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New Purchases! |
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thewh00sel  United States. Sep 22 2012 18:12. Posts 2734 | | |
Yeah, I'm back on the consumer bandwagon and made a big purchase! Went ahead and dropped a few thousand dollars this week on some bling!
Purchase #1:
Ok, maybe only a little of my purchase was bling; I've been thinking about buying some silver bars as a hedge against the US Dollar going kaput and our financial system collapsing. Pretty much just a hyper-inflation insurance policy. I picked up my first purchase of silver for just 0.89 over spot value, which is a pretty good rate from what I've researched, but let me know if any of you know of better rates. I bought generic Morgan silver bars, as the spot price on these versus the spot price on Silver Eagles was much lower.
Morgan silver bar (.99 over spot)
Silver Eagle (2.99 over spot)
My cost-basis for the purchase (after shipping/fees) is $36.77 per ounce. Silver is currently trading at $34.41, but I'm not too concerned with the current price because, like I said, I am only really holding some precious metals in my portfolio to protect against economic collapse. If it dips in the near future I will likely pick up some more.
Purchase #2
Ok, enough with that speculative investment, on to the next purchase. For stocks, I generally seek out strong companies with a history of dividend increases over time, and with balance sheets that can sustain future dividend growth. You could say I'm a "dividend growth investor". I seek out companies with an entry dividend yield of 3% or higher, but I will consider companies with lower yields who I suspect will be raising dividends in the future. Another qualification for my watch list is a P/E Ratio less than 20 so I do not over-pay for a company's stock. Now, on to the purchase:
Intel, ticker INTC
Intel has been a dominant player in tech, specifically PC chipsets/processors for years, but has been particularly slow in creating something for tablets and mobile devices. They have, however, recently developed a lower-consumption processor built for mobile/tablet devices known as the atom microprocessor. Their R&D budget is huge. Because of it they have forced out one-fierce competitors such as AMD and others. Couple that with a P/E ratio of 9.79, a current yield of almost 4% (3.89%) and a history of sustainable dividend increases (9 years and counting), and it becomes hard to do anything but buy Intel at these levels. I think that with their large R&D budget that they will catch up to their smaller competitors in the mobile space over the next 5-10 years so I'll buy Intel on sale at 23.12 and be happy to allocate more money if it is still on sale next month.
Purchase #3
Norfolk Southern Corporation - NSC
Norfolk Southern is a railroad company that transports goods, including coal, across the united states. It recently lowered it's guidance for 2012 citing higher fuel costs and a decrease in the demand for coal. This guidance drastically dropped the price of the stock 10% from the mid seventies, to where it now sits at $65 per share. NSC is an extremely strong company, and in a market that doesn't offer a lot of value right now, I think this stock is offered at a heavy discount for long term investors. Coal transport makes up about a third of NSC's business, but NSC isn't going anywhere. Train transportation is a vital part of the US economy. After the drop in price, NSC is trading at a P/E ratio of 11.15, offering a dividend yield of 3.08%, and have raised dividends for the past 11 years. I would be a buyer still if my position weren't so large in it already. I will buy more if it dips much lower though.
Well, that's it, 3 purchases this month. Looking forward to doing some more stuff like this in the future if you guys like reading about it.
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| A government is the most dangerous threat to man’s rights: it holds a legal monopoly on the use of physical force against legally disarmed victims. - Ayn Rand | |
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bigredhoss Cook Islands. Sep 22 2012 18:22. Posts 8649 | | |
have nothing of substance to say but enjoyed reading |
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Syntax United States. Sep 22 2012 18:49. Posts 4415 | | |
im pretty sure i saw u @ bellagio yesterday. i was at the loud table behind u im pretty sure |
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Spicy United States. Sep 22 2012 20:38. Posts 1027 | | |
From a macroeconomic perspective, now is probably a very risky time to be initiating positions in the general equity market. The broader market is arguably overbought at this point since we've recently just had a huge run-up from expectations of QE3 up until the the actual fed announcement on Sept13. In addition, the impending fiscal cliff situation poses a greater than normal amount of systematic risk to most stocks. There's much debate among professionals over how much of the fiscal cliff is already priced in, but regardless of what they think just realize that the market is in an overall vulnerable position with extreme amounts of fiscal uncertainty and things could get pretty ugly after the election.
I can't really give you an informed opinion on either of the stocks you mentioned but from a glance INTC looks like a good value play (I'd find it more attractive a bit closer to $20/share). Not sure I like your reason for being heavy in NSC right now though. Demand for coal is likely to continue going down (PCX recently went bankrupt and coal stocks have been a nightmare) and the Fed's open-ended monetary easing means fuel costs will continue going up. Extrapolating from their lowered guidance, intermediate term is probably not very bright. Remember that a good company is not necessarily a good investment. A year or two down the line, you might see NSC get down to $40-50 range and that could be a much better value play.
Standard disclaimer: These are just my opinions and should not be interpreted as recommendations to buy or sell stock. Investing is risky yadda yadda
Anyway, I think the average retail investor could improve his game a lot by incorporating global macro analysis as well as industry analysis. Stock-picking in a vacuum will blind you from important macroeconomic factors that could potentially change your general investment thesis. Also remember to be unemotional about cutting losses small if you expect bad shit to happen. |
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| | Last edit: 23/09/2012 01:19 |
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thewh00sel United States. Sep 23 2012 03:30. Posts 2734 | | |
| | On September 22 2012 17:22 bigredhoss wrote:
have nothing of substance to say but enjoyed reading |
Thanks 
| | On September 22 2012 17:49 Syntax wrote:
im pretty sure i saw u @ bellagio yesterday. i was at the loud table behind u im pretty sure |
Yeah I thought I heard someone saying wh00sel or something that sounded like it as I was leaving the poker room, but it was really late and I was really tired. Sorry. Wasn't trying to blow anyone off, just didn't recognize anyone who might be saying wh00sel lol.
| | On September 22 2012 19:38 Spicy wrote:
From a macroeconomic perspective, now is probably a very risky time to be initiating positions in the general equity market. The broader market is arguably overbought at this point since we've recently just had a huge run-up from expectations of QE3 up until the the actual fed announcement on Sept13. In addition, the impending fiscal cliff situation poses a greater than normal amount of systematic risk to most stocks. There's much debate among professionals over how much of the fiscal cliff is already priced in, but regardless of what they think just realize that the market is in an overall vulnerable position with extreme amounts of fiscal uncertainty and things could get pretty ugly after the election.
I can't really give you an informed opinion on either of the stocks you mentioned but from a glance INTC looks like a good value play (I'd find it more attractive a bit closer to $20/share). Not sure I like your reason for being heavy in NSC right now though. Demand for coal is likely to continue going down (PCX recently went bankrupt and coal stocks have been a nightmare) and the Fed's open-ended monetary easing means fuel costs will continue going up. Extrapolating from their lowered guidance, intermediate term is probably not very bright. Remember that a good company is not necessarily a good investment. A year or two down the line, you might see NSC get down to $40-50 range and that could be a much better value play.
Standard disclaimer: These are just my opinions and should not be interpreted as recommendations to buy or sell stock. Investing is risky yadda yadda
Anyway, I think the average retail investor could improve his game a lot by incorporating global macro analysis as well as industry analysis. Stock-picking in a vacuum will blind you from important macroeconomic factors that could potentially change your general investment thesis. Also remember to be unemotional about cutting losses small if you expect bad shit to happen. |
While I agree with you that there is a lot of potential for a stock market crash, I can't predict the future so I have to do the best I can with the information that I have. I also welcome a crash as it would be a great opportunity to get a piece of some great companies on sale. I think that investing in these wide economic moat companies, who continued to raise dividends even through the financial crisis of 2008 is the best that I can do. As far as NSC goes specifically, I was already an owner and still like the fundamentals. I think the drop in price is a great buying opportunity because even if coal disappeared off the face of the earth, whatever items were required to replace it (solar panels, wind generator parts) would still need something to transport them. The railroad grid is too embedded in the US and I believe that in the long term I will benefit from this buying opportunity in NSC. |
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| A government is the most dangerous threat to man’s rights: it holds a legal monopoly on the use of physical force against legally disarmed victims. - Ayn Rand | |
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I'm a poker player with a law degree. There's no reason to think I know shit about anything and no one should take anything I say about anything as a recommendation to do or not do anything as related to investment or anything else that involved money.
That said:
I like both your investment strategy with dividends and such (buying stocks without dividends is just speculation). When/if I've made a few 100k from my miners I'll try to put a lot of it into that type of companies, although I might not pick just those two.
Check out Silver Wheaton Corp. (SLW) if you like silver. The dividend is only 1% right now but it'll probably be a lot more if silver increases. Not really well read on the company but on of the guys behind it (Nolan Watson, probably one of like 3 people I'll check out anything he is involved in) has great success with the same businesses model in a few other companies. I love Sandstorm Gold (ssl.v) but it has just increased so much in value lately that I don't think it's a buy right now and it'll probably take a few years before they give a decent dividend.
Do you read TraderDan or the Turd? |
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