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Old 01-13-2013, 03:22 PM   #161
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So what's everyone having for dinner today?
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Old 01-13-2013, 03:23 PM   #162
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I'm risking a high-yield meal.

Go ahead, prove me wrong.
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Old 01-13-2013, 03:26 PM   #163
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High-yield after digestion?

I really do not want to know. No argument at all from me.
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Old 01-13-2013, 03:27 PM   #164
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I'm not sure if I even want to know what a high-yield meal is. I just hope it doesn't result in too great a loss of any liquid assets.

Oh Lord. I can't even believe I just said that.
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Old 01-13-2013, 03:48 PM   #165
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I have to admit I find this thread interesting.

I too have suspected that these 2 user names are either the same person or a pair of friends/spouses that are jerking the group around. Why is the OP asking people to dispute his methodology? Maybe he/she wants to stir up trouble? To me it's a pointless thread because the OP is confidient they are wise enough to make a go of this and many of us that are passive/indexers shake our collective heads at this so what's the point of this? You (the OP) are happy doing this so good for you. Many of us think this is dangerous and bound to end badly and Jack Bogle would agree. I think Mr. Bogle is wiser than the OP but that's my opinion.

The other poster is even more annoying than the OP! It's rather amusing. Hopefully this won't get visited by Porky Pig, I'm enjoying this.
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Old 01-13-2013, 03:57 PM   #166
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It's vxp036000 that's the day trader, not me.

If you take the time to check back on some -- or any -- of my posts (posts by Alex in Virginia), you'll see soon enough.

And I've got to say this, Brewer. Again, you respond but again you shed absolutely no light on what you do to evaluate companies, what criteria you look at, or where your buy/no buy thresholds are -- whether based on company financials or a risk-reward assessment or whatever.

But that's okay. I'm done waiting.

Alex in Virginia
Sorry, I keep mixing up you and the other troll.

I like cheap, CHEAP stuff that the market has tossed out or ignored. I gravitate toward names with headline risk, fixable problems, industries out of favor, etc. If its in the news with people screaming about what a scandal there is, I am immediately interested (watching HLF right now). Once I locate a disfavored name I start doing my digging on the fundamentals, prospects, leverage, structural ability to improve cashflow generation as times improve, downside risk, and any gotchas. I also try to figure out if whatever people are fixated on that they do not like can be fixed or sorted out given some combination of time, money, change in management, or sale of the company. I also like to see a key stakeholder that has a vested interest in sorting things out pronto. This can be a large insider owner, activist investor, etc. If it all checks out, I ideally want to buy the equity if EV/EBITDA is 6 or less (and we are not at peak EBITDA levels), and I like buying bonds at a discount to par where I can get at least a 10% YTM.

All of the above applies only to reasonably normal market conditions (like now for equities). There are two other market cionditions. First, there are crashes in which case you want to buy reasonably broadly and pick the most leveraged names that you are confident will survive the bad stuff (more leverage = better upside). Second, there are excessively overvalued markets (like junk bonds right now) where you don't really want to buy anything and should be thinking about selling.
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Old 01-13-2013, 04:09 PM   #167
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If I wanted abuse, I wouldn't have to post here.
Actually, this is abuse. If you want an argument, that's in 12A, next door.



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So what's everyone having for dinner today?
I'm having a glass of forex. Guaranteed returns, don't you know.
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Old 01-13-2013, 04:16 PM   #168
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Delightful thread! Thanks to the many who are far more financially sophisticated than I in pointing out the fallacies. Things I know - high reward potential comes with proportionate risk. If someone claims exception, run! I have ~30 years of investment experience based primarily on AA and index funds. Retired with about 15 years of last income in portfolio. Plus a pension. I'll close echoing the question....if this method is great, why aren't you running a fund? Best of luck assuming the posts represent reality.
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Old 01-13-2013, 04:18 PM   #169
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If you're willing to dive deep enough into your research on the company, you can even make money with companies teetering on the edge of bankruptcy. You just need to be in the right position within the capital structure when they finally fail. (99.99% of the time, that position is not the common stock).

To do this successfully, you need to understand the company's assets and liabilities in excruciating detail, which will require reading every bond indenture, all bank loan agreements and any other documents that evidence an obligation or claim on the company's assets, including claims based on statute -- such as environmental claims, pension claims and the like. You need to know precisely where each claim stands within the payment waterfall, which requires knowing where the claim exists within the corporate structure, what assets are available to satisfy the claims at that level and who else can claim against those assets. This, of course, requires a full understanding of priority of different claims under bankruptcy law, every actual subordination agreement, the relevant facts and legal arguments for and against equitable subordination and the facts and legal arguments for substantive consolidation.

If all this research show a mis-pricing for a particular debt instrument in the current market and you are confident that you will recover more in the bankruptcy, then you might consider investing. And even then, there is a non-trivial possibility that you will be wrong. The number of people who can do this successfully is very small, but some of them have become very wealthy doing it.
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Old 01-13-2013, 05:19 PM   #170
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Anyone with an ounce of brains can see that Alex and VXP are one and the same troll riffing of each other and us. Makes for an amusing thread.
I can't think of anything to say. What an idiotic waste of time and effort it would be to play that two-poster game. I have better things to do.

And those are the last words I'll have on that particular subject.

Alex in Virginia
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Old 01-13-2013, 05:25 PM   #171
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Has anyone seen both Alex and vpx at the same place and same time? Didn't think so...
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Old 01-13-2013, 05:36 PM   #172
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If I wanted abuse, I wouldn't have to post here. I'd just go into the kitchen and ask why dinner isn't ready yet!
I feel your pain....I once asked my wife when she was going to wash my favorite sweatshirt..You can't imagine the terror of seeing that giant bottle of Tide coming my way at warp speed.
It worked out OK though, I've been able to pass off the scar as either a war wound or football injury, depending on who is asking..
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Old 01-13-2013, 05:39 PM   #173
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I can't think of anything to say. What an idiotic waste of time and effort it would be to play that two-poster game. I have better things to do.

And those are the last words I'll have on that particular subject.

Alex in Virginia
The troll doth protest too much, methinks.
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Old 01-13-2013, 05:46 PM   #174
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My wife keeps asking me why I spend so much time on this forum. I have gotten quite a few financial tips from this site, but the recreational value is also fantastic for the price.

+1 I don't really post much (I'm in awe of the financial expertise of a lot of the posters and feel I don't really have a lot to add) but the entertainment value of this forum is right up there so I keep coming back...
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Old 01-13-2013, 05:55 PM   #175
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If you're willing to dive deep enough into your research on the company, you can even make money with companies teetering on the edge of bankruptcy. You just need to be in the right position within the capital structure when they finally fail. (99.99% of the time, that position is not the common stock).

To do this successfully, you need to understand the company's assets and liabilities in excruciating detail, which will require reading every bond indenture, all bank loan agreements and any other documents that evidence an obligation or claim on the company's assets, including claims based on statute -- such as environmental claims, pension claims and the like. You need to know precisely where each claim stands within the payment waterfall, which requires knowing where the claim exists within the corporate structure, what assets are available to satisfy the claims at that level and who else can claim against those assets. This, of course, requires a full understanding of priority of different claims under bankruptcy law, every actual subordination agreement, the relevant facts and legal arguments for and against equitable subordination and the facts and legal arguments for substantive consolidation.

If all this research show a mis-pricing for a particular debt instrument in the current market and you are confident that you will recover more in the bankruptcy, then you might consider investing. And even then, there is a non-trivial possibility that you will be wrong. The number of people who can do this successfully is very small, but some of them have become very wealthy doing it.

I believe Max Heine and subsequently Michael Price built up the Mutual Shares series of very successful funds based on the type of analysis you describe. I still have a couple of them from long, long ago and even with management changes continue to do reasonably well, particularly in down markets. Unfortunately greed has taken over and their current fee structure is not encouraging.
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Old 01-13-2013, 06:58 PM   #176
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And those are the last words I'll have on that particular subject.
I hope you mean the troll subject, Alex.

C'mon back. I was looking forward to a discussion of the study I linked.

My two cents: while the study results are somewhat compelling on the surface, I didn't see whether the universe of stocks they ranked into quintile groups were evaluated on today's conditions or on the conditions at the beginning of the study period. It makes a huge difference.

It would prove little - and have a weak relevance to stock selection using their method - if stocks with favorable dividend and quality characteristics today performed well over the past x years. It only says "you will have good returns over ten years if you select stocks that will show good quality and high dividends ten years from now." That is unknowable to today's investor.

On the other hand, if the "quality stocks with high dividends" group was selected based on measuring those characteristics at the beginning of the study period, they might be onto something. You, too, Alex.
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Old 01-13-2013, 07:05 PM   #177
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Perhaps this is a good time for an entr'acte, so please let me sneak in a bit of music.

This song talks about how

You can check-out any time you like,
But you can never leave!


which seems to describe the addictive nature of this forum. This idea was suggested by Martha in a buried thread long ago.

But I found that the following lyrics describe Alex's quandary, whether he is a double poster or not.

They livin' it up at the Hotel California
What a nice surprise (what a nice surprise)
Bring your alibis


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Old 01-14-2013, 09:57 AM   #178
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OK, thanks for that, Texas. I'm going to beef up my risk/reward assessment method. (Believe it or not, I do have one but I also have a very high tolerance for risk.)


That's not me! That's vxp036000. Check back my posts (Alex in Virginia) and you'll see.


I certainly hope that's not true. It would negate the reason I started this thread. I have answered people's questions as to what I do and how I do it, and I've done it in enough detail so that people can/could come back and rebut what I've said. It's just unfortunate -- particularly for me -- that most posters haven't put enough reasoned argument into their posts to prove their points to me. Declarative statements by themselves should not be expected to be persuasive.

Thanks again, Texas. Honestly.

Alex in Virginia

Thanks for the response.... and yes, I did get you and vxp mixed up in my mind... he seems to be 'day trading' even though he says he is not under the true definition....


I think something that would help is to put down what you actually are investing into.... just saying 'high yield' is not enough...


Also, it is kind of hard to show you... I took a course in portfolio analysis in my MBA... lots of calculations etc. went into the various analysis... I would have to spend some time looking for the information and I just do not care to waste my time doing it.... there are people here who's job it is to invest... they know markets much better than I do.... and they have responded to you...

SO, go look at something that has efficient frontier info...

Efficient frontier - Wikipedia, the free encyclopedia

Or this...

Modern portfolio theory - Wikipedia, the free encyclopedia
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Old 01-14-2013, 10:36 AM   #179
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To both Alex and vxp: you might want to check out a phenomenon called "illusory superiority". It seems that we humans tend to over-estimate ourselves in comparison to other people, with the vast majority of us honestly believing that we are smarter than the median. This indicates that a lot of us are highly biased in our assessment of our own abilities. Nothing personal, but the odds suggest that you are among those many misguided people. I probably am too. However, my passive investing strategy doesn't depend on my glowingly positive assessment of myself being accurate --whereas, yours does.

In any case, best of luck to you.

Illusory superiority - Wikipedia, the free encyclopedia
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Old 01-14-2013, 11:31 AM   #180
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Like I've said, just keep thinking that and we'll all be happy The beauty of my approach is that it does NOT require any guess work or speculation. I suspect Alex also has a rather rigorous approach to his high yield dividend / bond investing. I do see that most folks here like to bash any form of active investing with absolutely no logical basis. And the index fund fan boys still have not addressed my previous questions about re-balancing and inflation.

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Originally Posted by sunsnow View Post
To both Alex and vxp: you might want to check out a phenomenon called "illusory superiority". It seems that we humans tend to over-estimate ourselves in comparison to other people, with the vast majority of us honestly believing that we are smarter than the median. This indicates that a lot of us are highly biased in our assessment of our own abilities. Nothing personal, but the odds suggest that you are among those many misguided people. I probably am too. However, my passive investing strategy doesn't depend on my glowingly positive assessment of myself being accurate --whereas, yours does.

In any case, best of luck to you.

Illusory superiority - Wikipedia, the free encyclopedia
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