***Official*** 2008 Stock Market Thread

[abovewood]

Originally posted by: Azurik
Well... I think it's time to do what the opposite of what I did earlier this year. Going long on oil if it falls below $40 a barrel.

How do you plan to go long on oil?
Buy stocks like CVX, SLB, XOM, BP or other method?

I have some BP.

 

[ponyo]

Originally posted by: abovewood

Originally posted by: Azurik
Well... I think it's time to do what the opposite of what I did earlier this year. Going long on oil if it falls below $40 a barrel.

How do you plan to go long on oil?
Buy stocks like CVX, SLB, XOM, BP or other method?

I have some BP.

Best way to play a commodity is usually the pure play commodity itself. That way you only have to worry about the actual commodity price movement. USO or equivalent.

That said, I'm playing oil via ConocoPhillips. I rebought COP today at $44.50. COP is my favorite energy play with its oil and natural gas exposure. It's trading at similar prices to when oil was at $80 a barrel. If I screw up trading COP and have to hold longterm, I won't mind. It's one of the names I want for the longterm when the market reaches a true bottom next year.

 

[Special K]

Originally posted by: Naustica

Originally posted by: abovewood

Originally posted by: Azurik
Well... I think it's time to do what the opposite of what I did earlier this year. Going long on oil if it falls below $40 a barrel.

How do you plan to go long on oil?
Buy stocks like CVX, SLB, XOM, BP or other method?

I have some BP.

Best way to play a commodity is usually the pure play commodity itself. That way you only have to worry about the actual commodity price movement. USO or equivalent.

That said, I'm playing oil via ConocoPhillips. I rebought COP today at $44.50. COP is my favorite energy play with its oil and natural gas exposure. It's trading at similar prices to when oil was at $80 a barrel. If I screw up trading COP and have to hold longterm, I won't mind. It's one of the names I want for the longterm when the market reaches a true bottom next year.

Why do you say the market won't reach a true bottom until next year? You don't think we've already hit bottom?

 

[JJChicken]

Buy High, Sell Low..it's never failed me :grin;

 

[imported_Lothar]

Originally posted by: Azurik

Originally posted by: Lothar

Originally posted by: Azurik
RMBS stock price will be $100+ once everything is resolved.

The only chance RMBS has in reaching $100+ is for them to do a 5:1 reverse stock split.

How did you come up with that, Lothar? I know you are being a little sarcastic, and I obviously disagree.

At the current price of $11+, RMBS is valued at $1.2 billion. Because of their enormous litigation cost, their EPS has been affected and have been negative for a while. However, they are flushed with cash, about $400m. They cannot be litigated to death by the manufacturers (thanks largely to the licenses they signed with Intel, AMD, Sony for the PS2 and PS3, Elpida and at one point, Samsung). Essentially, they will survive. Folks, this isn't about their current earnings, but what they are about to receive.

Hynix already OWES them $300m in back damages for SDRAM/DDR alone. This doesn't even account for DDR2 and beyond, which they have won an infringement summary judgement on. Hynix will owe. Samsung will owe. Micron will owe. Nanya will owe. And this is before we add in controller royalties from the likes of Nvidia.

The DRAM market this year is $30b. Rambus collects 3.5% royalties for companies who sign up - where companies who choose to litigate will pay at least 4.25% and as high as 10%+ for willful infringement. Lets assume a global settlement or Rambus legal victory in their upcoming January trial: the current DDR2 share is 88% of the $30b DRAM market. Conservatively, we'll say Rambus collects 5% royalty on average which equates to $1.14 billion per year. DDR, XDR (Sony licensed XDR for Playstation 2 and 3) and XDR2 is about 7% of the total market. At 4.25%, that's an additional $76 million annually. At 35% corporate tax rate, Rambus' after tax earnings would be $787 million. They only have 100 million shares outstanding which would equate to earnings of around $7.50 per share. At a growth P/E ratio of 35, the price per share would be $262.

This doesn't include the $4 to $10 billion in illegal price-fixing damages Rambus will receive after their Antitrust suit. They manufacturers have all admitted to price-fixing to the Department of Justice. That particular case is a slam-dunk.

A conservative analyst with Capstone Investments came out with a research note today with RMBS stock price at $50-60 with a win in this upcoming January trial (note: they have won infringement in this trial already). IMHO, he is overly conservative.

BTW, Rambus gained an additional 10%, which makes the 5-day percentage gain to be 120%. What is more impressive is it did this on with the stock market posting its 3rd worst day point wise, and on 3x average volume.

I'm not claiming RMBS will be able to reach $262. What I am stating is their decade long legal saga is about to come to an end next year. With Rambus itself today, it is only worth $3-$5 a share. With what they are about to get back that is rightfully theirs, I'd be willing to say it will get to at least $100, assuming none of the companies it has won against/will win against goes bankrupt.

If you have rationale why they won't reach that level eventually, I would welcome your response. The rationale can be based on their market segment, current legal proceedings, patents, etc.

I was being partially sarcastic when I said that.

I like to separate facts from speculation when looking at investments.
Bolded are facts, underlined are speculation.

http://www.reuters.com/article.../idUSN2452063620081125
What if everything doesn't go your way in court? What is/will be your exit strategy?
Can RMBS survive as a business entity if they lose their court cases and the decisions don't go as planned?
Sorry, but I want a little more reassurance on something that depends on "one man" or a few people wearing hoods, robes, and wigs in a court.
The judges deciding these cases may wake up on the wrong side of bed one morning for all I know.
The current Supreme Court can essentially be considered "pro-government" given the rulings they've made the past few years on Habeas Corpus, eminent domain, and many others. I don't have the time(or the risk appetite) to decide(or think about) which way Supreme Court justice Anthony Kennedy and Stephen Breyer are going to vote on the Supreme Court.
If I remember correctly...on the original case, the FTC capped royalty rates RMBS can collect on certain technologies SDRAM (0.25%), DDR (0.5%), SDRAM controllers (0.5%), and DDR controllers (1.0%).
Your "5% royalty" assumption does seem a little steep.

http://hosted.ap.org/dynamic/s...=HOME&TEMPLATE=DEFAULT
Qimonda, the manufacturer for the XDR for the PS2/PS3, is rumored to be in the process of being bought by Micron or otherwise face bankruptcy which could throw a wrench in RMBS's XDR revenue. And if I remember correctly, Micron is almost broke. Being as you can't even buy a cup of coffee with a share of Micron stock, I'd say Micron might be out of business soon as well. Don't expect to collect much money from them through litigation.
The same can be said about Hynix as well. They just received a loan from the Korean government a few months ago which prevented them from almost considering bankruptcy. Hynix debt is currently rated "junk" by Moody's. Again, don't expect much money through litigation.

RMBS doesn't sell anything directly to customers(ex: John Q. Public). They earn revenue by licensing their IP's to companies.
RMBS can't depend on DDR/DDR2 revenue forever, and if things get too expensive royalty wise, companies will simply go around their own way to invent newer technologies that don't depend or infringe on RMBS IP...(ex: See DVD-R vs. DVD+R, *.* vs. Linux, and many other countless examples in the technology industry)

I don't consider a company that only has $400 million cash on hand to be "flushed with cash".
Maybe that's just me.

$262/share? :laugh: That's some crazy calculation there. If I were you, I wouldn't put faith in such numbers.

Think of the "worst possible" scenario.
I asked myself this question "Can RMBS survive as a business entity if the court cases don't go their way as planned?" With the current business model, current/projected earnings, my answer to that question is a resounding "no".
I do find it a little ridiculous to assume they'll reach $100+(or $262)/share given the fact that the stock only peaked $100 for a few days at the height of the .com bubble in 2000.

 

[Azurik]

Hi Lothar,

To answer your questions:

Rambus Authorized to Receive Withheld Royalties from FTC
You are correct in remembering the FTC capped royalty rates for SDRAM at .25% and DDR at .5%. It is their opinion that because RMBS misled the standards committee, that those are RAND (reasonable and non-discriminatory) rates had they properly disclose their patents. DDR had double the royalty because it had twice the RMBS IP in it. They enforced this even after their own judge exonerated Rambus of any wrongdoings. Rambus also appealed this cap on royalties and won. The FTC is now going to the Supreme Court for this, and there is virtually no chance the SC will hear this.

Rambus vs Hynix
My 5% is on the conservative side. The jury awarded Rambus 9.9% royalty rates on SDRAM and DDR. This was reduced to 4.25% by the judge (to match what Hitachi settled with RMBS for back in 2000. The judge didn't feel RMBS proved enough to get double that rate. The DDR2 trial coming up, RMBS has answered the judge why that rate or higher is supportable. We know at a minimum know that the rate will NOT be less than 4.25%. My rate of 5% is actually conservative.

I am actually hoping Qimonda, Micron and Hynix goes bankrupt. Qimonda is only 1 of 3 companies who can produce XDR (Samsung and Elpida being the other 2). All I care about is the back payments they owe to RMBS, it doesn't matter if they survive in the future. All companies are losing money on every DRAM being sold. They overproduced to steal market share and have an oversupply issue now. The only company who is a shoe-in to get out of this mess is Samsung thanks to their diversified businesses and cash position. Samsung (and 2 or 3 companies left surviving) will gladly pay high royalties to RMBS since they own the entire market. This is a positive for RMBS. They don't care who pays them in the future, as long as they get paid. Consolidation in the DRAM industry is a good thing.

Flush with cash in all relative to what company you're talking about. If this is Intel, then with only $400m, they would be in trouble. We're talking about RMBS which is a lot smaller than Intel and $400m is flushed with cash when you look at their position.

The beauty of not selling anything directly to their customer IS their competitive advantage. They have extremely low operating cost as revenues ramps up. Their profit margin rises with increased revenue. Their DDR and DDR2 revenue will not last forever, you are right. Those patents expire in 2010. What I think you don't realize is, there are newer patents that CONTINUE to cover future flavors of DDR (DDR3, DDR4, etc.). Those don't expire until 2020 I believe. The point is they keep inventing new technologies in order to enhance current DDR technology.

As to your question if the royalty is too expensive, they will simply go around their own way... that is usually true is most technologies, however, they cannot do that in the DRAM industry. The DRAM manufacturers had no other alternatives back in 1990. Rambus tech was a huge technological leap at the current time. That's why the manufacturers who didn't sign licenses with Rambus were forced to steal. When RMBS invented RDRAM, SDRAM and DDR - there were no alternatives that came close. Now that the manufacturers are so entrenched in DDR, they have no way of going back 15-20 years to improve DRAM that doesn't infringe on Rambus' intellectual property. They will not go back to EDO DRAM or whatever it was before Rambus.

Deadly Meance
Read the above PDF document. This was a document back when Rambus was first being known throughout the tech industry. They called Rambus a fascinating company, but a deadly menace to the industry because of their breakthroughs.

There's a line at the end of that document where he wrote, "One day all computers will have to be built like this, but hopefully without the royalties going to RAMBUS."

And that, Lothar, is why some DRAM manufacturers stole. There are NO alternatives. Rambus is just trying to get these 3-4 companies to sign in order to validate the entire industry and own a legal monopoly.

Side Note: There is risk to everything, and Rambus is definitely in that risk category. The risk/reward ratio heavily leans the reward aspect in this case. Given the proper analysis, $100 does not sound crazy. It's just a long ways off from the $10 we are now at.

 

[abovewood]

Originally posted by: Naustica


That said, I'm playing oil via ConocoPhillips. I rebought COP today at $44.50. COP is my favorite energy play with its oil and natural gas exposure. It's trading at similar prices to when oil was at $80 a barrel. If I screw up trading COP and have to hold longterm, I won't mind. It's one of the names I want for the longterm when the market reaches a true bottom next year.

Nice play on the COP. I should follow this stock too.
I bought AA last week and sold them today. I wasn't sure which direction it would go after breaking $10, and I was worried I would lose the gain, so I got out.

 

[her209]

What the hell happened?

http://finance.yahoo.com/q?s=ptrax

 

[Slew Foot]

I picked up some Rambus with some play money around 9 based upon Azurik's suggestions. Its been going up nicely since then.

 

[Random Variable]

The only reason I can come up with as to why the Dow is at 8700 (and not at a level around 6500) is because there is a belief that the U.S. automakers won't be forced to go into bankruptcy.

 

[ponyo]

Originally posted by: abovewood

Originally posted by: Naustica


That said, I'm playing oil via ConocoPhillips. I rebought COP today at $44.50. COP is my favorite energy play with its oil and natural gas exposure. It's trading at similar prices to when oil was at $80 a barrel. If I screw up trading COP and have to hold longterm, I won't mind. It's one of the names I want for the longterm when the market reaches a true bottom next year.

Nice play on the COP. I should follow this stock too.
I bought AA last week and sold them today. I wasn't sure which direction it would go after breaking $10, and I was worried I would lose the gain, so I got out.

Thanks. I'm still holding COP. I like energy plays here. Thinking about picking up some USO or levered DXO. Only thing I don't like about DXO is that the fund has 100% of its assets in June '09 crude futures. Because of that it hasn't been trading with 2x movement like the fund name would have you to believe. USO is the better vehicle for spot oil price movement.

AA had a nice move. I had been trading PKX as my vehicle of choice for the basic materials play but I missed this last move up from the $40s.

I sold the AMKR position at $2 only to buy it back at $2.10 yesterday. I felt the sale was wrong so I paid up a dime to put it back on my sheet.

My trading instinct tells me to sell my GE shares here for a loss and start shorting GE but haven't pulled the trigger yet. I'm going to have to think about it little more.

I haven't been quick to the sell triggers recently as this Santa Claus rally felt like it had legs. I think the performance anxiety buying will push S&P into 1,000 territory and maybe even up to 1,100 before the year end. That would be nice if it happens. I will exit pretty much all my positions if that happens and look to start shorting the S&P and select names. I think we'll see new lows in the Dow, S&P, and the Nasdaq next year.

 

[Azurik]

Originally posted by: Slew Foot
I picked up some Rambus with some play money around 9 based upon Azurik's suggestions. Its been going up nicely since then.

Congrats on getting a great price. I bought a bunch around that price when it was heading down with my last big purchase at $5.19. If it is play money to you, if I were you I wouldn't book the profit anytime soon because it's the only shares you have. I'd suggest holding it out until sometime in 2009 if you plan on selling. This book is in Chapter 9 of 10 and it about to end, in RMBS's favor.

If you haven't noticed, there is major accumulation going on and RMBS is going up regardless of an up or down market these past few weeks. Net-net, there were about 20,000,000 shares accumulated, and there's only 100,000,000 outstanding. There's been a lot of block buys too. Not sure what it means at this point.

There was a court hearing today regarding their January trial. The word is the hearing went extremely well for Rambus. The judge, as unbiased as he can be, looked over at the memory manufacturer's table and warned them that it would be in their best interest to inform the clients they are representing what kind of situation they are getting into at this point in time. He also stressed that a settlement would be in their best interests and he could see how a deal could be brokered. He would be happy if they could find a resolution to this mess before Christmas. He also told Rambus that they had risk too, that being of an appeal.

My thoughts on this: He already said in more or less words that Rambus has this case in the bag and that it will be insanely expensive if the manufacturers press on with this. He wants a deal brokered (he even has a special judge dealing with settlement possibilities). I'm sure settlement talks are ongoing, but I'm not sure how successful they will be considering Rambus has their gun loaded.

I've been in this for so long, part of me wants Rambus to finish them to the bitter end. Business wise, it would be good for Rambus to wrap this saga up and start becoming that 800 pound gorrilla.

If no settlements happen, expect the judge to certify Rambus' previous win against Hynix pretty soon and Rambus can then use that as collateral estoppel.

Either way, the January trial and Antitrust trial in March are slam dunks.

 

[Azurik]

Originally posted by: her209
What the hell happened?

http://finance.yahoo.com/q?s=ptrax

I have that bond fund too. It's their annual big capital gains distribution. No worries.

 

[her209]

Originally posted by: Azurik

Originally posted by: her209
What the hell happened?

http://finance.yahoo.com/q?s=ptrax

I have that bond fund too. It's their annual big capital gains distribution. No worries.

Capital gains distribution to whom? My 401k went down by about 4% yesterday.

 

[Ricochet]

Auto bailout dies in Senate. DOW future is tanking. Buying opportunity before the weekend or is this going to continue to be ugly into next week?

 

[Ricochet]

It's not as bad as I thought it would be. We'll see if there is a sell off at the end of the day.

 

[abovewood]

DOW, S&P, GM, F are all green. Didn't expect to see this.

 

[Azurik]

Originally posted by: her209

Originally posted by: Azurik

Originally posted by: her209
What the hell happened?

http://finance.yahoo.com/q?s=ptrax

I have that bond fund too. It's their annual big capital gains distribution. No worries.

Capital gains distribution to whom? My 401k went down by about 4% yesterday.

Depends on how it is set up. The distribution they gave you either reinvested in PTRAX and now you have additional shares or you got a cash payment sitting in your account.

It usually takes a day for some brokerage to recognize this gain... you account might be -4% and bounce back to even a day later.

 

[DomS]

Symbol: SHY
Current Price: 84.91

A/D is pinned to the top.
ADX Signal Line is way above both +DI and -DI, BUT the +DI is actually sloping up.
OBV is pinned to the top
Stochastic is not TOO overbought.

I'm giving this one a DOMS rating of 4.2 trouts. (out of 5)

 

[DomS]

Symbol: ALIF
Current Price: 0.825 (currently .96, but got in at .825)
A/D is increasing almost maxed out
ADX is snazzy looking +DI over signal line.
Stochastic has a ton of room before it's in overbought territory.

The balance sheet on this is looking good to me too, revenue in 2007 was up 700% over 2006.

As a medium term hold, I'll give this one 4.1 trouts.

 

[ponyo]

Originally posted by: DomS
Symbol: SHY
Current Price: 84.91

A/D is pinned to the top.
ADX Signal Line is way above both +DI and -DI, BUT the +DI is actually sloping up.
OBV is pinned to the top
Stochastic is not TOO overbought.

I'm giving this one a DOMS rating of 4.2 trouts. (out of 5)

Originally posted by: DomS
Symbol: ALIF
Current Price: 0.825 (currently .96, but got in at .825)
A/D is increasing almost maxed out
ADX is snazzy looking +DI over signal line.
Stochastic has a ton of room before it's in overbought territory.

The balance sheet on this is looking good to me too, revenue in 2007 was up 700% over 2006.

As a medium term hold, I'll give this one 4.1 trouts.

I've zero idea what all that means, and I don't think you do either. Why complicate things with garbage?

 

[DomS]

Originally posted by: Naustica

Originally posted by: DomS
Symbol: SHY
Current Price: 84.91

A/D is pinned to the top.
ADX Signal Line is way above both +DI and -DI, BUT the +DI is actually sloping up.
OBV is pinned to the top
Stochastic is not TOO overbought.

I'm giving this one a DOMS rating of 4.2 trouts. (out of 5)

Originally posted by: DomS
Symbol: ALIF
Current Price: 0.825 (currently .96, but got in at .825)
A/D is increasing almost maxed out
ADX is snazzy looking +DI over signal line.
Stochastic has a ton of room before it's in overbought territory.

The balance sheet on this is looking good to me too, revenue in 2007 was up 700% over 2006.

As a medium term hold, I'll give this one 4.1 trouts.

I've zero idea what all that means, and I don't think you do either. Why complicate things with garbage?

hahahhahahahhahahaha....really? Get out of this thread. You have no business being here.

 

[DomS]

OK, so instead of being spiteful and returning your misguided vitriol I'll instead explain what those indicators are:

A/D is Accumulation / Distribution. It's actually my favorite indicator along with ADX for investment purposes. It's an indicator for momentum. Basically it measures whether people are accumulating or distributing a given stock. Volume is figured into it. So if you have a stock that's losing ground, but has updays with high volume behind them, it's said to be accumulating. A criteria on one of my screeners is a divergence between price (dipping) and A/D (increasing). That indicates that even though there's a current downtrend I should keep an eye on it because people are starting to accumulate (PUN!) shares. Of course if something is going up in price, and the A/D is also increasing

Formula for it:
[(Close ? Low) ? (High ? Close)] /(High ? Low) * Volume for period.



ADX is Average Directional Index. It's a TA indicator that can tell you the strength of a given trend. When you see it on a chart, something below about 25 (some use 20) is a weak trend, and anything over 45 (others use 40) is a strong trend. ADX is based on +DI and -DI. +DI is Positive Directional Indicator. It's used to measure an uptrend, when it's sloping upwards on a chart that usually means an uptrend is gaining strength. -DI is Negative Directional Indicator. It's the opposite of the +DI. When it's sloping up it's an indicator that a negative trend is increasing in strength. I usually wait for +DI to cross over -DI, and even the ADX line as well. Although in one of the posts I made the ADX is way over the +DI but I don't mind because of how strong the trend looks to me.

note: ADX is ALWAYS plotted with +DI and -DI.



OBV is On Balance Volume. It's another TA momentum indicator. I'm using it more now than I had previously. It's basically a tally of volume, and shows whether the volume is flowing in or out of a given stock. An OBV that is up near the top of the chart, along with an upslope on it are good signs. It indicates that there's accumulation, and that it's still increasing. A downward slope indicates that people are starting to get out. If you see an upward slope on it, while the price is going down it may indicate that people are starting to get in at the base level for a run. The opposite is true if you see a downward slope while the price is going up. Getting out or at least taking some profit may be in order.


Stochastic is pretty basic. It's another momentum indicator (see a pattern here yet?) It basically looks at the closing price over a period of days as compared to the price range over that period.

Here's the formula:

%K=100[(A-LX)/(HX-LX)
A=Closing price for previous day.
LX=Low for the previous period of X days. (usually 10, or 14. I use 14)
HX=High for the previous period of X days. (same number as LX).

%D= 3 day average of %K.

I Freely admit that when I was first trading I could never remember the formula off the top of my head. I do now though.

The idea is based on an assumption that closing prices are a pretty good indicator of what's going on over a period of days. (i.e. if something is running up prices for the day will close pretty close to their highs, and the opposite for something that's bleeding). You're looking for K to go through D for your trading signal.

 

[bignateyk]

Originally posted by: DomS
OK, so instead of being spiteful I'll actually explain what each of those is.

So we can bow down to your infinite financial wisdom? :roll:

I'm sure if he actually gave a shit he could just look it up on google and find out in 3 seconds. I think you're missing the point.

 

[DomS]

Originally posted by: bignateyk

Originally posted by: DomS
OK, so instead of being spiteful I'll actually explain what each of those is.

So we can bow down to your infinite financial wisdom? :roll:

I'm sure if he actually gave a shit he could just look it up on google and find out in 3 seconds. I think you're missing the point.

re-read the post. edited. Stop acting like asswipes. I'm just saying I like those 2 particular securities. If you don't like them, don't pay attention to what I'm saying. I'm hoping that if I post a few I like, other investors (obviously not you or nauseoustica or whatever) will post ones that they like, and reasons why. Collectively we're probably smarter than any individual.

Now stop acting like a dickhead cyber-gangster. I never said I was better than you or the retard that replied to me first. Stop putting words in my mouth.