***Official*** 2012 Stock Market Thread

[Ricochet]

I remember a coworker was boasting to me about how he got in RIMM at ~$85 and that it will make him a lot of money. I don't have the heart to touch on this subject with him. At least he still have a job.

 

[SSSnail]

From reading all this, I think I must remind you guys of this saying: "Bulls and bears make money, pigs get slaughter".

I was a pig, once...or twice... I'm now just a Sssnail.

 

[Pliablemoose]

From reading all this, I think I must remind you guys of this saying: "Bulls and bears make money, pigs get slaughter".

I was a pig, once...or twice... I'm now just a Sssnail.

 

[Pliablemoose]

Signs of a dieing company:
"The only things that has significantly increased is subscriber base numbers, up to about 75 million, and hardware and tablet sales." - RIMM

Funny what happens when people ignore things like facts. Reduced market share means that as a percentage of new phones sold, RIM is selling less RELATIVE to others. That doesn't mean their sales are dropping. Facts ... stupid facts.

Humor me here, Why in the hell would you pick a company that's struggling when you could easily invest in some other company in the sector with a virtually guaranteed return of 25+% for the next 2-5 years? I'm not even talking about Apple, look at Google, Motorola Mobility, the chipset manufacturers, etc...

I disagree with virtually everything you do, but damn, you may as well light cigars with your $

My return this year:

 

[chusteczka]

Humor me here, Why in the hell would you pick a company that's struggling when you could easily invest in some other company in the sector with a virtually guaranteed return of 25+% for the next 2-5 years? I'm not even talking about Apple, look at Google, Motorola Mobility, the chipset manufacturers, etc...

I disagree with virtually everything you do, but damn, you may as well light cigars with your $

My return this year:

You seem to do well. My question is not questioning that at all.

How is it that you can purchase shares in overpriced companies and expect a 25% return from them?

Your large and established companies are like gold right now. People are putting their money into them since they do not know where else to put their money. Large companies are the currently fashionable place to put money. This means it is already too late. By the time people are talking about it is the time to sell and move on to the next sector.

At what point in the pyramid are you with these large companies? The bottom, middle, or top? I think you are just below the top and current purchases should be put somewhere other than the large and established companies. I expect your returns from large companies will be short lived from this point forward.

However, large companies may extend themselves for the next 2-3 years as you mention. I am only self-educated in stock picking without the professional education you seem to possess.

 

[IHateMyJob2004]

Ricochet,

Your friend that bought RIMM at $80 or whatever is an idiot. He paid to much. RIMM was at $80 more than 3 years ago. For $80, it's market cap was about $35 billion.

3 years ago, RIM may have been doing about $1B in FCF when your friend bought. So, he paid 35x FCF. Forget about cash, debt and all that crap. 35x FCF? Your friend has no idea what he is doing.

It's a different picture today. Today it has a market cap of $7B while generating twice as much in FCF than 3 years ago. So, $7B market cap and $2B in FCF. 3.5X FCF.

But thanks for playing.


Pliable,
Why?
I do not pay fair value for stocks. Apple is not overvalued. I'll give you that. 10x-13x FCF multiple (depending on how you adjust for zero debt) which is not that crazy. The thing i don't get though is why Apple is diluting shareholders every year even though they keep growing FCF annually. What I don't get is why their cash and cash equivalents are not increasing.

Now take RIMM. RIMM is reducing share count, and trades at a 3.5x multiple. It has a new CEO as of 6 months ago. A better board of directors than it had 1 year ago. It had a big software update to it's tablet. And a new start for them in smartphones when the BB10 is released later this year. Their playbook can play many Android apps. The BB10 will also support Android apps. RIMM is not struggling. RIM’s sales outside Britain, the United States and Canada jumped 31 percent last quarter. But US sales fell 45 percent to $1.03 billion. The only problem is that US investors are to lazy to look at the big picture. And the US was a lesson for them. They are going to the markets they dominate or co-dominate where 3G/4G is just now appearing and not letting the lessons of the US repeat itself. RIMMs brand is strong in those countries and they are focused on maintaining brand dominance in those locals. And shocker .... they intend to make a big push in the US when the BB10 is released. Actually, I've seen a blackberry ad almost every night this week. Seems like they are increasing their advertising budget in the US already. What is funny is that I don't see Apple ads on TV anymore.


My question to you. Apple is generating $40 Billion in FCF now. They are parking most of that cash in long term investments. Most of their holdings are corporate securities, U.S. Treasury securities, and U.S. Agency Securities. These are all are rated a minimum of single A. So, what kind of yield does a single A security have?

So, they have $100 billion parked in low risk (ahem, low yield) investments. So, adjusting for inflation, that is pretty much no growth of their cash hoard. Generating some nice FCFs but what does that mean in the long term as the cash hoard grows?

I guess that 10x FCF multiple makes more sense now. As the cash horde grows, I wonder what will happen to that multiple.

 

[IHateMyJob2004]

You can not change the past ... you can only effect the future.

http://youtu.be/mTqAcmc9E4Y

 

[Pliablemoose]

IHMHJ, you're overthinking this stuff... It's not some magic formula, well it is some simple math and a lot of crowd psychology.

We're playing with real money, getting emotionally involved and taking a moral position is fucking stupid.

You want moral high ground, go volunteer at a soup kitchen or a homeless shelter, don't stake out some mindless crap in the stock market and try to emulate some billionaire that makes more than your year's salary in a day.

Actually, do whatever the hell you want, but the game here is Monopoly, and the one with the most shit wins.

 

[IHateMyJob2004]

Pliable,

What on Earth are you talking about? Can you please make a coherent thought. You ask a question, I answer. I ask a question and you respond with some sort of admission that your gains are 100% luck? 25% growth from 3% yields on bonds is not going to happen long term. Get it?

Reminder:
Stock - A type of security that signifies ownership in a corporation.

 

[Pliablemoose]

Snip

Simple math, Apple's P/E ratio is 15%, which puts it on instutional buyer's hotlist right now.

More simple math, smartphone penetration in the US is around 40% of cell phones, not sure where it'll top out, but there growth left in the US and factor in that 48% of iPhone 4S owners broke their contracts to buy one. When the iP5 comes out, I suspect it'll have higher numbers. You can argue with that if you want, but for the 4S that's a staggering figure.

Add in China and it's massive market, virtually untapped, and with an appetite for Apple products.

Add Brazil, add India, add Russia...

Smartphone penetration worldwide is ~10% of cell phone users. Just doubling that number is a massive number of smart phones, and I think 20% is very realistic.

We're seeing a fundamental change in personal computing, people argue the point, but they're ignoring what's happening in the world around them, and Anandtech forum members are pretty well tied into the PC mode for many reasons and don't reflect what's happening in general.

Whatever, use whatever logic you wish, but Apple is going higher, I'm not saying it's not going to have any pull backs or consolidations, but it's going a lot higher.

RIMM's problem is it has the stink of death to it now. I have a PlayBook, an HTC Flyer Android tablet, several iPads, and just got a Samsung Galaxy Note. I play with all the stuff all the time. Apple is the closest thing to a "pure play" in mobile right now. Even with OS 2.0, the PlayBook is a distant 3rd to iOS and Android's OS's. I have Android 2.3 on my Galaxy Note phone tablet, and it's worlds better than RIM's OS 2.0. Android has 2 significant OS updates beyond 2.3.

You want to invest in forever? I have no idea what works forever, maybe genetically modified soybeans/rice, they're likely forever, beyond that, I think short term.

 

[Riverhound777]

Anyone watching Yelp? Just found out my company got a big allocation for the IPO today. Up 63% and we get a chunk in our 401k, happy dance!

 

[HopJokey]

AAPL vs. RIMM:

I believe AAPL will be still be rather relevant at least 5 to 10 years down the road and with the mobile computing market growing there is plenty of growth left in Apple - thus the high market cap (although rather fair P/E, FCF, and PEG ratios).

The same cannot be said about RIMM - right now they are priced for death with the super low trailing P/FCF, P/E ratios. These concerns are legitimate and if you believe otherwise then RIMM is a good investment.

Of the two RIMM is the way more riskier investment with corresponding short term reward. I would put my money into AAPL until something fundamental changes about their position.

Obligatory Buffet quote:

It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

 

[HopJokey]

Anyone watching Yelp? Just found out my company got a big allocation for the IPO today. Up 63% and we get a chunk in our 401k, happy dance!

Congrats! And sorry buddy I was trying to short YELP today, it just seems ridiculously overvalued ($1.43 Billion MCap, 17X trailing revenues).

 

[Riverhound777]

Congrats! And sorry buddy I was trying to short YELP today, it just seems ridiculously overvalued ($1.43 Billion MCap, 17X trailing revenues).

Oh I'm sure they shorted it as well. They got it for the $14 or whatever it opened at and probably sold it at $24. And by a chunk in our 401k, I mean a chunk of the profit

 

[lothar]

Humor me here, Why in the hell would you pick a company that's struggling when you could easily invest in some other company in the sector with a virtually guaranteed return of 25+% for the next 2-5 years? I'm not even talking about Apple, look at Google, Motorola Mobility, the chipset manufacturers, etc...

I disagree with virtually everything you do, but damn, you may as well light cigars with your $

My return this year:

I've picked lots of companies that were considered to be struggling(by Mr. Market's standard at least) and I've made lots of money from them.
ACF(credit/financial crisis, News Corp(Murdoch scandal last summer), KFT(commodity bubble affecting their margins), AXP(credit/financial crisis), and many others.

In fact I would have bought SHLD in the $20's if it wasn't for the fact that I was busy increasing my stake in GRVY late last year and also opened a stake in Blackrock as well.

 

[Corporate Thug]

I'm thinking about diversifying a little bit. I don't have anything in the financial sector in my portfolio. Any thoughts on BAC?

 

[Demo24]

I'm thinking about diversifying a little bit. I don't have anything in the financial sector in my portfolio. Any thoughts on BAC?

I've been contemplating doing this myself, but just haven't quite felt ready to. Was a bit tempted to get some earlier in the week before it went over $8.

 

[hiromizu]

I'm thinking about diversifying a little bit. I don't have anything in the financial sector in my portfolio. Any thoughts on BAC?

I just opened a direct account with Fairholme a few weeks ago for FAIRX which holds BAC and a few others. Me so long on financials for long time.

 

[Imp]

I'm thinking about diversifying a little bit. I don't have anything in the financial sector in my portfolio. Any thoughts on BAC?

Only concern I have is Greece default/drama impact in the shortterm on financials across the board.

I don't feel their mortgage issues are as bad as before at this low of a price, but it is still something to consider.

I'd rather play C, but not for the first reason right now.

 

[IHateMyJob2004]

I'm sure there is some way to spin this ....

Future Shop tweeted that the PlayBook as the bestselling tablet this week. Future Shop is kinda the Canadian Best Buy.

 

[Pliablemoose]

I'm sure there is some way to spin this ....

Future Shop tweeted that the PlayBook as the bestselling tablet this week. Future Shop is kinda the Canadian Best Buy.

Consider it spun

There are 146 FutureShop stores, and they're only in Canada, Canada is pretty proud of RIM, and tend to be very supportive of the company, so when RIM essentially pays you to take one of their products, of course they'll sell well.

http://www.futureshop.ca/en-CA/prod...spx?path=e5c014cd204b5a6951e5a162deb0e9b2en02

http://www.intomobile.com/2011/04/20/blackberry-playbook-components-cost-205/

BB is losing $ on the 16GB Playbook on component costs alone, that's not taking into account manufacturing, shipping, software development, etc...

They already took a massive write off on the PlayBook, what 500 million, looks like they're going to take another write off on it...

I bought mine for $189, just on component costs and shipping, they lost about $40 on it.

The only positives are they're getting devices out there, and gaining experience in the QNX OS.

Compare that to Apple making ~31% profit on each iPad sold, add in the accessory sales, app store profits and the "halo" or "gateway effect" from getting an Apple product in consumer's hands and drawing them into the Apple ecosystem.

I went from 0 Apple products to owning a ton of Apple stuff in about 2.5 years and I hated Apple as a company and their products.

 

[Imp]

I'm sure there is some way to spin this ....

Future Shop tweeted that the PlayBook as the bestselling tablet this week. Future Shop is kinda the Canadian Best Buy.

Actually, a few years ago, Best Buy bought out Futureshop. We also have Best Buy's in this country. They are essentially the same thing with the same inventory (some minor differences), except Futureshop employees get a commission and BB ones don't. They operate and are managed independently, as far as I know, though.

They are probably suffering like BB too now because some cheaper, specialty retailers like NCIX, Newegg, and Canada Computers have popped up. We also have Apple Stores and The Source (terrible...). Overall, I wouldn't think of Futureshop sales as representative of anything...

 

[chusteczka]

Simple math, Apple's P/E ratio is 15%, which puts it on instutional buyer's hotlist right now.

More simple math, ...

Allright, you are hyping product demand growth through expanding markets. This is certainly logical. It just seems to me like it has been played out.

Apple is trading at 5.5 times Book Value. Obviously that does not mean anything but it shows me the premium pricing. I do not like paying premium prices and tend to lose interest in a company at anything greater than 2.5 times Book Value.

Apple does not pay dividends. What use is there to own the stock? Merely for pyramid-like growth as the masses mindlessly follow the enthusiastic and fashionable trend to purchase anything Apple. I have always closed my mind to such fashionable trends.

You are lucky to be riding this to the top. You made a good play. I plan to sit tight with what I have.

 

[RbSX]

Consider it spun

There are 146 FutureShop stores, and they're only in Canada, Canada is pretty proud of RIM, and tend to be very supportive of the company, so when RIM essentially pays you to take one of their products, of course they'll sell well.

http://www.futureshop.ca/en-CA/prod...spx?path=e5c014cd204b5a6951e5a162deb0e9b2en02

http://www.intomobile.com/2011/04/20/blackberry-playbook-components-cost-205/

BB is losing $ on the 16GB Playbook on component costs alone, that's not taking into account manufacturing, shipping, software development, etc...

They already took a massive write off on the PlayBook, what 500 million, looks like they're going to take another write off on it...

I bought mine for $189, just on component costs and shipping, they lost about $40 on it.

The only positives are they're getting devices out there, and gaining experience in the QNX OS.

Compare that to Apple making ~31% profit on each iPad sold, add in the accessory sales, app store profits and the "halo" or "gateway effect" from getting an Apple product in consumer's hands and drawing them into the Apple ecosystem.

I went from 0 Apple products to owning a ton of Apple stuff in about 2.5 years and I hated Apple as a company and their products.

Sigh, Best Buy owns Future Shop.

 

[Imp]

Allright, you are hyping product demand growth through expanding markets. This is certainly logical. It just seems to me like it has been played out.

Apple is trading at 5.5 times Book Value. Obviously that does not mean anything but it shows me the premium pricing. I do not like paying premium prices and tend to lose interest in a company at anything greater than 2.5 times Book Value.

Apple does not pay dividends. What use is there to own the stock? Merely for pyramid-like growth as the masses mindlessly follow the enthusiastic and fashionable trend to purchase anything Apple. I have always closed my mind to such fashionable trends.

You are lucky to be riding this to the top. You made a good play. I plan to sit tight with what I have.

I may be okay with playing AAPL if it weren't for the exponential growth it's displayed in the past 2 months. Just look at the 1-5 year charts: nice straight, upward trend, then pow, exponential growth suddenly. And it still hasn't formed a new base yet.