3SOF

We are due for a "normal" correction.
Hoping to get at least 7% -10% this time.
Look at the trend line break on the S&P.
Technically this is not a good thing:

Quote from: yukiii on June 07, 2007, 01:59:28 PM
Time to buy guys just hit support on the S&P 500 1495

Bounced off support, let see if it holds. To bad Bill Gross had to make a comment and bring the market down again. He is usually wrong most of the time.
Closed at the 50 ma
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=5&g=0&id=p75293289261

QuoteAre you suggesting that you anticipated declines in SILC and CIMT in excess of 25% - that were the result of (negative) fundamental developments?

More or less so, please read my update when the company posted 1st quarter earnings: SILC's update on earnings day

«I see the stock opening higher and if I were a short term trader I would certainly take profits. This is one of those cases where there's about 90% probability of the stock going down after today's gap up.»

For CIMT I didn't see the stock going down that much, but I saw a weak quarter coming, due to seasonality.

Anyway, your question is "why not sell, if you see a decline?" Let me try to explain my reasoning, point by point.

QuoteI think it is a great idea to hold stocks for the long term, and to reap the benefits - but I do not think it is a good idea to hold the stock through sharp declines - especially sharp declines that we anticipate in advance, due to negative fundamental developments.

There are short term and long term fundamental developments. You'll never be able to hold a stock for more than two years if you sell every time you see a short term negative fundamental development. There are always soft quarters, bad news ... think of a business instead of a stock. Not everything always goes well, but one needs to know what is relevant for the long term outcome and what may have a short term impact but doesn't affect the long term fundamentals of the business.

Do you think Warren Buffet, the best investor ever, would have held his core positions for 20 or 30 years, if he had sold when there were negative developments? How many times did Coca Cola have a bad quarter? How many times it went down more than 30% from its peak? However, Buffet held it all the way up throughout the decades and still holds it.

QuoteI don't think this is "losing faith" as much as I think it is "losing capital". Regardless of how much "profit" we have in a stock, I consider that "profit" to be "capital" once it is gained - and I believe that we, as investors, should protect our "capital" in the best way we can.

Yes, but trying to avoid losses so much you might end up creating them, never sticking to a business for the long term.

QuoteWith SILC being 24% and CIMT 48% off the highs, I know that I would have liked to have avoided any part of these declines, if possible - and probably most people here feel the same as I do.

Same thing, most stocks that go up several bags have those types of drawdowns several times, because not even good companies always deliver top results or never get overvalued.

QuoteIsn't it possible that CIMT does not have such a "bright" future?  Shouldn't we wait for concrete evidence that CIMT is indeed headed down that "prosperous road"? Right now, we have concrete evidence that revenues and profits declined in the most recent quarter, and that the stock is 48% off the highs.

This is for CIMT's thread, I'll reply you there.

Quote from: DragonAMG on June 07, 2007, 12:04:14 PM

Quote from: David Randolph on June 07, 2007, 04:44:33 AM
HOLD SILC, unless the stock prints $18.9. If that's the case, SELL.

What about the guys like me who bought this stock in the $20-21 range?  Same advice?

Sure, same advice. I hope the stock doesn't go that low, because I really like the long term fundamentals of the business, but I can't risk losing all the profit and stay alone in this room.

Thank you for your questions, update for SILC after the close.

Quote from: David Randolph on June 07, 2007, 03:17:21 PM

QuoteAre you suggesting that you anticipated declines in SILC and CIMT in excess of 25% - that were the result of (negative) fundamental developments?

More or less so, please read my update when the company posted 1st quarter earnings: SILC's update on earnings day

«I see the stock opening higher and if I were a short term trader I would certainly take profits. This is one of those cases where there's about 90% probability of the stock going down after today's gap up.»

For CIMT I didn't see the stock going down that much, but I saw a weak quarter coming, due to seasonality.

Anyway, your question is "why not sell, if you see a decline?" Let me try to explain my reasoning, point by point.

QuoteI think it is a great idea to hold stocks for the long term, and to reap the benefits - but I do not think it is a good idea to hold the stock through sharp declines - especially sharp declines that we anticipate in advance, due to negative fundamental developments.

There are short term and long term fundamental developments. You'll never be able to hold a stock for more than two years if you sell every time you see a short term negative fundamental development. There are always soft quarters, bad news ... think of a business instead of a stock. Not everything always goes well, but one needs to know what is relevant for the long term outcome and what may have a short term impact but doesn't affect the long term fundamentals of the business.

Do you think Warren Buffet, the best investor ever, would have held his core positions for 20 or 30 years, if he had sold when there were negative developments? How many times did Coca Cola have a bad quarter? How many times it went down more than 30% from its peak? However, Buffet held it all the way up throughout the decades and still holds it.

QuoteI don't think this is "losing faith" as much as I think it is "losing capital". Regardless of how much "profit" we have in a stock, I consider that "profit" to be "capital" once it is gained - and I believe that we, as investors, should protect our "capital" in the best way we can.

Yes, but trying to avoid losses so much you might end up creating them, never sticking to a business for the long term.

QuoteWith SILC being 24% and CIMT 48% off the highs, I know that I would have liked to have avoided any part of these declines, if possible - and probably most people here feel the same as I do.

Same thing, most stocks that go up several bags have those types of drawdowns several times, because not even good companies always deliver top results or never get overvalued.

QuoteIsn't it possible that CIMT does not have such a "bright" future?  Shouldn't we wait for concrete evidence that CIMT is indeed headed down that "prosperous road"? Right now, we have concrete evidence that revenues and profits declined in the most recent quarter, and that the stock is 48% off the highs.

This is for CIMT's thread, I'll reply you there.

Quote from: DragonAMG on June 07, 2007, 12:04:14 PM

Quote from: David Randolph on June 07, 2007, 04:44:33 AM
HOLD SILC, unless the stock prints $18.9. If that's the case, SELL.

What about the guys like me who bought this stock in the $20-21 range?  Same advice?

Sure, same advice. I hope the stock doesn't go that low, because I really like the long term fundamentals of the business, but I can't risk losing all the profit and stay alone in this room.

Thank you for your questions, update for SILC after the close.

David
I hope you are learning from your mistakes.
Summary in general as i repeated them many times before.
1. You can't have a portfolio of small caps for the longterm.
2. You are not Warren Buffet he picks mostly undervalued companies, not speculator small caps.
3. Today was a good day to buy, cheap stocks out there now....
4. The portfolio needs to be adjusted if its for the long term, large caps, mid and small. Your system only works if small caps are going up.
5. Sell your picks when overvalued as of today not 2 years from now.
If you follow this advice it will work much better for 3sof but requires more work for you.

I knew this would happen sooner or later to the portfolio, thats why I always take my profits.

Believe me I've learn the hard way. I could tell you some stories.

Yukiii  i wouldnt buy stocks today...the correction might take longer....since july 2006 the market just went up....i couln t sleep with holding stocks long now. With daytrading, stalking stocks i made good profits the last 2 weeks ...portfolio almost up 100% in a year...24% the last 2 weeks...

I agree with ket1390.
See my S&P breakdown of the ascending trend line above.

Quote from: ket1390 on June 07, 2007, 04:13:08 PM
Yukiii  i wouldnt buy stocks today...the correction might take longer....since july 2006 the market just went up....i couln t sleep with holding stocks long now. With daytrading i made good profits the last 2 weeks ...portfolio almost up 100% in a year...24% the last 2 weeks...

Well I guess if you daytrade nothing make sense untill the nest day.
Many stocks hit there support today and were good buys. SILC, SIMO, ASY, TWIN, ZOLT,BITS, SMCI, STKL

Support didn't hold at 1495. Another couple percent down to go I think.

Quote from: yukiii on June 07, 2007, 04:22:40 PM

Quote from: ket1390 on June 07, 2007, 04:13:08 PM
Yukiii  i wouldnt buy stocks today...the correction might take longer....since july 2006 the market just went up....i couln t sleep with holding stocks long now. With daytrading i made good profits the last 2 weeks ...portfolio almost up 100% in a year...24% the last 2 weeks...

Well I guess if you daytrade nothing make sense untill the nest day.
Many stocks hit there support today and were good buys. SILC, SIMO, ASY, TWIN, ZOLT,BITS, SMCI, STKL

I am not daytrading all the time...just in wild times like this.......but i also consider fundamentals....but technicals has to be right or i dont care about fundamentals.

Quote from: wxmang on June 07, 2007, 02:17:53 PM
We are due for a "normal" correction.
Hoping to get at least 7% -10% this time.
Look at the trend line break on the S&P.
Technically this is not a good thing:

thanks wxmang...is there a short fund for the S+P?...like Qid for QQQQ....and DXD for Dow jones.

Quote from: ygtrdr on June 07, 2007, 04:24:38 PM
Support didn't hold at 1495. Another couple percent down to go I think.

The 50 ma is holding at 1490 after that look out below to 1420.
All four are holding at there 50 dow, sp500, nas, russell

Hi Ket1390,

Here ya go:

Here are the symbols for the three most liquid Ultra ETFs:

NASDAQ 100: (QLD) [2x long]; (QID) [2x short]
S&P 500: (SSO) [2x long]; (SDS) [2x short]
Dow 30: (DDM) [2x long]; (DXD_ [2x short]

Wx

Quote from: yukiii on June 07, 2007, 03:00:17 PM

Quote from: yukiii on June 07, 2007, 01:59:28 PM
Time to buy guys just hit support on the S&P 500 1495

Bounced off support, let see if it holds. To bad Bill Gross had to make a comment and bring the market down again. He is usually wrong most of the time.
Closed at the 50 ma
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=5&g=0&id=p75293289261

MACD Hist looks bearish...this is the most reliable indicator i use...with success..mostly on weekly basis (elder was right thanks to his book i learned a lot there)

Quote from: ket1390 on June 07, 2007, 04:41:11 PM

Quote from: yukiii on June 07, 2007, 03:00:17 PM

Quote from: yukiii on June 07, 2007, 01:59:28 PM
Time to buy guys just hit support on the S&P 500 1495

Bounced off support, let see if it holds. To bad Bill Gross had to make a comment and bring the market down again. He is usually wrong most of the time.
Closed at the 50 ma
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=5&g=0&id=p75293289261

MACD Hist looks bearish...this is the most reliable indicator i use...with success..mostly on weekly basis (elder was right thanks to his book i learned a lot there)

Let me get this straight the Dow is down like 500 points and now you predict the market will go down. If you look at my post on the correction may 26th I stated

We are coming up on June, and historical you would want to be out of the market by June 1 or 4th till the 3rd week in June. Or short small caps as a hedge SKK.

Some long-term Buys for your portfolio

*****BHI and  *****HXM

****DE, MA, LVS, MBT, C, BAC, FLR, CBG



« Last Edit: May 28, 2007, 04:58:25 PM by yukiii »

QuoteDavid
I hope you are learning from your mistakes.

I hope so.

Quote1. You can't have a portfolio of small caps for the longterm.

Sure I can, most large caps were small caps in their beginning, of course.

Quote2. You are not Warren Buffet he picks mostly undervalued companies, not speculator small caps.

I'm not, but 30 or 40 years from now, if I live that long, I can be, not like Warren Buffet, but a very wealthy individual that did the right thing over the years and feels good about himself. I believe my stocks are undervalued, they're not "speculator small caps". Several big caps Buffet now owns were small caps 30 or 40 years ago.

Anyway, I recognize that my skills or efforts are still way below where they should be to pick exactly the right businesses to hold for the long term. Hence I should stick to my more active, undervalued/overvalued strategy.

Quote3. Today was a good day to buy, cheap stocks out there now....

So, they're cheap now that the market fell 4%, but they weren't cheap 4% higher? I disagree with your cheap/expensive view, it is too short term oriented. I don't want to buy stocks to win or lose 5 or 10%. My motives warrant more than that, or I wouldn't have a valid motive at all.

Quote4. The portfolio needs to be adjusted if its for the long term, large caps, mid and small. Your system only works if small caps are going up.

Good businesses that are mispriced by the market, will continue to go up, regardless of being a small or large cap. I think micro, stock by stock, not macro, sector by sector, or large caps vs small caps. Each case is a unique case, because it is a unique business.

QuoteI knew this would happen sooner or later to the portfolio, thats why I always take my profits.

Yeah, you always take your profits. Do you take your losses too? I've never seen you talk about your losses. Anyway, this isn't about you or me, it's a strategic discussion.

The portfolio is fine, it is up 15.2% in 2007, which annualized gives me about 40% profit. If I were to start today with $100,000 and make 40% a year for the next 33 years, I would reach $6.6 B by the time I retire, age 65.

You say you invest for 40 years, and I respect your experience yukiii, I've been investing for only 11 years. But I must say that I've met hundreds of traders and investors over the years, and almost all of them have a similar short term mentality. They all claim to have great gains, but over the years, I don't see that, I see them staying basically the same or even losing and giving up trading. Sure, they have 20 or 30% monthly gains, sometimes. But years go by and they don't seem to grow. I believe they don't grow because they're doing something that has no basis in the real economic world. In the real economic world, there are good businesses that thrive over the years, and others that shrink and disappear. To excel as an investor, one should buy the stocks of the good businesses and then hold them as they grow.

As I look at SILC, it seems like a great business to me. Its fundamental trends, in terms of revenue and EPS growth, are phenomenal. Valuation is attractive, because most industry peers trade at double the multiples. But it has risks. Its products can become obsolete. Companies that buy them products can develop in house solutions. They can dilute shareholder's value, and even as the business grows, the stock may go down. They did that recently, and I didn't like that.

Thinking of the present situation I must be humble and say that I don't know enough to see the long term future for SILC. I base my investment in recent fundamental trends, but there's no assurance those trends won't change, because, let's face it, the company operates in a niche market and it isn't one of those obvious situations of an expanding business with a unique product to offer consumers. There's the possibility of SILC having a below trend quarter, and the stock gaps down and I'll see all my profits evaporate.

If someone told me: "David, you have to buy 15 stocks that you're going to hold for 30 years no matter what happens and make no other investment whatsoever" I wouldn't put SILC on that list.

But, if the order was: "David, buy 15 stocks that you expect to rise the most over the next three years", without a doubt SILC would be on the list.

Geee, I've been writing this update for over two hours, I have a family too

Probably this was boring, the trading plan is:

HOLD SILC, unless the stock is set to close below $19, if that's the case, SELL (notice the slight change).