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TranceAddict Investors Club @ Marketocracy (pg. 84)
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| Krypton |
| quote: | Originally posted by mndeg
S&P 500 up 2.79% today! no news from FOMC that wasn't priced in.
USO down 2% |
Were you long or short or both? How many shares did you buy/short of SPY or USO? |
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| mndeg |
i bought WFMI puts yesterday at close and approx while WFMI was at $22.78 today
I love run up then a dump. I got in SNDK while it did that too before earnings.
I have no idea what makes people want to go long consumer discretionary before earnings, especially with 2 years of economic pain ahead of us. |
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| Capitalizt |
I'm buying UNG and either PVX or PWE in my real portfolio tomorrow. I think natural gas is down because the weather is so damn hot right now that nobody is thinking of heating their homes. But demand WILL pick up 2-3 months from now and the price will recover...so now seems the perfect time to buy..
Somebody talk me out of it. And if you can't, tell me which energy trust I should buy...PVX or PWE ;) |
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| mndeg |
| why not buy it when it starts to trend upwards? look above a 20 period EMA? |
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| Capitalizt |
| Because I don't believe in technicals at all. And I prefer to buy low. :) |
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| mndeg |
It's not really technicals, it's price action. And above a 20 period EMA IS low. Imagine how many people tried to call the bottom on financials only to have it go lower. Using a simple buy above MA rule and stops can keep you out of trouble and being a long term bag holder.
Buffet himself is usually off in timing by years.
I think I tripled my money today.
http://www.prweekus.com/Whole-Foods-CEO-caught-in-message-board-dispute/article/57350/
lol |
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| Krypton |
Here are some simple valuation formulas that I use on a daily basis. I developed all of them independently in the development of my model over a period of 2 years. I won't be listing all of them but just the simplest ones. I am still writing a thesis on my model, and have been for almost a year now. Unfortunately, I'm am changing it so often, whatever I write quickly becomes outdated. So, when I find the time to stop improving it, I'll get that thesis done, and perhaps you guys can read it. These formulas can very easily be transferred into an excel spreadsheet so you can use them for practical purposes of estimating a stock's true value BEFORE you buy it. The higher the "margin of safety", the better. You want the estimate to be as high as possible above the current market price, because that would indicate an undervaluation.
How I get my intrinsic value is by averaging all my stock price estimates. You can do the same thing with these formulas. Instead of relying on just one, you can average the results of all of them, and get an average valuation.
NOTE: Sub-numbers indicate the time period. For example PE1 would mean the estimated PE for next year. A -1 would mean PE for last year.
-> Estimating metrics: A lot of these metrics must be estimated into the future for you to obtain an estimated future target price. Here is a simple way of doing it...
Problem: Estimate PE for next year.
[(PE-4 - PE-5) + (PE-3 - PE-4) + (PE-2 - PE-3) + (PE-1 - PE-2) / 4] + PE-1 = PE1
All you're doing is averaging the amount of growth from the last 5 years. Then all you do is add the average growth amount to last year's metric, which for this example is the PE. You can use this method to estimate almost anything. I only estimate one year into the future because I believe anything past 1 year is impossible to accurately gauge.
-> Stock Price Growth Valuation
[(Stock Price-4 - Stock Price-5) + (Stock Price-3 - Stock Price-4) + (Stock Price-2 - Stock Price-3) + (Stock Price-1 - Stock Price-2) / 4] + Stock Price-1 = Stock Price1
-> PE Valuation
(PE1)(EPS1) = Price1
-> PS Valuation
(PS1)(Sales per Share1) = Price1
-> PB Valuation
(PB1 x Total Equity1) / Shares Outstanding1 = Price1
-> Ratings Valuation
This valuation uses the ratings of any analyst to estimate the future stock price. Before I give the formula, you must make sure the rating itself is quantified on a 0-100 scale. For example, say you're getting your rating from stock scouter. Their ratings are given on a scale of 0-10. This mean you must convert this rating by multiplying it by 10, so that the rating fits the 0-100 scale. Maybe you're using the CAPS rating at Motley Fool. You must multiply these ratings by 20 because their scale is on a 0-5 scale. If the rating is in the form of a recommendation such as STRONG BUY, you can easily quantify this by looking to see how many ratings are possible. Say a STRONG BUY is the highest rating out of 5 ratings (strong sell, sell, hold, buy, strong buy). You would assign a 100 to that strong buy, 80 to buy, 60 to hold, 40, to sell, and 20 to strong sell.
Stock Price0 - [Stock Price0 x (Relative Strength - Stock Rating)] = Price1
The reason I assign the estimated price to the future instead of the present is because the equation assumes that market never values a stock according to its rating. Rating are usually based on good or bad things. A good rating is likely a result of a good analysis, and so the stock can be expected to rise. So this rise or decline could only be expected in the future.
-> Gamma Valuation
Before you do this valuation, you must first calculate the gamma, and this is very simple. All you do is take the stock rating (must be on a 0-100) scale, and divide it by the relative strength of the stock. So a stock rating of 80 divided by a relative strength of 40 would equal a gamma of 2.
Stock Price0 x Gamma = Price1
-> 52 Week High Valuation
Stock Rating x (52 Week High / 85) = Price1 |
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| mndeg |
ahhh formulas
i'm looking at http://www.optionistics.com/
very interesting, with free delayed data you could see a TON of puts on FNM were sold by put writers on 7/15, and they were 100% right. those guys made a ton of money on premiums due to very high implied volatility levels.
finally the ability to differentiate between options buyers and sellers (writers).
look at the complexity of what put/call writers have to deal with
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| Capitalizt |
Holy crap..that stuff is too complicated Krypt...You are making things too hard on yourself.
This is the only formula I use..
P/E > average annual growth rate (past 2-3 years) = overvalued
P/E < average annual growth rate = undervalued |
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| Krypton |
| quote: | Originally posted by Capitalizt
Holy crap..that stuff is too complicated Krypt...You are making things too hard on yourself.
This is the only formula I use..
P/E > average annual growth rate (past 2-3 years) = overvalued
P/E < average annual growth rate = undervalued |
Well, look at the PE, PS, PB, and Gamma valuations. They aren't that complicated. For example look at the PE formula..
(Next Year's PE)(Next Year's EPS) = Next Year's Stock Price
All you have to do is estimate next year's PE, and next year's EPS. Multiply the two together, and you've got a target price. Easy huh? |
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| mndeg |
10:35am
Crude supplies rise 1.6M barrels. Gas down 4.3M barrels. Distillates up 2.8M barrels.
I love being in the money with out of the money options. after earnings the implied volatility premium collapses and it's mostly just time premium left. |
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| mndeg |
Today is turning out to be like 7/23, next 3 days will be down huge. I may be up over 500% on my puts. about 360% today.
Seems like a good strategy to ride fed pump up then down. |
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