I used to be a Verizon (VZ) shareholder, and I received shares of Idearc (IAR) in a spinoff two years ago. I immediately sold it, because I foresaw future sales decreases for yellow pages, plus it was not valued very cheaply by the market then.
As you can see by this graph, I made a smart move.
What hurts most is missing the easy money: ECOC.ob decided to decline by 50% or so today. I closed my small short position in it just a few days ago (with only a 30% gain) and I pinched the pennies by submitting a limit order this morning to short it just below the ask (that order did not get filled). The problem with worthless companies like this is that they can go up and down a lot on no news.
In response to critiques of my previous proposal, here is my current one. Don't do anything. House prices will fall, many people will walk away from their homes and declare bankruptcy. The savings rate will increase. We will go through a recession. Many companies will go bankrupt. That's fine. It's called capitalism. People always need houses, so vulture investors will buy houses out of bankruptcy, fix them up, and sell them (cheaply) to new homeowners. [more]
The best way to bailout subprime mortgages and anyone else losing money in the housing market is this: allow losses in residential real estate to be deducted for the purpose of income taxes and allow any losses to be carried back OR forward up to 3 years. Also, the government should not tax forgiven mortgage debt as income. I know I'd feel a lot better about my $30k loss on my house if I could use it to reduce my taxes by $10k this year. [more]
If you aren't reading him yet, you need to start reading David Milstead of the Rocky Mountain News. I like his take on a filing by Level 3 Communications. [more]
As some of you may know, my house will go on the market in just a couple days. Whereas Zillow estimates my house to be worth $188,500, it will be listed at just under $170,000. I paid $185,000 for the house 3.5 years ago and put over $10,000 in upgrades into it. That is a price decline of at least 13%. If you look at the price decline from the peak (similar homes sold a year after I bought mine for around $200,000), the price decline is 20%. This would wipe out 2/3 of a normal buyer's equity (if he or she had put down 20% as a down payment). For most of the buyers in the last few years, with less than 20% down payments, current price declines will send them way into negative equity. [more]
Pomeroy is cheap cheap cheap (or, as they say in the Lou, "Cheap Cheap Fun Fun"). It isn't very profitbable, but it isn't losing money. Currently has a mico-sized market cap of $80 million. If I weren't too busy with other things I'd finish my DD and buy this company. My CAPS pick of it is down 17 points, but that means it is even cheaper now. [more]
ONJP.ob took a bit of a dive today, on huge volume of 2,000 shares traded. I'm actually short this in real life to the tune of 1200 shares, with a cost basis of $2.72 and all my profits (after tax) pledged to charity.
This is nothing more than a shell company built for pump and dumps. This will head back to $0.10 or less, but the waiting is killing me.
I am 89% long, 98% short, 44% levered (which is backup funding on my shorts and is currently all in cash). Including proceeds from my short sales, the uninvested equity, and my loan, I am 150% in cash.
The problem with fancy financing and investing is that it sure makes tracking things a lot tougher!
A new ETF I added to my portfolio is MGV, Vanguard's mega-cap value ETF.
Below is info on the Cheap Stock 21 Index of companies trading below their net current asset value. See the performance info. [more]
To penny stock fraud afficianados, TheStockster.com holds a special place. It is now back (under new management, supposedly), and better than ever. I am subscribing so as to get some short ideas.
See its sordid history.
This is yet another pitch for Icarra.com. If you do not accurately track your performance, how can you know whether you should change your investment strategy. Another site that could be useful is Covestor.com. [more]
But I didn't do anything about it.
See my Foolish take from last September
To all those who want easy points, feast your eyes on Lighting Sciences Group Corporation. [more]
Wow, Lithia Automotive (LAD) had horrid earnings and a bad forecast, and even that assumes the second half of 2008 picks up. Zale saw its net fall 30%. This is definitely an indication of recession, as consumers start to pull back on discretionary spending.
Now is the time to pair down debt and hunker down. But on the other hand, worries of stagflation (see WSJ or FT today) would mean that we should hold lots of debt. Arrgh! I'm confused!
The Globe and Mail had an article about social investing and I was their lead in. Interestingly enough, the reporter never contacted me--if he had done so he would have gotten a better quote than the one he lifted from CAPS (or my blog, not sure which). I also would have told him that I am NOT a psychologist, just trained as one. [more]
In July 2004 I bought a house for $187k. I put about $6k into it and a little bit of sweat equity (not too much). I am now selling it, after putting $5k into some cosmetic improvements. That puts my total cost basis at $198k. The listing price will be $170k. If I get my listing price (something I doubt, although I do think it is priced appropriately), I will have had a loss of 14% over 3.5 years. Oh, and this is an a nice area of St. Louis that continues to improve; housing was never crazy here like it was in California or Florida. [more]
Following is the performance of a real-life portfolio of mine, started last August. Not exactly AIMR-compliant, but reasonably accurate. Needless to say, I am doing well since I started this portfolio back in July. My outperformance has primarily come from shorting OTC stocks. [more]
I love earnings season! RMDX.ob got killed today. So what if I had $20k in losses in it up until last week? I knew I was right, shorted a bunch more, and now I am seriously in the black. Just two more OTC companies left that I massively shorted. If they tumble then my big bet (borrowing a huge chunk of change to short more) will have paid off handsomely. [more]
Okay, well it is not my book, but I co-authored a chapter. Plus, it is an interesting book. Are We Free? Psychology and Free Will gives the opinions (and research) of some of the world’s top psychologists (and one of the world's top CAPS players) on whether (and how) humans have free will. I have not read any chapter but my own, but I am familiar with many of the authors, and their research is intriguing and sometimes disturbing. If you have ever wondered whether you were truly free, this book will be of interest. [more]
It's nice to see when smart people who know what they are talking about agree with me. Read Roubini's article on financial disaster in 2008. Then read mine (on my real blog), written earlier. [more]
It is hard to go wrong with profitable insurers selling below book value, as long as their insurance risks are not too great (such as the monoline bond insurers such as MBIA) and as long as they don't delve into crazy assets. It also helps to have good management, and I trust the Tischs of Loews (LTR) which owns a majority of CNA.
As do I. Investors in target-date funds will spend less time on their investors and outperform 80% of their peers. Not bad. See Kiplinger’s article.
Here are the stock ETFs that make up 85% of my long portfolio: [more]
And in the stock market, levering up to make a big bet on a couple stocks means you are probably hardcore (and probably dumb). I guess I now fit the bill on the first, hopefully not the second. [more]
What is not to love about a life insurer trading at 80% of book value? I wouldn't long this in real life without a lot more DD, because KCLI does have significant mortgage and RE related assets, but those are likely low-risk.