Author Topic: What are you buying today?  (Read 1789435 times)

John Hjorth

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Re: What are you buying today?
« Reply #70 on: June 28, 2013, 01:46:18 PM »
Off topic:
Ladies and Gentlemen [if there are any ladies posting in this topic within the last posts?],

The discussion contained in the last posts in this topic by writser, Palantir, ERICOPOLY, Heilko & Birdman23i is in my opinion certainly worth a separate topic in the General Discussion Forum of its own! I hereby suggest one of you to pick this discussion up buy starting a separate topic in the General Discussion Forum. Personally, I'm sure it will be reading of interest to many board members!

-Thanks in advance, because I hope you all pick this suggestion up!

[I have also been buying books about roses lately, btw...]

-And now back to topic again-again!
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai


muscleman

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Re: What are you buying today?
« Reply #71 on: June 28, 2013, 01:47:47 PM »
Rimm's "intrinsic value" is likely dropping....why would you buy more? People seem to assume that IV is fixed and certain while price is variable....but IV seems to be pretty variable when it comes to these tech stocks...

I disagree.  IV doesn't change.  Your perception of IV changes along the turbulent path of discovery.  You keep trying to predict the unpredictable, and blame it on the IV of the business rapidly changing.  No.

To get the IV prediction accurate with a higher batting average, and thus fewer investment mistakes, stick to businesses that are more predictable.  (that's a "Duh" comment).

I guess that by definition of the term "predictable business", you then realize that your IV number is a "prediction of the business"... well, more of the obvious.

I would say IV changes in some cases and doesn't in other cases.
For example, due to the fact that AMZN is trading at extremely inflated multiples for prolonged time, it is able to issue a small amount of equity to do a lot of things. The IV increase whenever it issues the equity at such extremely inflated multiples. You can run some simple math. Suppose AMZN's book value is $10 per share, and it issues equity at $200 per share and doubles the share count, what is the book value now? It is $105 per share! Who can create value faster than this? Buffet clearly cannot! ;) Then if the market thinks OMG, AMZN is much cheaper now than before, buy a ton! Then the stock price will jump to maybe $400. Then they can do this game again and again and the book value will increase a lot consistently.

For other companies, if the stock price is distressed and it gets some liquidity issue and is forced to issue equity, the IV will drop a lot, depending on how dilutive it is.
« Last Edit: June 28, 2013, 01:49:49 PM by muscleman »
I am muslceman. I have more muscle than brain!

Palantir

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Re: What are you buying today?
« Reply #72 on: June 28, 2013, 02:02:09 PM »
Gonna have to add Accenture (ACN) to my watchlist....please go down.
My Portfolio: AMZN, PYPL

tombgrt

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Re: What are you buying today?
« Reply #73 on: June 28, 2013, 02:03:31 PM »
Rimm's "intrinsic value" is likely dropping....why would you buy more? People seem to assume that IV is fixed and certain while price is variable....but IV seems to be pretty variable when it comes to these tech stocks...

I disagree.  IV doesn't change.  Your perception of IV changes along the turbulent path of discovery.  You keep trying to predict the unpredictable, and blame it on the IV of the business rapidly changing.  No.

To get the IV prediction accurate with a higher batting average, and thus fewer investment mistakes, stick to businesses that are more predictable.  (that's a "Duh" comment).

I guess that by definition of the term "predictable business", you then realize that your IV number is a "prediction of the business"... well, more of the obvious.

I would say IV changes in some cases and doesn't in other cases.
For example, due to the fact that AMZN is trading at extremely inflated multiples for prolonged time, it is able to issue a small amount of equity to do a lot of things. The IV increase whenever it issues the equity at such extremely inflated multiples. You can run some simple math. Suppose AMZN's book value is $10 per share, and it issues equity at $200 per share and doubles the share count, what is the book value now? It is $105 per share! Who can create value faster than this? Buffet clearly cannot! ;) Then if the market thinks OMG, AMZN is much cheaper now than before, buy a ton! Then the stock price will jump to maybe $400.


Those kind of companies' IV has little to do with BV and thus the effect on IV is much smaller. It's substantial but I don't see how they could exploit this forever. Do you have examples of extreme cases that were able to double share price a few times? I doubt they are out there and if they are it simply won't be for the capital injection but market perception of the company / simple momentum.



OT: Bought some ITM SD leaps.
« Last Edit: June 28, 2013, 02:18:03 PM by tombgrt »

SharperDingaan

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Re: What are you buying today?
« Reply #74 on: June 28, 2013, 02:17:27 PM »
We bought in a modest BB position today, & it had zero to do with IV or valuation.

Frankly, BB is an investment POS. But we're confident that enough folks got burnt today, to be fairly sure there will be changes before the next quarterly earnings report. Hence, a minimum 10% appreciation between now & the next report seems pretty modest; which is a 40+% annualized compound return. Rain or shine we will be flat by the next report; & if we get to average down, so be it.

Sometimes its just nothing more than plain vanilla supply & demand.

SD




 

Hawks

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Re: What are you buying today?
« Reply #75 on: June 28, 2013, 02:30:09 PM »
Bought some MDLZ today on weakness over last week or so. Anyone else buying this or has done some research?

ItsAValueTrap

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Re: What are you buying today?
« Reply #76 on: June 28, 2013, 03:49:43 PM »
Quote
For example, due to the fact that AMZN is trading at extremely inflated multiples for prolonged time, it is able to issue a small amount of equity to do a lot of things. The IV increase whenever it issues the equity at such extremely inflated multiples.

I'm not so sure about that.  During the dotcom bubble, they raise capital through debt when they could have sold stock.

Right not Amazon is buying back some shares.  Their share count went up a little over the past 10 years, but it hasn't really increased its IV by issuing lots and lots of stock.
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. " -Buffett

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jay21

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Re: What are you buying today?
« Reply #77 on: June 28, 2013, 05:10:42 PM »
Bought some MDLZ today on weakness over last week or so. Anyone else buying this or has done some research?

Here's the thread:

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/mdlz-mondelez/msg112645/#msg112645
@jay_21_

Hawks

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Re: What are you buying today?
« Reply #78 on: June 28, 2013, 07:15:08 PM »
Thanks Jay. Appreciate it.

ERICOPOLY

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Re: What are you buying today?
« Reply #79 on: June 29, 2013, 08:30:11 AM »


There is only one intrinsic value.  Time will reveal it to us.

We have only prediction to rely on divining it's value.

But when? And how will we know when we are at intrinsic value, and that our intrinsic value estimate is the "true" intrinsic value?  :)

Berkshire's intrinsic value may very well be zero.  You don't know.  You have only prediction to rely on, and thus you will have better luck restricting your forecasting efforts to the relatively more predictable businesses.

Again, nothing brilliant in pointing out that "prediction" and "predictability" are related.  However, still some disagree!
« Last Edit: June 29, 2013, 08:33:24 AM by ERICOPOLY »