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Resource Capital Corp. Message Board

  • exdivy exdivy May 22, 2010 6:06 PM Flag

    Investment Strategy Challenge!

    First, I want to thank all of those who are concerned about my welfare. Pretty nice stuff to read on a stock message board.

    Nevertheless, I do have a strategy. Unfortunately, it takes more than one investor/trader to implement, so I am challenging others here to participate.

    Three points:

    First, anyone who does not think the stock market is a gamble is foolish. Every time someone buys a stock, they are obviously betting the stock will go up in value.

    Second, everyone who buys stocks and intends to sell at some point is a trader by definition. The duration of the hold is a function of too many variables to list, but if one buys and intends to sell, he/she is a trader (maybe not a Day Trader, but a trader nonetheless).

    Third, diversification is an equally relative concept. Some, for example, have diversified into all REITs, some into all REITs and Financials like C or GS, some into all REITS, Fianacials, and Emerging Markets. Of course, one could replace the word "all" with the word "only" and claim little to no diversification. My point would be that everything is connected/disconected at some level.

    From my perspective, the biggest problem by far with diversification is that we diversify the number of problems with which we have to contend as followers of more and more stocks.

    I think if one owned the S&P over the past 10 years, one would be even today? So much for diversification.

    That said!

    I am convinced the only way to truly make money in this market is to have a number of people, each following a particular stock to the point of knowing when the stock is going to go up. For example, I am almost certain RSO is going up from here, and I can provide at least ten reasons why that is the case.

    If one of the respected members of the board (almost everyone here seems to fit that bill) was to follow a particular stock, tell us that it is about to go up and why, then I would diversify into that stock briefly.

    I assume all of you "diversifieds" have other stocks you follow. I am just asking you to pick your best one and share. Of course, your reputation would be on the line. That is, if you tell us to buy and you're wrong, then it would appear you do not really know what you are talking about.

    I do not think any of us can predict "day-to-day" fluctuations, but I do think we know if there should be a run-up to divy, run-up after earnings, run-up after divy announcement, run-up after govt. contract, run-up based on an upgrade, or any other catalyst.

    All we need is for each person to do homework on one stock. (Homework means whatever you want it to mean.) If you have a magic 8 ball and it's always correct, I would have to start going with your prediciton - maybe not a lot, but an ever increasing amount.

    Everyone owns stocks, so why not put your mouth where your money is, so to speak?

    I get RSO - why, because I love it. Of course, if the only stock you own is RSO, then we can combine our knowledge. Maybe the only time others (ourselves) would want to invest is when we are in agreement.

    Any takers? You just need one stock.

    The test would be if anyone's portfolio performed as well as the money each of us kept separate for our strategy.


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    • I think you have a great idea if you can find the right people. I'm interested so write me a private note and let's talk.

    • bilwild45, let me take a stab at your question.

      I am not a financial guru, but I have followed the overall market over the past few years.

      While you were in jail (no offense) or on the space station (no offense), or in jail on the space station (how sad is that) there was a fiancial crisis that caused many REITs to stop paying any dividend whatsoever. Indeed, RSO is only one of a few that has continued to pay a "meaningful dividend," albeit less than during boom times.

      OTOH, the reason for the most recent decrease in the dividend was due to a follow-on offering (dilution) the company thought was necessary to take advantag of certain opportunities to buy back notes at pennies on the dollar.

      Based on the last dividend, we are currently earning 18% on our investment.

      I can appreciate your wanting to learn all you can about the dividend. One of the best things about RSO is the fact that the CEO tends to provide visibility on the dividend (out as much as a year). I think you will find such visibility completely absent from most REITs.

      Let me be the first to welcome you to our board and suggest you go to seeking alpha to read the transcripts of the last three CCs. That should help you a lot.

      As a bonus to owning the best REIT around, you also get one of the best (if not the best) message boards on Yahoo.


    • RSO has reduced it's dividend, but the share price has fallen such that a very nice yield has been available all the way thru. Sometimes, a ridiculous yield. For income investors, those who should be attracted to this stock, this has been a windfall.

    • RSO has been steadily decreasing its dividend the last couple of years and is currently paying the lowest dividend since inception of the company. Does anyone who has followed this company for a long time know the reason(s) for this continued downtrend?

    • Those of you looking to diversify might want to take a look at VRNM at these levels ($2.90).

      As I said before, this is a play on cellulosic ethanol. It is down, I believe, because it is partnered with BP. A lot of people might assume that is a bad thing; however, I believe it is a good thing!

      Does anyone believe BP would not want to continue to invest in the construction of a plant in Florida?

      Quite frankly, I believe the VRNM partnership, Vercipia, will be a very important part of the BP PR campaign following the oil problems.

      1. They are investing in Florida.

      2. They will be providing jobs in Florida.

      3. They will be buying grain/grass from well over 100 Florida farms.

      4. Cellulosic ethanol may be THE viable alternative to deep water drilling.

      Certainly, it is worth checking out.

      Just a thought about what one might do with that 18% dividend we are getting from RSO.


    • Sorry,

      my last post was a response to nschwartz not wayne!

      Back to bed for me,


    • Wayne,

      >"I don't see why a rational explanation of all of this wouldn't be that the dividend is not likely to maintained at this level, that's why the offering at $5.25. Perverse, isn't it?"<

      I think the offering was low, based on the amount of shares and the speed at which RSO wanted the money.

      It seems the offering has to be at a discount to market, and that discount may be variable based on any number of factors.

      All I know is that $5.25 was enough of a discount to snap up $40 million from institutional investors in a couple of days.

      Consequently, a price of $5.60 is still a reflection of that discount, and we should be back up in no time.


    • "At $5.60 buyers get an 18% dividend.

      Before the offering, investors were happy with a 14% dividend and a stock price over $7."
      I agree ex-divy, they were. So was I, that's why I added to my RSO holdings in the high 6's and low 7's which raised my average cost to 6.11. The stock had an incredible yield before the offering, but evidently not incredible enough for Wall Street? Oh, because the yield needs to be higher becasue it's so risky, was that the message, so it ought to have a yield of 19% because new buyers won't believe this dividend can or will be maintained? So how come it was selling WELL NORTH of $5.25 if that's what investors really believed?

      I don't see why a rational explanation of all of this wouldn't be that the dividend is not likely to maintained at this level, that's why the offering at $5.25. Perverse, isn't it?

    • Exdivy gets me all primed up for the challenge then leaves me stranded by wetting the powder
      I was to bring to the artillerist. My plan was
      to use the now-exposed NRF to do my bidding.
      Can I now resurrect myself?

    • I completely agree with your assessments.
      And you have proposed what appears to be a
      novel idea at the least. How clumsy
      will the board become if many of us "sign up"?
      I'd like to take a look at this in practice
      rather than discussion.

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