Bought some stocks for a change

Investing Strategies Falling Knives
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Damn, I hate buying stocks. I find it’s best to hate buying stocks; stops you buying them until greed finally starts to drag you in at the bottom of the market.

I bought some today. Intel and Google, priced in Euros, were at a fabulous price, the best all year. They may be worth a look.

Intel; as a turnaround story and ‘what if’ bet against China doing further silly things.

Google; just good value. Net cash, good earnings, good earnings growth. Monopolies in a stack of areas. The big risk is they start wasting money or get antitrust, I think. I will be amazed if Buffett doesn’t have some in his portfolio next quarter. Show me a better combination of value and quality that isn’t Berkshire itself.

Google is the ‘apple of 2016’ play this year IMHO. Anyway I am talking my book because I am full up with Google stock for the future. No more space in my tummy.

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Meanwhile the pros say recession could mean another 20% drop in share prices. PEs still too high for many high flyers.

Best of luck with your choices. Could be time for a long vacation away from the news while all of this gets sorted out.

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Hmmm.
Google is essentially advertising.
They get ads because everyone uses their search.
If their search gets threatened…well.

Amazon was already becoming a replacement for many product searches…even if people just using amazon to price shop against their local store or other websites. But also good source for info on the products, plus reviews, etc…

Now comes the dawn of AI answering your questions.
Forget search…this AI can write your college essay for you.
It is disruptive.

None of this will be immediate impact to Google, but to the extent that stock prices reflect the future, or that FUD has impact on pricing, it may be worth noting.

Dreamer

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Meanwhile the pros say recession could mean another 20% drop in share prices. PEs still too high for many high flyers.

Totally agree. I desperately hope so and expect so. I think widespread awful earnings will smash company prices through the (apparent) floor.

I’m not fully invested yet by any means. About halfway at this point, including some Japanese stocks.

Sitting in cash, I found I was having anxiety attacks and the darkest, most terrible despair crushing me for days, weeks whenever these bear rallies occur this year.

I felt like… I am going to get screwed by inflation and there’s nothing I can do to escape it. Nothing. I’ve missed the boat, and life is going to pass me by for another 10 years. Goodbye stock market! See you in 10 years when the next bear starts.

Buying a stock that is good quality, on a historic PER around 15x and net cash, bit of growth historically, that’s a fair enough deal, whenever earnings get back to trend or some new bubble comes along.

You have to realise I’m in my 40s, and despite superb qualifications, I don’t have a car, a house or flat, pets, etc. I literally have my laptop and some books and old clothes. Not even new clothes! I traveled for work all around the world literally living from a small backpack for months at a time.

The feeling of being left behind - again - at this point, after the dotcom recession, the GFC, the greek crisis, Brexit, covid, current inflation… endless money printing and house price inflation, but never a point where you can afford to jump on the magic money train with everyone else.

When you see people buying lunatic stocks like gamestop or AMC or whatever, or bitcoins, often this feeling of ‘I’m running out of chances, and life sucks, maybe this is the only chance I’ll get?’ is what drives it.

Getting back to the point; Google at $87 and HOPEFULLY Intel at $25 aren’t quite so awful as Gamestop (at any price). I think it has an excellent chance to work out OK. And maybe I’ll be supremely lucky - they’ll go up, BRK goes down, I get to flip things around…

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Their search. And Gmail. And Android. And youtube. And streetview. And Google Shopping. And various AI technologies. Not many cloud providers at their scale either.

etc.

I don’t like Google all that much but I have to admit they do make money.

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(I have heard on the grapevine that Google may be about to offer a “GPTChat+more” service for companies some time in the coming weeks. Not that many companies have the machines, datasets and staff to be able to do it.)

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If you can’t beat em, join em. Would be a smart move for both.

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If you truly believe the bear market will continue selling short or selling options must be the right approach. At least for the pros.

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I jumped in a bit earlier than you at an average of $92.5/share for Google and $264 for BRK.B. I am a vanilla investor that doesn’t do anything fancier than buying or selling, and have a very long term view of these investments. My expectation was not that they might not be cheaper at some point, but that they were likely to be more expensive when I go to sell them, and I didn’t want to miss the opportunity by trying to predict the bottom. Still very cash heavy and looking for bargains.

IP

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If you truly believe the bear market will continue selling short or selling options must be the right approach. At least for the pros.

I do truly believe, but

a) the interesting thing about the market is that it doesn’t give a damn about my beliefs

b) rarely, hard as it seems to believe, I have been known to be wrong

c) events can happen, unforeseeable by everyone today, which might make my beliefs irrelevant - covid being a recent example - china’s sudden pivot being another - ukraine being a third - a warm european winter being a fourth

d) cash is a perfectly valid position to hold, it isn’t necessary to short something or take options positions just because you think something will go down.

For example, I think bitcoin will go down. Am I short? Nope. Do I have options over bitcoin? Nope. Staying the heck away is always a valid plan to deal with an overvalued or crazy market or one you simply don’t want to be a part of.

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Options that expire can be a source of income while you hold the stock and wait for recovery. So long as prices continue to fall.

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I keep saying this over and over and over again. The people you are selling those options to are rational and are buying something of value from you. They aren’t giving you free money. It is essentially a transfer of risk in return for the option premium.

Mark [trading options since 1986. Burned hard in '87 crash while being long NYA options.]

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Options that expire can be a source of income while you hold the stock and wait for recovery. So long as prices continue to fall.

There are many countries in the world where regular or short-term use of options can significantly alter your tax situation, and people often don’t find out about this till after the fact as the determination is made on an ad hoc basis by tax authorities.

It’s extremely common in Europe and for example, also in New Zealand. The consequences can be brutal; all of your investing gains may be taxed as income, with tax rates of up to 50%.

In countries like NZ and others where there is no capital gains tax, that is a horrifying outcome to risk.

I appreciate you are attempting to help, and I’m grateful for that.

I assure you though, I’m quite comfortable with my strategy at present, and extremely familiar with how options may be used :slight_smile:

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In countries like NZ and others where there is no capital gains tax

You wish! As you mention NZ several times I suppose you know about NZ’s FIF regime which is NZ’s substitute for that.

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P/E too high? How about a P/E of 8.63? ExxonMobil
Energy stocks are the place to stay invested
Worried that crude oil prices are destined to tank?

Coal? Prices up 200%

Consol Energy P/E 6.59 NYSE CEIX
Beat Earnings Est. two Qs in a row by 40%
Consol Energy is ramping up exports to Germany

Follow the Money

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You wish! As you mention NZ several times I suppose you know about NZ’s FIF regime which is NZ’s substitute for that.

Thank you, I’m familiar, but I believe it’s not an subsitute, it’s a minimum, and actual ‘random capital gains tax’ on top is a real risk there.

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said2, my original reply was too brusque, sorry. I’ve edited it to be more polite.

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Valuing cylicals on 1-year PER at moments of cyclical strength is seldom a good idea.

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Are you kidding? It was not brusque at all!

I am all for being polite on the Inet as it’s soooo easy to be aggressive/attacking/insulting without knowing the other and without having to look into his eyes (similar to road rage, distanced by the metal/armour around one).

I know that just too well as I was often guilty of that on the old board, did regret it, and repeated it not much later when felt provoced.

But believe me: You were not even brusque!!!

P.S.: And overdoing politeness can lead to robbing the other one of the chance to see what you really want to tell him.

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I’m not.
https://www.macrotrends.net/stocks/charts/XOM/exxon/pe-ratio

XOM P/E average P/E 8
(leaving out the pandemic oversupply)
Go look EPS for the past ten years. The Current EPS is four times currently and the P/E is still at 8. There’s still upside to this stock. Russian Oil isn’t coming back anytime soon in the next year or two, Saudi Oil production is at peak, and that can not last for long.
If you don’t trust Oil, look at Coal
Coal skyrocketed to a high of about $400 a ton following the invasion. Germany’s demand for coal will continue, there’s no way that Germany will go back to dependance on Russian Oil and Gas. It will take a half a decade for Germany to get off LNG and Oil dependency and coal will be their only bridge to get there.
Consol Energy CEIX has gone from an historic EPS of .75 to 4.50. with a P/E 6.7
Consol is positioned to get exposure to export coal. Roughly half of the company’s coal production is going to export customers, and they can’t even ramp up production fast enough to meet demand in Germany.

Natural Gas demand in Europe
Cheniere Energy is well positioned as a leading supplier to Europe for LNG despite reporting an unexpected loss in EPS (reporting a net loss of $9.54 per share while sales soared 175% to $8.8 billion in the third quarter due to settlements of $2bil and $6bil)
Russia has cut LNG supplies to Europe by 2/3s which makes Cheniere Energy imports a crucial component of the EU’s emergency energy plans.
US Liquefied Natural Gas Exports Price is at a current level of 16.72 , up from 15.45 last month and up from 8.34 one year ago.

Follow the money

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