The $$ thread.

[Mark1031]

We have lots of discussions of economics, capitalism, oil etc. Well with all these opinions I want some stock tips. A general discussion of trading ideas, mostly short term but also long term, also your recent successes failures.

I got most of my $$ out of the market last Nov. and have been 2x short since S&P 1350. I did great on an IPO last Dec Netsuite (N) Bought at like 18-20 and sold around 40 2 days later (Just bought in again at 17.50). Lost a fair bit betting against oil and just got out on this dip. So questions:

Where do you see the bottom of the US market? There was a late rally today but I still don’t see a lot of upside. Housing has not bottomed and I suspect there is still a lot of bad debt out there (and apparently so does the Fed). I don’t see how it really turns around until housing and the financial stocks stabalize and there is nowhere left to go on interest rates or stimulus.

Should I buy oil on this dip? What is a good target price on oil? Over the next 20 yrs I only see demand going up.

What are good alternate energy plays?

What are good plays on greenhouse gas controls/ CAP and trade?

What long-term trends do you see?

Where will a turn around start in the US market (eg. Small cap value funds)

Don't know if we have enough people investing $$ to contribute to this but there was a good thread on this a few years back.

 

[mrt144]

the problem with many alternate energy plays at this point are that theyve either gone up 400% already and have ludicrous fundamentals (fslr, 100 p/e? what?) or are like ae biofuels and suck ass.

as for the rally today, it bit me in the ass. skf 11% swing? ure up 14%? This is kind of ridiculous . there is still a lot of unwind left right now and i'm set with some double short sector etfs (financials, real estate). my strategy right now is sector plays that i think are toxic, but there aren't a lot of sectors that are strong right now (even energy has been knocked down recently).

 

[Mark1031]

Ouch. skf. I was actually thinking of going long on financials just playing short-term volatility. Basically craps. I made a bit on that during the Bear-Stearns collapse and rescue. There is a lot of negativity already factored in and if they don't announce massive write downs this quarter you could see a bounce until the next round. Plus with the fed reiterating essentially a guarantee I would cash out on the short-side.

 

[mrt144]

I'm sure that for the ultrashort etfs theres still 10-20% to be made after today's rally. You might be right that a lot of the bad news is already out there but i don't see any way up.

The really concerning aspect of the past few weeks is the correlation between crude prices and market activity. just as we've seen crude go down $9 in the past few days, it isn't beyond imagination that it could easily hit $150.

 

[Whomp]

Should I buy oil on this dip? What is a good target price on oil? Over the next 20 yrs I only see demand going up.

What are good alternate energy plays?

What are good plays on greenhouse gas controls/ CAP and trade?

What long-term trends do you see?

Where will a turn around start in the US market (eg. Small cap value funds)

Actually, I'm a bit contrary.
On oil, I see demand flat to declining over the next 20 years. Transportation consumption will actually be half of the IEA's estimate for 2030 imo. Short term there's already demand destruction occuring in airlines, emerging economies, diesel users and consumers in the OECD. China can continue to subsidize their demand to about $170/barrel so maybe it will happen in the short run. At some point it will bite them hard on the inflation side or their currency will have to appreciate considerably.

Cap and trade play is CXCHF (Climate Exchange which owns the Chicago Climate Exchange) and trades on the London Exchange.

My alternative play is a bit different. SQM (Chile) which produces 1/3 of the world's lithium along with fertilizers. The stock has gone down (very recently) in a parabolic fashion so tread lightly. If Monsanto gets cheaper it is a great alternative play. Modified seeds will continue to be more accepted the higher ag prices go and planting on deserts, as they can, is a pretty huge deal.

On financials, if you're looking for dead cat bounce I guess...but as an investor there's a lot more carnage coming. The European banks haven't even experienced their worst where spreads are widening on their EU sovereign debt holdings while they haven't had to market to market the bonds nor collateralize them. Credit default markets aren't so sure about the low quality debts like Italy, Spain and Portugal. Kind of sub prime type issue is developing with quality versus low quality credits except here it's governments...

In the US, regional banks could be disasterous with auto loans and credit receivables on the way. Allianz Insurance insures the banks on their foreclosed homes. Pretty good biz right now. Maybe banks like PNC or Bank of NY because their businesses are more services/processing driven. I don't own any of these. I'd rather be late than early and I prefer not to jump in burning cars or catch falling knives.

My long term trend include a number of things but taxes are most definitely going up but it seems like everyone's in denial. Buy municipal bonds. The defaults over the history of BBB rated munis compared to AAA rated corporates is 0.1% defaults versus 0.4% so they're safer than anyone realizes and their valuations are cheap all the way around. Double digit returns easy imo.

I'd also see demographics favoring health care long term. The world's getting old fast and the Obama effect has been considerable on these stocks to the downside. I question whether it will hamper devices and biotechs so I'm starting to look here...
Pharmas and insurance companies not so much.

 

[JerichoHill]

@@Whomp
Actually, I'm a bit contrary.
On oil, I see demand flat to declining over the next 20 years. Transportation consumption will actually be half of the IEA's estimate for 2030 imo. Short term there's already demand destruction occuring in airlines, emerging economies, diesel users and consumers in the OECD. China can continue to subsidize their demand to about $170/barrel so maybe it will happen in the short run. At some point it will bite them hard on the inflation side or their currency will have to appreciate considerably.
I completely agree with Whompers here

On financials, if you're looking for dead cat bounce I guess...but as an investor there's a lot more carnage coming. The European banks haven't even experienced their worst where spreads are widening on their EU sovereign debt holdings while they haven't had to market to market the bonds nor collateralize them. Credit default markets aren't so sure about the low quality debts like Italy, Spain and Portugal. Kind of sub prime type issue is developing with quality versus low quality credits except here it's governments...
Britian's housing market is about to go belly up too, and several Euro countries are not far behind.

In the US, regional banks could be disasterous with auto loans and credit receivables on the way. Allianz Insurance insures the banks on their foreclosed homes. Pretty good biz right now. Maybe banks like PNC or Bank of NY because their businesses are more services/processing driven. I don't own any of these. I'd rather be late than early and I prefer not to jump in burning cars or catch falling knives.
I am completely avoiding financial sector stocks for that reason.

My long term trend include a number of things but taxes are most definitely going up but it seems like everyone's in denial. Buy municipal bonds. The defaults over the history of BBB rated munis compared to AAA rated corporates is 0.1% defaults versus 0.4% so they're safer than anyone realizes and their valuations are cheap all the way around. Double digit returns easy imo.
What Whompers hints at here but doesn't state is that many municipal bonds earn TAX FREE returns. Which is why they're attractive. Typically, bonds are attractive when stocks aren't as vice-versa


For a few of my own stock tips:
I made a big play with Under Armour. They're branching product lines and have better penetration into the youth market than Nike now. I feel that's a stock with good LT potential.

I think it may be played out now, but I bought Marvel back in 02. Taking control of their movie production was a smart move, as evidenced by their recent box office success. Since I bought in 02, the return has been around 800%.

Of course, I've had some stinkers too. But for individual stock picking, play like Adam Dunn of the Reds. It's a strikeout or a homerun, and normally the home runs make up for the strikeouts

 

[Mark1031]

as for the rally today, it bit me in the ass. skf 11% swing?

Looks like you made most of that back today. Nice end of day collapse to mirror yesterdays rally. Very good for me as my long pick N is up about 4% and the rest I'm still short the market. Next week is a huge earnings week techs and financials. Can you say capitulation.

 

[mrt144]

Going long on energy companies has been nightmare over the past 5 days. 15% down on DIG in the last 5 days. I think there might be a good deal here soon. RSI is below 30 today...

 

[Mark1031]

Going long on energy companies has been nightmare over the past 5 days. 15% down on DIG in the last 5 days. I think there might be a good deal here soon.

I watch DIG DUG. Got burned on that. Got out of DUG at 30 for a loss, I had been holding it for a while from about 32, it was down to like 25. If earnings forcasts next week are bad there could be a broad slide. I like pure energy play like OIL/USO as high oil is pulling the market down and energy stocks with them sometimes. I would make this decision after a few weeks of earnings reports.

 

[mrt144]

I watch DIG DUG. Got burned on that. Got out of DUG at 30 for a loss, I had been holding it for a while from about 32, it was down to like 25. If earnings forcasts next week are bad there could be a broad slide. I like pure energy play like OIL/USO as high oil is pulling the market down and energy stocks with them sometimes. I would make this decision after a few weeks of earnings reports.

overlaying USO with DIG, you can clearly see that the performance of them is closely linked. But since all of DIG isn't just Oil related there will be swings here and there. My hope is a slide down to 25% for the 7 day period and then good earnings reports from most energy sectors, if i make that play.

 

[Mark1031]

Any thoughts on this. It's on credit default swaps. It is apparently a form of insurance on loans/bonds which is traded on an opaque and unregulated market. According to this there is $62 trillion (with a T) of this floating around (I assume that is the value of the insured bonds). The point made is that there is no requirement to maintain assets to pay off defaults and with a likely increase in defaults this could lead to a new wave of financial meltdown.

The more I read about the financial markets the more I think it is not worth bottom fishing. I see Freddy Mac has a net valuation of -$5 Billion. Nice.

 

[LightFang]

We're playing a stock market game. I laughed at the guy who invested everything in WMT (that's Walmart).

Now we're about a third done, if I recall correctly. And he is kicking all of our butts.

 

[Ansar]

We're playing a stock market game. I laughed at the guy who invested everything in WMT (that's Walmart).

Now we're about a third done, if I recall correctly. And he is kicking all of our butts.

I did that too (invest in WMT).

 

[Theige]

Stock market games are fun.

A couple friends and I use updown.com

 

[Godwynn]

I just use the Motley Fool's website so I can measure my success against the S&P 500.

 

[Mark1031]

I just use the Motley Fool's website so I can measure my success against the S&P 500.

So.... how you doing?

 

[Godwynn]

So.... how you doing?

Top 5% of stock pickers throughout the Motley Fool community.

"Rank: 2627 out of 60039"

My username on fool.com is the same here. You can search for me.

 

[Mark1031]

Top 5% of stock pickers throughout the Motley Fool community.

"Rank: 2627 out of 60039"

My username on fool.com is the same here. You can search for me.

got any tips?

 

[Godwynn]

got any tips?

My best performers have been steel industries.

WLT
SCHN
ZEUS

 

[Whomp]

Nice job Godwynn.

On the credit default market there might have been a concern but the problem that will occur will like likely not be that. It will come from what is unknown right now. The counterparty risk used to be able to be traded to other firms who then traded it to some other firm and so on and so forth but that's been sorted out and can't be done any longer.

Where I think the bigger risk is where spreads widen on credit risk, for instance, between EU sovereign debts. Unlike with FASB 157, where firms need to mark down the value of their holding, Basel II does not require an institution in Europe to collateralize the default swap they put, on say, Italy's debt. Problem is the spreads between weaker debts and stronger debts are widening and the credit defaults are responding accordingly. This could pose some major disruptions within some of the European banks.