Another victim of the housing market. This home was bought by an investor/flipper in Dec. 2009 for $350k from US Bank and flipped it in Feb. 2010 for $595k. If I remember it correctly, it was listed for $580k. Not a bad profit for two months worth of holding. I am not sure if the new owner was aware of this information, or his realtor hid this information from him. I wouldn't buy it knowing this information because I would just tick me off so bad. Basically, the new owner paid 2005 price for the home. It is what it is. The market determines the price, not you, not me.
1625 Ridgetree Way, San Jose, CA 95131
By E-man Follow Thu, 25 Mar 2010, 12:54am 7,344 views 113 comments
In San Jose CA 95131
Watch (1) Share
Quote
Permalink Like Dislike « First « Previous Viewing Comments 74-113 of 113 Last » See most liked comments
|
Premium member E-man is moderator of this thread. |
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
While I believe the economy is stable, which is itself a recovery from falling, it seems that there are many problems afoot. I don't see us tanking, but I also don't see where our investment money is going to go.
From what I'm reading now, is that the Euro has gotten a big bucket of money dumped into a leaking bucket. The leak isn't being fixed, and the fix could be painful yet unlikely to be addressed. Which isn't too surprising. Cuts will likely lead to a deeper recession in greece, which will require further cuts. Those cuts will chew into Germanys exporting business, which will hurt them. Like wise, spain/portugal will likely have similar issues, causing further damage to France/Germany and other stable EU nations.
China will be hurt by a pull back in Europe. China also has a few of it's own issues, including their own housing bubble.
Every day we dump more money into the market, which needs investing. For the most part, housing doesn't seem to be all that safe of a bet - while individuals can find good deals, buying in bulk might not yield those same consistent deals.
The stock market looks fairly valued. So where are we likely to keep dumping all our investment money? It seems that the stock market almost has to go up, with competition from investors to find places to put their money.
I'm kind of hoping for a stock pullback, to buy in. I'm sitting on cash now, and I'm not used to that :D I should learn to do it more often though! I like the idea of bonds until something haywire comes along to knock things into gear, either up, or down. I'll ride the market further up, if it starts heading in that direction, or buy in after a fall. What kind of time frames do you think we're looking at, for anything "new" to happen?
What "new" thing is building that might be a cause for concern/jubilation?
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
I have another question regarding bonds.
How do you purchase those, I think you mentioned you used tdameritrade, which I use as well. I tried doing some preliminary searches on google for bonds, but couldn't find anything useful. I searched for bonds on ameritrade using the names above, a few symbols from those companies, but nothing showed up. Is there an "easy" way to sort through the offerings? Are they essentially all unique, due to terms?
I'm going to keep looking, I thought they would be pretty easy to find, and found it odd that they weren't just prominently displayed somewhere!
Follow
Befriend (2)
61 threads
1,335 comments
Premium
pkennedy,
with these you want to use CUSIP # so there is no confusion. I get a report listing thousands of bonds from my firm so I never have trouble finding them.
In TDA, go to dropdown trade > Bonds & CD's and there is a variety of search method including name, CUSIP, rates, maturity etc. I think you can download it on the spreadsheet so it is easier to review.
For example,
METLIFE INC CUSIP: 59156RAT5
7.717% 02/15/2019 non-callable
Coupon & Yield
Coupon 7.717 Pay Months Feb,Aug Current Yield 6.500
Frequency Semi-Annual First Coupon 08-15-2009 Yield to Maturity 5.040
Yield to Worst N/A
Offer & Pricing Information
Quantity 150 Price 118.726 Principal $11,872.60
Min. Qty 10 Settlement Date 05-18-2010 Accrued Interest $199.36
Total Cost $12,071.96
This is a 7.717% bond so it will pay 772 in annual interest (assume 10 units) paid semi-annually. It will cost 11873 (price is 118.73% to reflect bond premium) and 199 in banked interest (buying the three months accrued from previous owner), effective yield is 6.5%. The premium is as a result of recent run-up in bond price. yield and premium has an inverse relationship. In essense, when yields go down, price go up and vice versa. Bonds are puchased in 1K increments. I bought 10 of these Tuesday for a total cost of
11,985.
go to investinginbonds.com to learn more.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
Ah thanks.
I got to the CUSIP# and there was a search functionality, but I wasn't able to come up with anything! I thought it might more resemble options pricing and/or naming.
1K increments is handy, I was wondering how they were priced as well, and paying the accrued interest makes sense as well. That pretty much sums up everything I was wondering about.
Follow
Befriend (31)
34 threads
2,608 comments
San Jose, CA
Premium
@ SF ace,
Very interesting. Moving to high yield bonds at this time. Are you betting on deflation in the near future?
@ pkennedy,
My investment strategy is somewhat different with SF ace. SF ace is more about wealth preservation while mine is about leverage. I am not sure what type of investor you are.
I invest mostly in low-end housing market (not very diversify). My home would be the best home inside out on the block. Cash-on-cash return must be about 8% after rehab to make it worthwhile for me. I'd settle for 6% cash-on-cash return for a better location with good potential for appreciation. When I find a good RE deal, I liquidate most of my stock holdings to buy RE.
I recently figured out a way to increase the cash-on-cash return to about 12% to 15% on RE. I'm not done with the first transaction yet, so I don't want to jing it. I don't mind sharing it with you guys after the deal is closed.
I just finished reading a 15-page article dated in 1984, written by Warren Buffet. It's called "The Superinvestors of Graham-and-Doddsville". Very insightful. A friend emailed it to me. He knows I love RE and finance. What I got from the 15-page article are:
1) price and value (value investing, paying 40 to 60 cents on a dollar for a business)
2) risk and reward (do not cut it too close. Basically, having a good margin of safety)
3) The secret about value investing has been out there for over 50 years. It's so simple that human likes to make easy things difficult. I guess this is what separates the "nay sayers" from the "yes it can be done sayers".
With that in mind, I'd like to share an email I got from cousin yesterday. Remember, buyers are paying retail price. E-man is paying wholesale price (margin of safety). You have to be part of the network to get these kind of deals. Of course, nay sayers would say it can't be done. Sorry for the long post.
****************************
Do you want to buy high end houses in Willow Glen for 70 cents on a dollar?
Bank currently listing $725,000.
I stay conservative, so my comp is about $700k
The wholesaler who contacted me said he can get it for $507,500.
That'll leave about 30% equity
There are 3 houses. We can either buy 1, or buy all 3.
The deal is this. He wants to split 30/70. We put up the cash, we take 70% of profit. He'll do all the leg work, he'll take 30%. The houses are in excellent condition, so no rehab.
The discount is big enough that using hard money would still be profitable. However, it'll really cut into the profit.
I'm still thinking what can we do with these deals. How would we structure it to yield the most profit.
The wholesaler has not yet given me the address of the houses, but I asked him a lot of questions and based on the information, I'm very sure these are the addresses:
1) http://www.realtor.com/realestateandhomes-detail/906-Willowshire-Wy_San-Jose_CA_95125_1118267751
2) http://www.realtor.com/realestateandhomes-detail/1163-Curtiss-Av_San-Jose_CA_95125_1116010799
(this one we can buy for $471,922)
What do you think we can do???
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
I'm a messy investor. Investing without enough knowledge and dangerous :) I'm very good at savings, and I'm very value orientated, vs super deal. Super deals are generally priced that way for a reason, I like to get value and get a good price on things. I also min/max my living standards. If i'm not getting the best, I'll often buy the worst and see if I like it, if I do, I'll probably end up with the best next time. Investing, I spent too much time reading crap I didn't need to read. I should have been value investing for the last decade. Ah well, live and learn. I'm still making mistakes, but taking in everything you guys have said and others! I'm currently waiting for the market to make a move somewhere. I think it's going to head back down again, just because of momentum. I don't think any massive crash, just a drop, and then back on up. I'll see if I can figure out this dip and try and buy in as it's returning.
As for the housing deals, you're basically having this guy find a house for a 30% discount, then flipping it and paying him a 30% commission? Will he resell it, or do you need to introduce realtors in there again? Are you planning on renting them out? Even at 500K it seems like you would need some hefty rent to make it worth while.
Follow
Befriend (2)
61 threads
1,335 comments
Premium
E-Man,
In the end it is about risk vs. reward. What is the reward for the dow 15% to bring to 12.500. what is the downside, 9800 or 10%? In retrospect, I currently rather take 7% bonds. Bonds have been flying off the shelfs lately and is reflected on the yields. I may consider selling bonds and buy back stocks if Dow can break 11K and we have more encouraging economic news or bonds yields are going up.
Investment strategy is pretty flexible. I was very agressive early in my life, but I had a lot less money and no family to deal with. I have a lot more to play with now, including taking about 200K from HELOC alone. a 10% return adds up to a median salary of most people. I am working hard to add to the base yet protect it at the same time. Also, I need to protect my spouse' $$ and my kids $$. In my field, you can make money for 12 straight quarters, lose money on one quarter and nobody remebers the good work the other 12.
We cannot count on having good earned income forever. Who knows, we survived two down cycle and there's no gurantee we can survive two more or desire to survive. I was fortunate to start my career when all it takes was being able to breath, now these 23 year old coming in the door have incredible upside potential and will be harden even more over time. It'll be nice to be able to live off of working capital and not worry about working, financial independence if you will.
I was wiped out in the stock market the first time, fortunately it was just chump change then and the return on education investment is well worth it. I left hundreds of thousand in home equity in 2006, on secondary home and that is a pretty costly mistake as well. But mistakes make you wiser, ignorance doesn't.
I was thinking about buying a house in the Sacramento area, but that would make it a fourth home and decided that it was not worth it from a time perspective, not financial perspective. Those 8% yield are an awful lot of work and it is just too darned illiquid right now.
In this forum, you see a lot of anger towards banker, realtors and whatnot and you see all kinds of cynacalism toward them. To me, you want bankers to be your friend, you want realtors to be your friend, etc. It's not hard to figure out
Follow
Befriend (31)
34 threads
2,608 comments
San Jose, CA
Premium
@ SF ace,
Ah, got it. It's a short-term play. Yields have been falling. You're following the big money. I guess a stock market correction is well on its way. Makes sense totally now.
"In my field, you can make money for 12 straight quarters, lose money on one quarter and nobody remebers the good work the other 12."
It's always about what have you done for me lately. These big boys have such a short memory.
"In this forum, you see a lot of anger towards banker, realtors and whatnot and you see all kinds of cynacalism toward them. To me, you want bankers to be your friend, you want realtors to be your friend, etc. It’s not hard to figure out."
I am completely in agreement with you on this. Why do you think I can buy homes at 20% below market value?
@ pkennedy,
SF ace typically knows which way the market would likely go. If you want to maximize your profit, follow his suggestions. Basically, he makes $$ when the market goes up, and he also makes $$ when the market goes down. Life is good :o)
Happy Investing.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
I'm halfway between sface and you eman. I would like to be where sface is play a little more conservatively, but I'm also looking at these coming 3-4 years as possible good money makers and possible a good chance to buy and sell a couple of times.
I agree with your assessment of the ups and downs. Since we're a fairly valued market right now, the upside seems to be growth and/or momentum bubble. Downside is negative news and possible a dip in the recovery. I would like to play both sides, but playing one side safely is probably going to net me more, as I'm more likely to lose on both sides :) but as Warren Buffet said, buying a good value stock when the whole market is down is much easier than buying an excellent value stock when it's up. So waiting for a dip might be easier for me than trying to time the top.
I'm not sure about your returns though sface, I'm guessing your downside and upside are much greater. The market might go to 12500 as you said, but will it take a year? More likely it's going to jump up there with a nice run up, giving a better return within a year, at which point 15% gains will be compared with your 4% gain. I think the downside is much greater threat though. Too much bad news is likely to come out in the coming months that will push down consumer sentiment. The difference is, it will be single failure points, perhaps a couple of banks, or a construction company, it won't be 2-3 full industries blowing up at the same time, causing havok. But sentiment will be negative for awhile.
I'm wondering, if the market goes down, won't people bail on your bonds, making it harder to get out? You'll make say 4% but the under lying value will crumbling because people won't be offering as much, once the market tanks. Or is that when people start buying bonds (eg at the wrong time)?
As for real estate agents and other "frowned" upon professions, people are on one side demanding the best results, and on the other crying foul when they find out how they're getting those results. It's best to play with the winners, than with the losers though... so I'm going to stick around the bankers!
Follow
Befriend (2)
61 threads
1,335 comments
Premium
market goes down because money is flowing out, most likely into the fixed income market (bond market), lowering yield and raising the premium of the bond.
If you think about it from a broader perspective, a 30 year goverment T bill at 4.31% means you are locking in that rate of return for 30 years. If interest is at 5%, then your 4.31% is worth less thus a discount to balance the difference, but if interest is at 4%, then your 4.31% is worth more thus there is a premium to balance the difference. In the end, you'll still get 4.31% regardless and reversing the transaction is not a big deal. You can't lose money on bonds, you can make a little more than 4.31% or a little less.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
I understood the difference you're paying, but the part that confused me was the fact that you're buying into the bond market paying a mini premium, thus lowing your current yields due to demand, but when you go to sell you're going to be selling at a mini discount as everyone will be heading that way too? Eg if it's a 10% bond now, you're probably netting 7% due to a slight premium you're paying now. When money flows the other way, won't you be trapped selling at a discount as well? Selling into a market that is demanding 11% now?
Follow
Befriend (2)
61 threads
1,335 comments
Premium
yes, that is the risk of the hedge. As with all hedge, there is a small cost associated with it.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
Ah ok!
Still not a bad hedge, it just seems more like a loss/small win scenario? If you lose 15% in the stock market that is a big loss, if you break even in the bond market that is still a loss compared with just sitting in cash with no risk. It seems like you need to bail from bonds before they tank? Or is it common for bonds to have a major premium attached to them after a stock crash?
Bonds aren't that "easy" to get into, as I've just realized! It takes a bit of knowledge to get into them, and they're not "glamorous" like stocks. So I'm assuming they have far more savvy financial buyers using them, which seems that after a stock crash, the bonds would take a hit as those savvy people run to grab good deals in the market? Or am I way off, are there masses who will buy up your bonds, thinking the worst is going to happen in the stock market? Thus losing out twice?
Follow
Befriend (31)
34 threads
2,608 comments
San Jose, CA
Premium
pkennedy says
You got it. When the market corrects or crashes, people run to bonds, which pushes yields down. Like I said above, SF ace likely knows this stuff before the average Joe like us since he's in the business. You don't want to bet against him. With that said, it looks like the market is not done correcting. Every bounce is a chance to sell. Now is the time to identify which market leader stocks to buy on the next leg up. My two picks are SBUX and AAPL.
My half-way decent knowledge is in real estate so I'll stick with it for a while. I will diversify when I have more money, not now.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
I'm not betting against SF ace! Don't worry about that! I was just wondering if he was trying to catch a falling knife when people switched markets. But if people run to bonds for a double whammy, I can believe it :)
With all these ups and downs days, I'm wondering if people are having a chance to cash out, preventing a big sell off or if they're just getting antsy and likely to create a large sell off due to market psychology. I'm still looking at buying back into Citi, but they're saying Citi has a large european position which could be hurting it right now. Same with GE. Maybe they'll both be hammered down to some great buying opportunity levels...
Follow
Befriend (31)
34 threads
2,608 comments
San Jose, CA
Premium
@ pkennedy,
As far as I understand, that's not how active mutual fund managers operate. They don't go all in or all out. They take profit and raise cash (say 10% of total holding) when the market appears to be frothy. If it holds support at say 1,050 for S&P 500, they would put the money back to work. They would likely raise more cash (say 15%) if the market breaks the first support (1,050 for the S&P). They would increase even more cash (say 20%) if the market breaks the next support at 970. They would raise even more cash (say 30%) if the market breaks the next support at 865. When the market signals all clear, they slowly put these cash back to work. They don't put all 30% cash back to work immediately.
I will use a couple of methods, which includes value-investing like Warren Buffet. To put things in perspective, I talked to a very wealthy retired engineer this morning. He bought 100 shares of Exxon Mobile in the 1970's. He now has over 2,000 shares of it. If you had invested $1,000 with Warren Buffet in 1965. It's now worth $6.5 million.
With that said, I will model the holdings in our IRA's to have 50% in good long-term value companies. 50% in high-yield REITS, preferred shares, or dividend stocks. I might have some overlaps between value and high-yields here. Then, I'll just let them ride. I'll go to some cash when they look frothy. I don't want or have time to micro manage them.
I do have $10k to $20k in Wellstrade account depends on when. This is purely gambling $$, which I do occasional trading. I'd rather spending my time looking for RE deals. At this point, 85% of all my equity is in RE. 10% in IRA and 5% in checking and savings account. I know, not very diversify. I should have another $300k to invest in RE by the end of July. Most of this money will likely go into more RE because that's what I know best
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
I diversify be getting a new 401K account and having "new" options every couple of years :) Each account generally has 1-2 picks in it. Although I'm stuck without a 401K plan now, and one my last employeers closed it down forcing me to roll it into another plan which I had at the time. Not the best strategy.
Btw, have either of you gotten into options? Buying options now seems risky, but buying them after a massive market fall like in 2008 seems like a good deal? Buying value stocks with say 6 month options or a leap 1 year option? Obviously not making massive purchases, but it seems like when everything has tanked, that options would be a good bet? I've never had a chance to do option buys when the market was down (never thought about it last time it tanked.. sigh)... Since recovery usually happens decently quickly, a longer term option seems like a pretty good chance of recovering and really turning a tidy profit... I had looked at options years ago, but decided against them.
Follow
Befriend (31)
34 threads
2,608 comments
San Jose, CA
Premium
Sorry. Don't know anything about options.
Follow
Befriend (31)
34 threads
2,608 comments
San Jose, CA
Premium
@ SF ace,
The S&P and DOW bounced off the 200 DMA today, which is somewhat encouraging but too early to tell. My hunch is telling me you know something that we don't know so spill the beans. What's the stock market outlook for later this year and early next year? Are we going to see a 50% hair cut from here?
Follow
Befriend (2)
61 threads
1,335 comments
Premium
as stated before, I look for a trading range between 9800-11000 until Dec 2010 or until new development come along. No more easy buys, trading the ranges will make money for the rest of 2010.
We bounced off the 200 DMA twice recently but i suspect the real support will be around the 9800/1050 level. We'll have trouble breaking 11K as that looks like pretty strong resistence. looks like trading range until further economic news develop.
I will continue to stay away from BP, Rig in the current future.
1% chance we will see 50% haircut from here. In fact, the market have not even broken the up trend yet. Earnings growth remain intact for most companies in 2010. Sorry, that is as specific as I can get.
Follow
Befriend (31)
34 threads
2,608 comments
San Jose, CA
Premium
Thank you very much for your response. I just need some confirmation.
I always get in trouble when I over-analyze things. I guess I should stick with the K.I.S.S. rule, and continue to let the numbers be my guidance. I've been reading too much negative data/info from several economists, and it got me so bearish.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
I need to learn this as well. I have no problems finding information, but it eventually gets so complex and so intertwined that i can't get anything out of it all. Which ends in either no action, late action or wrong action most of the time!
BP looks like it could be really screwed though. While the numbers they are reporting are miniscual compared with other oil slicks in the world, if this thing has dumped more oil than they expected and less has "surfaced" than they expected (or reported...) they could be in for a pretty serious clean up bill, and/or lawsuits from people. It's going to kill tourism, it's going to kill a lot of fishing, not only from the US, but from likely other countries as well.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
Ok, so we're at about 10200 right now. Losing about 200 per day for the next two days will put us inline with 9800. The 200 DMA looks about 10200? I'm looking on yahoo finance though.
I assume you mean 9800 is likely where it would bounce off of? Will options expiration play into this, going into friday, changing momentum at all? If it hits 9800, I'm thinking of buying back in.
I was looking into Citi, and GS, but they've both got issues right now. GE also has it's own issues possible. Any other recommendations to look at? Ones that have been hit hard and are now under valued?
Follow
Befriend (2)
61 threads
1,335 comments
Premium
I hate to share specific, but I have what you are looking for. JASO
• Very little debt, Book value approaching stock value. The business is almost free. (which is justified when not earning $$$, but as can see later this is not even close to being the case.) If I own this company, I want at least 10x annual 2010 operating cash flow + net cash and assets, which would give it a market value of 2.5B - 3.0B. Very undervalued.
• Cash on hand can pay for expansion (no dilution)
• Sold out of supply for the next three quarters.
• Raised guidance 3 times in 2010 alone. 2010 estimates are way too low. I am looking at worst .90 - 1.00 a share. Scaling is improving margins/profitability. Borrowing history is over as cash flow can fully fund capital investment.
• Every government/country wants exponetially more solar capacity. Supply should not be able to keep up with demand in the future (supply is easy from 0-1GW but 1GW to 30GW is a lot harder to keep pace) and I believe solar panels will be very profitable and valuable. Solar panel reminds of the the semiconductor industry back in the 80's.
• Solar stock got punished exponentially along with oil price drop but fundamental remain the same. It will reverse the same way. I think oil price is pretty close to a bottom/supprt. Solar has always been the better/rewarding play than oil/drillers.
I am buying at these level as I am not sure what is a good entry point. Of course, do your own due diligence.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
My due diligence is finding knowledge people and asking them questions :)
I do like solar as well. I'll toss some info to you, maybe you can use it. I had a roommate who had a friend involved in this business. There are a lot of SV companies currently working on solutions actually! All "different" methods, each will yield what appears to be a pretty decent increase in efficiency and/or cost. My roommate was into silicon wafer machines and machines in general, so we would hound this guy on their industries "stupidity". I learned a few things though. 50% of cost is install, that's an obvious one to reduce in the future. 50% of solar panels product cost is actually in the product "housing", apparently building the panels is expensive because they have to work under high heat conditions, and last 25 years without falling apart. The other 50% or so was apparently in the cells themselves. I always thought it was like 10/90.
Some of the upcoming solutions (which didn't seem that hard) included using light collectors and aiming more light at the cell, this makes it more efficient, while using less of the costly cells. It was funny, we said they could build mini collectors that would track the sun for next to nothing, he said it was extremely costly, and my room mate pointed out that a simple metal rode (essentially a toaster) that bent as it was heated could direct panels at the light. The mini collectors could be fairly shallow as there would be a lot of them. He disagreed, then came back next week and said a company was now doing this.. Heh. Anyways, the "technology" has a long ways to go, with *massive* potential to drop the costs. I was surprised.
He was working at a company that was working on slicing the wafers thinner, thus saving on the cell costs.
Interestingly this stock hasn't gone down much from this last fall, in fact it seems to have been climbing since oil fell through the floor, not very quickly mind you.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
Actually, after reading something warren buffet wrote about car companies and horse carriage companies, I realize solar might not be a great place to be. When car companies arrived, he said it wasn't a good idea to invest in them -- most failed, of the hundreds that started up, only 3 survived in the US and they're not doing that well today. What car companies did show, is that investing in horse carriages was a bad idea.
Solar is sitting where car companies once stood -- there are so many possible break through that the first one to actually combined 3+ of these innovations together will likely be the survivor, while the rest fail due to massively being under competitive. Hmm..
Okay, onto this "banking" bill. What is likely to happen to banks with this bill? Is it going to neuter their ability to reap massive rewards at all? I've always wondered how much money a bank makes through services, and regular loans vs exotic potentially toxic stuff.
Follow
Befriend
16 threads
4,426 comments
pkennedy says
The same can be said pretty much regarding many new companies that start out in a given industry.
Microsoft was a small player compared to Digital Research, UNIX, or other flavors of OSware, but managed to become the most unlikely winner at the end. I certainly wouldnt touch Solar given there are a multitude of players.
E-man says
Buy and hold on basic materials one can understand. No one has yet to invent a replacement for toilet paper and there is a long term need. I dont expect anyone of them to go out of business.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
You've obviously never encountered the three sea shells...
Well Warren Buffet didn't invest in any of those companies, for the same reason. He said the gains on the winner were tremendous, but there were so many losers. MS wasn't really considered a good product, intel was never the best chip by FAR. Yet they still came out on top.
I like solar, and think it will do well. I'm just worried that it needs to have a major innovation to make it real practical, and then whoever doesn't have that innovation is going down...
Follow
Befriend (2)
61 threads
1,335 comments
Premium
"Btw, have either of you gotten into options? Buying options now seems risky, but buying them after a massive market fall like in 2008 seems like a good deal? Buying value stocks with say 6 month options or a leap 1 year option? Obviously not making massive purchases, but it seems like when everything has tanked, that options would be a good bet? I’ve never had a chance to do option buys when the market was down (never thought about it last time it tanked.. sigh)… Since recovery usually happens decently quickly, a longer term option seems like a pretty good chance of recovering and really turning a tidy profit… I had looked at options years ago, but decided against them."
Options are absolute cash cows for option originator. Imagine if they sold call option at 45 for $10 and put option at $55 for $8 dollars for three months, they win both side of the bet if price of stock stays at $50. Given that background, you can kinda tell what type of stock market movement can be expected from the days heading toward options expiration.
Options are about timing and volitilty. I guess if you know violent stock movement is headed, a 20% stock gain can result in 1000% gain in the options. Most likely, options are used as hedge and finanical vehicles like ETF with leveraged bet.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
I read a couple of books on options trading, basically one shouted out about all the great gains you could make. Then I read a book about selling options and about all the money you could make :) In the end, I just tossed options out the window as advanced day gambling trading. They both had great ideas, they both shot down each others ideas and in the end it seemed like a good way to lose money.
I figured options + a massive sell-off might be an interesting time to buy in, although I'm guessing options would be priced accordingly. Even now, if we know the market is likely to trade between 9800 and 11500 like you suggested this year, it seems that options priced out over the rest of the year within this range are likely to move into the money just by using that information. I always looked at trading them during a normal bull market but the pricing seemed like it would be too well predicted. Right now, it would be pretty hard to predict, especially if it touches both sides, 9800 and 11500 once or twice during the year.
Selling options sounds interesting though. Seems like a pretty safe area to get into, assuming they are covered.
Follow
Befriend
4 threads
2,114 comments
For all the options conspiracy theorists out there, check out where JPM and Wells Fargo ended up today.
JPM: 40.05
WFC: 30.11
I don't normally fall in that camp, but I'd say someone wanted them to end up at those prices. The charts are pretty impressive.
Follow
Befriend (2)
61 threads
1,335 comments
Premium
@pkennedy
FYI, bought JASO and SPWRA today, lightened up on bonds which had some amazing gains in just 2 weeks. I will likely add to stock position and sell bond position prospectivly in increments as well. I believe bonds have peaked.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
@sface
Thanks for keeping me up to date.. I didn't think bonds would have swung around that much that quickly. I wish I had spent a bit more time looking into them over the last week! Although jumping in two weeks ago would have likely been with too little information on my side.
Sunpower was the company warren buffet sold out of lately wasn't it? I'm guessing that after this BP mess starts to get cleaned up, there is going to be renewed talk about "alternative energy". It might be a good buy just for that reason.
This BP mess looks like it's going to have some far reaching consequences. The fact that they're trying something new every week doesn't bode well for them. Instead of running everything they could out there, the news appears to have them shuffling one thing out at a time. Try it out, oh that failed? Well lets ship something else out. Instead of having boats just lined up and ready with new ideas to try they're going 1 after the other as if they're trying to save some money. I get the feeling the backlash on this will be horrendous because most of that oil hasn't been seen yet.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
@sface
I'm just reading some of the news and worries about solar, and wanted to get your take on this.
* Energy is heading down right now, at least while the US dollar remains strong, which makes solar look extra expensive here
* The main market is Europe right now, where the Euro is down, hurting profits and causing price increases
* Germany is cutting a subsidy for solar (not sure how much or how much impact)
* Sunpower is the leader in California at least, but the above two points are pushing competitors over here.
I guess my take on this is
* Sunpower might be in the best position, as it's doing the most sales in the US and thus less likely to feel the pain of the EURO
* Sunpower is going to have more competition as competition leaves Europe and comes here
* Y/Y solar has grown in California by 135% which looks good. More competition might start a price war and/or cut into sunpowers sales but it also might further push acceptance of solar in homes and thus give the whole market a bigger boost up
Am I going to in depth with what I'm looking at? Are you considering any of these points, or just looking at the sheets and saying "looks like a bargain..." and going for it?
http://www.thestreet.com/story/10762515/1/solar-looks-to-us-to-ease-euro-woes.html
Follow
Befriend (2)
61 threads
1,335 comments
Premium
@pkennedy,
I understand the German subsidy, ASP pressure and Euro you mentioned. There are potentially lots of problems, that's why sunpower is 1B and JASO is 770'sM and not significantly more. These stock are trading at significantly below book value and combined with strong cash flow and no likelihood of dilution, and techincal signals from both the macro and company level, that is why I was a buyer.
I am not buying the entire company just 500 shares and 1000 shares respectively today so it is part of an investment strategy I have applied for the last 8 years. Over the years I have tended to simplify my buying criteria into.
1) BV and equity value
2) Operating cash flow and capital requirement
3) Gross and Net income potential
4) management and prospect for dilution.
5) technical trends
If you think about it, there is never really a screaming buy. I have learned to combined fundamentals with business environment with risk and reward to determine what I invest in. I was looking into the issue with the concern you were thinking about and came out satisfied that Gross Margins will be pretty stable and would risk some $$$ at these prices.
Follow
Befriend (31)
34 threads
2,608 comments
San Jose, CA
Premium
SF ace,
Thanks. I was waiting for this day where the S&P coming down to 1,050. I bought 1,200 shares of JASO and 500 shares of SPWRA this morning. Made $$ already, hehe! Good move on the bonds.
@ pkennedy,
I also bought SBUX, HTS, SID, COP, TOT, DO and MO today. Also up on these :-). Hopefully we'll have a follow thru day in the next couple of days.
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
Makes sense. I have to get into the habit of dropping information and sticking with some good solid basics, like you're pointing out.
Follow
Befriend
4 threads
2,114 comments
This is an interesting discussion, as I'm looking at installing solar panels now because my roof needs replacing. I've got a limited roof area, so Sunpower's high efficiency panels are of interest. One of "their" dealers quoted me both a Sunpower and Suntech (Chinese panels) solution. The Suntech (Chinese) system is about 17cents/watt cheaper (after all rebates are considered); it is also about 20% smaller (wattage) because of the panel's lower efficiency. The other Sunpower dealer (featured here, our margins have shrunk) had a quote that came in only ~4cents/watt more expensive than Suntech. For a sense of scale, system numbers are over $6/CEC rated watt (installed, after rebates).The installers, I think, are fairly fickle as they have to watch their own backs. I know that high density Sanyo's were the module of choice a couple of years ago; they're definitely not afraid to jump ship. At the same time, they know Sunpower is a company that will stand behind their product (and be around for a long time).
The recently passed AB 920 should create some more (mild) demand for solar systems, as utilities will now pay for excess power generated. The PUC has until Jan. 1, 2011 to set the reimbursement rate. Utilities want $.08/kWhr while solar advocates are pushing for $.14/kWhr. That said, this is nothing like the outsized feed in tariffs in Germany, and the systems are supposed to be sized for the consumer's existing use, so (in theory) any excess generated power comes from efficiency measures within a residence.
Maybe I'll buy some BP tomorrow, and then some SPWRA for good karma....
Follow
Befriend (2)
61 threads
1,335 comments
Premium
this is just the market as I see it and from my limited experience and how to play it safely. Nothing is guaranteed here. Gotta pay attention to the 1050 support level to see if we can confirm that bottom for the fourth time.
we gotta start a new stock thread, it is taking too long to load on the iphone
Follow
Befriend (8)
28 threads
1,348 comments
Redwood City, CA
We need to find a new property to "discuss" this under then, since it seems so nice and quiet here for us!
EBguy, I read about Germanies buy back. That is a sweet plan. They paid something like 20 cents/watt, then dropped it each year. The key with their system is they sold EVERYTHING back to the power company, then bought back whatever they needed at the regular consumer rate of like 13 cents. So not just excess, but everything. Before investing in solar, I would invest in solar water heating, insulation, better appliances and learn more about where you're losing power and where you could get more efficiency. I like solar/wind, but I could never justify it. I've spent around $18-22/month for electricity for the last several years and this is in many different places, cities and home types. Installation is a huge part of that cost too, I'm sort of waiting for some low cost outfit to come out that will set everything up quickly and efficiently. And of course, I need to buy a place :)