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  • #521
  • Nov 23, 2013 1:51pm Nov 23, 2013 1:51pm
Quoting split_unit
{quote} How big are these test positions on average? And when you say bigger positions, how big is bigger to you? Where I come from, we don't have tax on individuals thank god. So I never incorporate tax on to the equation. Whats you thesis on MCK and JAZZ? If you don't mind sharing.
I went back and looked at some old posts where we were going back & forth. And came across this one where I was discussing current positions w/ you. It's funny Split, you picked the two best performing stocks in my account to ask about. Did you ever end up buying?

MCK I bought on a breakout at $90/share. Oddly enough I actually posted the chart on Forex Factory around when I bought (about 11months ago): http://www.forexfactory.com/showthre...76#post6275276 It's actually up to $163 now.

JAZZ on the other hand has been unreal. I originally bought around $55, Sold 1/3 or 1/2 (can't remember) at $85, and am still long the rest. It's at $113 believe it or not...

GNRC and SLCA which i mentioned on 7/25/13 in your thread (here: http://www.forexfactory.com/showthre...12#post6847912) are also doing quite well.

I might start paring back a few of these to rotate into some other things. But one thing is for sure, this market has been very forgiving. My guess is that it'll make many people believe they are very good at picking stocks, will start buying on margin, and will get RUN OVER during the next downturn. That's the way it always seems to go.
  • #522
  • Nov 24, 2013 6:12am Nov 24, 2013 6:12am
Quoting InfinitySL
{quote} I went back and looked at some old posts where we were going back & forth. And came across this one where I was discussing current positions w/ you. It's funny Split, you picked the two best performing stocks in my account to ask about. Did you ever end up buying? MCK I bought on a breakout at $90/share. Oddly enough I actually posted the chart on Forex Factory around when I bought (about 11months ago): http://www.forexfactory.com/showthre...76#post6275276 It's actually up to $163 now. JAZZ on the other hand has been...
Well done Infinity! I don't even remember why I selected those two in particular. The stock market has been very generous, and might continue to do so due to the self reinforcing pattern present in the market. I believe that we are in a bubble and things might remain irrational for a while. Bubbles are not always bad things, they can be quite profitable if managed properly
  • #523
  • Nov 24, 2013 8:57am Nov 24, 2013 8:57am
Quoting split_unit
{quote} Well done Infinity! I don't even remember why I selected those two in particular. The stock market has been very generous, and might continue to do so due to the self reinforcing pattern present in the market. I believe that we are in a bubble and things might remain irrational for a while. Bubbles are not always bad things, they can be quite profitable if managed properly
I actually don't think we are in a bubble. The reason is quite simple... Everyone keeps saying we are! If you think about it, most bubbles are where everyone and their brother is a true believer. I.e. Internet stocks are "safe Investments" or Tulips will always go up in price. There may be a few shouting from the rafters that this is irrational, but a bubble is generally regarded as a can't miss prospect, even the mainstream media picks it up. Remember in 2006 there was a cover of Time Magazine talking about "Why we love Housing".

Yes, the market is making new highs, but valuations don't actually seem that stretched. Various metrics like trailing/forward earnings look within normal bounds. And then there's the obvious other question -- where else can you hide out and make positive *real* (i.e. adjusted for inflation) returns?


I like stocks, but only stocks that have a good story, strong free cashflow and reasonable valuations.
  • #524
  • Nov 25, 2013 10:53pm Nov 25, 2013 10:53pm
Quoting InfinitySL
{quote} I actually don't think we are in a bubble. The reason is quite simple... Everyone keeps saying we are! If you think about it, most bubbles are where everyone and their brother is a true believer. I.e. Internet stocks are "safe Investments" or Tulips will always go up in price. There may be a few shouting from the rafters that this is irrational, but a bubble is generally regarded as a can't miss prospect, even the mainstream media picks it up. Remember in 2006 there was a cover of Time Magazine talking about "Why we love Housing". Yes, the...
Thanks for your input Infinity,

I believe we are in a bubble mainly for the fact that I see reinforcing trends happening every where in the stock market. In my opinion, valuations are stretched and are above equilibrium, but not very far from it, we are slowly entering that irrational period where valuations are going far from equilibrium. Anything negative is being treated as a buying opportunity to reinforce the up move. Almost everyone is becoming a believer, and when everyone becomes a believer, everyone except for the non-believer lose. This might continue for months or years. One thing is for sure, we are approaching an extreme, and that is making me uncomfortable.

“The less prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs.” -Warren Buffett
“Be fearful when others are greedy, and greedy when others are fearful.” -Warren Buffett

With that being said, I continue to be net long. I have no short positions other than small put options to hedge my portfolio. I am still heavily concentrated in commodities, YPF a stock I previously discussed that doubled in the last period like many other stocks in all sectors. I tripled my position in YPF before it was announced that Buffet had a position in XOM. XOM invested $ 10 billion in YPF in Q2 2013 and YPF responded very positively to the announcement.

The last time Buffet announced a position in a stock I owned was PSX, which doubled in the following months after the announcement. We will see if things turn out to be the same this time around. I am also semi-concentrated in Chinese stocks, which are also being hated at the moment. I had them before Howard Marks announced that Oaktree like the Chinese market.

I am not saying this to boast about my calls, which may have some element of luck in them. I am writing this to prove a point, that I am learning to become more and more independent in my analysis of equities and I feel like now is a time for caution. The margin of safety here is low.
  • #525
  • Nov 26, 2013 5:41pm Nov 26, 2013 5:41pm
Im glad this thread has been created as I follow NASDAQ thoroughly will be interesting to see all your thoughts
  • #526
  • Nov 27, 2013 8:56am Nov 27, 2013 8:56am
Quoting afzalkhan786
Im glad this thread has been created as I follow NASDAQ thoroughly will be interesting to see all your thoughts
Welcome afzalkhan786,

Hope you find what you read here helpful.

Regards,

Split
  • #527
  • Apr 3, 2014 3:47am Apr 3, 2014 3:47am
It seems like in the previous couple of months here on the FF Stocks and Commodities section that speculators have become interested in stocks again. This is understandable. What the smart people did in the beginning, the dumb people do in the end. I am very cautious of this 6 year bull market that is getting pretty old and tired. Valuations are stretched and we will get a top sooner or later. It can be in a week, month or year. Caution is advised, this time is not different. Know your portfolio, why you own what you own and your strategy and the risks/potential returns associated with that strategy.

http://www.ritholtz.com/blog/2014/03...ycles-updated/
  • #528
  • Apr 3, 2014 8:14am Apr 3, 2014 8:14am
Ah yes, but don't forget Rithotz other comments/editorials:
http://www.bloombergview.com/article...nce-for-stocks

To quote:
Quote
In ‘99, a whopping 67 percent thought putting money into the stock market was a great idea. Risk aversion was for cowards and losers, and only 28 percent thought equities were a bad idea. To put that into context, in 1997, about 33 percent of Americans thought stocks were a bad idea.

Fast-forward to today -- more Americans think putting money into the stock market is a bad idea (50 percent) than think it’s a good idea (46 percent). In light of the performance of the market over the last five years, I call this Irrational Non-Exuberance.

Put yourself in the shoes of a large institutional investor with $1bn of cash to invest -- what are you buying here? Bonds? Doubtful. Cash? Earnings negative returns. Precious Metals? A bit of a craphshoot I'd say. So what does that leave you with?

Also bear in mind that "not cheap" is not the same as "wildly overvalued".

Anyway, just my 2c. I've been overly cautious myself, but (obviously) incorrectly so.
  • #529
  • Apr 3, 2014 9:26am Apr 3, 2014 9:26am
Quoting InfinitySL
Ah yes, but don't forget Rithotz other comments/editorials: http://www.bloombergview.com/article...nce-for-stocks To quote: {quote} Put yourself in the shoes of a large institutional investor with $1bn of cash to invest -- what are you buying here? Bonds? Doubtful. Cash? Earnings negative returns. Precious Metals? A bit of a craphshoot I'd say. So what does that leave you with? Also bear in mind that "not cheap" is not the same as "wildly overvalued". Anyway, just my 2c. I've been overly cautious myself,...
Nice to hear from you Infinity!

I didn't really read the comments in the link. I agree with you that we aren't wildly overvalued but we aren't cheap either. I just wrote that post as a warning that things aren't so rosy as people might believe. Buffet said that:

“A bull market is like sex. It feels best just before it ends.”

I feel that people are feeling really good right now and I felt inclined to warn them to not make mindless bets on this aging bull. I am finding it very hard to find bargains, and I am liquidating my portfolio slowly at these levels.
  • #530
  • Apr 3, 2014 10:14am Apr 3, 2014 10:14am
I love that quote about Bull Markets! How true.

I agree up to a point. i don't think the frothiness (a technical term) is there yet. I also think the Fed really needs to get into its tightening cycle before we really start to see money moving away from the market, but time will tell.

The easy money has been made...
  • #531
  • Apr 3, 2014 1:23pm Apr 3, 2014 1:23pm
Quoting InfinitySL
I love that quote about Bull Markets! How true. I agree up to a point. i don't think the frothiness (a technical term) is there yet. I also think the Fed really needs to get into its tightening cycle before we really start to see money moving away from the market, but time will tell. The easy money has been made...
So Infinity, whats got your attention these days?
  • #532
  • Apr 3, 2014 2:42pm Apr 3, 2014 2:42pm
I've migrated to the boring end of the spectrum. I purchased JNJ for the first time the other day. I own a couple mortgage REITs and odd-lot mortgage securities (One of my brokers gets them very cheap -- 4-6% yields). I also bought TGT after the ___ hit the fan as I'm still a big fan of their company and the credit card data breach overstates how hard the stores will actually get hit.

Sadly i don't play around in the high fliers like LNKD, FB, TWTR, etc. If I'm going to buy tech/small cap i'll do it in names no one has ever heard of.

How about you split?
  • #533
  • Apr 3, 2014 3:23pm Apr 3, 2014 3:23pm
Quoting InfinitySL
I've migrated to the boring end of the spectrum. I purchased JNJ for the first time the other day. I own a couple mortgage REITs and odd-lot mortgage securities (One of my brokers gets them very cheap -- 4-6% yields). I also bought TGT after the ___ hit the fan as I'm still a big fan of their company and the credit card data breach overstates how hard the stores will actually get hit. Sadly i don't play around in the high fliers like LNKD, FB, TWTR, etc. If I'm going to buy tech/small cap i'll do it in names no one has ever heard of. How about you...
Well, I have a large position in YPF.. never liquidated.. I have a new position in Gazprom which was trading at 2 times P/E.. I have also X in my portfolio along with FCX.. My portfolio is abit overly concentrated in commodities right now.. I also have several long dated LEAPs on some stocks.. I recently had a change in philosophy about investing and hence liquidated most of the stocks that didn't fit the new criteria.. I guess I am evolving again.. Oh, and I have puts on the QQQ to hedge any potential risk.. I recently covered a short in CONN.

I will probably also get rid of X soon and trim positions in commodities. I am mostly in cash, and it is very difficult.
  • #534
  • Apr 5, 2014 1:19am Apr 5, 2014 1:19am
Scary sell off yesterday, it messed up some technical charts pretty good. It occurred right a the top,if I could make an educated guess, I would say that the sell off in the NASDAQ and other broad based indices resembled a climax.Back to Warren Buffets quote.Whether there is follow through selling on Monday remains an open question. One big down day DOESN'T necessarily end a bull market, but forces you to think about where you stand.

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  • #535
  • Apr 5, 2014 11:49pm Apr 5, 2014 11:49pm
Insiders were well aware of the stretched valuations at tech companies hence decided to sell their stocks well ahead of any decline. Almost any large tech stock I pulled up had sharp insider selling. Not a positive sign.
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  • #536
  • Apr 5, 2014 11:55pm Apr 5, 2014 11:55pm
The tables above are in order:

-Facebook
-Amazon
-Google
-LinkedIn
-Microsoft
-IBM
  • #537
  • Apr 24, 2014 4:37pm Apr 24, 2014 4:37pm
I never really liked Barry Ritholtz and now I know why. He just has to express his opinion on everything, and I don't like people who are too hasty to express their opinion. Just because the market isn't at the "dot com" bubble levels in terms of valuation doesn't mean that its cheap. That bubble shouldn't be used as a bench mark for this bubble. That bubble was the biggest in history (as far as I remember), and this one may not be, but when it pops its gonna pop like any other. I purposely underlined when, because its a matter of "when" and not "if".
  • #538
  • May 13, 2014 4:38pm May 13, 2014 4:38pm
Well, i'll have to disagree with you. I find Ritholtz is one of the more level-headed pundits out there. He never gets too bullish or bearish. The perma-bears are always predicting crashes and the perma bulls blue skies and smooth sailing. Ritholtz will raise cash when he think markets are ready to decline and get fully invested when he think things are cheap. As we've argued about in the past, I don't htink the current market is particularly expensive. (notice I didn't say it was very cheap but there's a difference between fair value and over-valued).

Sure there are pockets of bubble-like valuations here and there -- you pointed out some tech names -- but the difference beteween those tech names you mentioned and the ones from the dot.com bubble is that these are real companies with real business models and most importantly real earnings. Take a company like LNKD. I'm not fan of the stock and think it trades at too high of a PE, but lets look at something...

2 LinkedIn stats by Year
2009 $120mm revenue / $21mm Cash flow from operations
2010 $243mm rev / $54mm C/F
2011 $522mm rev / $133mm C/F
2012 $972mm rev / $267mm c/f
2013 $1.52bn rev / $436mm c/f
2014E $2.1bn rev / don't have an estimate

You can probably see my point... What would you pay for a company that almost doubled its revenue/c/f 4yrs in a row, and now is "only" growing at 30%/year? This is no Pets.com or Webvan, this is a company that will probably revolutionize how professionals change jobs and find jobs. Will you find your next job in the classified section of your local paper, or will you find it through a connection on Linked in? If you're a recruiter will you use word of mouth to find candidates or will they pay LinkedIn for premium access to their large & growing database of candidates? Perhaps I'm drinking the kool-aid a bit but this is a real business with groundbreaking technology. Many of the other "bubble" stocks have technology that while perhaps overvalued is not very comparable to the dot.com stocks.

The S&P is at 17.5x earnings right now and pays a 2% dividend. Is that reasonable in a world where 10yr US Treasuries yield 2.6%? I would say yes. Europe and Japan also don't look unreasonably expensive... So again, I would say Ritholtz is not incorrect in saying the people calling this all just a bubble are if not outright wrong, a tad early on their warnings.

But that's just my opinion. I'm wrong just as often as the next guy.
  • #539
  • May 21, 2014 1:56pm May 21, 2014 1:56pm
Quoting InfinitySL
{quote} I actually don't think we are in a bubble. The reason is quite simple... Everyone keeps saying we are! If you think about it, most bubbles are where everyone and their brother is a true believer. I.e. Internet stocks are "safe Investments" or Tulips will always go up in price. There may be a few shouting from the rafters that this is irrational, but a bubble is generally regarded as a can't miss prospect, even the mainstream media picks it up. Remember in 2006 there was a cover of Time Magazine talking about "Why we love Housing". Yes, the...

I agree with you. Everytime I hear that this market looks like a "bubble" and in a certain perspective, it can look, however how high can the bubble be really? If the market goes up and up during the next 4 years, looking at this current period, you are not going to believe that it was in a bubble yet, but just another formation of an up leg going to the top before the market crashes.
  • #540
  • Jun 29, 2014 4:03am Jun 29, 2014 4:03am
Quoting ZaiKo
{quote} I agree with you. Everytime I hear that this market looks like a "bubble" and in a certain perspective, it can look, however how high can the bubble be really? If the market goes up and up during the next 4 years, looking at this current period, you are not going to believe that it was in a bubble yet, but just another formation of an up leg going to the top before the market crashes.
I agree with that you wrote, when I say that the market is in a bubble, it doesn't mean that I said it would pop anytime soon. Insiders may have been selling and the dumb money might have been buying, that doesn't mean markets will crash. I am always reminded by Keynes quote:

"Markets can remain irrational longer than you can remain solvent"

Besides, my definition of bubbles is derived from the reflexivity theory by G. Soros, and G. Soros looks for bubbles as opportunities to buy. I am however very careful about what I buy and hold.
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