5 year Market Outlook opinions
01-06-2022, 02:57 AM
#351
Gets Weekends Off
Joined APC: Dec 2007
Posts: 5,602
Back in 2005-2007 time frame, I can’t remember, I almost did this exact thing based on a USA Today article and Jim Cramer. This amazing energy company called Enron was down 60-70% because of a weak earnings report but guidance was strong and it was a solid, established company and there was no reason for the dramatic pullback it had gone through. It was a terrific opportunity to “BUY BUY BUY!!” I almost bought a bunch of Enron stock in my brokeragelink account. Thank God I waited for a confirmed bottom (waited for it to move up some and make higher lows first.)
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01-06-2022, 03:04 AM
#352
Gets Weekends Off
Joined APC: Nov 2013
Position: A320 Left seat
Posts: 2,591
You act like I put my all my money in Deep Out of the Money options that expire in 3 months. I'm using LEAPS as a stock substitution strategy. You yourself stated that if one or two out of 10+ takes off the competition is over. How is that extremely risky with an expiration date 1+ year away? You were correct on that note, if BABA takes off its game over. Everything else can go to zero and my returns will still be spectacular. That's the power of LEAPS when used on deeply undervalued securities. BTW I learned about LEAPS investing from famed value investor Joel Greenblatt:
In his book You Can Be a Stock Market Genius, Greenblatt shares his secret to generating parabolic returns with a long-term options contract—Long-Term Equity Anticipation Security (LEAPS).
(On using LEAPS) “There is almost no other area of the stock market where research and careful analysis can be rewarded as quickly and as generously.” — Joel Greenblatt
https://steadycompounding.com/option...-uses-options/
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In his book You Can Be a Stock Market Genius, Greenblatt shares his secret to generating parabolic returns with a long-term options contract—Long-Term Equity Anticipation Security (LEAPS).
(On using LEAPS) “There is almost no other area of the stock market where research and careful analysis can be rewarded as quickly and as generously.” — Joel Greenblatt
https://steadycompounding.com/option...-uses-options/
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You really believe in BABA still? You’re not worried about China pulling some shenanigans? I have 800 shares in my 401K. I bought 200 at $230 or so and was on the fence about selling, but then instead of that, I bought 600 more at $118 the other day. I need you to convince me that was better than selling and taking my 50% loss. You don’t have to go full tilt, just give me some bullet points about why you believe in BABA specifically, and aren’t worried about, well China.
I feel like every time the US accuses China of any kind of manipulations or shady dealings, China fines BABA a few hundred million and thinks that will appease the US.
01-06-2022, 03:22 AM
#353
Gets Weekends Off
Joined APC: Dec 2007
Posts: 5,602
You really believe in BABA still? You’re not worried about China pulling some shenanigans? I have 800 shares in my 401K. I bought 200 at $230 or so and was on the fence about selling, but then instead of that, I bought 600 more at $118 the other day. I need you to convince me that was better than selling and taking my 50% loss. You don’t have to go full tilt, just give me some bullet points about why you believe in BABA specifically, and aren’t worried about, well China.
When you look at BABA's business fundamentals, 30%+ annual growth in Revenue, Earnings, and Free Cash flow, then factor in the growth of AliCloud, which is projected to be BABA's biggest cash generator in a few years even though it contributes nearly zero cash flow today, for a price of 9 times free cash flow BABA is absurdly low. Hence I added not only BABA shares, but LEAPS for added leverage to my brokerage account. In my 401k BABA is an 11% position for me.
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01-06-2022, 04:39 AM
#354
Gets Weekends Off
Joined APC: Feb 2011
Posts: 766
Back in 2005-2007 time frame, I can’t remember, I almost did this exact thing based on a USA Today article and Jim Cramer. This amazing energy company called Enron was down 60-70% because of a weak earnings report but guidance was strong and it was a solid, established company and there was no reason for the dramatic pullback it had gone through. It was a terrific opportunity to “BUY BUY BUY!!” I almost bought a bunch of Enron stock in my brokeragelink account. Thank God I waited for a confirmed bottom (waited for it to move up some and make higher lows first.)
There’s a very interesting podcast about Enron on “American Scandal” by wondery. Suffice to say, no matter how “intelligent” you think you are, you couldn’t have caught this fraud until it was too late. It wasn’t as simple as cash flow negative, debt positive=bad investment. They hid all of this with hundreds of shell companies and questionable accounting practices. They were selling assets to shell companies that had no money, for huge profits to prop up cash flows, revenue and profit while the Star Wars named shell company took on the debt. Even insiders didn’t know what was going on. This would take teams of forensic accountants to actually unwind the full story and see what happened. So, don’t worry, most of us aren’t “overconfident” ehm…”intelligent investors” like others on this board are.
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01-06-2022, 04:50 AM
#355
Gets Weekends Off
Joined APC: Dec 2007
Posts: 5,602
There’s a very interesting podcast about Enron on “American Scandal” by wondery. Suffice to say, no matter how “intelligent” you think you are, you couldn’t have caught this fraud until it was too late. It wasn’t as simple as cash flow negative, debt positive=bad investment. They hid all of this with hundreds of shell companies and questionable accounting practices. They were selling assets to shell companies that had no money, for huge profits to prop up cash flows, revenue and profit while the Star Wars named shell company took on the debt. Even insiders didn’t know what was going on. This would take teams of forensic accountants to actually unwind the full story and see what happened. So, don’t worry, most of us aren’t “overconfident” ehm…”intelligent investors” like others on this board are.
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Could the typical small investor have discovered a year ago that Enron Corp. was on the brink of disaster? It's highly unlikely. Still, if you looked for the right thing, you never would have bought Enron stock in the first place.
The right thing is cash. The earnings statements that obsess Wall Street analysts are based on technical, arcane accounting conventions. But what truly counts for investors is how much cash they can put in their pockets, and shareholder cash is inextricably linked to the cash that the company itself generates and uses.
The right thing is cash. The earnings statements that obsess Wall Street analysts are based on technical, arcane accounting conventions. But what truly counts for investors is how much cash they can put in their pockets, and shareholder cash is inextricably linked to the cash that the company itself generates and uses.
CASH RULES EVERYTHING AROUND ME
A corporation can do all kinds of accounting tricks to boost the income statement. But it’s hard to invent cash outta thin air. I focus on the cashflow statement, the cold card cash that runs thru the business, which leads to my emphasis on future free cash flows to estimate the intrinsic value of a company. Enron had years of negative free cash flow and was “selling” assets, issuing shares to raise cash. A simple look at Enron’s Cashflow Statement and the Intelligent Investor would have stayed away with a 10 ft pole. That’s why you didn’t hear of any value investors getting caught up in that mess.
BTW selling assets has no effect on cashflow from operations or Free Cash flow, which was BLOODY red for Enron.
01-06-2022, 04:59 AM
#356
Gets Weekends Off
Joined APC: Feb 2011
Posts: 766
They actually did. They sold their assets to shell corporates and created money on the balance sheet. That shell company (Jedi 1, Jedi 2) etc would take on debt to pay them for it. You’d have to go down a very long and sophisticated trail to get to this point. It wasn’t until the end did the accountants realize what was happening. Further, you need a shady accounting firm willing to sign off on this. Which they had in Arthur Anderson. What you’re saying would also require a deep understanding of account rules and practices, how capital is being allocated, how they are putting future sales on the books today and so fourth.
I also want to point out this article was written in 2002 and found this gem;
This guy is something, but it ain’t intelligent.
“A good example is J.C. Penney Co. The company, at last report, had $1.7 billion in cash, and while its debt totals $5 billion, that number has been cut in half in the past three years, and most of the loans are not due for more than five years. In addition, net cash flow was positive last year by more than $1 billion. Penney's was Olstein's second-largest holding last year, and it rose more than 100 percent over 12 months.”
I also want to point out this article was written in 2002 and found this gem;
This guy is something, but it ain’t intelligent.
“A good example is J.C. Penney Co. The company, at last report, had $1.7 billion in cash, and while its debt totals $5 billion, that number has been cut in half in the past three years, and most of the loans are not due for more than five years. In addition, net cash flow was positive last year by more than $1 billion. Penney's was Olstein's second-largest holding last year, and it rose more than 100 percent over 12 months.”
01-06-2022, 05:07 AM
#357
Gets Weekends Off
Joined APC: Dec 2007
Posts: 5,602
They actually did. They sold their assets to shell corporates and created money on the balance sheet. That shell company (Jedi 1, Jedi 2) etc would take on debt to pay them for it. You’d have to go down a very long and sophisticated trail to get to this point. It wasn’t until the end did the accountants realize what was happening. Further, you need a shady accounting firm willing to sign off on this. Which they had in Arthur Anderson. What you’re saying would also require a deep understanding of account rules and practices, how capital is being allocated, how they are putting future sales on the books today and so fourth.
I also want to point out this article was written in 2002 and found this gem;
This guy is something, but it ain’t intelligent.
“A good example is J.C. Penney Co. The company, at last report, had $1.7 billion in cash, and while its debt totals $5 billion, that number has been cut in half in the past three years, and most of the loans are not due for more than five years. In addition, net cash flow was positive last year by more than $1 billion. Penney's was Olstein's second-largest holding last year, and it rose more than 100 percent over 12 months.”
I also want to point out this article was written in 2002 and found this gem;
This guy is something, but it ain’t intelligent.
“A good example is J.C. Penney Co. The company, at last report, had $1.7 billion in cash, and while its debt totals $5 billion, that number has been cut in half in the past three years, and most of the loans are not due for more than five years. In addition, net cash flow was positive last year by more than $1 billion. Penney's was Olstein's second-largest holding last year, and it rose more than 100 percent over 12 months.”
What gem are you talking about? And who isn’t intelligent? Robert Olstein, founder of Olstein Funds, a boutique value shop with an outstanding track record?
01-06-2022, 05:28 AM
#358
Gets Weekends Off
Joined APC: Feb 2011
Posts: 766
I agree that Enron did shady accounting. All that was to keep the company afloat to meet its debt covenants and to not scare off analysts because Management(for good reason) was hyper focused on keeping the stock price high as many of the shell companies that took on Enron’s debt used call options/Swaps on Enron shares as collateral(LMAO). My main point is the intelligent investor would not have been invested in Enron in the first place because the stock price was speculative compared to its free cash flows(or lack there of).
What gem are you talking about? And who isn’t intelligent? Robert Olstein, founder of Olstein Funds, a boutique value shop with an outstanding track record?
What gem are you talking about? And who isn’t intelligent? Robert Olstein, founder of Olstein Funds, a boutique value shop with an outstanding track record?
His performance is an underwhelming index matching return. And that comes with a 2.14% expense ratio to boot. No reason you and I can’t produce double the returns he has. As an investor, I wouldn’t idolize this guy.
So, I retract my previous statement. He’s intelligent, just not because of his investing prowess.
01-06-2022, 05:45 AM
#359
Gets Weekends Off
Joined APC: Dec 2007
Posts: 5,602
Well this guy is apparently your example of an intelligent investor. He followed the cash flow statements and bought JCP. What’s the phrase you use? “Permanent loss of capital”?
His performance is an underwhelming index matching return. And that comes with a 2.14% expense ratio to boot.
So, I retract my previous statement. He’s intelligent, just not because of his investing prowess.
His performance is an underwhelming index matching return. And that comes with a 2.14% expense ratio to boot.
So, I retract my previous statement. He’s intelligent, just not because of his investing prowess.
You don't seem to understand this investing game well outside of your "hold on to leaders of visionary growth companies forever" philosophy. Underwhelming huh? There's a reason why he manages hundreds of millions of dollars:
The only advantage of an ETF over a mutual fund, Olstein said, is “for trading.” His all-cap fund, he added, has turned a $10,000 investment in 1995 into $68,000 after fees today.
NEW YORK (CNN/Money) - Updated Jan. 31. A lot of supposedly smart investors blew it on Enron -- money managers at Alliance Capital, Janus and Putnam are just a few of the big names who got stuck holding the bag when the energy company imploded this past fall.
And now it looks like the Enron debacle was just the beginning. This week, new questions surfaced about Tyco International's bookkeeping. Williams Cos delayed the release of its fourth-quarter results, and PNC Financial said it would have to restate its 2001 earnings.
Suddenly, quality of earnings is on everyone's mind (as seems to happen every couple of quarters when another high-profile company blows up due to accounting irregularities).�
But digging through the numbers is nothing new to Bob Olstein of Olstein Financial Alert. Olstein, a 34-year veteran of the industry, was obsessed with earnings quality long before most money managers had even graduated from business school.
Olstein first made his name in the 1970s as the co-author of a prominent Wall Street newsletter, The Quality of Earnings Report, which counted George Soros and Peter Lynch among its readers. The point of the newsletter was simple: Are the numbers that a company reports portraying the economic reality of the business. "I've always found that it's not important what management says, it's important what they do," says Olstein. "And what they do is already in black and white in the financials."
In 1995, Olstein set up his own shop, and over the past five years, the Olstein Financial Alert(OFALX: up $0.11 to $14.79, Research, Estimates) fund has returned an average of 21.6 percent, placing it in the top 1 percent of Morningstar's mid-cap value category and ahead of the S&P 500 by 12.2 percentage points.
The key has been in avoiding the catastrophes that have undone other hot funds. "There's a high correlation between long-term performance and error avoidance," says Olstein. "A fund that's up 80 percent one year and down 50 percent the second year isn't up 30 percent -- it's down 10 percent." To that end, the fund has had consistent returns, and in 2001, when the S&P 500 lost 11.9 percent, Olstein returned 17.2 percent.
And now it looks like the Enron debacle was just the beginning. This week, new questions surfaced about Tyco International's bookkeeping. Williams Cos delayed the release of its fourth-quarter results, and PNC Financial said it would have to restate its 2001 earnings.
Suddenly, quality of earnings is on everyone's mind (as seems to happen every couple of quarters when another high-profile company blows up due to accounting irregularities).�
But digging through the numbers is nothing new to Bob Olstein of Olstein Financial Alert. Olstein, a 34-year veteran of the industry, was obsessed with earnings quality long before most money managers had even graduated from business school.
Olstein first made his name in the 1970s as the co-author of a prominent Wall Street newsletter, The Quality of Earnings Report, which counted George Soros and Peter Lynch among its readers. The point of the newsletter was simple: Are the numbers that a company reports portraying the economic reality of the business. "I've always found that it's not important what management says, it's important what they do," says Olstein. "And what they do is already in black and white in the financials."
In 1995, Olstein set up his own shop, and over the past five years, the Olstein Financial Alert(OFALX: up $0.11 to $14.79, Research, Estimates) fund has returned an average of 21.6 percent, placing it in the top 1 percent of Morningstar's mid-cap value category and ahead of the S&P 500 by 12.2 percentage points.
The key has been in avoiding the catastrophes that have undone other hot funds. "There's a high correlation between long-term performance and error avoidance," says Olstein. "A fund that's up 80 percent one year and down 50 percent the second year isn't up 30 percent -- it's down 10 percent." To that end, the fund has had consistent returns, and in 2001, when the S&P 500 lost 11.9 percent, Olstein returned 17.2 percent.
During this competition, I'm going to enjoy watching you turn into a value investor. Here's how you can get a head start:
https://www.amazon.com/You-Can-Stock-Market-Genius-ebook/dp/B0043RSJB8/ref=sr_1_1?crid=ZSE4JYF521T3&keywords=you+can+be+a +stock+market+genius+by+greenblatt&qid=1641480235& sprefix=you+can+be+a%2Caps%2C67&sr=8-1
https://www.amazon.com/Intelligent-Investor-Collins-Business-Essentials-ebook/dp/B000FC12C8/ref=sr_1_1?crid=XWIIPNWYW2XU&keywords=the+intellig ent+investor+by+benjamin+graham&qid=1641480203&spr efix=the+intel%2Caps%2C77&sr=8-1
Last edited by Trip7; 01-06-2022 at 05:56 AM.
01-06-2022, 06:04 AM
#360
Gets Weekends Off
Joined APC: Feb 2011
Posts: 766
The article was written in 2002. He had already doubled in money. Do you really think he held on to JCP all the way to bankruptcy? You don't seem to understand this investing game well outside of your "hold on to leaders of visionary growth companies forever" philosophy. Underwhelming huh? There's a reason why he manages hundreds of millions of dollars: He's not like Cathy Wood where most of the Fund's investors are underwater
https://www.cnbc.com/2016/06/23/olst...ket-today.html
During this competition, I'm going to enjoy watching you turn into a value investor. Here's how you can get a head start:
https://www.amazon.com/You-Can-Stock-Market-Genius-ebook/dp/B0043RSJB8/ref=sr_1_1?crid=ZSE4JYF521T3&keywords=you+can+be+a +stock+market+genius+by+greenblatt&qid=1641480235& sprefix=you+can+be+a%2Caps%2C67&sr=8-1
https://www.amazon.com/Intelligent-Investor-Collins-Business-Essentials-ebook/dp/B000FC12C8/ref=sr_1_1?crid=XWIIPNWYW2XU&keywords=the+intellig ent+investor+by+benjamin+graham&qid=1641480203&spr efix=the+intel%2Caps%2C77&sr=8-1
https://www.cnbc.com/2016/06/23/olst...ket-today.html
During this competition, I'm going to enjoy watching you turn into a value investor. Here's how you can get a head start:
https://www.amazon.com/You-Can-Stock-Market-Genius-ebook/dp/B0043RSJB8/ref=sr_1_1?crid=ZSE4JYF521T3&keywords=you+can+be+a +stock+market+genius+by+greenblatt&qid=1641480235& sprefix=you+can+be+a%2Caps%2C67&sr=8-1
https://www.amazon.com/Intelligent-Investor-Collins-Business-Essentials-ebook/dp/B000FC12C8/ref=sr_1_1?crid=XWIIPNWYW2XU&keywords=the+intellig ent+investor+by+benjamin+graham&qid=1641480203&spr efix=the+intel%2Caps%2C77&sr=8-1
Tell me, when did he close his JCP position? How did that turn out? I can’t say, and honestly I don’t really care. He doubled his money at the time of this writing, and if he closed it out after 12 months, who is doing the trading? The ETF investor or this bozo? His turnover according to morning star is 42%. Again, who is doing the trading?
for someone who claims to be as intelligent as you do, you really have bought into the instutional and academic side of things. The whole system is stacked so that this bozo can collect his fees, Becuase there is a perceived level of safety there. And you need big money names like this to “keep you safe” from the scary and risky thing called investing. All these guys do is destroy wealth through underperforming and fees. He has hundreds of millions in money he manages not because he’s an exceptional investor, but because he’s a good marketer. There’s nothing in his performance number down the entire list that is exceptional.
The financial industry has also created a market for books. Books that you think contain some sort of secret sauce to investing, when the real secret sauce is simply doing nothing. But you can’t write a book about that. To sell their books they need to have some sort of convoluted method full of equations, accounting, and big words. I also went through this phase, where I thought I could buy a book and becoming the next Warren Buffett, but that phase is a decade behind me. There’s no secret sauce in any of those books, so I’ll pass.
Im not any type of investor except a patient one. There will be a time when the companies I hold become a “value” (whatever that means) and there will be times when I buy more of them at this “value” level. The reason? Becuase I’m always buying.
You continue to amaze me with your overconfidence. You really think you know something more than the market. Amazing! You’ll come around, but you’re new to this journey, and I’ve been there too.
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