly chart.
courtesy of stockcharts.com
Again, nothing terribly exciting. I think if you have to play it, the Gary B. Smith call would be to buy the breakout of the old high at 36.5, although there is a lot of resistance above that. Looking at the price by volume bars along the left side, you can see however that a lot of the outstanding volume traded around 30, so maybe there isn't a lot of supply in the high 30's. Still, nothing here that makes me eager to take a position.
Finally, the monthly chart, the one that Buffet and Simpson should be looking at :>)
courtesy of stockcharts.com
Aha!! Now we have our answer! Clearly, Buffett and Simpson looked at this chart, saw the wedge and all the volume right around 30, and concluded when this one pops to the upside, it'll really run!
Isn't great to solve a mystery??!!???
(Uh, where's the sarcasm button on this thing?)
CMCSA has drawn a lot of interest lately with the news that Warren Buffett's Berkshire Hathaway has doubled its stake in the cable provider. A lot of people have been sort of scratching their heads, trying to figure out what the value angle is that the Sage of Omaha sees in Comcast. Let me end the suspense and give the answer at the end of this post;>).
First, I will offer a couple observations--1) A big chunk of Berkshire's equity portfolio is actually managed by Lou Simpson at Geico, with little/no input from Buffett. Simpson is no slouch himself as a stock picker, but the point is this may not be a Buffett pick per se. 2) Whether it is a Buffett pick or not, Buffett and Berkshire in the past have done very well with local newspapers and television stations--the Buffalo News, Washington Post, and Cap Cities/ABC. The thinking has been that these local media represent businesses with some sort of a "moat" --Buffett-speak for some sort of barrier, be it regulatory or whatever, to entry of competitors in the space. Cable television providers certainly fit into that category.
That having been said, Buffett has always maintained that you can't just buy a great business, you have to pay a good-to-great price for it. This is where the head scratching comes in, because any way you slice it, its hard to find the great valuation on CMCSA. The comparisons are a little difficult, since a lot of the broadcast/cable TV entities are privately held, but a quick review of the yahoo!finance stats shows a PE of 75 (!) compared to Echostar's 91 and the industry's 35, a P/Sales of 3.6 compared to Echostar's 2 and the industry's 1.7, and a PEG of 4, compared to Echostar's 2 and the industry's 2.5.
My summary of the fundies is that I don't see the screaming value here, but apparently somebody (Buffett and/or Simpson) a lot smarter than me does.
Now, let's look at the charts. As always, it depends on your time frame.
First, the daily charts, if you're looking for a swing trade of a few days duration.
courtesy of stockcharts.com
Well, its a nice uptrend, I guess you could look for a swing trade a couple different ways. There is pretty good support at 32, from prior lows and the uptrend line, but there is resistance from the old highs at 33. I guess if it dropped to 32 and bounced, you could buy it on a tight stop, with an expected run to 33, so maybe you could squeeze a risk return of 3/1 out of it, but you'd have to be pretty nimble--that's really more of a day trade than a swing trade, frankly.
The other way to play this is to buy a breakout of the old high at 33.6. I think if you have to swing trade this one that's what I'd do. There are probably better plays out there.
Next let's look at the weekly chart.
courtesy of stockcharts.com
Again, nothing terribly exciting. I think if you have to play it, the Gary B. Smith call would be to buy the breakout of the old high at 36.5, although there is a lot of resistance above that. Looking at the price by volume bars along the left side, you can see however that a lot of the outstanding volume traded around 30, so maybe there isn't a lot of supply in the high 30's. Still, nothing here that makes me eager to take a position.
Finally, the monthly chart, the one that Buffet and Simpson should be looking at :>)
courtesy of stockcharts.com
Aha!! Now we have our answer! Clearly, Buffett and Simpson looked at this chart, saw the wedge and all the volume right around 30, and concluded when this one pops to the upside, it'll really run!
Isn't great to solve a mystery??!!???
(Uh, where's the sarcasm button on this thing?)
Weekend Wazzup for February 27, 2005
My roundup of the Fox News Channel' s "Cost of Freedom" Saturday Morning shows-- is here. The Roundtable stock this weekend is CMCSA. Already weighing in on the Roundtable this weekend is Levi Bauer--other roundtable members are Tom at Sixth World, Ron Sen, Bill Cara, Kaushik Gala, and yours truly.
Congrats to Mr. and Mrs. Sixth World on their new arrival, Emily!
Ron Sen wins a prize again this week, with a total so far of 16 posts since yesterday morning. Lots of nice charts, some yada yada yada for Louise Yamada, and an admonition.
Bill Cara had, as he usually does, an outstanding review of the week. You'll want to set aside some time to read it but let me just throw out 2 nuggets--Bill says crude oil will see $35 before $55, and gold will go to $475.
Galatime reminded us again about the free subscriptions available to SFO magazine, as well as some earnings season options strategies on AEOS, SNY, COST, and PETM.
Random Roger had an interesting tidbit from Tom Dorsey, about how once a stock hits $90, its a good bet to get to $100. Micheal Taylor from Taylortree looked at the data--its an interesting exchange. Bottom line, its not a sure bet, but its better than 50/50.
Byrne at Marketview has been busy this weekend, commenting on everything from Social Security to Bono at the World Bank to the great Florida trailer bubble.
Stephen Castellano at Reflections on Equity Research--puts it right out there and says that Qwest will not acquire MCI. Gotta love it when somebody makes a call!
Ugly at uglychart has a bit on how to start your own stock market kung fu blog.
TraderMike had a nice little review of NVDA's chart as well as EBAY's and GOOG.
And last but not least is Chairman MaoXian, with a newsletter and his chat every weekday 8:30-9:30 Eastern time. Tell him ni hao!
And that's wazzup with my cyber-peeps for this weekend.
Congrats to Mr. and Mrs. Sixth World on their new arrival, Emily!
Ron Sen wins a prize again this week, with a total so far of 16 posts since yesterday morning. Lots of nice charts, some yada yada yada for Louise Yamada, and an admonition.
Bill Cara had, as he usually does, an outstanding review of the week. You'll want to set aside some time to read it but let me just throw out 2 nuggets--Bill says crude oil will see $35 before $55, and gold will go to $475.
Galatime reminded us again about the free subscriptions available to SFO magazine, as well as some earnings season options strategies on AEOS, SNY, COST, and PETM.
Random Roger had an interesting tidbit from Tom Dorsey, about how once a stock hits $90, its a good bet to get to $100. Micheal Taylor from Taylortree looked at the data--its an interesting exchange. Bottom line, its not a sure bet, but its better than 50/50.
Byrne at Marketview has been busy this weekend, commenting on everything from Social Security to Bono at the World Bank to the great Florida trailer bubble.
Stephen Castellano at Reflections on Equity Research--puts it right out there and says that Qwest will not acquire MCI. Gotta love it when somebody makes a call!
Ugly at uglychart has a bit on how to start your own stock market kung fu blog.
TraderMike had a nice little review of NVDA's chart as well as EBAY's and GOOG.
And last but not least is Chairman MaoXian, with a newsletter and his chat every weekday 8:30-9:30 Eastern time. Tell him ni hao!
And that's wazzup with my cyber-peeps for this weekend.
Saturday, February 26, 2005
Paging drgood--you were right and Jaloti was wrong
Back here on my loser list I mentioned a buying opportunity in the "canroys"--canadian oil and gas royalty trusts. Drgood commented by asking, essentially, isn't there a lot of downside risk in these since they will probably drop as interest rates rise? I responded by saying I always thought these were correlated more with the price of oil than with interest rates, but maybe I was wrong--I posted the charts and said look at the charts, maybe there is some correlation there, whaddya think?
The other day in the chairman's chat I mentioned I was looking at the correlations between the canroys, interest rates, and oil prices using "math". Let me say officially that I was wrong and Drgood was right. I'll give a few details below, but I looked at one canroy, PGH, and found a strong correlation with the price of treasuries, and in fact a little better correlation with the Nasdaq, for goodness' sake, than with the price of oil.
My method was fairly straightforward--I downloaded historical price data from stockcharts.com for PGH, the CBOT treasuries index, the West Texas Intemediate crude price, and the COMPQ.
I entered the numbers into my trusty Open Office spreadsheet (almost as good as excel, but the price is much better-"free"), and used the "R" correlation function. If you don't know what R is, it is essentially a measure of how 2 variables are correlated. If 2 variables are perfectly correlated, (e.g. one changes in exactly the same direction and ratio as the other), R would equal 1, if there was no correlation (e.g. two sets of random numbers) R would equal 0, and if they were perfectly negatively correlated (e.g. one moves in exactly the opposite direction--like bond prices and interest rates) R would equal -1. (If your smart in math/statistics you'll undoubtedly find flaws in my descriptions--if I am "materially misleading or incorrect" let me know. Aw heck, even if you want to nitpick let me know).
The results surprised me. Over the past 10 months, the correlation between PGH and treasuries was 0.8--that's pretty highly correlated. The correlation between PGH and the COMPQ was 0.66 and between PGH and WTI crude was 0.58. That's right--PGH was a little better correlated with the Nasdaq, than with crude. Over the past month, correlations were lower, but still better with treasuries than oil--PGH and treasuries was 0.57, and PGH and WTI was 0.47.
I intend to play around with these correlations a little more, but I have to say I am surprised, and hopefully I learned something. In the words of Alexander Elder--"I reserve the right to be smarter tomorrow than I am today." Thanks Drgood!
The other day in the chairman's chat I mentioned I was looking at the correlations between the canroys, interest rates, and oil prices using "math". Let me say officially that I was wrong and Drgood was right. I'll give a few details below, but I looked at one canroy, PGH, and found a strong correlation with the price of treasuries, and in fact a little better correlation with the Nasdaq, for goodness' sake, than with the price of oil.
My method was fairly straightforward--I downloaded historical price data from stockcharts.com for PGH, the CBOT treasuries index, the West Texas Intemediate crude price, and the COMPQ.
I entered the numbers into my trusty Open Office spreadsheet (almost as good as excel, but the price is much better-"free"), and used the "R" correlation function. If you don't know what R is, it is essentially a measure of how 2 variables are correlated. If 2 variables are perfectly correlated, (e.g. one changes in exactly the same direction and ratio as the other), R would equal 1, if there was no correlation (e.g. two sets of random numbers) R would equal 0, and if they were perfectly negatively correlated (e.g. one moves in exactly the opposite direction--like bond prices and interest rates) R would equal -1. (If your smart in math/statistics you'll undoubtedly find flaws in my descriptions--if I am "materially misleading or incorrect" let me know. Aw heck, even if you want to nitpick let me know).
The results surprised me. Over the past 10 months, the correlation between PGH and treasuries was 0.8--that's pretty highly correlated. The correlation between PGH and the COMPQ was 0.66 and between PGH and WTI crude was 0.58. That's right--PGH was a little better correlated with the Nasdaq, than with crude. Over the past month, correlations were lower, but still better with treasuries than oil--PGH and treasuries was 0.57, and PGH and WTI was 0.47.
I intend to play around with these correlations a little more, but I have to say I am surprised, and hopefully I learned something. In the words of Alexander Elder--"I reserve the right to be smarter tomorrow than I am today." Thanks Drgood!
Friday, February 25, 2005
Request for Assistance
Assistance is needed from Jaloti's readers.
A doctoral candidate is interviewing financial blog readers for a research paper.
Any financial blog reader (that's you, if you're reading this) qualifies, but especially needed are readers under age 35, and female readers.
I was interviewed today, and rather enjoyed it, but then I enjoy just going on and on and on about myself, don't I . . .
Anyhow, if you are willing and able to be interviewed, please email me at harryjaloti@hotmail.com and I'll send your info along.
A doctoral candidate is interviewing financial blog readers for a research paper.
Any financial blog reader (that's you, if you're reading this) qualifies, but especially needed are readers under age 35, and female readers.
I was interviewed today, and rather enjoyed it, but then I enjoy just going on and on and on about myself, don't I . . .
Anyhow, if you are willing and able to be interviewed, please email me at harryjaloti@hotmail.com and I'll send your info along.
Another blog
Loser List for February 25, 2005
CULS a break out, but actually not by much; why do I get the feeling this one will fail?
CNC rising out of a pullback-- long, stop about 30.5- 31
DDDC Pull back, buy with a stop at 4.4
IINT if it shows strength, long with a stop at 2.3
TGA overbought, but if the gap holds above 8, this may be buyable.
LAB pullback in an uptrend, long with a stop at 9
For the "long term"-
ACAS may want to look at this on a fundie basis, might be a tradable pullback with a stop at 33-33.6
KO another long termer, I think 42 and change may well prove to be a good place to get into this one.
MFD nice long termer, good divy, pullback in an uptrend, buy around 20.5 or so.
The Pennies-
MUCL ?long with a stop about 0.4?
CTCHC how many days do I need to say it-a classic pullback with reduced volume. long with a stop about 0.55 -0.6
How to use this list. As always, read the disclaimer.
CNC rising out of a pullback-- long, stop about 30.5- 31
DDDC Pull back, buy with a stop at 4.4
IINT if it shows strength, long with a stop at 2.3
TGA overbought, but if the gap holds above 8, this may be buyable.
LAB pullback in an uptrend, long with a stop at 9
For the "long term"-
ACAS may want to look at this on a fundie basis, might be a tradable pullback with a stop at 33-33.6
KO another long termer, I think 42 and change may well prove to be a good place to get into this one.
MFD nice long termer, good divy, pullback in an uptrend, buy around 20.5 or so.
The Pennies-
MUCL ?long with a stop about 0.4?
CTCHC how many days do I need to say it-a classic pullback with reduced volume. long with a stop about 0.55 -0.6
How to use this list. As always, read the disclaimer.
Thursday, February 24, 2005
Free Energy!! (essentially)
Props to the truck and barter boys for this one:
money quote:
Although expensive to build, solar towers "essentially produce energy for free," said Sherif [a University of Florida professor of mechanial and aerospace engineering].
The Jaloti corollary:
"Although expensive to buy and hang in your living room, a Picasso provides enjoyment and prestige essentially for free"
(I won't even bring up opportunity cost like T&B did . . . )
money quote:
Although expensive to build, solar towers "essentially produce energy for free," said Sherif [a University of Florida professor of mechanial and aerospace engineering].
The Jaloti corollary:
"Although expensive to buy and hang in your living room, a Picasso provides enjoyment and prestige essentially for free"
(I won't even bring up opportunity cost like T&B did . . . )
Loser List for February 24, 2005
MFLX Pullback--long with a stop at 20?
ACU Volume is a little low, maybe long with a stop at 16
ADAM long, with a stop at 5.5. Maybe
CTCHC a penny, long, stop at 0.6
GLOW if it show shows strength, long with a stop at 2
ISCA long, stop at 54
PLUM might be peachy above 5
NFI if 32-33 holds it might be time to get back in--if it doesn't then it isn't :>)
ACU Volume is a little low, maybe long with a stop at 16
ADAM long, with a stop at 5.5. Maybe
CTCHC a penny, long, stop at 0.6
GLOW if it show shows strength, long with a stop at 2
ISCA long, stop at 54
PLUM might be peachy above 5
NFI if 32-33 holds it might be time to get back in--if it doesn't then it isn't :>)
Wednesday, February 23, 2005
Update to the Loser List for Today
It should be CTIC--I've changed the original post to reflect that.
And I wasn't kidding about free gasoline with SUOG--check out the press release, about 2/3 of the way down.
And I wasn't kidding about free gasoline with SUOG--check out the press release, about 2/3 of the way down.
Loser List for February 23, 2005
No more gloating about being on the right side of gold, oil, and the dollar--it's all about what's happening now.
COMPQ looks like it could go to 2000.
SINA and SOHU gapped right to the 200d and pulled back-funny how that works
ASTM--bring back the fork
BOOM--interesting chart--is that a buyable gap up, or a failed test of top? I'm not sure, so I'm staying away; if you've got an edge here go for it.
ALEX one of my long term holds (they own a lot of Hawaiian real estate carried on the books at 50 year old prices) , nice uptrend, this may be a buyable pullback above 42.
CTIC still looking like a failed breakout. Short with a stop at 11
GLOW might be a buyable pullback--if it shows some strength, long with a stop about 2
LCBM--strong uptrend, some range contraction, long with a 16 stop?
Pennies--if you've got any spare change, you might look at one of these slot machines:
PMU --breaking out--stop at 0.6
MUCL might take a poke at this one, long, with a stop at 0.40
SUOG, long above 0.20 and free gas!
IINT if you've got anything left over, might go long if it shows strength, stop about 2.4
Read what this list is about and check out the disclaimer.
COMPQ looks like it could go to 2000.
SINA and SOHU gapped right to the 200d and pulled back-funny how that works
ASTM--bring back the fork
BOOM--interesting chart--is that a buyable gap up, or a failed test of top? I'm not sure, so I'm staying away; if you've got an edge here go for it.
ALEX one of my long term holds (they own a lot of Hawaiian real estate carried on the books at 50 year old prices) , nice uptrend, this may be a buyable pullback above 42.
CTIC still looking like a failed breakout. Short with a stop at 11
GLOW might be a buyable pullback--if it shows some strength, long with a stop about 2
LCBM--strong uptrend, some range contraction, long with a 16 stop?
Pennies--if you've got any spare change, you might look at one of these slot machines:
PMU --breaking out--stop at 0.6
MUCL might take a poke at this one, long, with a stop at 0.40
SUOG, long above 0.20 and free gas!
IINT if you've got anything left over, might go long if it shows strength, stop about 2.4
Read what this list is about and check out the disclaimer.
Tuesday, February 22, 2005
Floor traders 1, Greenpeace 0
What happens when you screw with raw capitalism:
http://www.timesonline.co.uk/article/0,,2-1487741,00.html
WHEN 35 Greenpeace protesters stormed the International Petroleum Exchange (IPE) yesterday they had planned the operation in great detail.
What they were not prepared for was the post-prandial aggression of oil traders who kicked and punched them back on to the pavement.
“We bit off more than we could chew. They were just Cockney barrow boy spivs. Total thugs,” one protester said, rubbing his bruised skull. “I’ve never seen anyone less amenable to listening to our point of view.”
Another said: “I took on a Texan Swat team at Esso last year and they were angels compared with this lot.” Behind him, on the balcony of the pub opposite the IPE, a bleary-eyed trader, pint in hand, yelled: “Sod off, Swampy.”
http://www.timesonline.co.uk/article/0,,2-1487741,00.html
WHEN 35 Greenpeace protesters stormed the International Petroleum Exchange (IPE) yesterday they had planned the operation in great detail.
What they were not prepared for was the post-prandial aggression of oil traders who kicked and punched them back on to the pavement.
“We bit off more than we could chew. They were just Cockney barrow boy spivs. Total thugs,” one protester said, rubbing his bruised skull. “I’ve never seen anyone less amenable to listening to our point of view.”
Another said: “I took on a Texan Swat team at Esso last year and they were angels compared with this lot.” Behind him, on the balcony of the pub opposite the IPE, a bleary-eyed trader, pint in hand, yelled: “Sod off, Swampy.”
Don't you just hate . . .
. . . those pundits with selective memory who are always plugging their right calls and forgetting their wrong ones?
(sigh)I can't help it.
I'm one of them.
With today's moves in gold, oil, and the dollar, doesn't this Haiku look like I knew something?
Yeah, like a stopped clock knows something :>)
(sigh)I can't help it.
I'm one of them.
With today's moves in gold, oil, and the dollar, doesn't this Haiku look like I knew something?
Yeah, like a stopped clock knows something :>)
Loser List for February 22, 2005
Oil indices XOI and OIX look overextended and due for a correction, but when? If you're in the oils, trailing stop. If not in, wait for a pullback.
LENF --another BB, does range contraction ... at 5?
MFLX--if it shows some strength, it might be a buy with a stop at 22.
MUCL--if you've got beer money you don't need, take a flier with a stop at 0.40
ADAM buyable pullback stop at 6?
FFIV long stop at 51
NAT buyable pullback at 50?
PLUM--consolidating above 5, and maybe some of that range contraction stuff as well
TKF, long, stop 19
How to use this list. As always, read the disclaimer.
LENF --another BB, does range contraction ... at 5?
MFLX--if it shows some strength, it might be a buy with a stop at 22.
MUCL--if you've got beer money you don't need, take a flier with a stop at 0.40
ADAM buyable pullback stop at 6?
FFIV long stop at 51
NAT buyable pullback at 50?
PLUM--consolidating above 5, and maybe some of that range contraction stuff as well
TKF, long, stop 19
How to use this list. As always, read the disclaimer.
Monday, February 21, 2005
Just to show I'm not just a short term trader
Another one of those Top Performers lists--This is top 25 of 1994-2004.
http://www.thinkequity.com/blog/reports/topperformers.pdf
(note--I suspect #2 doesn't include the past couple months . . .)
1. APOL Apollo Group, Inc.
2. CREE Cree, Inc.
3. DRL Doral Financial Corp.
4. QCOM QUALCOMM, Inc.
5. SHFL Shuffle Master, Inc.
6. DHI D.R. Horton Inc.
7. AMHC American Healthways, Inc.
8. OSK Oshkosh Truck Corporation
9. WFMI Whole Foods Market, Inc.
10. SBUX Starbucks Corporation
11. SLM SLM Corporation
12. COF Capital One Financial Corp.
13. RYL The Ryland Group, Inc.
14. TECH Techne Corporation
15. EV Eaton Vance Corp.
16. HAR Harman International Industries Inc./DE/
17. TOL Toll Brothers, Inc.
18. MSCC Microsemi Corporation
19. CAI CACI International Inc
20. HARB Harbor Florida Bancshares, Inc.
21. NTY NBTY, Inc.
22. BZH Beazer Homes USA, Inc.
23. JKHY Jack Henry & Associates, Inc.
24. ZQK Quiksilver, Inc.
25. CDWC CDW Corporation
http://www.thinkequity.com/blog/reports/topperformers.pdf
(note--I suspect #2 doesn't include the past couple months . . .)
1. APOL Apollo Group, Inc.
2. CREE Cree, Inc.
3. DRL Doral Financial Corp.
4. QCOM QUALCOMM, Inc.
5. SHFL Shuffle Master, Inc.
6. DHI D.R. Horton Inc.
7. AMHC American Healthways, Inc.
8. OSK Oshkosh Truck Corporation
9. WFMI Whole Foods Market, Inc.
10. SBUX Starbucks Corporation
11. SLM SLM Corporation
12. COF Capital One Financial Corp.
13. RYL The Ryland Group, Inc.
14. TECH Techne Corporation
15. EV Eaton Vance Corp.
16. HAR Harman International Industries Inc./DE/
17. TOL Toll Brothers, Inc.
18. MSCC Microsemi Corporation
19. CAI CACI International Inc
20. HARB Harbor Florida Bancshares, Inc.
21. NTY NBTY, Inc.
22. BZH Beazer Homes USA, Inc.
23. JKHY Jack Henry & Associates, Inc.
24. ZQK Quiksilver, Inc.
25. CDWC CDW Corporation
George Orwell and Blogging
The fact that a loser like me can just set up a blog and actually have people read it, got me to revisit a recurrent thought I've had--that George Orwell in 1984 got it half right and half wrong. Orwell's "negative utopia" had ubiquitous "telescreens", something he conceived of as a television set that could both receive and transmit; it could both feed you the government's line, and spy on how closely you were following it. With computers, laptops, web cameras, and everywhere internet access, we're basically there. What Eric Blair (Orwell's real name) couldn't quite see was that all this recieving and transmitting could go in many directions. Being a good socialist, he only saw the central planning model, where "the word" goes out from one location to all, and the return path is from all back to the central location. He didn't (apparently) envision telescreens that were peer-to-peer, to use the term loosely, where any one can see and talk to and write to any other one (or many other ones), where in fact this giant network of two-way telescreens that we call the internet lets us choose from a multiplicity of voices, not be forced to hear just one.
Yeah, ok, the markets need to open back up so I don't get too philosophical . . . .
Yeah, ok, the markets need to open back up so I don't get too philosophical . . . .
Interesting site and post
With the US markets closed today, it might be a good day to catch up on reading, etc. Check out Michael Taylor's TaylorTree site. He's got a lot of good stuff with some interesting insights. He made a comment on the move into electronic medical records and how QSII might benefit from that. He also linked to a fascinating interview of Bob Hoye from institutionaladvisors.com: "The world is long inflation and short the dollar." Definitely some "against the crowd" views there; it's worth the read.
Sunday, February 20, 2005
Sunday Night Charts for February 20, 2005
All weekly charts.
Let's start with a new one.
The Dow Jones Utility Average
Courtesy of stockcharts.com
Trendline intact. Lots of support below based on volume and prior highs. Still a bull run.
Next is the Nasdaq Composite
Courtesy of stockcharts.com
Despite the action of the past few weeks, the longer term trendline is still intact.
The CRB Weekly
Courtesy of stockcharts.com
I worried here and here about the trend maybe being over, but it looks like temporary violation of the trendline may be reversed. Looks more like the bull is continuing than ending.
As confirmation of the CRB, here is the CME stock chart
Courtesy of stockcharts.com
Despite a nasty gap down on the daily the other day, trendline is intact.
Here is Gold
Courtesy of stockcharts.com
Again, the bull continues.
Next is West Texas Intermediate Crude (oil, that is, black gold, Texas Tea)
Courtesy of stockcharts.com
Not even really overextended.
However the Oil index, representing oil equities, is a little different story.
Courtesy of stockcharts.com
Definitely overbought, based on the RSI, the Bollinger Bands, the distance above the 50d and 200d, and probably any other criteria known to man. However, overbought can stay overbought for a long time. Additionally, check out late '04--same story, parabolic move up, overbought, but corrected not by dropping but by marching in place. Could the oil stocks correct from here--sure, but it may be by stagnating rather than dropping. It also may occur 10%, 20% above here. Thus, if you're in--trailing stop. If you're out, might want to wait and see.
Finally is the USD
Courtesy of stockcharts.com
continuing its downtrend as I called here and here.
Good luck and have a great week!
Let's start with a new one.
The Dow Jones Utility Average
Courtesy of stockcharts.com
Trendline intact. Lots of support below based on volume and prior highs. Still a bull run.
Next is the Nasdaq Composite
Courtesy of stockcharts.com
Despite the action of the past few weeks, the longer term trendline is still intact.
The CRB Weekly
Courtesy of stockcharts.com
I worried here and here about the trend maybe being over, but it looks like temporary violation of the trendline may be reversed. Looks more like the bull is continuing than ending.
As confirmation of the CRB, here is the CME stock chart
Courtesy of stockcharts.com
Despite a nasty gap down on the daily the other day, trendline is intact.
Here is Gold
Courtesy of stockcharts.com
Again, the bull continues.
Next is West Texas Intermediate Crude (oil, that is, black gold, Texas Tea)
Courtesy of stockcharts.com
Not even really overextended.
However the Oil index, representing oil equities, is a little different story.
Courtesy of stockcharts.com
Definitely overbought, based on the RSI, the Bollinger Bands, the distance above the 50d and 200d, and probably any other criteria known to man. However, overbought can stay overbought for a long time. Additionally, check out late '04--same story, parabolic move up, overbought, but corrected not by dropping but by marching in place. Could the oil stocks correct from here--sure, but it may be by stagnating rather than dropping. It also may occur 10%, 20% above here. Thus, if you're in--trailing stop. If you're out, might want to wait and see.
Finally is the USD
Courtesy of stockcharts.com
continuing its downtrend as I called here and here.
Good luck and have a great week!
Weekend Wazzup for February 20, 2005
My roundup of the Fox News Channel' s "Cost of Freedom" Saturday Morning shows-- is here.
Weighing in on the Roundtable today are Tom at Sixth World, Ron Sen, Bill Cara, Kaushik Gala, Levi Bauer , and yours truly. The stock is AAPL, and I think everybody has some useful insights, even if we all pretty much came to the same conclusion.
Speaking of my roundtable brothers, it looks like Tom may have some big news soon. Good luck, Mr. and Mrs. Sixth World!
Ron Sen has changed the name of his blog to Technically Speaking. Ron, I don't care what you call it, it's still great stuff. He had a whole plethora of posts covering a wide range of topics, including many charts. He coined the best nickname this week: "Abby-normal Joseph Cohen."
Bill Cara had, as he usually does, an outstanding review of the week. I was somewhat surprised to see him on the same side of the LEXR trade as Tobin Smith. Maybe I need to look at that one.
Levi the Soothsayer of Omaha had what I consider a model of evaluating a stock--take a look at his review of AAPL.
Moving on and picking a name at random, Roger Nusbaum had a couple very insightful comments--one of them being a more in depth view of something I commented on as well. He also asks if a bell is ringing for Brazil, Russia, India and China. I said it before I'll say it again, I can always count on Roger for insights I don't get elsewhere.
Always providing insight is Chairman MaoXian, whose newsletter came out a day early this weekend. He's not taking more donations for it at this time, but he's still the man! ;>) Check out his chat every weekday 8:30-9:30 Eastern time.
Also check out Byrne's Marketview who has a couple observations on the Verizon-MCI deal.
CommodityTrader noted that the price of copper is nearing an all-time high. (Still hasn't done anything for my position in MKRR, though.)
Ugly at uglychart also weighs in with his view of AAPL. There has been some good natured back and forth about this. I was also interested to see his review of Shaolin Soccer, a movie that I enjoyed as well.
New on my list of blogs is Stephen Castellano at Reflections on Equity Research--he links to Jaloti, how bad can he be! ;>)
TraderMike has been quiet so far this weekend. He's probably busy reading the rest of us. :>)
Weighing in on the Roundtable today are Tom at Sixth World, Ron Sen, Bill Cara, Kaushik Gala, Levi Bauer , and yours truly. The stock is AAPL, and I think everybody has some useful insights, even if we all pretty much came to the same conclusion.
Speaking of my roundtable brothers, it looks like Tom may have some big news soon. Good luck, Mr. and Mrs. Sixth World!
Ron Sen has changed the name of his blog to Technically Speaking. Ron, I don't care what you call it, it's still great stuff. He had a whole plethora of posts covering a wide range of topics, including many charts. He coined the best nickname this week: "Abby-normal Joseph Cohen."
Bill Cara had, as he usually does, an outstanding review of the week. I was somewhat surprised to see him on the same side of the LEXR trade as Tobin Smith. Maybe I need to look at that one.
Levi the Soothsayer of Omaha had what I consider a model of evaluating a stock--take a look at his review of AAPL.
Moving on and picking a name at random, Roger Nusbaum had a couple very insightful comments--one of them being a more in depth view of something I commented on as well. He also asks if a bell is ringing for Brazil, Russia, India and China. I said it before I'll say it again, I can always count on Roger for insights I don't get elsewhere.
Always providing insight is Chairman MaoXian, whose newsletter came out a day early this weekend. He's not taking more donations for it at this time, but he's still the man! ;>) Check out his chat every weekday 8:30-9:30 Eastern time.
Also check out Byrne's Marketview who has a couple observations on the Verizon-MCI deal.
CommodityTrader noted that the price of copper is nearing an all-time high. (Still hasn't done anything for my position in MKRR, though.)
Ugly at uglychart also weighs in with his view of AAPL. There has been some good natured back and forth about this. I was also interested to see his review of Shaolin Soccer, a movie that I enjoyed as well.
New on my list of blogs is Stephen Castellano at Reflections on Equity Research--he links to Jaloti, how bad can he be! ;>)
TraderMike has been quiet so far this weekend. He's probably busy reading the rest of us. :>)
Roundtable on AAPL
This week's Roundtable stock is AAPL. Joining me in evaluating it are Tom Ott, Kaushik Gala, Levi Bauer, Ron Sen, & Bill Cara. I try pretty hard not to look at my colleagues' evals before I write mine, because I don't want to bias myself. I have to confess this week I glanced at Levi's; frankly, after seeing it I'm tempted to write "just read Levi's write-up, I can't add anything intelligent to that"--he put together a disciplined, thorough, step by step comprehensive look at it that is just outstanding. Nevertheless, I'll try to say something semi-intelligent and vaguely appropriate.
Apple to me is one of those "cult" companies and products. There are fanatics who think Apple's products are "genius", and who think Jobs is a visionary pioneer, and then there are people like me who say, "yeah, that's kinda cool, but Dell makes pretty much the same thing cheaper, and Whizbango makes something similar for a whole lot cheaper."
If this sounds derogatory, I apologize; I don't mean it that way--what I really mean to say is that I just don't get it, it being Apple's products or the company. To me computers become more and more of a commodity every year, and why one product or one company deserves a premium is unclear to me. However, just because I don't "get" something doesn't mean it can't work.
Right now it does look like Apple the stock is commanding a premium compared to other computer manufacturers. It sports a PE of 70, compared to Dell's 30, and the industry average of 24, and a PS of 3.6, compared to Dell's 2 and the industry's 1.5. Yeah, but its a fast grower right now, you say--except that its PEG ratio is 2, compared to Dell's1.1 and the industry's 1.3. Now, I know this is just a cursory look at simple numbers, but sometimes you don't have to put the fat person on a fancy scale to know that he's fat. I don't see any way to call this company a "buy" on a fundamental basis--the time to do that was late '02-early '03 when it was priced in the low teens and, as I recall, had 12 bucks per share in cash. Of course, then there were rumblings that Apple was "over" (that's always the way it is, isn't it?).
Let's look at some technicals. I think those are a pretty simple stratightforward story as well.
Here is the weekly chart for AAPL
courtesy of stockcharts.com
While it certainly has come real far real fast, I wouldn't short it--its come this far, who's to say it can't go up another 20,30,50, or even 100 points? When a stock has risen like this, I think it's a coin flip as to whether the next 20-30 points will be up or down. Thus, I have no edge in picking the direction here. I will say that a simple glance at the chart shows me support at 60, from the consolidation there, and the fibonacci retracement. If we get a pullback to about 60, and then some strength again, one could justify going long again with a stop just below 60.
The money quote: Any way you look at this one, it's expensive. If you're lucky enough to be in this one from a lot lower, two words: trailing stop. If you're not in this one, I'd stay out. I wouldn't do anything till after a significant correction.
Apple to me is one of those "cult" companies and products. There are fanatics who think Apple's products are "genius", and who think Jobs is a visionary pioneer, and then there are people like me who say, "yeah, that's kinda cool, but Dell makes pretty much the same thing cheaper, and Whizbango makes something similar for a whole lot cheaper."
If this sounds derogatory, I apologize; I don't mean it that way--what I really mean to say is that I just don't get it, it being Apple's products or the company. To me computers become more and more of a commodity every year, and why one product or one company deserves a premium is unclear to me. However, just because I don't "get" something doesn't mean it can't work.
Right now it does look like Apple the stock is commanding a premium compared to other computer manufacturers. It sports a PE of 70, compared to Dell's 30, and the industry average of 24, and a PS of 3.6, compared to Dell's 2 and the industry's 1.5. Yeah, but its a fast grower right now, you say--except that its PEG ratio is 2, compared to Dell's1.1 and the industry's 1.3. Now, I know this is just a cursory look at simple numbers, but sometimes you don't have to put the fat person on a fancy scale to know that he's fat. I don't see any way to call this company a "buy" on a fundamental basis--the time to do that was late '02-early '03 when it was priced in the low teens and, as I recall, had 12 bucks per share in cash. Of course, then there were rumblings that Apple was "over" (that's always the way it is, isn't it?).
Let's look at some technicals. I think those are a pretty simple stratightforward story as well.
Here is the weekly chart for AAPL
courtesy of stockcharts.com
While it certainly has come real far real fast, I wouldn't short it--its come this far, who's to say it can't go up another 20,30,50, or even 100 points? When a stock has risen like this, I think it's a coin flip as to whether the next 20-30 points will be up or down. Thus, I have no edge in picking the direction here. I will say that a simple glance at the chart shows me support at 60, from the consolidation there, and the fibonacci retracement. If we get a pullback to about 60, and then some strength again, one could justify going long again with a stop just below 60.
The money quote: Any way you look at this one, it's expensive. If you're lucky enough to be in this one from a lot lower, two words: trailing stop. If you're not in this one, I'd stay out. I wouldn't do anything till after a significant correction.
Saturday, February 19, 2005
Fox Saturday Morning "Business Bloc" for February 19, 2005
Fox News Channel' s "Cost of Freedom" Saturday Morning shows--
All four shows had a lot of the usual pointless back and forth macro talk--housing- is it a bubble, is tech coming or going, etc. A lot of this seems to be the same-old same-old every week, so I basically ignore most of it unless there is some unusual insight (rare) and concentrate on the specific stock mentions.
Bulls and Bears
Had a "Scoreboard" segment which was a review of guests' previous picks, good and bad. The two most interesting things in this segment were 1) they generally only talk about stocks with a market cap greater than 500 million on this show, so they had to make exceptions for KKD and LEXR; and 2) nobody said anything about a stop loss being important in the case of some of these bad picks. As for specifics, Tobin Smith scored with picking MSO but now says sell it; also had picked LEXR (loser) but said he's buying it again(he said it has $2 in cash per share). Scott Bleier had a winner with LSS and currently says hold it; his big loser was GNSS. Perma-bull Joe Battipaglia picked NMGa which he says is still a hold but he had said avoid EK which subsequently racked up some gains.(Kinda ironic that the perma-bull's "avoid" pick was a winner.) Pat Dorsey picked NOK which he called still a hold but had picked KKD last May(he said he missed some warning signs). Gary Kaltbaum had a winner in MAR (still a hold) but a loser in LLY.
In the predictions segment Tobin Smith called for a test of the Nasdaq bottom and then a rally, Joe Battipaglia said buy SGP and BMY, Pat Dorsey liked DV and Gary Kaltbaum said MSFT will sink.
Cavuto
Lots of pointless macro talk but this interesting exchange in regard to the housing bubble question-- Ben Stein said there is a shortage of home inventory in Southern California, and Jim Rogers compared that to when the pundits said there was a shortage of stock in 1968, right at the top. Next was a segment on how well C, TYC, TWX have done since scandals and bad news. Rogers says buy ABB and short FNM and the homebuilders but Charles Payne says go long FNM. (Insert your favorite comment about it takes two sides to make a market) Payne also recommended RHI.
Forbes on Fox
Had a rather non-specific discussion about whether cable companies or phone companies were a better buy. Mentioned as a speculative buy was CHTR , as a possible takeover was CMCSA, also mentioned was VZ, supposedly cheap at 13x earnings.
Cashin In
Wayne Rogers says oil, gas and natural resources are still strong and he mentioned PKZ, PTR, BR, VLO, BHP saying he owns them all. He also mentioned TSRA. Jonathan Hoenig says utilites and reinsureance are the trends he sees. As usual he managed to mention a number of tickers he owns in passing: PBR E COP BP XOM RD. (In case it isn't clear I appreciate this--I watch these shows to get specific stocks to look into). His featured pick was Brazilian utility ELP and he also mentioned SBS CPL CIG. When he was challenged that their dividends were realtively low, he said he owns them for the capital appreciation more than the divys. Danielle Hughes picked ERICY and said she owns it. Jonas Max Ferris picked BCS, in part because he believes them to be in the running to manage private social security accounts. Wayne Rogers liked the stock and said it has a great website. Ferris also picked ANPI as a speculation for drug coated stents--he's looking for a surprise on earnings next week.
All four shows had a lot of the usual pointless back and forth macro talk--housing- is it a bubble, is tech coming or going, etc. A lot of this seems to be the same-old same-old every week, so I basically ignore most of it unless there is some unusual insight (rare) and concentrate on the specific stock mentions.
Bulls and Bears
Had a "Scoreboard" segment which was a review of guests' previous picks, good and bad. The two most interesting things in this segment were 1) they generally only talk about stocks with a market cap greater than 500 million on this show, so they had to make exceptions for KKD and LEXR; and 2) nobody said anything about a stop loss being important in the case of some of these bad picks. As for specifics, Tobin Smith scored with picking MSO but now says sell it; also had picked LEXR (loser) but said he's buying it again(he said it has $2 in cash per share). Scott Bleier had a winner with LSS and currently says hold it; his big loser was GNSS. Perma-bull Joe Battipaglia picked NMGa which he says is still a hold but he had said avoid EK which subsequently racked up some gains.(Kinda ironic that the perma-bull's "avoid" pick was a winner.) Pat Dorsey picked NOK which he called still a hold but had picked KKD last May(he said he missed some warning signs). Gary Kaltbaum had a winner in MAR (still a hold) but a loser in LLY.
In the predictions segment Tobin Smith called for a test of the Nasdaq bottom and then a rally, Joe Battipaglia said buy SGP and BMY, Pat Dorsey liked DV and Gary Kaltbaum said MSFT will sink.
Cavuto
Lots of pointless macro talk but this interesting exchange in regard to the housing bubble question-- Ben Stein said there is a shortage of home inventory in Southern California, and Jim Rogers compared that to when the pundits said there was a shortage of stock in 1968, right at the top. Next was a segment on how well C, TYC, TWX have done since scandals and bad news. Rogers says buy ABB and short FNM and the homebuilders but Charles Payne says go long FNM. (Insert your favorite comment about it takes two sides to make a market) Payne also recommended RHI.
Forbes on Fox
Had a rather non-specific discussion about whether cable companies or phone companies were a better buy. Mentioned as a speculative buy was CHTR , as a possible takeover was CMCSA, also mentioned was VZ, supposedly cheap at 13x earnings.
Cashin In
Wayne Rogers says oil, gas and natural resources are still strong and he mentioned PKZ, PTR, BR, VLO, BHP saying he owns them all. He also mentioned TSRA. Jonathan Hoenig says utilites and reinsureance are the trends he sees. As usual he managed to mention a number of tickers he owns in passing: PBR E COP BP XOM RD. (In case it isn't clear I appreciate this--I watch these shows to get specific stocks to look into). His featured pick was Brazilian utility ELP and he also mentioned SBS CPL CIG. When he was challenged that their dividends were realtively low, he said he owns them for the capital appreciation more than the divys. Danielle Hughes picked ERICY and said she owns it. Jonas Max Ferris picked BCS, in part because he believes them to be in the running to manage private social security accounts. Wayne Rogers liked the stock and said it has a great website. Ferris also picked ANPI as a speculation for drug coated stents--he's looking for a surprise on earnings next week.
Friday, February 18, 2005
Thanks
I'd just like to take a moment to thank everyone who's sent a tip, everyone who's sent an email, or posted a comment and especially everyone who's just stopped by and looked at a page or two on my site. I started this effort as a way to just get my thoughts and plans down in black and white as a way to help me in my trading; I continue to be pleasantly surprised, gratified and flattered that so many people actually are reading what I write.
I'm going to keep writing, and I hope y'all keep reading.
Thanks again.
I'm going to keep writing, and I hope y'all keep reading.
Thanks again.
TA vs. FA
Byrne had a thought provoking post about Technical Analysis. He certainly is pretty open minded about it for a fundamentals guy. I sorta agree and sorta disagree with him though. Money quote: "One of the crucial differences between fundamentals and technicals in this respect is that fundamental analysis is about taking a lot of data and applying a few rules, whereas technical analysis involves a little data (prices and volume) and a lot of rules. "
Certainly, TA only uses price and volume as data--everything else is derived from that. As for a lot of rules, I think that depends on the implementation. Certainly there are a lot of rules out there, but I'm not sure that the successful use of TA depends on using a lot of them--in fact quite the contrary; I think the more successful TA traders use only a few simple rules.
He also said, "However, most of what it (technical analysis) offers is the same thing fundamental analysis offers: Confidence. I'll go out on a limb and hypothesize that whether or not there's any real science behind the discipline of picking stocks, people who are confident that they're right (and can admit it when they're wrong) will do better than the rest." Mostly, I agree with this--especially with the "can admit it when they're wrong" part. I think an essential component of any successful approach is that you pick some criteria by which your thesis will be proven wrong, and set up a contingency plan for what you will do then (i.e., close your position).
In my view what makes TA useful is that to, some degree, EVERYBODY trades on price. The Warren Buffetts of the world say, I'm buying KO below 40 and not a penny more--so the technician says the volume coming in and every dip below 40 get pushed back up to form a nice hammer or whatever you're calling the formation(support). The average Joe trader says I'm underwater on INTC, so everytime it gets back to my entry point at 24, I'm gonna sell and use the money for table dances (note, NOT a work-safe link) and booze. This shows up on the chart as well(resistance.) Oversimplified, but you get the idea.
Certainly, TA only uses price and volume as data--everything else is derived from that. As for a lot of rules, I think that depends on the implementation. Certainly there are a lot of rules out there, but I'm not sure that the successful use of TA depends on using a lot of them--in fact quite the contrary; I think the more successful TA traders use only a few simple rules.
He also said, "However, most of what it (technical analysis) offers is the same thing fundamental analysis offers: Confidence. I'll go out on a limb and hypothesize that whether or not there's any real science behind the discipline of picking stocks, people who are confident that they're right (and can admit it when they're wrong) will do better than the rest." Mostly, I agree with this--especially with the "can admit it when they're wrong" part. I think an essential component of any successful approach is that you pick some criteria by which your thesis will be proven wrong, and set up a contingency plan for what you will do then (i.e., close your position).
In my view what makes TA useful is that to, some degree, EVERYBODY trades on price. The Warren Buffetts of the world say, I'm buying KO below 40 and not a penny more--so the technician says the volume coming in and every dip below 40 get pushed back up to form a nice hammer or whatever you're calling the formation(support). The average Joe trader says I'm underwater on INTC, so everytime it gets back to my entry point at 24, I'm gonna sell and use the money for table dances (note, NOT a work-safe link) and booze. This shows up on the chart as well(resistance.) Oversimplified, but you get the idea.
A little housekeeping about the Loser List
Every day I post the "Loser List". I give it this name because I call myself Just Another Loser On The Internet. This is a list that I work off of to make trades, based mostly on technicals. Usually, I am looking at something that is trending, has moved against the trend ("pulled back", if in an uptrend), and is now resuming its trend. (Otherwise known as "buying strength on weakness" or "selling weakness on strength".)My time frame is nearly always at least a couple days, and sometimes much longer.
It certainly is not a recommendation to buy or sell, because, after all, if you remember from the disclaimer, I am not a registered investment advisor and thus could not make such recommendations. Obviously, anybody has to due their own due diligence and look at all the factors that might be important to them in buying or selling a stock. So, take the names you see on my list, and use them as a starting point for your own evaluation. Or maybe you should just fade me, that might be a plan . . . ;>)
It certainly is not a recommendation to buy or sell, because, after all, if you remember from the disclaimer, I am not a registered investment advisor and thus could not make such recommendations. Obviously, anybody has to due their own due diligence and look at all the factors that might be important to them in buying or selling a stock. So, take the names you see on my list, and use them as a starting point for your own evaluation. Or maybe you should just fade me, that might be a plan . . . ;>)
MSFT shows its m4d sk1llz
Very interesting to see article at Microsoft.com on l33t ( pronounced "leet"in case you didn't know), also known as "hackz0r" or "h4kz0r" ("hack-sore"). If you didn't know what the kids these days are up to, this is a bit of an introduction. It did sort of remind me a bit of my parents' generation passing information to each other about what us kids were up to ("Marijuana is referred to by many names: maryjane, hash, reefer, pot, stash, lid, key") of course, they would get the syntax wrong, and leave out the latest names. There always seems to be an element of "those kids have their own lingo to hide their shenanigans from us" and that's probably true. Frankly (and to get semi-serious for only a minute I promise) as the parent of a teenager I worry very little about what he does on the internet; with only a few exceptions (writing viruses, etc.) they don't get into trouble or run into harm on the net, its when they leave the net and go out into the real world and get wasted, drive cars, play grab-ass and try to get into each other's pants that the real trouble happens.
The more time they spend on the net calling each other "n00b" and discussing their "m4d sk1lz", the less time they have to get into real trouble.
The more time they spend on the net calling each other "n00b" and discussing their "m4d sk1lz", the less time they have to get into real trouble.
Loser List for February 18, 2005
ADAM--buyable dip?- stop at 5.5
DDDC-buyable pullback? stop at 5
CTIC fake out break out? (thanks makin) short below 10?
GTEL--want to play a BB penny--buy the pullback, stop at 0.25--or you could spend the money on booze, it'd probably be more rewarding
CTCHC--another penny, stop at 0.65
PMU--penny breaking but--if it gets above the 200day at 0.64, might be worth picking up a couple shares
ASTM --gotta hold 3, or the fork gets stuck in it(again).
DDDC-buyable pullback? stop at 5
CTIC fake out break out? (thanks makin) short below 10?
GTEL--want to play a BB penny--buy the pullback, stop at 0.25--or you could spend the money on booze, it'd probably be more rewarding
CTCHC--another penny, stop at 0.65
PMU--penny breaking but--if it gets above the 200day at 0.64, might be worth picking up a couple shares
ASTM --gotta hold 3, or the fork gets stuck in it(again).
Subscribe to:
Posts (Atom)