RE: ABOVE POST


The point - which I failed to include in the above post..

Companies that come to market -- or are in the market already - who's SHARE PRICE are built on HIGH GROWTH EXPECTATIONS... need to have every metric GROWING not "decelerating". They can fail to make a profit for quite a few quarters and still be rewarded with a high P/E share price... but high growth needs to be high growth or you get your ass handed to you. That's pretty basic fundamentals.

Greg what do you think about this company Mannkind being approved on their insulin inhaler for diabetes? MNKD

I don't -- because I don't know anything about the company. Plus I don't do recommendations about when - who - what - how much - etc.... I'm more or a "how to think about stuff" kinda guy.

Only names that really get discussed on here are the ones just used as examples or what to think about and here's why kind of discussions.

As an addition to the "way of thinking" discussion as it pertains to boutique pharma companies...I would never want to invest (remember investing and gambling differ) my $$ with a firm whose revenue, income, hopes and dreams are riding on the FDA approval of one product. Not saying the one you mentioned is, as like Greg, I know nothing about the company.

These firms are not valued the way most best-of-breed companies you've seen discussed in this thread are. So might you miss out on a 400% gain when the new product gets green lit through the final stage of FDA approval? Sure...but you might also miss out on a 50+% loss when the thing dies on the vine since the market knows their product pipeline had nothing else in it.

Good reply JK...


I looked at the company after the OP... Just because I love this stuff.


So to use them as an example... MannKind (MNKD).


Over the long term chart - they're DOWN 27% -- and that's AFTER a 58% run up in the stock prior to getting the FDA approval for the newest drug.

No dividend. And the stock was at $20 in '07 then dropped like a rock to $3 and less for about 5 years. A couple short term blips to the $10 range when I would ASSume some news about stage this or that trials were favorable. Then sold off right back to the bottom.


Here's the investing 102.

I can't possibly spend enough time to be up to date on the latest greatest drug trial - or who has a competing product in the pipeline... Not to mention I hate Yo-Yo stocks. Rich one day broke the next. No dividend. No knowledge. No investment.

There's no doubt that if you can stay on top of this stuff - there's HUGE money to be made... There's also huge money to be lost when your picks fail to get approval - or get sued because somebody did something which is blamed on the drug or treatment. I'm not being negative -- I'm just being truthful for what happens to 9 out of 10 investments like this.

If you're in the business -- up to date -- understand the MARKET or the product that is ultimately brought to market... Then maybe you can make some money in these.

But this is INVESTING 102... not "let's pick the next hot stock to lose money on"... and I would think that unless a guy is playing with several hundred thousand dollars -- he should steer clear of the "next hot thing".

I play with some of this kind of stuff... but I don't discuss it in this thread because it's just not appropriate. That would need to be a different thread titled --- What rich guys do with their play money -- or something along those lines... Or Stock market gambling how to lose money overnight. :>) Maybe "I went to bed rich and woke up broke"? I kinda like that one. HAHAHAHAHAHAHA

Maybe its just me but whenever I hear something about pharmaceutical stocks I think of JP Marlin and Stratton Oakmont lol

lmao. Thats a good one. That could be a bit interesting!

:G-Dub: :drowninga:

Oh, and a side note:

7/1 = DISTRIBUTION REINVESTMENT: KO
7/2 = DISTRIBUTION REINVESTMENT: KMB
6/27 = DISTRIBUTION REINVESTMENT: LMT

Woot! Paydays. :):G-Dub:

I had to look that up to see what the reference was. I never saw the movie. But yes --- the parallel could be made there. And not just pharma stocks - but any company where there is similar "amazing upside" but little in actual real business to back that up except a lick and a promise.

To be clear --- with all due respect to Sebtarta (the OP) I mean no disrespect for his question. If you're new to the thread -- without reading about half a billion pages -- you would have missed the full idea behind the thread. So - Sebtarta - please don't take our pokes at this type of investing as a personal shot. But this type of investing is EXACTLY what this thread is about in a 180* way. The thread became a blog almost - but about how to safely invest - how to get started investing - how to stay invested without gambling or stewing about big quick losses etc. So unfortunately for your questing -- it played right into the "WHAT NOT TO DO" that this thread has tried to cover.








It happens all the time....









Don't ya just love getting paid like that! It's just such a satisfying feeling. Regardless of the AMOUNTS --- just seeing those credits to your account brings a smile to a guys face.

So let's just stay on this question about MannKind (MNKD) for another post.



A couple days ago -- the big news was about the FDA approval of a new product for them --- which created the question from Sebtarta. To which I responded that "I don't know anything about them".

That quote is really larger than just about the one single company. I have often stated in this thread to stick to what you know and understand. To do otherwise is a tar pit trap. You buy based on something you've heard - or buy because something is going up and CNBC is talking about it... But you really have no GD idea what the larger picture is - competitors - revenue - growth potential - management... etc.


So this is TODAYS news on MannKind (MNKD) --- and bam! Down 4.5% from yesterday. When I'm trying to earn 4.5% or 5% in dividends (and get capital growth on top of that) I don't need to be down that much in one day. And these kinds of stocks are purely NEWS DRIVEN or event driven. UP DOWN UP DOWN... Personally... my stomach can't deal with that.

Now -- the stock could shoot to the moon.... and many people could make a killing on it. But you could also just as easily get killed. I don't want to invest in that kind of risk. I'd rather be like Albert and roll out my dividend calendar! LOL



Cut and pasted:



MannKind Corporation (NASDAQ:MNKD)’s inhaled insulin drug Afrezza won the USFDA approval on Friday, June 27 for type 1 and type 2 diabetes. Though it’s a positive for the biopharma company that doesn’t yet generate a revenue, there are some big concerns around potential commercialization of Afrezza. That’s the key reason JPMorgan’s biotechnology analyst Cory Kasimov still has a Neutral rating on the stock with $6 price target, reflecting about 40% downside potential.

^ 100% agree with what Greg said as usual. Sebtarta, If you understand the company and industry and know why you want to invest in that company then go for it! I just know nothing at any kind of medical companies, and in my reference I just remember hearing lines in movies about how this pharma company could be "the next big thing." Which who knows, it could be! I just stick with super basic names I understand and can keep up with by scanning through their stuff a few minutes each day.

I highly encourage reading through as much as you can of this thread, good real life stuff here, good luck :thumbsup:

Speaking of GoPro I read that the stock fell 10% and triggered the circuit breaker today. That could have been painful for folks that were late to jump in.

Don

Thank you all for the responses. I am not ready to invest by any means, just researching and see if I would do any good. Lots of good info here as usual, will keep reading and keep learning.

Glad you came back in --- because when I re-read the posts referencing yours -- I thought --- wow --- they kind of sound like we're all in flame mode. And that's just not Lateral-G --- nor is it the intent of anyone in this thread.

If you're "new" to investing -- or just want info and ideas (not on what company to buy but things to think about)... just start reading this thread from page one. The thread is not the end all be all to investing. Rather - it's attempting to have people that are new to investing try to make some sense of it all. Trying to take the mystery out of Wall Street... And an attempt to have people see that they don't need to start out rich - to get rich given enough TIME.

There's no "dumb" question. Everyone is willing to help... some that started investing with this thread -- have now actually witnessed their own success and really have gotten a good handle on what it's all about -- and more importantly -- what to think about.

The thread is more about teaching how to fish rather than catching the fish.... which is why everyone had made a valiant attempt to keep it about the thought process vs a buy this or that.

It's time to start to pay attention here if you're invested in INTEREST RATE SENSITIVE investments. The unemployment rate is dropping... T Bill rates are rising... Won't be long now til the FED raises rates.


This is a Yin/Yang issue for investors.

Rising interest rates can hurt capital growth on rate sensitive investments.... but HELPS stocks such as industrials etc -- as the rising rates tend to signal an expanding economy. An expanding economy helps the stock market....


I'm never a fan of moving money to try to get out of one sector to buy another. Rather -- if you have new money - that's what you put to work in something that should benefit from better housing - better car sales - better infrastructure spending... Think Caterpillar... PACCAR... Railways... that type of thing. But I'd also remind people to look AHEAD... because the big boys on wall street are 6 months to a year ahead of you THUS the rising market we've been seeing.

No worries. I had put on my flame suit before hitting the post button :lol:


edit--
I never really elaborated as to why I asked about MNKD. Well we all know that diabetes here in the US is a very big number unfortunately. I read that MNKD got approved for their Afrezza drug which is a insulin in the shape of an inhaler. I know the company really has no profit currently as they have been putting every cent into this drug. For some reason (no idea why) I feel that if the correct partners join MNKD to distribute this drug could sky rocket.

Do ya think maybe stuff like this is what makes GoPro (I do not own) GPRO - so "loved" in the market?? LOL

#1 -- I do not own GoPro (GPRO) nor do I expect to... and once again - I'm not trying to discuss buying or selling this particular name. However... since it's the recent IPO and Market Darling.... I'm always interested and I pretty much spend my day either messing with cars - or reading and scanning news which relates to stocks....


So we always are discussing FUNDAMENTAL CHANGES -- what to look for - and to look out for. They're important. Not all news is FUNDAMENTAL... but we're always wanting to scan for things where it can be. Here - for INVESTING 102... is an example I just found by accident on GoPro.

REVENUES are what drive share prices. End of story. Big profits. Big revenue. Big expectations.

BEWARE big expectations - because then we have to think about the "priced for perfection" scenario where the stock gets crushed even if they did pretty well - but they didn't meet "expectations". We've discussed this earlier. I tread lightly when expectations get overblown.

BUT the 'news' here, is news to me -- because we discussed the fact that many think GoPro is a one trick pony - with basically a camera and attachments to sell ------ yet here's an article bringing up the possibility of a huge advertising revenue stream... that's pretty fundamental and can be a real runner if it proves to be A) True and B) bigger #'s than expected (ah beware!).

Again -- nothing about GoPro -- But about the little nuggets and changes that can make or break any investment -- That's what I want readers/investors to start thinking about. Don't just look at the share price gain today or tomorrow... look for nuggets, good or bad. Learning these things is what we're all about.




Long-term investors in GoPro can probably ignore today's drop. While it's important to be aware of the short interest in the stocks you hold, heavily shorted stocks can also quickly spike on good news due to short squeezes from short sellers attempting to cover their bets. Even after the pop, shares still seem reasonably priced at a P/S of 6, and the company, which is only 10 years old, is already profitable. GoPro dominates the niche market of stunt and extreme sports-based video, and is set to begin collecting money from advertisers, which should give the company another valuable revenue stream. As video usage and wearable technology continues to grow in the Facebook/YouTube generation, I'd expect GoPro to thrive

So as i was thinking about "said stock" the other day, and while this isn't a stock picking thread (rather a discussion on the fundamental's of stock/investing) I was thinking about "insert company with the recent IPO in the manufactoring-technololgy--lol".
I was kinda wondering about the stocks potential. As you "go" public (pun intended), you raise money for capitol growth (Greg correct me if i'm wrong)..
As you raise more money/capitol, you can then grow your target audience.
In this case, if they can land "government" contracts, with a durable camera/video device, think of the growth in numbers that way, potential markets. And/or placing the products anywhere security is required, and a monitering network (think big brother), it may have future potential....
Just another something to ponder in investing, try to think of "whats next?"

Generally most of the money raised is capital that goes back into the shareholders pockets. The founders are usually sellers - which means those shares that are sold come from their personal holdings and thus the cash goes into their personal accounts -- and then you have the VC's that were the early seed money -- those shares, likewise, get sold to replenish their pockets.

IPO's are about unlocking cash, rather than just holding equity, for the early investors.

SOME shares might be from the company coffers -- but you'd have to read the prospectus to find out how much, and what their intentions are... balance sheet repair -- cash burn rate if they're not profitable -- R&D -- Marketing...

GoPro is all about mobility and about "self". They do best at Marketing and have managed to beat out better products that are more niche market... i.e., the SmartyCam HD which is all about recording car events with it's OBD II interface cables etc... or Contour - with their GPS enabled cameras.

Personally -- And I own all three of the above mentioned devices... I think the GoPro camera sucks. Their video quality is great - their sound quality sucks and their user interface is dreadful. But they're cheap - easy to mount - sound doesn't seem to be that important for most things - like who cares what your skateboard sounds like (unless you're doing an epic fall and we hear bones crunching).... so their compact size - goes anywhere - waterproof cases.... those things are why they sell well -- and their display or what is called POS -- POINT OF SALE... is by far the best in the market.

It remains to be seen what or where they go from here. But the name is already like Kleenex or Clorox.... every camera is referred to as a GoPro... and that can be taken a long way. It's called BRANDING. And branding is very important if the company doesn't screw it up.

BUT ---- FOR INVESTING 102 ---- a STOCK can quickly be separated from the company... a stock can have it's very own momentum which can vary widely from the actual company performance. People begin to bet on the "what's ahead"... stretching the P/E way out. Or the traders start flipping it -- this is where you see the volumes in daily trading shoot well beyond what is "normal"... People just start flipping shares in and out - 1000 shares up .50 is $500 bucks... so WTF -- making $500 on a trade that took 5 minutes is easy money in a hot stock. Until it isn't.

So the analogy is -- two 6'5" people make a 4' baby at birth... EVERYONE sees the next Yao Ming.... and people push the child to be a basketball player... and everyone watches the boy's every move. He can rise to be the star that people thought he would be.... or he discovers Ballet.... and all bets get crushed. Or he signs a big contract and turns pro - but breaks his ankle in practice and never plays a pro game...

The point? All we can go by right now is what the company has done in the past -- pretty impressive so far. What we don't know is what they'll do going forward -- and THAT is making the shares a gamble. Paying too much now for results that disappoint... or are we paying CHEAP prices for a rising star in the future. WHO THE HELL KNOWS.

If you like the company and have some extra PLAY MONEY and want to buy some shares --- JUST DO IT. Just understand what you're doing.

Dude -- I buy stuff like this all the time... I don't talk about it on here because this is INVESTING <first> and 102 <beginners>.... and I don't want people to do what I do because I did it. I want them to THINK about what's right for them - their wallet - their goals - their stomach. So I walk a fine line of what's appropriate for this thread. My goal is to point out what can happen to a stock - what's really important - what affects things - what to think about - and if someone wants to use all the tools at their disposal and buy "X" and does so with wide open eyes. That's their choice and I hope it works out and makes them the next millionaire.

Just don't do this like you do with $10 buying a lottery ticket. In this game you have to THINK. If you think you want to own it - whatever It is - then go for it. It's nobodies money but the guy that made the choice. I'm not here to approve or disapprove of anyones investment choices.

I'm no smarter about these IPO's than anyone else on the planet. $385K angel money in one investment made me 20MM in 2010.... $500K in another investment went to ZERO in 2008. I was far more certain of the $500K investment. Management made the difference there and I was just flat wrong about their skills and honesty. Given the chance to do it over again - I'd put the 500K right back into the same idea. My point? Only play with money you can afford to loose 'cause you just never know.

Another real life example.....


LuluLemon (LULU) and NetFlix) NFLX..... I would have bet you LULU would go to the moon - and NetFlix was going to be history after the gigantic faux pas the CEO made..... <BUZZER> It all came down to management and how they handled the fallout of what happened and whether or not they continued to shoot themselves in the foot -- or learned from it and moved on and became better. I lost money on LULU and never invested in NFLX..... which is now a 4 bagger or so. Stocks like these don't have HISTORY.... they're young - they're going by feel - they flourish or they wilt... I make my money on the right stuff being invested in big names - rock solid - dividend payers..... and once in awhile I have some extra that I play with and hope to hit a home run. Sometimes it works and most times it doesn't. I can afford to play like that. Most people can't and that's what this thread hopes to fix.... so that they CAN once they've built a base.

Okay --- off my soap box. :>)

Good post, Greg. Thanks for taking the time to type it.

Great explanation Greg. Personally, get back on top of or stay on that soap box cause i think you know what the f__k your talking about. I've never met ANY investors that can put it in layman's terms like you can.
I thought the same way about Google vs Apple three years ago, i "woulda" put all of it into Apple thinking they were the cats meow and Google just didn't have enough bling....well we know what happened(ing).....

So ya, thanx for your explanation, some times i can actually here you yelling at me lol, but i needs to learn. i'm still trying to put the basics together for me in my Schwab....

On lending club
 

A few months ago I posted on this thread asking about peer lending... I ended up going in with the equivalent of 10% of my post tax discretionary investment account.

Thus far my Net is 17 percent including charge offs :topic:

Good job! Be safe with it.

Actually - that drop was 15% !


So here's what happens to small - retail investors.... that's "US".

A guy gets tired of hearing how much "X" stock is going up every day... and he finally listens to the idiot in his head telling him "WTF - why am I the only guy in the entire universe not making a fortune off this!?!?"

Then he plunges in with 5K.... and in hours or days --- He is now the only idiot in the entire universe that is DOWN $500 "already".... and he is now walking around with his stomach churning... and burning... and a couple days later when it goes up .10 a share - he sees his chance and bails out.

Give it another week and it's a buck a share more than he paid.... and he's confused - estranged - and can't figure out why he can't figure it all out. Now the worlds dumbest investor in the entire universe is walking around telling everyone how he WAS in X..... and WAS is the key word here. But now the worlds dumbest investor in the universe is afraid to pull the trigger on ANYTHING - buy or sell.... because he just showed himself that he can't buy right and worse - he can't even get the sale right! He now sees that he could have waited and bought on the dip -- and even better - he could have sold high and made a months wages in a matter of days... but he's now frozen like a deer in the headlights.

DON'T BE THIS GUY....


Be "okay" with stuff that gets away from you. Buy what you can hold on to and you can afford to buy. That includes houses - cars - woman.... Be the tortoise... the same one that your Mother read you the story about. That's a very sage story.

Does this mean DON'T buy a GoPro?? HELL NO! It means -- understand yourself - your expectations - your guts for pops and drops.... Can you really stomach losses and not have it affect your thinking.

102 investors should build a nice base -- live thru some ups and downs - watch their money grow and then watch as some or all of that growth melts away... what's that do to you.... can you handle it.... can you keep putting money in the market when it's down - and then it goes down more... can you put the next $500 in regardless or do you fold like a kleenex.

The dividends offer a "buffer" for the above scenario. That's why I recommend beginners invest in them. Reinvesting the dividend happens when you're looking the other way or laying under your car banging your knuckles... It puts your "investing" on autopilot.

Once you understand yourself... and the market (write me when you think ya got that goin' and good luck with that thinking!)... THEN MAYBE you're equipped to spread your wings and take a flier.


Think about a guy that hasn't ever seen Soccer... he runs out on the field and promptly gets the ball taken from him - has not a clue which end he should be at or what just happened to him. Versus the guy that stands on the sidelines --- studies a bit - talks to others on the sidelines and asks why this or that happened... runs some scenarios in his head... watches and understands who on the field seems to really be a good player.... When he THINKS he can play he finally goes out and has some success (vs the guy that just ran out there). The first idiot walks off the field humiliated and never plays soccer again, KNOWING that it's too hard for him, and he'd never be any good at it..... The other guy is enjoying a brew with the boys at the pub, enjoying his modest success, and his new found soccer buddies.

Sometimes -- if you're a real stupid "investor" -- all you're left with... is the crumbs. I'd call this a crumby investment...

#1 -- I had no idea they'd "list" some company like this...





http://abcnews.go.com/US/wireStory/c...tores-24461104

Bpt
 

This is NOT a recommendation to own this name... it's just another example or at this point A REMINDER of why DIVIDEND INVESTING (nothing more than a particular style)... has proven to be a good thing OVER TIME....

I own 20,000 shares of this name... but what's important for 102 is -- I just got a RAISE for doing nothing. Not much of a raise... but a raise is a raise -- and over time raises in the dividend rate can keep you ahead of inflation...

And even more importantly --- A raise is on your cost basis! So over time you're earning a higher and higher PERCENTAGE on your investment!


I'm actually now being paid 13.56% on this investment because my cost basis is $89.41 a share.

See how that works! Sweet!






BP Prudhoe Bay Royalty Trust (NYSE:BPT) announced a quarterly dividend on Monday, July 7th, Analyst RN reports. Investors of record on Tuesday, July 15th will be paid a dividend of 3.0326 per share on Sunday, July 20th. This represents a $12.13 annualized dividend and a dividend yield of 12.47%. The ex-dividend date is Friday, July 11th. This is an increase from BP Prudhoe Bay Royalty Trust’s previous quarterly dividend of $3.01.

I love raises. How do you calculate the yield for the investing 102 newbie crowd. I have very few shares of BPT but my Cost average is $86.79

Bob, pretty sure you divide annual dividend by share price.
$12.13 divided by $86.79 =13.9 percent. Yeeha



John

Exactly right.


Make sure you do this calc with the ANNUAL yield not the quarterly! There's 4 quarters (DOH!)...


Annual yield (in dollars and cents) divided by the share price (using your cost).


It will NOT come out with the decimal point in the right place -- but you'll get the number and you put the decimal where it belongs


i.e., 1.60 / $10.00 will show up as .16 ------ move the decimal 2 points --- 16%

Came across this chart today and thought it was interesting. It shows who makes the food you buy at the store. Might help influence your stock purchases.

http://knowmore.washingtonpost.com/2...t-the-grocery/

FaceBook
 

Just happened to check in on FaceBook (FB) this morning.... WOW! Those guys that bought and stayed in it -- it's climbing nicely... but WOW what a gut churning ride that has been!!

So here's why I post this....

Remember we talked about GoPro (GPRO) and about "waiting" -- and rather than thinking you missed the biggest "deal" ever... that if you wait and be patient -- there is always time to get in. FaceBook looks like the HYPE has been wrung out of the stock, and now it might actually be trading based on MAKING A REAL PROFIT. That's important -- because without that key metric -- stocks go down faster than they go up! And that's where people get killed in the market. They buy the hype -- and then sell out when the air goes out of the name.... Sometimes those names NEVER come back -- and sometimes they report that they're making real money (as in profits and margins) and then they can stand on their own two feet without the hype baked in. Now you can make a real decision based on facts and not just hyped hopes.

Not saying to buy or sell it -- just using it as a recent example on buying IPO's

Yep, I mentioned to my financial adviser about FB when it was going public and to buy the IPO. Got denied, now LOOK! :confused18:

Decent read related to retirement planning: http://seekingalpha.com/article/2314...ia-group?ifp=0

What do you mean by "got denied"?

He did not agree on jumping on it.

Well thanks if remember you in the beginning very down on "facey book" I got in during IPO at 38 the more at the drop ...... I hope to be posting a similar opine message on peer to peer in a year....

He did not agree -- because maybe he knows - that like MOST PEOPLE they are in love with the stock - as long as the stock goes UP..... and when it doesn't - or drops in HALF like this one did -- then -- since they only really like the prospects of the stock going up --- they SELL OUT... losing money. MOST PEOPLE don't stick it out. See below for ONE that did.... and like I always say -- better LUCKY THAN SMART!




Good for you! As per above -- most would have bailed on this one way before it ever turned around. Here's my point for INVESTING 102.

Had you NOT bought on the IPO --- and you waited --- you might have bought shares for half what you paid.... IF YOU LOVED THE COMPANY VS THE STOCK... you would have really loved it at $22 instead of $38.... So there was plenty of time to sit on the sidelines and watch this one....

THAT'S MY ONLY POINT ON IPO'S..... Let's not discuss THIS COMPANY or some other company --- We learn from EXAMINING this stuff. GoPRO is off and running to the moon since day one -- they DO NOT always do this! It's fun when they do... but FaceBook was a classic example of the most hyped IPO that I can remember in a very long time -- and it was an EPIC FAIL. Since then they have been able to calm down - show they're making money (the goal after all).... and now people can get in without the hype.

We'll watch GoPro and see what happens -- because it's all very interesting.

Glad to hear you stuck it out -- bought more at lower prices -- and are now being rewarded for your faith. Good for you!

Once again - not saying whether or not someone should buy - hold - or sell any particular stock --- just picking on this name as ANOTHER example of the IPO market.


Twitter (TWTR) was another highly anticipated IPO "block buster".... But Year-to-date it's DOWN over 40% from it's high.... It opened at $44 -- ran to $70 with HYPE... and is now $38....


If you LOVE TWTR as a company and think they have a bright future, with the EARNINGS to go with it.... great. My point is -- there was plenty of time to take a step back and see where the shares would go.


Some of these remind me of the late 90's IPO market when the key "metric" used to hype the market was "EYEBALLS" --- everyone was going to make money because they had eyeballs. The problem though was -- you don't pay your bills with eyeballs... you have to monetize the eyeballs with earnings and profits. That's harder to do. There is only so much advertising dollars to go around. MySpace had eyeballs and "users". Do you even remember who they were? LOL

Just an example that a safe dividend stock can occasionally have a nice run as well.


http://seekingalpha.com/article/2317...r-40-per-share