What is YOUR economic survival/investment strategy? Here's mine.

[ADL Colin]

No one can call a bottom in the stock market. No one can predict how bad the recession will be or how long it will last. I've never met or heard of anyone with such insight.

The S&P 500 is down 42% from its peak. The worst S&P bear markets of all time were -85% starting in 1929 and -44% starting in 2000. Futures are down 4% today. Looks like this will officially be the 2nd worst bear market of all time.

Last night I took everything that I absolutely won't need for the next few years and loaded it into my investment account. Gonna make one last big buy. This will increase my account by 20%.

Consider a large cap conservative company with a strong balance sheet selling at 6 times cash flow. There are quite a few right now. Assuming 8% average growth the next 10 years and 5% growth the next 10 that company is being sold at roughly 4x less than its value - using discounted cash flow and using a conservative long-term bond rate of 5%. It is likely that such a company will grow at 30% per year the next 10 years. These are values we haven't seen in the market since the 1970s. Assuming of course that we aren't entering a recession so deep that such companies will simply disappear.

As long as we aren't entering the Great Depression II such investments will, in the long run, turn out awesome. if we are, well, no one knows what darkness will come over all our finances. i will take that chance. In that case I will put the rest of what I have into anything that protects against inflation. Maybe TIPS.

Good luck to you all.

[GrouchyAdmin]

I wish I could find the site, it was "TheGoldStandard" or something similar. Some of the stranger fringe Ron Paul supporters were hoarding things such as toothbrushes, hair brushes, and MREs.

It was all of the pleasure of waking up on Janurary 2nd, 2000 - where nothing happened.

Myself? I have pillowcases lined with lead.

[AlienQ - BANNED FOR LIFE]

I can help ya in yer choice
I locked in a recent IPO in the Solar Industry that has a world wide reach. THe first day I was freaked as the IPO shed off 2 bucks per share killing my investment by half but 2 days later stabilised and gained 2 back and so most likely slated to climb. I stopped investing a for a few years and I decided to get back to it. One segment that is not faultering to hard is the technology industry. SO going long on tech might be a good idea.

The market is to ripe and some of the investment offering's right now are incredibly undervalued and would never fail even if hell froze over. As the panic and hysteria sell off has sunk in there are some incredible stocks up for grabs at bargain basement, people are selling shit off without even thinking at this point or they are screaming at there financial agents to sell everything. Eitherway it's a good time if ya know what you are doing.

[Vendot]

Im from the Jim Rogers camp.....

Buy Yuan, Buy into China (cheaply right now)

[AlienQ - BANNED FOR LIFE]

PS: People that know me know that I raked in very well as a day trader over the course of 8 years. My specialty was tech stocks such as APPLE, EBAY, IBM and Microsoft.

I know for a certain that Renewable energy is going to be HUGE for the next 8-10 years as pure vertical growth to a full large scale industry that will make Oil companies look like small fish. Invest in GE, or SHARP at the start for the boom.

Why? They make Solar Panels and energy eficient products. Even if the economy completely collapses companies that make such things or install them will certainly flourish. People are going to need electricity even if all the shit hits the ground ( Dooms day scenerios ahead ) or even if it gets so bad that cities start going through black outs...
Solar power and alternative energies will eleviate the problem no matter where people are.

I abandoned city living as I knew two years ago shit was going to hit the fan, it was impossible to go on thinking there would not be a financial backlash in the economy even before the gas prices and foreclosure issues rised to news stands. I was already saying 2 years ago that what was happening was non sustainable right here on GFY.

[ADL Colin]

Originally Posted by Vendot

Im from the Jim Rogers camp.....

Buy Yuan, Buy into China (cheaply right now)

i read his book earlier in the year but haven't had any time to research Chinese stocks. Considering there are just so many great opportunities in the US. Might be kicking myself in the ass over that lost opportunity later

[ADL Colin]

Alien,

I have solar powered panels on my house. Nothing better than a 98 degree pool at 2am after getting back from the club.

[AlienQ - BANNED FOR LIFE]

Originally Posted by ADL Colin

Alien,

I have solar powered panels on my house. Nothing better than a 98 degree pool at 2am after getting back from the club.

Right on man, thats the way to do it

I am out 4AM here. Time for sleep!

[Thomas N]

Originally Posted by ADL Colin

In that case I will put the rest of what I have into anything that protects against inflation. Maybe TIPS.

TIPS might be as good a place as any to put all your investment capital right now. Honestly, I don't have the balls to move a big position into a single stock at this point. If you do, feel free to let me know what you invest in so I can live vicariously through you for a while.

[ADL Colin]

Originally Posted by SwordFish

TIPS might be as good a place as any to put all your investment capital right now. Honestly, I don't have the balls to move a big position into a single stock at this point. If you do, feel free to let me know what you invest in so I can live vicariously through you for a while.

Hey swordfish,

Been buying at all?

I own 14 individual stocks. Probably buying more IR, GE and JNJ this morning. One would think GE will have a difficult year ahead considering their finance and infrastructure divisions. Long term purchases. I hope to still own them in 10 years.

Definitely be thinking about putting rest in TIPs. I already have a sizable bond position in a tax-free account.
One thought on TIPS is it is tied to CPI which I'm not sure is a very reliable tracking of inflation. In a hyper-inflationary environment would TIPs track that reasonably? i have doubts. Any thoughts?

[Lamis]

Buy devaluated properties.

[ADL Colin]

Originally Posted by Lamis

Buy devaluated properties.

"Devaluated"? You mean beat down real estate?

[Libertine]

Originally Posted by ADL Colin

Last night I took everything that I absolutely won't need for the next few years and loaded it into my investment account. Gonna make one last big buy. This will increase my account by 20%.

That seems like an exceedingly bad idea

Looking at the current markets, it's extremely likely that you will lose 20-30% in the next few weeks. Those losses will take years to make up, and only after that will you begin to make a profit.

Originally Posted by ADL Colin

Consider a large cap conservative company with a strong balance sheet selling at 6 times cash flow. There are quite a few right now. Assuming 8% average growth the next 10 years and 5% growth the next 10 that company is being sold at roughly 4x less than its value - using discounted cash flow and using a conservative long-term bond rate of 5%. It is likely that such a company will grow at 30% per year the next 10 years. These are values we haven't seen in the market since the 1970s. Assuming of course that we aren't entering a recession so deep that such companies will simply disappear.

Consider that many companies still have hidden liabilities right now. It's likely that a few will still go bust no matter what happens. Ones that right now still look stable.

Even if you assume the markets will recover shortly, going into specific stock simply raises your risk exposure. By not choosing to go with a broad basket, you're betting both on a full recovery of the market in the relatively near future and on the future financial health of those specific companies.

Essentially, you're making two large bets at the same time. And that's not all.

You're making a third big bet in assuming that the near future isn't a deflationary one. Right now, that's a pretty big bet to make. Especially when combined with the other ones

[pornguy]

Originally Posted by AlienQ

I can help ya in yer choice
I locked in a recent IPO in the Solar Industry that has a world wide reach. THe first day I was freaked as the IPO shed off 2 bucks per share killing my investment by half but 2 days later stabilised and gained 2 back and so most likely slated to climb. I stopped investing a for a few years and I decided to get back to it. One segment that is not faultering to hard is the technology industry. SO going long on tech might be a good idea.

The market is to ripe and some of the investment offering's right now are incredibly undervalued and would never fail even if hell froze over. As the panic and hysteria sell off has sunk in there are some incredible stocks up for grabs at bargain basement, people are selling shit off without even thinking at this point or they are screaming at there financial agents to sell everything. Eitherway it's a good time if ya know what you are doing.

I see going long on tech right now could be a bad thing. Someone said by google and apple.

If the shit hits the fan here, I wont be buying any new computers, and I will cut my connection back to the cheapest thing I can get. But I LIVE by the connection. For people that dont, they will DROP the connection all together. Food before fun.

Renewable energy might be a good one, and hardware medical is another. Not Drug companies. The US us bringing home a lot of soldiers that will need new arms and legs and such, and those companies are mostly global. So they should stay steady and in the long future pick up.

[ADL Colin]

Originally Posted by Libertine

That seems like an exceedingly bad idea

Looking at the current markets, it's extremely likely that you will lose 20-30% in the next few weeks. Those losses will take years to make up, and only after that will you begin to make a profit.



Consider that many companies still have hidden liabilities right now. It's likely that a few will still go bust no matter what happens. Ones that right now still look stable.

Even if you assume the markets will recover shortly, going into specific stock simply raises your risk exposure. By not choosing to go with a broad basket, you're betting both on a full recovery of the market in the relatively near future and on the future financial health of those specific companies.

Essentially, you're making two large bets at the same time. And that's not all.

You're making a third big bet in assuming that the near future isn't a deflationary one. Right now, that's a pretty big bet to make. Especially when combined with the other ones

I ended up buying mostly IR after it went down 10% this morning. Filled at 18.70. You can follow and either laugh at me or pat me on the back ;-)

[ADL Colin]

Originally Posted by Libertine

By not choosing to go with a broad basket, you're betting both on a full recovery of the market in the relatively near future and on the future financial health of those specific companies.

why "the near future"? I think of my investments on the time scale of 10 years.

[Naughty]

Originally Posted by ADL Colin

I ended up buying mostly IR after it went down 10% this morning. Filled at 18.70. You can follow and either laugh at me or pat me on the back ;-)

What is IR?

I bought TomTom at 7.53 today.

[Vendot]

Originally Posted by ADL Colin

i read his book earlier in the year but haven't had any time to research Chinese stocks. Considering there are just so many great opportunities in the US. Might be kicking myself in the ass over that lost opportunity later

You will believe me........ cheap US stocks are one thing, but cheap chinese stocks in some sectors at this early stage in chinas growth are going to produce some of the major wealth of the next 100 years.

[ADL Colin]

Originally Posted by Vendot

You will believe me........ cheap US stocks are one thing, but cheap chinese stocks in some sectors at this early stage in chinas growth are going to produce some of the major wealth of the next 100 years.

I don't disagree with you at all. I like the way you think.

I have an incredible financial library. Wish I could scan all this stuff and put it online for people to see. For example, I have a 1926 Moody's Guide. It has all kinds of incredible info. a listing of all the 19th century depressions, financials for 1000s of companies from 1920-1925, a breakdown of production figures for every major business in the US at the time. i believe obtaining a deep knowledge of the history of financial markets and businesses is one of the best things one could do to improve one's investing skills. the #1 thing being actually doing it of course. Nothing beats experience. Here's that book::






If anyone has any sort of CD with all the Wall Street Journals from the 20th century in them I am looking for something like that.

[CaptainHowdy]

I'm buying a gun and a ski mask ...

[Libertine]

Originally Posted by ADL Colin

why "the near future"? I think of my investments on the time scale of 10 years.

Near future = 1-3 years.

If there's no full recovery by that time, achieving decent growth in 10 years will be pretty hard. Basically, you'd have been better off just saving the money (calculating in risk).

[brand0n]

gold, gold miners

[ADL Colin]

Originally Posted by Libertine

Near future = 1-3 years.

If there's no full recovery by that time, achieving decent growth in 10 years will be pretty hard. Basically, you'd have been better off just saving the money (calculating in risk).

I think your points are fine ones. Every business decision has positives and negatives and we all assess the probability of the risks differently.

IMO, the whole point of buying a business so cheap is to protect yourself against such risks and misjudgments. In the example I gave at the beginning of the thread the sum of the discounted cash flows gives you a value more than 4x greater than the current price. If you assume that same company makes 10% less money in each of the next 3 years than it did in the prior year and say the company ends up 10 years from now with a Price to cash flow of 15 (conservative unless T bills rise above 6.5%) you are still going to get a 9% per year return. Maybe instead you end up at PCF of 20 and you would get a 13% average annual return. Both fine returns.

To me, the market prices of many public companies are far below underlying value. I compare it to this. Say there is a busy convenience store in your neighborhood that averages $100k per year profit. The company is for sale at $300k. Now that might be a fine price but there are probably other better options for sale. So you pass. Now say a year goes by and it becomes obvious that a recession is coming. The price is lowered to $200k. Still you pass. Another week goes by and suddenly the owner is selling the store for (PANIC!!!) $100k. One year's average profit! I figure, hell, it's going to be a tough year. Maybe even 2 tough years. But eventually the business will return to normal and I will be earning the price paid every year on profit. Great deal. now some might argue that maybe he will lower the price even further. Maybe you can get it for $85k in another few weeks. I don't know about that. the one year's profit looks pretty good to me. I'd take it. Of course in the stock market the multiples are different than they are for private companies. Instead of multiples of 2 and 3 year's earnings we are dealing with - in ordinary times - 15-20x earnings.

[BradM]

Everyone is investing in gold. DO NOT do what the pack does.

[ADL Colin]

Originally Posted by BradM

DO NOT do what the pack does.

[Brujah]

By the end of the week of November 11 (1929), the index stood at 228, a cumulative drop of 40 percent from the September high. The markets rallied in succeeding months but it would be a false recovery that led unsuspecting investors into the worst economic crisis of modern times. The Dow Jones Industrial Average would lose 89% of its value before finally bottoming out in July 1932.

http://en.wikipedia.org/wiki/Stock_market_crash

[TheStout]

Thanks for the advice. I will definitely be reading some of those books you recommended.

[woj]

pssh, investing stuff you don't need? Only an amateur would do that... real investors with balls buy up stuff on margin now...

[Lamis]

Even Bernanke and Paulson have no fucking idea what to do.

So my advice, if someone tells you: "Do this asap".. Don't do it.

[slapass]

Originally Posted by woj

pssh, investing stuff you don't need? Only an amateur would do that... real investors with balls buy up stuff on margin now...

Just sent a butt load of cash to the account. did this before and it did not work out so well but never learn is my motto.

[$tandaman]

Colin, how about Gazprom and Lukoil

[qwe]

alot of people will make some nice money from this... everything is way oversold and way too much panic, but this can be one in a lifetime opportunity to get some nice companies that can generate cash for you your entire life... my point is, you shouldn't put ALL your money in stock market, but if you have money sitting on a side doing nothing, and you pretty comfortable with your financial situation you should definitely jump in...

[bhutocracy]

Originally Posted by Brujah

By the end of the week of November 11 (1929), the index stood at 228, a cumulative drop of 40 percent from the September high. The markets rallied in succeeding months but it would be a false recovery that led unsuspecting investors into the worst economic crisis of modern times. The Dow Jones Industrial Average would lose 89% of its value before finally bottoming out in July 1932.

http://en.wikipedia.org/wiki/Stock_market_crash

If we are going to bring up the Great Depression lets also quote from the same article:

On August 24, 1921, the Dow Jones Industrial Average stood at a value of 63.9. By September 3, 1929, it had risen more than sixfold, touching 381.2

596% vs the 175% climb since the last slump

Yes there will be false rallies yes it will most likely stagnate and go lower, but we have to remember that during the very, VERY worst part of the depression P/Es were at about 5.5.. Some stocks are either close to this now or will be based on increased revenue that won't be included until the FY09 accounts (and we're talking growing companies that aren't going to be that affected by a recession). Using the '29 crash as a reference in some ways shows that now is the time to buy. That is simplistic, but no more so than using one crash to divine another.

[IllTestYourGirls]

The bottom is not here and we are about to see some massive inflation. That is of course things change over the weekend with Paulson meeting with other world leaders to see how they can change the fact that they have put too much fiat money into their stock systems.

[nitroy2k]

Well i hope i will survive...
last night data center Alpha Red or alphared.com got in problems...
ccbill canceled there funding and they went down... internet stop'd working ... loading of sites were imposible... we got info that they are going down and they are going in next 10-15 days... we some how made backup of all data.. were doing backup of 400gb ... so that is not a small thing ...
so i know that USA is totally fucked up

and yes thanx to theplanet for fast response for new server..

[pigman]

Let the market settle before you make investments.

[brandonstills]

Originally Posted by ADL Colin

No one can call a bottom in the stock market. No one can predict how bad the recession will be or how long it will last. I've never met or heard of anyone with such insight.

The S&P 500 is down 42% from its peak. The worst S&P bear markets of all time were -85% starting in 1929 and -44% starting in 2000. Futures are down 4% today. Looks like this will officially be the 2nd worst bear market of all time.

Last night I took everything that I absolutely won't need for the next few years and loaded it into my investment account. Gonna make one last big buy. This will increase my account by 20%.

Consider a large cap conservative company with a strong balance sheet selling at 6 times cash flow. There are quite a few right now. Assuming 8% average growth the next 10 years and 5% growth the next 10 that company is being sold at roughly 4x less than its value - using discounted cash flow and using a conservative long-term bond rate of 5%. It is likely that such a company will grow at 30% per year the next 10 years. These are values we haven't seen in the market since the 1970s. Assuming of course that we aren't entering a recession so deep that such companies will simply disappear.

As long as we aren't entering the Great Depression II such investments will, in the long run, turn out awesome. if we are, well, no one knows what darkness will come over all our finances. i will take that chance. In that case I will put the rest of what I have into anything that protects against inflation. Maybe TIPS.

Good luck to you all.

Paper is not the only thing you can invest in. Think outside the box.

[Matt_WildCash]

I dunno the market is probably going to tank another 20-30 % in my book. Wait for companies like General motors and Ford who were losing Billions a 1/4 during the boom time. Wait till the recession hits in with no money for them to borrow there gone without a massive bailout by the fed's. GM is down 87% this year OUCH!

We have ALOT more pain to come, the banks are STILL along way from lending to each other and until that is fixed it won't stop the collapse. When they start lending again from enough govenment action then we'll start seeing a bottom I think.

Best thing to do in my book is keep cash safe and wait for the bottom, wait for stuff to clear up stabilise. Then there will be lot of good oppotunities around again. There was none left after 13 years of booming in every market, now we have a crash in every market, housing, stocks, commodities. Clear it all out and there will be lots of good money making places to put cash.

Matt

[ADL Colin]

Originally Posted by woj

pssh, investing stuff you don't need? Only an amateur would do that... real investors with balls buy up stuff on margin now...

Seriously, if prices go lower I would consider dipping further into the pot.

[ADL Colin]

Originally Posted by $tandaman

Colin, how about Gazprom and Lukoil

Stan,

I have quite a lot of Lukoil. Been buying a lot under $40/share. I figure the company is being priced as if oil is only $25/barrel. They had that big oil find in that joint project with Gazprom
earlier in the year plus the reduction in the oil taxes from the Russian government and more being considered. Plus I like the insider buying. The CEO and I think the VP bought some a few weeks back.

I don't have any Gazprom nor have I researched it. I did own some shares of Cimarex earlier. That was my gas play. I sold them at a nice profit.

You own both?

[ADL Colin]

Originally Posted by Matt_WildCash

I dunno the market is probably going to tank another 20-30 % in my book.

Are you shorting the market?

Predicting floods doesn't count. Building arks does.

[V_RocKs]

I invest in my business... Then again.. My business pays me about 600% ROI.

[The Duck]

I chose not to succumb to the fear and does not have a plan.

[ADL Colin]

Originally Posted by ADL Colin

I ended up buying mostly IR after it went down 10% this morning. Filled at 18.70. You can follow and either laugh at me or pat me on the back ;-)

$27.48 now. Up 47%. i put my money where my mouth was. I had 1/2 of all my worth in just 3 stocks. IR up about 50% and WFC and AXP both more than doubled - loaded up on those when everyone got REALLY scared about financials.

Hope everyone made a killing. You don't see this but once or twice a lifetime. When everyone is scared and fearful and everyone is telling you you're an idiot and have no clue how bad it really is that and how much worse it is going to get ... when the headlines are screaming sell, when people are dejected, beaten down and frightened, THAT is when you invest.

[Monk]

Originally Posted by ADL Colin

You don't see this but once or twice a lifetime.

The second time is coming soon to a stock market near you.

Not so confident in the market as you Colin... buy and hold is a good strategy in a bull market (something that most of us are accustomed to)..... other generations were not so lucky and 'buy and hold' strategies would have gotten them eaten for lunch.

Everything has its day (or cycle)

I should qualify that I have gone long many different stocks during this last run-up.... all short-term investments though..... 2nd leg of this horrific bear market is on its way... I am starting to lighten up on all longs as S&P gets closer to 1100-ish area.
I would never consider holding anything for 10 years in the current environment.

[DaddyHalbucks]

Old thread, but.. buy low, sell high is a proven strategy.

I also saw the downturn coming and drastically cut my expenses in June 2007.

[ADL Colin]

Originally Posted by ADL Colin

I ended up buying mostly IR after it went down 10% this morning. Filled at 18.70. You can follow and either laugh at me or pat me on the back ;-)

$35.16 now. Up 88% in 13 months on that one stock and not even my best return. Killed it in the financials. More than doubled my entire net worth in one year in the market. 1/2 of everything I own in just 3 stocks. IR, AXP, WFC. I love bear markets for the fear they put on people and prices.

[fatfoo]

Interesting investment read. Good luck.

[MikesTraffic]

wish I knew what you knew about investing...

[woj]

Originally Posted by ADL Colin

$35.16 now. Up 88% in 13 months on that one stock and not even my best return. Killed it in the financials. More than doubled my entire net worth in one year in the market. 1/2 of everything I own in just 3 stocks. IR, AXP, WFC. I love bear markets for the fear they put on people and prices.

nice score