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Re: Time to start buying again?
Old 03-30-2007, 12:52 PM   #21
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Re: Time to start buying again?

Ah, the piglet sodomizer theory again. :

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Re: Time to start buying again?
Old 03-30-2007, 01:42 PM   #22
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Re: Time to start buying again?

I love times like these becasue you can see whatever you want in the tea leaves. My take: On the plus side; corp profits are good, corp debt OK, low unemployment. On the downside; stupid large Fed debt, bad balance of payments, high personal debt and declining housing market.
I have 'forecast' in my own financial life, that 2007 would be OK but 2008 may see a recession. I may be wrong. I mostly invest into a Target Retirement Fund so I don't expect much trauma if the market tanks. I have been collecting more cash and will look for bargains but I do not expect to hold individual stocks unless they are a long term prospect and have a DRIP program. I closed my trading account, maybe I need to open one again to catch things quickly but I am not a trader and do not want to spend even more time staring at computer screens than I do already.
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Re: Time to start buying again?
Old 03-30-2007, 01:44 PM   #23
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Re: Time to start buying again?

Quote:
Originally Posted by Running_Man
Now is the time to be selling, of that I am convinced more as the year is progressing.
Please let us know what you're selling... maybe we can offer you a good deal!
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Re: Time to start buying again?
Old 03-30-2007, 02:16 PM   #24
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Re: Time to start buying again?

Quote:
Originally Posted by brewer12345
retail depository institutions, and reinsurers.
Any current favorites for the above?
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Re: Time to start buying again?
Old 03-30-2007, 02:20 PM   #25
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Re: Time to start buying again?

Quote:
Originally Posted by MooreBonds
Any current favorites for the above?
Cannot talk about reinsurers, although if you look at the ones based on an island off the east coast of the US that trade just over book value, you can probably just grab a handful of random names and go fine.

For banks, I like AF, but it isn't quite cheap enough to go buy. OCFC is embarassingly cheap and the baby has been thrown out with the bathwater. BPOP is dirt cheap for an enviable franchise. I think WHI is cheap/attractive, although the ride is likely to be bumpy as they work through some credit quality issues. Basically, the whole space is cheap, though. You could probably do real well simply by buying the retail bank ETF.
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Re: Time to start buying again?
Old 03-30-2007, 02:29 PM   #26
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Re: Time to start buying again?

Quote:
Originally Posted by MooreBonds
Any current favorites for the above?
Quote:
Originally Posted by brewer12345
Cannot talk about reinsurers, although if you look at...
Quote:
Originally Posted by brewer12345
For banks, I like AF, but it isn't quite cheap enough to go buy. OCFC is embarassingly cheap and the baby has been thrown out with the bathwater. BPOP is dirt cheap for an enviable franchise. I think WHI is cheap/attractive, although the ride is likely to be bumpy as they work through some credit quality issues. Basically, the whole space is cheap, though. You could probably do real well simply by buying the retail bank ETF.
Eh, Brewer, you're ringing my Pavlovian bell again. Or maybe I'm just tired of plugging numbers into Turbotax already.

The real accomplishment isn't catching the fish that Brewer's throwing out, however much that might accelerate a Young Dreamer's planning or an ER's spending plans.

The real trick is studying those fish to see where they came from, and then learning to go find your own.

But how long & hard do you want to work at it, and how many longboards can one investor use at a time?!?
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Re: Time to start buying again?
Old 03-30-2007, 02:36 PM   #27
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Re: Time to start buying again?

Quote:
Originally Posted by Nords
how many longboards can one investor use at a time?!?
Dunno. Would you like a plug-in modified Prius to haul it to the beach?
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Re: Time to start buying again?
Old 03-30-2007, 04:50 PM   #28
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Re: Time to start buying again?

Ok Brewer help me understand why DSX is such a bargain. (Note I am absolutely not picking a fight here, just a bit confused after reading the prospectus of the new stock issue.) Obviously DSX pays a mouth watering dividending, made doubly attractive by it being qualified dividend.

They have rapidly expanded the fleet and the ships are new, and it seems smart they the ships they purchase are only two or three classes of ships, since it increases their operational flexibility and reduces cost. (It worked for Southwest Airlines...)

All of the positives, aside I am struck by several negatives.
o Despite an increase in the number of ships net income seems to be stuck in the 60+ million range for 3 years now.
o The stockholder just suffered a 15% dilution (8.25-9.25 million new shares issued) and there are now 61.3 million shares so roughly speaking net income is $1 a share (I am excluded last year prefered dividend payment.) This makes an P/E or ~17 or an earning yield of ~6% an amount substainal lower than the nominal dividend yield.
o Virtually every transaction involves the CEO selling shares through a holding company and his ownerships has dropped from 51% to the mid 30%


I guess I am worried that we have a pontential ponzi scheme where the company is using debt and future equity offers to pay off existing shareholders (primarily CEO Simeon Palios) with high dividend yield which isn't sustainable.
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Re: Time to start buying again?
Old 03-30-2007, 06:59 PM   #29
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Re: Time to start buying again?

Quote:
Originally Posted by Nords
Please let us know what you're selling... maybe we can offer you a good deal!
I have sold 100% of my stock holdings which represented 25 percent of my portfolio. My most recent holdings sold were:

Questar Utah Natural Gas - Held for 10+ Years
Compass Minerals: Salt Company Held 18 months
Kimco Realty - Held 12 Years
Cedar Fair Parks - held 15 Years
S&P 500 Fund - Held 18 months
Gold Bullion and Silver Bullion 5% of Portfolio adjusted annually until this year, now no preciousl minerals in my portfolio.

So there is your list of purchases if you think I am incorrect
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Re: Time to start buying again?
Old 03-30-2007, 09:12 PM   #30
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Re: Time to start buying again?

Quote:
Originally Posted by brewer12345
Dunno. Would you like a plug-in modified Prius to haul it to the beach?
OK, you got me there...
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Re: Time to start buying again?
Old 03-30-2007, 10:10 PM   #31
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Re: Time to start buying again?

Quote:
Originally Posted by Running_Man
I have sold 100% of my stock holdings which represented 25 percent of my portfolio. My most recent holdings sold were:

Questar Utah Natural Gas - Held for 10+ Years
Compass Minerals: Salt Company Held 18 months
Kimco Realty - Held 12 Years
Cedar Fair Parks - held 15 Years
S&P 500 Fund - Held 18 months
Gold Bullion and Silver Bullion 5% of Portfolio adjusted annually until this year, now no preciousl minerals in my portfolio.

So there is your list of purchases if you think I am incorrect
Interesting. Compass Minerals (CMP) owned also for about 18 months, up 41% still yielding 3.8% and raised dividends last year, and dividends have increased almost 70% in 4 years, increased earning despite a much warmer than normal winters (drives down demand for salt for deicing.) What exactly is wrong with this company?
Cedar Fairs Park (FUN). I held it briefly last year, I was concerned about its take over of Paramounts amusement parks, but they appear to have done a decent job integrating Paramount (like Great American in Silicon Valley) parks into their operations. Distribution are at 6.6% and they raised the distribution last year. It is on my watch list.
S&P 500 I guess I have owned this in various forms practically as long as I have been investing.
Never owned gold, bought silver in the mid 80s at about $12/oz not only has it gone done in value, but dummy (that is me) actually lost the 100 oz bar of silver. After reading Siegel's stocks for the long run I'll never own metals again.

A 25% equity allocation is fairly small for early retiree, and now it is zero!? What do you have your money invested in now and why did you get out of the market?

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Re: Time to start buying again?
Old 03-30-2007, 10:20 PM   #32
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Re: Time to start buying again?

Quote:
Originally Posted by Running_Man
Now is the time to be selling, of that I am convinced more as the year is progressing. To be ignoring the fundamentals that are underlying the economy of the US, with the mantra of there is never a bad time to buy is symbolic of the poor future for the near term 12-36 months for the stock market.

Look at the article in Wednesday's Wall Street Journal where Alan Blinder discusses the future of America's higher paid workers to realize that the technology era, which was a source of the boom in the 80's and 90's will be leading an era of decreasing income in the United States. A leading indicator is the slowing of housing, and the mortgage problems that are following them. This is part of a technological sea change that will impact pricing across the world. Citicorp's decision to offshore 15,000 workers to China and India and Circuit City's decision to fire all higher paid workers to be replaced with minimum wage workers will put inexorable pressure on competitors to do the same as the price pressures continue.

Time will tell but the year is unfolding very much as I was afraid it would at the start of the year.
What fundamentals are telling you to sell all your assets? Strong employment,inflation is not that bad,SP 500 is still a good value to buy and GDP is still strong. It may not be a roaring economy but its still fairly strong overall. I guess if the housing correction scares you...
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Re: Time to start buying again?
Old 03-31-2007, 08:16 AM   #33
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Re: Time to start buying again?

Quote:
Originally Posted by clifp
Ok Brewer help me understand why DSX is such a bargain. (Note I am absolutely not picking a fight here, just a bit confused after reading the prospectus of the new stock issue.) Obviously DSX pays a mouth watering dividending, made doubly attractive by it being qualified dividend.

They have rapidly expanded the fleet and the ships are new, and it seems smart they the ships they purchase are only two or three classes of ships, since it increases their operational flexibility and reduces cost. (It worked for Southwest Airlines...)

All of the positives, aside I am struck by several negatives.
o Despite an increase in the number of ships net income seems to be stuck in the 60+ million range for 3 years now.
o The stockholder just suffered a 15% dilution (8.25-9.25 million new shares issued) and there are now 61.3 million shares so roughly speaking net income is $1 a share (I am excluded last year prefered dividend payment.) This makes an P/E or ~17 or an earning yield of ~6% an amount substainal lower than the nominal dividend yield.
o Virtually every transaction involves the CEO selling shares through a holding company and his ownerships has dropped from 51% to the mid 30%


I guess I am worried that we have a pontential ponzi scheme where the company is using debt and future equity offers to pay off existing shareholders (primarily CEO Simeon Palios) with high dividend yield which isn't sustainable.
Ah the perils of not modelling things out. I (mostly) ignore this company's income statement. I model revenue out by day rate times days per year for each ship. Expenses are 5% of revenue as commissions, about $5k a day for each ship in op expense, some overhead/G&A, interest expense, and that's about it. That gives you cash flow. I don't care about depreciation because I track the value of the ships via open market transactions and shipbroker quotes. All of this ciphering gets me to an annual dividend of about $2.20 a share, pro forma for the new shares issued and new ships purchased. So that is how I look at the mechanics of the company.

The wider picture is IMO very favorable for this company. Demand for bulk shipping continues to skyrocket. Day rates for ships like DSX' are up 100+% year over year and continue to climb. It takes years to get a new ship built, and the nearest date I see companies contracting for is 2011 (if they pay up, more likely 2012 now). Meanwhile demand for ships is so high that there is something like 15 to 20% of the world's fleet stacked up waiting in line outside the Australian coal ports waiting to even load up. Then we have India imposing an export tax on iron ore, so the Chinese are turning to Brazil instead. Any idea how much longer it takes to do a round trip between China and Brazil vs. India? A lot, which eats up more shipping capacity. And DSX has used this frenzied demand to lock in high day rates for up to 5 years.

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Re: Time to start buying again?
Old 03-31-2007, 07:09 PM   #34
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Re: Time to start buying again?

i'm at a 100% cash in 401k for 2 reasons. wife and i are in early 30s.

1. market seemed to be topping out last month based on some technical indicators I read about and on IBD.

2. going back 50 years or so the 7th year of every decade is usually a big market crash or correction. 1987 was junk bonds. 1997 it was a correction in the early part of the year, then a rally and then 1998 was a bear market.

IBD called this latest correction the day it happened. On March 21st they called a follow through day after the rally started, but with the following warnings. Based on past research most corrections take around 7 weeks or more to work themselves out. In mid march when the rally started after making a higher low it was only around 4 weeks or less from the start of the correction. There was also a down day with high volume this week on day 5 after the follow through day, and based on past research this is a big warning that the rally can fail.

I'm keeping my money in cash for several reasons.

1. the IBD warnings and the fact that there is no volume. I think if this was a real rally the volume would have to be higher as proof that the big institutions were buying back in.

2. the mortgage crisis is just starting and already there are stories that it's creeping into Alt-A. Someone is holding a lot of credit default swaps and rumor is that it's insurance companies or a big pension fund or some big hedge fund. They had a hedge fund go public last year and Blackstone wants to go public this year. Question is why do they need the money. As foreclosures increase I'm almost positive that we will see some big financial company run into a lot of problems.

3. Federal Reserve is biased into raising rates. They raised rates in the late 1980's and took the whole housing market with them and I think they will do it again.

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Re: Time to start buying again?
Old 03-31-2007, 07:26 PM   #35
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Re: Time to start buying again?

Quote:
i'm at a 100% cash in 401k for 2 reasons. wife and i are in early 30s.
al: tsk, tsk, tsk. with this kind of reasoning, there are two great dangers:
1) you'll still be at 100% cash when you and your wife are in your early 60's;
2) you'll buy equities at/near their peak, then bail when they fail, and you'll still be at 100% cash when you and your wife are in your early 60's
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Re: Time to start buying again?
Old 03-31-2007, 08:26 PM   #36
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Re: Time to start buying again?

Quote:
Originally Posted by al_bundy
i'm at a 100% cash in 401k for 2 reasons. wife and i are in early 30s.

1. market seemed to be topping out last month based on some technical indicators I read about and on IBD.

2. going back 50 years or so the 7th year of every decade is usually a big market crash or correction. 1987 was junk bonds. 1997 it was a correction in the early part of the year, then a rally and then 1998 was a bear market.
Are you kidding?! Wow, fasten your tinfoil hats, kids.

I really don't understand this sort of rationale. Have you actually ever seen any documented, preferable academic evidence suggesting that any of this technical mumbo-jumbo has any validity? I certainly have not. Instead, I note that a sizable percentage of amateur schmoes follow this nonsense. In contrast, none of the smart, well-educated investment professionals (who produce very strong returns) of my acquaintance have any truck with this stuff. If you are drinking that formaldehyde kool-aid, I'm not sure we can help you, my friend.
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Re: Time to start buying again?
Old 03-31-2007, 09:28 PM   #37
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Re: Time to start buying again?

Quote:
Originally Posted by brewer12345
Have you actually ever seen any documented, preferable academic evidence suggesting that any of this technical mumbo-jumbo has any validity? I certainly have not.
Hey hey hey, H0cus published an entire book on the subject!

Quote:
Originally Posted by al_bundy
i'm at a 100% cash in 401k for 2 reasons. wife and i are in early 30s.
1. market seemed to be ...
For your sake I hope that you're tracking these reasons closely over the next 12 months, where we can again compare notes (and returns).

Even at the trough of the recent dip, our high-equity small-cap-value international-bias highly-volatile portfolio was only down 4.4% from its all-time high. And yesterday it was only down a total of 1.4% from that same all-time high. And that was after 2006's 15% returns.
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Re: Time to start buying again?
Old 03-31-2007, 09:38 PM   #38
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Re: Time to start buying again?

I'm in the middle of reading Random walk down Wall Street (Why, oh WHY didn't I find that book in 1999?), and seeing this thread right after finishing the chapter where Malkiel does a thorough...ah...*discussion* of Technical Analysis theories was worth a smile. As for us, we're DCAing our contributions into index funds, and grabbing a nice beer with the comissions we won't be spending churning our portfolio. If that strategy delays our retirement by 6 months, well, it probably would have taken a year of our lives total fretting over charts to do it the hard way, so it's still a net profit. To each their own though, and good luck...
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Re: Time to start buying again?
Old 03-31-2007, 09:52 PM   #39
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Re: Time to start buying again?

Quote:
Originally Posted by Nords
Hey hey hey, H0cus published an entire book on the subject!
For your sake I hope that you're tracking these reasons closely over the next 12 months, where we can again compare notes (and returns).
If you'd like a real life example of what retiring early, with insufficient funds, and zero equity exposure looks like, and I can't recommend Rob Bennet (*****) book highly enough.

http://www.passionsaving.com/index.html.

If other hand you'd like to actually be able to retire early and enjoy your retirement years, I'd recommend doing the opposite.
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Re: Time to start buying again?
Old 03-31-2007, 10:01 PM   #40
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Re: Time to start buying again?

(Note: I am closer to my 70th birthday than my 60th)

In my youth, when I went shopping for my school wardrobe Mother used to admonish me not to spend all of my money in one place and to be sure to attend to my 'foundation' (in those days ladies wore girdles ). My investments reflect her advise: don't concentrate in any sector and make sure that what is underneath supports the flash.

With that in mind my 'flash' amounts to no more than what I can afford to loose.

If a stock looks too good to be true, it might be.. or it might not. So, bite off some - but not enough to choke.
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