3SOF

Some food for thought: I just ran across some commentary in IBD. Evidently Alan Greenspan made some comments back in Dec. 1996 (I don't remember them)  to the effect of the irrational exuberance, investors and stocks getting ahead of themserlves, etc. If one heeded his comments and sold,  they would have missed out on one of the best 3 year runs ever.

Quote from: Rmagos on October 04, 2007, 12:43:26 PM
Hi David

I`am wondering if you are trying to exploit the China hot market why not try a position in the Indian market as you know it also are hot... just an opinion

Thank you

I think thats a good idea Rmagos. I need to limit my port to an already overly abundant Chinese/Asian weighting. Maybe you can come up with list of suggestions or even a list of all/most U.S traded Indian stocks?

Quote from: BigSully1 on October 04, 2007, 02:26:16 PM

Quote from: Rmagos on October 04, 2007, 12:43:26 PM

I think thats a good idea Rmagos. I need to limit my port to an already overly abundant Chinese/Asian weighting. Maybe you can come up with list of suggestions or even a list of all/most U.S traded Indian stocks?

I`ll try to do the job.. I don`t know if I can, but tomorrow I`ll post what I`ll have

Quote from: BigSully1 on October 04, 2007, 02:26:16 PM

Quote from: Rmagos on October 04, 2007, 12:43:26 PM
Hi David

I`am wondering if you are trying to exploit the China hot market why not try a position in the Indian market as you know it also are hot... just an opinion

Thank you

I think thats a good idea Rmagos. I need to limit my port to an already overly abundant Chinese weighting. Maybe you can come up with list of suggestions or even a list of all/most U.S traded Indian stocks?

Actually we probably should start separate threads for all foreign/emerging markets including China, Indian, other Asian, Russia, Latin America, Israel, Australia, Europe etc. etc. Maybe even one for U.S companies doing big business in emerging markets. I started a list of Chinese on the daily stock analysis board, but it should have been started elsewhere.

I just realized the other day that my entire portfolio was now about 78% foreign/emerging markets. Most advisors would severely frown on this, but hey it didn't start out that way, it grew that way.

The "better half" told me that Iraq just bought 100M in weapons from China, saying that the U.S. was too slow to supply them. That figures. There was also something again about tickets for the "Hannah Montana and Cheetah Girls" live show. Asked her to tivo it, will get details later.

Quote from: BigSully1 on October 04, 2007, 02:55:16 PM

Quote from: BigSully1 on October 04, 2007, 02:26:16 PM

Quote from: Rmagos on October 04, 2007, 12:43:26 PM
Hi David

I`am wondering if you are trying to exploit the China hot market why not try a position in the Indian market as you know it also are hot... just an opinion

Thank you

I think thats a good idea Rmagos. I need to limit my port to an already overly abundant Chinese weighting. Maybe you can come up with list of suggestions or even a list of all/most U.S traded Indian stocks?

Actually we probably should start separate threads for all foreign/emerging markets including China, Indian, other Asian, Russia, Latin America, Israel, Australia, Europe etc. etc. Maybe even one for U.S companies doing big business in emerging markets. I started a list of Chinese on the daily stock analysis board, but it should have been started elsewhere.

I just realized the other day that my entire portfolio was now about 78% foreign/emerging markets. Most advisors would severely frown on this, but hey it didn't start out that way, it grew that way.

BigSully1...I started a China thread in the STOCK TRADING category below last week.  But not one person responded to it .

Sorry, kslifka, I guess I missed it. I was thinking about having them on the member boards though..

You know I have gotten myself so caught up in the China frenzy, I did something totally out of character and really VERY stupid that I've never done before, not even close. When you first posted about DSWL the other day or was it yesterday?. I looked at your post, your chart, your thoughts, saw that it hadn't run up yet and just instantly bought it without even looking anywhere else to even see what it was. Granted it was only 3K shares and it did good today, but I didn't even bother looking to see what is all about until a couple hours ago. I'm not so sure thats it's "undervalued" at all, maybe when comparing to some other Chinese rockets overvaluation it is, still haven't looked at it hard enough yet. There's some others that I'm just now looking deeper into also and  starting to question, one I'm going to write about tommorow.

I'm going to have to nip this behavior in the bud before it eventually gets me in trouble. From now on it's going to have to be look closely first before I shoot, cause next time, I might just shoot myself in the foot. Best of luck to you, kslifka.

BadSully 

Oh here is a site that updates an entire list of Chinese stock prices every 15-20 minutes if your interested. I actually pulled it off the DSWL yahoo message board, a place I rarely ever visit. Gotta stop that too. Feel free to post the link wherever.

http://chinabizfocus.com/modules/InvestChina/performances.php?sel=performances&perf=daily

China is probably in a bubble...but I don't see why you think DSWL is NOT undervalued.  Anyway.

from my experience .... bubbles last several months..or more.  Two years ago we went through an oil bubble that lasted about 4 months.  By the end, only the truly strong oil companies survived even though today the price of oil continues to be high. 

I've thought many China stocks have been undervalued over the past couple of years...I guess because they are "Risky"...I wonder if we've gotten over that....

Quote from: kslifka on October 04, 2007, 11:13:32 PM
China is probably in a bubble...but I don't see why you think DSWL is NOT undervalued.  Anyway.

from my experience .... bubbles last several months..or more.  Two years ago we went through an oil bubble that lasted about 4 months.  By the end, only the truly strong oil companies survived even though today the price of oil continues to be high. 

I've thought many China stocks have been undervalued over the past couple of years...I guess because they are "Risky"...I wonder if we've gotten over that....

Just in a nutshell -  cash/debt, divi, institutional and insider holdings might look attractive to some, but declining profits, sales, higher expenses, resulting in declining gross/net margin that is not up to par in a not very attractive industry. The decline could be just a ST thing and not a trend, but I wouldn't bet on it at all.

I'm not saying I'm sorry I bought it at all, it's just the way I went about doing it that I'm concerned about.  I'm not selling yet, the momo has likely just started. Traders will likely see the biggest Chinese gainer yesterday, see that it hasn't run very far yet, look at the chart and are going to want regardless of what I think of it's valuation. Sure it it could run up to 15, 16, even 20, but I think it would absolutely be overvalued and I would be more than happy to let em have it.

Hey Bad BigSully, DSWL had a nice chart setup in place, I had it on my list to buy yesterday (purely on technicals) but in the end decided not to, which turned out to be an error. If you position size correctly and have the right risk management rules in place you can still protect yourself well enough.

Who knows how long China mania will run for, no way of telling, so lets try and participate and profit

As for my friend the SPY, well again a nice tight consolidation after latest breakout points to another upward leg around the corner which would take out 1550 and get into blue skies. I have started accumulating my SPY position in this flag pattern and have a buy stop entry waiting on the break of 1550.
Today we have non farm pay rolls. No idea what it will say or the market reaction to it, but it will set the speculation rolling for the next fed announcement end Oct. Technicals say SPY IS going higher (but that is not a guarantee

The mini-uptrend pause, which started Tuesday, caused the market indices to test their support levels, and the INDU (DJIA) fell slightly below 14,000. Nevertheless, indications are that this near-term correction in the market will be short, shallow and mainly sideways.


There are some early signs that the indices may stop correcting downward, and start to ratchet up again, maybe sometime today. The trade-term indicators are mixed. Some are neutral and some are oversold. An upward rotation in the QQQQ started about 3PM yesterday, and INDU and INX formed bases at the same time. Whether and when intraday the three indices carry through with a rally, as early as today, may depend on catalytic economic news this morning. News with such potential is discussed below along with several stocks in the news.

With a near-term rally expected shortly, this is a good time to examine uptrending stocks.
Absent the recent strength in tech and energy shares.

Technology issues were battered by weakness in semiconductor shares as Morgan Stanley initiated coverage of Intel , Advanced Micro Devices and Nvidia, with underperform ratings due to an "aggressive price environment" and an inventory glut. SanDisk shares dropped 2.9% in concert with weakness in Micron Technology, off 7.7%, which printed its third straight quarterly loss on Wednesday. Energy shares came under pressure as the US Energy Department's weekly inventory report disclosed an unexpected gain of 1.2 million barrels in crude, and oil prices dropped 28 cents to below $80 per barrel. Exxon Mobil shares fell 1%, after reaching another 52-week high Tuesday. And ConocoPhillips shares fell 1.7% on company assertions that refining margins in the third quarter would widely miss second quarter levels. In case readers need any reminder of the Fed's import on equity market prices, a recap may be in order. Following Fed interest rate cuts on September 17, the ensuing rally in equity markets generated 4.8% gains in the DJIA, 6.4% in the Nasdaq, and 4.7% in the S&P 500. It was a dismal August nonfarm payroll and its attendant recession concerns that catalyzed Fed members to adopt its more dovish tone, addressing growth concerns at the expense of inflationary ones, and presenting the Street with unexpected 50 bp rate cuts. With the worst of the credit crunch believed behind us, tomorrow's jobs figure may once again prove pivotal to the Fed decision on October 30-31. Yesterday's data suggest nonfarm payrolls have recovered from August lows, growing in line with expectations of 115K, although perhaps indicating a step-up in unemployment to a 4.7% rate. ADP's healthy 58K adds, in line with expectations, do not include government hirings, which are expected to have rebounded in September; initial jobless claims held steady at 317K, up 16K, still signaling a strong jobs market; Challenger job cuts have declined 9.7% from August levels, and 8.1% from a year earlier. Besides the benign jobs data, yesterday's ISM service index further dampened expectations for an additional interest rate cut as it pointed to improved employment and rising inflation numbers, with the index printing at 54.8 in September, well beyond the 50 point expansion level. Both the Bank of England and European Central Bank held rates at current levels, as expected. 

In the corporate corner, Pier 1 shares advanced 9.8% due to insider buying and improved turnaround prospects. Radian shares fell 9.5% on news that Deloitte and Touche had quit as company auditors; the firm recently reported one of its market value collateralized debt obligations of asset-backed securities was in trouble, although S&P has maintained the company's AA-rating. CSX shares fell 2.6% on a lower rating by Morgan Stanley. Bear Stearns (off 0.7%) announced 310 mortgage-business firings; the company will host its semi-annual investor meeting today. Credit Suisse added to its 150 job cuts with 170 more in its commercial mortgage business. Las Vegas Sands shares fell 11.8% as investors realized the rumored 100% revenue gains likely to come in at a still-healthy 55% from Macau growth; Wynn shares dropped 9.9%. However, over the past 52 weeks Las Vegas Sands' shares are up 90%, and Wynn's up 120%. Marriott International posted third quarter results of 31 cents adjusted, topping estimates by one cent.

Quote from: AussieTrader on October 05, 2007, 03:40:42 AM
As for my friend the SPY, well again a nice tight consolidation after latest breakout points to another upward leg around the corner which would take out 1550 and get into blue skies. I have started accumulating my SPY position in this flag pattern and have a buy stop entry waiting on the break of 1550.
Today we have non farm pay rolls. No idea what it will say or the market reaction to it, but it will set the speculation rolling for the next fed announcement end Oct. Technicals say SPY IS going higher (but that is not a guarantee

Nice breakout from the consolidation period again. Now blue skies and personally I think we are set for bullish continuation through this year and probably further interest rate cuts from the fed starting end Oct.
Fundamentals and growth are leading the way (Dow, NAS100, S&P500), as David has said before it may take days / weeks / months but ultimately fundamentally superior stocks will lead. Hopefully we are looking at an extended period of time that will benefit owners of those types of stocks.

Market may go to the moon
or sell hard by next noon
Dont worry be happy
and profits will come soon


Have a nice weekend all. Also if you guys have time, checkout my new blog @

funnytrader.blogspot.com

Quote from: David Randolph on August 06, 2007, 06:25:42 AM
Good morning

I tried to get my head out of the stock market during the weekend, but of course, I couldn't.

Friday's sell off was too serious, as the SPY broke down below a key support area, with enough volume to prove myself wrong about the "we're at the bottom" call:

Quote from: stocky on August 04, 2007, 03:03:24 PM
I am interested in what the commercials are doing as per Aug 3 report. Hope David found time to review it.

Hi stocky, indeed, I reviewed the Commitment of Traders Report, and commercials are still long and speculators are still short, more or less in the same proportions of the last week.

But over the weekend I thought: Who are the "commercial hedgers"? And the answer is, they are the Goldman Sachs, the JP Morgans, the Bear Sterns of this world, exactly the stocks that are dragging the market down (check their charts at the links). Should I follow the guys that are suffering the most?

Next my head went to one of the other lessons I've taken over the years, which is, "nothing, no theory or indicator is always right about the market".

And considering this I got to the conclusion that I couldn't base my investments or recommendations on the Commitment of Traders Report.

I've read a lot of bullish and bearish arguments over the past few days and thought about several of my own, and even though you don't pay the 3 SOF subscription fee for me to have doubts, I must say that I'm in doubt.

About the macroeconomic situation of the United States I thought the following article was quite revealing: Going With the Flow?

The bearish arguments and evidence constant in the article are not new (I remember many people had the same bearish arguments around the market bottom in 2003), but because they're so long term, it is possible that they took four years to materialize in terms of a macroeconomic shift towards more savings and less debt, which is actually a sound long term direction, but the short term adjustment can be dramatic and prolonged. The short term, when we're talking about macroeconomics, can be very long, just think of the Nikkei 225 Index 17 years old Bear Market because one day the Japanese decided they wanted to save more (not that they had any choice, like the Americans don't).

Back in March the market sold off for the wrong reasons, at the wrong time, but now?

The bears seem to have a lot more strength and truth in their arguments.

Anyway, I have many doubts about the gloom and doom scenario, because the opening of the World, the emergence of the BRIC (Brazil, Russia, India and China) countries as economic powerhouses is truly amazing and could support another 20 years bull market. 

Moreover, in a long term investment strategy perspective, no business owner is going to sell his business just because there can be an economic recession in the US, so why should I sell his business? I truly love the microeconomic approach to investing in stocks, and there are stocks in the Main Portfolio that I'm not willing to let go whatever happens to the general economy of the United States or the World for that matter. They're individual stories and are a lot more dependent on their niche sectors and management's skills than the economic cycles.

Saying this, I can't ignore that the Main Portfolio plunged from a gain of 27% in 2007 to the current 8.9% profit for the year, as the S&P declined from a 10% advance to the current 1%. I can't ignore that if the S&P 500 falls another 10 or 15%, probably the Main will fall into negative territory for the year, and may even go 10% or more into the negative territory. There's a real possibility of this happening if nothing is done.

What I would like to do is to keep holding my specific story stocks, but at the same time protect the portfolio from the general market risk. I would say a 60% long/40% short exposure would be ideal. If I invest 20% of the Main's capital in those two times leverage short funds I would  get to a 40% short exposure.

Since I have 8.06% in cash already, I just need to sell about 12% of equity in stocks to be able to buy 10% of equity in SDS (ultra short S&P 500) and another 10% in TWM (ultra short the Russel 2000). Because these funds have a two times leverage I would have 40% short exposure. But I would also have 80% long exposure, with the portfolio, in practice, being 120% invested. With time I would probably let go of three more of the long positions to get to the 60% long/40% short "ideal" exposure to a possible bear market.

There are a lot more justifications and questions to be answered, but there's not enough time now. We'll keep this thread alive and possibly merge it with the Correction or Bear Market? thread. 

My plan is to sell two holdings of the Main Portfolio and buy 10% of capital in SDS and another 10% in TWM. But I still don't know which ones to sell, I'm going to review the individual story on them all and pick two to drop out.

Have a nice day

David,

Years ago I would have been one of the many to sell out my entire portfolio probably right at the bottom and would be afraid to get back in and lose out on the next leg up. I want to applaud you for your vision,calm and past experiences during the tough market times and working diligently to find those fundamentally strong stocks.

Brad

Yes, David has been a wonderful resource for me as well. Because of him (and the many other valuable members on this site) I had the courage and conviction to go from %80 cash to %100 stocks on that key reversal day back in when the Dow rallied from -500 to close relatively flat on the day. This was shortly after I had gone to mostly cash because things looked toppy.

I would be kicking myself now if I had let the fear rule my decision process and stayed in a money market account; but instead I'm happy as a pig in slop and crushing the market returns for the year.