3SOF

Good morning

Today I'm going to buy FMCN put options around the open (actually not me, I delegate to Ramsburg the execution part, he'll then put on the Trades thread and the 3 Stocks on Fire Portfolio page which puts he bought).

Advertising is the first thing to go down when the economy softens. FMCN lives from advertising in China and is trading at 17 times sales and 46 times earnings.

Since I bought just 8.7% of capital in those GOOG puts on Friday, I still have about 24% free cash to invest.

Today we'll talk about everything you please, from stocks (long and short) to options, to macroeconomics, whatever.

Thank you for your participation, have a nice day

The market opens with a gap down, people that think "great, cheap prices" buy, the market closes the opening gap and then goes down again, as the trend continues.

Typical bear market behavior. Seen one, seen all.

Good morning

Good Morning!

Why are you buying the put option for FMCN so close to expiration (MAR07)?  You are expecting a short, fast move?  The way I learned was to always buy 2-3 months out to decrease risk of time decay.
But I am here to learn new things ... so what is the strategy behind the same month purchase?
Thanks

I expect FRPT to break the $15.45 support on the downside, as the stock is extremely overvalued.

Hey David,

How bout AVB short.

I see it could go down to 125, 120 or even lower.

Wht do you think?

Keep it up buddy!

Quote from: TraderStar on March 05, 2007, 10:08:12 AM
Good Morning!

Why are you buying the put option for FMCN so close to expiration (MAR07)?  You are expecting a short, fast move?  The way I learned was to always buy 2-3 months out to decrease risk of time decay.
But I am here to learn new things ... so what is the strategy behind the same month purchase?
Thanks

Good question TraderStar. I don't know why Ramsburg picked those puts, I would like to have more time. I'll let him answer that when he gets back home, I think he was out to lunch.

David,

Would you put new money into GOPOL at this time.

What up Dave, what's your downside target for FRPT?

Quote from: eggman11 on March 05, 2007, 10:16:43 AM
David,

Would you put new money into GOPOL at this time.

Absolutely. As I see it, GOOG is making a classic throwback to the broken support line, now resistance. I see it going down by the end of the session.

But put just pocket money into it. High reward/high risk here.

Quote from: ultraman on March 05, 2007, 10:13:15 AM
Hey David,

How bout AVB short.

I see it could go down to 125, 120 or even lower.

What do you think?

Keep it up buddy!

Hi ultraman

AVB is almost at your target already, great But you should consider trading for larger moves, as the money is in the big swing, not in short term fluctuations.

Technically the stock broke down below the 50 days SMA, and is now approaching the 200 days SMA at $123.68 which can provide support and a technical bounce, at least.

Fundamentally:

- Market cap is $10.4 B. A real estate investment trust, or REIT, for federal income tax purposes. Engage in the development, redevelopment, acquisition, ownership and operation of multifamily communities in high barrier-to-entry markets of the United States.
- Book value is $2.6 B, so about 1/4 of the market cap.
- Revenue in 2006 was $758 M, so the price to sales ratio is roughly 14, which is high
- EPS in 2006 was $3.57, so the earnings multiple is 36

I agree with you, AVB is way overvalued and this valuation doesn't make any sense to me because the real estate market will be dormant to down over the next couple of years.

But I would hold for a larger move, not paying attention to short term developments. If your hand is weak, you'll make many trades and miss the majority of the move.

Good luck

Quote from: pompano on March 05, 2007, 10:23:36 AM
What up Dave, what's your downside target for FRPT?

My plan is to buy to cover FRPT around the 200 days moving average, currently standing at $10.16.

If $oil goes down as I think it will (due to a worldwide, but especially Chinese economic recession in late 2007, early 2008), alternative energy will go down even more than oil related companies, because these trade at cheap valuations, where as alternative energy companies are trading at lofty multiples, unfortunately.

I say unfortunately because we all want the World to be more environmentally friendly, but the free market economy doesn't solve all problems of the World.

David, are you still taking a wait a see on gold, what's your current specualtion on that sector?   Thanks

I'm glad I sold XING at $19 plus, due to the existence of preferred shares, but I'm sad because I know some friends are still holding.

I didn't expect it to tank so hard. I guess it is a good example on how a cheap stock just gets cheaper in a bear market

Quote from: pompano on March 05, 2007, 10:58:34 AM
David, are you still taking a wait a see on gold, what's your current specualtion on that sector?   Thanks

Those "wait and see" words perfectly reflect my take on Gold and Silver at this moment. They continue to trade as commodities, and I don't want to buy commodities in the face of what I expect to be a global economic slowdown.

What I would like to buy is alternative financial assets. Alternative to stocks, bonds and currencies. When Gold starts trading like that I'll buy it.