Equity Investments

[347Mike]

No worries. I look at it all like a game. If the account dropped to $0 this afternoon, I'd just shrug my shoulders and move on.

You must be a true baller or are trading peanuts if money is nothing to you.

[MandyZ]

You must be a true baller or are trading peanuts if money is nothing to you.

Well, it's more because I grew up poor. As long as I have a roof over my head, food in the fridge and friends & family to love, I consider myself lucky. Sure I've tried to provide myself a better life than what my parents were able to, but if the money and posessions were gone tomorrow, I'd still have a lot to be thankful for.

[347Mike]

Well, it's more because I grew up poor. As long as I have a roof over my head, food in the fridge and friends & family to love, I consider myself lucky. Sure I've tried to provide myself a better life than what my parents were able to, but if the money and posessions were gone tomorrow, I'd still have a lot to be thankful for.

Yeah, and so did I and if anything you would think this would make you cheaper or understand the value of a dollar.

[OldGuysRule]

Whoops, sorry for the miscalculation. Anyway... I just rely on intuition. I know that sounds stupid and crazy, but it works for me. For example, Harley-Davidson was trading at $10. Harley is a great brand - so much so that some people get the logo as a tattoo. Bought. Sold at $25 when the P/E started making me nervous. Also, Bank of America was trading at $4. How many people do you know who have a B of A account? Bought. Still holding and waiting to hit about $20-$30. I also try to follow Buffett's ideas about "being greedy when others are fearful and fearful when others are greedy" and not buying into companies I don't understand. Wish I had a more logical explanation for you, but that's how I invest.

If it works for ya' more power to you.

So you use P/E as your indication of whether a company is trading above or below fair value I suppose.

[MandyZ]

Yeah, and so did I and if anything you would think this would make you cheaper or understand the value of a dollar.

Oh believe me, I'm cheap as hell when it comes to spending. As for investing, I do it because I believe in building wealth, but what I'm saying is that wealth comes after basic needs, health, love, etc. for me, so I'm not scared to lose it.

[MandyZ]

So you use P/E as your indication of whether a company is trading above or below fair value I suppose.

Sometimes. I'd say I'm better at buying than I am at selling (I tend to sell prematurely). I use P/E as part of my "sell" guage. But it could be a number of factors like if a company has just sold off a major asset, had a PR win or loss, etc. etc.

[GE]

Premature anything is generally not a good thing.

[Nash B.]

It's OK for her though.

[OldGuysRule]

Sometimes. I'd say I'm better at buying than I am at selling (I tend to sell prematurely). I use P/E as part of my "sell" guage. But it could be a number of factors like if a company has just sold off a major asset, had a PR win or loss, etc. etc.

Cool. Like I said what ever works for you. Lots of different ways to make money in the markets.

Was curious because you listed two homebuilders. HOV is in pretty bad shape at the moment having the highest impairment charges in the industry and has already written off close to 50% of their inventory. Without some pretty large tax refunds in the next couple of years I seem them running out of cash. They certainly won't be making money selling homes during the next two years. Their quarterly yoy sales are continuing to take a hit and while their losses narrowed they are still over $100 million for the quarter. They have about $300 million in cash and at the rate their losses are going, even if they continue to narrow at their current pace, I can't see the cash holding out.

[Broncojohnny]

Whoops, sorry for the miscalculation. Anyway... I just rely on intuition. I know that sounds stupid and crazy, but it works for me. For example, Harley-Davidson was trading at $10. Harley is a great brand - so much so that some people get the logo as a tattoo. Bought. Sold at $25 when the P/E started making me nervous. Also, Bank of America was trading at $4. How many people do you know who have a B of A account? Bought. Still holding and waiting to hit about $20-$30. I also try to follow Buffett's ideas about "being greedy when others are fearful and fearful when others are greedy" and not buying into companies I don't understand. Wish I had a more logical explanation for you, but that's how I invest.

Not a bad way of looking at things at all. Your idea about consumer monopoly is dead on. If you will read some of the books about Buffett and others written by his mentor Benjamin Graham, you will be able to quantify what makes a company efficient and at what share price a given company is a good buy. Some companies should never be bought at any price, of course. You may have done this already, I don't know.

[MandyZ]

Cool. Like I said what ever works for you. Lots of different ways to make money in the markets.

Was curious because you listed two homebuilders. HOV is in pretty bad shape at the moment having the highest impairment charges in the industry and has already written off close to 50% of their inventory. Without some pretty large tax refunds in the next couple of years I seem them running out of cash. They certainly won't be making money selling homes during the next two years. Their quarterly yoy sales are continuing to take a hit and while their losses narrowed they are still over $100 million for the quarter. They have about $300 million in cash and at the rate their losses are going, even if they continue to narrow at their current pace, I can't see the cash holding out.

Well, either a rising housing market will help all housing/construction stocks, it'll get bought, or it'll go bankrupt. The bet is that all housing stocks will rise on a rebound (because psychology and herd mentality are a large part of trading) and I can hopefully jump out before going down with that ship. Same type of play I made on MGM casino stock earlier this year. Is it foolproof? Hell no. But it sure is fun

[MandyZ]

Not a bad way of looking at things at all. Your idea about consumer monopoly is dead on. If you will read some of the books about Buffett and others written by his mentor Benjamin Graham, you will be able to quantify what makes a company efficient and at what share price a given company is a good buy. Some companies should never be bought at any price, of course. You may have done this already, I don't know.

I have read up on Buffett's strategies, and I agree. I just don't enjoy doing calculations. I feel that some of the gain of trading is nonmonetary for me - I do it mostly because it's fun. If it wasn't fun, I wouldn't do it.