My goals in starting this journal: 1. Get constructive feedback 2. Force me to put more thought prior to making investment decisions. Myself: I'm a 31 year old, single person who is interested in building wealth from savings. My general philosophy: I don't mind taking on risks, as long as I feel the risk/reward ratio is on my favor. I try to be rational / unemotional in investments My investments consist of a stocks I feel are priced at a discount to their mid/long term growth potential; and stocks that I feel have a potential to appreciate in the near term. I will sometimes make trades prior to earnings announcements. I don't trade based on technical analysis I tend to invest more heavily in tech, as its an area I feel I'm decently educated on. I hesitate to invest in earnings negative companies. About my financial status: I'll simply say that I've been pretty good about saving up to now, and my net worth is somewhere between 100k and a million. In order to obfuscate the exact number, all dollar values will be scaled by a constant factor of X. So if I say I have $2,000 in stock XYX, it really means I have 2000 * X where X is known only to me. Employment: I'm currently an employee of a large cap tech company, one of the companies that I currently own stock in. I don't care to say which one & its possible my employer might change in the near future.
Current Portfolio (dollars scaled by X) Total Value: $47,669 Cash: $-17,871 (negative = using margin to fund stock purchases) GOOG: $23,904 MSFT: $14,231 TTM: $7,500 JASO: $4,162 LDK $1,956 RDY: $7,557 HDB $6,230 Thoughts: In general, I feel certain large cap tech companies -- Including Google (GOOG) and Microsoft (MSFT) are undervalued and will likely hold positions in them for the long term -- unless they dramatically rise in value to where I feel they become overvalued. Google is still growing at 20+% a year and its price doesn't reflect that growth rate, in my opinion. Microsoft is still growing, and I believe will continue to do so, yet its price seems to imply that the company will be stagnant / negative in future earnings. Prior to the Google earnings, I increased my position by a factor of 2 as I felt that any downside had already been priced in. After earnings, I increased my position again. So the current position is maybe 2-3x what I'd ideally want it to be in the long term, but I feel there's not much downside, and there's still upside for the next month or two. I think analyists will start piling on with increased estimates. My target is to keep GOOG until it has a backwards P/E of 20, and then to consider scaling down. With Microsoft, I've felt its run up too much in the past month based on little news. If it comes down to the 24.5 level prior to earnings I'll probably load up on it for an earnings play. If not, I'll keep my current holdings Tata Motors (TTM): I thought they were idiots for buying Jaguar / Land Rover, yet they've been able to turn those companies around. I feel their P/E makes them attractive given they seem to have good management, and are in a country where automative growth will continue. Sidenote, I've also been considering buying some Ford (F) lately. JASO / LDK: A potential long term bet that Chinese Solar is undervalued. I'm not a solar expert, but based on what I've read, my gut tells me these companies can withstand any short term market turmoil and that they'll be fine in the long term. RDY: I may end up dropping this stock. HDB: A bet that the Indian banks have good long term growth given their population will make more use of the banking system. I might also by IBN. In cases where I like the sector but am not too aware of the individual company's differences, I'll often buy two companies in that sector.
I know long term is relative, but can you mention what timeframe it is to you? Interesting take on the indian banking sector: do you have any stats as to what % of their pop. currently uses established banking? And where they compare globally to other nations (emerging or not)?
Made two purchases today: MSFT @ 26.42, total cost = $3,435 TTM @ 22.18, total cost = $155 My money is split over multiple accounts. The account with TTM in it had some extra cash. I'm not a big fan of keeping cash -- ie. I don't try to time the market as a whole. The additional MSFT purchase is just increasing my bet on their earnings. I think there's ~$2 downside risk, and a much greater upside reward on any positive news.
If I believe in a stock / company, I'm willing to wait it out for it to prove itself. For example, I held EGHT for 4 years; most of the time I was underwater or sideways, but I held because I felt it was a good company with good management and it was making good progress toward positive earnings, and that with positive earnings would come price appreciation. It just started moving up in the past year, and it just suddenly became a bull in the last month. I sold EGHT a few weeks ago at 4.20 -- as I felt at that point it had gotten ahead of itself. It kept going up, but has dropped a bit in the past few days. I'm hoping earnings are as expected and it drops down back into the 3s as I still like the company. Of course, I'd rather not wait 4 years on most of my investments for them to pay off, so I look for some catalysts. In Google's case, they're still growing at a good rate, and the p/e has shrunk alot in the past few years. I feel like if they just meet their estimates, the earnings growth will outweigh a continued p/e contraction. So I expected to see a bump this quarter, and I expect it will have a higher price in 3 months, in 6, in 9, etc. The only way I close out completely is if it runs up more than I think it should. For example, if it shot up to 800 tommorrow, I'd close out. In Microsoft's case, I don't see that same catalyst since their growth is slower. But I do think they will continue to grow, and they're priced to reflect no growth or negative growth. So I like the odds off it paying off, but I think it might take longer (a year +) for it to do so. JASO/LDK. I think these two companies can withstand short term market downturns, and if they can, they could be huge winners. The solar industry is priced for implosion, and I just don't believe it will happen. If there's oversupply (which is the fear), I think demand will grow so it won't be catastrophic in the short term, and in the long term dropping prices are actually good for solar as they'll lead to more sales if it can become a viable (not requiring subsidies) competitor to other energy. I am a bit concerned about today's news that LDK's auditor resigned -- but not completely. So I'm hoping these can payoff at most within 2 years, and hopefully sooner. I'll answer your banking question at a later time
MSFT had a good day today. If it remains strong tommorrow, I'll sell the addition I made to it from the other day -- take the 4% profit on that addition. If it drops after earnings, I'll likely start loading up.
Keyser, We sound very similar in investment philosophy and points in our life (age, work for large cap company, frugal, looking to accumulate wealth). I am going to start my own journal as well and I look forward to following yours.
I wonder about the solar names. They're very depressed right now, but its much more than just a supply issue. Government subsidies across the key markets of Germany and Itality are being cut significantly this year. Further cuts will happen in the future. Many solar projects are highly dependent on the generous subsidies and were only earning marginally interesting IRRs with high leverage. There is a lot of uncertainty where the final demand picture will play out. The hope is demand in China and US grow to offset but these are still relatively small markets compared to the key European markets. Furthermore, customers have been buying aggressively ahead of subsidy cuts last year, and through the early part of this year. This will make the coming trough all the more painful. The Chinese solar names are higher cost producers compared to the likes of FSLR, that's why that have been hit harder. I'm not saying your investment in these names is a poor decision, as I don't have much a view on this sector myself. I think it will be very interesting where these names play out over the coming year.
I ended up holding my additional msft shares. If it stays around 27 in the morning I'll probably sell them as I feel MSFT will drop further -- seems to be their pattern -- drop following earnings, runup prior to earnings I felt MSFT earnings were good, but as one article pointed out, a bit deceiving -- they only paid 7% tax in the quarter http://www.bloomberg.com/news/2011-...-company-demand-outweighs-consumer-slump.html Still feel strong about Google's potential to hit 650 in the next month. I'm way overweight on it, but I dont think there's much downside to holding out for that potential. EGHT slightly beat earnings but has dropped -- that stock was just priced for perfection. They've carved out a nice niche (focusing on small business customers), but there is a risk that bigger companies eventually enter their niche; and if that happens, I would be wary of eght's ability to compete. So if they can drop back down to a forward p/e of 10, I'll take it; but i'd be watching for any sign of a said bigger players encroaching. RDY announced earnings and dropped a bit. HDB announced & has been sideways I havent had a chance to really read the details of their earnings yet so I don't have much comment other than I'm still holding.
doublet: thanks for your opinion I agree with the risks/concerns you listed. I'm not an expert on solar or power, so my opinion is formed on a combination of other people's opinions and gut feel. Government Subsidies: That's been the reason why its now cost-effective to buy solar as a consumer. Without subsidies, solar wouldn't be able to compete on price with other forms of energy. In a way, I'm making a bet that the subsidies won't be cut, and that more countries will decide solar energy is important -- for environmental & safety reasons. I also like the rate of efficiency improvements & think it will only help going forward. The two companies I own -- seem to have enough cash to withstand any 1-2 year long market problems -- hopefully enough time to withstand the issues you mention. Seems like most analysts have a negative view overall about the sector. Although analysts also often focus on short term issues. There's a bunch of bullish articles on seekingalpha.