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Thread: more investment questions

  1. #1
    God/dess Lena's Avatar
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    Default more investment questions


    I think I'm lacking some perspective. I've been watching a few stocks that Melonie mentioned, and some that were on Motley Fool, but... I don't know what to compare them to.

    What are some stocks that you guys consider "good"? What is good about them? When you look at stocks, what aspects do you evaluate them on?

    What are some stocks that you would consider mediocre or bad? Why?

    Lena



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    Banned Melonie's Avatar
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    Default Re:more investment questions

    A stock being considered good, mediocre, or bad is often simply a matter of timing ! The basic questions I always ask about a stock go something like this ...

    - is the company in a position where its gross profits are likely to grow significantly over the next 6 months based on the same amount of business ? (example oil companies, due to rapidly rising oil prices)

    - is the company in a position where its business volume is going to grow significantly over the next 6 months even if profit per unit sold stays the same ? (example companies that manufacture plasma screen flat TV's)

    - is the company's business purely in a desireable segment, or does it have other divisions which are involved in losing businesses (example GE, which is involved in the fast growing electrical equipment segment, but also is heavily involved in subprime consumer lending and nuclear reactor maintenance !)

    - will the company actually be able to keep its new profits, or is it already heavily in debt, heavily burdened with having to pay for increasing union wages and benefits, facing lawsuits or environmental fines etc. such that any extra money earned will have to be paid right out again (example Daimler Chrysler) ?

    - is the company vulnerable to changes in political or financial policy beyond its control (example MacDonalds, home of the saturated fatburger, or a housing developer whose business may dry up instantly if mortgage interest rates rise) ?

    and if a stock basically survives the above tests, you then have to ask ...

    At the current stock price, is there still a potential for further increase, or has the stock already been bid up in anticipation of better company financial performance 6 months into the future ?

    At this point I have just sold out of all of my US stocks, including my natural gas stocks. The only stocks I'm still holding onto are Chinese commodity companies, although it's beginning to look like the Chinese government is putting the damper on economic growth in China now as well.

    Since last March, IMHO, the US economy and the US dollar have started an undeniable turnaround, and US financial policy has taken on an inflationary bias with a high probability of an interest rate hike soon. This has changed many of the underlying premises which made the stocks I previously mentioned several months ago a 'good deal', which is the reason that I quickly sold them. One segment which I'm starting to look at seriously is the banking industry, who will be the main beneficiary of higher future interest rates.


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    God/dess montythegeek's Avatar
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    Default Re:more investment questions

    Melonie is totally correct that it is often a matter of timing. Many of those dot-bombs which dropped 98% in value have since tripled their lows. Others dropped another 90%. The theory of relativity in finance is that everything is relative.

    When you pick a stock, you are expecting it to go up in value more than your alternatives would. You can be right about it being a good company, with good prospects and still lose money if others thought it was going to be a "great" company and failed to do "great", had better alternatives, and moved on.

    There are different approaches to picking companies. One is to pick companies that you expect better things to come from than others do. Another is to pick industries/companies because you believe the fundamentals will turn out different than they do. Reasonable people with the same set of perceptions of possibilites, can rate the odds of them in a different way.

    To pick stocks as Melonie does (and she knows this is not a criticism) takes a well thought out assessment of a lot of things most people do not take the time to think about, like the Chinese economy and what it could mean. One can do as melonie does and do this alone, or one could implicitly pay someone to do this research for you (eg a mutual fund).

    My tests are, is it a good company with good prospects AND do other people undervalue it for some reason. If that test is met, are there indications that people will continue to undervalue it by even more in awhile (buy later), or would I expect the perception of others to be about to change. The reason many of those who picked a company lost money was that they failed to change "their" opinions when facts proved them wrong on one of these counts.

    I see a fairly typical cyclical recovery transpiring. The fact that the federal funds rate would rise eventually from 1% to about 4-5% has been inevitable for a very long time. If it does the first move in June as opposed to August will not be a matter of significance to my holdings except as others adjust their expectations. Those adjustment periods are brief.

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    God/dess GoldCoastGirl's Avatar
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    Default Re:more investment questions

    I don't think it has been mentioned (or has been ??) but also go for QUALITY stocks... companies that you expect will be around for quite some time (ie GE, Disney, Nike, McDonalds, etc).

    Also, if you do invest in stocks... always have a guideline for yourself of when you will sell a loosing stock... ie the stock's price has gone down 10% from the original purchase price... yet my "stop" mark is 15%.. I won't sell until it has dropped 15%.

    Timing is crucial yet there is never a bad time to invest in the stock market... whether a bull or bear market there is always a way to make decent money via stocks.

    Personally stocks aren't my thing so it is the minor part of my investment portfolio.


    enter: E3167322D9 for your 10% discount

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    God/dess montythegeek's Avatar
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    Default Re:more investment questions

    Vee, you are not quite correct in
    Timing is crucial yet there is never a bad time to invest in the stock market... whether a bull or bear market there is always a way to make decent money via stocks.
    It happens that it can be a bad time to invest in a company when you would have done better waiting, then buying the good company. Better off in 5 years by investing today, and better off in 2,3,4,5 years by waiting 6-9 months, then investing are not the same thing. Sometimes waiting, and having the cash ARE much better. Sometimes the waiting period can be quite brief. If one had waited in September 1987 until November one would have been 30% better off in 1992. You would have still been ahead by not waiting, but much better off waiting.

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    Senior Member awboy's Avatar
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    Default Re:more investment questions

    ooooooooooo, I love it when Melonie talks business. I like to look for companies that have a broad market base. Melonie's example of plasma screen TV's, great area, but I look for the companies that are supplying the components. There are several companies that make the TV's, but usually only one or two that make the companents necessary to build the TV's (i.e. Intel and Athlon, processing chips for electronics). I also look at what is their current market share and whether they will be able to sustain it for awhile. I also look at how much money the company is putting back into itself and what their debt burden is. There is no set answer. In fact I just bought a bank stock because I liked what I saw, and the stock has not stopped going down since I bought it. Such is life. Win some lose some. I haven't lost yet, I'll hold it for awhile to see what happens because I would hate to think I was that wrong about what I saw. I should have listened to Melonie 6 months ago I looked toward China.

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    Banned Melonie's Avatar
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    Default Re:more investment questions

    Well, at the moment, I'm not looking at much of anything in the way of investments other than put options and GIC's ! Today the Dow went south of 10,000 for the first time this year, and the near future isn't looking all that rosey. As Geek said, sometimes it's the smart play to hold your money in "cash" until you see which way the biological weapon cloud is blowing.

    Although my Chinese stocks have taken a bit of a pullback from their peak, I'm still holding on to them for the moment. I suppose this stems from my belief that China is the only place on the globe where real genuine growth is occurring, plus the difficulty and cost of trading stocks on the Hong Kong exchange, plus the fact that every single one of my Chinese stocks is still worth at least 3 times what I paid for them !

    Regarding sectors like my Plasma TV example, it's really difficult to latch onto a stock which is a "pure play". As you point out, Intel and AMD do indeed make TV chips, but unfortunately they make 100 times more chips for other uses. Dell is one of the hottest Plasma TV producers, but they also produce 10 times more cheap computers. Rex and other electronics retailers do indeed sell Plasma TV's, but they also sell 10 times as many bargain basement DVD players, boom boxes and conventional TV's. Thus buying any of these stocks would put you at greater risk of losing on some other falling sector the company is also heavily involved in than of gaining from the hot Plasma TV sector.

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    Senior Member commando's Avatar
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    Default Re:more investment questions

    Lena, I would not suggest any one particular stock to anyone, until I first find out their financial goals, and current situation. Are you looking for long term growth and preservation, or are you a speculator, (i.e., playing the market). You can sit down with a professional financial advisor who will go over your current financial situation and create a customized financial plan for you to achieve your goals within your risk tolerance level. THIS IS FREE! and, it should only take about 15 minutes of your time. It's what I do for a living. There are a lot of different firms out there, and some may charge for this. I work for Morgan Stanley, and we do this for free. Unless you have the time and energy to do a lot of learning, and pay attention to your portfolio (which it looks like Melonie has), I would suggest consulting a professional. Otherwise what is a good investment for one person might not be suitable for you. If you'd like to know anything more about this, you can feel free to email me. I belive there are also a few other financial advisors who post here, from what I've read, and any of us would be happy to help you.

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    Veteran Member SexyBooty's Avatar
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    Default Re:more investment questions

    10 percent a month.

    www.carubapro.com

    SVE22

    last month they had 9.3 hey still good.

    been there for 5 years.try it
    Most people would rather be certain they're miserable, than risk being happy.

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    Banned Melonie's Avatar
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    Default Re:more investment questions

    Caruba and it's partner Options Trading house appear to be an offshore based organization specializing in high risk commodity options/futures trading which they manage on their clients' behalf. The 10% return per month is indeed impressive - however that figure is before US income tax. No offense Nyla, but IMHO anybody living in the USA with more than $10,000 invested with this highly speculative foreign outfit is almost guaranteed IRS audit bait. Also, the method they use of allowing their investors access to their money held in an offshore account, i.e. a debit card underwritten by a foreign bank, is specifically listed by the IRS as a target reason warranting extra IRS attention towards any US citizen who has such a credit card.

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    God/dess montythegeek's Avatar
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    Default Re:more investment questions

    Nyla do you even know what the difference is between a 10% per month return on an investement is and a 9.3%/month return on an investment is. A $1000 investment at the promised 10% return after 60 months is 304,481.64 at 9.3% it is $207,591.57. The difference is $96,900. In other words they stole a third of your promised return. At 9 years they have taken half of your promised money. Then there are the fees. At 15 years they have stolen 2/3rds of the promised money--the promised $28.3 BILLION dollars---BTW at 28.3 Billion you just passed Warren Buffet.

    Ask yourself, why did these guys not invest a measly 10 grand and buy out Bill Gates?

  12. #12
    Senior Member commando's Avatar
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    Default Re:more investment questions

    I think I've already read a lengthy thread on this ponzi scheme here, but allow me to just add that to make any kind of guarantees as to investment performance such as "10% a month" is highly illegal, and will catch the attention of the SEC and FBI pretty quickly. Probably not on this website, but I'd be careful when saying something like that.

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    Banned Melonie's Avatar
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    Default Re:more investment questions

    Actually, Caruba is totally immune to the FBI and SEC because all of their transactions and all of their bank accounts are outside the USA. However, this does NOT make US residents with an offshore Caruba account immune from the IRS. In fact, I'm sure that homeland security and the FBI will be paying a great deal of attention to ANY US citizen who has more than $10,000 in an offshore bank account, as part of the Patriot Act anti-money laundering investigations. It is for this reason that I was forced to close my own Swiss bank account, and Swiss banks are looked upon much more favorably than a bank from a carribean island which is not a signatory to the anti-money laundering financial disclosure treaty.

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    Senior Member commando's Avatar
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    Default Re:more investment questions

    That's true, they are immune; but anyone within the united states who is involved with them or solicits business for them is not immune. I'm not implying that anyone posting on this board would be considered soliciting, but if they had anyone within the US doing anything for them. Also, I would be wary of any company that guarantees returns. Not that 10% is hard to do, but if it's so legitimate, why be based outside the US, where you're immune from federal prosecution?

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    God/dess montythegeek's Avatar
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    Default Re:more investment questions

    Quote Originally Posted by commando link=board=6;threadid=9010;start=msg112263#msg1122 63 date=1085102354
    That's true, they are immune; but anyone within the united states who is involved with them or solicits business for them is not immune. I'm not implying that anyone posting on this board would be considered soliciting, but if they had anyone within the US doing anything for them. Also, I would be wary of any company that guarantees returns. Not that 10% is hard to do, but if it's so legitimate, why be based outside the US, where you're immune from federal prosecution?
    Comando,
    That promised return is 10% per MONTH or more than tripling you money Every year (or 1.1 to the 12th power)--Not a 10% annualized return. Loan sharks do not even generate these returns after losses.

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    Senior Member commando's Avatar
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    Default Re:more investment questions

    monty, even 10% a month is not hard to do. i used to trade professionally, and far surpassed that on a monthly basis. My point is just that no one can promise returns of any kind, be it 2% or 10%. They also need to disclose the risks inherent to the kinds of investments they offer, and the fact that past performance does not indicate future results.

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    God/dess montythegeek's Avatar
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    Default Re:more investment questions

    Ok Commando, I misread your meaning the first time around.
    You are absolutely correct as restated. A 10% return is even possible over a day. It just cannot be consistently done on a monthly basis to the point of promising it, as no return can consistently be done monthly in excess of the interest rate.

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