So, looks like things will tumble today again. What should I buy?
So, looks like things will tumble today again. What should I buy?
I wasn't thinking a Swiss REIT, eJ, that wouldn't necessarily help you much. I'm sure you have access to some foreign funds that might do the trick. IMO, though, a better hedge would be a commodity with less volatility than gold. There's other methods out there as well.Originally Posted by earthJoker
Dread: I still think that construction stocks (Caterpillar in particular) have been hit more than necessary lately, and they might be worth taking a chance. Other cyclic stocks (e.g. Alcoa) might be worth a look as well; they tend to get hammered during bad news periods like this one, even if the overall trend is towards a (weak) recovery. I haven't seen any particular bargains lately, though.
OK, well but that would than add currency rates insecurity. I will wait for the next inflation numbers first. I still get 1% interests on my savings account ATM.
"Wer Visionen hat, sollte zum Arzt gehen." - Helmut Schmidt
If you need the money liquid (i.e. as an emergency savings account, or funds you'll be spending in the next 6-12 months), you should always keep it in cash or a near-cash equivalent. If you don't need it liquid, though, you're going to be barely breaking even or losing money if you keep it in a savings account irrespective of inflation. Buying something - a chunk of a company, a loan, whatever - is almost certainly better than keeping it in a savings account.
As for the currency thing, I thought your concern was that the franc was overvalued and you'd lose a lot of purchasing power if you kept your funds in cash. In that case, buying assets denominated in non-franc currencies would help dilute the risk of a sudden drop in the franc, yes?
Well it all depends how far the national bank goes with it measures to devaluate the Swiss franc, if I knew that I would know whether to invest abroad or not.
A rising inflation is just a risk that I am taking into account, I don't really fear that there will be a huge inflation.
"Wer Visionen hat, sollte zum Arzt gehen." - Helmut Schmidt
Went for DuPont and P&G. I'm still on a dividend kick.
If the economy improves, P&G might lose some attraction (it tends to be a mild form of safe haven). But both are pretty solid, regularly yielding companies. Not a bad choice.
My picks are generally pretty boring when it comes to actually spending my money.
Should be interesting to follow Kraft breaking up into two distinct entities. I already own some Kraft and have no idea how that will break out.
Wow, interesting news. I would sell the stock, GGT.
I guess they decided that marketing to so many different markets was too difficult as one company, but there are enormous production efficiencies in being a global manufacturer. I see a loss of value here.
Kraft has had major issues for a while; I believe I alluded to them earlier in this thread. Not one of Buffett's better investments, IMO.
Coincidentally I was thinking of buying them two days before, despite how crazy disorganized of a company it is. Could have gotten a temporary blurp in value, but I couldn't get over how much of a mush the place can be.Should be interesting to follow Kraft breaking up into two distinct entities. I already own some Kraft and have no idea how that will break out.
BoA is falling pretty bad today, remember someone questioning about them earlier
"In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."
Yeah, that was me. Guess it's good I didn't buy any! Obviously lots of stocks are looking awfully cheap today. If I had a big chunk of change, I'd probably be buying a few thousand dollars a day worth of undervalued stocks.
What do you think about GE? It's looking pretty nice right now, especially with a dividend yield of 4%. Obviously it might be hurt in the short term if economic growth stalls (esp. for things like durables orders), but I think it's a great company in general, and the price is definitely right.
I've always been wary of them because of how much of their cashflow is from financial services (a bit over 50% last I checked), which means many see them as something of a bank stock.
One thing I've never had the time to research is how much of their business comes from the government. It's either larger or smaller than one would expect, just haven't had a chance to research.
More generally, I made some long-term buys last week. While I think this dip will be temporary, I'm almost at my limit for how much I am comfortable keeping in equities versus my cash reserves.
GE Capital is definitely a concern, agreed, but they've restructured their loan portfolio to less risky positions (notably getting rid of a bunch of real estate) and have been trying to make it a less important chunk of their revenue stream. Additionally, their Q2 results for the finance arm surprised on the upside; even so, it only accounted for 44% of their profit, which is down from pre-crisis years. Their revenue was better, with only 33% of their revenue coming from GE Capital, a huge drop from the ~50% a few years back. Their industrial/durable goods arm is doing great - they have about $190 billion of orders; and they've shed a lot of the useless bits they picked up over the years, like NBC. I like their focus on fundamentals, even if they still have quite an overhang in their capital divisions while they wind down their positions.
It's not a perfect company - I have doubts about the short term as orders are likely to decrease if the current malaise continues. But the stock is pretty cheap, trading at ~12X earnings with a hefty 4% dividend; the price hasn't been this low since the mid-90s, except for a brief period at the height of the crisis. A boring stock, but one I like.
I'm not sure I know how much of their business is from the government. I mean, there's a lot of indirect business: GE Aviation has a bunch of business from Boeing's commercial side, but they also have a lucrative side business for defense. GE Energy primarily serves the private sector, at least nominally, but at the end of the day their business is heavily dictated by government regulations and subsidies for power generation (e.g. wind vs. nuclear, smart grids, etc.). Ditto for GE Healthcare.
I agree with you about your equity exposure, though. I'm pretty much as invested in equities as I can be given my short-term goals, and I'm not one to shift assets around too much for a perceived short term opportunity. Hell, I don't own any individual stocks.
Netflix just went poof. Faster than I thought. Not because of whatever subscriber splits it did or whatever as random reporters might have you believe, but because it was overvalued.. I think.
Last edited by agamemnus; 09-15-2011 at 10:50 PM.
Netflix was definitely overvalued - but they've really tumbled since their first announcements in July about the pricing scheme change up until today's mess with their subscriber number.
I don't think it actually has to do with the strength of Netflix's subscriber base, though - IIRC it's still growing, just not as fast as they had originally projected, and I'd bet most subscribers are going to stay on (I, for example, was pissed off like everyone else, but the alternative options just aren't good enough, so I dropped DVDs and am hoping their streaming collection catches up quickly). I think the broader concern is that Netflix is having a much tougher and more expensive time licensing streaming content, which is clearly their platform of choice. That's going to cut into their ability to deliver a cheap, high quality product, and it's likely going to hurt subscriber growth in the medium term.
So the pessimism isn't about this specific issue, but what it says about Netflix's broader business model, and how their content costs are increasing faster than their subscriber base. It's simply not a good growth stock any more, and there's no reason for it to be trading at such an insane valuation.
edit: the stock is still overvalued, though, and it's trading around where it was in early 2011 (and all-time high, then). Their earnings performance isn't likely to warrant that kind of buzz.
Agreed. No potential for earnings growth above perhaps the population growth rate or the US GDP growth rate means the stock value will eventually trade at 15-25 times earnings at most.
RIM took another huge hit to its share price, too. After-hours has it at a 19% decrease. That means it is trading at 3.8 times earnings... is it really that bad?
A lot of other stocks are strangely barely affected. McD's and Apple are still close to its 52-week high. Google has retreated somewhat, but it has weathered the recent storm well. I guess it's because they sell things people "need", as opposed to RIM's Playbooks and (useless!) Blackberries, which are just curiosities...??
Yeah, that's the kind of business that is likely to lose margins over time.
Separately, funny how our appetite for investing has soured? Or maybe that's just me, as I'm firmly in hold-with-some-occasional-buys mode.
Are you serious? Did you say that because you really want to discuss stock investing, and how much it's changed since you sat at your daddy's knee? (that's a euphemism for those literal typesYeah, that's the kind of business that is likely to lose margins over time.
Separately, funny how our appetite for investing has soured? Or maybe that's just me, as I'm firmly in hold-with-some-occasional-buys mode.) Or just a random "I don't know what the fuck is going on so I'm in standby mode?"
If one wants to not read too much into things, the markets frothed up a bit earlier this summer and so did our interest. Now, vice versa. Maybe.
Though I'm sure you see something dark and evil in my starting this thread.
I never really got that logic. I mean, I currently don't have any 'play' money for investing, anyways - I have my boring buys every 2 weeks for retirement and that's it. But if I had a good $10k to throw around, I'd be bargain hunting in a market like this!
That's what I said a few weeks ago. But can't settle on anything I'm totally on-board with, I just get the sense there are more asset value declines to come.
No, not at all. Just that when I try to tell people that investing in the stock market is NOT AT ALL like what their folks or profs told them, and am met with resistance or denial....the whole thing takes on a strange element. Investing isn't the same thing as speculating, but (unfortunately) most of today's "investing" means trusting others who speculate, and giving them a fee.
I've never liked the recent trend that tells people they can make big bucks or fund their retirement on e-Trade or other internet stock buying firms, with their lure that "our specialists are here for YOU". It's bunk. They want their fees, and don't give a shit if you lose your whole life's assets, or sold the money for baby's new shoes on some great "tip". It's gambling.
Well, unless you have a functional crystal ball....
Of course it's speculative and unsure, because that's the nature of the future. There's no such thing as a sure bet, and everyone here has been wearing big boy pants long enough to know it, so maybe what people are objecting to or "resisting" is your exaggerated sense of the risks, or your erroneous statements and implications about the nature of "investing." I mean, shit, of course brokerages take a cut. By your logic, no one should ever trust any salesman, because he just wants the commission. Well, pfft, duh. Everyone's gotta make a living. That doesn't mean never buy anything from someone who's selling something, because they're only after your money, it means engage brain before proceeding.
Business use, man. RIM tried to break out into the consumer market, and couldn't, really. Their core market and competencies are around selling to other businesses and corporations, and that's where they should focus their efforts. I think when the markets realize that RIM's still in decent shape with its corporate customers, and the consumer failures don't matter so much their stock is going to rebound... definitely worth taking a closer look at, given how cheap it is now.
"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them."
"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."
-- Thomas Jefferson: American Founding Father, clairvoyant and seditious traitor.
I haven't the faintest clue where prices are going, nor do I care. IMO that kind of thinking is akin to trying to time a bottom.
The reason I'd be interested in buying right now is not because prices have gone down - after all, stocks could still be overvalued if they were stratospherically priced before, or they could be coming up off a trough but still be worth a buy. No, it's because there are solid companies selling out there at bargain-basement prices. There are a lot of companies out there trading at ridiculously low P/Es given their earnings history and estimates, which were just dragged down by general market panic/malaise. So what if prices drop a little more? They could also start rising. If the price is right, I wouldn't bother worrying about catching the very best price, but just a very good price.
Of course, that logic fails utterly if one is buying shaky companies, but I doubt you'd do that.
If one had even more money, it could help smooth out these concerns about volatility and possible drops in short-term asset prices by doing the good ol' dollar cost averaging - but it needs to be enough money to make the additional trading costs minimal.
If you can't talk about the changes in stock investing, massive volatility, huge movements up or down, timing like a HFT trader or hedge fund, plus international considerations or currency exchanges....don't feel bad, and don't beat yourself up. Even highly paid experts admit they don't know what the fuck is going on, because Fundamentals and Technicals have changed. They are having a very hard time convincing clients they DO know what's going on, justifying their fees, trying to keep investors from cashing out and fleeing. Everyone is trying to hold onto their own shorts. But we know you're wearing those big boy diapers and have no worries, and have no idea why anyone else would.Well, unless you have a functional crystal ball....
Of course it's speculative and unsure, because that's the nature of the future. There's no such thing as a sure bet, and everyone here has been wearing big boy pants long enough to know it, so maybe what people are objecting to or "resisting" is your exaggerated sense of the risks, or your erroneous statements and implications about the nature of "investing." I mean, shit, of course brokerages take a cut. By your logic, no one should ever trust any salesman, because he just wants the commission. Well, pfft, duh. Everyone's gotta make a living. That doesn't mean never buy anything from someone who's selling something, because they're only after your money, it means engage brain before proceeding.
[/sarcasm]
It's not about trying to time the bottom as much as putting money in companies (even solid companies) when they are at the mercy of larger trends that will keep every stock in the doldrums for a significant period of time.
And also concerns over whether even-solid companies may have their earnings threatened by a persistently weak economy. Pretending otherwise is yet another fallacy by thinking you can beat the market.
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