***Official*** 2012 Stock Market Thread

[JEDI]

triple longs/shorts are better than options for a beginner?

 

[Pliablemoose]

Christ, Cramer suggested selling Apple ahead of earnings, it'll take a hit tomorrow.

I really hate Cramer....

 

[The-Noid]

triple longs/shorts are better than options for a beginner?

Well options have quite a bit more embedded leverage. As long as you understand in the purchase of an option your maximum loss is all of your principal. Same as if you buy a triple levered ETF.

The way the ETF's work by using daily swaps plays havoc in volatile markets. Options generally stay close to intrinsic if they are in or near the money as delta is high.

I wouldn't say one is better than the other for a daily vehicle, for a month or longer I like options a lot better...

 

[Imp]

Feeling stupid... I may start playing RIMM with small amounts of money once it goes back to ~$13.

They are completely disconnected from any economic news/influence (i.e. Europe/recession) at this point. It's all run on hope for a buyout and hope for change in leadership rumours.

 

[bookem dano]

Been with F since it was $4
Getting ready to fund my Roth and need to pick what to buy with the new funds. Debating on getting more F or do more 'safe' bets.

 

[Corporate Thug]

Christ, Cramer suggested selling Apple ahead of earnings, it'll take a hit tomorrow.

I really hate Cramer....

Well, that's half of what he said...he said sell if you're a day trader but otherwise, don't sell because you might miss out on an entry point.

 

[Corporate Thug]

Been with F since it was $4
Getting ready to fund my Roth and need to pick what to buy with the new funds. Debating on getting more F or do more 'safe' bets.

I don't see what's not safe about F?

 

[SSSnail]

triple longs/shorts are better than options for a beginner?

I think the only "safe" bet with options is research some securities with good option plays, buy the shares and sell call options that is a bit out of the money. Win win either way.

There was a time when I was playing with FAZ/FAS. It's not as easy as it looks.

 

[IHAVEAQUESTION]

An ETF question. When I buy an ETF, should I be concerned with the expense ratio? I realized that it's already built into the ETF price and all my profit come from the difference in buy and sell price.

 

[Arachnotronic]

Christ, Cramer suggested selling Apple ahead of earnings, it'll take a hit tomorrow.

I really hate Cramer....

Relax, AAPL will go up on earnings tomorrow.

 

[bookem dano]

I don't see what's not safe about F?

Care to explain?

One of the things that kept F out of bankruptcy with the other car peeps is they were lucky enough to get a lot of credit before it all dried up. I haven't had a chance to follow up on that(how much of that credit are they still banking on), but when it hit the low of the low I didn't pull the trigger. Then I waited and finally bought in for a total amount of what I thought was reasonable. Wish I would have bet the bank on it but I know only bet what you are willing to lose.

Being in a Roth...I am looking for long term 'safety' to add. Last year I somewhat split JnJ and K with my contribution.

Currently the Roth has...
AMD (at 2.67/share)
Sprint (2.89 yeah, bought with some extra cash from dividends, very small position)
Ford(4.35)
Nvidia(6.94/share)
GE(13.54)

Below list have < 100 shares at this point of each
Rambus(again, very small position but not really worth selling for the amount I'd get, <$200)
Kraft(33.47)
JnJ(58.40)
PG(63.00)
PEP(64.80)
BRK.B(82.24) net loss of 3.76%

Made some 'stupid' bets using some of the dividend earnings, but for the most part I am up 31% according to quicken. So I'm debating, sack all the last years funding(yet to be deposited) into 1 or split it up among a few. F is still interesting to me since its in my top 3 performers in my list.

One thing I do like about F is that it was able to survive without a bailout, but as I mentioned earlier it was in some cases by luck, then by skill. Some polls suggest this is helping sales, but for how long is the question.

Their ford touch or their user interface has been a substantial help to their sales, and the recall on it has helped a dip in their stock. Their quality ratings actually suffered for the user interface of extra gadgets, not the quality of the main function of the vehicle. That's kinda funny to me.

I just read http://seekingalpha.com/article/321168-the-definitive-ford-bull-case and I'm not sure on the exact long holding upside. My gut says it will flutter a bit up and a bit down for awhile but that same gut also thinks it has a potential for a better upswing. Part of me thinks the world financial crisis will impact F and other car companies more-so in the market than some of the others already on the list.

According to NBC nightly news, the average car age is now at a record high of 10.8 years.
http://www.msnbc.msn.com/id/3032619/#46032096
You can look at that as they will all need to be replaced soon, but will that just be temporary and help prove my gut?

And for anyone wondering, I'm a complete noob to stocks. Couldn't tell you one ounce of how to really judge them by any sense of normal metrics. My current success is because I realized the market was at a decent low so buy now. I have at least followed this forum for a few years on and off but more recently the last 2 years(hence some rambus, but also thanks to the multiple opinions and the shear amount of detail by Azurik decided to not bet the bank. Guess I felt it wasn't a sure thing when you let the power of the people decide). I've only contributed for 4 years and I'm about to make the 5th year contribution for 2011.

Well, that's my two cents, and probably my longest post on this forum.

 

[JEDI]

I think the only "safe" bet with options is research some securities with good option plays, buy the shares and sell call options that is a bit out of the money. Win win either way.

There was a time when I was playing with FAZ/FAS. It's not as easy as it looks.

really?

thought buying both faz/fas was pure win?

thwe only preoblem is buying it. brokrage houses was always out of either one. or force u to sell one because they needed it

 

[JTsyo]

Feeling stupid... I may start playing RIMM with small amounts of money once it goes back to ~$13.

They are completely disconnected from any economic news/influence (i.e. Europe/recession) at this point. It's all run on hope for a buyout and hope for change in leadership rumours.

You mean another change? The Co-CEOs are stepping down.

 

[JTsyo]

I think the only "safe" bet with options is research some securities with good option plays, buy the shares and sell call options that is a bit out of the money. Win win either way.

There was a time when I was playing with FAZ/FAS. It's not as easy as it looks.

seems you need to buy and sell at a fast pace.

If you bought either and held it for 6 months, you would be down more than 30% on each. While the DOW was about zero.

If you held them for a year FAZ was down 30%, FAS 46%, while the DOW was up 7%.

 

[The-Noid]

seems you need to buy and sell at a fast pace.

If you bought either and held it for 6 months, you would be down more than 30% on each. While the DOW was about zero.

If you held them for a year FAZ was down 30%, FAS 46%, while the DOW was up 7%.

That is because they only track daily prices based on daily swap contracts.

They are not meant to be long-term holds.

 

[IHateMyJob2004]

Lee up another 20% this morning.

 

[The-Noid]

Lee up another 20% this morning.

Did they report today, I see no news anywhere...

NM it just passed through the wires. Bankruptcy planned confirmed. Apparently the equity guys like it.

 

[mshan]

"The changing risk map

What has changed in 2012 is the map of risk. The actions of the ECB, Federal Reserve and other global central banks have effectively minimized tail risk for investors. Instead of having to worry about a market with a bimodal distribution, which Pimco manager Vineer Bhansali wrote about here, and is shown in the graph on the right below, I believe that stocks and other risky assets have returned to the classic unimodal bell-shaped return distribution shown in the graph on the left.

In other words, instead of worrying about catastrophic events, such as a Creditanstalt-like collapse, we just go back to worrying about earnings, recessions, growth, interest rates, etc. Bimodal distributions are much more difficult for professional managers to deal with because there is a single decision or event that can lead the market in two different directions. Will X default? Will the FDA decision be favorable for the company? How will the court rule in this key case that affects the survival of the company? It was largely these circumstances that led to the poor hedge fund and professional manager performance in 2011.

Unimodal return distributions, on the other hand, are far more manageable and much easier for professional investors to deal with. Modern portfolio theory is based on bell-shaped return distribution functions. Managers are well trained to manage risk in such situations and virtually everyone does it well".

http://seekingalpha.com/article/321174-global-healing-2012-vs-2009

Counter-argument articles from end of last year: (these articles may not reflect impact of LTRO, which Mr. Hui's much more recent article does seem to incorporate):

- JPM: http://www.zerohedge.com/news/jpm-explains-why-us-economy-about-hit-brick-wall vs. http://www.businessinsider.com/jp-m...ategist-thomas-lee-sp-500-target-2012-2011-12 (IIRC, perma-bull Thomas Lee was one of strategists last year using Asian Financial Crisis (Mr. Hui's LTCM reference in article) for his very bullish call last year (IIRC, chief economist at IHS was also using Asian Financial Crisis as template for his very bullish long-term stance on CNBC last year)
- Goldman: http://www.zerohedge.com/news/goldman-releases-strategies-stagnation & http://www.zerohedge.com/news/goldm...better-and-gives-sp-target-if-eurozone-breaks vs. http://video.cnbc.com/gallery/?video=3000060649
- Nomura: http://www.zerohedge.com/news/nomura-presents-fair-value-european-currencies-euro-breakup-scenario & http://www.zerohedge.com/news/bob-janjuah-payback-rally-coming-q2


(And regarding immediate concerns about Greek deal or no deal, I thought Mohammed El-Erian of PIMCO had some good insights yesterday:
- LTRO seems to have quelled concerns about wholesale funding of European banking system (i. e. tail risk of European Lehman moment / Creditanstalt-type cascade of bank failures as seen during Great Depression (my guess is real fear last year was the so called shadow banking system, hyper re-hypotecation, and fear of uncontrolled collapse of this global financial house of cards (collapse of MF Global really seemed to make the markets particularly acutely aware of that- we had that breakout at end of October when Europe might have been perceived to be solved, but then turned down aggressively as collapse of MF Global became public news in the days to week that followed (http://www.tradingmarkets.com/stocks/commentary/amazing-october-1578670.html vs.http://www.tradingmarkets.com/stocks/commentary/the-cuckoo-s-nest-1578737.html) Mr. Hui refers to in his article), but questions still remain down the road about asset quality and then capital adequacy of European banking system
- it is not Greek bailout deal itself, but execution risk of that plan that he is concerned about (temporary bouts of stock market volatility?)
- http://video.cnbc.com/gallery/?video=3000068852







Let's hope that Mr. Hui's recent change in sentiment (LTRO is a game changer?) ends up being presciently correct for rest of the year and beyond! (if you read through his response to reader comments here (http://seekingalpha.com/article/314645-the-bull-case-for-stocks), his baseline case in mid-December 2011 was recessionary bear with SPX trading down to 900 - 1000 at some point in 2012:

(December 19): "My base case is a recessionary style bear, not an end-of-the-world Lehman/Creditanstalt type bear market. This would take the S&P 500 down to the 900-1000 level in 2012, which would create a superb buying opportunity."

 

[darkxshade]

thought buying both faz/fas was pure win?

No... they are both leveraged etfs so over the long term they deteroriate in value. The pure win is if you short both.

edit: You will make money if your short both sides of any leveraged etfs.


http://finance.yahoo.com/q/ta?s=FAS&t=2y&l=on&z=l&q=l&p=&a=&c=faz

 

[Demo24]

I don't think I'd buy anymore Ford until next week sometime. It's pretty elevated at the moment and I feel it's staying up around this level because of earnings on Friday, after which it may get a slight bump from those numbers but I suspect it will then trend down for a bit. I'm looking to try and get out of my positions at over 13, then try and get back in closer to 12. Have to see if that happens or not.

 

[IHateMyJob2004]

Did they report today, I see no news anywhere...

NM it just passed through the wires. Bankruptcy planned confirmed. Apparently the equity guys like it.

I've been an owner/follower of LEE for years. To me this is not news. I was surprised that it didn't shoot up when their conditional refinancing was anounced a few months ago. Part of the conditions was the preapproved bankruptcy plan. Seemed like a done deal back then.

 

[Imp]

You mean another change? The Co-CEOs are stepping down.

Yep. A change with someone whom isn't the co-CEOs' puppet.

RIMM down another 4-5% today...

Everything else flat or down slightly. Not really "buy" territory. Feels like the market's out of steam.

 

[KB]

Even in a down day Ford is finding some buyers. People expect good earnings from it but I would agree with Demo in that I wouldn't put much extra into it right now. After earnings it will be bumpy for a while.

Another down-trodden stock with a forward P/E of 7 - 8, which I am hoping for surprise earnings from, is Corning (GLW), maker of Gorilla Glass and Gorilla glass 2. Estimates are rather low, only 33 cents this quarter, but they surprised last time and will do so again this time. Even if they failed to improve business I am betting that with stock buybacks they will get their EPS to where it needs to be.

 

[JS80]

I jumped into another printing company last wednesday on the big dip, my position is up a bit, but if I hold out for another two days the company goes ex-div. Contemplating whether I should dump tomorrow.... Oh, it's RRD. What do you think js80?

RRD is a different beast. By print we are referring to print media (newspapers, yellow pages). RRD is more business services. Due to various laws and regulations, they pretty much have their revenues locked up (until of course these laws change). As I understand it, they are hedging their revenues with digital products. At the beat up price I think it's worth the gamble if you like the stock.

 

[The-Noid]

No... they are both leveraged etfs so over the long term they deteroriate in value. The pure win is if you short both.

edit: You will make money if your short both sides of any leveraged etfs.


http://finance.yahoo.com/q/ta?s=FAS&t=2y&l=on&z=l&q=l&p=&a=&c=faz

Where on earth can you short leveraged etf's? I see them at 100% maintenance everywhere.