I received my first email inquiry yesterday and was unabashedly excited about it. Somehow, the thought of at least one person even reading this blog makes me happy.
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 :-)
Friday, February 12, 2010
Tuesday, February 9, 2010
Dow closes above 10,000 (again)
The Dow closed above 10,000 today due to the news that Germany is considering loan guarantees for Greece's debt. It's not surprising that someone stepped up to the plate to save the euro zone from experiencing a default, but it is surprising that investors seem so confident it will happen.
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.
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.
Happy New Year!
So, it's been a while once again. The markets reached new highs only to see the Dow fall slightly below 10,000 the other day. Now seems to be a great time to take advantage of the rips and dips of the markets and I hope readers are partaking in some discount shopping opportunities.
Since I am out of topics to write about, please feel free to respond to this post or email me at:
streetchicstreetsmart@gmail.com. Please send me any questions you have!
Since I am out of topics to write about, please feel free to respond to this post or email me at:
streetchicstreetsmart@gmail.com. Please send me any questions you have!
Monday, October 19, 2009
Stock pick challenge
I needed lots of motivation to continue with this blog, so I suggested a stock pick challenge with some friends. There is no obligation besides tracking the closing price of the stock pick at today's close as well as on 12/31/09. Whoever picks the stock with the highest percent gain between today and year end wins bragging rights. If you want to participate, post a comment here and I will add you to my tracker spreadsheet :-)
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.
Edited to add closing price.
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)
My reasons:
- 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: $189.86Edited to add closing price.
Wednesday, October 14, 2009
Economic Indicators
Picking up where we left off :-)
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.
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
ING Sharebuilder Deal
So I am admittedly one of the worst bloggers out there. However, I saw this email in my inbox and figured it was the world's way of forcing me to start writing on the blog again.
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.
This limited-time offer is only available to currentING DIRECT Customers without a ShareBuilder account and is a great value. 50 Real-time trades at the standard commission price of $9.95 would cost almost $500. So there's no better time to start investing in your financial future.
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
Thursday, August 27, 2009
My Criteria for "Research"
Before you do anything with your money, the first rule of thumb is to research, research, walk away, and then research some more before putting in a buy order. When I refer to "doing your own research," I am thinking of the following:
After that long intro, we can now have some fun and concentrate on the first item on my list: Read/listen to the financial news headlines.
The first thing I do in the morning is to read the headlines for the day. I need to get familiar with what is going on in the financial world (especially if you are like me and have not paid close attention to the markets for months). So many things can influence the behavior of the markets that you just need to be aware of the major news. You don't have to read every single article in the Wall Street Journal, but you should know the major headlines.
When I was working long hours, I used to cheat and listen to CNBC's Squawkbox while getting ready for work. Then, on my commute, I would read as many news stories and headlines on my Bloomberg feed. By the time I walked in the door at work, I had a decent sense of what is going on for the day. I was also spoiled since CNBC was on all day long at work and I could listen to the news chatter in the background if I wanted to.
If you have the ability to leave the news on throughout the day, I highly recommend it. You don't need to have the volume on either. Watching news headlines at the bottom of the page every so often does help you stay in touch with what's going on. You also get to see how the market indices like the S&P 500 Index, the NASDAQ and the Dow Jones Industrial Average are behaving throughout the day. Another option is to keep streaming data open on your internet browser. A lot of the online brokerage accounts offer these services and it is yet another way to stay informed.
So let's go back to browsing headlines. Today, a very interesting story caught my eye on WSJ.com. Apparently, Apple (NASDAQ: APPL) is getting ready to launch the iPhone in China, where the market is one of the biggest money making opportunities in the world. Exciting, right? Well, don't forget to read the comments following the article because a lot of random internet strangers have the ability to do more fact checking and, lo and behold, the iPhone is already sold in China. However, it looks like the device is being sold at an egregious amount and Apple is looking to make it much more affordable. If the demand for the iPhone is that high for that ridiculous price, demand for the device at a much more affordable price might presumably be even bigger. APPL could be a good buy, so save that thought for later.
Side note: Any time I will mention a stock, I will list the general name and then I will list the stock exchange it is listed on followed by the ticker symbol. So, "Apple" is the name of the company, "NASDAQ" is the stock exchange where the company is listed, and "APPL" is the ticker symbol for the stock. Ticker symbols are an easy way to find a company's price quotes, data, SEC filings, etc.
Another headline that peaked my interest this morning is one from FT.com: Oil Prices Weigh Heavily on Wall Street. This article is a general overview about the US market's behavior in the first hour of trading (US Markets open general trading at 9:30 am EST and close at 4:00 pm EST). Oil's prices influence the energy industry greatly and it could be an opportunity to buy some of these big name stocks like Chevron (NYSE: CVX) or Exxon Mobil (NYSE: XOM). Again, more food for thought and you can use these names as a starting point to do more research on the industries and the companies themselves.
Make sure you read headlines from multiple sources since some, like the Financial Times, publish stories with a more international twist. This will help you get a better understanding of not just the US Markets but also the rest of the major world markets. After all, we all now know that the markets are intricately tied to each other after seeing them all crash at the end of 2008.
Another reason to read multiple sources is to understand what happened in markets that opened and closed ahead of the US. The Japanese and Chinese markets have already closed by the time the US opens and London and the rest of Europe are halfway through their market day by 9:30 am EST. In general (and this is a BIG generalization here), US markets will follow the patterns of the other markets right after the opening bell. Now, our own domestic news can swing the US markets in different directions as we go through the day so don't forget that either.
So, I will reiterate that research is a very big part of becoming an active investor. There are multiple ways to keep up with the news and the key is to get in the habit of reading/listening/browsing through the financial headlines to keep you informed.
Disclaimer: The company names I mentioned above are only examples of what can possibly catch my interest at any given day. I will not purchase a security based solely on headlines for the day.
- Read/listen to the financial news headlines from multiple sources
- Watch the economic indicators calendar
- Read in-depth economic reports from the three rating agencies: Standard & Poor's (S&P), Moody's, and Fitch
- Read industry reports published by research analysts (you can find these through your brokerage firms or you can subscribe to services directly, like Morningstar)
- Read research reports on specific companies you are interested in
- Read financial statements and SEC filings
- Read special reports from economists, both the bulls and the bears side (to gain appropriate perspective from each side)
After that long intro, we can now have some fun and concentrate on the first item on my list: Read/listen to the financial news headlines.
The first thing I do in the morning is to read the headlines for the day. I need to get familiar with what is going on in the financial world (especially if you are like me and have not paid close attention to the markets for months). So many things can influence the behavior of the markets that you just need to be aware of the major news. You don't have to read every single article in the Wall Street Journal, but you should know the major headlines.
When I was working long hours, I used to cheat and listen to CNBC's Squawkbox while getting ready for work. Then, on my commute, I would read as many news stories and headlines on my Bloomberg feed. By the time I walked in the door at work, I had a decent sense of what is going on for the day. I was also spoiled since CNBC was on all day long at work and I could listen to the news chatter in the background if I wanted to.
If you have the ability to leave the news on throughout the day, I highly recommend it. You don't need to have the volume on either. Watching news headlines at the bottom of the page every so often does help you stay in touch with what's going on. You also get to see how the market indices like the S&P 500 Index, the NASDAQ and the Dow Jones Industrial Average are behaving throughout the day. Another option is to keep streaming data open on your internet browser. A lot of the online brokerage accounts offer these services and it is yet another way to stay informed.
So let's go back to browsing headlines. Today, a very interesting story caught my eye on WSJ.com. Apparently, Apple (NASDAQ: APPL) is getting ready to launch the iPhone in China, where the market is one of the biggest money making opportunities in the world. Exciting, right? Well, don't forget to read the comments following the article because a lot of random internet strangers have the ability to do more fact checking and, lo and behold, the iPhone is already sold in China. However, it looks like the device is being sold at an egregious amount and Apple is looking to make it much more affordable. If the demand for the iPhone is that high for that ridiculous price, demand for the device at a much more affordable price might presumably be even bigger. APPL could be a good buy, so save that thought for later.
Side note: Any time I will mention a stock, I will list the general name and then I will list the stock exchange it is listed on followed by the ticker symbol. So, "Apple" is the name of the company, "NASDAQ" is the stock exchange where the company is listed, and "APPL" is the ticker symbol for the stock. Ticker symbols are an easy way to find a company's price quotes, data, SEC filings, etc.
Another headline that peaked my interest this morning is one from FT.com: Oil Prices Weigh Heavily on Wall Street. This article is a general overview about the US market's behavior in the first hour of trading (US Markets open general trading at 9:30 am EST and close at 4:00 pm EST). Oil's prices influence the energy industry greatly and it could be an opportunity to buy some of these big name stocks like Chevron (NYSE: CVX) or Exxon Mobil (NYSE: XOM). Again, more food for thought and you can use these names as a starting point to do more research on the industries and the companies themselves.
Make sure you read headlines from multiple sources since some, like the Financial Times, publish stories with a more international twist. This will help you get a better understanding of not just the US Markets but also the rest of the major world markets. After all, we all now know that the markets are intricately tied to each other after seeing them all crash at the end of 2008.
Another reason to read multiple sources is to understand what happened in markets that opened and closed ahead of the US. The Japanese and Chinese markets have already closed by the time the US opens and London and the rest of Europe are halfway through their market day by 9:30 am EST. In general (and this is a BIG generalization here), US markets will follow the patterns of the other markets right after the opening bell. Now, our own domestic news can swing the US markets in different directions as we go through the day so don't forget that either.
So, I will reiterate that research is a very big part of becoming an active investor. There are multiple ways to keep up with the news and the key is to get in the habit of reading/listening/browsing through the financial headlines to keep you informed.
Disclaimer: The company names I mentioned above are only examples of what can possibly catch my interest at any given day. I will not purchase a security based solely on headlines for the day.
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