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checklist34 (99.79)

A letter to the stock market. I'm going long, you can't stop me.

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February 20, 2009 – Comments (19)

I've been dollar cost averaging into the market for the last few months, and last friday, the 13th, i was nearly even.  This week has been brutal on my holdings, brutal, and has left me bleeding red ink like crazy.  I stand down more than 10% overall today.  Its a greusome thing to behold, it has shaken my confidence, left me nervous and less than fully able to sleep, and all those things that I'm sure more seasoned investors know well or have gotten used to.

But, stocks are cheap today.  Very cheap.  As long as one doesn't pick companies that are going bankrupt, in the long run you will profit heavily.

And so I am well on my way to all in.  I am diversified across 90 stocks, each of which is severely beaten in this wild bear market, most of which will recover 2 or several times their value if they don't go bankrupt.  I have one large holding that falls into the realm of speculative - Nova Chemical (NCX) - and many that could have downside.  The upside potential is huge.

I've got a good job, money put away for several years, everything is paid off, and I don't need whats on the market.  So bring the pain, Mr. Market, make me wimper.  But i'm long and I'm staying there.  I've got 5 gallons of Rolaids, a big punching bag and some gloves, and I'm ready for the ride.

love and regards,

Checklist_34

19 Comments – Post Your Own

#1) On February 20, 2009 at 3:06 PM, Chromantix (98.57) wrote:

Right there with you brother.  Debt free is the way to be.

Sometimes I feel like I'm just throwing money over the edge of  this  handbasket on a one-way ride to market hell. Yet still I invest.

 To all the ultra-shorts, my respect. I'm going long.

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#2) On February 20, 2009 at 3:06 PM, barich1 (60.05) wrote:

   I feel your pain, I'm long too.  I went long in a big way the first time the Dow got into the 7500-8000 range.  I sold it too early but still, it was profitable.  When the Dow got back down to 8000 I started buying again.  I can't beleive how much damage 600 points on the Dow has done to me.  I keep buying a little more, basically everyday the way things have been going.  Today has been real bad... so I bought more.  Dry powder is in short supply.  Can you spare a few of those Rolaids?

I have some serious dividend payers at some great prices though.  I can wait awhile. 

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#3) On February 20, 2009 at 3:24 PM, checklist34 (99.79) wrote:

Send me a number and I'll fax some rolaids over.  I probably cornered the market on them in the upper midwest, so i'm sorry if you other Fools can't find any. 

Today got better towards the end. 

And Chromantix, I'm withyou.  To everybody who's short this market godspeed, but be careful.  Plain and simple stocks are too cheap right now. 

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#4) On February 20, 2009 at 3:34 PM, djemonk (< 20) wrote:

90 stocks?  How can you possibly follow all of them?

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#5) On February 20, 2009 at 3:57 PM, checklist34 (99.79) wrote:

Hobbies?  Who needs hobbies.  Beer and a movie at night?  Who needs it.  :)

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#6) On February 20, 2009 at 4:50 PM, EnigmaDude (96.53) wrote:

Good on ya, mate! I too am doing some buying and dollar cost averaging. I'm only invested in about a dozen stocks and ETFs, but adding shares on days like today. They might not all be winners, but most pay dividends along the way (for now at least), so I can wait it out.

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#7) On February 20, 2009 at 4:59 PM, maxhoffa (< 20) wrote:

good luck.  i think it's still too early to go heavily long, but that day isn't too far in the future i hope . . . for us all.

 

did you add EXM?  along with oil, one of my favorite long-horizon plays.  but agree with the above, 90 stocks are a lot to track.  again, best of luck.

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#8) On February 20, 2009 at 6:03 PM, rofgile (98.99) wrote:

Here's one going long now.  This is crazy cheap how the market is acting now, I think it is totally irrational.  I'm stock in MTW now, buying into my local bank (which I also bank at and trust) RF, and even buying some speculative stocks now such as SiriusXM (SIRI). 

Anyways, I hope I am not being a fool - but I have a faith that this is too much of a selloff.  MTW for example has cash flow in the 100 millions, but its total market cap is only 550 million now.  I would buy that company if I could - it's Enodis group should be making in the hundreds of millions a year alone in the future.   $4.20/share ... is madness.

Regions bank is another buy because they've been fairly up front with their losses so far (looks awful in EPS at the moment).  The FDIC keeps merging in other banks that have fallen apart into Regions, my county of Alabama has all the county money in the bank, etc.  It should be fairly safe choice for a bank, just gotten knocked down with the rest.

SiriusXM just got a financing deal that means it won't be going bankrupt (at least for another 6 months or so) - yet it is still trading at $.13 cents as if it is on the verge of bankruptcy.  I think this stock will be slowly gaining over the next six months as their higher sub prices + iphone use is going on.   But this is maybe my most risky (though RF is still risky too with what could happen to banks - who knows). 

Anyways, my gut is telling me that the market is in a panic, oversold, and crazy.  In 2009-2010 I don't expect the world to end.  And, locally I've seen a heck of a lot more people shopping, going to Whole Foods, etc.  I don't believe things are as bad as the majority believe.

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#9) On February 20, 2009 at 9:58 PM, StockSpreadsheet (74.46) wrote:

I would also say that 90 stocks is a lot.  It seems that you might be overdiversified.  If one of your stocks doubles, it will only add about 1% to the value of your portfolio. 

Also, with that many stocks, you can tend to get too many in the same sector.  If you pick the three best oil stocks in the world, why would you want to buy the fourth?  Wouldn't you be better off adding more money to the first three?  Just a thought.

I also added stocks to my portfolio in January and am all long.  (No shorts, no leverage.)  Some of my stocks got killed.  Most are doing OK and some are doing well.  Most pay good dividends and all have little to no debt.  I am willing to hold them for 5 years or more, at which time I think I will be able to look back with wonder at how cheaply I got them and smile at how much money I made.  Between then and now though, I expect a crazy rollercoaster ride.  I just need to hang on until the ride ends.

Good luck with your stocks.  May all of them be winners.

 

Craig 

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#10) On February 21, 2009 at 9:17 AM, lenri (79.72) wrote:

Check

I used to own about 20-25 stocks (still have 17) but I would follow 100 others. It is a full-time job. I have no skill or cajones for shorting. I think you will do extremely well with a 5-year horizon. Good luck.

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#11) On February 21, 2009 at 2:46 PM, amassafortune (29.98) wrote:

It's too early to be 50% long without hedging. Earnings drive the market and consumers drive 60% of the economy - both continue to get weaker. Q1 09 will show a net loss for S&P earnings. Q2 09 has a good chance to be at least as dismal. The 5 million continuing unemployed number will exceed 6 million in May. The unemployment rate at the end of 2009 is expected to be over 9%. More dividends will be cut than raised for the next two quarters. Soros says he cannot see the bottom of the financial slide in sight. 180,000 retail stores are expected to close during 2009. I don't trust government predictions or headlines, but the net indication of all the data is that we have more deleveraging to go.

People entered this downturn with more debt than any other recession. For those of us with little or no debt, prices look low, but 17% of IRAs were unexpectedly tapped last year and 25% are expected to be drawn from in 2009. Unexpected = not retired. 

If you have a 5-yr horizon like Stockspreadsheet, today's prices will look good. Just be prepared that if the S&P low point ends up being 650, that's a 58% drop from the 2007 high and a 15% drop from today's 770. When we finally recover, this Boomer wake-up call will have them keeping more in cash going forward and will prolong the market recovery. 

Having said this, I nibbled on some WMT and CVS myself on Friday. I just don't know if I will own them a month from now or a decade from now. I'll let the market tell me that when it's ready to spill its secrets. Meantime, I'll be hedging anything long. 

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#12) On February 21, 2009 at 9:03 PM, Hudarios (< 20) wrote:

Actually, the stock market is not cheap today.  The projected real P/E ratio for the S&P 500 for the 3rd quarter of 2009 is 62. Even going as far into the future as the end of 2010, Standard and Poor's still projects a P/E ratio of 20 at today's prices.

I went 100% short on the market in late January/early February.

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#13) On February 23, 2009 at 12:17 AM, checklist34 (99.79) wrote:

Hodarius, that is fools logic (I mean absolutely no respect for yourself or anybody else offering similar logic today).  Earnings on the S&P are a bit misleading.  Every bank and insurer using mark-to-makret accounting is rpeorting ENORMOUS losses dragging P/Es up, but its a bit of an illusion.  House prices rebound (tomorrow?  no.  2 years?  yes) and some "losses" now come magically back to balance sheets everywhere. 

Stocks are cheap, cheap, cheap.  ASH is at an all time low, trading for less than 1/2 of its all time low despite being FAR, FAR, FAR bigger and more profitable than it was then.  Same for DOW.  dozens of stocks are either 2+x your money or bankruptcy, dozens.  Earnings may be bad now, but they will be back, and I am absolutely certain that today is a good entry point.  If the market goes down, bring the pain, thats what those rolaids are for.  If it bounces 15%....  I'll take profits and ready for another dip to go long again. 

If you pick intelligently, stocks are cheap cheap cheap cheap cheap. 

Good luck to all, except the shorts!

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#14) On February 23, 2009 at 12:18 AM, checklist34 (99.79) wrote:

Hodarius, I meant I mean no DISrespect to you or anyone else. Remember, in 1999 tech stocks weren't expensive.  Look how that turned out. 

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#15) On February 23, 2009 at 12:23 AM, checklist34 (99.79) wrote:

Hey guys, I know 90 is alot, and I thank you all for the advice and I'll trim a few next week.

But I should add that some of those aren't managed by me, they are managed by Heartland Funds who, since December have beaten the market by 15%. 

And some are my kids choices.  I decided to get them interested in stocks and let them make some pics so i own some Polaris as my 9 y/o son thought that this winter, with so much snow, must be good for snowmobile makers.  And so on  and so on.  That adds several tickers to the list that honestly I don't look at at all, the amount involved is low and its really their show not mine. 

I will do some trimming, but i guess the 90 tickers is a bit more shocking than the reality of my situation, which is a bit less ambitious. 

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#16) On February 23, 2009 at 1:24 AM, Hudarios (< 20) wrote:

Remember, in 1999 tech stocks weren't expensive.

I remember it differently. The P/E ratio of the NASDAQ 100 was more than 100 by the end of 1999 ... that's why they call it the "tech bubble" now.  Maybe you and I have different definitions for the word "expensive."

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#17) On February 23, 2009 at 9:54 AM, checklist34 (99.79) wrote:

Hodarius, I was referring to the attitude on TV and from guru's everywhere, who repeatedly told me, every time I turned on CNN, that tech stocks weren't actually expensive.  My comment was meant to be mildly sarcastic.  :)

Today those same talking heads are the ones spreading the "stocks aren't cheap right now" stuff.  The p/e of the S&P is a bit of an illusion.  Many cyclic businesses are out of cycle and earnings are perhaps gone. 

USG, a big holding of mine, is an example of this.  They have an infinite p/e as '09 will be a losing year.  But at 5 bucks (where I bought it Friday) is it cheap?  Oh  yeah, earnings will be back and that will trade several times higher some day in the future.

Also the enormous, epic losses in the financial and insurance side of life are dragging the p/e of the market up, making a statement like "stocks aren't actually cheap" seem semi-reasonable despite the fact that stocks are incredibly cheap. 

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#18) On February 23, 2009 at 7:40 PM, vriguy (82.12) wrote:

I haven't gone all in - but have continued buying steadily every month at the same rate as before. At the same time I've boosted my cash position and started reducing my mortgage.  I am expecting it will take 5-10 years for the market to repay my confidence.  

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#19) On March 30, 2009 at 8:22 AM, amassafortune (29.98) wrote:

checklist34, Looking back on March 30th - You were a little early, but averaging back into the market by mid-February ended up being only two weeks from the bottom. Good call.

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