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Old 07-13-2017, 02:49 AM   #221
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With RAD? No. I've heard the chances are 50/50 of the new deal going through within the 6 months that the government has to approve it. Seems to me Rite Aid thought the first deal was reasonable, or else analysts would have been saying it would probably fail. With whatever guidance they got from the rejection, they're able to increase the chances with this new deal, so I'm betting it will happen. I read that approval would boost the stock whether it works out for Rite Aid in the long run or not, which I already knew. I think it's likely I'll gain $100,000 within 6 months from RAD.
So you are saying there's a 50% chance you just bet the farm on a lemon. RAD is losing money, it's still not even remotely cheap (4.2 price/book, forward PE of 45), and deeply in debt.

I also do not understand your decision to buy it from a game theory viewpoint. You had a comfortable lead after making a couple of limited risk moves. Why didn't you keep doing what you were doing? Did you get bored with our little competition this quickly?
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Old 07-13-2017, 08:48 AM   #222
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So you are saying there's a 50% chance you just bet the farm on a lemon. RAD is losing money, it's still not even remotely cheap (4.2 price/book, forward PE of 45), and deeply in debt.
There are mixed opinions on whether it's a good deal. I think I bought about 24 hours after its crash started so I'm calling that low even though it got lower. If the deal is approved, I'm expecting it to go significantly higher than my buy price. As I said, I think the odds are greater than 50%. I've read where the analyst speaks of the deal happening as a "when" and I've heard another say 50/50. I think the odds are something in between. I don't look at p/e. I look at the big-picture valuations from analysts and I look at the trading pattern and prices and news.

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I also do not understand your decision to buy it from a game theory viewpoint. You had a comfortable lead after making a couple of limited risk moves. Why didn't you keep doing what you were doing? Did you get bored with our little competition this quickly?
I was buying largely what I bought in real life, which I researched carefully, but in May I bought DRAD using a slightly different strategy because, though I did great in April, some trades were close and I decided to hold longer when I thought the stock was still undervalued. I also started bidding lower. DRAD stayed way undervalued, and now I'm waiting for the next financial report. Hopefully I'll sell at that time and start trading again and my real life research will help me in the contest.

Also, I took a chance by setting my limit order as high as I did with RAD because it wasn't a microcap like I'd been used to buying on drops and I thought the prices would make more sense and settle in faster. It was somewhat better than the microcaps I've delt with but there was still a downward momentum for days. I'm still optimistic though.

With ARNA, I have to see what people are saying about the chances of their drug working out. I just bought on a whim when I saw a headline and the skyrocketing prices. I saw the high was somewhat persistent and I set my limit lower but not low enough so I'm probably forced to wait for more good news about their drug which I currently know nothing about.
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Old 07-17-2017, 12:45 AM   #223
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With ARNA, I have to see what people are saying about the chances of their drug working out.
From Barron's "As it pertains to ralinepag in [pulmonary arterial hypertension], we are raising our probability of success (PoS) to 50% (from 30% previously), which raises our PT to $53/shr." I bought at $26.87 and it's now $24.28.

So analysts give my two biggest holdings the same 50/50 probability of success.
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Old 07-17-2017, 10:33 AM   #224
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... So analysts give my two biggest holdings the same 50/50 probability of success.
I am (only a little) curious how a strategy that relies on the same analysts 'the market' has access to can be expected to do better than 'the market'?

With individual stocks, an investor could easily do far better or far worse than averages, so anything is possible. But I can't see why out-performance should be expected. Or are you playing Rock Paper Scissors with these analysts behind the scenes?

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Old 07-17-2017, 10:57 AM   #225
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From Barron's "As it pertains to ralinepag in [pulmonary arterial hypertension], we are raising our probability of success (PoS) to 50% (from 30% previously), which raises our PT to $53/shr." I bought at $26.87 and it's now $24.28.

So analysts give my two biggest holdings the same 50/50 probability of success.
So, you're "putting it on black" as your investment strategy?

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Old 07-17-2017, 11:11 AM   #226
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How many investors know the advantages of a 50/50 bet that a stock will double in price compared with buying the S&P? I don't claim too. I just use my non-expert interpretation of analyst opinions (normally more than one) as one factor. This one sounds pretty specific, as opposed to the undated value, outlook, etc. ratings that I see elsewhere, never knowing when they were updated or what was considered but which most investors may put the most weight on.
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Old 07-17-2017, 02:29 PM   #227
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If one is not afraid of being wrong occasionally, one can eek out a small advantage in the longer term.
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Old 07-17-2017, 03:04 PM   #228
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If one is not afraid of being wrong occasionally, one can eek out a small advantage in the longer term.
Only if the weighted average of the "rights" outweigh the weighted average of the "wrongs".

And 85% of professional money managers seem to fail at this.

And I'll be "wrong" even with buy&hold - "Oh, I should have got out before the crash"... But if the alternative is based on... what? I don't know how to predict the future.

If one never wants to be "wrong", they should stick to treasuries, or maybe TIPS.

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Old 07-18-2017, 09:31 AM   #229
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In the context of the game and of the human propensity to feel losses more than gains, I think it's possible to eek out a small advantage. Not that it's guaranteed to always win. What I was talking about is Boho's relative bravery (albeit in this case, with fake money) having the painful possibility of being wrong, but also the joyful possibility of being right. Some people, most of us on this forum, I'd wager, would rather not risk being "so wrong", and instead do what you suggest...buy and hold an index or something even more conservative like TIPS.
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Old 07-18-2017, 09:57 AM   #230
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I appear much more wrong than I am by the fact that I lost so much money early in the contest, which actually doesn't matter and could be inherent in a good investment strategy. Buying during a huge swing and volatility works like that and it doesn't mean you made a bad choice. Given the forecasts of my stocks, they only have to rise a small fraction of the price target for me to make some money, but people are talking like I'd be so incredibly optimistic to hold them as they move another small fraction away from the target on momentum from days ago. People are naturally averse to this kind of trading.
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Old 07-18-2017, 10:19 AM   #231
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I appear much more wrong than I am by the fact that I lost so much money early in the contest, which actually doesn't matter and could be inherent in a good investment strategy. Buying during a huge swing and volatility works like that and it doesn't mean you made a bad choice. Given the forecasts of my stocks, they only have to rise a small fraction of the price target for me to make some money, but people are talking like I'd be so incredibly optimistic to hold them as they move another small fraction away from the target on momentum from days ago. People are naturally averse to this kind of trading.
I'm averse to the style of trading you're engaging in currently because you have no defined risk:reward strategy that makes any sense to me. "I'm only planning on getting out of this trade if it goes up *some* or I lose all my money and my timeline for this trade is completely uncertain" is an abhorrent amount of risk to me. When I was day/swing trading, I'd never, ever, ever have my planned/expected risk be 100% loss, much less pair that with a planned/expected gain that only has a projection of "maybe double at sometime in the potentially distant future IF that one thing that might happen does actually happen".

Risking the loss of $xxx,xxx for a potential gain of $xxx,xxx that is only even potentially reasonably thought to be possible in a perfectly ideal situation is something that most people with a basic understanding of statistics and/or probability, as well as risk management, would be very averse to as it doesn't make logical sense.
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Old 07-18-2017, 11:11 AM   #232
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In the context of the game and of the human propensity to feel losses more than gains, I think it's possible to eek out a small advantage. Not that it's guaranteed to always win. What I was talking about is Boho's relative bravery (albeit in this case, with fake money) having the painful possibility of being wrong, but also the joyful possibility of being right. ...
I'm not convinced that 'loss aversion' will help anyone to maximize gains in this scenario. Maybe. It's always 'possible' to eek out an advantage, lottery ticket winners do that, it doesn't make it a good strategy.

I also don't see where any sort of 'bravery' makes much difference, beyond being fully invested, overall. Sure, you can be 'brave' and it increases your volatility with specific stock risk, just like I can put it all on number 17. But it doesn't necessarily increase your odds to maximize gains.


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I'm averse to the style of trading you're engaging in currently because you have no defined risk:reward strategy that makes any sense to me. ....
That's the key for me. Buying & selling on analysts recommendations is ummm, let's just say 'questionable'. Or 'interesting'?

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I appear much more wrong than I am by the fact that I lost so much money early in the contest, which actually doesn't matter and could be inherent in a good investment strategy. ...
Now there ya' go.

That sounds more like trash talk among the guys in a pick-up game or at the bar. Not a strategy.


Again, anyone taking wild risks could end up on top in this game. That's the nature of it, just like putting it all on 17. Now if someone can pull ahead fairly early on, and maintain their lead during market drops that might say something. That would mean the gains are large enough to keep their drops above the index crowd. So they may be more volatile, but if that keeps them high enough, that's cool. I'm in better shape with 10 million that dropped to 5 M than I am with 3 M that rose to 4 M. But you gotta get to that big 10 M buffer first.

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Old 07-18-2017, 11:21 AM   #233
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I appear much more wrong than I am by the fact that I lost so much money early in the contest, which actually doesn't matter and could be inherent in a good investment strategy. Buying during a huge swing and volatility works like that and it doesn't mean you made a bad choice. Given the forecasts of my stocks, they only have to rise a small fraction of the price target for me to make some money, but people are talking like I'd be so incredibly optimistic to hold them as they move another small fraction away from the target on momentum from days ago. People are naturally averse to this kind of trading.
For illustrative purposes of the contest, I see Boho as a hare and several others as the turtle (myself in that category). The hare still has a chance to win, but is all over the place on the leader board.

Kinda like my choice to have the contest a 3 year one as one month, one year doesn't give the entire picture.

I'm approaching the contest as though I was investing my real money. From what I gathered, Boho is too.
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Old 07-18-2017, 12:20 PM   #234
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If my stock had risen 10% the week after I bought it, it would be seen as a good thing even if it would have risen 20% if I bought it a week earlier. Having it drop before it's likely to rise (whether or not it rises as high as the projected price target) is the same thing in my mind.

I bought it at a volatile time a day after the news that caused it to start rising, with the price target far exceeding the highest price it was going for. I bid almost 1% lower than the price it had been at for a while and it dropped to that price. Then the market changed its mind based on zero new information and it dropped more. Which market is right? I think it doesn't matter much. It's probably close enough to a fair price.

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"I'm only planning on getting out of this trade if it goes up *some* or I lose all my money...
ALL my money? I don't think so.
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Old 07-20-2017, 02:29 AM   #235
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I'm approaching the contest as though I was investing my real money. From what I gathered, Boho is too.
I honestly hope your assumption is incorrect.
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Old 07-20-2017, 05:33 AM   #236
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Boho, any plans when to cut your losses in RAD, or will you ride it down all the way if the slide continues?
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With RAD? No.
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ALL my money? I don't think so.
When I say all your money, I'm referring to all the money you bet on the stock, based on you saying you had no plans to cut your losses in RAD at any point. To me, that says you're plan is to either lose 100% or gain some unknown amount (with one analyst you cited suggesting it's possible if things work great you could double your money eventually).
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Old 07-20-2017, 07:35 AM   #237
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...

I'm approaching the contest as though I was investing my real money. From what I gathered, Boho is too.
I honestly hope your assumption is incorrect.


There are two ways to take the first comment. Yes, I think the point of this contest was to invest as if it was your real money, and act as you would in your own real account.

But I agree with RISP, for some people's sake, I sure hope they don't invest like this in real life!

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Old 07-20-2017, 07:43 AM   #238
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When I say all your money, I'm referring to all the money you bet on the stock, based on you saying you had no plans to cut your losses in RAD at any point. To me, that says you're plan is to either lose 100% or gain some unknown amount (with one analyst you cited suggesting it's possible if things work great you could double your money eventually).
I read an article that specifically said that despite Rite Aid's problems they're not in danger of going bankrupt. Even if they were, I don't think ALL is lost for investors in such a case. Technically, I would get out if it seemed very likely they'd continue to nosedive or go bankrupt.
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Old 07-20-2017, 07:50 AM   #239
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I read an article that specifically said that despite Rite Aid's problems they're not in danger of going bankrupt. Even if they were, I don't think ALL is lost for investors in such a case. Technically, I would get out if it seemed very likely they'd continue to nosedive or go bankrupt.
And how do you measure "very likely they'd continue to nosedive or go bankrupt"? Have you decided that? Is it a set % decline? A set % decline in a given period? A number of articles saying bankruptcy is possible? Some other methodology?

If you haven't decided exactly when you'd get out of a trade, you have no exit strategy for a loss. I'd wager that's your current condition based on your responses here. That's not how you take a calculated risk, it's a method of "hoping for the best".
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Old 07-20-2017, 07:58 AM   #240
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And how do you measure "very likely they'd continue to nosedive or go bankrupt"? Have you decided that? Is it a set % decline? A set % decline in a given period? A number of articles saying bankruptcy is possible? Some other methodology?

If you haven't decided exactly when you'd get out of a trade, you have no exit strategy for a loss. I'd wager that's your current condition based on your responses here. That's not how you take a calculated risk, it's a method of "hoping for the best".
This. "By failing to prepare, you are preparing to fail", as Benjamin Franklin put it so well.

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I read an article that specifically said that despite Rite Aid's problems they're not in danger of going bankrupt.
You obviously put WAY too much stock into the opinion of some random talking heads.
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