patrick.net

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.

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.

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?

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.

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.

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.

pkennedy says

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

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

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.

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.

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...

"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.

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.

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.

@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.

@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.

@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

@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.

Makes sense. I have to get into the habit of dropping information and sticking with some good solid basics, like you're pointing out.

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....

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

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 :)

I've gone through several different investment strategies, and keep coming back to the brute simplicity of earnings and dividends. Especially after reading "Margin of Safety" by Seth Klarman

Things that have never happened before are bound to occur with some regularity.

When excesses such as lax lending standards become widespread and persist for some time, people are lulled into a false sense of security, creating an even more dangerous situation.

Nowhere does it say that investors should strive to make every last dollar of potential profit; consideration of risk must never take a backseat to return.

Risk is not inherent in an investment; it is always relative to the price paid.

Do not trust financial market risk models. Reality is always too complex to be accurately modeled. [Attention Federal Reserve]

Do not accept principal risk while investing short-term cash

The latest trade of a security creates a dangerous illusion that its market price approximates its true value.

Ratings agencies are highly conflicted, unimaginative dupes.

Beware leverage in all its forms.

Financial stocks are particularly risky. Banking, in particular, is a highly leveraged, extremely competitive, and challenging business.

When a government official says a problem has been “contained,” pay no attention.

The government – the ultimate short- term-oriented player – cannot withstand much pain in the economy or the financial markets. Bailouts and rescues are likely to occur

Almost no one will accept responsibility for his or her role in precipitating a crisis: not leveraged speculators, not willfully blind leaders of financial institutions, and certainly not regulators, government officials, ratings agencies or politicians.

Looks like this house gained nearly a $1M in equity since 2010

BayArea says

Looks like this house gained nearly a $1M in equity since 2010

Do you know how many I-phones need to be liberated to keep up the "Free" money given to the White family that bought it?

BayArea says

Looks like this house gained nearly a $1M in equity since 2010

Do you know how many I-phones need to be liberated to keep up the "Free" money given to the White family that bought it?