My rating on BSC is strong sell, fundamental strength 22%. Here's the deal...

1. Cash & Short-term Investments: $34.3 billion
2. Total Debt: $80.2 billion
3. Total Assets: $395.5 billion
4. Total Liabilities: $383.6 billion
5. Sales: $16.2 billion

Today's Price: $30.00
My Target Price: $22.31; -26% from current price.


As you can see, BSC's balance sheet was pretty edgy back in November 2007. Their financial strength must have finally tipped over during the past 3 months. Too bad during these times, we can't know what's going on financially until we get the yet to be released 1st quarter 2008 statements. All we have is the announcement of a deal. Few numbers to crunch.

BSC does not have enough cash on hand to pay for debts, so they must start selling assets to pay up. Total liabilities is smaller than total assets, BUT the total debt offsets this deceptive surplus. Sales does not even cover the debt.

Damn banks are the only ones who get a free pass...

Last edited by Krypton on Mar-15-2008 at 01:48

Update on DSX and dry-bulk shipping. It turns out that inbound shipping cargos to the US have dropped, BUT, the outbound traffic (exports) have more than offset the income bound traffic. This is a bullish sign for dry-bulks. Subprime isn't even touching this sector. The falling dollar only means exports increase which offsets declining imports. The only bad thing going right now is the high oil prices. But, even still, the charter rates for these ships more than offsets maintenance costs for each ship.

quote:

HEADLINES MAR 13, 2008 3:47PM News in Brief Financial Times Newbuild cape fixed at $48k LONDON-based broker Fearnleys has reported that a capesize newbuilding of 178,000 dwt was fixed at $48,000 per day for delivery in the fourth quarter of 2009, writes Michelle Wiese Bockmann. Major Japanese owners and charterers have secured capesizes for delivery as far ahead as 2010. Further details about the time charters, including their duration and ownership were not available, Fearnley's said. The time charters compare with deals by Diana Shipping, which chartered its capesize newbuilding for $50,000 per day for delivery between October 2009 and January 2010 or $48,000 per day delivery between February-April 2010. Star Bulk recently said that its 1991-built capesize Star Sigma would be chartered for a further three years from April 2009 at an average rate of $63,000 per day. US economy affects trade FEBRUARY container throughput figures show that the US economy continues to dampen transpacific trade from Asia to the US west coast, writes Michelle Wiese Bockmann. The Port of Long Beach has reported that loaded inbound container volumes fell 7.6% to 263,231 teu in February, compared with the same period last year. But loaded outbound containers rose by more than a third year-on-year, to 147,275 teu, while empty container volume dropped 20% to 119,193 teu. 'Just like in January, we're seeing that loaded containers into the US are dropping, while loaded outbound are rising sharply,' said a research note from DnB NOR Markets. 'Likely reasons are a weak US dollar versus Asian currencies and a more general consumer slowdown in the US. 'Interestingly, the figures suggests that the loss of cargo on the eastbound transpacific trade, was in February more than offset by the increase in westbound trade... the throughput figures alone can therefore be viewed as bullish for container shipping.' High bunker prices and slowing business have seen container industry losses on transpacific trades collectively reach more than $1bn, a senior official recently said.

Haha, I so called this one...

http://www.tranceaddict.com/forums/...ers#post8456648

Hey Krypton,

I'm very jealous of your fundamental valuation model =) I am working on something similar right now, but I am only 2 months into it, so it's still going to take a while. On the other hand I have completed some extensive research on Risk Management/Position Sizing models, and I've written some stand-alone programs to manage my portofolio risks. They have worked pretty well in the recent market turbulance, since they take current volatlity into account when deciding upon position size and exits.

I see you have an excellent valuation model to screen for possible buys, but do you use any sort of rules/algorithms for your whole risk management or is it entirely discrentionary? how do you decide when to get out of a trade when it goes against you, or do just hold on? If so how do you avoid the "value trap"? When do you decide to take profits?

I have been struggling to code a program to quantify any sort of exit strategy, because I catch myself taking profits much too soon. Of course you can use trailing stops and adjust these to volatility, like I do with my risk management program, but you lose a lot of profit if you set them too far, and you don't catch the whole trend if you make them too tight. It has been boggling my mind lately =)

Anyway once I am finished with my screening model I will also put it up on marketocracy.

good trades everyone

quote:

Originally posted by Krypton Haha, I so called this one... http://www.tranceaddict.com/forums/...ers#post8456648

lol I just started reading the thread and this is from mid july :P

quote:

Originally posted by Krypton lol, that's a pretty pessimistic view Guess what got the Dow over 14000, and other US markets going higher? Foreign investors. Compared to Europe, the USA is cheap cheap cheap. Look at the british pound, the euro are at historic highs against the dollar. Right now, US stocks for europeans are bargains. Today showed us that US stocks are still great bargains and we are not in a market bubble.

imagine me as a european buying american equities in july...that would have been doubly bad with the dollar/euro exchange rate now haha i would've gotten so screwed

just fooling around though, i was too bullish on equities as well during the summer.

quote:

Originally posted by blitz~ Hey Krypton, I'm very jealous of your fundamental valuation model =) I am working on something similar right now, but I am only 2 months into it, so it's still going to take a while. On the other hand I have completed some extensive research on Risk Management/Position Sizing models, and I've written some stand-alone programs to manage my portofolio risks. They have worked pretty well in the recent market turbulance, since they take current volatlity into account when deciding upon position size and exits.

I have also been doing pretty well despite the market turbulence. Stop losses help a lot. If a stock drops past 10%, I have learned that usually such a stock continues to decline. So for me, I just sell at -10%, no questions asked...

http://marketocracy.com/cgi-bin/Web...gMiPlKnMaKiAbDd

quote:

I see you have an excellent valuation model to screen for possible buys, but do you use any sort of rules/algorithms for your whole risk management or is it entirely discrentionary? how do you decide when to get out of a trade when it goes against you, or do just hold on? If so how do you avoid the "value trap"? When do you decide to take profits?

I compare a company to its industry/market average. I use about 33 catagories and the more a companies financial data is above the industry/market averages, the better the stock. Think about it. A stock whose finances are above the market's average will most likely outperform the market.

My risk management entails using a 10% stop loss. My strategy is "buy & hold". If you want to learn my philosophy, read up on Warren Buffet, otherwise known as the richest man on earth. I don't worry about short-term volatility, which is why when I lost 10% in a day last week, I didn't worry one bit. See, I protect myself by methodically analyzing the company's balance sheet, income statement, and cash flow statement. Using my model, I use this data to calculate a rating. I then use another algorithm to calculate an intrinsic value. So, risk is mitigated by always...

1. Buying high quality stocks based on their historical financial data (taken from quarterly financial statements).
2. Buying a stock whose intrinsic value is substantially higher than the current value.

Every 6-12 weeks, I analyze my stock's financial data to see if their fundamentals are still high quality. If the rating drops, then I start deciding what to do. I figure out why the rating dropped. If the fundamentals have declined since the time I bought, I might consider to sell. I also might sell if my stock reachs the intrinsic value I set for it, and after reanalyzing a new intrinsic value, the value is equal to or less than the current value, then I'll sell. I never want to hold overvalued stocks in my portfolio.

I avoid the "value trap" by using my financial model to analyze the quarterly financial statements. Numbers don't lie, so if the company has problems with their business operation, I would know about it by just looking at their accounting books. Easy as that.

I decide to take profits when my stock position changes. So, if I bought a stock and allocated 5% of my portfolio to it, and it rises to 7% of my portfolio, I would sell that extra 2%. Or if the fundamentals decline past a certain point, or if my target price is reached.

quote:

I have been struggling to code a program to quantify any sort of exit strategy, because I catch myself taking profits much too soon. Of course you can use trailing stops and adjust these to volatility, like I do with my risk management program, but you lose a lot of profit if you set them too far, and you don't catch the whole trend if you make them too tight. It has been boggling my mind lately =) Anyway once I am finished with my screening model I will also put it up on marketocracy. good trades everyone

I paid a computer programmer $100 to code a program for me called (FundamentalStrength 1.0). That was about a year ago. Now my model has been improved upon so much that the program is basically useless to me. I need to program a version 2.0.

My exit strategy is...

1. Stop loss at 10%
2. Profit take at intrinsic value if my calculated intrinsic value has not increased.
3. Partial profit take every 3 months if stock position changes from original allocation.

Otherwise, I buy and hold, take in the dividends, and let the company do its thing. Nevertheless, I am always studying their finances at least every 6-12 weeks like a hawk.

EDIT::: Let me differentiate between my personal investing, and my mutual fund management. My personal investing has no stop losses. My mutual fund on Marketocracy does. So my DSX investment lost 10% in a day, I didn't sell at any stop loss. But if it was in my mutual fund, then I would have sold.

Last edited by Krypton on Mar-15-2008 at 22:32

quote:

Originally posted by Krypton I have also been doing pretty well despite the market turbulence. Stop losses help a lot. If a stock drops past 10%, I have learned that usually such a stock continues to decline. So for me, I just sell at -10%, no questions asked...

Fair enough considering your time horizon (possibly years or preferably forever as Warren Buffet says?) is longer than mine (usually several weeks/months). I just like to differentiate between lets say a Biotech startup and Pfizer for example. If Pfizer drops 10% from my purchasing price thats a lot worse than the Biotech startup firm. My Program tries to quantify such differences in stocks, and size the positions accordingly, also setting the stops tighter or looser depending on the stocks previous price behaviour. So I would automatically have a smaller position but a looser stop in the Biotech firm while a larger position but tighter stop in Pfizer. Thus
achieving the same kind of risk/reward ratio for every trade I make.

But I guess the longer you stretch out the time horizon and the less turnover one has, such position management strategies lose their edge.

quote:

I compare a company to its industry/market average. I use about 33 catagories and the more a companies financial data is above the industry/market averages, the better the stock. Think about it. A stock whose finances are above the market's average will most likely outperform the market.

I agree, I am also using some Fundamental and Technical metrics of relative strength in my model.

quote:

My risk management entails using a 10% stop loss. My strategy is "buy & hold". If you want to learn my philosophy, read up on Warren Buffet, otherwise known as the richest man on earth. I don't worry about short-term volatility, which is why when I lost 10% in a day last week, I didn't worry one bit. See, I protect myself by methodically analyzing the company's balance sheet, income statement, and cash flow statement. Using my model, I use this data to calculate a rating. I then use another algorithm to calculate an intrinsic value. So, risk is mitigated by always... 1. Buying high quality stocks based on their historical financial data (taken from quarterly financial statements). 2. Buying a stock whose intrinsic value is substantially higher than the current value. Every 6-12 weeks, I analyze my stock's financial data to see if their fundamentals are still high quality. If the rating drops, then I start deciding what to do. I figure out why the rating dropped. If the fundamentals have declined since the time I bought, I might consider to sell. I also might sell if my stock reachs the intrinsic value I set for it, and after reanalyzing a new intrinsic value, the value is equal to or less than the current value, then I'll sell. I never want to hold overvalued stocks in my portfolio. I avoid the "value trap" by using my financial model to analyze the quarterly financial statements. Numbers don't lie, so if the company has problems with their business operation, I would know about it by just looking at their accounting books. Easy as that.

Fair enough, although don't forget that sometimes companies appear very cheap with all sorts of different measurements of value, and get a really high "value" rating. Often enough it turns out they are cheap for a reason, which is not yet known to the public. So not using stops in your personal account alltogether for an enitre lifespan may mean you get some of the foul eggs once in a while which give you large downswings (I don't know how concentrated your portfolio is of course).

quote:

I decide to take profits when my stock position changes. So, if I bought a stock and allocated 5% of my portfolio to it, and it rises to 7% of my portfolio, I would sell that extra 2%. Or if the fundamentals decline past a certain point, or if my target price is reached.

I haven't actually thought about rebalancing yet, although it may make less sense with shorter time spans (weeks to months opposed to several years). I will have to think about this =)

quote:

I paid a computer programmer $100 to code a program for me called (FundamentalStrength 1.0). That was about a year ago. Now my model has been improved upon so much that the program is basically useless to me. I need to program a version 2.0.

I also got help from a friend who studies IT with the programming...

quote:

My exit strategy is... 1. Stop loss at 10% 2. Profit take at intrinsic value if my calculated intrinsic value has not increased. 3. Partial profit take every 3 months if stock position changes from original allocation. Otherwise, I buy and hold, take in the dividends, and let the company do its thing. Nevertheless, I am always studying their finances at least every 6-12 weeks like a hawk. EDIT::: Let me differentiate between my personal investing, and my mutual fund management. My personal investing has no stop losses. My mutual fund on Marketocracy does. So my DSX investment lost 10% in a day, I didn't sell at any stop loss. But if it was in my mutual fund, then I would have sold.

Again big respect, I think people with a quantifible and solid/robust approach, that are willing to stick with it over a long time span, without taking on too much risk, will ultimately end up very succesful.

quote:

Originally posted by blitz~ Fair enough considering your time horizon (possibly years or preferably forever as Warren Buffet says?) is longer than mine (usually several weeks/months). I just like to differentiate between lets say a Biotech startup and Pfizer for example. If Pfizer drops 10% from my purchasing price thats a lot worse than the Biotech startup firm. My Program tries to quantify such differences in stocks, and size the positions accordingly, also setting the stops tighter or looser depending on the stocks previous price behaviour. So I would automatically have a smaller position but a looser stop in the Biotech firm while a larger position but tighter stop in Pfizer. Thus achieving the same kind of risk/reward ratio for every trade I make. But I guess the longer you stretch out the time horizon and the less turnover one has, such position management strategies lose their edge. I agree, I am also using some Fundamental and Technical metrics of relative strength in my model. Fair enough, although don't forget that sometimes companies appear very cheap with all sorts of different measurements of value, and get a really high "value" rating. Often enough it turns out they are cheap for a reason, which is not yet known to the public. So not using stops in your personal account alltogether for an enitre lifespan may mean you get some of the foul eggs once in a while which give you large downswings (I don't know how concentrated your portfolio is of course). I haven't actually thought about rebalancing yet, although it may make less sense with shorter time spans (weeks to months opposed to several years). I will have to think about this =) I also got help from a friend who studies IT with the programming... Again big respect, I think people with a quantifible and solid/robust approach, that are willing to stick with it over a long time span, without taking on too much risk, will ultimately end up very succesful.

Getting down to the basics, simply buying high quality equity at bargain prices, and repeating the process over time, is a great way to wealth. I just need to either get hired by an investment company, or start my own company. That isn't as easy as I thought it would be. Getting into an investment company, they want a degree. Starting my own company, I need investors. So I've got a long long road ahead.

So what's your model all about?

quote:

Originally posted by Krypton Getting down to the basics, simply buying high quality equity at bargain prices, and repeating the process over time, is a great way to wealth. I just need to either get hired by an investment company, or start my own company. That isn't as easy as I thought it would be. Getting into an investment company, they want a degree. Starting my own company, I need investors. So I've got a long long road ahead. So what's your model all about?

you don't only need a degree, you need an MBA from Harvard, Chicago, Wharton, Columbia, or NYU. After the MBA, hopefully you could get into goldman (or to a lesser extent maybe lehman or morgan) and become a trader for the firm (then you get to play with real money - 00,000,000) Or, you could be a good salesman and skip all of that.

Last edited by jerZ07002 on Mar-16-2008 at 09:03

krypt, you don't need either of those things (an MBA or to start your own business) to become wealthy. The fact you are thinking about this at your age makes it a certainty. Any Joe Six Pack in his 20s can become a millionaire with proper discipline.. You just need to work hard and systematically pay yourself before spending your money on anything else.

Once you are debt free, start chopping 15-20% off the top of every paycheck and have it go into a separate account for investments. It would help if you could set up a bank draft to do this automatically every payday so you don't miss the money. To keep things simple you can dollar cost average into index funds...Most most professional money managers don't consistently beat the market..so you can greatly reduce the time (and risk) of investing by buying the whole market.

If you feel confident in your stock picking, you can go that route and pick no more than 10-15 good companies to build positions in for the long term. I personally have never had more than ten stocks in my portfolio at any time, and I try to stick with the "big boys" that know have absolutely no chance of going bankrupt or getting hit with unexpected news overnight. I stay away from smaller companies and try to find those who are leaders in their field with some certainty in growth and earnings. These are the companies you can buy and FORGET...so you don't need to waste hours of your valuable time every week checking up on them. You can spend that time enjoying life and learning about other subjects.

Just keep it simple... Work hard (in any field). Invest FIRST, before touching the rest of your paycheck...and be patient.

Assuming stocks hit their historical rate of return of 12%, if you start off with $1000 today and invest just $100 a month for 40 years (long time I know), you will have around $1.2 million. After inflation, that will be around $300k in today's dollars. Obviously you will eventually be able to invest more than $100 a month..and any amount beyond that will grow exponentially.

Check this out

Last edited by Capitalizt on Mar-16-2008 at 19:43

quote:

Originally posted by Krypton Getting down to the basics, simply buying high quality equity at bargain prices, and repeating the process over time, is a great way to wealth. I just need to either get hired by an investment company, or start my own company. That isn't as easy as I thought it would be. Getting into an investment company, they want a degree. Starting my own company, I need investors. So I've got a long long road ahead. So what's your model all about?

I have the same plans as you. I'm currently studying economics in my 2nd year just to get a degree... If it wasn't for that I'd be working on my models 24/7. And it looks like I will probably also end up working at some investment bank first lol =( And even then getting investors is a main obstacle I'm still thinking about...why should these people trust you when they have big name companies they can go to instead? How will they even find out about you?

Well my model looks something like this, it is supposed to be far more automatic with as little human intervention as possible once it is finished:

I have a similar Excel/VBA Spreadsheet as youm that acceses a database with all the fundamental metrics on every german equity. It then calculates scores for each equity between 0-100 based on these fundamental metrics (basically I don't put as much emphasis as you on value but more on growth, although I do take value into account).

Each metric has its on "weighting" I can change, I believe there are fashions in the market, sometimes value is more favored and sometimes growth is (I try to figure these trends by doing ratios of indices, for example Dow Industrials:Nasdaq). So I can adjust my model to current "fashions".

Then I end up with the top 20 rated stocks which I put into a technical scanner. Basically I just use oversold MACD and Stochastics for buy signals to avoid situations where I buy an overbought stock to see it break my stop-loss in a week.

Once a buy signal comes up I basically "hand it over" to Risk management algorithm which will tell me which position size I should put on and where I will have to put the stop-loss point.

My major sticking point is still when do I take profits? When the ratings in my fundamental models deteriorate? Trailing Stop-Loss? I am still thinking about this...

quote:

Originally posted by blitz~ I have the same plans as you. I'm currently studying economics in my 2nd year just to get a degree... If it wasn't for that I'd be working on my models 24/7. And it looks like I will probably also end up working at some investment bank first lol =( And even then getting investors is a main obstacle I'm still thinking about...why should these people trust you when they have big name companies they can go to instead? How will they even find out about you? Well my model looks something like this, it is supposed to be far more automatic with as little human intervention as possible once it is finished: I have a similar Excel/VBA Spreadsheet as youm that acceses a database with all the fundamental metrics on every german equity. It then calculates scores for each equity between 0-100 based on these fundamental metrics (basically I don't put as much emphasis as you on value but more on growth, although I do take value into account). Each metric has its on "weighting" I can change, I believe there are fashions in the market, sometimes value is more favored and sometimes growth is (I try to figure these trends by doing ratios of indices, for example Dow Industrials:Nasdaq). So I can adjust my model to current "fashions". Then I end up with the top 20 rated stocks which I put into a technical scanner. Basically I just use oversold MACD and Stochastics for buy signals to avoid situations where I buy an overbought stock to see it break my stop-loss in a week. Once a buy signal comes up I basically "hand it over" to Risk management algorithm which will tell me which position size I should put on and where I will have to put the stop-loss point. My major sticking point is still when do I take profits? When the ratings in my fundamental models deteriorate? Trailing Stop-Loss? I am still thinking about this...

I have four spreadsheets. Like you, I use weights a lot because no company is a perfect 100%.

1. Fundamental Strength
2. Intrinsic Strength
3. Target Price with Dividend
4. Target Price without Dividend

The fundamental strength basically is a rating that I can quickly and easily do with American stocks. You would really like it. I use the MSN MoneyCentral "Key Ratios" page. I don't know if they have German stocks, but, if MSN has a German MoneyCentral website, you might be able to use it. This one looks at 33 different catagories and just uses copy and pasting of data, which is why it's so easy.

The intrinsic strength uses data just off the balance sheet, income statement, and cash flow statement. So any company with these statements can get a detailed analysis of 38 different catagories. The thing is, you have write down 32 numbers, then input them into the spreadsheet, so this spreadsheet is more work. I am still working on the weightings of this algorithm.

The two target price spreadsheets use historical data from the income statement and balance sheet to estimate 8 or 9 target prices, all averaged together for an intrinsic value.

How complete is your model? If it can give a reliable "output" answer from your inputs, I wouldn't mind trading my spreadsheets for yours...