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Thread: SBUX

  1. #1
    God/dess scarlett_vancouver's Avatar
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    Default SBUX

    ~ 20 a share.

    Everything I read tells me this is a bad buy. My gut (blech, I know) and observations tell me this is a good time to buy.

    I don't do in-depth analysis (I should, I know, I will learn at some point). So...can someone tell me why exacty this might be a bad buy?

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    Veteran Member XxAmber89xX's Avatar
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    Default Re: SBUX

    I remember watching the ceo on cnbc in October and he didn't seem too optimistic.

    If you bought it, why would you? Do you expect it to double? Or do you expect a big dividend increase?
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    Default Re: SBUX

    SBUX was one of those stocks that was hyped on Wall Street as a trendy/popular buy. It's over rated. With a recession approaching, the first thing that's going to get hit is SBUX, and the speculation in this stock will disappear. It's a total luxury item.

    I've never been a fan of buying retail/fast food stocks. They take forever to move and they usually underperform.

    Yeah, the stock is approaching its 52 week low, but that doesn't mean anything. It may still go lower. Even if it has bottomed out, that doesn't mean it's going to return to its previous high or close to it. A lot of that high was speculation/trend.

    SBUX: Risk high:Reward low

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    Veteran Member XxAmber89xX's Avatar
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    Default Re: SBUX

    ^ agreed. and for much of its 15 or so years as a publicly traded company it's price average has been around $7-$10.

    I'd actually consider shorting it over buying it- but i'd do neither. Alot more interesting things out there.

    It is a potential falling knife.

    Check out Revlon's ten year for an example of a chart that looked like it was once a bottom around $20... the bottom fell out! with no recovery in sight.
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  5. #5
    Banned Katrine's Avatar
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    Default Re: SBUX

    I can run some fundamentals tomorrow when I stop by the office, if I remember. I'll get back to you on it Scar.

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

  6. #6
    Banned Katrine's Avatar
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    Default Re: SBUX

    I can run some fundamentals tomorrow when I stop by the office, if I remember. I'll get back to you on it Scar.

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

  7. #7
    Banned Melonie's Avatar
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    Default Re: SBUX

    James Bond nailed this one ... Starbucks coffee is an expensive luxury, which will be one of the first 'discretionary' expenditures to be cut when people's budgets are pressured by rising energy prices / rising food prices / rising taxes / rising insurance costs / rising loan payments and interest rates. Additionally Starbucks chose to market themselves heaviest in precisely those areas where people's taxes / loan payments are likely to rise the most.

    Also, Starbucks is caught in a profit margin squeeze in that their payroll will be affected by rising state/federal minimum wage and the cost of (worldwide commodity) coffee is going up as the US dollar exchange rate goes down. I agree that this stock would have been a good 'short' a while back ...

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    Default Re: SBUX

    Thanks for the perspective so far, and thanks Kat, that'd be cool.

    I'm learning as I go, and still rely too heavily on my experiences. I see starbucks' all over the world, every one of them is always packed, they treat their employees pretty well and have low turnover (relatively), so I think to myself "that's a solid company". *shrug*

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    God/dess shasta's Avatar
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    Default Re: SBUX

    I know everyone is against it. I have no formal education in the investment field- although I like investing My gut also says go for it, i mean, everyone (some secretly) likes Starbucks...
    My reasoning is really stupid. Everyone liked pogo balls too.

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    Banned Melonie's Avatar
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    Default Re: SBUX

    ^^^ I agree that almost everyone 'likes' Starbucks coffee ... in the same way that almost everyone 'likes' IPhones / Blackberries ... in the same way that almost everyone 'likes' new cars. But everyone 'needs' to make mortgage / rent payments, everyone 'needs' to buy gasoline and utility bills, everyone 'needs' to pay their taxes etc. The underlying economic point is that most people's incomes are not rising, while at the same time the cost of most people's 'necessary' expenses IS rising. At the same time, most people are now being restricted in terms of access to easy credit, meaning that cash out refi's and zero interest credit card offers are no longer there to provide an 'artificial' extra income source.

    Eventually the rising cost of 'necessary' expenses crowds out spending for 'luxuries' ... and in the final analysis Starbucks coffee like lap dances is a luxury item. However Starbucks has an additional strike against them that lap dancers do not ... the 'cost' of providing their product is increasing thanks to rising coffee commodity prices, rising minimum wage pay rates, rising property taxes etc. Thus even if Starbucks sells exactly the same amount of product in 2008 as in 2007 their profits will be lower. If product sales fall in volume as well, which is highly probable, Starbucks profits will be MUCH lower.

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    God/dess britneyireland's Avatar
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    Default Re: SBUX

    what is your time frame for this investment? It's a bad buy for me, but could be an excellent opportunity for someone who wants to hold til age 65.
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    Default Re: SBUX

    My 2c

    * As the price gets lower, the investment is less riskier. (This is the principle Tenet of Warren Buffett and Benjamin Graham). If you look at Wall-Street models, if the price falls, its beta increases and hence the risk increases
    But Buffett/Graham correctly argue that as the price goes lower your margin-of-safety increases and risk goes down

    * Yes, people fear recession and probably have oversold SBUX stocks. But those are short term investors. In the last recession Market oversold Apple and was trading at $6.

    * If you are thinking long-term, recessions are the best time pick up solid luxury stocks.

    And it is always worthwhile to remember the Graham's allegory from Buffett

    Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success. He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a
    private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.

    Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market's quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he will name a very low price, since he is terrified that you will unload your interest on him.

    Mr. Market has another endearing characteristic: He doesn't mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you.

    But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren't certain that you understand and can value your business far better than Mr. Market, you don't belong in the game. As they say in poker, "If you've been in the game 30 minutes and you don't know who the patsy is, you're the patsy."

    Ben's Mr. Market allegory may seem out-of-date in today's investment world, in which most professionals and academicians talk of efficient markets, dynamic hedging and betas. Their interest in such matters is understandable, since techniques shrouded in mystery clearly have value to the purveyor of
    investment advice. After all, what witch doctor has ever achieved fame and fortune by simply advising "Take two aspirins"?

    The value of market esoterica to the consumer of investment advice is a different story. In my opinion, investment success will not be produced by arcane formulae, computer programs or signals flashed by the price behavior of stocks and markets. Rather an investor will succeed by coupling good business
    judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace. In my own efforts to stay insulated, I have found it highly useful to keep Ben's Mr. Market concept firmly in mind.

  13. #13
    God/dess britneyireland's Avatar
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    Default Re: SBUX

    Well, if you want a 13.6% return on SBUX in 8 weeks, you could place a Feb Bear Call Spread by selling the 22.50 call and buying the Feb 25 call for a .30 credit.

    As long as the stock stays below $22.50 on expiration day in Feb you make $30 for every $220 you risk.

    There was some heavy institutional selling on earnings in Nov and 22.50 support did not hold. So now it will take some major institutional buying to push it back up through 22.50
    Last edited by britneyireland; 12-29-2007 at 09:44 AM. Reason: forgot somehting
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    Default Re: SBUX

    and as a result ...




    if I actually gave a damn about Starbucks, I wouldn't bother with the straddle and would just buy the put options !

    Looking at the 'fine' print shows they are even worse off than expected. Not only have they been hit by rising labor costs and rising coffee commodity prices, but rising milk prices are killing them. They have little international presence, thus their future fate is closely tied to only the US economy. Their attempt to pass on a modest price increase was met by a shifting of customers to MacDonalds and Dunkin Donuts. This downscale shift is likely to accelerate as more and more US consumers start pinching pennies. Yes they are attempting to increase their international presence ... however it remains to be seen how well their product will be accepted in foreign countries that are TRUE coffee conoisseurs.

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    Default Re: SBUX

    Quote Originally Posted by Melonie View Post
    http://www.bloomberg.com/apps/news?p...d=a_x4VuHtz_nY

    and as a result ...




    if I actually gave a damn about Starbucks, I wouldn't bother with the straddle and would just buy the put options !

    Looking at the 'fine' print shows they are even worse off than expected. Not only have they been hit by rising labor costs and rising coffee commodity prices, but rising milk prices are killing them. They have little international presence, thus their future fate is closely tied to only the US economy. Their attempt to pass on a modest price increase was met by a shifting of customers to MacDonalds and Dunkin Donuts. This downscale shift is likely to accelerate as more and more US consumers start pinching pennies. Yes they are attempting to increase their international presence ... however it remains to be seen how well their product will be accepted in foreign countries that are TRUE coffee conoisseurs.
    Yeah, but what if Mr. Market has already priced all these factors in?

    At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he will name a very low price, since he is terrified that you will unload your interest on him.

    Also it's funny that you bring in the charts when

    Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful

    Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful

    Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful

    Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful

    Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful

    Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful

    .
    .
    .
    .

  16. #16
    Banned Katrine's Avatar
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    Default Re: SBUX

    Quote Originally Posted by scarlett_vancouver View Post
    Thanks for the perspective so far, and thanks Kat, that'd be cool.

    I'm learning as I go, and still rely too heavily on my experiences. I see starbucks' all over the world, every one of them is always packed, they treat their employees pretty well and have low turnover (relatively), so I think to myself "that's a solid company". *shrug*
    Check out Costco, for a company that treats their employees well and is growing. When they increased employee benefits, the stock price plunged and shareholders were pissed, complained to BOD.

    Cause ya know, them big evil corporations...how dare they make me lose .$05/share by actually treating their people like humans!

    Sometimes I don't know why I do this, but its the world we live in.

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

  17. #17
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    Default Re: SBUX

    Quote Originally Posted by britneyireland View Post
    Well, if you want a 13.6% return on SBUX in 8 weeks, you could place a Feb Bear Call Spread by selling the 22.50 call and buying the Feb 25 call for a .30 credit.

    As long as the stock stays below $22.50 on expiration day in Feb you make $30 for every $220 you risk.

    There was some heavy institutional selling on earnings in Nov and 22.50 support did not hold. So now it will take some major institutional buying to push it back up through 22.50
    Where can I learn more about this type of investing?

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    Default Re: SBUX

    Quote Originally Posted by scarlett_vancouver View Post
    Where can I learn more about this type of investing?
    Before you begin options investing, I would suggest you Dollar Cost Average on a diversified portfolio. Once you have this discipline in place, and when you get extra money that you can afford to lose, you can start investing in options.

    Also, Britney is a Math genius. You definitely need to have a good handle of probability and statistics (at the minimum) to be a successful options investor. Basically, when you see numbers you should immediately recognize the story and pattern behind the numbers.

    Just to elaborate, the 13.5% returns that Britney mentioned is not entirely risk free. The stock needs to be below $22.5. If for any one of the thousand reasons the stock goes above $22.5, you lose all your money.

    Britney is fairly confident based on her pattern recognition of Institutional activity, Pricing charts, the Implied Volatility, her view on future Volatility. In order for you to develop that intuition and confidence, it'll take years. The question again is, do you have the time and resources to spend to develop that intuition. Options trading needs a fairly good intuition for Market Volatility and that intuition can only be developed by observing Mr. Markets manic behaviour over the course of Bull-Bear-Recession-Expansion cycle

    All I'm saying is you can't read a book or blog and start successfully trading options tomorrow. Like a professional baseball player, you should have an innate passion for finance/math and you should have taken at least a million swings before you master it.

    But, here's what you can do tomorrow. Invest monthly on a portfolio World1000 stocks, Sleep well, spend your precious time generating additional income, observe the irrationality of Mr. Market, and read about options and derivatives. At the end of it all, you would have done better than 90% of the options investors out there. And probably 5-7 years from now, you can start trading options

  19. #19
    Banned Katrine's Avatar
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    Default Re: SBUX

    Xan, you are starting to sound like a broken record. Can you please, for one second, STFU. You don't know Britney nor Scarlett's investing/trading backgrounds and experiences. Some of us have been here for a few years and might know a little more than you. Not about investing or the markets, but about the individuals we are dealing with.

    Thank dog you don't do what I do, you'd lose all your clients! Even though for the most part, I do expound upon your basic philosophy!

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

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    Default Re: SBUX

    Scarlett, starting with the basics requires learning what put and call options are, and how they work from a dollar standpoint ...

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    Default Re: SBUX

    Quote Originally Posted by Katrine View Post
    Xan, you are starting to sound like a broken record. Can you please, for one second, STFU.
    Investing is like a broken record and many investors lose money because they don't sound like broken records.

    Oops, I did it again....

    However, with a question like 'Where can I read about these investments?'. I can fairly assume where scarlett stands in terms of options trading and If I go and look back at my reply, I think it was fair, honest and relevant.

    Of course, my responses always annoy the professionals and with zero (or even negative) credibility on this board, I can safely assume nobody cares for my posts.

    But, I post for my own reaffirmations and hopefully by repeated postings I instill the discipline in myself. Even in a single post, I repeat statements and I'm not oblivious to it

    If I annoyed you or anybody else on this board, I'm sorry.

  22. #22
    Banned Katrine's Avatar
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    Default Re: SBUX

    Just keep in mind xan, I do agree with your philosophy and discipline. B. Graham is the shiznit.

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

  23. #23
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    Default Re: SBUX

    Quote Originally Posted by xanfiles1 View Post
    Before you begin options investing, I would suggest you Dollar Cost Average on a diversified portfolio. Once you have this discipline in place, and when you get extra money that you can afford to lose, you can start investing in options.

    {snip}

    All I'm saying is you can't read a book or blog and start successfully trading options tomorrow. Like a professional baseball player, you should have an innate passion for finance/math and you should have taken at least a million swings before you master it.

    But, here's what you can do tomorrow. Invest monthly on a portfolio World1000 stocks, Sleep well, spend your precious time generating additional income, observe the irrationality of Mr. Market, and read about options and derivatives. At the end of it all, you would have done better than 90% of the options investors out there. And probably 5-7 years from now, you can start trading options
    Ok, I'm not quite retarded, for the record. The down-talking isnt required.

    The money I play on the market is always money I could lose. Not that I want to, but it wouldn't put me on the street. This is how I've elected to learn about the market, and any losses I suffer (thankfully v. few so far) are, in my mind, tuition.

    I asked because I'd like to learn about options trading. Im not going to read an internet article and then start investing in options tomorrow.

    Thank you Melonie.
    Last edited by scarlett_vancouver; 12-29-2007 at 04:53 PM.

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    Default Re: SBUX

    Scar, I didn't get my lazy arse to the office today, btw. I would love to sit down with you and talk investing one of these days. Perhaps in Jamaica? I sure do hope so!

    Imagine, Scarlett and Kat, sitting on a Carribean beach, butt ass nekid, sipping a pina colada, and discussing Sharpe Ratios, ADRs, and stochastic oscillators....

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

  25. #25
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    Default Re: SBUX

    You just made my day

    Absolutely, it's a date

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