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| Posted by: noobie
- [151038108] Mon, Nov 11, 2002, 18:00
hello, my economics class is doing a stocks competition, where we can buy, sell, sellshort, etc for any use stocks. I've been doing well but last few days because of the situation in US i guess, almost all stocks have been falling.
no one is allowed to have more than 1G in cash (we started with 100G) Is there any safe bets at this point?
Can anyone suggest any strategy to use at this point>? like should i sell short or buy somethign. Any advice will be greatly appreciated.
O This is for fake money so dont fell nervous about giving opinions |
| | | 1 | Madman
Donor
ID: 21020124
Mon, Nov 11, 2002, 18:36
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I assume your goal is to accumulate wealth before the end of the semester? If so, it could be tough. I think the uncertainty with the war may present some real problems.
You might look for war-related stocks. I'd look at businesses that may benefit if Republicans take control. Any company that is making anti-terrorism devices or gadgets. I wonder how munition-companies are doing . . .
Nothing specific here, sorry. But maybe some places to look. No, there are no safe bets at the moment.
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| | | 2 | Baldwin
ID: 4261155
Mon, Nov 11, 2002, 20:52
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I could give very specific short term in and out advice if I get the urge.
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| | | 3 | Baldwin
ID: 4261155
Mon, Nov 11, 2002, 20:53
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I wouldn't be looking for slow and steady growth any time soon.
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| | | 4 | Baldwin
ID: 321048126
Tue, Nov 12, 2002, 08:58
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I have been feeling the itch to start that Political Board Stock Market competition I have been promising. If I can muster the ambition you would get a lot of great advice just watching our moves.
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| | | 5 | PuNk42AE
Donor
ID: 598521312
Wed, Nov 13, 2002, 14:16
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You could go with UAL. The union and them have been working things out pretty good. The only downfall would be if they have to file Bankruptcy, that could kill the stock.
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| | | 6 | skinneej
Sustainer
ID: 40625911
Wed, Nov 13, 2002, 19:20
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Well, I'd think Lockheed would be doing better, but we've fallen pretty steadily since July. There was an uptick last Wed. after the election but then back down again. Not all war-related stocks are going up is the point. BTW, since it's an economic class, do you have your earnings taken at the end of the period and re-distributed to those that didn't make quality decisions? That would be a true lesson! ;)
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| | | 7 | Razor
Donor
ID: 5993122
Fri, Nov 15, 2002, 16:13
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I had a similar sort of deal my last semester in college. Is it with Stocktrak?
Anyway, if you can, go with options. I made a killing on options. Most financial sites will give you Black-Scholes evaluations on all the options available - just pick out the under/overvalued ones and ride them until they are over/undervalued and then get out. Rinse, repeat. They are highly leveraged instruments so it's kind of make or break - perfect for investing fake money which you don't care about lsoing. You have to be patient though. I remember a week before my simulation ended, I was at 200K (we started with 500K). 3 days later, with the exact same portfolio, I was at 700K. If you're feeling even more ambitious, look into futures.
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| | | 8 | Razor
Donor
ID: 5993122
Fri, Nov 15, 2002, 16:22
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Oh, and if your simulation is online, there's a strong possibility of an information lag - maybe like 15 minutes - you exploit the crap out of it. The simulation sites are a lot slower to update prices and stuff then real sites like Datek or Yahoo. For example, you could watch the news or a real financial site and see a stock that just went up 1/2 point. Go to the site immediately and go in on it heavily. Then wait until the simulation site updates its prices and then sell. Not exactly fair but you can make a killing using that strategy. If your teacher isn't looking for it, you'll look like a genius.
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| | | 9 | Cosmo's Cod Piece
ID: 32655306
Sat, Nov 16, 2002, 09:52
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noobie: I would buy UAL. The value of their infrastructure is too great to sit and rot.
Look at the Real Estate Income Fund. Symbol RIT on the NYSE. Check out American Real Estate Partners, ACPPR on the NYSE.
Good luck.
I did one of these projects in my high school Consumer Ed. class and it was a lot of fun. Let me know how it turns out.
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| | | 10 | PuNk42AE
Donor
ID: 598521312
Sat, Nov 16, 2002, 16:52
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CCP. In real life i've been thinking about buying UAL. But now there is to much risk involved because of them most likely going to have to file Bankruptcy. But it is really low now, so it could be a very good pick up with the cost. Plus with all of these warning's you have to imagine that airlines are kind of freaking. Thats another problem with buying it now, because if something did happen with airlines, i'd be pretty much screwed. What do you think?
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| | | 11 | Cosmo's Cod Piece
ID: 32655306
Sat, Nov 16, 2002, 23:22
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PuNk42AE: The Nov. 16 high for UAL was $3.05 per share. 50 shares is roughly $150.00. Their 52 week high is $17.90, times 50 = $895.00. See the gain potential? What is your loss potential? IMHO, the gains outweigh the losses. Also, as I've mentioned in a previous post, look at the size of United's infrastructure. All of the airplanes, personnel, and other equipment. That infrastructure has a high value. What drives stock prices are mainly sales, sales and more sales. Part of your consideration should be a company's assets. I think they would be bought out first.
Yes, United may be on the verge of bankrupcy (check spelling). However, the holiday season is approaching and the full effect of the incoming business won't be fully spoken for until the financial statements for 1st Qtr. of '03.
Ask yourself this question, what would happen to me if I lost $150.00? Would I not be able to pay my mortgage? If that is the case, then you shouldn't be in stocks in the first place. Or, will it just cost me three trips to the bar?
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| | | 12 | PuNk42AE
Donor
ID: 598521312
Sun, Nov 17, 2002, 00:59
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Yeah you are correct. I've been study and following UAL the last month or so. And all the cuts that the unions approved really raised the stock price. But last week they had a high of around 3.8 right after the Flight Attendents said they would allow the cuts. But then went down the next four days. But that isn't much money to risk with. I was thinking about getting 30-50 shares. So also the drop over the last week does decrease how much I need to pay for them. So maybe you and myself have talked me into it. Plus I never really thought about how the Holiday season is coming upon us. Have you used any internet sites for it? I had a problem earlier in the week trying to set one up, because I haven't gotten a Checking account and needed one to make them. My guess is though that to get into it i'd have to get one on monday.
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| | | 13 | noobie
ID: 3710391816
Thu, Nov 21, 2002, 20:41
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wow thx for all the response.
its been a couple of days but i'll go see UAL
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| | | 14 | noobie
ID: 3710391816
Thu, Nov 21, 2002, 20:56
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I'll tell you guys what my portfolio looks like at this moment. I really dont know anything about stocks so I may have the illogical portfolio ever. So feel free to critcize.
Starbux (SBUX) 700 shares
AT&T Wireless (AWE) 2000 shares
Nortel Network (NT) 11250 shares
Lucent Technology (LU) 25000 shares
Cisco (CSCO)1000 shares
Motorolla (MOT) 2200 shares
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| | | 15 | yankeeh8tr
Donor
ID: 1510232112
Fri, Nov 22, 2002, 09:32
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The only suggestion I would make is a wee bit more diversity, my friend. Five of your six picks are tech related...
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| | | 16 | biliruben
Sustainer
ID: 589301110
Fri, Nov 22, 2002, 10:33
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I was going to say the same thing, then realized it isn't a real portfolio. He needs high risk to win.
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| | | 17 | sarge33rd
ID: 324532412
Fri, Nov 22, 2002, 11:18
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havent followed the market in a long while, but I seem to recall 2 distinctly predictable stocks each X-mas season: Toro and Tonka. Virtually always gained nicely between Thanksgiving and X-mas. I might suggest researching abit, the 4th qtr performance over the past few yrs for these 2, and perhaps if your findings warrant it, sell off some of the Lucent and acquire Tonka/Toro.
Again, I havent followed the market in a long, long time,...but I clearly recall these 2 from the days when I did. (early 80's)
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| | | 18 | Baldwin
ID: 4261155
Fri, Nov 22, 2002, 12:10
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I was going to point out the same thing Bili.
Most of those companies either are part of or sell to an industry that is mortgaged to the eyeballs to buy bandwidth/spectrum and it isn't clear at all that those gambles will ever prove to be sound ones. Maybe your horizon is so short it doesn't matter but I wouldn't have gone in that direction.
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| | | 19 | noobie
ID: 4510442914
Fri, Nov 29, 2002, 18:12
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o great.... today. UAL.... wont even say it. !!!
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| | | 20 | beastiemiked
Sustainer
ID: 298152019
Fri, Nov 29, 2002, 18:31
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I saw that today on Fox News and I thought of this thread. Hope nobody bought any UAL. Any company that is losing 8 million dollars a year is headed for bankruptcy unless something miraculous happens.
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| | | 21 | PuNk42AE
Donor
ID: 598521312
Sat, Nov 30, 2002, 15:24
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Yeah i'm glad I didn't get any two weeks ago. I was listening to Radio today driving back from Kentucky and heard the news. But then again, if they do file for bankruptcy that should be their low point in the stock market.
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| | | 22 | noobie
ID: 491126117
Sun, Dec 01, 2002, 22:27
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well i invested fakemoney so its ntohting serious. Thats the good news.
Say, waht exactly happens when a company files for bankruptcy? Will their stocks fall more? will it be taken off the market? I was thinking about doing Sell short for UAL as soon as I can get the game to sell my UAL shares! Is that wise?
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| | | 23 | PuNk42AE
Donor
ID: 598521312
Sun, Dec 01, 2002, 23:33
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If they file for Bankruptcy, which I think I heard could happen the 6th, then the shares will most likely lose 50% or so. The company I work for filed for Bankruptcy back in October, and nothing has really changed, so I don't expect all that much to change with UAL. But I bet their shares would fall to around 1.00 or so, and then go up from there. Basically I think the biggest thing that will hit the stock, major drop if they have to file bankruptcy, pretty big jump in price if they get the $1.6 Billion from the government. This week will be big for the Stock...
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| | | 24 | PuNk42AE
Donor
ID: 598521312
Mon, Dec 02, 2002, 09:58
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Hope you didn't sell that fake stock. Looks like today they might gain back all they lost last week. And it also looks like they have spurrened the market into big gains.
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| | | 25 | biliruben
Sustainer
ID: 5310281417
Mon, Dec 02, 2002, 15:38
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When a company demonstrates that it is not fiscally sound (for instance, by filing bankruptcy), it often takes years for investors to regain confidence in it, if they ever do. It would be very dangerous for an investor to assume a stock will "go up from there". Often a stock's price is depressed for a long time, and sometimes never recovers.
This sort of investing is very different than "buying on the dips". In the later case, you are assuming a fundentally sound company. Without investor's confidence that it is sound, you won't be getting much of a rush to buy their stock.
That said, I don't know a dang thing about UAL.
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| | | 26 | noobie
ID: 491126117
Mon, Dec 02, 2002, 18:17
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!! i sold the stocks!! dang. now i dont know if i wanna go back into UAL....
I dunno waht I should go into now.
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| | | 27 | PuNk42AE
Donor
ID: 598521312
Mon, Dec 02, 2002, 18:58
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Thursday will be the day that the stock changes now. Thats when the Machinest union votes again. It could go up a little if they vote yes, but fall alot if they vote no. What was it when you got it sold?
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| | | 28 | noobie
ID: 491126117
Mon, Dec 02, 2002, 19:13
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market closing of previous day :'( BEcause of the delay on the system.
I think i figured out how to "cheat" this online fake money contest. I dont want to jinx it, so I wont reveal how. it was previously mentioned by someone but I just didnt try it.
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| | | 29 | Razor
Donor
ID: 5993122
Mon, Dec 02, 2002, 21:23
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Told you.
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| | | 30 | noobie
ID: 491126117
Tue, Dec 03, 2002, 01:03
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hehe. well the thign is sometimes it catches up and sometimes it doesnt. I hope waht i'm doing todnight doesnt catch up
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| | | 31 | nerveclinic
Donor
ID: 5791566
Tue, Dec 03, 2002, 03:48
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noobie
You are getting some uninformed advice.
If a company goes bankrupt, the stock is pretty much toilet paper. It's worthless. You might get pennys on the dollar but it takes years and we are talking small percents of your investment.
I'd stay far away from UAL with real or fake money.
How long does your market game go on for?
Nerve
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| | | 32 | biliruben
Sustainer
ID: 589301110
Tue, Dec 03, 2002, 09:08
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Woops. Of course, Nerve's right. I was thinking about less drastic, though still serious, fiscal problems.
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| | | 33 | noobie
ID: 39116317
Tue, Dec 03, 2002, 18:08
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it goes until Jan. 15th. pretty soon.
http://www.virtualstockexchange.com
the plan didnt work. I dont know if I should try it again or not.
i've pretty much given up now.
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| | | 34 | biliruben
Sustainer
ID: 5310281417
Tue, Dec 03, 2002, 18:12
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Yeah - though VSE uses a 20 minute delayed ticker, they also only process their transactions every 20 minutes, I think. Theoretically you could still cheat, but it is harder. You need to do some expirementation with timing.
This, BTW, has implications for what we do with cheaters in Baldwin's game, if anyone in that challenge is listening.
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| | | 35 | nerveclinic
Donor
ID: 38113542
Wed, Dec 04, 2002, 03:39
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noobie
Is the point to take extremely high risk and the person who gets lucky on the gamble wins? Or is the point to practice intelligent sound investment strategies.
If the point of the school excersize is to gamble with a chance of winning, then I think you are in the wrong school.
My guess is they are trying to show you just how difficult high risk investing is.
The tortise wins this race.
Nerve
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| | | 36 | Razor
Donor
ID: 5993122
Wed, Dec 04, 2002, 13:34
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At least in my class, the point was to learn how the different instruments work and how they are bought and sold. Extra credit went to those who could beat the professor's 2 year old daughter's (i.e. random) picks. Only 1/6 of the class did it.
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| | | 37 | Seattle Zen
Donor
ID: 554192913
Wed, Dec 04, 2002, 13:43
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I've been thinking about this exercise myself. I have to agree with Nerveclinic, I hope they want to show you how difficult high risk investing is.
If I was the teacher, I'd award bonus points for anyone who turned a real profit and PUNISH those who lost over a certain percentage. There has to be a downside or you'll just swing from your heels with each shot trying for the hole-in-one.
The tortise wins this race
I think that everyone in this race is going to get a BEATING for the next few years. Hope your shell is thick.
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| | | 38 | Razor
Donor
ID: 5993122
Wed, Dec 04, 2002, 13:49
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Just because someone takes what appears to be an extremely risky position (highly leveraged), doesn't mean the person is relying on luck. Maybe the person went in on something very, very heavily on something they were completely sure of.
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| | | 39 | PuNk42AE
Donor
ID: 598521312
Wed, Dec 04, 2002, 18:37
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United is screwed now. The government won't allow them a loan, meaning they are all but filing, most likely tomorrow after the Union votes, althought now they have no reason to take a pay cut. United is probably done as an airline...
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| | | 40 | Baldwin
ID: 4261155
Wed, Dec 04, 2002, 20:17
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I hear the union members really want the bankruptcy to undo the last labor deal. I am not so sure what the union leaders do as the last deal was great for them personally.
Labor unions that have negotiated deals that raise their members' pay to robber barron proportions are just surreal aberations.
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| | | 41 | noobie
ID: 261116419
Wed, Dec 04, 2002, 20:21
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the thing is, my teacher has 2 classes and he made everyone pay $3. And apparently the winner will be getting most of the most back. like $100. I wont be gettning it, i guess :'(
BTW if UAL files bankruptcy, will that be a good time to sell short on them?
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| | | 42 | PuNk42AE
Donor
ID: 598521312
Wed, Dec 04, 2002, 20:45
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I was just thinking the same thing. Would you basically be able to sell short 100,000 shares tonight and have it go into action at the opening tomorrow? I know that the stock will drop a bit before opening bell, but still after the fed's said no to the loan, won't that basically half UAL's stock tomorrow no matter what?
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| | | 43 | biliruben
Sustainer
ID: 5310281417
Wed, Dec 04, 2002, 20:50
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You can't sell short except on an up-tick, and most brokerages won't let you short anything below $5 a share.
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| | | 44 | PuNk42AE
Donor
ID: 598521312
Wed, Dec 04, 2002, 20:56
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What's an Up-tick?
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| | | 45 | biliruben
Sustainer
ID: 5310281417
Wed, Dec 04, 2002, 20:57
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It has to go up in price.
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| | | 47 | noobie
ID: 261116419
Wed, Dec 04, 2002, 22:03
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but this is simulation...
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| | | 48 | nerveclinic
Donor
ID: 38113542
Thu, Dec 05, 2002, 01:57
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47 right interesting point about the simulation.
To answer the real question, noone is going to "sell" you a short knowing what is happening to United. There still needs to be a buyer for every seller.
But this is a simulation and the game may allow you to do it. Did the news about the Governement loan etc. all happen after the market closed? I haven't followed the news so I am not making any direct comment on the game tomorrow.
razor post 38 Just because someone takes what appears to be an extremely risky position (highly leveraged), doesn't mean the person is relying on luck.
my arguement against that point is that you are betting against some very sophisticated, intelligent experts who spend every waking hour studying this. There is "lots" of misinformation diseminated by the most powerful brokerages in the world. It's hard to beat those odds except by very safe conservative strategies. Don't believe it? Just study how few mutual funds over a 10 year period beat the index funds, a small minority. Why would a novice think they know more then the sharks...that's my point.
Now can it be done in a game? I guess the gurupie league will find out.
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| | | 49 | nerveclinic
Donor
ID: 38113542
Thu, Dec 05, 2002, 02:00
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razor post 38 Just because someone takes what appears to be an extremely risky position (highly leveraged), doesn't mean the person is relying on luck.
Oh yeah, just ask the people who said the same thing while they invested in the internet bubble and were still there when the musical chair music stopped.
Monty
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| | | 50 | Razor
Donor
ID: 5993122
Thu, Dec 05, 2002, 02:30
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I was pointing out that highly leveraged does not equal risky, necessarily. If I had inside information I could leverage up like crazy but it wouldn't be risky at all. Also, to retort to your points, arbitrage is possible. Information is not perfect. Markets are not perfect. Did you know you can make a killing investing in international mutual funds based on what the US market does for the day? Most foreign markets have a direct correlation with the way the US market moves. So you go in on international mutual funds. If the US market goes up for the day, put money in, if it goes down, take money out. You can exploit the time lag between the US and the foreign markets for big gains. In essence, you know what's going to happen abroad in advance because of what happened here. This is possible because the funds Net Asset Value is calculated at the end of the trading day in the US. You have to have a brokerage house that will let you move around money internally very cheaply but it is very much possible.
All that said, with real money, I would stick to value stocks. With fake money, it's no holds barred. Especially considering the time frame.
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| | | 51 | noobie
ID: 261116419
Thu, Dec 05, 2002, 11:28
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I see that UAL stocks has been halted. Can someone explain the implication of this? Will they make it active again later?
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| | | 52 | noobie
ID: 261116419
Thu, Dec 05, 2002, 15:45
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woo hoo. dropping again!
just one question now. Do I need to buy to cover before the stock is taken off the exchange? I mean, if they take the stock off the market will I lose all my "gains" from teh sell short? or will I get 200% of my investment back?
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| | | 53 | nerveclinic
Donor
ID: 38113542
Fri, Dec 06, 2002, 01:10
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Razor post 50:
Most foreign markets have a direct correlation with the way the US market moves. So you go in on international mutual funds. If the US market goes up for the day, put money in, if it goes down, take money out. You can exploit the time lag between the US and the foreign markets for big gains. In essence, you know what's going to happen abroad in advance because of what happened here. This is possible because the funds Net Asset Value is calculated at the end of the trading day in the US. You have to have a brokerage house that will let you move around money internally very cheaply but it is very much possible.
You’re kidding right? You want us to believe this. You think it's just this easy and this is all you have to do to make money? Why doesn't everyone do it?
This is complete misinformation. Let's start with the original premise you are making.
Most foreign markets have a direct correlation with the way the US market moves. So you go in on international mutual funds.
Ah one problem here. No matter what time of the day you buy a mutual fund, you don't get the price till the close of the business day. If you buy a mutual fund 5 minutes after the open, the price you will pay is where the fund is when the market closes. That's how mutual funds work.
If it drops 400 points that day you get it at that price. If it goes up 400 points you get it at that price.
If what you are saying is possible, why would anyone do anything but trade in foreign mutual funds? It would be like shooting ducks in a barrel.
Misinformation abounds on this thread. Some people need to study the subject a little more before they pontificate.
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| | | 54 | nerveclinic
Donor
ID: 38113542
Fri, Dec 06, 2002, 01:56
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fish in a barral not ducks
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| | | 55 | Baldwin
ID: 4261155
Fri, Dec 06, 2002, 11:11
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That's the beauty of having an actual competition Nerve. We get to put our theories to the test for all to see. Barbara Streisand walks.
I am hoping we don't get people who abuse bugs in the vitual system, gains that depend on playing with the brief time delays and such. I hardly think winning that way would exactly crown anyone with glory around here.
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| | | 56 | Razor
Donor
ID: 5993122
Fri, Dec 06, 2002, 13:06
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Uh, this has been a known problem for quite some time, nerveclinic. The rates of return are huge (30-70%) and the risk is basically nothing. You buy/get out of the fund at the end of the US markey day, depending on how the US market did. Then, the international markets change accordingly and you clean up. I'll save you the trouble of looking it up and just post some links here:
Link 1
Link 2
Link 3
Link 4
And you accuse me of spreading misinformation?
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| | | 57 | Razor
Donor
ID: 5993122
Fri, Dec 06, 2002, 13:07
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So yes, arbitrage is still possible. And yes, markets and information are far from perfect.
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| | | 58 | noobie
ID: 501138614
Fri, Dec 06, 2002, 15:44
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can someone answer my question about what happens to the gains if the UAL (which i have as sell short) get delisted?
will i lose the gains i got and get my initial investment back? or will i get 100% of my investment as gain(since the value can be considered 0)? or will i lose my investment plus the gains?
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| | | 59 | noobie
ID: 31122814
Mon, Dec 09, 2002, 17:54
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:) :D
Sell short UAL at 1.28
Bought back at 0.64! 30,000 shares!
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| | | 60 | nerveclinic
Donor
ID: 38113542
Sat, Dec 14, 2002, 02:41
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Razor post 56 read your links...
Found this interesting...
Performance data from Hedge Fund Research showed the market timing arbitrage strategy generated an annualized gross return of 17.98 percent between 1995 and 1998, mainly driven by higher returns from the international arbitrage trade. Those returns resulted in a max drawdown of (3.00) percent.
I looked at the SP 500 during the same period and the performance seemed close to the same. If it's such a sure thing where's the huge jump in performnance.
I will say this, the return from 2000 through January of 2002 of 1.87 percent. is pretty impressive. Seems to have been an advantage there. In any case seems like this strategy would work best on days when there was a huge spike up in the US market, other wise there are too many after hour variables that could change the international price downward.
In any case while there seems to be some merit to this strategy, it hardly looks like a sure fire method. That is what I thought your original post was implying when you said: Did you know you can make a killing investing in international mutual funds based on what the US market does for the day? Most foreign markets have a direct correlation with the way the US market moves. So you go in on international mutual funds. If the US market goes up for the day, put money in, if it goes down, take money out. You can exploit the time lag between the US and the foreign markets for big gains. In essence, you know what's going to happen abroad in advance because of what happened here.
17% in the late 90's hardly seems like a killing compared to how the rest of the market did or am I misinterpreting the articles data?
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| | | 61 | nerveclinic
Donor
ID: 38113542
Sat, Dec 14, 2002, 02:46
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Here's some food for thought:
The Nikkei slid 3.9 percent to 8516.07 this week, its biggest weekly drop in seven. The Nikkei is 213 points away from its lowest close since March 25, 1983.
If you invested $10,000 in the Japaneese market in 1983 almost 20 years ago, it would be worth about the same today. Except with inflation it would be maybe a 3rd of the value. Makes one realize what can happen.
At it's high the Nikeei was at close to 40,000 now 8,500 more then a 75% drop and holding.
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| | | 62 | Baldwin
ID: 4261155
Sat, Dec 14, 2002, 04:56
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How many years ago was America all but set to rebuild itself on the Japanese model? 8]
Actually what success Japan did have was based largely by following that America's formost expert on manufacturing efficiency [forget his name, Drucker?] better than America was following him and what went wrong in Japan stemmed from things idiosyncratic to Japanese culture such as their banking system.
No denying their great workforce tho.
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| | | 63 | nerveclinic
Donor
ID: 38113542
Sat, Dec 14, 2002, 05:39
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BAldwin post 62...How many years ago was America all but set to rebuild itself on the Japanese model? 8]
I think it was about 20 years ago, when the Nikeei hit 40,000
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| | | 64 | Razor
Donor
ID: 411149818
Sat, Dec 14, 2002, 13:20
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Re: post 60, jeez, I shouldn't have posted an article which contradicts me slightly, but, the Stanford article notes that "arbitrageurs could earn excess annualized returns of anywhere from 35 to 47 percent." Also, my professor showed us before our eyes (by downloading in Excel the daily prices from the past year on a fund and the US market and using an Excel formula to do the hypothetical buying/selling for him) what the daily and annual returns would be like. They were around 60% for the fund he choose. He said his buddy actually does this and has made a killing, although now fund managers are wising up and imposing higher transaction costs.
Needless to say this isn't the only case of arbitrage. I actually saw an option last year that you could've bought, immediately exercised and sold (bought? I forget) the stock and came out ahead. Free money. Strange and amazing but true. Now, this was just given listed prices on E-trade/Datek, etc. Could it have worked in real life? Maybe, maybe not....but the pricing and volume certainly indicated that it could.
Re: post 62, you must be thinking of Deming. Ya, Japan followed him like the Bible while America stuck to the manufacturing theories. When the flood of cheaper, better Japanese products came in, everyone was wondering "How did this happen?"
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| | | 65 | nerveclinic
Donor
ID: 38113542
Sat, Dec 14, 2002, 18:14
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so razor any chance you will try this method?
My companies 401k charges zero fees and we are allowed to make daily moves as often as we like.
The price we pay is determined by the price of the fund at 4pm eastern time. At that time foriegn markets are closed so if US stock price rose significantly during the day it seems like it would make sense to take a chunk of money and drop it into the foriegn fund before 4pm. You would get the fund at the price at that moment and would have a pretty good bet of making a big jump the next day.
Here's what I don't understand. If it's not in the 401k and you go to buy a foriegn fund when it's closed. I thought you would get it at the opening price the next day(But after any initial spike) rather then the price at the moment you attempt to buy.
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| | | 66 | Razor
Donor
ID: 411149818
Sat, Dec 14, 2002, 19:35
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This will answer your question:
"Arbitrage pricing occurs when funds use out-of-date prices to value their portfolios. When a fund's securities trade on foreign exchanges, especially those in the Far East that close up to 13 hours before the 4 p.m. ET pricing deadline used by most funds, the market price may be overtaken by events during the day. Earthquakes, power outages, even major market swings, can have a substantial effect on the value of foreign stocks after an exchange has closed for the day.
But many funds have ignored events occurring after the close of a foreign exchange and used stale, 13-hour-old closing prices to value their portfolios. This permits arbitragers to buy shares of funds that haven't updated their net asset values, or NAVs. These arbs cash out their shares the next day to pocket a risk-free one-day profit that comes directly out of the pockets of fund shareholders."
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| | | 67 | Razor
Donor
ID: 411149818
Sat, Dec 14, 2002, 19:41
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Correction to post 64: "manufacturing theories" should be "old manufacturing theories."
Re: post 65, Would I do this? Nah, it's immoral because the gains come at the expense of diluting the fund, bad news to buy-and-hold investors.
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| | | 68 | nerveclinic
Donor
ID: 38113542
Sun, Dec 15, 2002, 16:41
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Wait a minute is it immoral if it's within the way the system is set up to operate?
In fact aren't you punishing yourself by not doing it because obviously there are others who do and that means your shares are being diluted? In order to play on a level playing field don't you have to take advantage of the loop holes in the system since others are doing the same?
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| | | 69 | nerveclinic
Donor
ID: 38113542
Sun, Dec 15, 2002, 16:42
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does anyone know what time of the day the European markets close?
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| | | 70 | Baldwin
ID: 4261155
Sun, Dec 15, 2002, 17:40
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I guess the question you have to ask yourself is if you would respect yourself in the morning or if we would respect you in the morning after you won that way.
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| | | 71 | nerveclinic
Donor
ID: 38113542
Tue, Dec 17, 2002, 03:05
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I'm not talking about the game Balwin, I am talking about real life.
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| | | 72 | Nerveclinic
ID: 16538111
Sat, Jun 21, 2003, 18:21
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So if one looks back on some of the posts in this thread, one would see that razor schooled me on arbitraging (?) moving in and out of a foriegn index fund based on the performance of the US market that day. For an explanation see his fine description in post 50.; I doubted it was true but by the end of the thread he had me convinced it was possible and after some research I agreed.
Fast Forward to today when I receive in the mail a letter from the office of the VP for Law and Retirement Plans from the mega corporation I work for.
I have been very actively tradeing, and some of it, actually quite a bit has involved the foreign fund by T. Rowe Price.
The letter states that I have been identified as an individual who makes frequent transactions within my profit shareing plan. T. Rowe price has alerted my company and said if I don't stop I will no loger be allowed to trade in the fund.
The reason given is the high expense involved in making the transactions. The truth is they probably suspect arbitraging. The fact is it has been a combination of simple market timing moves along with some arbitraging.
Thanks for the help Razor but the gigs up.
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| | | 73 | Nerveclinic
ID: 16538111
Sat, Jun 21, 2003, 18:39
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I also would like to revisit this post
It's the last post in this thread, post 136.
stock market thread
Here is the content:
I was in Chicago last week and focused on business. Therefore I didn't listen to my weekly financial radio show.
Bob Brinker.
As I have mentioned before, Brinker told his listeners to remove most of their stock market money from the market in Jan 2000 when SP 500 was at 1465.
Had I listened last Sunday, or had I paid the 200 dollars a year for his newsletter, I would have heard that Bob Brinker had sent out the buy signal to his newsletter owners on March 10th. He sent an email alert at 2am in the morning with the SP500 at 807 and said to put your stock market money back into the sp500. The SP stayed down for 2 more days after his call.
I will point out again (Thanks to what I learned from Bob) that in Post 130, I almost made a purchase on my own. But I decided to wait and see what Bob said. I missed it.
In the week that followed his advice to reenter the market on March 11th at 807 the sp500 literally had the biggest one week gain in the last 20 years.
I'm telling you this guy is amazing. Now he refuses to say to callers this week if they should get in. "Why would I recommend you get into a market that has run up 10% since I recommended entering he asked a caller this Saturday."
Fast forward to today and the SP is sitting right around 1,000, about 25% since Bob's call in early March. This wasn't just any call. This was money he had instructed his subscribers to pull out of the market at it's height over 3 years earlier. He isn't making constant moves so it was a significant call.
That having been said the market has made incredible progress and one must suspect it is due for some kind of a correction this summer (And Brinker anticipates that) but he claims that his call will be to stay in a minimum of 1 year and perhaps as long as 3 years, although he still thinks we are in a long term bear market.
I put a good chunk back in at 865 and have recently taken a piece of that off the table. (not something hje recommended, just what I feel I have to do since I didn't get in the market at 807 when he made the call)
Just trying to continue to recommend this show if you want to learn how to carefully and conservatively manage your money. If nothing else it's fun to listen to all the people call in and tell him he single handedly saved their retirement.
Don't call in and ask if you should get in now, he will just scowl at you and ask why you didn't get in at 807. He's not going to make any bets beyond that one.
You can check his web page to see when he is available in your market. For $4.95 a month you can subscribe to his show so you can listen any time, even if your not in his market.
Brinkers web page
Nerve
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| | | 74 | biliruben
ID: 531202411
Tue, Nov 22, 2005, 12:19
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Short squeeze. Wahoo!
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| | | 75 | beastiemiked
Sustainer
ID: 03531815
Wed, Dec 14, 2005, 17:36
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Does anyone have any experience with ING Direct? Their savings accounts are currently at 3.75%(4.75% for a 2 yr CD) blowing away anything my current bank could offer. The reveiws I've seen online seem somewhat positive but was wondering if any gurupie faithful have dealt with them.
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| | | 76 | biliruben
Leader
ID: 589301110
Wed, Dec 14, 2005, 17:59
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Nope, but if it's an FDIC insured savings account, is there any risk?
I've also heard Emigrant and HSBC (4%) have pretty high rates as well, depending on balance of course.
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| | | 77 | biliruben
Leader
ID: 589301110
Wed, Dec 14, 2005, 18:30
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Bureau of the Public Debt? Who knew.
6.73% for I Bonds. They are estimating an annualized rate of inflation of 5.7%?!? Wow.
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| | | 79 | nerveclinic
ID: 2511442315
Fri, Dec 23, 2005, 17:01
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Bili:
6.73% for I Bonds. They are estimating an annualized rate of inflation of 5.7%?!? Wow.
That high rate is an anomoly based on the timing of the six month rate being set at an exact moment in time when the price of oil/gas sky rocketed because of Katrina.
It's not an "estimate".
The I bonds are based on the rate of inflation as they are gauged on a particular day/period every 6 months.
It's not a perdictor of future inflation, it's a number based on the current rate of inflation.
It's a blind system that doesn't seperate the core rate of inflation from the overall rate. At the moment in time when this next 6 month rate was set, the overall inflation rate was through the roof because of the huge hike in gas and oil prices post Katrina. (The core rate at that time was quite normal but because oil is included the number was skewed.)
This number was destined to be such an anomoly that Bob Brinker urged anyone in the market for Bonds to jump on them in October when you would lock in a 6 month guarenteed return of over 5% and then lock in again the next 6 months at the almost 7% rate you sited. (Yet another reason to devote time on Sat/Sun to Mr. Brinker)
Of course this will all correct down to a more normalized return six months from now assuming the
price of oil doesn't go through the roof past $70 a barral.
The problem is you are locked into these particular bonds for 5 years to get the full return. (If you opt out early you lose 3 months of interest)
One time anomoly, if you got in, in October you did very well. No guarentees if you choose to get in now.
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| | | 80 | biliruben
Leader
ID: 589301110
Fri, Dec 23, 2005, 17:16
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Interesting, Nerve. I'd never heard of these things before, and just stumbled upon them. Thanks for the info.
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| | | 81 | biliruben
Leader
ID: 589301110
Fri, Dec 23, 2005, 17:18
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Though isn't just about any inflation number an estimate? The indexes that we normally use only have a limited number of products in their basket, and I assume some sort of sampling is performed on this products.
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| | | 82 | nerveclinic
ID: 2511442315
Sat, Dec 24, 2005, 14:22
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Though isn't just about any inflation number an estimate? The indexes that we normally use only have a limited number of products in their basket, and I assume some sort of sampling is performed on this products.
I guess it has to be an "estimate" because you can't check the price of everything, but they arrive at an agreed upon number by going back to stores all over the country and checking the price of specific items. They go to the same stores and look at the exact same items so even though it's an "estimate" it's a "consistant" estimate.
Here are some cut and pasted explanation of the I Bonds...
The index for measuring the inflation rate is the nonseasonally adjusted CPI-U.(U.S. City Average All Items Consumer Price Index for All Urban Consumers (CPI-U), published monthly by the Bureau of Labor Statistics (BLS).)
CPI-U was selected by Treasury because it is the best known and most widely accepted measure of inflation.
Every six months Treasury pays interest based on a fixed rate of interest determined at auction.
Semiannual interest payments are determined by multiplying the inflation-adjusted principal amount by one-half the stated rate of interest on each interest payment date.
So oil is part of the "inflation gauge" and on the day that they "multiplyed the inflation-adjusted principal amount by one-half the stated rate of interest on that semi-annual date." Oil was through the roof thus the high rate. Luck.
The core inflation rate (food and clothing) was actually fairly normal on that date (I think about 2% annual, that's a guess). Partly because people had less money to spend because of the high cost of gas.
One of the reason the Feds are starting to state they are close to ending the interest rate hikes is because even though the price of oil has shot up the "core" inflation rate has stayed very normal.
This is also something Brinker predicted for months now based on the sharp price of oil limiting consumer's excess spending power for core items.
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| | | 83 | nerveclinic
ID: 19730619
Tue, Dec 27, 2005, 23:22
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Just to reinforce what an anomoly the October inflation number was (Due to oil spike), Novembers number were just released and inflation for the month was minus 6/10ths of a percent (This is the largest drop in a long time). On a yearly basis this would be de-inflation of more then 7% for the year.
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| | | 84 | Madman
ID: 43410119
Wed, Dec 28, 2005, 16:18
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nerve, bili -- yes, the inflation-adjusted rate will be high through April. But it will likely be low after that; the inflation blip will be counteracted in the subsequent 6 month return (unless the blip extends, which has always seemed to be very unlikely and as nerve points out, the CPI-U index has already begin to reverse). Also as nerve pointed out, you have to hold those things. I don't even think an off-the-run market exists in them.
Perhaps I'm missing something, but I don't see how you can effective "game" this system. You're going to get a 1% real return, adjusted for the CPI-U (unless you can buy an off-the-run i-bond that is ready to expire, and the unrealistic inflation estimate is the very last one ... and for some reason the seller was stupid enough to not adjust his price accordingly).
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| | | 85 | Madman
ID: 43410119
Wed, Dec 28, 2005, 16:25
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BTW, bili, would you object to a private account proposal for Social Security that includes as a component the option for the private account to be invested in either TIPS or I-Bonds? Both TIPS and I-Bonds are MORE SECURE than the "scheduled" Social Security benefit, which, as you likely know, depends on the average wage index that exists when each worker turn 62.
Right now, the market in these things is very illiquid, and few people take advantage of them. But it seems like a win-win from my perspective. I was trying to figure out a way to use I Bonds for my retirement, and current restrictions make it difficult. Utilizing private accounts within Social Security seems like one of those small proposals with big implications.
It would turn Social Security into a mechanism whereby the government would bear virtually all the real risk for your retirement. It might also lower debt service, since people accept lower returns for lower risk.
Any liberal otherwise skeptical of private accounts can feel free to respond. This idea struck me while trying to compose a blog post on the "Non-Partisan" Social Security plan that recently came out. Obviously, I haven't finished.
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| | | 86 | nerveclinic
ID: 19730619
Thu, Dec 29, 2005, 22:24
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Perhaps I'm missing something, but I don't see how you can effective "game" this system. You're going to get a 1% real return, adjusted for the CPI-U
My take on it is that the only reason these make any sense is if you feel there is a good chance that inflation will be a problem in the next 5 years.
Even with a low inflation environment, these bonds have given a reasonable return the last few years comparable to other secured government bonds, with the built in confidence that if inflation takes off you're protected. Most people probably use this as only a portion of their bond portfolio.
You mentioned the 1% + Inflation figure, that number was higher until this last rate period when it was lowered to the 1% (In part to the realization that these bonds would become so high with the October inflation rate.)
The reason Brinker recommended them (Only if you bought in Oct not Nov) is for the first year you owned them you were locking in a govt. guaranteed over 6% interest. Nothing else Guaranteed could touch that. Granted it would not likely hold up for the remaining 4 years you hold, but for a low risk portion of your portfolio, you got a sweet 1 year deal and for the next 4 years you would do "fine" so evened out over the 5 years it would be a good "low risk" play.
If inflation does go up, then you get the added bonus.
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| | | 87 | Madman
ID: 43410119
Fri, Dec 30, 2005, 08:36
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My take on it is that the only reason these make any sense is if you feel there is a good chance that inflation will be a problem in the next 5 years.
Agreed.
My only comment here was that the Sept. CPI-U figure was overstated, for the reason you mentioned. Similarly, the next 6- month inflation measure used for the I-Bonds we would expect to entirely back-out the "overstated" portion of the CPI-U.
In other words, if inflation is trucking at 3% and for fluky reasons oil prices spike to drive a 6-month estimate to 6% (annualized), then subsequent CPI levels will drop according. I'm not saying that the next observation would be zero (enough to average out to 3%), but over the long-haul -- and you have to hold these bonds for awhile -- your aggregate return is going to be the CPI-U + the fixed rate.
I don't see a free $20 lying on the ground, either now or even in last October. Unless, of course, you are genuinely concerned about inflation, in which case these instruments are great deals, as you already noted.
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| | | 88 | biliruben
ID: 531202411
Fri, Dec 30, 2005, 12:18
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So they reset to the latest inflation figures annually?
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| | | 89 | Madman
ID: 43410119
Fri, Dec 30, 2005, 13:16
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br -- I think it's every six months, actually.
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| | | 90 | Madman
ID: 43410119
Fri, Dec 30, 2005, 13:20
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IBond FAQ ...
"The earnings rate combines two separate rates:
A fixed rate of return, which remains the same throughout the life of the I Bond.
A variable semiannual inflation rate based on changes in the Consumer Price Index for all Urban Consumers (CPI-U). The Bureau of the Public Debt announces the rates each May and November. The semiannual inflation rate announced in May is the change between the CPI-U figures from the preceding September and March; the inflation rate announced in November is the change between the CPI-U figures from the preceding March and September."
If Sept. of one year has blipped upward for spurious reasons, you'd expect the Sept.-Mar. observation to reverse that blip.
There is a windfall to those who purchased i-bonds more than 5 years ago (and who therefore should consider liquidating them after the bump upward in inflation in Sept. of this year), but prospectively, I don't see how you can game this for the long-run.
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| | | 91 | biliruben
Leader
ID: 589301110
Fri, Dec 30, 2005, 16:08
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Interesting.
re 85: I'll have to go back and re-remember my stance, but I don't think I was against instituting a voluntary option for investment, and one of the proposals you highlighted in DPS (I can't recall at the moment) sounded very solid in that it protected the lower end of the income scale from erosion of their payout. I think my main objection was what amounted to penalizing folks for not opting to invest, as well as the tricky language which didn't make it clear that you were taking what amounted to a 3% loan that you would have to repay to the gov't, whether your investment garnered 3% or not.
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| | | 92 | biliruben
ID: 52014814
Thu, May 10, 2007, 17:53
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Is anyone else bothered, after a bad day on the street, by ubiquitous statements along the lines of "Stocks Down amid Profit Taking"?
Is this just a feeble attempt to put positive spin (profits! Yeah!) on a negative situation, or is there really some way these financial reporters have of determining motivations behind the how the market traded that day?
I've never seen any evidence or justification for using this apparently lamo explanation pulled out of some reporter's behind, but perhaps I'm mistaken.
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| | | 93 | Baldwin
ID: 14358177
Thu, May 10, 2007, 19:54
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I think there is justification for the term. Walk could prolly answer this with more authority than I can but...
If the selling is unrelated to bad news and comes at a logical time to sell based on trend analysis tools then what else can you call it?
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| | | 94 | biliruben
ID: 52014814
Thu, May 10, 2007, 20:31
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...at a logical time to sell based on trend analysis tools...
You're suggesting market timing? Show me a market timer and I'll show you a poor man.
How about fear. How about a decrease in confidence in the economy.
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| | | 95 | Baldwin
ID: 14358177
Thu, May 10, 2007, 21:55
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Well when we played the market in that market parallel game, I used standard trend analysis tools and made money so I don't know why you are that down on them. I'm not exactly sure what you mean by market timing. Are you suggesting that anyone who isn't a buy and hold dollar cost averager is going to be a loser?
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| | | 96 | Seattle Zen
ID: 46315247
Thu, May 10, 2007, 23:06
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Well when we played the market in that market parallel game, I used standard trend analysis tools and made money...
Wrong. Biliruben and I were the only two entries that did not lose money. Your memory has failed you again.
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| | | 97 | biliruben
ID: 4911361723
Fri, May 11, 2007, 10:28
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No, Baldwin. There are lots of ways to invest, and many of them "make money" (I'd put the bar a little higher to beating the market, however).
I've just never seen someone jumping in and out of the market, which is how I interpret "taking profits", based on pretty charts, which is how I interpret "trend analysis", who consistently beats to market. If there were, than we'd see market timing mutual funds with nice historical returns. We don't.
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| | | 98 | nerveclinic
ID: 105222
Sun, May 13, 2007, 05:27
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Bili
You're suggesting market timing? Show me a market timer and I'll show you a poor man.
Bob Brinker
He only does very limited moves but he has slaughtered the market the last 10 years by going mostly to cash in Jan 2000 and has been 100% invested since March 2003 almost exactly at the market bottom.
He is a market timer and he and his disciples certainly have not gotten poor following his moves.
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| | | 99 | nerveclinic
ID: 105222
Sun, May 13, 2007, 06:20
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Here's what a top market timer does...
Brinker's 3 model portfolio's 10 year performance through 12/01/07.
High growth portfolio...323%
Less agressive portfolio 233%
Very conservative portfolio 147%
Here's what a buy and hold investor did the last 10 years if they owned the total stock market index and never market timed.
127%
Who is the poor one?
Nerve
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| | | 100 | biliruben
ID: 4911361723
Sun, May 13, 2007, 09:17
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That is pretty impressive, but my guess is that is largely associated with a one-time event: the internet bubble.
How's his 5 year performance?
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| | | 101 | biliruben
ID: 4911361723
Sun, May 13, 2007, 09:18
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Woops. Missed post 98.
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| | | 103 | biliruben
ID: 4911361723
Sun, May 13, 2007, 09:30
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Does he actually have a fund? In other words, is there any way to verify the results?
One major problem with timing (as well as most mutual funds in general, actually) is the transaction costs associated with buying and selling frequently. Taxes, fees, and such. Does he take these costs into account in his performance?
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| | | 104 | nerveclinic
ID: 354291313
Sun, May 13, 2007, 15:06
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Does he actually have a fund? In other words, is there any way to verify the results?
There's no problem verifying Brinker. He is one of the top watched newsletters in the business and he's been on ABC radio for over 20 years 8 hours a weekend. He’s published a monthly newsletter since 1988.
He is monitored by Hulbert for example (A newsletter analyzer who writes for marketwatch.com and monitors over 100 monthly newsletters) and Hulbert rates him as the number one performance newsletter of the last 10 years.
He doesn't have "a fund" he has a newsletter that comes out monthly (I subscribe for $180.00 a year) that tells readers what he thinks and suggests a basket of no load mutual funds.
One major problem with timing (as well as most mutual funds in general, actually) is the transaction costs associated with buying and selling frequently. Taxes, fees, and such. Does he take these costs into account in his performance?
Brinker would agree with everything you said above. These aren't really issues with his performance.
He only recommends no-load mutual funds with extremely low expense ratios. He does not recommend any fund that charges commissions or "fees". He virtually never recommends any individual stocks. He uses a lot of Vanguard but also carefully handpicks a number of other funds but ALL have to be no load, no commission and low expense. Most have .25 to .50% yearly expenses tops.
All the performance ratings you are seeing are AFTER expenses are taken into account of course. He will be the first to tell you that it's the only way to judge fairly and he will tell you the reason he does so well is his mantra is exactly as you suggested...avoid Taxes, fees, and such.
He doesn't have big tax issues because even though he does market time it is only very rarely. I've listened to him since the mid 90's, he was 100% in the market until January 2000 then went mostly to cash, then went back in 100% in March 2003. Those are the only moves in 10 years but they were so "right on" that he slaughtered the market.
It's a huge advantage if you can make those calls right rather then buy and hold and I can't tell you how well I slept having my 401 K in bonds from 2000-2003 because I did exactly what he said. Fortunately I had already been listening to him for the preceding 5 years, 8 hours most weekends or I wouldn't have done it.
Never the less, even though his moves are rare, it is market timing and you can see the results. If it was a 2 or 5 year track record I would be skeptical but his newsletter goes back to 1988.
The last market drop in late February he was actually hoping for a bigger 10% correction but said there was nothing to worry about as stocks dropped 6.5% and some people started to panic.
You should give his show a listen Bili, the best time is the first 15 minutes each Saturday as he usually sums up what he's thinking. The stations and times are listed on his website. I listened in Seattle for years.
Make sure it's him though; sometimes he has a guest host named "Bill" who can't hold a candle to him.
Based on your concerns about market timing expense, I think you would really like him. He has had John Bogle the founder of Vanguard on a number of times.
Obviously I am a big fan.
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| | | 105 | Baldwin
ID: 14358177
Sun, May 13, 2007, 17:16
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SZ, you are wrong. I showed a profit at the end of the game.
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| | | 106 | nerveclinic
ID: 504531413
Mon, May 14, 2007, 14:57
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I miss spoke.
Brinker is only on 6 hours a weekend.
3 hours each saturday and Sunday.
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| | | 107 | biliruben
ID: 33258140
Wed, Jun 04, 2008, 13:59
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Smucker Pays $3.3 Billion for Folgers Coffee:
So is the creation Smolgers, or...
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| | | 108 | Boxman
ID: 571114225
Wed, Jun 04, 2008, 19:24
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Bili: I'm really surprised companies like Campbell's Soup, Clorox and Dr. Pepper have been allowed to float around on the market without being scooped up by a P&G or Kellogg's type company.
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| | | 109 | biliruben
ID: 33258140
Thu, Jun 05, 2008, 19:56
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Finally. Someone who understands what money's for.
Dr. Henry T. Nicholas III, the flamboyant co-founder and former chief executive of semiconductor chip maker Broadcom, was indicted Thursday in California on various charges, including spiking the drinks of industry executives with ecstasy and maintaining several residences from 1999 to 2005 that were used to distribute and sell other drugs, including cocaine and methamphetamine.
A second indictment filed in the Federal District Court in Santa Ana, Calif., and also unsealed Thursday accused Mr. Nicholas and William Ruehle, the former chief financial officer of Broadcom of improperly backdating stock options, which forced Broadcom to take a $2.2 billion write-down.
Mr. Ruehle, who faces conspiracy and securities fraud charges, is not charged with drug violations.
Broadcom executives did not return calls seeking comment. But Mr. Nicholas, who turned himself in to the FBI on Thursday morning, is expected to appear in federal court Thursday afternoon.
From his early days running Broadcom at the height of the dot-com boom, and when he was nicknamed Darth Vader by rivals, Mr. Nicholas has been known for his outlandish stunts and spectacular outbursts.
In one incident, according to the indictment, Mr. Nicholas and his guests smoked so much marijuana on a flight to Las Vegas from Orange County, Calif,, that the smoke drifted into the cockpit of the private plane they were flying in and the pilot was forced to put on a gas mask.
Mr. Nicholas is also accused of hiring prostitutes not only for himself but Broadcom’s customers. He used several residences in Orange County, Calif. and Las Vegas, as well as a commercial office space called the “warehouse” for his activities. According to the indictment, Mr. Nicholas “used threats of violence and death and payments of money to attempt to conceal his unlawful conduct.”
In January of 2003, Mr. Nicholas resigned from the company he co-founded, which went public in 1998 and made him a billionaire many times over. The reason he gave then was to focus on salvaging his marriage after his wife, Stacey, filed for divorce.
In work and play, Mr. Nicolas always had a wild streak.
He once tried to strip an investment banker at a winter conference in Utah and roll him in the snow because he thought the banker was too uptight. And on his 40th birthday in 1999, his guest list included a porn star, as well as MTV’s band of the year, Orgy, which performed at his home. Police officers showed up at the party and warned Mr. Nicholas to turn the music down.
I owned Broadcom back in the day and made lost money on it in the dot-bomb crash. Glad my money went for a good cause.
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| | | 110 | Boxman
ID: 337352111
Mon, Jun 09, 2008, 13:32
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I haven't posted in this thread in a while.
I sold off my cost basis in Visa today (been in since the IPO date) and rolled it into Pepsi (PEP; not the bottling division). Since PEP has been on a downslope lately I thought this was a good time to increase a position in a company with strong cap appreciation and dividend growth.
I left the remaining shares of V in the portfolio to see if this thing will turn into MasterCard. I have to admit that I'm curious to see if this thing will go to $300. At that point I'll get out entirely unless there's a strong dividend. Since there is no dividend currently and even if it pays a comparable one to MC it would be weak and the share would still be kind of volatile. The SEC documentation isn't very promising in that the greatest risks to V are gov't restrictions and legalities on the fees they charge. Since V basically prints money for themselves via these fees so long as they keep G&A under control, this would be crippling.
Now I'm waiting on Intrepid Potash (IPI). This thing has finally started moving up for me since I got in on the IPO date.
It looks like my summer move into Burlington Northern (BNI) may fail. I looked back at historical prices over the past 3 years and there's been a minimum of a 10% price decline in June compared to the April high price. BNI has been as unstoppable as, well, a train lately so I don't know if the pull back will be that dramatic if at all. Their dividend is weak too, but the cap appreciation has just been so consistently strong that it justifies it as part of my portfolio.
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| | | 111 | nerveclinic
ID: 5047110
Mon, Jun 09, 2008, 18:16
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I sold off my cost basis in Visa today
I bought more today on the downturn.
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| | | 112 | Boxman
ID: 571114225
Mon, Jun 09, 2008, 19:26
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I bought more today on the downturn.
I can see why. V looks like a juggernaut. Outside of the dividend, which is my own personal strategy, from a trading perspective I worry about an out of control P/E ratio. If we learned anything from dot.com it was that.
There's plenty of $$$ left to be made with V fo' sho'.
I did get my lunch handed to me by Citigroup. I just got tired of it and when the rumors about C and their dividend started flying around I sold off all my holdings about a month ago and turned that into more WFC common stock and JPM preferred.
What's your take on the S&P? The index has been getting murdered.
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| | | 113 | biliruben
ID: 33258140
Tue, Jun 10, 2008, 13:26
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I started dollar-cost-averaging into the index last week. I think there is a good possibility it will dip down into the 12s again, but I want to get some of my money I cashed out of my house working so that it inflation doesn't eat too much of it. I can't withstand too much volatility right now, given that I am going to be buying a house within a year, though I am buying a little bit of stock as well.
What's annoying me right now is how much TD-Am. is charging me to buy the index - 5-times what they charge for a stock purchase.
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| | | 114 | Boxman
ID: 337352111
Tue, Jun 10, 2008, 13:29
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What's annoying me right now is how much TD-Am. is charging me to buy the index - 5-times what they charge for a stock purchase.
Are you buying a mutual fund? What about an ETF? What are they charging?
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| | | 115 | biliruben
ID: 33258140
Tue, Jun 10, 2008, 13:37
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I'm buying vfinx, which they consider a mutual fund not an ETF, I guess. $49.99. Not a huge deal, but I don't see why it should be so much more than a stock purchase.
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| | | 116 | Boxman
ID: 337352111
Tue, Jun 10, 2008, 13:45
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For my mutual funds I just do it straight thru the brokerage that created the fund. They don't charge me anything other than the management fee.
Could you get around it that way?
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| | | 117 | biliruben
ID: 33258140
Tue, Jun 10, 2008, 14:07
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I suppose. I have a retirement account with Vanguard, but it just isn't worth it to create another account just for this. I am having account overload as it is. My mortgage broker was overwhelmed with accounts when I sent her the paper-work for pre-approval.
They sure do make it a pain in the ass to maximize your tax-advantages.
It's enough to suspect that they want you to give up and get someone to manage it all for you. For 1% of assets, of course. F 'em.
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| | | 118 | nerveclinic
ID: 5047110
Tue, Jun 10, 2008, 14:28
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Bili
Just by the SPY ETF trades exactly like a stock, replicates the SP 500 and commission should be exactly the same as buying stock.
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| | | 119 | biliruben
ID: 33258140
Tue, Jun 10, 2008, 14:30
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Cool. I'll check it out, Nerve. Thanks.
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| | | 120 | nerveclinic
ID: 5047110
Tue, Jun 10, 2008, 14:48
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Box I did get my lunch handed to me by Citigroup. I just got tired of it and when the rumors about C and their dividend started flying around I sold off all my holdings about a month ago and turned that into more WFC common stock and JPM preferred.
Well you and I just have completely different philosophies, as I said early last fall, I don't understand owning financial stocks during a crisis that is being called the "worst since the depression".
I understand blood in the street and everything but it's been obvious for some time this was going to protracted and there were lots of shoes to drop in financials...maybe more. We got blood in the streets, arms, legs, etc. If you have your head wrapped around it hats off but no one interviewed on Bloomberg seems to agree on when the end will be.
What's your take on the S&P? The index has been getting murdered.
The index has been getting murdered lately because of financials...8-}
Also the oil prices are freaking everyone out. Good, chance to buy stocks cheaper again. I've been buying on the way down and selling a little on the way back up. I went 100% invested the day we hit 1260...thinking it was the second retest of the bottom and I'm back to 85% now (Although bought some V yesterday)
The markets going to be crazy until we see more light at the end of the tunnel, but with the Fed putting interest rates at 2%, and shoveling money at the banks, and with an election coming up in November, it's hard not to take risks here.
I don't even know what Visa PE ratio is (Wait there isn't one yet is there?), I just see a great American company that's just started trading, a solid business that grows as the world grows. Mutual Funds have to accumulate shares, no exposure to the financials, the banks loan the money, VISA just collects fees. This seems like a long term story in a portfolio that can survive downturns. Wish I had figured it out as early as you did Box.
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| | | 121 | Boxman
ID: 337352111
Tue, Jun 10, 2008, 16:26
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Well you and I just have completely different philosophies, as I said early last fall, I don't understand owning financial stocks during a crisis that is being called the "worst since the depression".
True. Different ways of circling the world I suppose.
Most of the shares I sold I've had for years. It was the threatening of C's entire dividend that made me woozy and finally say enough of them. I am still in Wells Fargo common and JP Morgan preferred though. I respect market fluctuations as part of the game, but I do want income as part of the assumption of taking on risk. Admittedly I do make exceptions if there's a nice growth stock out there like V and what I think Intrepid Potash (IPI) will be at least for the short/medium term.
I don't even know what Visa PE ratio is (Wait there isn't one yet is there?), I just see a great American company that's just started trading, a solid business that grows as the world grows.
There wouldn't be a formal one yet I believe, but based on earnings forecasts some analysts on CNBC and Bloomberg radio have said it was getting expensive; especially when compared to MC. I saw PEP take a beat down recently and I decided to take out the V cost basis and increase PEP.
All V does basically is collect fees. It's a very simple business model. All they really need to do is lobby Congress to keep them off their back about the fee amounts, keep G&A under control, and get chin deep into the emerging economies before MC does.
The fed has got to be worried now that the 2% rate has been around. They shouldn't take it any lower for fear of inflationary and dollar weakening risks. It is here I defer to econ-studs like Madman, but I just don't see a continual 2% rate as good for the economy. Eventually rates have to go back up. Otherwise, won't the dollar just not even be worth wallpapering your house with?
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| | | 122 | nerveclinic
ID: 5047110
Tue, Jun 10, 2008, 17:34
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The fed has got to be worried now that the 2% rate has been around. They shouldn't take it any lower for fear of inflationary and dollar weakening risks.
Why would they take it lower? Except for financial companies, numbers have been fine given the circumstances.
Inflation has been high for oil and food (both in your face) but other areas continue to track well if not lower...
clothing, cars, electronics, appliances...houses.
The inflation hawks never mention this.
Ok eggs cost more, but if you want to buy a house it's 20% less now. Lotta eggs
by the way, $1.59 a gallon for gas here, just filled an empty tank for 14 dollas...sorry
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| | | 123 | nerveclinic
ID: 5047110
Thu, Jun 12, 2008, 02:48
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Looks like we are going to retest the March Lows.
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