Investing 102

[Flash68]

Nice post Greg.... I used to read seeking alpha a few years but had not in awhile... glad you brought it back for me.

What do you mean when you say "ripper"?

[Sieg]

Originally Posted by Flash68

Nice post Greg.... I used to read seeking alpha a few years but had not in awhile... glad you brought it back for me.

What do you mean when you say "ripper"?

I get daily email updates from Alpha, a lot of volume but you can pretty much qualify the content by the subject line.

I was wondering his definition of ripper also..........my interpretation is expensive per share.......to mortals anyway.

[GregWeld]

Originally Posted by Flash68

Nice post Greg.... I used to read seeking alpha a few years but had not in awhile... glad you brought it back for me.

What do you mean when you say "ripper"?

Ripping straight UP....

[GregWeld]

Originally Posted by Sieg

I get daily email updates from Alpha, a lot of volume but you can pretty much qualify the content by the subject line.

I was wondering his definition of ripper also..........my interpretation is expensive per share.......to mortals anyway.

Not touting or recommending this stock to anyone.... it's just a stock that I had an eye on for awhile and it took me some time to become "comfortable" with the spectacular run up.

Today it's trading UP $14.82 a share...

And here's an investing 102 peak -- Remember that I say scale in whether the stock is going down or up... here's my scale in.


02/14/2012 Buy 300.0000 TNH TERRA NITROGEN CO LP COM UNIT

$223.53500
-$67,063.18

02/14/2012 Buy 700.0000 TNH TERRA NITROGEN CO LP COM UNIT

$223.64900
-$156,560.57

02/02/2012 Buy 500.0000 TNH TERRA NITROGEN CO LP COM UNIT

$196.21200
-$98,114.95

02/01/2012 Buy 40.0000 TNH TERRA NITROGEN CO LP COM UNIT

$191.80000
-$7,672.72

02/01/2012 Buy 460.0000 TNH TERRA NITROGEN CO LP COM UNIT

$191.90900
-$88,286.37


I now - despite having scaled into a RISING stock price - have an UNREALIZED (paper) "gain" of $59,600.00

[Sieg]

I don't want to play Monopoly with you either!

[Bucketlist2012]

Originally Posted by Sieg

I don't want to play Monopoly with you either!

I don't want to as well. But then again, I may learn something while I lose my Money, haha..

But to give a smaller perspective.. I have been building my car for a while with profits from investments.. No out of pocket money..

I used to keep a larger rainy day fund because it IS the thing to do.. 6 months to a year's income..

But you get to a point that you can safely "park" the money somewhere, to get better yields than the .5% in the bank..

So, for a few years, i have parked my Rainy day money, and I made enough to pop on many upgrades..

I stopped for now to let more money "stew".. I will finish the car in 12 months , from those gains..

I am the small fish with much less money at work...Much, much, less..

But I try to share personal stuff too, to rally the troops with less money, or the younger troops..

Man this stuff works..I have another fund for travel...We spend the profits off that yearly. No private Jets, or World excursions, but first class lodging, ect... everytime..

I love to make memories, as much as having cool stuff..

I have some skills...

[Sieg]

It's all in "good" humor. I love the examples Greg sets because it shows how effective the strategies are. Though I do cry a little when I see a two week gain that's over 50% of my portfolio. Patience has never been a virtue of mine.

[GregWeld]

It's all about the PERCENTAGE of gains -- which is what wins in the end. Not the starting amounts. Ya don't start out "rich" -- but this whole thread is about how you will wind up "richer"... whatever that amount is doesn't matter - as long as you're forging ahead!

My points are more that you can have real GAINS -- in this case - even though I paid more than my original investment --- and collect real DIVIDENDS... and if you save a little - you'll have a far better life down the road. SolarGuy is living proof as am I.

It's really about not spinning your wheels.... not about how much horsepower a guy has.

[Bucketlist2012]

Originally Posted by Sieg

It's all in "good" humor. I love the examples Greg sets because it shows how effective the strategies are. Though I do cry a little when I see a two week gain that's over 50% of my portfolio. Patience has never been a virtue of mine.

I know, but it is what it is, Haha..

Like when I say that my emergency fund will make more money in a year.. I am talking 3 or so grand on the rainy day money, in profits.. Nothing earth shaking, but FREE money..Separate from the main Investments..3 grand in profits will pay for my Interior next fall..

Yes, I take Greg's figure's all with humor and awe... But I just try to break it down for the troops..On a Micro level, haha..Most money in Dividend paying , reinvested assets, some in 401K type, some cash for rainy days, but making money that i spend..In the old days, it would be in Savings and laddered CD's at DOUBLE digit gains... But alas, not now..

If you have been IN the game through 2008 and up to now, you are doing well.

Too many on the sidelines that never got it, or got out and they never really got back in..

And while I still see severe corrections in 2012, hold onto the tree, because in the end, we will be better off..And if your consumer debt is in order, oh man, the sweeter life is on the way..

[BC69]

I think there is a lot of great stuff in here, but a lot of it makes me cringe a bit too. There is alot of technical analysis, discussion of financial growth, and stock charts, ect. I can tell Greg knows his stuff, I just caution running with some of the simplicity of it. Also, maybe in the 89 pages of comments I missed something like what I am about to say, so I apologize.

But what concerns me is a) lack of using a comparison method and b) focus on technicals

I am one of the young guys here, but have been doing investment banking for 5 years now, 4 at one of those big Wall Street banks in downtown manhattan we all gang up on. On the private side of the world, we help companies buy and sell other companies, do any sort of financing, and of course IPO's. I am not on the private side anymore, so no worries about calling SEC.

When you see X company buying Y company, or X company IPOing at Y there is, at the foundation of it all, a discounted cash flow model behind it. You model out historic and projected periods (as far as you can reasonably be certain). Income is reduced down to cash flow, and that is taken back in time to the present period based on the companies cost of capital. The biggest part of it all is the Terminal Value - this is the value you assume the company grows in perpetuity. This makes up 90% of the total value. You can use a growth rate of 1% or so, but most likely you use a multiple of EBITDA. Think of it as operating income.

That multiple is determined based 99.9% of the time on comparison analysis. What are the public comparibles trading at. The median value of that. You tweek it if you think your company is better or worse at something. Sometimes analysts will use a multiple of earnings (P/E) which you see in research reports, its simpler, but also based on comparison!

My point is - you may see a company. A simple one, a fast food restaurant, that you understand the business model, you understand that in a downturn people go to QSR over sit down. You see sales up 5% yoy, EBITDA margins improving, CF reinvested in Europe, ect ect. So you think...great! BUY.

But what about the TRILLIONS of dollars in smart money out there, hedge funds, mutual funds, asset managers. Don't they see this? Wouldn't they be buying this? So what if all that smart money is already in the stock, and right now the stock is trading at 15x 2013E EBITDA vs. the industry trading at 8x 2013E? That means if they performed at industry average instead of projection you would be down big! If ebitda was 10mm, 1mm shares, at 15x its $150 a share, at 8x times its $80 bucks a share!

You need to make smart comparisons here. NFLX was mentioned earlier, and the chart looked great, but there was no real comp, no real way to measure that growth, and it was retail money coming in late. But industries that have established players and comparisons, you need to use that.

Its not just about stock x, it is stock x compared to the index and its peers.

On the technical analysis. Thats day trader glory, that can change in an instant! Thats not long term investing, thats day trading. And its us vs. smart big money that operates faster. Also, the options market is where the day trading really operates.

Focus on the fundamentals of the business, hold, average down during bear markets, and set limits on losses, and gains.