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TranceAddict Investors Club @ Marketocracy (pg. 23)
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| Krypton |
A little lesson..
Alpha - Alpha is the return above the required return for the risk taken. So say the stocks I choose have a certain risk measured by the beta. With risk comes a required return for taking the risk. The alpha is how much you profit above the risk you took. My alpha is over 80%!!
Beta - Beta compares stock price volatility to market price volatility. If the stock is more volatile than the market, meaning the price fluctuates more than the market, then the stock has more beta (over 1 beta) and thus more risky, but with more risk and volatility, comes a higher required risk of return. Keep that in mind;). My beta 1.07, so my fund is slightly more volatile and risky then the market, but not by much. Essentially with my 15% return in the past 2 months compared to the market's 8%, I'm making double what the market returns with the same amount of risk!!:stongue:
Turnover - Turnover is the rate at which stocks within your fund are replaced. The higher the turnover, the more trades you have been doing. In my opinion, as an investor and not a trader, I believe a low turnover is the best method. Keep your trades to the minimum, let your good company's grow, keep your trading fees you'de otherwise have to pay, etc. Of course, you have to choose good company's or you'll lose money. I believe I've been making 15% in 2 months because I have very low turnover and every single company I chose had an above average balance sheet, thus a good company. My turnover is 8%. Some of you have over 100%!! |
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| Krypton |
atbell - How come your fund is private?
capitalizt - Are you shorting again:stongue:
philliez - You'de have so much more profit if you didn't have so much cash!
laxfx - Nice recovery;) I'm guessing you've got Google in there? Microsoft? Qualcom maybe? Apple perhaps? You love information technology. If you made your portfolio 65% specific to IT, you'de be consider an IT fund.
psiweaver - We're neck and neck! I wonder what few stocks you picked that did so well. As good as your doing, you still aren't compliant though because of your allocation (I think you have too much money in one or a few stocks), so you won't be ranked as ever outperforming my fund.
funaki - I find it hilarious how you outperformed the market during september by just keeping all cash! But its over. Get rid of your cash..
spdandpwr - Nice comeback;) Alpha is positive, good thing.
omega_m - Nice comeback;) |
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| atbell |
| quote: | Originally posted by Krypton
atbell - How come your fund is private?
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Because I don't know how to change it. I'll take a look at it again. |
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| atbell |
| quote: | Originally posted by Krypton
Halliburton is on my black list..:mad:
Any unethical practices from any companies gets them placed on my black list. |
Just read this, don't know how I missed it.
Yeah, I'd black list them with real money but I just added them as a curiosity. It's kind of sickening that they are doing so well despite haveing been nailed for ripping off the admin. on multiple occasions. |
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| venomX |
Ok, So I've read through the material and I am planning to jump in and try this out for a while. I'll see how I do :p.
First investment:
Accenture, 1000 shares; Sapient Corporation 3000 shares; Patni Computer Systems, 1000 shares. They have all shown significant increase in revenue in the last quarters and I like their management. I am still not that skilled at doing analysis of companies, so I'm just doing this to give it a first go. |
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| Krypton |
| quote: | Originally posted by venomX
Ok, So I've read through the material and I am planning to jump in and try this out for a while. I'll see how I do :p.
First investment:
Accenture, 1000 shares; Sapient Corporation 3000 shares; Patni Computer Systems, 1000 shares. They have all shown significant increase in revenue in the last quarters and I like their management. I am still not that skilled at doing analysis of companies, so I'm just doing this to give it a first go. |
Here is a simple valuation to evaluate the cheapness of a stock. Remember, you want to buy on the cheap good performing companies.
PE x EPS = Stock Price
If you can estimate next year's PE and EPS, then you can predict a stock price. If you can predict a stock price, then you can guage whether the stock price today is better than tomorrow's estimate. You want tomorrow's prediction to be higher than today's stock price. The higher the better.
Good luck..;) |
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| atbell |
| quote: | Originally posted by venomX
Ok, So I've read through the material and I am planning to jump in and try this out for a while. I'll see how I do :p.
First investment:
Accenture, 1000 shares; Sapient Corporation 3000 shares; Patni Computer Systems, 1000 shares. They have all shown significant increase in revenue in the last quarters and I like their management. I am still not that skilled at doing analysis of companies, so I'm just doing this to give it a first go. |
Accenture is accounting right?
What is Sapient? |
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| venomX |
| quote: | Originally posted by atbell
Accenture is accounting right?
What is Sapient? |
There both consulting firms. Accenture does do accounting, they also do HR, strategy and other types of consulting (I'm planning to work for them when I graduate :p). Sapient focuses a bit more on operations, marketing consulting. |
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| Krypton |
My algorithm is really working! I'm making a killing! Look at my CVFF and all my other funds. They just work!
My Top 10 - CVFF
My Top 10 Losers & Profitability
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| Krypton |
NanoGen Inc. (NGEN) - $0.93 (October 15, 2007)
Nanogen, Inc. (Nanogen) provides advanced diagnostic products. As of March 16, 2007, the Company was developing several product lines that directly target specific markets within the advanced diagnostics field. Its diagnostic technologies focus on the identification of the nucleic acid sequences, gene variations and gene expressions associated with both genetic conditions and infectious diseases. Nanogen has four categories of advanced diagnostic technologies: molecular testing platforms molecular reagents point-of-care tests and advanced genetic markers. On February 6, 2006, Nanogen acquired the rapid cardiac immunoassay point-of-care test business of Spectral Diagnostics Inc. The acquired products include rapid tests for levels of CKMB, Myoglobin and Troponin, all of which are frequently used in cardiac care. On May 1, 2006, it completed the acquisition of the diagnostics division of Amplimedical S.P.A.
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NGEN is currently operating with 2 times more expenses than income. That means the company is not profitable, and has not been for at least 5 years... http://moneycentral.msn.com/investo...A=1&Type=Equity
The fundamental strength (FS) is 42. The relative strength is 8. This means the stock has done way worse than it actually is worth. In my strategy, as I said, I like see FS of at least 80 for me to consider buying.
Well, here is my valuation...
My average valuation for NGEN is that its worth $1.48. Now lets go back to the fundamental strength and relative strength. Based on the FS, I think the stock is worth $1.26. These valuations project that you should have huge returns for the year. But when I look at the fundamentals of the business, NGEN is not making profits, and is operating at a loss. Just know that the projections are positive, but this is a risky play. |
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| venomX |
Well I think a good question to ask is, are they operating at a loss because they are investing in capital assets or maybe in R&D? Or this just regular operating cost (i.e. salaries, accumulated depreciation of assets,etc...)?
If the investment is in capital assets, such as land for new factories, or if it is in R&D in order to decrease costs and increase the value of their products, I would think it might be a less risky bet than if the the loss is due to operating costs.
edit: In other news, I've included some other stock in my fund. I've bought some America Movil (AMX) stock. It's gone down today, not sure why. I think it is a good bet in the long term. They are increasing their presence in Latin America, usually in countries that are reasonably stable. I have also seen them operate. They adapt quickly to the demands of the particular country they are operating in. I have yet to master the whole analysis part of this, but looking at their quarterly earnings, they have increase net income YoY as well as revenue by quite a bit. What do you guys think of this pick? |
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| Krypton |
| quote: | Originally posted by venomX
Well I think a good question to ask is, are they operating at a loss because they are investing in capital assets or maybe in R&D? Or this just regular operating cost (i.e. salaries, accumulated depreciation of assets,etc...)?
If the investment is in capital assets, such as land for new factories, or if it is in R&D in order to decrease costs and increase the value of their products, I would think it might be a less risky bet than if the the loss is due to operating costs. |
Well, let me take a closer look... This will be for 2006...
NGEN took in $26.85 million. Now, it cost $13.29 million to make their products. After the cost of goods, NGEN has $13.56 million left (Gross Profit).
Salaries, bills, and admin cost $33.39 million. That alone bring NGEN into the negative territory on their balance sheet. Not only do they have no profit left, they now have to spend more than they make. I consider this HIGHLY risky. On R&D, they spent $25.68 million, also way more than than they have left after bills and other expenses.
When you subtract all their expenses from their revenue, they are lost $49 million in 2006. Not only that, but they've been losing tens of millions of dollars a year for at least the past 5 years. My question is where are they getting all this money? This would probably explain why they've kept issueing more and more shares. From 24.4 million shares in 2003 to 67.1 million in 2006. That's more than double! Even more risky! I also looked at their 2007 income statement, and its no different. They are still losing millions of dollars.
Yes they've increased revenue more than 5 times in two years, but their expenses still far outweigh their income. I wouldn't even touch this company with $1. You will never find me investing in unprofitable companies no matter how good they sound. If their accounting statements show negatives, why put money into paying their debts? You want profits, not debts right? |
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