Friday, March 19, 2010
So yeah, now I have a super long "shopping list" of single name stocks and mutual funds. I've done research on a handful of them but still have a long way to go. The most amusing part is that I definitely want to buy at least 4-5 securities but I am holding off until there is a dip in the market.
Am I insane for trying to time the market? Maybe, maybe not. You see, I don't believe in buying in, especially for a long term hold like a mutual fund, when the market is at 18-month highs. Yes, the data is getting better slowly but surely but I just don't think we have seen the worst just yet. I might miss out on a lot of upside, but I am not quite ready for dumping some cash in the market right now. I am beginning to think the dollar cost averaging is a much better method of purchasing securities vs once a year habits that I tend to have.
With all that said, where is my March dip that I have been waiting on? I could have sworn we were going to see the second dip in the "W" scenario I have been predicting for over a year now. I guess this means I need to readjust my very fixed income brain to figure out what the next 12-16 months will look like.
Anyone care to share thoughts?
Friday, February 12, 2010
Anyway, the question was about good ol' Toyota (NYSE: TM) and whether it is now a good time to buy it. The person who sent the question was a bit nervous about buying in too early before another dip in the stock's price. Every investor deals with this fear each time s/he places a trade order. However, as individual investors we must rely on our own research to make informed decisions so that we can sleep better at night.
So how DOES one determine whether it is a good time to buy TM? Well, one thing I learned quickly about the markets is that you shouldn't try to time actions perfectly. It will drive you bonkers. With that in mind, however, I read a bunch of recent research reports published since Toyota's President apologized for the massive recall on February 5th.
Here's my findings re TM's financial "health:"
- The official recall of 4 models will not heavily impact TM's earnings. There will be a massive amount of lawsuits to come, but not enough to cause major concern for the car company provided it works on regaining customer loyalty/trust immediately.
- TM has a small debt load and lots of cash, which is pretty darn helpful in this environment.
- 3rd quarter results showed 10% increase in revenues as well as some reduction in costs, another positive in my book.
- Fiscal year 2010 won't be as pretty as years past, but that is not unusual in this economy
- Expansion into emerging markets like Brazil and Russia should help ease the pain of a harsh decline in demand in the US
From a quick and dirty look at Toyota's financial status, the company sounds like it will be more than fine despite the recalls. Buying TM stock over the next few weeks is a good idea in my book. However, as an investor I would proceed with caution and try to wait and see if I could purchase Toyota around the mid $60s or low $70s range.
I am a big fan of Limit orders and would certainly put one on for TM at several price levels. By some conservative estimates, the 12 month stock price estimate is low $80s. Others have pointed out that it can reach its old $90s handle prior to the recall woes and even top out around the $110s. I now have TM on my own watchlist and hope to buy the stock on a down day(s).
Think long and hard whether you are willing to hold TM stock for the short or long term. Always do more research to help you make informed decisions since knowledge is power (so cliche, I know, but I couldn't help that one).
So, will you be watching TM more closely now?
Disclaimer: Please remember to speak to your own licensed financial advisor. I am just a person willing to share my thoughts about investing with internet strangers. Do your research, and then turn around and do some more. This blog is purely for discussion purposes :-)
Tuesday, February 9, 2010
I am having flashbacks of when people were so confident when Lehman would be saved from the brink of bankruptcy. Oh no, a 150+ year old firm could never go down in flames. JPM and BAC and Uncle Sam will be around to save them. Sound familiar? Perhaps I am being too bearish after all this time sticking my head in the sand. Perhaps not. If you are a day trader, the last few trading days should have been a dream come true for you.
Last Thursday and Friday, I decided to place some Limit Buy orders on a few securities. One was for the SPDR Gold Trust (NYSE: GLD) and the other was for Pfizer (NYSE: PFE). Even though a handful of researchers are calling for the end of Gold Rush III to be over soon (i.e. lack of inflationary pressures in the near term), I believe there is enough fear remaining in the markets that it is always good to buy some bling.
As far as my choice to purchase some Pfizer, I read a bunch of positive reviews from Money magazine, Merrill research analysts, as well as S&P analysts regarding PFE's prospects. Bruce Berkowitz picked PFE in Money Magazine (Jan/Feb double issue due to its 8.4x PE and believes that the stock will see some good movement this year. Diane Jaffee picked PFE in the same issue, highlighting the company's recent acquisition of Wyeth as an opportunity for the drug giant to cut costs and generate cash. Hopefully, Jaffee is right and the dividend will go back up this year. Either way, no matter what happens to the healthcare reform on Capitol Hill, boomers will continue to flood the big pharma market with more customers. I think PFE is a pretty safe bet, short and long term.
So, what stocks/ETFs have you purchased recently?
Note: A Limit order is a an order to buy or sell a set number of shares at a specified price or better. This gives me more control regarding what price I pay for a stock vs a market order, where it can be $1.00 more or less, depending on when my order was placed online.
Since I am out of topics to write about, please feel free to respond to this post or email me at:
email@example.com. Please send me any questions you have!
Monday, October 19, 2009
Here are the parameters:
- Check tonight's closing price for your stock. This will be the starting price when you calculate your returns at the end of the year.
- List reasons why you think the stock is great. You can also discuss other people's choices and whether you agree/disagree (link to research, news articles, etc extremely helpful).
- You can pick more than one stock or ETF.
- You can't change your mind after midnight tonight.
- Check the closing price of your stock on 12/31/09 and see if you won.
My 1st pick: Apple (ticker AAPL)
- China and S. Korea will finally have the iPhone available at a much more affordable price, which is HUGE for the company considering these are two previously untapped and unofficial markets. There was a story on WSJ.com that discussed these markets opening for Apple. I can't post the link since you need to be a subscriber in order to read the story. So, if you want to read the articles just do a search for Apple.
- There are some accounting rule changes on when Apple can actually book revenues on the iPhone. Since the product's release, Apple had to spread out the revenue from the sale of each iPhone over the life of the AT&T contract (2 years). Now, Apple can report the total amount immediately at sale. That will mean profits will jump over the next two quarters as the company plays catch up with the phones they already sold. I heard about this accounting rule stuff on Jim Cramer's Mad Money show. Normally, I loathe any recs that this man makes but I did some digging and other analysts also point to this new account change. The biggest caveat on the accounting rule, though, is whether Apple will adopt it. I am sure there are some other issues involved with the new rule, but we shall see. I am optimistic Apple will adopt the new rule and that it will be very helpful to the revenue line.
- IMO, Apple will eventually make the iPhone available to other wireless carriers. The moment that happens, there will be another big jump in profits. There are rumors as to which carrier will be next to offer the iPhone. Bets were initially on Verizon, but the recent commercials showing a new phone destroying the iPhone probably means that VZ will not offer it any time soon. That, however, is only in the US. The global market is much bigger and I am sure some carrier overseas will get an iPhone contract similar to AT&T soon enough.Closing price for 10/19/09: $189.86
Edited to add closing price.
Wednesday, October 14, 2009
One of the more important things to be aware of in the news is the economic indicators calendar. This is a well known calendar among the pros and most of them have memorized when certain data will be released throughout the month. For example, this past Friday, October 15th, initial claims and CPI (Consumer Price Index), among many others, were released. The data released that morning did a number on how the market opened. Combine that with the US earnings calendar and the market ended in the red for the day.
How does this help you as an investor? Well, for one, being aware of the economic data released will help you figure out if the stock or ETF you want to purchase that day will be higher or lower than the price you have in mind (same goes for selling a security). Most times, there will be estimates as to what the economic data numbers will look like. You can try and gauge from these estimates whether you should buy/sell a security before or after the economic data release. This is especially important for active day traders who move in and out of positions frequently.
For the average long term investor, checking the economic indicators calendar is a good habit to practice before making purchases. At least you know what type of news environment you make your purchase in. Many times, investors can purchase a brand name stock during a dip in the general market so you don't have to pay "full retail price" for a security that has had a great run in stock price for the year. Actually, this is similar to purchasing items during a random friends and family sale at the store. It's not on clearance just yet and it's not as good as the holiday sales, but it's better than full price.
Other economic indicators, like the new construction and existing home sales, can be especially important for investors interested in purchasing stocks in home building and construction related industries. What better way to figure out whether a company will have a better than expected earnings release after looking at the history of construction permits?
As I keep mentioning in any post in this blog, please do your research, walk away, then conduct more research when you invest. Information is a wonderful tool to help you make some money in the stock market.
Monday, October 12, 2009
Anyhoo, for those who are still a little hesitant to start trading in the stock market, ING Sharebuilder is offering a pretty sweet deal. ING Sharebuilder is offering a $50.00 bonus plus a week of free trading (up to 50 trades) when you open an account with them. Instructions and offer code are listed below (copied and pasted directly from the email I received from ING).
Please note that this offer only extends to current ING Savings account holders.
How to redeem this special offer:
1. Visit www.sharebuilder.com/em/tradefree and open a ShareBuilder account using promo code TRADEFREE by October 20, 2009.
2. TRADE for FREE (up to 50 trades) during the week of October 26-30
(Free trades apply to Real-time market order AND Automatic Investment commissions).
3. You'll see your $50 bonus in your ShareBuilder account 45 days after your first trade.
This limited-time offer is only available to current