OT: Stock and Investment Talk

[RU-05]

Not that he has been especially accurate post covid dip, but it's still interesting to hear what he has to say.

Thinks materials such as copper lithium and cobalt have years of running room.

Jeremy Grantham said US stocks are heroically overpriced, copper should shoot higher, and that he had an 'overprivileged' lockdown in a recent interview. Here are the 14 best quotes.

 

[RU-05]

Definitely agree with #1 and #3:

Redirect Notice

I got in on IBM last April, it did nothing, I sold in Sept.

Continued to do nothing for awhile, I bought again in Early March, and then sold in late May at a 18ish% profit.

Looks like it wants to get going again(,or better said keep going), so I think I might get back in. The company makes plenty of money, and it has a 4.5 % dividend, if it can get back to some consistent growth, this should have plenty of room to run. Still below it's pre covid levels.

 

[RU-05]

Don’t own any stocks in anything, but from a country boy point of view, it sure looks like Tractor Supply stores and Boot Barn are thriving through corona. Tractor Supply closing in on 2,000 stores including one opening this Summer in Toms River and Boot Barn is finally tackling the Northeast.

30ish% net income increase yoy 2019 to 2020 for Tractor Supply. 1st qtr 2021 more then doubled 2020.

Stock price took off as well up about 80% from it's pre covid levels. Looks at the high end of it's historical p/e evaluation at 24x.

 

[T2Kplus20]

I got in on IBM last April, it did nothing, I sold in Sept.

Continued to do nothing for awhile, I bought again in Early March, and then sold in late May at a 18ish% profit.

Looks like it wants to get going again(,or better said keep going), so I think I might get back in. The company makes plenty of money, and it has a 4.5 % dividend, if it can get back to some consistent growth, this should have plenty of room to run. Still below it's pre covid levels.

MS rather meh on IBM:

Fair Value and Profit Drivers
Updated Jan 21, 2021
Our fair value estimate for IBM is $125 per share. This implies a 2021 enterprise value/EBITDA of 11 times. We forecast IBM's revenue will rise at a compound annual growth rate of 2% over the next five years, as the company’s segments gradually change weights.

Driving our financial model is our expectation for IBM to continue to shed market share in global IT services, leading to customer losses in its global business services. As a result, we expect IBM technology services to see a compound annual decline rate of 1% from 2021 to 2025 as more sticky IBM software is applicable in other clouds. Consequently, we expect IBM to benefit from growth in its cloud & cognitive software as its customers transition to hybrid infrastructures, even if it’s not to the IBM cloud, as our outlook suggests. We forecast IBM’s hardware business to continue to be a lumpy one, with continuing waves of new mainframe models and keeping IBM’s financing arm in business.

We do not think direct Red Hat sales will play a large part in organic revenue growth. Even with Red Hat recently acquired, the acquisition is likely to only return $150 million each year in synergies. This assumes that 10% of IBM’s user base who are not Red Hat users adopt the technology within 30 select countries. We doubt that this would be much greater than 10% as moving to Red Hat Linux is a very conscious decision for companies, in our opinion. The change to Red Hat Enterprise Linux will either entail changing from Windows operating system, which likely means massive turnover in an enterprise’s engineering team. Or, if an enterprise already has Linux, this means getting rid of one’s own internal Linux servicing division or switching paid Linux providers. All of these decisions aren’t easy or intuitive ones in our opinion, which contributes to our outlook on Red Hat synergies.

On profitability, we expect IBM’s gross margins to gradually increase from 48% in 2020 to near 50% in 2025 as customers switch over to SaaS subscriptions.

 

[RU-05]

Keeping an eye on Lumber prices as a short term measure of inflation heading into summer.

Hit it's peak May 7th at $1680, has cooled since but has also bounced off the $1260 level twice since then. Trending downwards again over the last couple days and ended Friday at $1280.

I know there are other inflationary pressures, and the spotlight is now on wages, but lumber has been the poster child and still sits at ridiculous levels. If it breaks below that $1260 that would help alleviate some of that inflation pressure.

 

[RU-05]

MS rather meh on IBM:

Fair Value and Profit Drivers
Updated Jan 21, 2021
Our fair value estimate for IBM is $125 per share. This implies a 2021 enterprise value/EBITDA of 11 times. We forecast IBM's revenue will rise at a compound annual growth rate of 2% over the next five years, as the company’s segments gradually change weights.

Driving our financial model is our expectation for IBM to continue to shed market share in global IT services, leading to customer losses in its global business services. As a result, we expect IBM technology services to see a compound annual decline rate of 1% from 2021 to 2025 as more sticky IBM software is applicable in other clouds. Consequently, we expect IBM to benefit from growth in its cloud & cognitive software as its customers transition to hybrid infrastructures, even if it’s not to the IBM cloud, as our outlook suggests. We forecast IBM’s hardware business to continue to be a lumpy one, with continuing waves of new mainframe models and keeping IBM’s financing arm in business.

We do not think direct Red Hat sales will play a large part in organic revenue growth. Even with Red Hat recently acquired, the acquisition is likely to only return $150 million each year in synergies. This assumes that 10% of IBM’s user base who are not Red Hat users adopt the technology within 30 select countries. We doubt that this would be much greater than 10% as moving to Red Hat Linux is a very conscious decision for companies, in our opinion. The change to Red Hat Enterprise Linux will either entail changing from Windows operating system, which likely means massive turnover in an enterprise’s engineering team. Or, if an enterprise already has Linux, this means getting rid of one’s own internal Linux servicing division or switching paid Linux providers. All of these decisions aren’t easy or intuitive ones in our opinion, which contributes to our outlook on Red Hat synergies.

On profitability, we expect IBM’s gross margins to gradually increase from 48% in 2020 to near 50% in 2025 as customers switch over to SaaS subscriptions.

It seems the sentiment has changed on IBM, even in that short time period since this analysis.
The stock sold off after both it's 3rd and 4th qtr earnings. But the overall trend since both those selloffs has been solidly upward, and even jumped off it's 1st qtr earnings.


How often do they update?

 

[T2Kplus20]

The power of 529s:

A Loophole Makes '529' Plans Good Wealth Transfer Tools. Here's How to Use Them.

Looking for a way to transfer wealth to the next generation but still want the option of yanking it back if you change your mind? Consider a “529” education-savings plan, financial pros say.

www.google.com

 

[T2Kplus20]

It seems the sentiment has changed on IBM, even in that short time period since this analysis.
The stock sold off after both it's 3rd and 4th qtr earnings. But the overall trend since both those selloffs has been solidly upward, and even jumped off it's 1st qtr earnings.


How often do they update?

They normally update after every earnings reports, so quarterly. Not sure why the delay with IBM.

 

[RU-05]

They normally update after every earnings reports, so quarterly. Not sure why the delay with IBM.

They had to fire the last analyst given the poor take?

 

[T2Kplus20]

They had to fire the last analyst given the poor take?

Just probably not on their priority list anymore. IBM has tanked for the past decade. Barely up over the past 12 months. IBM should dump the dividend and reinvest the money.

 

[RU-05]

Just probably not on their priority list anymore. IBM has tanked for the past decade. Barely up over the past 12 months. IBM should dump the dividend and reinvest the money.

"The best gains are to be made when a stock goes from bad to OK" Or something like that.

"The best time to invest is when you don't want to" Or something like that.

I think many would agree that they should cut the dividend and reinvest though.

 

[jtung230]

Crypto is being linked to ransomware by this administration. I think regulation is coming. Could be bad in the short term but good in the long term.

 

[ScarletNut]

Is RMED the next meme stock?

 

[RUJohnny99]

this reminds me that E-trade has a thing where you can do simulated trades.

I'll have to see if they have one for options as well.

Here's a real life example of the downside of option writing:
I typically write naked puts on about 5 stocks per month. My requirement is that I only do this with companies that I wouldn't mind owning long term (no swing/momentum stocks) and diversified among different sectors to reduce systemic risk.

Back in late April, AT&T was at $31.50, and I figure it wasn't going to 30 anytime soon. So I wrote naked puts at 30 with an expiration date of 6/4/21 for about 32 cents after commissions. Easy money for about 40 days of risk. I picked up $32 per contract in "interest" on my margin SMA, which works out to about 8% income annually, and if I'm stuck with it, T has a 7% yield which will more than cover margin interest. As I've mentioned before, this strategy works well, until it doesn't work.

A few weeks later, T announced they were splitting up the company and clipping their dividend. The market overreacted, and on the Saturday after expiration I woke up with 100 brand new shares of T and a debit of $3000. Because I received the option income, my cost basis is $2968, and the position has a market value of $2925 for an unrealized loss of $43 if I had to sell it now. They'll declare a $52 cent dividend in July which will cover that loss, and I'll probably write a 30 covered call on it just to squeeze a little more juice out of it before I decide whether it's still a good long term play.

I mentioned using diversification and dividend players for a reason. I could have easily have done the same on TSLA at 650 and woken up with a $5000 unrealized loss even though I bought the stock significantly cheaper that it was selling for in April. One bad move like that wipes out a year of gains.

 

[rutgersdave]

I only made one option trade about 35 years ago. I was doing so well in trading stocks that I had about $10,000 after 10 trades. I heard my older brother say that his company was going to made their quarterly numbers that quarter so I brought options thinking it would go up after the earning date. I guess they made their number but they lower their forecast and the stock dropped and lost the $10 grand. I know it was illegal and probably would have been caught if I made $100k on the option trade. Never made an option trade again.

My younger brother was trading S&P options right after the 2008 crash for several years and was able to made a million. He thought he had a system but I wonder now whether it was just because interest rates were lower during this time span and the S& P always went straight up.

 

[jtung230]

I have done 8 to 10 options this year. Gains and losses are in the 60-80% range in both directions.

 

[ScarletNut]

Early October 1987, I bought futures in gold at $1200 per contract. I was a third year resident rotating through Sloan Kettering Memorial with an order to sell at $1500. As most of you know, the market crashed a couple weeks later. I called my broker (no internet apps or exchanges). He told me he couldn't fill my order at $1500 since the futures shot up and it was executed at $2400 per contract!! All the docs in the hospital were walking around shell shocked while I was whistling a happy tune that day. My salary as a resident at that time was around 30k and I made that much when the market crashed. Bought my first new car soon after. Better to be lucky sometimes in the market .

 

[Rutgers Chris]

Early October 1987, I bought futures in gold at $1200 per contract. I was a third year resident rotating through Sloan Kettering Memorial with an order to sell at $1500. As most of you know, the market crashed a couple weeks later. I called my broker (no internet apps or exchanges). He told me he couldn't fill my order at $1500 since the futures shot up and it was executed at $2400 per contract!! All the docs in the hospital were walking around shell shocked while I was whistling a happy tune that day. My salary as a resident at that time was around 30k and I made that much when the market crashed. Bought my first new car soon after. Better to be lucky sometimes in the market .

Paper hands 😂

 

[BillyC80]

For those who remember my mention of Ocugen on this board a couple weeks ago, when it was at $8.30, it’s currently at $10.60 and climbing, a 27% gain in 2 weeks. Could approach $20 once they announce EUA for Covaxin. Just a heads up...

 

[phs73rc77gsm83]

Biogen jumps 40% on fairly broad FDA approval of Alzheimer’s drug.

 

[rurahrah000]

Biogen jumps 40% on fairly broad FDA approval of Alzheimer’s drug.

The pathway used by the FDA to approve this drug may open up the market for a lot of other drugs to be approved as well. It maybe time to look at the biotech space and come up with potential winners. Eli Lilly, Sarepta, Bristol, Regeneron are just a few names that come to mind, but this space needs to be researched.

 

[T2Kplus20]

The pathway used by the FDA to approve this drug may open up the market for a lot of other drugs to be approved as well. It maybe time to look at the biotech space and come up with potential winners. Eli Lilly, Sarepta, Bristol, Regeneron are just a few names that come to mind, but this space needs to be researched.

I believe the AA patient advocacy groups got this product over the finish line. The Alzheimer's Association is very powerful. Most diseases/conditions don't enjoy this level of support.

 

[RU Cheese]

I believe the AA patient advocacy groups got this product over the finish line. The Alzheimer's Association is very powerful. Most diseases/conditions don't enjoy this level of support.

Because most drugs get approved on merit because they work. This announcement is crazy to me.

 

[T2Kplus20]

Great day for the HC sector and my PRHSX. Been rocking this fund since 2005!

 

[T2Kplus20]

Blackrock CIO looking forward to the fed pulling back:

 

[rurahrah000]

Great day for the HC sector and my PRHSX. Been rocking this fund since 2005!

Better than IBB?

 

[93RUDoc]

I just became an AMC Ape

 

[T2Kplus20]

Better than IBB?

Much better. PRHSX > IBB over the past 1, 3, 5, and 10 year returns.

 

[rurahrah000]

Much better. PRHSX > IBB over the past 1, 3, 5, and 10 year returns.

Do you have charts that back that up for 1, 3, 5, 10 years return?

 

[mdk01]

Do you have charts that back that up for 1, 3, 5, 10 years return?

1 yr. 49.87
3 yr. 18.72
5 yr 17.23
10 yr 19.65

 

[rutgersdave]

Nice tech day so far. Glad I loaded up the last few days, even bought myself SQ and TDOC, some of the high flyers that are down. I look at Cathy‘s ARKK to see what to buy. I was familiar with SQ and wanted ROKU but it already recovered closer to their high so tried TDOC.

 

[patk89]

Those are some real nice long term returns. That's called building wealth.

1 yr. 49.87
3 yr. 18.72
5 yr 17.23
10 yr 19.65

 

[mdk01]

Those are some real nice long term returns. That's called building wealth.

It's closed to new investors, but the New Horizons (PRNHX)numbers are even better:

1 yr 76.5
3 yr 27.8
5 yr 26.8
10 yr 19.6

 

[T2Kplus20]

Do you have charts that back that up for 1, 3, 5, 10 years return?

Just check Morningstar:

PRHSX – Performance – T. Rowe Price Health Sciences | Morningstar

PRHSX Performance - Review the performance history of the T. Rowe Price Health Sciences fund to see it's current status, yearly returns, and dividend history.

www.morningstar.com

If you click on the interactive chart, you can type in IBB for a comparison.

 

[T2Kplus20]

It's closed to new investors, but the New Horizons (PRNHX)numbers are even better:

1 yr 76.5
3 yr 27.8
5 yr 26.8
10 yr 19.6

I've been in PRNHX since late 2005 as well! My first big job with a pharma company came with a T Rowe Price 401k.

😁

 

[T2Kplus20]

Nice tech day so far. Glad I loaded up the last few days, even bought myself SQ and TDOC, some of the high flyers that are down. I look at Cathy‘s ARKK to see what to buy. I was familiar with SQ and wanted ROKU but it already recovered closer to their high so tried TDOC.

ARK Invest month webinar starts at 1:30pm:

mARKet Update Webinars by ARK Invest

Watch ARK's monthly webinar series, featuring Cathie Wood, with our latest innovation research, market developments, and a Q&A.

ark-invest.com

I like TDOC and the fact that it wants to partner with established players, not put them out of business (i.e., the Microsoft model). TDOC is below FMV.

 

[RULegion]

On with AMC since 14 and Clov at 18 today. 🦍 =me. Sold half AMC to buy CLOV.
Sold DKnG after a 20 percent run and bought sfix and back into mrvl.

 

[RU-05]

Lumber did indeed break down below that 1260 level. Currently 1170.

 

[Rutgers Chris]

SPAC's and de-SPAC's coming back with a vengeance the last few days, the quality ones at least.

 

[Frida's Boss]

SPAC's and de-SPAC's coming back with a vengeance the last few days, the quality ones at least.

Ive. It been shy about my views on SPACs. That said, if I did buy one, I’d look long and hard at Pershing Square Tontine Holdings. They recently agreed to purchase a 10% stake in Universal Music pre-IPO and will still have circa $2bn of capital for another deal without SPAC time constraints. Like UMG and the optionality on another deal. And I have a high opinion of Ackman as an investor. He’s had some Hugh profile misses, but his wins have still given him an overall very strong record.