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TranceAddict Investors Club @ Marketocracy (pg. 31)
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| Krypton |
| quote: | Originally posted by Yoepus
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. |
Well, I don't WM b/c I hate risk but if you've got the risk tolerance for WM, go for it.. |
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| Krypton |
| 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
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Hey Cap, you're a shorter, think you can beat me at your own game?
http://marketocracy.com/cgi-bin/Web...hEbBpFaMaKiAbDe
I heard WM and thought, they suck! Had to let it be known..
| quote: | | Keep up the hard work krypt...You are probably gonna end up the richest member of the board. |
I hear this all the time, it's quite flattering, but I'm just doing what I love!! |
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| Capitalizt |
| Closed all shorts last week...but I think you have a good idea shorting the banks. ;) |
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| Krypton |
Ok, I'm officially changing the Debt/Equity Ratio to become just the Debt Ratio. Leveraged financing is not always a bad thing, and I came across one particular case with Goldman Sachs.
Everything was good with Goldman, FS = 81, Gamma = 1.19, Yield Ratio = .96, PEG = .61, etc.... BUT, the D/E ratio was 7.83, very high. Goldman uses a lot of leveraged financing. But that is normal with banks and in fact, a sign of a healthy economy is when banks are willing to leverage buyouts and acquisitions.
According to this formula...
.1(FS) + .77(Gamma + Yield Ratio + PEG)
--------------------------------------------------------- = Intrinsic Strength Value (IS)
(Debt/Shareholder's Equity) + 1
Goldman's intrinsic strength value is 1.16. I consider a 5 to be a good buy, so a 1.16 IS for goldman alarmed me a little bit. It's because of that 7.83 DE, and yahoo finance said the DE was 11!
So, from now on, the DE will be switched to the debt ratio, (total liabilities) / (total assets) = debt ratio
Goldman's debt ratio is .96, so the new IS is 5.24. This is much more in line with all the other data that shows Goldman is a great quality company.
Adjusted formula...
.1(FS) + .77(Gamma + Yield Ratio + PEG)
-------------------------------------------------------- = Intrinsic Strength Value (IS)
(Debt Ratio) + 1 |
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| Krypton |
IS ratio is still being improved upon and will change...
Do you guys see what I am seeing???
I see a triple top, head & shoulders chart pattern. This is a BEARISH indication. I'm going to be looking for shorts!!
Cap, better start that short fund, I need some competition here!!:) |
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| Capitalizt |
yup...aluminum...weed...crack...all commodities in high demand. Dollar down = more expensive crack. ;) |
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| Krypton |
Ok, guys, here it is. The first report using my completed financial model of fundamental gamma. (You might want to ZOOM out 25% from normal viewing so you can fit the images without having to scroll..)
The basis of ranking is on the intrinsic strength value. This formula measures company quality, stock valuation, profit valuation, dividend valuation, future growth valuations, debt levels, management efficiency, growth rates, price ratios, profit margins, financial conditions, investment returns, assets, liabilities, operating cash flows, capital expenditures, and sales. There are over 130 variables contained within the Intrinsic Strength Value. I consider this equation to be the the all-encompassing measurement of value based on the balance sheet, income statement, and cash flow statement. The higher the value, the higher the quality of the company plus undervaluation. High IS's mean the stock is of good quality according to the financial statements, AND is cheap relative to the inherent company value.
New formula is...
.1[(fundamental strength + (revenue / plant,property,equipment)] + [(earnings yield + dividend yield) / (PE + PS + PB + PCF)] + (fundamental strength / relative strength) + [(operating cash flow - capital expenditures) / operating cash flow]
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debt ratio + PEG + 1
= INTRINSIC STRENGTH VALUE
So, without further ado, the Q4 2007 IS report...
The will set up a test fund tomorrow...
EDIT: MT is not second. MT's calculations were wrong and after reviewing its results, it's IS is really in the 3-4 range. |
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| venomX |
| The Berkshire's are down today. So I pose them as a challenge to your algorithm. If you have some free time, run them through and let's see the results. |
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| mndeg |
Bought CC puts on 12/11/07 sold them today, made 220% or so
I bought puts on a weak company after detecting S&P 500 technical weakness
The thing with long term investments is that with the phrase long term investment you put yourself in a situation where you are the bag holder for a long period of time. |
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| Krypton |
I called FMD two days ago.
I sold all FMD profits at about 50 - 60% around 3pm. Locked them in.
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FMD - December 19, 2007
FS = 83
Gamma = 16.6
Yield Ratio = 3.78
PEG = .08
IS = 23.2
The fundamentals are B average. The valuation is INSANELY cheap (gamma very high @ 16.6). The profits and dividends are extremely cheap too (yield ratio very high). The PEG is so low, the expected growth is so cheap.
The Intrinsic Strength is so high, an indication that this company is so cheap with fundamentals so good; Goldman Sachs did exactly what I did, but I did two days before they did!!!! 
| quote: | | BOSTON (Reuters) - First Marblehead Corp (FMD.N: Quote, Profile, Research) said on Friday that it is getting up to $260.5 million in funding from a Goldman Sachs (GS.N: Quote, Profile, Research) unit, sending shares of the securitizer of student loans up 66.4 percent. |
http://www.reuters.com/article/mark...20071221?rpc=44
FMD is in the student loan industry. Their stock has been dragged down with the current credit market decline.
| quote: | In a statement, CEO and President Jack Kopnisky said First Marblehead will not securitize new loans in the current quarter and possibly beyond, due to "uneconomic terms in the current capital markets."
"We are exploring non-securitization and securitization alternatives for future quarters to enhance our business model and provide long-term capacity to the private student loan market in a manner that benefits our shareholders," Kopinsky said. "Our business volumes remain strong and we see many opportunities to facilitate and process private student loans. Our Board of Directors determined it was prudent to continue to return capital to our shareholders this quarter even during these challenging times." |
http://www.thestreet.com/_yahoo/newsanalysis/financial-services/10393466.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
The CEO is grade A. The credit markets are being roiled, and this CEO is doing something to cushion the blow for FMD that is inevitable and expected in a credit contraction. Their fundamentals show FMD has industry leading fundamentals, only challenged by Sallie Mae. They will survive this 6 month to 2 year bear market. The student loan industry is little related to foreclosing homes. Goldman agrees that FMD is in a great industry and will recover far beyond current values.
| quote: | | The Berkshire's are down today. So I pose them as a challenge to your algorithm. If you have some free time, run them through and let's see the results. |
Will do.. |
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| Shakka |
| quote: | Originally posted by Krypton
I called FMD two days ago. |
I strongly disagree with you on FMD. Aside from the credit market decline their stock has been heavily sold because their business model is broken. Their margins are unsustainable, the competition is heating up, they have only been granted a temporary reprieve since the SLM/Flowers deal fell throug, but JP Morgan and BofA are their biggest clients and are moving production in-house. Watch this ****** bleed back down. The only difference between today and yesterday is that FMD is no longer destined for zero and Tom Brown saved a little face. Furthermore, they cut the dividend today. Today's action merely illustrates how desperate they were for a lifeline and how oversold the stock has become (down 70% in December alone).
But I congratulate you on making good profits even if you are wrong about the fundies. |
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