Stagg, I have said often that in a bear market, almost all stocks get sold. As to research, I don't just take the old stats that any financial website spews out, but I look at alternatives for both fundamentals and technicals. RSI is just a measure of whether a stock is overbought or oversold and it doesn't form the full basis of my decisions. You also seem to have a problem recounting my posts.
As to exporting good jobs, that is what companies are doing to lower their labor costs and the reason they are doing it is to improve their bottom line. For those of you who forgot, here are the stocks that you have pumped continuously and their record:
SDRL: you pumped it at 40, and it is now 2
SFL: you pumped it at 17 and it is now 13
AWLCF: you pumped it at 22 and it is now 3
FRO; you pumped it at 3 and it is now 2
NYMT; you pumped it at 8 and it is now 4
UVE: you actually made a good buy, and to your credit you took some profits, but you were back to pumping it at 24 and it is now17?
NMM you pumped at 9 and it is now 1.
Have I missed any?
During all of these pumps you always said all of these stocks had "good color" and you didn't see any of the declines coming.
Others have suffered from a similar infatuatio with high yield. Gambler used to like ARR. Sarge got stuck holding WMC too long. Keebon and Sarge held KMI too long. Many chased KNOP GLOP and other shipping stocks. We all chased NRZ.
I have had my share of losers as everyone does, but the difference is that I haven't pumped my holdings non stop like you, and when I sold something I admitted I was wrong. You never admitted you were wrong on SDRL or KCAP or any of the above.
Stagg, as long as you keep pumping stocks with silly "good" color comments, while ignoring technical and fundamental deterioration, I will offer the other side. When you misunderstand a business, like you did with KCAP and NYMT, I will offer the other side. It's a free country..
If you haven't heard the recession talk, then you are not following the right analysts and commentators. JPM, Goldman and BofA have all had analysts predicting a recession. Try zerohedge. They publish all of the econ stats along with commentary and historical analysis. They just published an article from Lance Roberts of Real Investment Advice called "Recession Signs."
What stats do you follow? The Atlanta Fed just reduced Q4 GDP to less than 1%. So did JPM. Companies are starting to layoff thousands of workers. Walmart announced 10,000 cuts as did Schlumberger. Do you not think there are going to be massive layoffs in energy?
I had read that the SEC was going to make buying these triple and triple inverse ETFs more difficult to buy. I use Fidelity and have bought TVIX and DWTI in the past, but who knows when the new restrictions take place.
Perhaps a way around is to actually buy oil futures instead, but you would have to open a futures account. You only need 5% margin for futures. I have never done that, but I think etrade offers that possibility, but you may need to meet certain financial levels.
I did add back the yields on my muni funds. As for PSEC and KCAP, its not the return from a calculator that matters (since anyone can make up the dates to prove their point) but your actual experience. How come you never tell us your cost basis on your holdings? You just tell us what they are currently yielding.
stagg, explain how you got paid when a stock went up in price, if you didn't sell. You always seem to count paper profits as real profits, but then are quick to point out that paper losses are not real.
I have my gains and losses in the energy sector, you just can't remember it.
But you can make money in safer plays, like closed end muni funds, where I am making 6% tax free and which have gained 20% (not including those divs) since 2014. Let's see, which is greater: 20% plus 6% tax free divies in each of two years, or a 50% loss in KCAP, PSEC and NYMT. There's no arguing with voodoo math.
Gambler, you are right, but your timing could be wrong. The high stakes vehicle to play the eventually rebound in oil will be the triple ETF, UWTI. It's companion fund, the triple inverse ETF, DWTI went from $80 to $400 from Nov until yesterday. But first UWTI will probably have to do a reverse split.
Stagg, that proves my point. The stocks always start to move before the underlying fundamentals. With oil, many thought that the decline would stop at $80, then it was 65 and then 50 and so on. Many "experts" and the companies themselves said the same thing. For the record, I got out of LINE and the bulk of EVEP in Jan 2015 and BTW, at that time they had not yet cut their distributions. While many stocks may not decline as much as EVEP and LINE, they are likely to catch up to those declines (and you are wrong about SDRL as it has fallen from $40 to 2 which is about 95% loss, so who is doing voodoo math now).
And you were wrong about KCAP as you admitted selling it after it went from $7 to 2. So how can you say you were right about it if you sold it when you were on the KCAP board pumping it December when they reported their earnings.
William, I went to all cash in my 401k in October. I have an IRA which is invested with Jeremy Granthan of GMO, but even he hasn't been doing that well in this decline. In the nonretirement, I own several closed end muni funds (VCV, VGM VMO VKI) which I bought last year. I still own some poor performers like HTGC, NRZ and TEGP and WPZ. My mom's portfolio is mostly in closed end munis, but she also has JNJ, DIS, SCG, PFE and BAC. I should have sold DIS after StarWars. JNJ and SCG are keepers. I sold a few others that she owned ESRX, CR, FR.
I have made my share of mistakes, which is why when I see someone making the same mistake, I point it out.
There are two theories. One is to buy the best quality companies (think Chevron or Exxon) because they have the wherewithal to withstand the worst and because large institutional investors and index funds will own them. The second theory is to buy the worst or weakest stock on the theory that if the whole sector gets a bounce, they will go up faster. The weakest stocks also probably have been shorted the most and probably have very little ownership, so that when investors come back to them, that produces the biggest push.
I have not tested which theory is the best, but with impending bankruptcies still uncertain, I would steer clear of the weakest stocks at least until we knew for sure that oil had stopped going down and was likely to start moving up significantly (in other words, more than just a dead cat bounce followed by a long flat line).
Stagg, the market moves in anticipation of changes in business conditions. That's why energy stocks started to decline way before the price of oil plummeted. That's why KCAP and PSEC started declining months ago, because the market was anticipating that the change in high yield. Ed has said this many times. The major oil stocks will start to turn up before oil reaches a bottom. Similarly, in 2009, stocks bottomed in March when the Fed announced QE and the economy took many months to start to turn up.
You keep saying that you look at "the current color" but the things that you mention, p/e and ROE, are reports of past activity -- they don't report the changes that are to occur in the future. Some analysts try to estimate future p/e ratios, but that is based on an "estimate" of future earnings that can change.
Finally, all bear markets have rallies, and some can be very substantial. Don't fall for the trap that everything is ok again just because we get a bounce.
stagg, you could be very successful as a business man and not be the best investor (most of us learned how to invest from someone, so there is always room to learn more). My responses to you are never about you personally, but always as an alternative view to consider to your views. We have all made investing mistakes. One of the biggest mistakes that investors make is to think that their success in other areas of their life translates into investing.
Your comments in the above post are about economics, not about investing. Your business may be doing fine and you may not ever experience a downturn, but that doesn't mean the entire economy is great.
Again, your opinions typically fall back on amorphous concepts of "good color" without ever explaining what that means. Then when I test you, you pull up past metrics.
Stagg, in the end, the market is the finally arbiter and many of your picks are down substantially, so maybe you aren't seeing things as well as you think. You did end up selling both SDRL and KCAP substantially lower after many had told you that they didn't "have good color" and despite your many arguments to the contrary.
A good summary of how markets typically work. However, I would add that this market decline is not just about the decline in oil prices. It's also about the popping of the China bubble and the leveraged investment products like ETFs, currency trading and the computer algos. Leverage in the system is at all time highs and it is being unwound (again). Second, we are going into a recession. The job losses in the energy field are going to have a huge effect. Real estate doesn't usually hold up well as we go into a recession.
People keep thinking a bottom occurs quickly and because they have been trained to buy every dip, they can't wait to jump back in. There are always bear market rallies, but people are going to think that the bear market is over and end up jumping in too soon.
I find it funny that some posters argue that people should not be looking to average into oil after it has had a huge drop, but those same posters insist that averaging into high yield stocks that have just started to decline and may be months away from bottoming makes sense. Seems very inconsistent to me.
I think there will be a flush down on oil and a likely bounce back and adroit traders can make money if they get the timing right. Some have written that the supply/demand might not get back into balance until the end of the year. We are in unchartered territory so patience is key.
Over the past 7 years, people have been trained to buy every dip in stocks because stocks rebounded quickly after every dip. But that is changing and a lot of people are finding out that the stocks are not resuming their climbs.
I have heard two rules on investing. First, let someone else get the last 10% of a gain when a stock is in a bubble. Second, bottoms are hard to pick and sometimes you miss the first 10% gain after a bottom is formed.
Stagg, you obviously have not been following the story on auto sales. Most of the increase in auto sales is due to subprime lending (just like prior to the housing crisis). The average loan length is now over 6 years and the average FICO score is way down. Again, there has been plenty written to analyze these stats.
There have been a lot of other stats that turned negative in the summer. The sales to inventory ratio, the ISM numbers etc. The govt is now going to clamp down on cash purchases of housing, which has been a prime source for overseas money to buy real estate in hot markets like SF, NYC and Miami. The Atlanta Fed and JPM just reduced GDP growth rates for the 4q again.
stagg, your comment that the market is "way too low" borders on delusional. Based on what? The market multiple for the S&P is over 16 based on over $100 in earnings. That is historically at the high end. But earnings are being cut and will likely fall further as we go into the recession. This bull market has lasted for 7 years which is also at the high end. Bear markets don't just last 2 months. They usually go at least 12 months. The S&P could easily fall to 1600. Historically, bear markets usually take 40% off prior highs (or it might be 40% of the past bull market gains). The S&P went from 666 to a high of over 2100, or a total of 1500 points. 40% of 1500 is 600 and 2100 minus 600 equals 1500. There are plenty of people who have studied bear markets and have written about them. Stop watching the cheerleaders on CNBC and start reading up on the history of bear markets. Read some John Hussman for some perspective.
Well maybe you are not looking at the right things. What are the prices for subordinated CMBS? What are preferred equity interests in commercial borrowers trading at? If you only look at last quarter's book value or earnings, everything looks fine. But that is the past. There were lots of lessons to be learned from the the financial crisis and how bad news was disclosed with a lag.
I think he meant Regeneron (REGN). That stock was really hot last year and went from 275 to 600. It closed at 461 but traded as low at 432 (same as last Oct). One could probably trade it, but perhaps easier to use options or LEAPs.
stagg, the layoff announcements have just started. I had lunch with a friend and he said JNJ is laying off 3000 people in their medical device area. Walmart just announced big layoffs, and you have to believe that there are going to be huge layoffs in energy and all the related industries. There are many economic stats that have been bad for several months, they just aren't talked about in the mainstream press. Again, we don't have to have a financial crisis to cause a bear market, and the markets always anticipate the future economic conditions.