3SOF

Good morning :)

I have to meet Ramsburg in his office today so we can discuss strategic options of 3 Stocks, so I won't be here throughout the morning, but feel free to post about anything you want.

Yesterday there were many interesting posts that were left unanswered because it was the strongest day ever on this message board, with 134 messages. If you feel your post should get more attention, please just copy paste it until I get to comment it (I remember there were great posts about individual stocks that I don't want to lose sight).

As for the market, my bear case is getting weaker and weaker. Remember when I wrote here that when there's a move, in one individual stock or the general market for that matter, people start making calculus and evaluating the situation?

Ok, my two main concerns were unwarranted. It's like I bought a stock and after a more in depth study I found out preferred shares, the non recurrence of revenues, something hidden in its 10-Q ... I believe the same happened here.

China is growing so much for so long, that there should have been a lot of economic excesses. But no, the Chinese are still afraid of the future and save a lot, since private consumption still accounts for just 35% of China's GDP:

«Most believe the answer lies with the Chinese consumer.  The numbers are compelling: Private consumption in the world's most populous nation currently accounts for only about 35% of its GDP – half the elevated share in the US, well below portions elsewhere in the developing world, and quite possibly the lowest consumption share of any major economy in modern history.  There's obviously nothing but upside to the case for the Chinese consumer.  It is widely billed as one of the great hopes and opportunities of global rebalancing – capable of picking up the baton of support from China's overheated investment sector and from an equally over-extended export sector.»

As for the housing meltdown in the US, it is starting to be priced in, since housing sector stocks trade at very low multiples (of course, some companies will file for bankruptcy) and big banks are trading at 10 times earnings.

This doesn't mean the US consumer won't kneel down and there won't be a cyclical recession, I think there's a good chance of that happening. But businesses have the strongest balance sheets ever, and business spending and exports could pick up and rebalance the US economy.

It also doesn't mean the correction won't go on for some more time, and we won't make new lows in the market. But the bear case isn't as compelling as I initially thought, just that.

What does all this have to do with the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php)? Very little to nothing.

I'll continue holding JADE and wishing those two stocks, GOOG and FMCN, pull back, so that those put warrants go up. The two stocks have medium term valid reasons to go down, because they're overvalued, but who knows about the next week? Anyway, at this point the reward/risk ratio makes me think I should maintain those positions a little longer (fortunately they're small size positions).

I wonder if I shouldn't just go back to the very first strategy of this portfolio. I've changed what was proving to be a winning strategy. Perhaps I'll correct course  and go back to the origins again in the near future.

I have to leave now, have a nice day and post as you please :)

Quote from: David Randolph on March 09, 2007, 09:34:22 AM

I wonder if I shouldn't just go back to the very first strategy of this portfolio. I've changed what was proving to be a winning strategy. Perhaps I'll correct course  and go back to the origins again in the near future.

I vote to do that .. and also watch for emerging market stocks, from countries like Brazil and others in South America, in addition to China.    When the market pulls back sharply, we should be looking for the stocks that did not pull back with it ... relative strength .. as these are the most likely to stay strong.  Regardless of what the market does overall, there will be new companies & technologies developing that will make 'some' people very rich.  Let's be among them :)

nullzero, I wonder if Cramer isn't lurking on this board .. after your last post yesterday, this morning he was touting the pawn shop stocks, mentioned the same one you mentioned & also CHE and AEA  ;D ;D

Or .. are YOU Cramer??  :o 8) ::)

David,

Yesterday you mentioning researching SILC a little more (potentially viewing it as a 10-bagger) and maybe possibly adding it to the 3 stocks on fire portfolio and posting your findings (will that psoted later today?).  (If a stock has potential for a 10 bagger - I see it as no brainer to include in the prtfolio.). Please consider the use of options in  the future for the portfolio. The recent puts turned out to be a big mistake, but you shouldn't rule out the use of options, because of one mistake. As I mentioned in an earlier post, we just need to set up some option trading rules in advance.

Thanks

Quote from: David Randolph on March 09, 2007, 09:34:22 AM
Good morning :)

I have to meet Ramsburg in his office today so we can discuss strategic options of 3 Stocks, so I won't be here throughout the morning, but feel free to post about anything you want.

Yesterday there were many interesting posts that were left unanswered because it was the strongest day ever on this message board, with 134 messages. If you feel your post should get more attention, please just copy paste it until I get to comment it (I remember there were great posts about individual stocks that I don't want to lose sight).

As for the market, my bear case is getting weaker and weaker. Remember when I wrote here that when there's a move, in one individual stock or the general market for that matter, people start making calculus and evaluating the situation?

Ok, my two main concerns were unwarranted. It's like I bought a stock and after a more in depth study I found out preferred shares, the non recurrence of revenues, something hidden in its 10-Q ... I believe the same happened here.

China is growing so much for so long, that there should have been a lot of economic excesses. But no, the Chinese are still afraid of the future and save a lot, since private consumption still accounts for just 35% of China's GDP:

«Most believe the answer lies with the Chinese consumer.  The numbers are compelling: Private consumption in the world's most populous nation currently accounts for only about 35% of its GDP – half the elevated share in the US, well below portions elsewhere in the developing world, and quite possibly the lowest consumption share of any major economy in modern history.  There's obviously nothing but upside to the case for the Chinese consumer.  It is widely billed as one of the great hopes and opportunities of global rebalancing – capable of picking up the baton of support from China's overheated investment sector and from an equally over-extended export sector.»

As for the housing meltdown in the US, it is starting to be priced in, since housing sector stocks trade at very low multiples (of course, some companies will file for bankruptcy) and big banks are trading at 10 times earnings.

This doesn't mean the US consumer won't kneel down and there won't be a cyclical recession, I think there's a good chance of that happening. But businesses have the strongest balance sheets ever, and business spending and exports could pick up and rebalance the US economy.

It also doesn't mean the correction won't go on for some more time, and we won't make new lows in the market. But the bear case isn't as compelling as I initially thought, just that.

What does all this have to do with the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php)? Very little to nothing.

I'll continue holding JADE and wishing those two stocks, GOOG and FMCN, pull back, so that those put warrants go up. The two stocks have medium term valid reasons to go down, because they're overvalued, but who knows about the next week? Anyway, at this point the reward/risk ratio makes me think I should maintain those positions a little longer (fortunately they're small size positions).

I wonder if I shouldn't just go back to the very first strategy of this portfolio. I've changed what was proving to be a winning strategy. Perhaps I'll correct course  and go back to the origins again in the near future.

I have to leave now, have a nice day and post as you please :)

Uh, I think you are still right on being bearish.  Though maybe it will only be a correction instead of a full blown bear market. 

But today isnt as strong as it needed to be to fix the damage.  I am all short and my portfolio is marginally green now ??? ;D.  This open is being faded, could even end red today.  Could be sell the news in reverse.

The technicals tell us there was a problem.  Maybe none of us know for sure what that problem was, but its there, somewhere.  Maybe it wasnt US jobs. 

David, in the past you didnt trust your instincts to hold stocks long for long enough and you learned from that, it would appear to me that recent events can be similar for you, but in reverse. 

We stilll have a ways to go before we are out of the woods on this one...

David, a suggestion for the portfoliio: MAMA   It's the Canadian Google ( fun to be around, diffident and all the queries have to end in eh?)  I bought in at around 5.40 this a.m.

David, I think you should take a look at SIGA.  I know it's a biotech stock, but I think if you are really interested in a 10-bagger, you need to consider some biotech stocks.  (After all, look where you'd be today if you bought Celgene 4 years ago.)  SIGA is a small company which I think will go much higher this year, probably starting this month.  They have developed a cure to smallpox that has proven itself effective and safe - and they have a pipeline of half a dozen other promising drugs.  The company is in a transition now as they just brought a new CEO on board (though no stranger to the company - and a man of much prestige) to bring this product to commercialization.  It was announced in January and he started March 1.  News is expected any day now on a lawsuit to dismiss claims to the drug by a company they almost merged with last year.  The company plans a conference call to discuss where things are at in 2 weeks or so.  (That piece of information comes from a posting on yahoo from someone who called the company yesterday to find out what's happening.)  I think other news is also imminent.  As far as I can tell, there has been no dilution for at least a year.  They seem to derive their funding from the government.

Yesterday, the stock rose suddenly 14% on large volume near the end of the day.  This is not the first time such a thing has happened in the past couple of months.  Last week during the market downturn, this stock did not go down much, unlike many other small biotechs.  It stayed in a narrow channel between the 20 and 50 day ma.  Monday it did breakdown, but yesterday returned it to levels higher even then before the latest market breakdown.

Quote from: Jim897 on March 09, 2007, 10:11:55 AM
David, I think you should take a look at SIGA.  I know it's a biotech stock, but I think if you are really interested in a 10-bagger, you need to consider some biotech stocks.  (After all, look where you'd be today if you bought Celgene 4 years ago.)  SIGA is a small company which I think will go much higher this year, probably starting this month.  They have developed a cure to smallpox that has proven itself effective and safe - and they have a pipeline of half a dozen other promising drugs.  The company is in a transition now as they just brought a new CEO on board (though no stranger to the company - and a man of much prestige) to bring this product to commercialization.  It was announced in January and he started March 1.  News is expected any day now on a lawsuit to dismiss claims to the drug by a company they almost merged with last year.  The company plans a conference call to discuss where things are at in 2 weeks or so.  (That piece of information comes from a posting on yahoo from someone who called the company yesterday to find out what's happening.)  I think other news is also imminent.  As far as I can tell, there has been no dilution for at least a year.  They seem to derive their funding from the government.

Yesterday, the stock rose suddenly 14% on large volume near the end of the day.  This is not the first time such a thing has happened in the past couple of months.  Last week during the market downturn, this stock did not go down much, unlike many other small biotechs.  It stayed in a narrow channel between the 20 and 50 day ma.  Monday it did breakdown, but yesterday returned it to levels higher even then before the latest market breakdown.

hi jim, have you tried the search functionality from 3SoF?
there is a SIGA analysis posted already  ;)
cheers
O.

Hi Tokyopua,

I think it's just too early too decide the bullish vs bearish case. I still think it's wise to take a "market neutral" approach for now, and continue looking for both good long and short prospects, and be ready for a more decisive move.
Like you, I think we are still in a corrective mode for now until proven otherwise and I don't think the big guys are buying.

I am really hoping that there is much more correction in store, it would be much more healthy  than the measly 4% to 5% we've had thus far.

Quote from: TraderStar on March 09, 2007, 09:46:15 AM
nullzero, I wonder if Cramer isn't lurking on this board .. after your last post yesterday, this morning he was touting the pawn shop stocks, mentioned the same one you mentioned & also CHE and AEA  ;D ;D

Or .. are YOU Cramer??  :o 8) ::)

I guess I kind of think a little like cramer... I go with trends I see around me and have a good sense of how things will play out by looking at the real world.

Quote from: BigSully1 on March 09, 2007, 10:29:26 AM
Hi Tokyopua,

I think it's just too early too decide the bullish vs bearish case. I still think it's wise to take a "market neutral" approach for now, and continue looking for both good long and short prospects, and be ready for a more decisive move.
Like you, I think we are still in a corrective mode for now until proven otherwise and I don't think the big guys are buying.

I am really hoping that there is much more correction in store, it would be much more healthy  than the measly 4% to 5% we've had thus far.

I am not hardcore bearish to the extent that I think the longer term bull market is necessarily done, but while we are in a confirmed correction, I am a bear for that time period.  Per Investors Business Daily correction theory, we are in a confirmed correction with a rally attempt.  Today is the 4th day of the rally attempt, and as such is the first day that the correction can be turned into a confirmed rally.  IMO today was the big hope for that, but you need to see the indices up about 1.5% on higher volume than yesterday and that seems unlikely from where I am sitting.

However, going forward all we need is the major indices to show .2% or greater loss in stronger volume than the day before and the rally count goes back to zero.

As for getting long picks, I dont doubt there might be some out there, and I will buy those if they seem really compelling!  But I have stopped scanning for those personally till we are out of the correction officially.

Quote from: David Randolph on March 09, 2007, 09:34:22 AM
Good morning :)

Yesterday there were many interesting posts that were left unanswered because it was the strongest day ever on this message board, with 134 messages. If you feel your post should get more attention, please just copy paste it until I get to comment it (I remember there were great posts about individual stocks that I don't want to lose sight).

David, I know you are very busy, but since you you asked, I will repost my request to you from yesterday. Thanks again.

David, I've been meaning to ask you about a microcap co. I am very much interested in and have been watching for some time. I know the chart looks bad now (I am more of a fundamental value hunter anyway) but I would REALLY appreciate and value your fundamental analysis and opinion on it.  THNX in advance.

AMK

American Technical Ceramics Corp. engages in the design, development, manufacture, and sale of radio frequency/microwave/millimeter-wave ceramic capacitors, thin film products, and other passive components worldwide. It offers multilayer capacitors, single layer ceramic capacitors, and passive resistive products, as well as provides resistors, terminations, attenuators, and other customized products. The company?s products are primarily used in ultra-high frequency and microwave applications, including wireless electronics, medical electronics, semiconductor equipment, satellite equipment, and fiber optics. It sells its products primarily to the manufacturers of microwave, high frequency, and fiber optic systems, including original equipment manufacturers, and electronics manufacturing services companies and suppliers. American Technical Ceramics was founded in 1966. It was formerly known as Phase Industries, Inc. and changed its name to American Technical Ceramics Corp. in 1984. The company is headquartered in Huntington Station, New York.

The company appears to be nicely diversified within their industry. I'm going to take the lazy way out and copy a synopsis of the situation from a recent yahoo poster;

>>Something I posted on MFCaps  (Not rated)       7-Mar-07 03:32 pm     American Technical Ceramics Corp is a thinly traded (57000 average volume for 3 months) small cap (currently 113M) company. The CEO holds over 50% of the company and insider ownership is around 55%. Though there have been a few insider transactions they have been minimal even during a 50% stock price increase (.4%). The company has established sales channels in the US, Europe and Asia, with wholly owned subsidiaries in Sweden and China, and offices in Germany and Russia. They consider their products "The Engineer's Choice", I have not read any reviews on their product to back this claim however.

It looks to me like the price of the stock had a quick run up that was much to large for the news (in December they announced that they would be moving a portion of their operations offshore to Costa Rica to reduce production costs.) On that news the stock had a 50% which was defiantly too high.

At the beginning of February the company released their 2nd quarter results, operations ended December 31st 2006. In this report they announced a slowdown in revenue growth, and a decrease in second quarter earnings compared to quarter 2, 2005. As far as I could tell this slow down was explained by 3 things.

1. Cost of severance packages (remember the news of moving operations to Costa Rica that caused the stock to shoot up in price)
2. There is a seasonality slowdown that extended further than expected, however the company saw an end to this in January and notes that they have had increased sales for that month. Forward looking statements include "The company expects that sales for the remainder of the fiscal year will be strong."
3. Lower gross margin realized due to a "less favorable product sales mix."

The result of this bad quarter resulted in a 1 day 28% loss in the stock price. The stock continued to loose an additional 15% over the next few weeks. After going up a bit, the stock lost 10% on march 5th. In all the stock is down close to 60% from the high seen when the company announced the move to off shore.

I feel the severance packages are a one time expense that should be overlooked as a whole. As the company saw an extended slowdown this year, I think this is something that may need to be factored in as an expectation for future years. However as the company has seen a strong demand and increase in sales for January to make up for the seasonality issue I consider it a minor factor. I am concerned with the lower gross margins, and hope that the move of some operations to offshore will help to overcome this.




When I saw the last price drop of 10% I felt that I needed to do more digging on the company, and I have decided to increase my position in AMK next week if the price holds below 13.00 (initial position was @13.93). Though I do not believe that another good earnings report would warrant putting the stock back into the $20.00 as some have stated, I do believe that this stock should be around the $16.00 level. However on a thinly traded stock like this you can get big spikes on news. In addition, the stock is currently trading at a 12.5 price to earnings verses an industry 19.4, if they can prove with a few good quarters that they warrant a P/E to match the industry by increasing earnings at the industry 20% growth, that would put the stock around $23 at the end of 2007. However I think that $23 is more than we will actually see.

Cheers,
stevie<<

Thanks la-onda.  I had no idea there was so much information about the stock here.  I guess I should do a search before I recommend anything.  I feel a bit foolish now.  I still think David should consider it for the 3stocksonfire portfolio.

The market turned around real quick this morning. I think we will see it the market lower towards the end of the day, with a lot of traders locking in their profits this week before the close and not wanting to hold their positions over the long weekend, (especially in GOOG, which had a nice run up this week)

The market is reacting poorly to good news. I think we headed for one more down day of +100 points within the next couple of days. If we finish today really weak. Down 50+. Monday could be the big drop day. 100+ IMHO

Quote from: BigSully1 on March 09, 2007, 10:29:26 AM
Hi Tokyopua,

I think it's just too early too decide the bullish vs bearish case. I still think it's wise to take a "market neutral" approach for now, and continue looking for both good long and short prospects, and be ready for a more decisive move.
Like you, I think we are still in a corrective mode for now until proven otherwise and I don't think the big guys are buying.

I am really hoping that there is much more correction in store, it would be much more healthy  than the measly 4% to 5% we've had thus far.

I may be to early on my call on a bear market who knows this may just be just a short correction and we may run into early summer making new highs. Just like my orignal guess of the implosion of subprimes I shorted some NEW back in late summer of last year was early with my call but didnt hold through. I would say by holiday season of this year we should be seeing the effects greatly. Consumers are definately tapped out I know so by all the people I know in debt upto their ears. Its a matter of when its going to play out. Im all in for playing short term long plays but I dont want to be holding the bag when its appearant that the U.S. economy is in total slow down mode and the global economy will get hit just as hard.

Quote from: tokyopua on March 09, 2007, 10:38:23 AM

Quote from: BigSully1 on March 09, 2007, 10:29:26 AM
Hi Tokyopua,

I think it's just too early too decide the bullish vs bearish case. I still think it's wise to take a "market neutral" approach for now, and continue looking for both good long and short prospects, and be ready for a more decisive move.
Like you, I think we are still in a corrective mode for now until proven otherwise and I don't think the big guys are buying.

I am really hoping that there is much more correction in store, it would be much more healthy  than the measly 4% to 5% we've had thus far.

I am not hardcore bearish to the extent that I think the longer term bull market is necessarily done, but while we are in a confirmed correction, I am a bear for that time period.  Per Investors Business Daily correction theory, we are in a confirmed correction with a rally attempt.  Today is the 4th day of the rally attempt, and as such is the first day that the correction can be turned into a confirmed rally.  IMO today was the big hope for that, but you need to see the indices up about 1.5% on higher volume than yesterday and that seems unlikely from where I am sitting.

However, going forward all we need is the major indices to show .2% or greater loss in stronger volume than the day before and the rally count goes back to zero.

As for getting long picks, I dont doubt there might be some out there, and I will buy those if they seem really compelling!  But I have stopped scanning for those personally till we are out of the correction officially.

Fair enough Tokyopua. By the way, I'm also a follower of IBD and recently renewed my subscription. 80 weeks (daily) $352. It's a great deal, less than 90c/copy. Best financial paper out there, IMO.

Anyone here good at interpreting the jobs numbers this morning?  It seems to me not so positive that Construction and Mfg jobs were down while the major up numbers were Service related?

Also, isnt it the case that unemployment fell in part because the labor force itself dropped by 190,000 as they reported on CNBC just now?

I spent some time searching for potential 10-baggers yesterday.

I started w/ the agricultural chemical's instrustry (alphabetically, the first industry).  

http://biz.yahoo.com/ic/112_cl_pub.html

Nothing "wow"ed me.  

A company called Itronics looks interesting, but has way too many outstanding shares (like 350million) and just as many warrants.  Itronics converts photoprocessing waste into fertilizer and pure silver bars.  Itronics is growing pretty rapidly, but does not appear to be approaching profitability any time soon.

http://finance.yahoo.com/q?s=ITRO.OB

Bodisen Biotech also looked interesting at first glance.  There are too many lawsuits (management fraud) looming, however, to make it a buy.

http://finance.yahoo.com/q?s=BBC

I then looked at the Aluminum industry (second alphabetically).  The only stock that may deserve a second look is ACH, the Aluminum Corp. of China.  Trades at a PE of about 2, while Alcoa trade as a PE of 12.  A possible 6-bagger.  I need to look into ACH a little better tonight.

http://finance.yahoo.com/q?s=ACH

Quote from: eggman11 on March 09, 2007, 09:54:00 AM
David,

Yesterday you mentioning researching SILC a little more (potentially viewing it as a 10-bagger) and maybe possibly adding it to the 3 stocks on fire portfolio and posting your findings (will that psoted later today?).  (If a stock has potential for a 10 bagger - I see it as no brainer to include in the prtfolio.). Please consider the use of options in  the future for the portfolio. The recent puts turned out to be a big mistake, but you shouldn't rule out the use of options, because of one mistake. As I mentioned in an earlier post, we just need to set up some option trading rules in advance.

Thanks

your a premium member check daves post on SILC in the main. the industry is supposed to grow 10 fold in 2 years. if you ask me SILC is a 10 bagger in 3 years minimum.

Quote from: BigSully1 on March 09, 2007, 10:54:11 AM

Quote from: tokyopua on March 09, 2007, 10:38:23 AM

Quote from: BigSully1 on March 09, 2007, 10:29:26 AM
Hi Tokyopua,

I think it's just too early too decide the bullish vs bearish case. I still think it's wise to take a "market neutral" approach for now, and continue looking for both good long and short prospects, and be ready for a more decisive move.
Like you, I think we are still in a corrective mode for now until proven otherwise and I don't think the big guys are buying.

I am really hoping that there is much more correction in store, it would be much more healthy  than the measly 4% to 5% we've had thus far.

I am not hardcore bearish to the extent that I think the longer term bull market is necessarily done, but while we are in a confirmed correction, I am a bear for that time period.  Per Investors Business Daily correction theory, we are in a confirmed correction with a rally attempt.  Today is the 4th day of the rally attempt, and as such is the first day that the correction can be turned into a confirmed rally.  IMO today was the big hope for that, but you need to see the indices up about 1.5% on higher volume than yesterday and that seems unlikely from where I am sitting.

However, going forward all we need is the major indices to show .2% or greater loss in stronger volume than the day before and the rally count goes back to zero.

As for getting long picks, I dont doubt there might be some out there, and I will buy those if they seem really compelling!  But I have stopped scanning for those personally till we are out of the correction officially.

Fair enough Tokyopua. By the way, I'm also a follower of IBD and recently renewed my subscription. 80 weeks (daily) $352. It's a great deal, less than 90c/copy. Best financial paper out there, IMO.

I havent heard many people here say much about IBD, glad to see someone else who has it.  I mainly chose my subscription to them based on their online "Big Picture" columns, do you have access to those or follow them?  I got a cheaper version where I only get the paper once a week, but that online Big Picture column alone was worth my subscription price I believe for their following of correction likelihood, rally likelihood, etc.

Do you follow their correction theory, distribution day counting, etc.?

GM   David and ALL

David glad to see you are stepping back a little and refocusing on the big picture.  We have all been suffering from watching the ticker a little closely and extrapolating into much longer time frames.  Some times you can't see the forest because there are just too many dam trees in the way.

Nice gap up this morning on this so called great jobs news, but then looked like the Big boys were stumbling over themselves to feed more shares to the bottom fishing retail guys.  For me not a lot has changed, I'm still in the correction mode and leaning towards Bear, but we'll see.  Many on this board are sharing the same opinion, others are not, thus we are in no mans land without a real short term trend.

Personally this sloppy action, means I'm mostly trying to sit on my hands and just watch.  Got tripped out of my QID's a few minutes after the open, almost pulled the order but felt money management rules needed to be observed, so ended up with a little smaller profit.  I don't think we are going to take out the recent low right now as we'll bounce again on the bottom fishers, we need a several day rally back into the lower red candle of last week on medium volume, then I think we can have a good washout to below the lows.  At that point we can rebuild a base and start another assault, but it will be many months before we take out the highs on the index's again.

The house of cards was showing some strain last fall and the coiled spring was very tight, last Tuesday released some of the pressure, but there's still a lot there.  I feel any rally back to the highs, from this point, without having a lower washout is just going to wind that coiled spring very much tighter.  Some pressure needs to be release here and that's a good thing in the long run for any Bull market to continue.

I don't expect the index's to close above the highs today, probably closer to yesterdays close.

JMHO

Quasi

I also have a subscription to Ibd, but haven't used it very much.  What are the few ways that anyone recommends using the various sections?

Quote from: tokyopua on March 09, 2007, 10:59:09 AM

Quote from: BigSully1 on March 09, 2007, 10:54:11 AM

Quote from: tokyopua on March 09, 2007, 10:38:23 AM

Quote from: BigSully1 on March 09, 2007, 10:29:26 AM
Hi Tokyopua,

I think it's just too early too decide the bullish vs bearish case. I still think it's wise to take a "market neutral" approach for now, and continue looking for both good long and short prospects, and be ready for a more decisive move.
Like you, I think we are still in a corrective mode for now until proven otherwise and I don't think the big guys are buying.

I am really hoping that there is much more correction in store, it would be much more healthy  than the measly 4% to 5% we've had thus far.

I am not hardcore bearish to the extent that I think the longer term bull market is necessarily done, but while we are in a confirmed correction, I am a bear for that time period.  Per Investors Business Daily correction theory, we are in a confirmed correction with a rally attempt.  Today is the 4th day of the rally attempt, and as such is the first day that the correction can be turned into a confirmed rally.  IMO today was the big hope for that, but you need to see the indices up about 1.5% on higher volume than yesterday and that seems unlikely from where I am sitting.

However, going forward all we need is the major indices to show .2% or greater loss in stronger volume than the day before and the rally count goes back to zero.

As for getting long picks, I dont doubt there might be some out there, and I will buy those if they seem really compelling!  But I have stopped scanning for those personally till we are out of the correction officially.

Fair enough Tokyopua. By the way, I'm also a follower of IBD and recently renewed my subscription. 80 weeks (daily) $352. It's a great deal, less than 90c/copy. Best financial paper out there, IMO.

I havent heard many people here say much about IBD, glad to see someone else who has it.  I mainly chose my subscription to them based on their online "Big Picture" columns, do you have access to those or follow them?  I got a cheaper version where I only get the paper once a week, but that online Big Picture column alone was worth my subscription price I believe for their following of correction likelihood, rally likelihood, etc.

Do you follow their correction theory, distribution day counting, etc.?

Sure, I have access to all the online features, but I really like the hard copy and your right, "The Big picture" on the front page is the very first thing I read, and it's just  one of many regular columns like IBD's Top Ten News items (front page) and "The New America" column.

I don't follow their theorys to a "T", but yes I definitely believe in them. Nor do I neccesarily follow their CANSLIM methods to a "T", but believe them to be highly reliable.

William O'Neil also has some pretty good books.

One thing though, I don't believe I have ever seen IBD or O'Neil  recommend shorting. They advise to be on the lookout for new leaders and compile a watchlist in times like these for possible future buying.

What I like the most from IBD is the Accumulation Distribution rating and EPS ratings.  They help me a lot when I'm looking for new stocks.  The Big Picture is a must read.  What I dislike is they don't take care of low priced stocks

Quote from: nica33 on March 09, 2007, 11:47:55 AM
What I like the most from IBD is the Accumulation Distribution rating and EPS ratings.  They help me a lot when I'm looking for new stocks.  The Big Picture is a must read.  What I dislike is they don't take care of low priced stocks

Yes, IBD doesn't advocate buying low priced stocks  much below $10 and they used to have to be above $15 to appear on the IBD 100 list, but I think that was changed to $10.

Have you tried this for low priced or thinly traded stocks?

www.investors.com/editorial/expandedIBD.asp

Quote from: BigSully1 on March 09, 2007, 12:05:33 PM

Quote from: nica33 on March 09, 2007, 11:47:55 AM
What I like the most from IBD is the Accumulation Distribution rating and EPS ratings.  They help me a lot when I'm looking for new stocks.  The Big Picture is a must read.  What I dislike is they don't take care of low priced stocks

Yes, IBD doesn't advocate buying low priced stocks  much below $10 and they used to have to be above $15 to appear on the IBD 100 list, but I think that was changed to $10.

Have you tried this for low priced or thinly traded stocks?

www.investors.com/editorial/expandedIBD.asp

Yes, they're very useful.   ;)

Quote from: BigSully1 on March 09, 2007, 11:33:55 AM

Quote from: tokyopua on March 09, 2007, 10:59:09 AM

Quote from: BigSully1 on March 09, 2007, 10:54:11 AM

Quote from: tokyopua on March 09, 2007, 10:38:23 AM

Quote from: BigSully1 on March 09, 2007, 10:29:26 AM
Hi Tokyopua,

I think it's just too early too decide the bullish vs bearish case. I still think it's wise to take a "market neutral" approach for now, and continue looking for both good long and short prospects, and be ready for a more decisive move.
Like you, I think we are still in a corrective mode for now until proven otherwise and I don't think the big guys are buying.

I am really hoping that there is much more correction in store, it would be much more healthy  than the measly 4% to 5% we've had thus far.

I am not hardcore bearish to the extent that I think the longer term bull market is necessarily done, but while we are in a confirmed correction, I am a bear for that time period.  Per Investors Business Daily correction theory, we are in a confirmed correction with a rally attempt.  Today is the 4th day of the rally attempt, and as such is the first day that the correction can be turned into a confirmed rally.  IMO today was the big hope for that, but you need to see the indices up about 1.5% on higher volume than yesterday and that seems unlikely from where I am sitting.

However, going forward all we need is the major indices to show .2% or greater loss in stronger volume than the day before and the rally count goes back to zero.

As for getting long picks, I dont doubt there might be some out there, and I will buy those if they seem really compelling!  But I have stopped scanning for those personally till we are out of the correction officially.

Fair enough Tokyopua. By the way, I'm also a follower of IBD and recently renewed my subscription. 80 weeks (daily) $352. It's a great deal, less than 90c/copy. Best financial paper out there, IMO.

I havent heard many people here say much about IBD, glad to see someone else who has it.  I mainly chose my subscription to them based on their online "Big Picture" columns, do you have access to those or follow them?  I got a cheaper version where I only get the paper once a week, but that online Big Picture column alone was worth my subscription price I believe for their following of correction likelihood, rally likelihood, etc.

Do you follow their correction theory, distribution day counting, etc.?

Sure, I have access to all the online features, but I really like the hard copy and your right, "The Big picture" on the front page is the very first thing I read, and it's just  one of many regular columns like IBD's Top Ten News items (front page) and "The New America" column.

I don't follow their theorys to a "T", but yes I definitely believe in them. Nor do I neccesarily follow their CANSLIM methods to a "T", but believe them to be highly reliable.

William O'Neil also has some pretty good books.

One thing though, I don't believe I have ever seen IBD or O'Neil  recommend shorting. They advise to be on the lookout for new leaders and compile a watchlist in times like these for possible future buying.

Hmm, they definitely dont recommend shorting in a bull market, but they do reocmmend it in a bear market, in fact I have a new book by O'Neil called How To Make Money Selling Stocks Short.  

Now granted we are not in a confirmed bear market, but to me a correction is a short term bear market, so I figured I would go short for awhile while making my list of what to buy if we come out of the correction.  

If David was right in his original thesis, then I guess I got started on the shorting early... also, I am not heavily shorted, I still am mostly in cash.

Quote from: tokyopua on March 09, 2007, 10:55:03 AM
Anyone here good at interpreting the jobs numbers this morning?  It seems to me not so positive that Construction and Mfg jobs were down while the major up numbers were Service related?

Also, isnt it the case that unemployment fell in part because the labor force itself dropped by 190,000 as they reported on CNBC just now?

Hi Tokyopua

Yes re the jobs numbers, I don't follow them or chart them or try to analyze them, I just go with my gut feeling and what I see in the world around me.  The following may not be politically correct and many will disagree with me, but its just how I see the NA jobs situation and for me its very much a large part of the overall problem.

I've worked in the engineering field for 28 years, last 18 yrs at Nortel doing research and development,  (downsized, no pension not enough yrs of service, now self employed).

I've been very concerned for many years that we in NA have a standard of living way beyond our means on a global basis.  Yes we were the worlds major supplier of manufactured items and we were very good at it, but that is changing radically as this historic engine of growth moves elsewhere.

In the manufacturing sector I've seen wages rise way beyond fair market value, ie when it takes 1 day to learn how to load and unload and push the start button on a machine, it is NOT a skilled labor job reflective of $35/hr with very lucrative benefits.  This is a minimum wage range job we're talking about, but nobody wants to listen and in the NA manufacturing boom times companies just gave the unions whatever they wanted because they couldn't afford a strike, and I've personally seen a lot of unbelievable deals over the years.  They were also justified by the fact that they guy across the street gets that much so I deserve it too.   Now in other areas say machinists or industrial electricians, with 2-3 years of study and then several years of apprenticeship and ongoing training, they are in the same $35/hr range but I feel, as a true skilled job they are much closer to fair market value.

So where are we now, well I just look around and see high paying factories everywhere shutting down, a devastating blow to many communities.  Now many of those employees get early retirement (now out of the market), the ones that don't move into the lower paying service industry.  So jobs are still being created, jobs numbers are OK right ?   So now we get to the point where  everyone works in the service industry at low paying jobs, well who are they servicing ?  My take is the current baby boomer's who are spending their retirement money, traveling and buying that last new BMW.  So what happens as they start to decline, less demand for service, as the current service people are not going to expensive restaurants, theaters or buying new Beamers.  Sort of a spiral, less disposable income, less spent in the community, less demand for service jobs, less disposable income, etc etc.

Now we still have a lot of R&D going on in NA, but here again there is erosion, as many of the mid & lower range jobs are being farmed out over the internet to places like India.  Big Engineering and Accounting firms have most of the drafting or booking entry stuff done overseas.  I see it happening everywhere and its accelerating, it's the only way companies here can remain profitable at the present time.

In many cases I see the Gov stepping in with subsidies to keep the factories running, I personally see this as a band aid on the symptom rather than a long term solution addressing the actual problem.  When the subsidies are now longer available the factory closes and relocates elsewhere to receive more subsidies.  I'm a business type guy so I feel if you want to start a banana plantation in Alaska, you should be on your own, no Gov help should be available !.  But the Gov continues to support many of these areas which just don't make proper business sense, I call them Gov paid make work projects with no long term fundamentals for success.

In Canada we are not so bad off as we still have O&G and mining, where the jobs just can't be farmed out offshore.

Sorry for this bit of a rant, just got on a roll.

Re Markets, guess we call this a gap to crap on pretty good volume, now slightly rising on low volume, not what the Bulls want to see.  Looks like its gonna be more sideways slop for a while longer.

JMHO

Quasi

Thoughts on IMOT?

SIGA is on fire.

Quote from: Quasi on March 09, 2007, 12:29:23 PM

Quote from: tokyopua on March 09, 2007, 10:55:03 AM
Anyone here good at interpreting the jobs numbers this morning?  It seems to me not so positive that Construction and Mfg jobs were down while the major up numbers were Service related?

Also, isn't it the case that unemployment fell in part because the labor force itself dropped by 190,000 as they reported on CNBC just now?

Hi Tokyopua

Yes re the jobs numbers, I don't follow them or chart them or try to analyze them, I just go with my gut feeling and what I see in the world around me.  The following may not be politically correct and many will disagree with me, but its just how I see the NA jobs situation and for me its very much a large part of the overall problem.

I've worked in the engineering field for 28 years, last 18 yrs at Nortel doing research and development,  (downsized, no pension not enough yrs of service, now self employed).

I've been very concerned for many years that we in NA have a standard of living way beyond our means on a global basis.  Yes we were the worlds major supplier of manufactured items and we were very good at it, but that is changing radically as this historic engine of growth moves elsewhere.

In the manufacturing sector I've seen wages rise way beyond fair market value, ie when it takes 1 day to learn how to load and unload and push the start button on a machine, it is NOT a skilled labor job reflective of $35/hr with very lucrative benefits.  This is a minimum wage range job we're talking about, but nobody wants to listen and in the NA manufacturing boom times companies just gave the unions whatever they wanted because they couldn't afford a strike, and I've personally seen a lot of unbelievable deals over the years.  They were also justified by the fact that they guy across the street gets that much so I deserve it too.   Now in other areas say machinists or industrial electricians, with 2-3 years of study and then several years of apprenticeship and ongoing training, they are in the same $35/hr range but I feel, as a true skilled job they are much closer to fair market value.

So where are we now, well I just look around and see high paying factories everywhere shutting down, a devastating blow to many communities.  Now many of those employees get early retirement (now out of the market), the ones that don't move into the lower paying service industry.  So jobs are still being created, jobs numbers are OK right ?   So now we get to the point that everyone works in the service industry at low paying jobs, well who are they servicing ?  My take is the current baby boomer's who are spending their retirement money, traveling and buying that last new BMW.  So what happens as they start to decline, less demand for service, as the current service people are not going to expensive restaurants, theaters or buying new Beamers.  Sort of a spiral, less disposable income, less spent in the community, less demand for service jobs, less disposable income, etc etc.

Now we still have a lot of R&D going on in NA, but here again there is erosion, as many of the mid & lower range jobs are being farmed out over the internet to places like India.  Big Engineering and Accounting firms have most of the drafting or booking entry stuff done overseas.  I see it happening everywhere and its accelerating, it's the only way companies here can remain profitable at the present time.

In many cases I see the Gov stepping in with subsidies to keep the factories running, I personally see this as a band aid on the symptom rather than a long term solution addressing the actual problem.  When the subsidies are now longer available the factory closes and relocates elsewhere to receive more subsidies.  I'm a business type guy so I feel if you want to start a banana plantation in Alaska, you should be on your own, no Gov help should be available !.  But the Gov continues to support many of these areas which just don't make proper business sense, I call them Gov paid make work projects with no long term fundamentals for success.

In Canada we are not so bad off as we still have O&G and mining, where the jobs just can't be farmed out offshore.

Sorry for this bit of a rant, just got on a roll.

Re Markets, guess we call this a gap to crap on pretty good volume, now slightly rising on low volume, not what the Bulls want to see.  Looks like its gonna be more sideways slop for a while longer.

JMHO

Quasi

Hi Quasi, I see the same thing. I am in NY State and watched as my local region lost 39,000 jobs in the steel industry. Workers were getting 13 weeks a year and making a professional salary. The Chemical industry lost 19,000 jobs, similar labor story but they also had huge accumulated environmental problems. Their solution has been to keep a skeleton crew operating the plants to avoid the huge costs of a cleanup required on closing, leaving a blighted area and no jobs.The region still has a fair amount of auto related business left. ll left. At one of the local plants, the average worker was still able to pull down 60,000 a year with really nice benefits. An acquaintance who works at the plant says that the average absentism is about 25% on any given day. The company entered bankruptcy a few years back. An axle plant just announced it is closing, 750 jobs gone overnight. The one bright spot  in manufacturing is a GM plant that builds engines. 15 years ago the union and management agreed on a policy of cooperation that has worked very well and is one of the most efficient operations in the GM family.  All in all, a wealthy (by world standards) middle class based on manufacturing is a thing of the past. A service economy which exists only to serve a service economy is not sustainable in the long run. Mid to Long term the US standard of living is going to decline until it is on par with the rising chinda economies. Gambling has moved into the area big time, touted as wonderful growth by the politicians, but in reality providing service jobs and sucking money from the local economy.
One advantage of the region is its housing prices. I can buy a very nice suburban home for less than 140,000, a beautiful modern log home w/swimming pool on 4 landscaped acres for 125,000, but people have a hard time affording them evan at those prices. When you look at realestate across the country, are retiring baby boomer's going to stay in a 600,000 ranch house that is no longer appreciating, or move to an area with a lower cost of living? Imagine what that could do to some over heated markets over the next 15 years.
Sorry for continuing your rant, but I think it is always good to be looking into the future.          

Hey guys,

Looks to me like the market is just starting to break down here.  The QQQQs, COMPEX, DOW are all showing signs of a channel breakdown.  The Dow just broke 12250, and I think that we may see an afternoon selloff into more selling next week. 

Quote from: ScottishTrader on March 09, 2007, 02:00:22 PM
Hey guys,

Looks to me like the market is just starting to break down here.  The QQQQs, COMPEX, DOW are all showing signs of a channel breakdown.  The Dow just broke 12250, and I think that we may see an afternoon selloff into more selling next week. 

I also see a possible cup and handle pattern forming on the intraday $VIX.  This was a learning experience because when I then checked the dow and s&P charts its an inverse cup and handle type pattern, which is interesting to see, I never looked for such a thing nor would have recognized it... only problem is I cant tell volume on the VIX so its hard to discern cup and handle pattern volume patterns.

Actually if I look at the SPY though, the volume pattern is perfect for an inverse cup and handle, you have high volume in the run down, diminished volume now on the pull back to form a handle...  then if it breaks down again I expect higher volume.

I have been invested in JADE for a few weeks now; but I am considering selling soon and moving my investment to CECE; there seems to be a lot of focus on improving the pollution issues in China lately (bookings in February already total 22 million; http://biz.yahoo.com/prnews/070226/clm051.html?.v=76 (http://biz.yahoo.com/prnews/070226/clm051.html?.v=76)).

As for Brazil, I have been following NETC for a few weeks, I am not invested yet, but am looking for a good entry point; the company provides entertainment and communications services; its a booming market.

After reading some posts here on NVTL, it reminds me of ATHR which I've been following for a few weeks.  Both have great potential.

I'm also interested in a recent post regarding  HQSB (I will start to follow this next week and do some research over the weekend).

David, can you share your thoughts on CECE and NETC?

Cheers,

Handle just broke to the downside, S&P at -3.0% but I think its going lower on this pattern...

Hey tokyo, not quite sure if I see what you're saying... could you post a chart???

Quote from: ScottishTrader on March 09, 2007, 02:30:01 PM
Hey tokyo, not quite sure if I see what you're saying... could you post a chart???

Guess I was wrong about the breakout or the handle needs more time to form, but here is the picture, let me know what you think:

Volume is supposed to be higher at the sides of the cup and on the handle breakout, but low in the base of the cup, and we see that here.  Except for the now messy handle, pretty classic pattern, but inverted.  A break below the 140.2 that lasts on this 3 minute chart should eventually lead to a swift downtrend if I am right about the pattern.

BigSully1 requested an analysis on AMK, let me see what I have here. Well, this is a very low volume stock, just 26,100 shares traded today, so definitely not a short term trader's dream (but perhaps a great investment, share volume traded has nothing to do with the value of the company). One has to be prepared to wait months, maybe years, for the stock to wake up to live again.

The trend is now bearish as the stock came off 40% over the last month or so, from $20 to a low of $11.53.

Fundamentally:

- Market cap is $124 M. American Technical Ceramics Corp. engages in the design, development, manufacture, and sale of radio frequency/microwave/millimeter-wave ceramic capacitors, thin film products, and other passive components worldwide. (complete profile here (http://finance.yahoo.com/q/pr?s=AMK))

I don't understand the business of the company completely. It was founded in 1966, so hardly a new growth story.

- No significant dilution over the years
- Balance sheet looks ok in terms of working capital, but I see inventory levels rising every quarter. This might be a signal that demand for the company's products is slowing down.
- Revenues and profits grew nicely in 2004, 2005 and 2006. Fiscal 2006 revenues were $84.13 M, so the price to sales ratio is 1.48. The Diversified Electronics industry average is 1.43.
- EPS in fiscal 2006 was $0.67, so the trailing earnings multiple is 20.7. The industry average is 19.4.

Revenues went down a bit this latest quarter and the stock tank. Yet, EPS rose some more as net profit margin rose and the company bought back some shares. EPS in fiscal 1Q 2007 (calendar 4th quarter 2006) was $0.35. If we annualize that we get $1.4 EPS for a full year, and that means a forward earnings multiple of about 10, which looks cheap, indeed, from this perspective, the stock might double.

But under the carpet I see problems arising, because that inventory buildup and decline in revenues tells me demand is slowing. The company can't get much more net profit margin expansion, in fact, the one that occurred this latest quarter might have happen because of the previous inventory buildup.

All in all I don't find the stock interesting, but, as I wrote, I don't understand its business well. Good luck :)

Maybe you can review JSDA.  Great earnings report yesterday.  I think they have a bright future

Quote from: rudynostalgia on March 09, 2007, 10:11:35 AM
David, a suggestion for the portfoliio: MAMA   It's the Canadian Google ( fun to be around, diffident and all the queries have to end in eh?)  I bought in at around 5.40 this a.m.

Hi Rudy :)

Canadian Google, MAMA wished. I believe I know MAMA fairly well, even managed to lose some money in it ... let's start by the chart. If you're playing the short term, you can see yesterday's candlestick was black, that means the stock closed below the open, so supply was higher than demand throughout the day. That is a bearish short term development.   

The news yesterday was:

• Mamma.com Releases Q4 and Year-End 2006 Results (http://biz.yahoo.com/iw/070307/0224114.html)
Market Wire (Wed, Mar 7)

First thing I want to look for is the number of shares outstanding and how it changed from previous quarters. They say:

«The Company's Q4 2006 net earnings were $420,175 ($0.03 per share)»

So, the number of shares outstanding is $420,175/$0.03 = 14 million. It was about that number for the previous 3 quarters, that surprises me, I was expecting dilution, but no.

The second thing I want to know about is the market cap and its relation with revenues and profits. Current market cap is $5.16*14,000,000 = $72.24 M.

Sales for the entire 2006 were $9.6 M, so the price to sales ratio is 7.52. Google's price to sales ratio is 13.3, so MAMA doesn't look expensive from that perspective.

I believe we shouldn't care too much about the $0.30 loss per share in the full year of 2006, but the $0.03 profit per share over the 4th quarter. If the company maintains that profit for a year (the natural assumption), it would earn $0.12 and have an earnings multiple of 43. GOOG's earnings multiple is about 32.

So, MAMA needs to get more profitable, to expand its revenues and bottom line (as any company).

Let me make just one more test, the balance sheet test: I'm amazed to see the balance sheet isn't weak.

Given the area the company is in, Rudy, I risk saying you have a nice investment here. Your short term timing wasn't the best, though, but I'll study MAMA some more. If they could enter a Adwords/Adsense type of business the stock would certainly explode.

Interesting situation, thanks :)

QuoteI guess I kind of think a little like cramer... I go with trends I see around me and have a good sense of how things will play out by looking at the real world.

I just wish your long term performance will be better than Cramer's nullzero :)

QuoteDavid, can you share your thoughts on CECE and NETC?

For CECE you just need to look under "C" on the Stocks Covered List, I'm a long term bull on the stock. Please request NETC on another day, no more time today.

Thanks :)

Lol I wish, im to negative or neutral most of the time. Im more of a pesimist which causes me to miss out on trades and oppertunities.

David what do you think of CMGI for a long?

Quote from: tokyopua on March 09, 2007, 02:12:05 PM...charts its an inverse cup and handle type pattern, which is interesting to see, I never looked for such a thing nor would have recognized it...

I hear ya Tokyopua

Its a whole different mind set in a bear market, the normal chart patterns that you look at are all upside down, the mind just doesn't like that.

Here's my trick, I run two monitors, so what I do is text on the main and put all the charts on my secondary monitor, then I turn that monitor upside down.  Now the mind works as normal.

Just kidding

Quasi

Quote from: nullzero on March 09, 2007, 03:50:09 PM
Lol I wish, im to negative or neutral most of the time. Im more of a pesimist which causes me to miss out on trades and oppertunities.

No, you don't wish, you need that, because Cramer has been underperforming the S&P 500 for years. Anyway, that happens to 80 to 90% of fund managers. I guess that is because they diversify too much. Cramer for example holds something like 100 different stocks in his portfolio, how can he beat the market? He owns the market !

Anyway, I love hearing what he says when I get a chance.

You know I'm always thinking stock market, it just doesn't get out of my head easily. Over the afternoon I thought: "the richest man in the world only holds 1 stock" ;)

David, thanks much for your analysis and opinion on AMK. You brought up some valid concerns. They do have a history of uneven Q'ly ER's and restructuring initiatives hurt earnings last Q. Management said orders in Jan have been "robust", but who really knows. The limited trade volume also a concern for anything more than a small position.

I will just continue to watch it for now and to look for better prospects. THNX again.

This short term/long term dichotomy is so hard to surpass. I created the 3 Stocks on Fire Portfolio to be a short term portfolio, but I'm having trouble to accomplish that, because, honestly, I "know" short term trading isn't the best way to trade/invest in the stock market. I've been a short term trader for most of my life, and I didn't make as much as I ought to make, considering how right I was in some stocks/trends.

So, a long term investor that makes 30% a year over a 30 years life span is a genius, even better than Buffet (who made a 24% average annual return). Now go say a man with a $15,000 account that he will make 30% for the next 5 years, and that in the end he will have $55,693. He'll say: "that's less than one year's pay at my job, I can't have that type of strategy. I would make a lot more money if I just worked a bit more".

And this is where the problem lies ... 30% a year is great for a $150,000 - $300,000 account, but seems so insufficient for a small account. So small traders look to be smarter than geniuses, risk too much or trade too much and almost all fail and lose money.

My pursuit with this board/portfolio is to get a strategy that, because of using little capital, can be very flexible, move quickly, and perhaps achieve a much higher return, impossible for a large account.

So, what are the advantages of being small? How can we use them for our benefit?

Food for thought for the weekend :)

QuoteSo, what are the advantages of being small? How can we use them for our benefit?

I guess it was Quasi that once wrote something like: "if many people follow 3 SOF Portfolio trades, they will become a self fulfilling prophecy".

And that was the catalyst for me to change the initial strategy and take a more longer term approach (Quasi, you're the guilty one, lol, just kidding), because winning because I could move stocks with my recommendations wouldn't be a proven or useful strategy at all.

I'm glad the weekend is here so I can think about these strategic issues. I received a private message requesting to leave the board open throughout the weekend because that is the best time for people to write more in depth analysis, so I'll leave this thread open, just in case ...

Have a great weekend :)

If I buy a very small cap for the short term, some people that subscribe that "Trades" thread will receive the e-mail and the stock would rise 5 to 10% as they buy if it is an illiquid penny stock. I could sell it right away and book a 10% profit.

Not a sound strategy.

Or, if it isn't a penny stock, but say a Nasdaq small cap with $200 M plus market cap, if the stock was on fire and gapped up the next day, I could book a 5% profit there, but people that bought a bit later and sold a bit later would just make 1% or even lose. 

Hence, having a longer term approach is the only way out for this portfolio. My kid is here, wants to have dinner at McDonadls ... see ya :)

David,

I agree with your new strategy. How about making 3SOF portfolio a "best of" the main portfolio. Containing your 3 top picks and updating them regularly. If you find just one 10-bagger that would turn $7,000 (33% of the Portfolio into $70,000 that would bring us a lot closer to $150,000.) I know your against using options, but with options your don't have to worry about how your picks will effect the price. With options you won't be limited to just small caps, you can earn huge returns from any stock and as long as you agree to sell at least 1 month before the expiration date, they won't be to stressful. You average holding time for a stock in 3SOF is about 2 weeks or so maybe less. So, buying options 2-3 months out will not be to much of risk. Please reconsider using options as a possible strategy.

Thanks

Dave what if we only pick one stock for the portfolio? We could pick the best posibility for a 10 bagger such as SILC and put all our capital into it. All of our capital combined would surely lift the stock. Its not like were pumping because its our best hope for a 10 bagger. If were right about it being a 10 bagger then we could keep reinvesting our gains in it as long as its still growing. If the industry is supposed to grow 10 fold through 2008 then why not put all our capital into SILC?

Quote from: prodigykid6 on March 09, 2007, 05:43:22 PM
Dave what if we only pick one stock for the portfolio? We could pick the best posibility for a 10 bagger such as SILC and put all our capital into it. All of our capital combined would surely lift the stock. Its not like were pumping because its our best hope for a 10 bagger. If were right about it being a 10 bagger then we could keep reinvesting our gains in it as long as its still growing. If the industry is supposed to grow 10 fold through 2008 then why not put all our capital into SILC?

David already said it a million times, don't put all your eggs into 1 basket, much toooooo risky! ::) :)

no risk no reward

Quote from: prodigykid6 on March 09, 2007, 05:59:22 PM
no risk no reward

No offense but I think the 3SOF gains over the years prove you wrong! :)

There's a limit in risk,  if you had 100.000$ to invest and you would put it all in 1 stock, I wonder if you still would sleep well, I know I wouldn't, no matter how high the reward can be...  ::)

Quote from: prodigykid6 on March 09, 2007, 05:43:22 PM
Dave what if we only pick one stock for the portfolio? We could pick the best posibility for a 10 bagger such as SILC and put all our capital into it. All of our capital combined would surely lift the stock.

hi,
i have done this to my own detrerment. i have made big gains and bigger losses.
lost a lot of sleep as well.
while the gambler n me says " yes it's a sure thing" the balnced mind says no . what ever we say about the fundamentals or technicals the market can turn on a dime.
no amount of optimism and confidence in a management or a technical strategy will always translate to the market place. (but i still like the idea! :D)
maxi

Quote from: David Randolph on March 09, 2007, 04:54:39 PM

Hence, having a longer term approach is the only way out for this portfolio. My kid is here, wants to have dinner at McDonadls ... see ya :)

McDonalds?? In Portugal?  Oh dear Lord the world as we know it is about to end....  ;D ;D ;D  I know, I know .. they are in Italy, in Japan ... but ... I was hoping some corners of the earth were stilll safe.

As to 3SoF ... it was NOT broke, so why are we trying to 'fix' it ???  Let's go back to Plan A and if the market pulls back, just take profits, watch for new stocks with relative strength and continue as before.  Sooner or later this strategy should lead us to 3 major winners.  Bet on it :)

Quote from: TraderStar on March 09, 2007, 07:26:17 PM

Quote from: David Randolph on March 09, 2007, 04:54:39 PM

Hence, having a longer term approach is the only way out for this portfolio. My kid is here, wants to have dinner at McDonadls ... see ya :)

McDonalds?? In Portugal?  Oh dear Lord the world as we know it is about to end....  ;D ;D ;D  I know, I know .. they are in Italy, in Japan ... but ... I was hoping some corners of the earth were stilll safe.

As to 3SoF ... it was NOT broke, so why are we trying to 'fix' it ???  Let's go back to Plan A and if the market pulls back, just take profits, watch for new stocks with relative strength and continue as before.  Sooner or later this strategy should lead us to 3 major winners.  Bet on it :)

I agree with this sentiment. Even in a market correction or bearish market, one can still find longs and make just as good of money as one can in a bull market. Why has the faith been lost. I am extremely guiltly of this and have lost way too much this year now and am actually in the red making too risky picks to try and make my losses back and have ended up losing more as a result.

I am so depressed over this but will still stick with 3SOF assuming we can go back to where we were.

8)

Quote from: David Randolph on March 09, 2007, 04:18:54 PM

QuoteSo, what are the advantages of being small? How can we use them for our benefit?

I guess it was Quasi that once wrote something like: "if many people follow 3 SOF Portfolio trades, they will become a self fulfilling prophecy".

And that was the catalyst for me to change the initial strategy and take a more longer term approach (Quasi, you're the guilty one, lol, just kidding), because winning because I could move stocks with my recommendations wouldn't be a proven or useful strategy at all.

Hi David and all

Wow with respect to all the speed reading you must do I'm amazed you can remember it all with that sort of detail.  It was just an observation then and it still applies today.  If just 100 of us jumped in with $1k that's $100K, enough to make a pretty good up tick on most of the stocks discussed.  Now more than likely it could easily be 500 of us at $1K or 100 at $10K, now were talking $500K or a $1M, definitely a significant impact on the daily tape.

Now as far as the performance objective of $15K to $150K in say a year or so, I think the target was set way to high and you were doomed to failure from the start.  Or maybe you were smoking from the afterhours pack when you picked that target out of the air.  In my old days I always negotiated lower but impressive targets, that way it was much easier to get those dotcom options every year.  No I didn't become rich, remember what happened to Nortel in the crash, well the options became mostly worthless too.

So I think the original shorter term / swing trade style was fine, just drop the 15K to 150K objective, as it is swaying the decision making process.  Now there is a mathematical probability for every thing, that one was just very very small.  I think it could be done basically daytrading (stocks or options or futures), in and out several times during the day and probably never holding overnight.  And you would also have to be in the top 5% of all the people doing it, the other 25% manage to make small gains, with the remaining 70% at market levels and most loosing money.  This isn't a site for aggressive intra day trading nor do I think we want to get everyone involved in that, most don't have tools, or the time during the day, it's a full time job.  I don't want to do it and most that have done it are broke and burned out in a short time.

The original objective was for very focused TA and fundamentals on a shorter time frame for higher gains, but noting this would require significantly more work in stock scanning, quick analysis and only holding for the best part of the quick burst.  Now many stocks go up 5-10-20% in a year, but this often happens in a couple of quick burst once or twice a year and lasting only a few weeks.  Some will also go up 100% in a year but it is seldom linear and we don't want those ones anyway, (7-8% a month boring).  We want the ones that go up 50 or 100% in a burst, get in get out and find the next one all in just a few weeks.  You know the saying the easy money has already been made and the traders have moved on.  Well this is it, get that 100% in two weeks move on and forget about that next 50% move that took 6 months.  Now realistically you might turnover each 1/3 of the portfolio say 5-10 times, if you were really lucky, not 26 times on a two week cycle.  In between there would be dead time where the set ups just aren't quite right and you can't push it, other wise you'll bring down the average and introduce more losers.  There would be time on the sidelines and we'd have to figure out what to do with cash during those times, right now I just park it at my broker and get 3%, a lot better than loosing money and its available at the push of a button.

When I site back and think about this its still a very aggressive target, say 8 turnovers per year on 15K at 10% gain per turn,  $15K * 1.10 ^ 8  = $ 32, 153.  Over 100% per year ! !, I think the 10% seems realistic but the 8 turns is not, as there are usually a couple of months of correction pullback per year so lets say 5 turns,  $15K * 1.10 ^ 5  = $ 24,157  OK 60% still very aggressive but I think achievable on a group basis.  Now this wouldn't be achievable if you were doing it all yourself, maybe you'll get lucky one year but not year after year.

Also for this portfolio lets get rid of the day trading style of following momentum out of the open and buying intra day.  Most of the stock competitions allow you to put in a market buy or sell at the open the next day.  The old stock picking contests here used to work that way.  I think it would help to get us back into more of a swing trade style and reduce the tendency to be ticker watchers intra day.  Now I wouldn't recommend an unconditional market order for the open the next day, I usually put in a limit order.  I would also set a minimum stock price say $1, no Pinks or OTC and 50 day MA minimum liquidity value.

Now the liquidity minimum could be a bit of a problem, I usually scan for stocks with a minimum 50MA liquidity of  > $500K.  That way I can easily meet my rule of never owning more than 5% of the average daily traded dollars.  Now for this 3SOF portfolio, as I said above, I think we could easily generate $500K as a group and more if this portfolio starts heading for that 60% per year level.  Thus the limit may have to be higher, but as we move higher the price moves will not be as large and will happen more slowly.

With respect to the shorts and puts I still think we should consider them, but at this time only for conservative plays during corrections, or the other option is to practice "sitting on hands" and loading up the potential list of future longs.  However I find this group seems to have a real problem holding cash, for me cash is a position and sometimes the best position to have in times of sloppy markets, otherwise you start pushing it and day trading.

JMHO for the consideration by the group.

I'll end with an investment story that happened back in the late 90's.  That was a time when brokers were allowed to make cold calls to try and sell stocks / investments.  This was before my stock days so I didn't get involved but a co-worker did.  He got talked into making a very small trial investment and he did well and re-invested with a little more money, after 6 months back and forth he had put in $10K and had a 75% gain.  On the next monthly phone call he asked the broker if he should sell or at least take out some profits.  The broker said that was a very good idea, the only bad part was the broker wasn't sure who he would sell the shares to, as my co-worker was the only investor in this particular company.

have a great weekend, talk to you later
Quasi

Quote

  However I find this group seems to have a real problem holding cash, for me cash is a position and sometime the best position to have in time or sloppy markets, otherwise you start pushing it and day trading.
have a great weekend, talk to you later
Quasi

hi,
i think that is the biggest problem here and anywhere around the world where people trade. the inability to be cashed out and sit on the sidelines .it is the ability to be able to open the computer and have`access to trading immediately without having to call brokers and check stock prices in the newspaper at the end of the day.
it is all done in an instant. no waiting. the temptation to trade is strong when you can see the intra day ticks or end of day charts , where news and blogs and stock sites are all available 24/7.
there is a lot of discussion here about direction and how to go about turning $15 into $150, all the while still trying to buy and sell stocks. best, imho to stop trading sit back and watch and wait for the right opportunity . decide on the direction you want to take . after all , one doesn't just start driving south to a destination and then decide to look at the map while behind the wheel.  this is not a criticism of David. after all 3sof is up 47% since inception which is not too shabby.
    my criticism of David would be that he is too concerned with too many things at once. and too nice .
here is what i mean.
it is hard enough to achieve the goal of 15 to 150 but to add pressure of looking back to the members to see if they made the entries and exits is too tough. it is like you are running a race but stopping to wait  and let everyone catch up. you are trying to do it for us. and that won't work . this is a public portfolio and a free site.
you are better off being the example and going ahead and buying and selling when you see fit, still sending the emails. one of the reasons you don't need to be concerned is there is always time for members to get into that trade. i noticed myself that i could leave it alone and enter the next day and get a better or same entry .
that is the beauty of the market and life in general . it is impossible to miss out.
David your goal is to turn 15 to 150 . i believe you can do it . but i believe the decision is a solitary one.
thanks,
maxi,
p.s. nothing you do here has any effect on reality whatsoever so be Happy in the knowledge that nothing can really go wrong.
maxi

Loved your message Quasi.  Well written, well thought out.  It's what I'm here on this board to do...read sound advice from educated people, learn, and make an attainable profit.

Haha brilliant Quasi!!  I have to agree, I think that the original formula for this portfolio was spot on.  Using the community for "on fire" stock picking to pass on to David for a quick but deeper analysis and decision to include it in the portfolio.  (by the way, the videos were great, what happened to them?  were they too time consuming to make, or was there too many problems with hosting them?) What worked so well with this was that one person simply cannot have their eyes on so many stocks, but a whole community can have their eyes on a lot more.  What we want is stocks that are on fire! Right now!  If you look back at the trades on this portfolio, most of the big gainers were held for a very short amount of time:

EXCS.OB In: 1/19, Out: 1/22 - Gain 37%
AAGH.OB In: 1/22, Out: 1/23 - Gain 40%
OFI          In: 1/25, Out: 1/30 - Gain 37%

CPNE was held for longer, and came out with a very decent gain, but was also included in the main portfolio, and David rightly believed that there was "more in the tank", which encouraged him to hold on to it.

Also, most of the losing/breakeven trades early on were held for a few days at most, on the basis of "this isn't on fire so lets ditch it".  This left the portfolio open to pick up new ones.  I think the difficulty came in when  CPNE, PFSW and ETLT.OB were held for most of February.  CPNE was a big winner, but the other two didn't perform as was anticipated, and so were effectively "dead money" for the whole month.  This led the board to become more of a general daily stock discussion forum, as David had made it clear that he did not intend to buy or sell any stocks that day.

What I would like to see this portfolio be is as its name implies, an "on fire" portfolio that aims to capture short term moves and then get onto the next one, as they are happening in the market all the time, bull or bear.  Aim to completed within a few days to a week or so, as very often, after the fire, profit taking kicks in.  If the stock moves into consolidation, we don't want it.  If it then breaks out of that consolidation, we have the eyes of the community to bring it back to attention and jump back on it for a bit more.  Also,  I agree with you rickjust, and I think that cash is king.  If we aim to have 2 of the 3 positions invested at any one time, it means that if that one golden opportunity comes up, we are able to take advantage of it, and don't have to hesitate around which position to liquidate to get in on it.  Finally, an agressive profit protection strategy with "on fire" stocks seems important too.  Say, if we are up over 10% on a position, implement a 50 or 75% profit protection strategy and a strict overall stop-loss strategy on all positions (I just realised I've been saying "we" a lot here.  I mean David, of course, as he is the decision maker for the portfolio, but "we" as the rest of this community in terms of contributing stocks and ideas, and also following the picks).

I think the portfolio should be open to pennies (OB stocks, not pinks), provided they have significant $ volume,  as they have the potential to make huge short term gains, and that intraday trades are crucial to its operation and success.  This does mean that most of us who are not able to monitor it all day, every day, may miss out on some trades.  But the trading pattern of holding for a few days to a week should mean that there will be others coming along soon enough that we can join in on.  This is expressly a counter to the main portfolio, which is looking for medium to long term holdings that should outperform the market, and probably stocks in the main and on fire portfolios would not be the same as they are bought for very different resons, purposes and outcomes.  (well, the purpose and hopefully outcome is always making money, but you know what I mean).

Finally, I don't think options should be included in the portfolio, as they really are too volatile and introduce huge risk, even on small positions, and bring up a whole other world of issues in terms of what affects option prices that may be outside the scope of most traders' knowledge here.  Also a lot of members can't trade options, and while the option moves may be impressive, the fact that we are using options to gain leverage means the stock is not as "on fire" as we would like, otherwise we'd be buying the stock instead.  Shorts could be included, but only if they meet the "on fire" conditions in reverse - e.g. the stock broke major support and is getting killed so is ripe for a good short play.  Really, though, I think if the market turns bearish, the "on fire" portfolio should just move to cash and look for those occasional runners - i.e. not use it to play the market (which presumably is what the main portfolio is for).

David, if you read this, please don't take any of it as a criticism of what you have been doing here so far.  It is simply how I could see this portfolio returning the kind of gains that you initially set out for, and I think, is more in line with what you originally set out to do with this portfolio. As always, I am very impressed with your analysis, insight and decision making skills in managing this portfolio so far.  However, I also know, as you have said many times before, that you are not a fan of this short term trading style, and believe it is a loser in the long run.  But with more than a 50% gain in less than 2 months, no-one can say you have not done exceptionally well with it to date, and I do believe that with the help of everyone here in terms of contributing ideas, we could rapidly increase this portfolio's value. 

What I think the community needs from you (and has received, but maybe it needs to be re-iterated, daily) is a clear definition of what you are looking for in terms of stock suggestions - maybe as the first post of each day's thread as a reminder, so people don't use up your time suggesting stocks that they are interested in but are clearly not on fire.  But it is also clear that the community likes to have an ongoing discussion board where we can interact with each other and with you during market hours, and this has proven very fruitful for all involved.  The tricky thing is that these two have both been blurred into one.  I don't know whether it would work to have two intraday boards, one for stocks on fire suggestions and analysis and one for more general discussion of ongoing things.  Maybe it would be too much for you and us to keep up with 2 boards during the day - often its hard enough just to keep up with one!!  Anyway, all of this is just my (long winded) thoughts and suggestions.  As you know, I will happily support what ever decision you make in how you want to take this and do my best to get involved as much as I can.  Thanks again for providing this excellent forum for all of us!

ST

Short term trading will not make a person wealthy. You will have pockets of success,but ususally you will give all the money back. I believe the best startegy is divide the money between 2 to 3 stocks with outstanding fundamentals and the potential for mutilple bags or maybe to satisfy the short termers put 2/3 into medium-long term companies with spectacular potenial and put 1/3 into short term. No offense to David, But it would be almost impossible to keep making 50% every 2 months and we won't be able to turn $15,000 to $150,000 in a year, that is a very unrealistic goal. Plus it would involve riskier trades. I believe the goal should be more over 3 years which would still be a phenominal. All the short term traders that I know, have lost money over the longer term, (one guy was up as high as 500% within 8 months and gave it all back) they eventually went bust or changed their startegy. David,  from your previous posts and experience you know the short term trading game is not a way to grow rich over time. I do believe diversification is a little overated. It better to concentrate on 3 stocks with enormous potential and make changes as warranted. (Never all in one stock, because you never know what could happen). It is a lot easier to find 1 stock that could double, than try to find 7 stocks in a row (without a loss) and make 10% on each one. Everybody just needs to be patient.

The two richest men in the whole world - Bill Gates and Warren Buffet a $100 billion between them are both long term holders, not to mention some of the other in the top 20. Look at them the 2 Google guys, the 4 Walmart heirs. in I didn't see any short term traders on the billionaires list.

Quote from: eggman11 on March 10, 2007, 01:21:57 PM
Short term trading will not make a person wealthy. You will have pockets of success,but ususally you will give all the money back. I believe the best startegy is divide the money between 2 to 3 stocks with outstanding fundamentals and the potential for mutilple bags or maybe to satisfy the short termers put 2/3 into medium-long term companies with spectacular potenial and put 1/3 into short term. No offense to David, But it would be almost impossible to keep making 50% every 2 months and we won't be able to turn $15,000 to $150,000 in a year, that is a very unrealistic goal. Plus it would involve riskier trades. I believe the goal should be more over 3 years which would still be a phenominal. All the short term traders that I know, have lost money over the longer term, (one guy was up as high as 500% within 8 months and gave it all back) they eventually went bust or changed their startegy. David,  from your previous posts and experience you know the short term trading game is not a way to grow rich over time. I do believe diversification is a little overated. It better to concentrate on 3 stocks with enormous potential and make changes as warranted. (Never all in one stock, because you never know what could happen). It is a lot easier to find 1 stock that could double, than try to find 7 stocks in a row (without a loss) and make 10% on each one. Everybody just needs to be patient.

The two richest men in the whole world - Bill Gates and Warren Buffet a $100 billion between them are both long term holders, not to mention some of the other in the top 20. Look at them the 2 Google guys, the 4 Walmart heirs. in I didn't see any short term traders on the billionaires list.

Buffett is a good example, but the others like Gates et.al are people who happened to hold shares of companies they or their families formed.  So in their case the lesson to be learned is that the best way to become rich is to start a hugely succesful company and dont cash out too early. 

I am not sure how long Ichan and Soros and Kerkorian hold shares, but they were on the billionaires list, and I believe Ichan flipped his Time Warner shares recently in something like less than 6 months?

Then there is Jim Simons who is a hedge fund manager whose computers trade so frequently I have heard that sometimes they make up to 10% of the trade volume on Nasdaq.  Clearly this is a very short term approach.

Not to mention billionaire oil trader Boon Pickens.  Probably more of a mid term trader, but not as long term as Buffett.

I forget who they were now, but there were a few other hedge fund managers who I recogonized in the billionaires list.  Newly minted billionaires are the guys who started Fortress Hedge Fund.

So I am not necessarily arguing against the long term approach, but rather that it only dawned on me recently by looking at that list that while Buffett stands out as the richest, I actually dont see that many pure long term investors and there are indeed traders who are successful, they just dont get as much acclaim as Buffett.

I still like the 2 balanced portfolio approach, and David set up the capital proportions properly to limit risk anyway.   Yes, it may not be practical to keep up the fast approach goal during a correction or a bear market, but I saw nothing wrong with it while we were in bull market mode, it was fairly consistent.

David, my opinion is "if it ain't broke, don't fix it!"  When you first set out on the $15,000 fund, you started out great by letting the board submit stocks that were on fire and you did a nice job covering them.  I believe what happened was you began to get too many requests and became overwhelmed.  One suggestion I have is when someone suggests a pick, you look at it and if it doesn't look to be on fire, don't even cover it, just tell that person to submit it for review on the premium site.  I believe we were getting too many picks from non-premium members who wanted a free review of a stock and David being the nice guy he is gave them a quick review.  This took up time from picking the stocks on fire.  My suggestion is to go back to the system that worked.  On the premium site, David can pick the long-term picks and on the 3stocksonfire, we buy the stocks on fire just for short-term trades.  No wasting time on people wanting just any stock reviewed.  David will only review the ones that are on fire!  Another suggestion is we need to stay focused, quit changing methods everyday or every week.  We need to give one method at least 6 months to a year to see how it works.  Its the changing back and forth that stalls the growth.  David, please go back to the original method and we can make more trades like OFI, CPNE, etc.  Don't review every single stock just because someone wants you too, only if it appears on fire and meets the requirements.  If someone wants a review of a stock that is not on fire, well they need to become a premium member, since that's what David does and he need to be paid for it! ;D  We need to stay focused and stick to a plan!!

Quote from: rickjust on March 10, 2007, 05:16:04 PM
david as yet is not really a long term holder in that category . the first sign of a large drop in the market and all long stocks were sold. remember these were businesses that he had done thourough dd on. and a lot of talk about strong hands and holding through technical setbacks etc. also he didn't buy these stocks with the technicals in mind so why sell on technicals if the business model hasn't changed.

David did take fundamentals into account. The technicals (and economic fundamentals) was telling him that we're at the start of a correction or a bear. Fundamentally, this meant lower trading multiples and estimate reports which in turn would effect the stock price...

...and plus...there's nothing wrong with trying out different strategies. There's no surprise to find that the gems are most always hidden among the crap. Sometimes you just have to dig to find them.

Quote
for me cash is a position and sometime the best position to have in time or sloppy markets, otherwise you start pushing it and day trading.
have a great weekend, talk to you later
Quasi

"Cash is a position" 
I nominate that for "intelligent phrase of the week" and apart from applauding you, I will post it alongside my quote that reads " If you keep RISK under control, you WILL have PROFITS!!"

Excellent  :D