Took2Summit: Thanks for the comment. I see you've already started your journal. Hopefully I'll be able to steal some ideas from it
I might as well use this Journal for market related commentary thats not directly related to my portolio: A month ago, I believed large tech was grossly undervalued (aapl, goog, msft). I still believe that, but less so -- ie a month ago i was saying 'this is crazy low'; now i'm saying 'this is not crazy, but still low' At the opposite spectrum, I believe 'young' tech is way overvalued. I've heard of early stage startups with no chance of ever getting real revenue other than adwords get funding. Seems like the VC world is funding companies with the hopes that a bigger player buys out the company -- ie not necessarily worrying about what the path to profitability is. And now with the IPOs that have come out -- if I were a founder at a newish tech company, I'd be trying to IPO right now and cash out some (the groupon strategy). Speaking of groupon -- lots of revenue. But no moat, and its a race to the bottom -- deal sites will undercut each other in commissions; and businesses will stop using them for insane deals. I don't see any benefit of groupon that you can't get for almost-free by posting a great deal on your website, and letting the slickdeals/fatwallet community know about it. I think Facebook at 80-100billion could be a reasonable valuation. I think Facebook is here to stay, and its become an underlying platform/service of the web -- everything is or will be integrated into it. However, I think the bullishness on Facebook is clouding everyone's judgement about other tech properties -- LinkedIn is a good company, but doesn't deserve the valuation it has. Its not Facebook. Most people visit LinkedIn only when they're looking for a job. THe best thing I liked about LinkedIn is the employment ads market is high revenue per ad. Zillow I find to have an even crazier valuation. Zillow has been around for a few years now. I would've suspected that they would've been able to start optimizing their revenue streams by now. And if they haven't, I don't have confidence that they would be able to in the future. I'm definitely not paying 30x revenue for them. I wouldn't consider paying even 10x revenue.
Also, the active shopping around for a buyer for Hulu is confusing me a bit (instead of keeping it private or ipo'ing it) Hulu is owned by multiple media companies -- companies that are both content producers and delivery mechanisms. I believe the traditional delivery mechanisms (tv channels, cable companies) are going to become worthless in the future. In the future, you'll be paying Comcast for internet connectivity, not as the supplier of tv (video). If Hulu's owners believed the same as I do, then I would think they'd be inclined to want to keep Hulu -- as Hulu is the leading internet tv delivery service. So either they don't believe that, or they believe that the delivery mechanism -- both traditional (cable, satellite), and new-internet (hulu, netflix, etc) are going to be worthless; and only content creators will have value. In which case, if I were a prospective buyer, I would either be happy or wary -- depending on if you think the seller is ignorant or correct in regards to the above paragraph. But, I also suspect the sellers could be a bit sinister. TV producers have already shown some disdain for putting their content on the internet -- as a Hulu user, I've noticed increasing delays (up to 30 days now) between when content airs and when its shown on hulu. I've also noticed increased restrictions -- some video is not available on tv-connected devices such as the xbox, even though if you're using hulu on the xbox, you're paying for hulu plus. As a consumer, I find that outrageous that something is free on the hulu website, but unavailable on the pay service. So what could be sinister? What if they sell Hulu, then slowly stop supplying content. Hulu becomes a shell with no reason to visit it. They could start a new hulu, and put their content on that. Of course, hopefully the buyer can prevent this, with exclusive content deals as has been rumored in articles, and maybe non compete agreements from the sellers?
You said you don't try to time the market. Can you talk about why? (Personal experience, something you read, etc). You hold views about particular industries within tech, why not hold a view on the credit market (the cost of your leverage)?
Hi fickle: I've been a buy & hold for 6 months - 2 years investor for most of my investing life -- buy a company, and then check up on it once every few weeks and around earnings time with maybe 5-10 transactions a year -- so worrying about macroeconomics and timing isn't something that I've spent time doing. In the past 3 months, thats changed where I'm read daily for a couple of hours -- and my transaction count has increased as a result (still undecided if thats good or bad) I dont know if the daily attention is going to last, so thats why I mentioned I'm generally not a time-the-markets person. I believe that the macroeconomics will trend positively during my life, and I just think its easier to make an educated guess at the micro level (on a particular company; or even industry) than the macro -- so I've made a decision to just remain in stocks 100+% always. Using margin has started recently as I've opened up an IB account and the 1.6% interest seems too good of a rate to pass up. Given my belief on macroeconomics, as long as my borrowing level doesnt put me at high risk of a margin call if the market heads south (ie permant capital loss), I think it will pay off as I expect the markets to return more than 1.6 The statements I made about tech have alot to do with the fact that I work in tech, read about it more often, and so have stronger opinions. I don't have that level of conviction with other industries -- and its why my portfolio is heavily tilted in tech (the Peter Lynch advice of buy what you know). Over time, the more reading I do, the more I'm influenced by the value investing crowd -- not completely, but atleast to the extent that I've become more mindful of future earnings prospects relative to stock price. Whereas in my younger days (2002 - 6) I was more attacted high reward / high risk companies -- some paid off, many burned -- definitely took some bad risks.
I started out doing something similar to this. You might consider to incorporate derivatives in your approach....
Sold the MSFT purchase I made on 7/18 at $27.22 /share a few minutes ago. Still hold the original lot mentioned in my first post. Expect MSFT to drop before increasing my position again.
I consider it from time to time, but I always end up having a hard time considering what a good strategy would be. Given my portfolio, any suggestions? If we take Google, for example. I've stated I think 650 is possible in the near term. I could buy call options; but I'm already loaded up on the stock. So I'm not sure if paying the time premium for calls is worth it rather than just buying more stock. I could sell some calls -- but if I sell 650 calls one or two month out, i'd be making pennies per share -- nothing to get overly excited about. The only thing that makes sense to me is selling puts. I'd be okay selling a 600 put a month out since I believe thats a floor and I'd be willing to buy more at that price. But I'm already over-weighted in goog, so I'm not sure if i feel comfortable adding more. In MSFT's case, I think a floor might be 24-25. But If I sell a near term put at that strike, its worth pennies.