Investing 102

[glassman]

You've answered my question wonderfully. Precisely the answer i was looking for even when not quite asked properly. Thanx

[GregWeld]

Originally Posted by glassman

You've answered my question wonderfully. Precisely the answer i was looking for even when not quite asked properly. Thanx

Good! Because I still have no F'n idea what you were asking!


LOL

[GregWeld]

I stole this directly from Motley Fool.... it states what I've tried to state here before... Predictions are a fools business. Ask Ballmer (the EX CEO of Microsoft) about what he thought and said about the iPhone. An Idiots statement.



Steve Ballmer QUOTE:
“Five hundred dollars? Fully subsidized? With a plan?” Ballmer chuckles in the way that only Ballmer chuckles. “That is the most expensive phone in the world. And it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good email machine.”


You think he wishes his EX company sold anywhere near 10 million of something in a weekend??


Now for a better "quote"....


If we want to plan for the future, we must predict in some capacity. But, to extend a theme proffered in last month's introduction, how do we think about predictions in such a hard-to-predict world?

Partly, we can't: The simplest way — and, if our investing track record says anything, the most safely profitable way — is to seek stocks that require fewer predictions; companies whose pasts most tend to approximate their futures. No complicated series of contingencies needs to play out for most Income Investor stocks to succeed.

[Sieg]

As a Microsoft shareholder I was seriously upset to hear of Steve's departure.









After all, in '99 I had 80 shares @ a $93 avg cost. Look what he did for me!

Thankfully a couple splits and buying 100 shares in '13 @ $27 got me back in the green.

[ErikLS2]

Originally Posted by GregWeld

NO MATTER WHAT though -- YOU own the share you buy. Even if the exchange was blown up (god forbid) or your brokerage went broke (hope that's not why they're called BROKErages). The shares are yours not anyone else's. The big boys are just facilitators.

It's a little tricky with BABA shares, and a bit more risky. Don't ask me to explain it but they're called Variable Interest Entities (VIE). Copied this from wsj.com:

The bigger concern is that, because China's government restricts foreign ownership of Chinese assets, Alibaba shareholders won't actually own the company. Instead, through a so-called variable interest entity (VIE), they will only own shares in a shell company with a contractual claim on Alibaba's profits. Many Western-listed Chinese firms get around Beijing's foreign-ownership rules this way. But Beijing could close this loophole at any time, and it gives shareholders limited recourse against abuses by company founders.

VIE "contracts are only binding and enforceable if Chinese courts are willing to uphold them," warned Congress's U.S.-China Economic and Security Review Commission in June. "For U.S. investors, a major risk is that the Chinese shareholder . . . will steal the entity, ignoring the legal arrangements on which the system is based."

***
As it happens, the most notorious VIE controversy involves Alibaba and Mr. Ma, who in 2011 separated Alipay from the rest of the company without board approval. He said Chinese regulations required him to make the move, but it infuriated Alibaba's minority owners Yahoo YHOO +1.03% and Softbank. 9984.TO -4.24% While a settlement was negotiated, trust between the company and investors was damaged.

Alibaba is thus a microcosm of today's Chinese economy: Hundreds of millions of consumers and businesses are benefiting from rising opportunity, but the commanding heights remain opaque, politicized and shaky. Caveat investor.

[GregWeld]

Yes Erik --- Alibaba is COMPLETELY different. I think Mike *Glassman* was asking about stocks in general so I responded that way.


Alibaba "investors" (are they, or are they gambling) are really just investing in paper - they own nothing. That doesn't mean they can't make a ton of money over time if the SHARES (paper) continue to go up. I look at those things like this --- if I bought Ford (F) and it went to zero... I wouldn't have any chance of recovery - it would just turn into wallpaper. So I don't really get too caught up in the legal aspects. If you do - that might hold you back from making some money. A loss will be a loss... and a gain will be a gain.... regardless of the silliness of the investment.

On the opening day -- there was 25 BILLION dollars on that bet. WOW! Just WOW!

Originally Posted by ErikLS2

It's a little tricky with BABA shares, and a bit more risky. Don't ask me to explain it but they're called Variable Interest Entities (VIE). Copied this from wsj.com:

The bigger concern is that, because China's government restricts foreign ownership of Chinese assets, Alibaba shareholders won't actually own the company. Instead, through a so-called variable interest entity (VIE), they will only own shares in a shell company with a contractual claim on Alibaba's profits. Many Western-listed Chinese firms get around Beijing's foreign-ownership rules this way. But Beijing could close this loophole at any time, and it gives shareholders limited recourse against abuses by company founders.

VIE "contracts are only binding and enforceable if Chinese courts are willing to uphold them," warned Congress's U.S.-China Economic and Security Review Commission in June. "For U.S. investors, a major risk is that the Chinese shareholder . . . will steal the entity, ignoring the legal arrangements on which the system is based."

***
As it happens, the most notorious VIE controversy involves Alibaba and Mr. Ma, who in 2011 separated Alipay from the rest of the company without board approval. He said Chinese regulations required him to make the move, but it infuriated Alibaba's minority owners Yahoo YHOO +1.03% and Softbank. 9984.TO -4.24% While a settlement was negotiated, trust between the company and investors was damaged.

Alibaba is thus a microcosm of today's Chinese economy: Hundreds of millions of consumers and businesses are benefiting from rising opportunity, but the commanding heights remain opaque, politicized and shaky. Caveat investor.

[GregWeld]

Originally Posted by Sieg

As a Microsoft shareholder I was seriously upset to hear of Steve's departure.









After all, in '99 I had 80 shares @ a $93 avg cost. Look what he did for me!

Thankfully a couple splits and buying 100 shares in '13 @ $27 got me back in the green.

The ONLY reason it's green right now is because he was replaced. I believe pushed out... because of the repeat of another OS that is needing major revision and is managing to further piss customers (enterprise customers) off. He was a failure at phones - a failure in the tablet market - and produced a series of bad software (mistakes) as well as made a fool of himself (thus the company) repeatedly.... "the monkey dance".... "Screw Janet Reno"... the iPhone comments stated earlier.

The most interesting thing I can point a person to is to go to Google Finance and pull up a chart of MSFT -- click on ALL so it shows the history of the stock dating to 1986... (My wife started there in 1984) and see the PEAK in 1999. That was when Bill Gates announced Ballmer would be CEO. It then stumbled along until they announced his departure.

Having said all of the above -- had you bought the IPO.... You'd be up 46,000 PERCENT. Every dollar you invested would now be worth $46,000. $10 (ten dollars) would be worth half a million... $1,000 would be worth 4.6 MILLION.

That story is what pushes people into IPO's to this very day. Everyone wants to be in the next MSFT.

[glassman]

my peabrain cant even comprehend 46,000%. Wow. And that was just before the time Lynch wrote "one up on wallstreet" where he was sayin "you hit true pay dirt if your stock is up ten fold". But i guess that is "tech" stocks (*that i dont know) vs stocks i do know/see/recognize (oil, consumables, entertainment )

Great stuff the last few pages.

[JasonElvisHeard]

anyone been following "blockbuster video" lately... now (ELEKTRA*:Mexico)?

I started looking into it since Feb. Although Blockbuster crumbled here in the US the last 3 quarters in 2013 it posted 118M in profit from mexico operations while under the ownership of Dish.

Since the acquisition (ELEKTRA*:Mexico) has been rising lately... this could be a possible "bagger" in the works. The first few months after the acquisition the stock fumbled a little, but now it looks like they have figured out how to capitalize on the recently acquired brand and we may see some serious earnings in the near future. It will be interesting to see the earnings after the next quarter.

I know its a random curve ball but I have been taught to look everywhere haha.

[GregWeld]

I've been poking around trying to figure out where I need to put some money to work and get some yield... which triggered something in my pea brain that might want to be brought up for this thread.

That wouldn't be the above post about some failed stock that now trades in Mexico... LOL

I like to buy on "DIPS"... and today we have a dip. Is this the dip I'm waiting for to get me excited? Just NO.... While down 200 points on the DOW seems like a "WOW"... it just isn't. It was 10 years ago --- and the number seems "large" - but it's NOT on a percentage basis. Down 200 points on the DOW is barely over 1 PERCENT.

In money -- everything is about PERCENTAGES. Doesn't matter if you make 1 dollar -- as long as that was on a 10 dollar investment - you made 10%... HUGE.... 1 Percent... come on.... 10 cents on 10 dollars. Not enough to move the needle.

So ---- While I say I'm poking around.... and I have some serious cash to put to work... I'll wait. IF the market is heading for "correction" territory... then that's in that 10% vicinity. THAT get's me excited... because it raises my yield... and it CAN snap back and recover that 10% down move - making me seem really smart... If it stays down - so what? My yield is good... I didn't pay "UP" and then have to wait for it to recover... and if it goes down beyond the 10% -- I'm a lot closer to where it goes than I am had I paid "full price". Think of it as NORDSTROM'S just did the whole store at 10% off... you'd be happy as hell to go shopping. If the 10% didn't lure you into the store -- next month they might go to 15% off.... you should be happy once more - go grab that sweater you passed on at the last trip! Now you're glad you waited. If they didn't go to 15% off ----- and they go back to full price.... it's okay - you didn't need the sweater that badly anyway. There will be more sales in the future.

That doesn't mean you should be frozen in place. YOU ARE NEVER EVER GOING TO GET THE VERY BEST PRICE - on either the buy side OR the sell side... ain't going to happen. Get over it. Buy when you're ready - start collecting those dividends and 5 years from now you'll look like the smartest guy in the entire Universe.