Investing 102

[CamaroMike]

^ 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

[dhutton]

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

[sebtarta]

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.

[GregWeld]

Originally Posted by sebtarta

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.

[GregWeld]

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.

[sebtarta]

Originally Posted by GregWeld

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.

......

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


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.

[GregWeld]

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

[GregWeld]

#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

[glassman]

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?"

[GregWeld]

Originally Posted by glassman

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. :>)