|
TranceAddict Investors Club @ Marketocracy (pg. 30)
|
View this Thread in Original format
| venomX |
| You might want re-evaluate your debt/equity weighting though. A debt/equity ratio is not necessarily a good thing when it is low. It is a bad thing when it is bad. Most consultants/accounts consider a debt/equity ratio of over .6 is a cause for concern. Other than that, the company is just engaging in outside financing. If a company has a low debt/equity ratio it just means they are financing their operations with equity, which is not necessarily good either. As long as you supplement your metrics with further analysis, I really don't see this as a problem though. |
|
|
| Krypton |
| quote: | Originally posted by venomX
You might want re-evaluate your debt/equity weighting though. A debt/equity ratio is not necessarily a good thing when it is low. It is a bad thing when it is bad. Most consultants/accounts consider a debt/equity ratio of over .6 is a cause for concern. Other than that, the company is just engaging in outside financing. If a company has a low debt/equity ratio it just means they are financing their operations with equity, which is not necessarily good either. As long as you supplement your metrics with further analysis, I really don't see this as a problem though. |
I wanted to use the debt ratio (total debt/total assets), but the debt/equity ratio is more readily available. I may switch it to the debt ratio though anyways. You've got to remember, there are a several variables, and they aren't all in the same place, so when look at a stock list filled with 100 or so stocks, it can be tedious finding each variable in all these places. |
|
|
| Capitalizt |
I'd be interested to see if you can backtest your system and see what stocks it would have told you to buy 5 years ago..
Any way you can do that? |
|
|
| Shakka |
| quote: | Originally posted by Capitalizt
I'd be interested to see if you can backtest your system and see what stocks it would have told you to buy 5 years ago..
Any way you can do that? |
Better yet, 10 years ago to see what kind of garbage dotcoms it might've put you in.
Actually--that brings up an interesting point--you have a system that helps you filter potential buys, but what discipline do you use to determine when to sell a position? Particularly a losing position? |
|
|
| Krypton |
| quote: | Originally posted by Shakka
Better yet, 10 years ago to see what kind of garbage dotcoms it might've put you in.
Actually--that brings up an interesting point--you have a system that helps you filter potential buys, but what discipline do you use to determine when to sell a position? Particularly a losing position? |
First of all, the dotcoms never paid any dividends, and were horribly lacking in earnings, fundamentals, and were grossly overvalued. My model would have filtered that out.
When I consider sells, I use a 10% stop loss. I also watch to see if the FS falls below 70, and if the gamma falls below 1. I'de also like to see the yield ratio above .6, so if it falls below that, I'de be looking real hard to see if those dividends and earnings are still cheap like when I bought them.
I really want to backtest, but I would need all these variables as they were 5-10 years ago, and I just don't know where i could get some historical values like that. |
|
|
| Yoepus |
All of you bottom-seekrs; take a look at WM.
Even with further debt increases, dividend decreases, and stock dilution it looks great at $15.
I'll buy more after the New Year. |
|
|
| Krypton |
| Goldman Sachs is going to trash Washinton Mutual into the dumpster. I read just today in the WSJ that Goldman made several billion dollars buying default swaps, essentially betting the subprime market would decline considerably. They made 2 billion dollars in writeoffs, but offsetted that loss with over 4 billion dollars in profits from their shorting of CDOs. Goldman has had one of the most profitable years ever in this horrible atmosphere. Their fundamentals are great, balance sheet is on par, price is good. No other bank so far that I've looked at passed my algorithmic criteria along with press coverage that corraborates my analysis. I like GOldman! |
|
|
| atbell |
| quote: | Originally posted by Krypton
Goldman Sachs is going to trash Washinton Mutual into the dumpster. I read just today in the WSJ that Goldman made several billion dollars buying default swaps, essentially betting the subprime market would decline considerably. They made 2 billion dollars in writeoffs, but offsetted that loss with over 4 billion dollars in profits from their shorting of CDOs. Goldman has had one of the most profitable years ever in this horrible atmosphere. Their fundamentals are great, balance sheet is on par, price is good. No other bank so far that I've looked at passed my algorithmic criteria along with press coverage that corraborates my analysis. I like GOldman! |
Careful with your sources. WSJ is now owned by Rupert Murdoc, a known hands on media owner who forwards his own agenda's without shame. I've heard (take that at what it is) that GS is also a pillar in the conservative organization.
Although I'm not purporting that there is something wrong, it's worth keeping in mind that GS and WSJ are now playing on the same team.
That said, I'm still strong on GS for the time being. |
|
|
| Capitalizt |
I feel bad for krypt. Every time he posts ANYTHING, about ANYTHING, somebody just has to disagree with him.
Can't someone say "Hey man, you're right about that." for a change? lol
Keep up the hard work krypt...You are probably gonna end up the richest member of the board. |
|
|
| Shakka |
| quote: | Originally posted by Yoepus
All of you bottom-seekrs; take a look at WM.
Even with further debt increases, dividend decreases, and stock dilution it looks great at $15.
I'll buy more after the New Year. |
I don't know why everyone wants to bottom fish with tainted financial stocks. The rise in NPAs at DSL was shocking. The implications are that, given its high levels of option ARM exposure, WM may struggle to survive. Be careful. Caveat emptor. |
|
|
| Shakka |
| quote: | Originally posted by Capitalizt
I feel bad for krypt. Every time he posts ANYTHING, about ANYTHING, somebody just has to disagree with him.
Can't someone say "Hey man, you're right about that." for a change? lol
Keep up the hard work krypt...You are probably gonna end up the richest member of the board. |
That's what makes markets! But I'll grant him this--Goldman has proven time and time again to be the smartest guys in the room. My only knock against it is that Jim Cramer worked there and is a huge fan. But he's right--of all the investment banks out there, Goldman is head and shoulders above the rest. If nothing else, I'd use Goldman as a hedge against the other deadbeat brokers.
Atbell, I think you might be reaching a bit beyond the fold and delving into the land of conspiracy theories!;) |
|
|
| Yoepus |
| quote: | Originally posted by Shakka
I don't know why everyone wants to bottom fish with tainted financial stocks. The rise in NPAs at DSL was shocking. The implications are that, given its high levels of option ARM exposure, WM may struggle to survive. Be careful. Caveat emptor. |
Right, I'm not putting a 100% of my portfolio in these things; however putting a small amount and knowing that you could risk losing half (I'll sell if it gets to $8) or make great dividends for the rest of the life of your investment, it is a reasonable risk to take.
I'm an optimist so I think this and the other banks can pull through and that the whole thing is a bit over-dramatic; however, realistically you can be very much correct and I put the odds more at 50/50 at whatever can happen. Then again even 30/70 odds against WM still make it a reasonable risk for me to look at putting a percentage of my portfolio; if it survives I will be making 15%+ dividends for the rest of my life on the original investment which I don't plan to cash out for 40 or so years till retirement.
I defintely think it is a longterm buy and not a quick play. |
|
|
|
|
