Chairman MaoXian had a thought provoking post today linking to an article about newspapers and free web access. The gist of the original link seemed to be that newspapers are losing paid circulation to free web access of their content. The Chairman, (I think) disagrees and thinks they only get more readers with free web content. I guess I disagree with the specifics, but basically agree with the general point. I do agree with the Chairman that paid web access is a pain (I'm a cheap bastard too) and short-sighted, but I suspect it does cost the papers paid subscribers. I mean, look at the numbers presented for the NY Times--their subscribers are down, in a country/world with ever-expanding population and resources. However, the issue may not be that people are deciding, do I pay for the paper NYT or read it online. No, I think the larger issue is that there are so many free sources of information, most of them online, that people think why should I pay for it?
By and large, I think people want nuggets of information; they don't want the NYT or the WSJ per se, they want the nuggets. If they can get the same nuggets for free, why pay? I think on a small scale, a paper loses paid readers when they put their content out for free, but they have no choice, really; whether they charge or not, they may be losing "eyeballs" to some other nugget provider. It's like when AOL tried to persist in their proprietary content as the internet grew; eventually, they figured out there was just too much good free stuff out there, that nobody really cared about their unique AOL stuff, and so they just became an access provider, really.
The challenge for newspapers (and everybody, really, including me and the Chairman) is with all the ways to get free nuggets, how do you distinguish yourself so that people gotta have your nuggets?
Thursday, March 17, 2005
Loser List for March 17, 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. . .
ABLE may have found support,at 8.5
BOOM wait for a bounce, might be a buy with a stop at 29.4
CLF keep an eye on it, 69.6 may be support
HANS is this the pullback, support at 54? I don't know
PTA long, stop at 2.25
ELP long support at 4.5
CPC nice breakout, stop at 15.7
IVX long, stop at 18.36
LFB, a breakout, stop at 18.4
OMR, breakout, stop 3.1
OPNT, stop at 8.5
GM think about a short, stop 30
pennies
JSDA a breakout, long, stop at 4.88
CTCHC let's see if 0.70 holds
PMU, long stop at 0.75
DTMG long, stop at .125
GDVI stop at 0.06
GRSU stop at 0.026
MBTG, stop 0.4
Keep an eye out for IGR, LGF, MACE, and look at the chart of WNHL and be glad you aren't in it. (Hopefully there's more to that story, like special divys, and not just old-fashioned capital destruction. Yowsaa!)
How to use this list. And don't forget the disclaimer . . .
ABLE may have found support,at 8.5
BOOM wait for a bounce, might be a buy with a stop at 29.4
CLF keep an eye on it, 69.6 may be support
HANS is this the pullback, support at 54? I don't know
PTA long, stop at 2.25
ELP long support at 4.5
CPC nice breakout, stop at 15.7
IVX long, stop at 18.36
LFB, a breakout, stop at 18.4
OMR, breakout, stop 3.1
OPNT, stop at 8.5
GM think about a short, stop 30
pennies
JSDA a breakout, long, stop at 4.88
CTCHC let's see if 0.70 holds
PMU, long stop at 0.75
DTMG long, stop at .125
GDVI stop at 0.06
GRSU stop at 0.026
MBTG, stop 0.4
Keep an eye out for IGR, LGF, MACE, and look at the chart of WNHL and be glad you aren't in it. (Hopefully there's more to that story, like special divys, and not just old-fashioned capital destruction. Yowsaa!)
How to use this list. And don't forget the disclaimer . . .
Wednesday, March 16, 2005
Let's see a show of hands--Who lost money today?
(my hand is up)
That's what I thought. If you made some money today, great, you don't need to hear from me. (You should be giving me advice.) I lost money today. These are the kind of days that can make or break you--and I don't just mean in a monetary sense, I mean in a psychological sense. In my opinion, the most important thing for times like this is to have a plan ahead of time, a plan that is constructed in calm, rational times, that you will stick to and execute in more emotional times like this. Maybe you've got stops in place. Maybe you're one of those crazy value guys that might buy on a day like this, when something gets cheap enough for you. (I must confess I thought Berkshire was heading in that direction, for me, today. Maybe another day.) The point is to have it planned ahead of time--don't decide on a day like today, when things are breaking down all over, that it's time to buy or sell or whatever. You might get lucky, but you probably won't. You've got to know ahead of time at what price you want to buy or sell. Stephen Vita has a great quote from Pit Bull about how when you feel like you want to puke, that's the time to double your position. That may or may not be what you need to do, but again, figure that out ahead of time, in the clear light of day.
Plan your trade.
Trade your plan.
Preserve your capital, because tomorrow is another day.
The only advice I give my oldest son about women is "There are plenty of carp in the river." The same is true of stocks--there's always another play.
That's what I thought. If you made some money today, great, you don't need to hear from me. (You should be giving me advice.) I lost money today. These are the kind of days that can make or break you--and I don't just mean in a monetary sense, I mean in a psychological sense. In my opinion, the most important thing for times like this is to have a plan ahead of time, a plan that is constructed in calm, rational times, that you will stick to and execute in more emotional times like this. Maybe you've got stops in place. Maybe you're one of those crazy value guys that might buy on a day like this, when something gets cheap enough for you. (I must confess I thought Berkshire was heading in that direction, for me, today. Maybe another day.) The point is to have it planned ahead of time--don't decide on a day like today, when things are breaking down all over, that it's time to buy or sell or whatever. You might get lucky, but you probably won't. You've got to know ahead of time at what price you want to buy or sell. Stephen Vita has a great quote from Pit Bull about how when you feel like you want to puke, that's the time to double your position. That may or may not be what you need to do, but again, figure that out ahead of time, in the clear light of day.
Plan your trade.
Trade your plan.
Preserve your capital, because tomorrow is another day.
The only advice I give my oldest son about women is "There are plenty of carp in the river." The same is true of stocks--there's always another play.
Loser List for March 16, 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. . .
Going thru the charts, I see some impressive breakdowns and lots of lower lows. I don't want to sound too much like Stephen Vita, (what the heck, why not?) but its some pretty scary stuff. I'm kinda nervous about buying some of these longs, even with strength. Be careful out there.
BZH buy if strength, stop about 155
CLF. long if strong, stop 69
DESC long, stop about 3.75
PTA long with a stop a 2.25
RESC long, stop about 22.4
TZOO short a break, stop at 50
ARS yowsaa--take some play money and buy, stop at 24.6
ASTE another breakout long,stop 20.4
CPC long stop 15.7
DRRX long stop 3.6
MWPR long stop at 8
OMR, long stop 3
F a short, stop at 12.5
VGZ, long, stop at 4
KKD reload the shorts, stop about 8.5
pennies--only a little less exciting than throwing your money into the sea-
ACKO--it might be fun while it lasts, stop at 0.5
GRSU breakout over 3 cents!
MVOG long stop at 3 (dollars for this one)
MBTG long, stop at 0.33
SPCI buy it before the hoarders do, long stop at .025
TSNU buy stop 1.35
How to use this list. And don't forget the disclaimer . . .
Going thru the charts, I see some impressive breakdowns and lots of lower lows. I don't want to sound too much like Stephen Vita, (what the heck, why not?) but its some pretty scary stuff. I'm kinda nervous about buying some of these longs, even with strength. Be careful out there.
BZH buy if strength, stop about 155
CLF. long if strong, stop 69
DESC long, stop about 3.75
PTA long with a stop a 2.25
RESC long, stop about 22.4
TZOO short a break, stop at 50
ARS yowsaa--take some play money and buy, stop at 24.6
ASTE another breakout long,stop 20.4
CPC long stop 15.7
DRRX long stop 3.6
MWPR long stop at 8
OMR, long stop 3
F a short, stop at 12.5
VGZ, long, stop at 4
KKD reload the shorts, stop about 8.5
pennies--only a little less exciting than throwing your money into the sea-
ACKO--it might be fun while it lasts, stop at 0.5
GRSU breakout over 3 cents!
MVOG long stop at 3 (dollars for this one)
MBTG long, stop at 0.33
SPCI buy it before the hoarders do, long stop at .025
TSNU buy stop 1.35
How to use this list. And don't forget the disclaimer . . .
Tuesday, March 15, 2005
Loser List for March 15, 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. . .
PLUM may have found some support at 4.5
RIG long , stop at 47
RIMM I'd be looking to short a dip on this, stop at 68
GEOI breakout, long above 9
PBR long, only if it shows strength, stop 44
MKRR long if it can stay above 1.6
pennies
PMU buy the breakout above 0.76
AGFL at some point will pull back?
DTMG long, stop .1
EZEN breakout above 1.8
FNPR support at 0.35
How to use this list. And don't forget the disclaimer . . .
PLUM may have found some support at 4.5
RIG long , stop at 47
RIMM I'd be looking to short a dip on this, stop at 68
GEOI breakout, long above 9
PBR long, only if it shows strength, stop 44
MKRR long if it can stay above 1.6
pennies
PMU buy the breakout above 0.76
AGFL at some point will pull back?
DTMG long, stop .1
EZEN breakout above 1.8
FNPR support at 0.35
How to use this list. And don't forget the disclaimer . . .
Monday, March 14, 2005
Canary in coal mine singing K.C. and the Sunshine Band
TaylorTree had an excellent post this morning about whether we're in for a repeat of the '70's. No, not disco, platform shoes, and mood rings, but stagnant equities, hot commodities, and an iminent apocalypse. Essentially, I've sort of argued the same point, and so have others, but Taylor used a little different method of analysis--demographics, and old Business Week editions. It's really a good read.
Let me lay out my own thesis--history doesn't repeat tiself, but it does rhyme. The Dow flirted with 1000 at the end of the 1960s. The first Dow close above 1000 was in 1972. The last Dow close below 1000 was 1982. In the same way, the first Dow close above 10000 was 1999. In my view, the last Dow close below 10000 will be somewhere between 2010 and 2015.
Let me lay out my own thesis--history doesn't repeat tiself, but it does rhyme. The Dow flirted with 1000 at the end of the 1960s. The first Dow close above 1000 was in 1972. The last Dow close below 1000 was 1982. In the same way, the first Dow close above 10000 was 1999. In my view, the last Dow close below 10000 will be somewhere between 2010 and 2015.
Loser List for March 14, 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. . .
*SU buy above 37.5
AKS might be a buy if 12.5-13 holds
CENT might be a buyable pullback, stop at 44
CLF, buy, stop at 69.5
DESC, buy with a stop about 3.75
KMRT broke out of the box. Darvas would buy it.
MW ditto
NAT found support at 45?
TGA--support about 5.9?
CPL long above 21.5
GMP long above 29.8
KO buy it "for the long term" on any pullback
CNR might be a buy with a stop at 1.59
Pennies --real casino stuff. Instead of buying these, click the tip jar for jaloti.
**FNPR buy above 0.35
*GEOI a buy above 6.2
CTCHC buy, stop at 0.7
TLEI buy above 0.45
AGFL another breakout above 3.5
DTMC a breakout above 0.1
EZEN buy above 1.65
RIRI buy above 0.27
How to use this list. And don't forget the disclaimer . . .
*SU buy above 37.5
AKS might be a buy if 12.5-13 holds
CENT might be a buyable pullback, stop at 44
CLF, buy, stop at 69.5
DESC, buy with a stop about 3.75
KMRT broke out of the box. Darvas would buy it.
MW ditto
NAT found support at 45?
TGA--support about 5.9?
CPL long above 21.5
GMP long above 29.8
KO buy it "for the long term" on any pullback
CNR might be a buy with a stop at 1.59
Pennies --real casino stuff. Instead of buying these, click the tip jar for jaloti.
**FNPR buy above 0.35
*GEOI a buy above 6.2
CTCHC buy, stop at 0.7
TLEI buy above 0.45
AGFL another breakout above 3.5
DTMC a breakout above 0.1
EZEN buy above 1.65
RIRI buy above 0.27
How to use this list. And don't forget the disclaimer . . .
Sunday, March 13, 2005
Sunday Night Charts for March 13, 2005
Let's start with the old favorite.
Nasdaq. Weekly chart.
Courtesy of stockcharts.com
Boy, it's caught between a trendline and a resistance line. Let's look at it in another view. This is the Nasdaq, daily chart.
Courtesy of stockcharts.com
I still say, 2090-2100 is key on this one--if it can break above it and hold, it may run up for awhile--if it can't it's look out below.
Oil is on everybody's mind--let's first look at West Texas Intermediate Crude
Courtesy of stockcharts.com
Uptrend, pretty strong move the last couple weeks, but bumping up against a double top. If it can't crack this, maybe a rest for a while--the support in the low 40's looks strong.
Next is the Index of Oil stocks--the OIX
Courtesy of stockcharts.com
Well, we all knew that parabolic up move couldn't last. Where will the downmove find support? Remember, don't try to catch a falling knife--wait for it to bounce, or better yet come to rest.
Next is a new one--the VIX
Courtesy of stockcharts.com
No fear here. The downtrend will continue until it reverses.
And in the continuing saga of commodities, the CRB
Courtesy of stockcharts.com
After a little fake out, the uptrend continues with a vengeance.
Finally, Warren Buffett's favorite short, the USD
Courtesy of stockcharts.com
The downtrend continues.
Have a great week everyone!
Nasdaq. Weekly chart.
Courtesy of stockcharts.com
Boy, it's caught between a trendline and a resistance line. Let's look at it in another view. This is the Nasdaq, daily chart.
Courtesy of stockcharts.com
I still say, 2090-2100 is key on this one--if it can break above it and hold, it may run up for awhile--if it can't it's look out below.
Oil is on everybody's mind--let's first look at West Texas Intermediate Crude
Courtesy of stockcharts.com
Uptrend, pretty strong move the last couple weeks, but bumping up against a double top. If it can't crack this, maybe a rest for a while--the support in the low 40's looks strong.
Next is the Index of Oil stocks--the OIX
Courtesy of stockcharts.com
Well, we all knew that parabolic up move couldn't last. Where will the downmove find support? Remember, don't try to catch a falling knife--wait for it to bounce, or better yet come to rest.
Next is a new one--the VIX
Courtesy of stockcharts.com
No fear here. The downtrend will continue until it reverses.
And in the continuing saga of commodities, the CRB
Courtesy of stockcharts.com
After a little fake out, the uptrend continues with a vengeance.
Finally, Warren Buffett's favorite short, the USD
Courtesy of stockcharts.com
The downtrend continues.
Have a great week everyone!
Fox Saturday Morning "Business Bloc" for March 12, 2005 Part Deux
Forbes on Fox and Cashin In were pre-empted yesterday for breaking news. The segments were replayed today, and this is my summary. The first part of the cost of Freedom suumary is here.
Forbes on Fox's The Informer segment mentioned that new legislation is apparently being proposed that will make it hard for "deadbeats" to walk away from credit card debt. While this sounds like it might be good for credit card issuers, the panelists couldn't agree, and the consensus was that credit card issuers such as KRB, COF C and PVN should be either bought or sold. Michael Thomsett in the Makers and Breakers segment mentioned FITB but the panelists thought it was too expensive; he also mentioned PAYX and the panelists liked it.
Cashin' In started with a discussion about whether CEOs make too much money. Wayne Rogers made some good points about CEOs being paid off by the compensation committee whether the stock is performing or not. Price Headley gave the bottom line--if the stock is performing, nobody cares about the compensation. As usual, no insights were given about how to trade this one. In the Best Buys segment, dealing with former high-flying stocks, Price Headley mentioned MSTR but says he doesn't own it now. Wayne Rogers suggested AKAM. Jonathan Hoenig says SBSA is worth a look, but Rogers mentioned UVN as better in this sector. Adam Lashinsky suggested SNDK. In the mail segment, water transportation stocks were discussed, both Rogers and Hoenig threw out a list of names-VLCCF, CKH, TNP, OSG, MMLP, ATB, that they have been in and out of. In the final segment, John Curran was plugging DVN.Why not?
Forbes on Fox's The Informer segment mentioned that new legislation is apparently being proposed that will make it hard for "deadbeats" to walk away from credit card debt. While this sounds like it might be good for credit card issuers, the panelists couldn't agree, and the consensus was that credit card issuers such as KRB, COF C and PVN should be either bought or sold. Michael Thomsett in the Makers and Breakers segment mentioned FITB but the panelists thought it was too expensive; he also mentioned PAYX and the panelists liked it.
Cashin' In started with a discussion about whether CEOs make too much money. Wayne Rogers made some good points about CEOs being paid off by the compensation committee whether the stock is performing or not. Price Headley gave the bottom line--if the stock is performing, nobody cares about the compensation. As usual, no insights were given about how to trade this one. In the Best Buys segment, dealing with former high-flying stocks, Price Headley mentioned MSTR but says he doesn't own it now. Wayne Rogers suggested AKAM. Jonathan Hoenig says SBSA is worth a look, but Rogers mentioned UVN as better in this sector. Adam Lashinsky suggested SNDK. In the mail segment, water transportation stocks were discussed, both Rogers and Hoenig threw out a list of names-VLCCF, CKH, TNP, OSG, MMLP, ATB, that they have been in and out of. In the final segment, John Curran was plugging DVN.Why not?
Weekend Wazzup for March 13, 2005
My roundup of the Fox News Channel' s "Cost of Freedom" Saturday Morning shows-- is here.
Bill Cara once again presents an very thorough review of the week. The very provocative money quote: "I have one thing to say to the buyers of stock on Friday March 4; if you were solicited by a broker to buy MSO stock at $36 that day, and you can prove (probably easily) that your brokerage firm sold stock from their inventory position that day, you have a 100 percent chance of winning a lawsuit. Get a lawyer." I wish Bill would tell us what he really thinks! Like he did when he talked about being voted off the blog island last week in Uglychart's running "survivor" contest for stock market blogs. Don't take it personally, Bill, I think the number of votes reflects the number of readers, or something; interestingly, I think Random Roger had only a single digit number of votes last week, and now has a huge lead. All I know is Jaloti is getting hits right from the contest--publicity is publicity as long as they spell your URL correctly. (That's J A L O T I--it is not my real name, it is short for Just another loser on the internet, in case anyone hasn't figured that out yet.) At any rate, whether he gets voted off or not, Random Roger had a Big Picture post on investing (or not investing) in currencies and commodities. He says he believes in keeping it as simple as possible, and doing what you are comfortable with. Good advice for most everything, frankly. Always full of good advice is Stephen Vita at Alchemy of trading. He had a nice chart of TOL breaking a trend line, and he also previews a post for tonight. (I guess he knows something about marketing as well as trading;>)). Stockcoach had some interesting comments about checking your portfolio mulitple times a day even if you're not a daytrader. (If I'm not mistaken Nassim Nicholas Taleb has written something about this as well.) Moving on, Taylor Tree made some comments about Galatime's covered call work. Sounds like Taylor's posting is inhibited by his day job. I can sympathize, mate--good luck. Gala had some interesting more general posts on options--keep it up Gala, both the general and the specifics! Stephen Castellano at Reflections on Equity Research had a few interesting posts--thoughts on TiVo (I love my TiVo, except that MY TiVo isn't a TiVo, it's a Cox DVR, which I think in some way makes his point), about how you don't need to give yourself an MI to be a good analyst (it doesn't even help) and about the always intriguing RFID. Byrne's Marketview has also been busy, opining on the Warner Music IPO, the FERC nullifying Enron contracts, the Five Dumbest Things from thestreet.com, a dot.con job, and more of the Qwest-MCI-Verizon love triangle. The Soothsayer of Omaha, besides tipping us to the Mark Cuban portfolio revelation, also offered a slightly different perspective on oil prices. TraderMike reflected on a wild Friday, (in the markets, that is). Chairman MaoXian's newsletter came out today. Check out his chat every weekday 8:30-9:30 Eastern time, often you'll find a loser there.
Ron Sen has been quiet other than one thought-provoking post; maybe it has something to do with a basketball tournament?. Sixth World's Gazette has also been quiet so far this weekend(probably busy reading the rest of us ;>)).
Have a great week, everybody!
Bill Cara once again presents an very thorough review of the week. The very provocative money quote: "I have one thing to say to the buyers of stock on Friday March 4; if you were solicited by a broker to buy MSO stock at $36 that day, and you can prove (probably easily) that your brokerage firm sold stock from their inventory position that day, you have a 100 percent chance of winning a lawsuit. Get a lawyer." I wish Bill would tell us what he really thinks! Like he did when he talked about being voted off the blog island last week in Uglychart's running "survivor" contest for stock market blogs. Don't take it personally, Bill, I think the number of votes reflects the number of readers, or something; interestingly, I think Random Roger had only a single digit number of votes last week, and now has a huge lead. All I know is Jaloti is getting hits right from the contest--publicity is publicity as long as they spell your URL correctly. (That's J A L O T I--it is not my real name, it is short for Just another loser on the internet, in case anyone hasn't figured that out yet.) At any rate, whether he gets voted off or not, Random Roger had a Big Picture post on investing (or not investing) in currencies and commodities. He says he believes in keeping it as simple as possible, and doing what you are comfortable with. Good advice for most everything, frankly. Always full of good advice is Stephen Vita at Alchemy of trading. He had a nice chart of TOL breaking a trend line, and he also previews a post for tonight. (I guess he knows something about marketing as well as trading;>)). Stockcoach had some interesting comments about checking your portfolio mulitple times a day even if you're not a daytrader. (If I'm not mistaken Nassim Nicholas Taleb has written something about this as well.) Moving on, Taylor Tree made some comments about Galatime's covered call work. Sounds like Taylor's posting is inhibited by his day job. I can sympathize, mate--good luck. Gala had some interesting more general posts on options--keep it up Gala, both the general and the specifics! Stephen Castellano at Reflections on Equity Research had a few interesting posts--thoughts on TiVo (I love my TiVo, except that MY TiVo isn't a TiVo, it's a Cox DVR, which I think in some way makes his point), about how you don't need to give yourself an MI to be a good analyst (it doesn't even help) and about the always intriguing RFID. Byrne's Marketview has also been busy, opining on the Warner Music IPO, the FERC nullifying Enron contracts, the Five Dumbest Things from thestreet.com, a dot.con job, and more of the Qwest-MCI-Verizon love triangle. The Soothsayer of Omaha, besides tipping us to the Mark Cuban portfolio revelation, also offered a slightly different perspective on oil prices. TraderMike reflected on a wild Friday, (in the markets, that is). Chairman MaoXian's newsletter came out today. Check out his chat every weekday 8:30-9:30 Eastern time, often you'll find a loser there.
Ron Sen has been quiet other than one thought-provoking post; maybe it has something to do with a basketball tournament?. Sixth World's Gazette has also been quiet so far this weekend(probably busy reading the rest of us ;>)).
Have a great week, everybody!
Saturday, March 12, 2005
Charting Change in the Middle East
There can be no doubt that there is change in the Middle East, and the potential for a lot more change, and their markets reflect that. While it can be a little difficult for Americans to invest in markets of the Middle East, the easiest way is through closed end country funds trading on the NYSE. I own two that have been quietly doing quite well recently. I looked up these charts for my Sunday Night Charts feature, but I decided to give them their own post, partly because they are nice charts, but mostly because I think this is a worthwhile story.
First is ISL, a closed end fund investing in Israeli companies. It is up nearly 50% since the third quarter 2004. I should note it trades at a slight (about 3%) discount to NAV.
courtesy of stockcharts.com
Next is TKF, a closed end fund investing in Turkey. While Turkey itself is pretty stable and democratic, Turkish companies stand to profit from increased peace and prosperity in the region. It is up nearly 100% in a year, and trades at about a 14% premium to NAV.
courtesy of stockcharts.com
Let's hope there will continue to be more freedom and more prosperity in this region.
First is ISL, a closed end fund investing in Israeli companies. It is up nearly 50% since the third quarter 2004. I should note it trades at a slight (about 3%) discount to NAV.
courtesy of stockcharts.com
Next is TKF, a closed end fund investing in Turkey. While Turkey itself is pretty stable and democratic, Turkish companies stand to profit from increased peace and prosperity in the region. It is up nearly 100% in a year, and trades at about a 14% premium to NAV.
courtesy of stockcharts.com
Let's hope there will continue to be more freedom and more prosperity in this region.
Fox Saturday Morning "Business Bloc" for March 12, 2005
Fox News Channel' s "Cost of Freedom" Saturday Morning shows-- The "Cost of Freedom" Block was abbreviated due to breaking news.
Bulls and Bears started with an macro initial discussion of if and when the Dow would reach 12K. Gary B. Smith said September. 'Nuff said. Tobin Smith actually said if oil is above $50 and interest rates about 5%, it won't get there. Mostly, it was a lot of"rising oil will kill the market" "no it won't". Next segment was stocks that won't get hurt by a CEO sex scandal (???) Tobin Smith said VLO. Danielle Hughes said XOM. Pat Dorsey liked (and owns) BRK --quote of the day "technically he (Buffett) was living in sin for a number of years anyway" Scott Bleier suggested HON. In the "Smith Brothers" segment, Gary B. Smith named IPXL and BRO as breakouts but Tobin Smith didn't like them; they both agreed SBUX was okay though. In predictions, Scott Bleier called a pop in housing bubble and TOL to fall; Pat Dorsey said MSFT is finally cheap enough to buy; Tobin Smith said MANH is gonna get bought out at a 40% premium by MSFT; Danielle Hughes said EBAY is going down; and Gary B. Smith ELY to go up.
Cavuto on Business started with yet another discussion on scial security reform, but at least there was something different-the suggestion of a national lottery to raise money for secial security. The panelists either loved it or hated it. The next segment was "knockout stocks": Leigh Gallagher said NKE, Gregg Hymowitz named PMMAY, Charles Payne liked PEP, and Chris Russo mentioned SWC because he likes commodities and "palladium is the only cheap metal". Next segment was more sex scandals-doesn't help me make money. Finally, lots of pointless predictions about American Idol and Martha--the most interesting one was Charles Payne predicting that many more small public companies will voluntarily delist themselves because Sarbanes-Oxley and other regulations are making the burden of being public too onerous.
Forbes on Fox started with more CEO sex scandal stuff. Interesting discussion to a point--but again, I don't really see how it makes me money. Next segment discussed taxing junk food, and was mercifully interrupted by a breaking news segment.
Unfortunately, Cashin' In, my favorite of the Fox Saturday financial shows, was completely pre-empted by the breaking news. I'll keep an eye out for it being replayed at some point this weekend.
UPDATE--Forbes on Fox and Cashin In were played in their entirety Sunday morning and my summary is here.
Bulls and Bears started with an macro initial discussion of if and when the Dow would reach 12K. Gary B. Smith said September. 'Nuff said. Tobin Smith actually said if oil is above $50 and interest rates about 5%, it won't get there. Mostly, it was a lot of"rising oil will kill the market" "no it won't". Next segment was stocks that won't get hurt by a CEO sex scandal (???) Tobin Smith said VLO. Danielle Hughes said XOM. Pat Dorsey liked (and owns) BRK --quote of the day "technically he (Buffett) was living in sin for a number of years anyway" Scott Bleier suggested HON. In the "Smith Brothers" segment, Gary B. Smith named IPXL and BRO as breakouts but Tobin Smith didn't like them; they both agreed SBUX was okay though. In predictions, Scott Bleier called a pop in housing bubble and TOL to fall; Pat Dorsey said MSFT is finally cheap enough to buy; Tobin Smith said MANH is gonna get bought out at a 40% premium by MSFT; Danielle Hughes said EBAY is going down; and Gary B. Smith ELY to go up.
Cavuto on Business started with yet another discussion on scial security reform, but at least there was something different-the suggestion of a national lottery to raise money for secial security. The panelists either loved it or hated it. The next segment was "knockout stocks": Leigh Gallagher said NKE, Gregg Hymowitz named PMMAY, Charles Payne liked PEP, and Chris Russo mentioned SWC because he likes commodities and "palladium is the only cheap metal". Next segment was more sex scandals-doesn't help me make money. Finally, lots of pointless predictions about American Idol and Martha--the most interesting one was Charles Payne predicting that many more small public companies will voluntarily delist themselves because Sarbanes-Oxley and other regulations are making the burden of being public too onerous.
Forbes on Fox started with more CEO sex scandal stuff. Interesting discussion to a point--but again, I don't really see how it makes me money. Next segment discussed taxing junk food, and was mercifully interrupted by a breaking news segment.
Unfortunately, Cashin' In, my favorite of the Fox Saturday financial shows, was completely pre-empted by the breaking news. I'll keep an eye out for it being replayed at some point this weekend.
UPDATE--Forbes on Fox and Cashin In were played in their entirety Sunday morning and my summary is here.
Friday, March 11, 2005
Loser List for March 11, 2005
The word for all these picks is "BOOS" Buy Only On Strength
Looking at a chart of TNX, I think the yield on the ten year note may have put in a short term top.
AAPL-- don't worry ugly the buyers will come in at 35--it will go no lower than that--I guar-an-tee it.
**APLX-- long, support at top of gap at 6.8
BRY may have found support at 55. But wait for strength to buy.
CMTL still may have support at 40
GSOL--might be a long, stop about 16.5
IINT long stop at 2.2 if it shows some strength
RESC buy on strength, stop 22.5
ELP long above 4.48
GMP long stop 29.8
AWR-"for the long term" besides, it's my water company
BGT-- ?time to pick up some more "for the long term"
SU might be time to get back in--above 37.5
SJT long stop 33
Lots of setups in the casino--but don't actually buy any of these--a more enjoyable way to blow your money would be to spend it on booze and strippers
*FNPR long stop at 0.34
RIRI breakout long above 0.3
CTCHC--keep an eye above 0.75
PMU gotta break above 0.75
QUIK long only on strength, stop 3.8
TLEI long above 0.37
ANX long above 1.25
AGFL breaking out of a Darvas box, long above 3.32
EZEN long on strength, stop 1.48
CGREF if it breaks 2
Looking at a chart of TNX, I think the yield on the ten year note may have put in a short term top.
AAPL-- don't worry ugly the buyers will come in at 35--it will go no lower than that--I guar-an-tee it.
**APLX-- long, support at top of gap at 6.8
BRY may have found support at 55. But wait for strength to buy.
CMTL still may have support at 40
GSOL--might be a long, stop about 16.5
IINT long stop at 2.2 if it shows some strength
RESC buy on strength, stop 22.5
ELP long above 4.48
GMP long stop 29.8
AWR-"for the long term" besides, it's my water company
BGT-- ?time to pick up some more "for the long term"
SU might be time to get back in--above 37.5
SJT long stop 33
Lots of setups in the casino--but don't actually buy any of these--a more enjoyable way to blow your money would be to spend it on booze and strippers
*FNPR long stop at 0.34
RIRI breakout long above 0.3
CTCHC--keep an eye above 0.75
PMU gotta break above 0.75
QUIK long only on strength, stop 3.8
TLEI long above 0.37
ANX long above 1.25
AGFL breaking out of a Darvas box, long above 3.32
EZEN long on strength, stop 1.48
CGREF if it breaks 2
Thursday, March 10, 2005
Couple odds and ends
Byrne's Marketview had a link to a story about a guy buying all the outstanding shares of a penny stock, yet it still trades. False SEC filing, or naked short selling?
On the fifth anniversary of the Nasdaq top, Inventing Money linked to a collection of articles about where the money's flowed since then. The "money summary" is that 13 of 26 world indices have hit all-time highs in the past month. Was it Livermore who said there's always a bull market somewhere? WWLD?
On the fifth anniversary of the Nasdaq top, Inventing Money linked to a collection of articles about where the money's flowed since then. The "money summary" is that 13 of 26 world indices have hit all-time highs in the past month. Was it Livermore who said there's always a bull market somewhere? WWLD?
What Mark Cuban is buying
Both Soothsayer of Omaha and Marketview have linked to Mark Cuban's portfolio.
Or, at least, what he wants to reveal of his portfolio.
And I don't say that perjoratively, just realistically--the guy's a gajillionaire, with some pretty big postions in companies--why should he tell us what he's doing?At any rate, a couple interesting holdings--LGF, RENT, and some fakakta position in NFI that I can't quite figure out (I'm not sure what "preferred stock loaned for rebate" means, and I'm a little suspicious if somebody says they make money if the stock goes up or down)
Or, at least, what he wants to reveal of his portfolio.
And I don't say that perjoratively, just realistically--the guy's a gajillionaire, with some pretty big postions in companies--why should he tell us what he's doing?At any rate, a couple interesting holdings--LGF, RENT, and some fakakta position in NFI that I can't quite figure out (I'm not sure what "preferred stock loaned for rebate" means, and I'm a little suspicious if somebody says they make money if the stock goes up or down)
Loser List for March 10, 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. . .
BZH if it shows strength, might be a long--160 looks like support
CMTL if you're looking for a breakout, here it is, long, stop at 40
NAT might be a buyable pullback if 45 holds
RMI might be worth some play money if 4.5 holds
TGA may be a long, stop about 6.5
ELANZ if it gets above 0.40, maybe so
GEOI long above 6.22
REV a breakout above 2.9
GG breakout above 15.2
and as the roulette wheel spins, watch out for DTMG,CWLC,TLEI, CTCHC, PMU, SGU and WILCF
How to use this list. And don't forget the disclaimer . . .
BZH if it shows strength, might be a long--160 looks like support
CMTL if you're looking for a breakout, here it is, long, stop at 40
NAT might be a buyable pullback if 45 holds
RMI might be worth some play money if 4.5 holds
TGA may be a long, stop about 6.5
ELANZ if it gets above 0.40, maybe so
GEOI long above 6.22
REV a breakout above 2.9
GG breakout above 15.2
and as the roulette wheel spins, watch out for DTMG,CWLC,TLEI, CTCHC, PMU, SGU and WILCF
How to use this list. And don't forget the disclaimer . . .
Wednesday, March 09, 2005
Loser List for March 9, 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. . .
I'm telling you, the COMPQ can't hold 2090.
Likewise, if the QQQQ if it can't crack 38, it's going down.
ABLE--not technically a distribution day, but in the interest of being provocative, I"m calling a top on this one right here right now.
ASR--if shows some strength, might be a long with a stop at 31
BOOM!-- TOP!
CREE keep an eye on it for a short--stop 23.5
MAX nice pop after stockcoach mentioned it--farther to run?
SGU this dog won't hunt, but maybe it'll scratch some fleas or bring in the newspaper. Maybe long, with some play money, on a real tight stop?
X--might be a buyable pullback, if it shows some strength. Long stop at 56
How to use this list. And don't forget the disclaimer . . .
I'm telling you, the COMPQ can't hold 2090.
Likewise, if the QQQQ if it can't crack 38, it's going down.
ABLE--not technically a distribution day, but in the interest of being provocative, I"m calling a top on this one right here right now.
ASR--if shows some strength, might be a long with a stop at 31
BOOM!-- TOP!
CREE keep an eye on it for a short--stop 23.5
MAX nice pop after stockcoach mentioned it--farther to run?
SGU this dog won't hunt, but maybe it'll scratch some fleas or bring in the newspaper. Maybe long, with some play money, on a real tight stop?
X--might be a buyable pullback, if it shows some strength. Long stop at 56
How to use this list. And don't forget the disclaimer . . .
Tuesday, March 08, 2005
Buffett
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.
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.
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.
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