2008 Financials Thread

[Marc Vaughan]

Im not sure that there is a jobless number that would downwardly beat expectations. I think everyone expects a horrible horrible number and I wonder that if they get it, or something even slightly better the market wont react positively to it.

This is something I've mulled over - the market appears somewhat desperate to put a positive swing on things rather than do further culling ....

That being said I'm happier sitting on the sidelines watching for a potential cliff than I would be with huge holdings waiting to fall off it

I'm looking for 'ins' and they'll come regardless of whether the market as a whole drops, I just want a solid stock which has good fundamentals and a bad announcement (in the same manner which JC Penney had).

Oh and my tip for a long term hold once its backed off a bit (it will if the market drops):

Apollo Group (APOL)

Its price fell off the side of a cliff (down from 60 to 40 - 33% drop) when it wrote down against a class law suit - but that is in theory at least a one off expense and the fundamentals of the company are unchanged. I made a quick 8% since its cliff-drop and am planning on repurchasing it when it seems favourable.

[Flasch186]

April 3

For fear of the jobs number tomorrow and on the heels of a weaker than expected weekly jobless claims number I will look to move out of my GOOG position at a high point today.

Cisco (CSCO) received a premarket downgrade from UBS so there will be pressure on it all day which stinks because I contemplated moving out of it. I will remain in my XLF position since it is longterm and not in one bank or another, somewhat safe from a surprise Bear Stearns event had I been in a particular bank that fell apart.

[Flasch186]

I did no get out of Google and have watched it tumble. The only shot I had at getting out was when it was only 3.5 down but now we're staring at 9. If we go to far down I will hold through tomorrow and cross my fingers.

[Marc Vaughan]

Originally Posted by Flasch186

I did no get out of Google and have watched it tumble. The only shot I had at getting out was when it was only 3.5 down but now we're staring at 9. If we go to far down I will hold through tomorrow and cross my fingers.

Google is a decent long term play imho - I wouldn't bail out on a loss on it, it'll bounce given a bit of time - I'll be buying back into it in the future I have no doubt (I'm guessing it'll end the year in the 500's somewhere once the economy recovers - I'm hoping to get back in around 440 if we can just get some bad news in to push it down a little more ).

[Flasch186]

well IMO most stocks are great long term plays at this point but the reason I got into GOOG was short term backed on ORCL. That failed and now the RIMM shot was nice but the downward pressure of what we see tomorrow leads me to try and get out (I think Im too late) so that I can get back in when it falls a bit. I may not be able to though at this point.

[MikeVic]

How long do you guys think a recession (whether the U.S. is in one right now or not) will last?

I just ask because I see Marc thinks by the end of the year the economy will recover. But I was talking to someone yesterday (not a financial expert or anything) and he thinks it would take a couple of years. What's the general consensus, and what's your opinion?

[Kodos]

YOUR PLANET IS DOOMED.

[Flasch186]

I think the word recession has begun to carry a lot more weight than it need be because there can be and has been a lot of pain already without being in a technical recession.

IMO, housing will turn around end of year and has already touched a bottom +/- regionally

Once that occurs it may help bolster or stabilize consumer confidence

the dollar should strengthen a bit in '09

So I think '09 should be better than '08 bu if recession means "pain" then Im with Buffett on that and we're already in it.

[Marc Vaughan]

Originally Posted by MikeVic

How long do you guys think a recession (whether the U.S. is in one right now or not) will last?

I just ask because I see Marc thinks by the end of the year the economy will recover. But I was talking to someone yesterday (not a financial expert or anything) and he thinks it would take a couple of years. What's the general consensus, and what's your opinion?

To me the American economy is starting to turn around now - you can see grass roots around the place, the house market picking up slightly even in very depressed areas like Florida, some economic indicators improving.

Certain items will take longer to have a visible turnaround because of natural lag - for instance jobs will always lag a little behind the real situation, companies can't hire and fire instantly and after a downturn will be somewhat cautious about hiring lots of new staff.

On top of this there's the bumper cash injection coming into the economy shortly which will further stimulate things and encourage growth - imho its heading in the right direction but it won't be fully visible until the second part of the year.

(which is why I'm betting on bad news tomorrow from 'lagging' indicators and a tumble on the stocks)

PS - By 'recovering' in the second half of the year, I don't mean a year of plenty - just that the economy will avoid recessionary levels and have a small amount of growth.
I also think despite the economic recovery some things will take a lot longer to recover - the mortgage situation for instance will remain 'tight' for quite a while and indeed in some areas I think a lot of people will almost be 'scared' of home ownership for at least a few years.

[NoSkillz]

I just want to reiterate that you can still make a lot of money in the market as it stands right now. Don't let the negative talk keep you from investing in the market. There are a lot of great value plays out there.

And Flasch...DON'T SELL GOOG FOR A LOSS! Please! It may get hit hard tomorrow but it WILL bounce back soon and you will likely miss your entry point.

** Also, you won't be able to claim the loss on your income taxes if you rebuy within a certain time frame so you'll miss out on any benefit you get by selling at a loss.

I'm not really high on GOOG to be honest - for that type of share price, I'd like to see a dividend but I understand why a company growing as much and as quickly as Google would shy away from that. If I ever get into Google, I'd likely play it short like Flasch, similar to what I do with Potash and Research in Motion on a constant basis.

But I would not sell it for a loss unless I felt it would never bounce back. And Google will bounce back, as Marc indicated.

** - I'm not sure if this is how it works in the US but in Canada, I believe you can't claim a capital loss on a holding if you repurchased the stock within a three month period.

[Flasch186]

BTW markets are fighting for positive territory because I took a nap.

Im actually surprised by it's resilience today considering the pressure to be short before tomorrow's report.

[Flasch186]

Originally Posted by NoSkillz

I just want to reiterate that you can still make a lot of money in the market as it stands right now. Don't let the negative talk keep you from investing in the market. There are a lot of great value plays out there.

And Flasch...DON'T SELL GOOG FOR A LOSS! Please! It may get hit hard tomorrow but it WILL bounce back soon and you will likely miss your entry point.

Its at a small profit now

** Also, you won't be able to claim the loss on your income taxes if you rebuy within a certain time frame so you'll miss out on any benefit you get by selling at a loss.

that's correct, its the wash rule.

I'm not really high on GOOG to be honest - for that type of share price, I'd like to see a dividend but I understand why a company growing as much and as quickly as Google would shy away from that. If I ever get into Google, I'd likely play it short like Flasch, similar to what I do with Potash and Research in Motion on a constant basis.

Im trying to play it's volatility but tomorrow's report is hanging over this whole play which didnt play out like I had intended due to the miss on Oracle.

But I would not sell it for a loss unless I felt it would never bounce back. And Google will bounce back, as Marc indicated.

** - I'm not sure if this is how it works in the US but in Canada, I believe you can't claim a capital loss on a holding if you repurchased the stock within a three month period.

the perfect play wouldve been Apple (AAPL) at 120.

[Marc Vaughan]

the perfect play wouldve been Apple (AAPL) at 120.

Sadly I had it - bought in at near enough 120 on the nose, sold off for a 12% profit a while back expecting another pull back in the future .... I'm still learning, my biggest problem seems to be premature selling - I'm fine at holding onto stocks if they bump along or even dive a bit, but give me a 10% gain and I get itchy to realise some short-term profit.

[Flasch186]

well i ran an errand and came back to everything up while Google extends it's losses.

[NoSkillz]

Originally Posted by Marc Vaughan

I'm still learning, my biggest problem seems to be premature selling - I'm fine at holding onto stocks if they bump along or even dive a bit, but give me a 10% gain and I get itchy to realise some short-term profit.

I do the same thing sometimes but I'll never get too upset if I miss out on making a bit more - my first rule of trading is to never get greedy, because that will cost you infinitely more than what you might gain on the one stock that shoots higher than you anticipate.

For instance, today I sold off Research in Motion for only $120.66/share. The stock didn't really come out of the gates as strongly as I thought it would so I sold off my shares when I got my 5% return (not bad for a two day holding). Of course, the stock started rising throughout the morning and has hit $125/share at one point, which was my target for the stock if you read my posts in the last couple days.

In a way, I'm a bit upset about losing another 3% or so but I can't really get too upset because I've been on the other side of the equation with the exact same stock in the past.

Three months ago, when RIM released their 3rd quarter numbers, I held quite a few shares and watched as the stock came out of the gates blazing hot, up over $10/share in the first half hour of trading. As it kept rising, I put my sell order in for another $3/share more than the current price. Of course, it would quickly start to come back to earth and within a couple days, the stock price was far below my cost, not to return to profitability for another month or so. I never panicked but I missed a glorious opportunity to sell for a nice profit and then re-enter at a value rate days later.

So the moral of the story is to not get greedy and never fault yourself for taking a profit - that is NEVER a bad play.

[miked]

Originally Posted by Flasch186

well i ran an errand and came back to everything up while Google extends it's losses.

So my question is this. If you are going to judge everything as if you were a day trader, how come you do'nt devote your full attention to it? I'm just trying to understand your goals since you seem to be fretting on a daily basis on the minute-to-minute variations, but don't seem to be committing the time to executing based on them.

[Fidatelo]

Originally Posted by miked

So my question is this. If you are going to judge everything as if you were a day trader, how come you do'nt devote your full attention to it? I'm just trying to understand your goals since you seem to be fretting on a daily basis on the minute-to-minute variations, but don't seem to be committing the time to executing based on them.

Stop causing problems.

[miked]

Originally Posted by Fidatelo

Stop causing problems.

LOL.

i am not trying be hurtful

why you are mean?

just tryin' to understand this since i'm playing with market too

seems odd to be do short-term playing when you have long-term time

[Fidatelo]

Originally Posted by miked

seems odd to be do short-term playing when you have long-term time

Yes, it does.

[Flasch186]

Originally Posted by miked

So my question is this. If you are going to judge everything as if you were a day trader, how come you do'nt devote your full attention to it? I'm just trying to understand your goals since you seem to be fretting on a daily basis on the minute-to-minute variations, but don't seem to be committing the time to executing based on them.

1. because this thread would be awfully short and uninteresting if everyone posted once a year to check in on their long term holdings or 401k. We've made it some 12 pages and had some really good discussion and debate. I'd say this thread has been successful even though Ive held one stock almost a year and the other one for 6 months.

2. I guess i dont understand what you mean by full attention. Is this defined by the number of times someone executes a trade. All that matters to me is profitability not time. Most day traders generally lose money and the market has been down this first quarter a lot, so if you've lost less than that is successful but probably equally frustrating.

[miked]

I understand what you are saying about thread benefits, but you seem to be pissed about these short term fluctuations when you have neither the time to execute short-term trades and the wrong stocks for short-term gains. I don't think it has to do with executing a trade per se, but I don't understand why you are pissed somebody walked in and you missed some chances on something.

Of course, re-reading the stuff on google, I don't think that's the case. But you surely shouldn't care that everything is up and GOOG is down when you plan on holding it long term.

[Flasch186]

oh, wait...youre talking about SDS.

That WAS a :30 minute play that needed to be perfect. Generally in my REAL job Ill go all day without seeing anyone, zero customers. This particular play I made was risky, I knew it, I smile about it days later but that just was the perfect storm when it came to timing and actually having a customer and wouldve been the best play Ive ever made had I been able to click the button instead of working with a low quality (inability to purchase) customer. That was an anomolie.

...and to the above I guess it depends on what you mean by "long "term". If I couldve sold Google (GOOG) at 480-485, which was my target, the "term" couldve been yesterday or next week or a month. It's a price target and we got close. An Oracle hit and I think we wouldve been there.

[NoSkillz]

Belated Post-Mortem: Wednesday April 2, 2008

Yesterday was a pretty calm day for yours truly in the market, as I eagerly anticipated the earnings report from Research in Motion.

The TSX jumped 73.42 points (+0.55%) on Wednesday, as financials seemed stronger. My portfolio lagged behind the index ever so slightly, increasing 0.29% on the day.

The report came in from RIM around 4pm and the results were very good, as anticipated. I was surprised that late day trading sessions only showed the stock selling for about $120/share, less than $3/share higher than the closing price on Wednesday.

Post-Mortem: Thursday April 3, 2008

I came into the day hoping I'd be able to move out of Research in Motion and kept my fingers crossed that the stock would sizzle upon open.

It was more like fizzle, as it opened around $120.50 and started slowly falling into the $118 region. I had visions of my last foray into RIM (see previous post) and was determined not to be greedy with this holding. I saw the stock start moving back up around 10:00am and put in a sell order for $120.66 and it was filled shortly thereafter, giving me a 4.4% return on my holdings after commissions - a pretty solid return considering I held the stock for less than 3 days.

The stock ended shooting up to over $125.00/share by midday so I left some money on the table but I have no regrets whatsoever. RIM ended up closing at $123.42, up 4.92% on the day.

Overall, today was spectacular. While the TSX jumped a modest 37.15 points (+0.27%), my portfolio ended up a fantastic 3.21%!

I had huge days with Potash (POT - TSX), which increased 3.35%, Agrium (AGU - TSX) was up 5.5%, First Quantum Minerals was up 2.93% and Teck Cominco was up 4.19%.

I actually sold off half my shares of Potash today at $169.32. My purchase price on those shares? $153.90! Pretty sweet 9.7% return after commissions after holding those shares for a month.

I even had huge days for two of my dud holdings: Uranium One (UUU - TSX) was up 10.72% on the day while March Networks (MN - TSX) continues to bounce back in style for me, up 11.6% on the day. March Networks is up over 30% for me over the past week or so, a pretty strong recovery.

HudBay Minerals (HBM - TSX) was also up on the day, increasing 2.35% and Quadra Mining (QUA - TSX) continues its climb as well, jumping 1.96%.

My only loser on the day was glorified penny stock MGM Energy (MGX - TSX) which was down $0.08/share or 9.41%.

Spectacular day!

I'm very close to hitting my sell targets on a number of holdings, including First Quantum, Agrium and my remaining shares of Potash. If the market starts on a solid note tomorrow, I could be a seller again.

If the market falls tomorrow, I'm back in a solid cash position (about 25-30%) that would see me looking for bargains.

I'll likely be happy (and active) no matter which way the market goes tomorrow.

[Flasch186]

Congrats. It's a shame that I feel so ignorant on the Ag play. Would definitely feel like I was chasing it to get in now. Would need to wait for some decent pullbacks to try and dip a toe in. MON below 100 was a real opportunity but anywhere under 105 is pretty good on it.

BTW - I end the day thinking that it would have to be an apocalyptic Jobs # tomorrow to send the markets down. I think there is more upside risk to downside now, on tomorrow.

[Marc Vaughan]

Well the payrolls came in as I expected (ie. tanked) - market is largely ignoring them presently though ....

[NoSkillz]

Originally Posted by Flasch186

Congrats. It's a shame that I feel so ignorant on the Ag play. Would definitely feel like I was chasing it to get in now. Would need to wait for some decent pullbacks to try and dip a toe in. MON below 100 was a real opportunity but anywhere under 105 is pretty good on it.

You wouldn't be chasing - agricultural holdings will continue to run hot for the foreseeable future. I don't know much about MON, so I won't comment on them as a company, but I know Potash and Agrium very well. Both still have a lot of upside and Agrium is actually still undervalued at the moment. I wouldn't hesitate picking up their stock around $65.00/share (CDN market - take into account exchange for US market).

Potash has become my favourite stock for obvious reasons but it's NOT value priced right now. It's due to have its semi-regular $10/share loss in one day and when that happens, I'll top up with more shares. It looks strong in early pre-market trading and there is a very good chance I'll sell my remaining shares if the price hits $174 or so today.

[NoSkillz]

Originally Posted by NoSkillz

You wouldn't be chasing - agricultural holdings will continue to run hot for the foreseeable future. I don't know much about MON, so I won't comment on them as a company, but I know Potash and Agrium very well. Both still have a lot of upside and Agrium is actually still undervalued at the moment. I wouldn't hesitate picking up their stock around $65.00/share (CDN market - take into account exchange for US market).

Potash has become my favourite stock for obvious reasons but it's NOT value priced right now. It's due to have its semi-regular $10/share loss in one day and when that happens, I'll top up with more shares. It looks strong in early pre-market trading and there is a very good chance I'll sell my remaining shares if the price hits $174 or so today.

I LOVE Potash!

It continues to exceed my wild expectations and eclipses $176.00 by mid-morning.

I'm completely out of it now, having sold my remaining shares for another substantial gain. Now I will sit back and wait for it to have a bad day so I can buy back in and repeat the process.

[MikeVic]

Maybe not the thread for it, but how long of a mortgage do people usually do when buying a home? It seems like a 25-year. But is a 35-year stupid to do?

[Kodos]

30 years is the standard, I believe.

[NoSkillz]

Originally Posted by MikeVic

Maybe not the thread for it, but how long of a mortgage do people usually do when buying a home? It seems like a 25-year. But is a 35-year stupid to do?

Mine is a 25 year mortgage, paid 'bi-weekly accelerated', which means the house should be paid off in about 16 years (hopefully).

[Fidatelo]

I've always understood 25 to be the standard, but it might be different south of the border.

I went with 20 using bi-weekly payments (rather than monthly), which brought it down under 18.

[Fidatelo]

hmm NoSkillz has me thinking maybe it was 25 and brought down to under 18 with the bi-weekly's... not sure.

[Fidatelo]

Double Dola

Nope, it's definitely 20 originally, then goes quicker with the bi-weekly's. Not sure how NoSkillz got his 25 to drop to less than a 20 using the same acceleration...

[Flasch186]

Fixed mortgage rates are generally quoted at 30 years, in passing. So if you ask , "What are rates?" the answer you'll get will generally be refwerring to a fixed 30 year mortgage. Then we can get all funky.

[Flasch186]

wow, just got in and the markets are doing really well all considering. Google's off to the races although I dont see any news corresponding so Im wondering if it's tech sector?

My wife's holding (3 shares) of FSLR is now back to Green for her. Good to see her weather the storm and hang in.

[NoSkillz]

Originally Posted by Fidatelo

Double Dola

Nope, it's definitely 20 originally, then goes quicker with the bi-weekly's. Not sure how NoSkillz got his 25 to drop to less than a 20 using the same acceleration...

Now you got me thinking...I'll check this out and post back later with my findings...I did make an additional contribution early last year which may have helped more than I thought.

[Flasch186]

im going to sell my GOOG stake at a profit as I expect some downward pressure to come in next week.

Nice profit after running it down, at $614. I'll take it and look for that downward pressure to bring things back down for me to get back into it.

[Fidatelo]

Ah ok, that makes sense. We've made some additional payments also, but I'm pretty sure the original arrangement was 20 years (this is for sure, I looked it up), and that by going bi-weekly we'd pay it off in 17.8 years, assuming no additional contributions.

[NoSkillz]

Originally Posted by NoSkillz

Now you got me thinking...I'll check this out and post back later with my findings...I did make an additional contribution early last year which may have helped more than I thought.

Ha. I was off big-time!

25 year mortgage, will be paid off in a little over 20 years. Sorry about that...thought I was closer to paydirt!

[MikeVic]

So at least for Canada it seems like a 25-year is standard. Is there anything wrong with taking a 35-year? And then adding and refinancing once you can?

[Flasch186]

Canada is on strike y'knoo.

[Fidatelo]

Originally Posted by MikeVic

So at least for Canada it seems like a 25-year is standard. Is there anything wrong with taking a 35-year? And then adding and refinancing once you can?

Here is my opinion on this, but keep in mind that I am very debt-averse (at least in comparison to others of this generation). I have never carried a balance on a credit card, I refuse to lease cars, I don't even like car-loans (and hopefully will never have one again after the current car).:

I would, if possible, not go beyond 25 years. Even if it meant getting less house, I think I'd still lean towards that. You are early 20's correct? Think about what a 35 year mortgage would mean: you might still have a mortgage as you approach 60 years old! To me, that is scary.

Now your reaction will be "ya, but I'll pay it off faster". Of course you will. Hopefully. But then you get married, have kids, want to go on trips... it is VERY easy to stop making extra payments or whatever. Then all the sudden you're 45 years old and you still have 7-10 years left and you need to be thinking about how you will retire and put your kids through college...

Personally, I want my house paid off by 35. I don't think I'll make it (that's only 5 years from now and I'm not yet on pace), but it's the goal. 40 at the absolute latest. If financial armageddon comes I want to know that my family will have a roof over our heads and no one can take it from us.

I'm interested to see what others have to say, but that's my take on it. I've got a lot of friends that would take 35 no problem, heck I even have friends with 8 year car loans! I don't think my opinion is the norm anymore.

[Flasch186]

Originally Posted by Fidatelo

Now your reaction will be "ya, but I'll pay it off faster". Of course you will. Hopefully. But then you get married, have kids, want to go on trips... it is VERY easy to stop making extra payments or whatever. Then all the sudden you're 45 years old and you still have 7-10 years left and you need to be thinking about how you will retire and put your kids through college...

Which is exactly why I tell my buyers my opinion on this when they ask for it, which is do NOT get a scheduled bi-weekly payment instead make the payment yourself, on your own. Reason being, as Fid points out, all of a sudden one month, you cant afford the extra payment but you've signed up for it and have to. I'd want the leeway of the one payment and then the discipline to be able to determine when you can and cant afford to make the extra one.

[Marc Vaughan]

Definitely imho pay off your mortgage as fast as possible - it'll reduce stress levels considerably from a financial perspective, the last thing you want to worry about if keeping a roof over your head (that and having the equity to remortgage in worst case scenarios is like having savings without ease of spending on luxury junk) ...

But I'm simila to Fidatelo, I hate debts ... if I don't have the cash to purchase something I try and avoid having to get it.

(My wife on the other hand is very good at spending money - between the two of us we make a nearly normal person )

PS - On a stock front, managed to get back into JCP Penny (JCP) on its drop today and thats already up a little. I also took small amounts of Dell (DELL) and Sketchers (SKX) because of their declines today (both are up a fraction from my purchase price, but not enough for note).
Oh also sold my London Stock Exchange shares for an 8% return within a week of having purchased them so quite pleased about that - will be looking to return into there should they be kind enough to drop back down a little next week (entirely possible considering the fickleness of that stock).

[Flasch186]

Im really surprised by the markets reactions to the jobs # today. It was horrible in every sense of the word. The downward revisions for the past numbers were catastrophic and the unemployment rate going to 5.1% signals a bad hurdle in front of us...not behind. Needless to say Im confused.

[Fidatelo]

Originally Posted by Flasch186

Which is exactly why I tell my buyers my opinion on this when they ask for it, which is do NOT get a scheduled bi-weekly payment instead make the payment yourself, on your own. Reason being, as Fid points out, all of a sudden one month, you cant afford the extra payment but you've signed up for it and have to. I'd want the leeway of the one payment and then the discipline to be able to determine when you can and cant afford to make the extra one.

Accelerated bi-weekly means you pay 26 payments a year, rather than 24. If you are putting yourself into a situation where 1/12th of those two payments might be hard to come up with one month, you should not be buying that house.

My plans never get into "all of a sudden, one month" scenarios, because I also don't believe in living month to month or paycheck to paycheck.

[Flasch186]

youre an exception to the rule my friend.

I understand the bi-weekly thing and I tell people to make the "extra" payment on their own instead of having it be "required" for all of the reasons you and I pointed out above. My car overheated today....it happens.

[QuikSand]

Originally Posted by Flasch186

I understand the bi-weekly thing and I tell people to make the "extra" payment on their own instead of having it be "required" for all of the reasons you and I pointed out above. My car overheated today....it happens.

Or, if you're paying under 6% on your mortgage, and you get to write the interest off on your taxes, you don't sweat the extra payments and enjoy the nice, easy, borrowing. Manageable debt is not a bad thing.

[Flasch186]

exactly

[NoSkillz]

Belated Post-Mortem: Friday April 4, 2008

Both the TSX and my portfolio continue to run very hot right now, as both have increased an incredible 10 out of the last 11 sessions.

The TSX increased another 116.90 points on Friday (+0.86%) while my portfolio shot up another 2.63%. Unbelievable!!!

Even more incredible is what this 11 day hot streak has done to my portfolio. I'm up over 14% over the past two weeks and now am up close to 11% for 2008. The TSX is still down about 1.5% for the year so needless to say, I'm elated with my results!

I expect the market to stumble a bit this week, if only as a profit-taking measure. The prolonged run of success will most likely end soon. I've got a decent amount of money on the sidelines now (around 50%) and will look to re-enter Potash if the share price drops.