***Official*** 2012 Stock Market Thread

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The-Noid

Diamond Member
Nov 16, 2005
3,117
0
76

This has been watched for the last three weeks and discussed extensively.

My own personal opinion.

Bull Case: There is an oversupply of ships as most people thought the economic recovery would be stronger by now and bought ships into it (which obviously have a lag). Even in the bull case some high yield credits and levered loans/abs are going to look worse given that the shippers aren't going to make any money and carry lots of leverage.

Bear Case: Worldwide economic demand has really slowed as judged by the BDIY and its larger than average seasonal drop. The overall pace of deterioration shows that European/US demand has weakened substantially in a very similar fashion to the beginning of the last year.

Economy seems fast in fourth quarter. Slows in first quarter. Everyone predicts recession in 2nd quarter, third quarter eeks by, demand in Q4. repeat.

Also I hate to sound old but I can remember BDIY in the 11,500 range during the heart of the global buy everything commodity expansion of 2007-2008.
 
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mshan

Diamond Member
Nov 16, 2004
7,868
0
71
(Jedi): Please take heed of what The-Noid said above as it seems to echo comments I've seen from various talking heads on CNBC regarding The Baltic Dry - it may more reflect overcapacity (build out put in place last spring when it did look like global economies were recovering), rather than tremendous drop off in global demand per se (OMG, the world is going into global recession and there will be no pockets of growth remaining (US, China?) to justify a rise in stock market).


And to follow-up on what I wrote above:
- when the dust settles and we look back at stock markets 2, 3, 5, or in worst case scenario 10 years after the fact, unless we are in the nascent stages of a new multi-year secular bull market (I have read William O'Neil's / Investor's Business Daily CANSLIM system (http://www.amazon.com/William-J.-ONeil/e/B000AQ1QAM/ref=sr_ntt_srch_lnk_2?qid=1327625711&sr=8-2), but have no had a subscription to the newspaper for about 10 years (http://www.investors.com/default.aspx?fromad=1), so don't know if their The Big Picture column is indicating new bull with what, in retrospect will be the next 10 bagger high growth companies breaking out of their initial bases - I use Gary Kaltbaum's technical analysis comments on the spotty basis he makes in comments public (http://www.tradingmarkets.com/authors/all/Gary_Kaltbaum) on the internet because he seems to use the same CANSLIM system, but on an institutional, not individual investor basis), that prudent institutional investors who have a client basis sophisticated enough to tolerate short-term market volatility but don't take kindly to real sustained losses over time (that is not me, I am no market pro, I have no formal financial markets education or training, I don't trade individual stocks, and just deploy all of my capital in a diversifed portfolio of what I believe are high quality mutual funds that are looking to optimize long-term shareholder gain), it seems like we are either in a muddle through environment with slight deflationary bias (cash, bonds, dividend paying stocks in defensive industries), vs. muddle through with slight inflationary bias (I think Bob Doll of Blackrock, who recommends companies with positive free cash flow who have the ability to either increase their dividend over time or institute one) might end up being the prudent call for someone who is concerned about both risk and reward.

Think back to commentary you yourself saw during those bleaker time in early November (post-MF Global collapse where markets felt European politicians were keystone cops hopelessly behind where the market wanted them to be and no sense that they will ever get their act together), to say time around Thanksgiving (coordinated global central bank 1% dollar swap lines action), and then perhaps to right after Christmas when LTRO had already been announced and market started to drift higher under guise of tepid Santa Claus rally.


For me, off hand, i think of:
- initial phase where only someone like Warren Buffett can see opportunities over 10 year horizon
- then someone like Larry Fink / Bob Doll of Blackrock seeing enough constructive policy action to say on CNBC that they see opportunity in equities if you can stomach volatility and have 5 year time horizon
- then someone like John Manley again reiterating how prudent equity investors who can stomach tremendous short-term volatility quite possibly being rewarded 3 - 5 years down the road, but being very unhappy during year 1 or 2.
- there was interesting banter this morning between Simon Hobbs and Michelle Cabrusso-Cabrerra this morning regarding Greece, blah, blah, blah, and that got me thinking about what if - what if this hedge fund Greek bond holder holdout actually leads to more a more substantive result (really dealing with Greece's debt in a way that just doesn't put another band-aid on the problem, but puts Greece (presumably same solution would apply to smaller PIIGS like Portugal and Ireland, but not TBBF Italy and to a lesser extent Spain) on a path where it really deals with that debt load AND puts them on austerity / growth path where they will actually be able to pay off those newly issued bonds over time. Would that indicate that European Keystone Cops might have actually gotten ahead of market expectations, at least on this particular issue (?)
- and some more perspective from early November 2011: (http://video.cnbc.com/gallery/?video=3000056089)




(end of random, stream of consciousness thoughts right now )
 
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manly

Lifer
Jan 25, 2000
11,364
2,373
136
Thoughts on the overall market? I'm 50% cash but I'm conflicted with whether or not I should be buying with cash or selling what I have left. The rally this month has been crazy and it feels very artificial but the 30-day moving average is on an uptrend and about to cross the 200 day SMA on the S&P500. I want to take that ride but have that itch that a correction is coming.
two competing factors (amongst) others are valuations are considered reasonably low on a P/E basis vs. the widely-held view that profit margins have no room left to grow. Personally I like bargains so I'm gonna stay on the sidelines after missing the Oct. 3rd lows.

I expected Netflix to continue dropping to the $45-$50 range. However, they possess a database of films that are not easily obtained elsewhere; specifically they have older, foreign, documentaries, BBC, National Geographic, and similar movies, along with tv shows. These are the reasons I continue my subscription.
but this makes you the minority in the 80/20 rule as opposed to the "mainstream" viewers who crave Hollywood wide releases. At least they'll have discs for that. As for whether to invest, isn't Netflix going to book a loss in every quarter this year?
 

The-Noid

Diamond Member
Nov 16, 2005
3,117
0
76
two competing factors (amongst) others are valuations are considered reasonably low on a P/E basis vs. the widely-held view that profit margins have no room left to grow. Personally I like bargains so I'm gonna stay on the sidelines after missing the Oct. 3rd lows.


but this makes you the minority in the 80/20 rule as opposed to the "mainstream" viewers who crave Hollywood wide releases. At least they'll have discs for that. As for whether to invest, isn't Netflix going to book a loss in every quarter this year?

Based on the fact the earnings beat rate is coming in the lowest since 2001 and earnings growth is trending towards something with a mid 5 handle, when 6 months ago analysts were looking for something with a 16 handle, those valuations are looking a lot less low. The justified p/e has to come down as the earnings growth rate comes down.

I am hesitant to say we have hit the highs of the year (although there are is a lot of chatter to this tune) but I do think growth is limited. If not just for earnings which are bad you have to look st the big 2, euro apocalypse and em slowdown.

What do I know though, even with some big moves the last couple of weeks I still lag by a couple hundred bps to the spx.

It will be an interesting year.
 

JEDI

Lifer
Sep 25, 2001
30,160
3,302
126
what makes a stock growth or value?

btw- small cap growth is kicking small cap value year to date
 

Pliablemoose

Lifer
Oct 11, 1999
25,195
0
56
Everyone is a winner in the stock markets on the internet forums

I always get a chuckle. A screen shot of a realized gain from a brokerage firm report is the only way to confirm the truth.

Closed my position in Apple today

Plan to buy it again on any pullbacks, next quarter will include Brazil, Russia and China iPhone sales for the first time ever...

 
Sep 29, 2004
18,665
67
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what makes a stock growth or value?

btw- small cap growth is kicking small cap value year to date

Value Investing is a huge topic. Make it simple? I'll try. Imagine a company is for sale. All of it. It puts $100,000 in the owners pocket each year. For such a company, would you pay $100,000? probably. It's obvious that you break even in one year. How about $10,000,000? Probably not. That's a 1% yield on investment. But there is a fair price to pay for such a company. It is fair to both buyer and seller. Value investing is all about paying 25%+ less than that price.

A growth stock is a stock perceived to grow faster than others. People usually look at past performance to determine this though.

Stocks are not one or the other. A growth stock can be undervalued thus a value buy.

FWIW: Price is what you pay. Value is what you get.

Another note on value stocks. There needs to be reasonable expectations for the future. Without that, you can not assume that the company in my example will put $100,000 in the owners pocket year after year. Which means you can not value it properly. If you can not value it properly, you can not buy it ata 25%+ discount.
 
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mshan

Diamond Member
Nov 16, 2004
7,868
0
71
"what makes a stock growth or value?"
I think it might be better to rephrase that to what is the difference between momentum investing and a more fundamentally driven investment strategy (growth and value investing styles may actually be two faces of the same coin and you have to be careful of pidgeon holing mutual funds based upon something like what Morningstar's categories puts them in based upon computerized analysis of the last portfolio that is publicly available to them).

Snapshot of the portfolio holdings of a classic value / deep value / relative value /contrarian growth investing fund, when they are being contrarian and loading up on unrealized "value" (intrinsic value market is not overtly realizing now because of presumably temporary and correctable shorter-term issues that will hopefully ultimately resolve themselves in positive manner) ideas, might be very different than snapshot when that same portfolio is in tune with current market trends / individual holdings (actual companies) have fixed their temporary problems and are now back on a path of higher growth and profitability and they may be selling those now fully appreciated "value" stocks to momentum traders who are looking to capture frothy gains that might not be fundamentally justified and where value funds are continuing to hold, or ideally selling in disciplined manner, to reload with new unrealized value ideas.

That same fund, with same portfolio holdings, could be classified as value, growth, or blend, depending upon how it's holdings align with current "hot" trends in market.

Those types of dislocations between intrinisic value and I guess mark to market pricing are what can create opportunities, and long-term outperformance, for money managers who have a proven strategy, executed consistently in a disciplined manner over time, and have a shareholder base that doesn't pull their money just because the fund is lagging markets for temporary period of time (dumb money pulling their money when best investment ideas going forward are presenting themselves to money managers, then piling into latest, hotest, best performing fund when there are few new opportunities to deploy that capital in a prudent manner going forward).

Remember what Warren Buffett said: in the short-term, the stock market is a voting machine, but in the long-term, it's a weighing machine. He is labelled as a "value" investor, but the companies he invests in are ultimately growth companies who can compound earnings growth consistently over very extended periods of time.
 
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rcpratt

Lifer
Jul 2, 2009
10,433
110
116
Pretty surprised F didn't fall more. Still, you're all welcome. I'm going to wait awhile to get back in.i
 

Imp

Lifer
Feb 8, 2000
18,829
184
106
Closed my position in Apple today

Plan to buy it again on any pullbacks, next quarter will include Brazil, Russia and China iPhone sales for the first time ever...

<Bragging...>


Bastard. Nice job!


Ugh... market's in holding pattern. Most stocks on my watch list have been moving <1% in the past week. I still get the feeling that the Dow will hit 13k before making a major pullback though.
 

chusteczka

Diamond Member
Apr 12, 2006
3,400
1
71
Ford will drop again according to the Euro situation. Only inertia and optimism is keeping it up now.
 
Sep 29, 2004
18,665
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Any thoughts on RIMM?

Prem Watsa sits on the board and just doubled his holding to be about 5% of all shares outstanding.

Quite frankly, if all you had were the financial statements and you knew the market cap but you didn't know the company that the financials were tied to, you would probably buy it.
 

PimpJuice

Platinum Member
Feb 14, 2005
2,051
1
76
Any thoughts on RIMM?

Prem Watsa sits on the board and just doubled his holding to be about 5% of all shares outstanding.

Quite frankly, if all you had were the financial statements and you knew the market cap but you didn't know the company that the financials were tied to, you would probably buy it.

So how much are you going to buy?

And why wouldn't they do the same thing with AAPL, which you seem to bash all the time?

What I get from this post is that you would rather invest in RIMM than AAPL.

Is RIMM a value stock or a growth stock? What is AAPL? You contradict yourself a lot.
 
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chusteczka

Diamond Member
Apr 12, 2006
3,400
1
71
I do not consider Apple for investment because I do not understand their marketing game. For my use, I have not yet embraced the smart phone or tablet concept and have not yet felt the need of a high-priced, portable and hand held computer, requiring a yearly commitment with high payments every month.

I am aware of people too poor to buy food but they own an Apple iPhone with monthly data plans. For me, this is illogical but people do it because of Apple's marketing genius.

On a technical level, yes they have innovative products of high quality. However, similar products are available at lower cost.

Admittedly, none of it makes sense to me. I am therefore unable to judge the market and understand if the public will continue purchasing Apple products for the stock price to rise or fall.
 

JS80

Lifer
Oct 24, 2005
26,271
7
81
RIMM should hire Jon Rubinstein and spend every penny of their free cash to buy back the stock.
 

PimpJuice

Platinum Member
Feb 14, 2005
2,051
1
76
I do not consider Apple for investment because I do not understand their marketing game. For my use, I have not yet embraced the smart phone or tablet concept and have not yet felt the need of a high-priced, portable and hand held computer, requiring a yearly commitment with high payments every month.

I am aware of people too poor to buy food but they own an Apple iPhone with monthly data plans. For me, this is illogical but people do it because of Apple's marketing genius.

On a technical level, yes they have innovative products of high quality. However, similar products are available at lower cost.

Admittedly, none of it makes sense to me. I am therefore unable to judge the market and understand if the public will continue purchasing Apple products for the stock price to rise or fall.

I respect your opinion. I disagree with it, but definitely respect it.

I'm just at a loss of words when someone would consider RIMM for an investment but not AAPL, when their concerns about AAPL would be the same concerns for RIMM. That is without mentioning the obvious fact that the two companies are heading in opposite directions.
 

Pliablemoose

Lifer
Oct 11, 1999
25,195
0
56
Any thoughts on RIMM?

Prem Watsa sits on the board and just doubled his holding to be about 5% of all shares outstanding.

Quite frankly, if all you had were the financial statements and you knew the market cap but you didn't know the company that the financials were tied to, you would probably buy it.

I wouldn't spend a penny on RIM unless they literally throw Mike and Jim off of the company property. The new guy is a figurehead and isn't changing anything.
 

Imp

Lifer
Feb 8, 2000
18,829
184
106
Okay, we really don't give a shit about Europe anymore. Fitch, not the shit disturber that is S&P, downgrades a few Euro countries, and stocks inch up a bit...

http://www.bloomberg.com/news/2012-...zone-nations-downgraded-by-fitch-ratings.html


RIMM is a good gamble right now. It swings 5-10% on completely unsubstantiated rumors about buyouts or change in corporate direction/strategy. If you think a one SKU company (that's bullshit, but they aren't remotely diversified) can make a complete turn around while two other companies sitting on $50-$100 billion in cash are dominating their field, then ya, RIMM is probably great value at a P/E less than 5 and billions in sales.
 

The-Noid

Diamond Member
Nov 16, 2005
3,117
0
76
Okay, we really don't give a shit about Europe anymore. Fitch, not the shit disturber that is S&P, downgrades a few Euro countries, and stocks inch up a bit...

http://www.bloomberg.com/news/2012-...zone-nations-downgraded-by-fitch-ratings.html


RIMM is a good gamble right now. It swings 5-10% on completely unsubstantiated rumors about buyouts or change in corporate direction/strategy. If you think a one SKU company (that's bullshit, but they aren't remotely diversified) can make a complete turn around while two other companies sitting on $50-$100 billion in cash are dominating their field, then ya, RIMM is probably great value at a P/E less than 5 and billions in sales.

S & P is the harshest on ratings, Moodys second and Fitch easiest.

The Fitch report was pretty easy on everyone.

GBTPGR10 Index <GO> 10Y Btps actually pulled below 6 in a hard way today.
 

JS80

Lifer
Oct 24, 2005
26,271
7
81
I wouldn't spend a penny on RIM unless they literally throw Mike and Jim off of the company property. The new guy is a figurehead and isn't changing anything.

RIMM should hire Jon Rubinstein and spend every penny of their free cash to buy back the stock.
 

JEDI

Lifer
Sep 25, 2001
30,160
3,302
126
in Aug, my small cap fund will be 1yr old, thus qualify for 15% tax rate.

hold on, or sell to free up cash to speculate?
 
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