The same reason for the dot com boom. People are driven to irrational acts by the interplay of greed and fear, and the promise of Sirius shifts the balance towards greed. I use Sirius and love the service but they have a huge amount of debt and have yet to turn a profit. They also have an obcenely large float of shares. You'd be playing chicken with people's perception. If you buy a stock like Sirius you'd better be checking the price changes daily. At least. It's not for buy-and-hold investors. Toll Brothers is a great homebuilder, and homebuilders in general have been great despite constant gloom and doom talk about the housing boom. Nevertheless, there is reason to believe that homebuilders will get knocked down eventually. Honestly, look for services or products that people buy when they are worried about finances. You might not have such spectacular returns in the short term, but you'll be in a position to buy the cyclicall glamor stocks for 1/4 current cost when the market turns south and people panic. One thing that you can count on with the market is that stock prices fluxuate above real value, and then below real value, only to start again. The averaged return from the market for it's entire history is 7%. If you're making too much above that too quickly, contemplate the stastical certanty of regression to the mean.
The two private REITS are set up to return 7% per year for 7 years, paid monthly, then liquidated to return your money plus 10% with provisions to share any capital gain over that. The oil and gas partnership is like a mutual fund of gas wells. The partnership is set up and capitalized to drill 6 wells. We need at least two of those wells to make to go positive on the cash flow. Our first well was dry, but our second was a real good find, enough in fact to pay for drilling the other 4 over time though we will still have to come up with our second cash call (as expected). The yield? No guarantees but I realistically expect to return about 20% per year over the 10-15 year life span of a gas well and there are some tax advantages. The partnership can decide to take the income, sell the producing wells or drill more wells. This type of investment is ultimately dependent on the knowledge and connections of the general partner and I just happend to fall in with very a good one. The corporates pay between 7 and 9% so they have some default risks like Continental Airlines but I'm spread over 25 or so. If you buy bonds with yields your happy with you don't have to worry about their price fluctuations (like you do with Bond Funds) If you haven't guessed I'm older than you guys and looking for more income than capital growh but after 20 years of playing the stock market (made and lost) I'm finding the alternative markets a much surer thing. And I still get a buzz by checking out the drilling reports. And I seriously believe there is a recession right out there on the horizon because the workers in China are not going to want to subsidize our national debt forever. Evidence began to surface just this week.
Ever looked at the Compass Bancshares(CBSS ) chart? Or the NDABX mutual fund? Both for the long term, mind you.
This was the main point I was getting at. From your initial post it sounded like you were just letting a broker put you into partnerships. Since you're taking a hands on approach with the wells that sounds like a fun/potentially rewarding investment. I'd still somewhat question investing in private REITs yielding 7% vs. public REITS that yield the same amount. Since your REIT return is basically dependent on yield, which is dependent on bottomline(90% pass through) I would think it would be to your advantage to have the company be required to disclose financials. Since you're older, you must know the history of REITs beyond these past 5 years. Even publicly traded REITS aren't the most liquid asset class in the world, so I would be concerned about liquidity of private REITs even moreso.
I've owned shares in Compass for a few years. Its a well managed bank, pays a pretty good dividend, and in my opinion is a good long term investment. Texas is a hot branch-banking market, and many of the megabanks are itching to have a larger presence there. Once Citi clears up their problems they're going to be looking to acquire branches in more desirable TX markets(bought a private TX bank based in B/CS last year). Wachovia also wants a piece of Texas. I would rate Compass as the most-likely bank to be acquired with a major branch presence in Texas. Dont know anything about the fund you mentioned.
You mentioned Archipelago earlier. If you have access to the Journal online check out an article from last Mon., July 18 called "NYSE seat prices cool off a tad". Talks about the discrepancy between Archipelago stock and Exchange seat prices. Something to think about if you're long Archipelago.
I've been thinking of throwing a couple of grand at Landry's stocks. To my untrained eye, this company is blowing up big-time, with tons of developments on the Seawall in Galveston, not to mention their holdings in Vegas, including the newly acquired Golden Nugget casino. Any feedback on this?
Why the $250K cap? I would say if you are not a professional investor (like a mutual fund manager), stay away from individual stocks. Thinking that you can outperform professional money mamangers is sheer folly. BTW if you can consistenly outperform professional money managers, you have a very lucrative career ahead of you in money management. If you can not help yourself from investing in individuals stocks, I would limit the exposure to less than 10% of your portfolio. I would also take Warren Buffett's advise and only make 20 stock selections in your lifetime, i.e. only invest in a stock if you think it represents a "once in a lifetime" opportunity.
I'm not long AX. All I do now is scalp NYSE stocks since I've found out I'm very good during the first hour of trading, especially the first 30 minutes. Generally, if I try to trade longer than that then my winning percentanges go down and I get myself into crappy stuff that isn't doing anything. So my knowledge of the general market has gone way down since I have started only scalping. Anyhow, the large spread between the price of AX and the price of the last sale is interesting. Make you wonder where the money will be made on buying the seats or shorting AX. You would tend to think that the seats are lagging the stock price since they are illiquid, but it could be a showing of lack of demand for the NYX IPO.
Sorry but I just have to correct this everytime I see it. You can outperform the large majority of professional fund managers simply because the large majority of the funds have specific types of investments they have to stick to and this hurts their performance. I think only like 80% beat the street on a year to year basis because of this. Further, not all guys in this industry are competent. Also, you are right about being highly selective with stock picks and not trying to nail everything. However, you have to qualify what "once in a lifetime" means relative to risk.
You have the wrong opinion. I thought the street (SP500 index) beat 65+% of the managed US equity mutual funds over a ten year period. I know in the late 90s that number was 90%. Since 2000 though, the stock pickers have rebounded. Still, 1 in 3 equity fund managers beating the street is weak. 2 in 3 get their hat handed to them. These "losers" work 80 hours a week; they have an education of the highest pedigree; they have a breath and depth of knowledge of the current equity markets that staggers; they are the first-to-know all significant market news; they have a crack staff of junior assistants who are fund managers in training. The fund companies have set these managers to be wildly successful, yet they are not. As individual investor it is our task to pick how we are going to invest our monies that we target for equities? Do we make the safe bet and pick the street? Or do we pick the fund manager that has an established track record of beating the street and take the 1 in 3 chance of being right?
I would be wary. They may be making big-name purchases and rapid expansions, but they are overpaying on almost all of their acquisitions. Returns on invested capital are likely to be quite poor going forward.
Lafarge. International concrete manufacturer. good for rebuild after tsunamis and the housing boom that continues. pays a hefty divident, like 4%. I like it.
it seems to me that the equities market has basically been horizontal this year. the dow, nasdaq, snp 500. minimal gains from jan 1. what is a good rate of return for the current year to date at this point?
There's a truism that the market trades not on today's news, but the news of six months from now. General expectations are for several years like the late sixties where little ups and downs average out to generally horizontal movement. (Of course, at least think about a plan for what to do if “general expectations" are wrong.) Furthermore, it's the first 6 months of a bull where the "easy money" is made. Once everybody accepts that the market is in a positive mode, the curves tend to flatten. In this respect, I'd honestly say that if you're in the black don't worry too much. There are individual stocks that have gained 1000X this year. Every day, some stock jumps 30-40%. These are statistical flukes and trying to find them is like chasing rainbows. If you beat inflation, you're not loosing ground. Approach your investing as a baseball player on his season at the plate. Don't try for a home run every time, but go to bat with the intention of getting on base and when you'll eventually hit a few homers, especially the more "batting practice" you take. Some days you'll face an ace and strike out a couple of times, but that's alright. If you want an object lesson in what not to do, read Jesse Livermore, world's greatest stock trader. The guy made an obscene fortune ($100 Million) shorting everything right before the depression. He was so rich that he used to pay every traffic cop on the route from his house to office a dollar a day so that he wouldn't have to stop. He also had many brilliant attitudes and philosophies regarding the markets. His wisdom is still widly quoted, and no man on Wall Street was more admired (or despised) during his hayday when he was on the top of the world. But, to quote the wikipedia article on him: I used to loathe Warren Buffett, but after a couple of years of Livermoresque gambling, I came to understand why Buffett is so respected and good. He waits for the right time. He doesn't do something jut to do something, and he doesn't overpay. He predicts a trend of a couple of years at most and doesn't panic if it doesn't pan out right away. He never makes a killing on any single deal, but he never looses the farm, either. To extend the previous analogy, great hitters always wait for the right pitch in their sweet spot to swing, even if it means taking a strike without swinging. Study market tendencies and cycles as well as individual stocks the way good batters watch film on what pitches a pitcher throws in specific situations, how they react to adversity, and how much they are effected by pitching late into games. As they use trends to predict what pitch is coming before it's thrown, figure out where the market will be in 6 month (or at most a year) and act on it. (Longer period prediction is like predicting weather. Chaos exponentialy increases the inaccuracy the more time elapses.) In summary: What I'm really trying to say is that your question isn't really a productive one. It's like asking (to extend a previous analogy) how a batter did at the plate today and using that to decide whether they are a good hitter or not. Finally, Best two free websites for investors - http://www.investor.reuters.com (you have to register for some content, but it's free) and http://finance.yahoo.com They both have good stock screeners and finders, as well as links to articles in major economic publications. Keep in mind, as well, the recent capital gains tax advantages introduced for dividends. P.S. Sorry for the rant in response to your simple question.
I've been investing for seven years now, and although that sounds like a decent amount of time, I still consider my knowledge to be limited. Understand this, the market will pick out your weaknesses, whether it be patience, luck, or whatever, and use it against you. With that said, the current market optimisim does have some legs, that being biotech, and tech. I am currently bearish on the market, been bearinsh for about 2 and a half years, and will continue to be bearish untill stocks get to reasonble levels. IMO, right now, every asset class is overpriced and this irrational exuberance will end when the majority of people go long. For example take GOOG, it is close to reaching the market cap of HD, google has about 3000 employee, and HD has over 220k, how is that possible? or even SIRI? I bought SIRI at .59 when it was cheap and sold later on. But the people buying now are better off playing the lottery. I have begged friends and family to discontinue their interest in homes. However, like I said earlier, this leg up does have some legs. Last week, I read about pension funds, who have underperformed the last 5 years are interested in real estate. It is only fitting that the group that should be most conservative with their assets will be buying real estate at 2 or 3 times value. This is why I actually see real estate boom lasting a little longer then expected. Just remember that bubbles last longer then people think. With the help of Mr. Bubbles (Greenspan) anything is possible. Recently, I have been adding to my Gold positions, selling my oil. During new years, all you could hear about was the dollars crash, and that is why I went long Dollar/Short Euro CD, it has been up 7% looking to close the position in the next 6 to 9 months. Before someone says why long Gold and Dollar at the same time? dont they negate eachother? NO, the Dollar and Gold broke off their relationship about 2 and a half months ago. Buying the Dollar CD was a hedge on my Gold position. For the meantime, I do have some tech and some bio just for the short term. The shorts have to cover their skirts before this market rolls over, so until margin calls and short covering begins, I will be long. Its amazing how if you would have placed your money in ING (not the stock, the bank account which is giving 3.15% right now) for the year, you would have beat most indexes. Lastly, if you are looking at real estate, do it safely, the only REIT that I have is actually in texas, ticker symbol CEI, the only reason why I bought was because of the large insider, Richard Rainwater, this guy is an insider I try to follow because he is always onto something. If you want to play real estate in a market that isn't in bubble mode, try HXM, in mexico. Fairly young company, but check out their earnings from last week, just blew everyone away. Technically the stock looks ready to move again. HXM has an interesting board of directors with Zell Millers son, look up Zell Miller on google, he is quite interesting and is a wonder when it comes to real estate. Sometimes, when the market is hard to understand, as it is now, you ride the coatails of big money. Good luck.
man i should really keep up with my stuff. i really thought it was 80% didn't beat the mkt. wait...i just realized that i was out of my mind when i was typing in my previous post that you quoted. it's funny how my mind works...anyhow...what i meant was what i said here with 80% of fund managers failing to beat the market. that's how it should read. that would kind of jive more with what i was saying about how they failed to beat the street. either way, i'm sure it doesn't hurt if you can find a good fund manager or even buy into a closed end fund. or go the route of Dubious and find solid income producers which i think is a great idea since the market basically sucks now for the average investor.
Just a side note....P/E levels on the NYSE are not horribly bloated i believe they are around 16-17. at major market bottoms it drops to below 10. short term, i don't think you can forecast a huge drop in the indices either, because like you said this breakout has legs. earnings have been strong again and oil prices are not killing this economy. we would need a massive fundamental change in the economy to get to the levels you are looking for. just because there are isolated cases of overvaluation that doesn't mean you can say this simply isirrational exuberance. the exuberance is gone and we are left with blah.
