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TomB16 investing blog

Discussion in 'Investing' started by TomB16, Aug 7, 2019.

  1. T0rm3nted

    T0rm3nted Moderator
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    I think it's yet to be seen if the election is a strong influence. With the volatility of the market over the last few years, I think the election won't have strong impact until a few days before the election, because why think/plan ahead when there's still profit to be made (sarcasm).
     
    TomB16 likes this.
  2. TomB16

    TomB16 Well-Known Member

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    I consider the S&P index to be a bull trap on the medium term, to an extent.

    We are on the cusp of unprecedented industry disruption.

    Tesla is taking over for century old automakers. Ford, the company that started mass manufacturing, is going away.

    Not so long ago, when I first started talking about the big car makers going away, the conversation wasn't well received. It still isn't but there is a lot less laughing. Ford's CEO just said full self driving is "too hard". Tesla has an FSD alpha on the road now and will be pushing the beta to early adopters by the end of this month. I'm talking about a generalized AI solution, not situational implementation like everyone else where huge reams of location specific data are required.

    Banking will be the next industry to be gutted. Go ahead and laugh. The alternatives are too small to fund IPOs and big corporations but we live in an era where scale comes quickly. We'll see.

    Most industries are ripe for change, actually.

    At some point, S&P will onboard companies like Tesla but they will resist and cling to the companies they know as long as they possibly can. In Tesla's case, they probably think it's in a massive bubble and they don't believe the value can possibly be real. That lack of objectivity and ability to comprehend the year 2020 will cost S&P 500 holders. I don't know if it will cost them a lot but it will definitely have an impact. As old guys like me die of stress induced heart attacks from the market doing things we find irrational, the S&P will likely be run a lot better. There is likely value in the S&P in future or, at least, in a company like S&P. Perhaps there will be a new index that will be better run.
     
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  3. TomB16

    TomB16 Well-Known Member

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    It's interesting to see municipal bond issues. I wouldn't touch these with a 10 foot pole, although they might become more interesting after the election.
     
  4. 姑爺仔

    姑爺仔 Active Member

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    The world is ripe for change.
     
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  5. TomB16

    TomB16 Well-Known Member

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    I’m going to share a decision point in near real time, because we all go through these. Perhaps someone will find value in this or perhaps someone will shine some light for me to follow.

    There have been times when I have loved our portfolio and knew it was what we needed to hold with the only problem being I wanted to buy more of some or all of it. This is not one of those times.

    We are heavy with REITs at the core of our holdings. It’s our largest single market segment. Long term, that has to change.

    Certainly, we are pleased with our portfolio and it’s performance. The issue is, how do we get from something that is performing well and we are happy with today to something that will perform well in the future.

    The bulk of our DRIPS are turned off and have been for about 18 months. New cash has been diverted into other holdings, including a bunch more Tesla in the spring of 2019, but roughly half of incoming cash is still sitting in near-cash.

    As well as Tesla has done, I have no intention to buy more now or ever. We have enough. I also don’t know when we’ll start to sell it down but I suspect we will sell it in small pieces, starting in about 5 years.

    The REITs are doing well and distributing like crazy. A couple of them are likely candidates for the first sale during the retirement sell-down. I don’t expect to sell the full balance of any positions in a short time. They are large enough to be sold in pieces to maintain our 12 month cash balance.

    Speaking of retirement cash flow, here is how I currently intend to handle it:

    - We have enough dividend cashflow to fund retirement, as long as most of our current distributions continue.

    - We have sufficiently diverse holdings that something is always doing very well and in good shape to sell. I will try to keep 12 months of cash on hand, as a minimum.

    - We have a very small bond ladder that can be consumed if dividends stop and no equity is in a good position to sell. Harvesting this bond ladder should fund about half of our cash flow needs, for most years, but it is single use so it will be folded back into another ladder step, when not needed.

    - For re-investment ammunition, I plan to hold a small amount of SH during times of extraordinarily high WBI (perhaps as much as 30% of cash reserves, varying with the WBI). This will somewhat defend our retirement cash during discount buying opportunities.

    A few notes:

    - The bond ladder is both small and incomplete. I’m not going to buy bonds I don’t like, just so I can fill in a box in our spreadsheet. We currently have three rungs occupied in a five year ladder. Essentially, we have three bullets to kill three zombies. Each bullet is about half a years spending money, in an austere year. We have a bond maturing in 2021 and it’s entirely possible there won’t be an adequate bond offering to occupy that position, at that time.

    - If we burn the bonds down early in the next 10 years, I will want to replace them. Once we get into our 60s, I can’t imagine wanting to replace them. They are in a box labelled, “In case of emergency, break glass.”

    - We hold an oil field services company that owes us nothing. It’s entirely returned our investment plus a wee bit but it stopped distributing late last year and it lost 35% of it’s value in March of this year. It’s mostly back to previous highs, at this point. I’m in no hurry to get rid of it but it has to go, at some point. The timeline of this divestiture is not known. It will be sold sometime in the next 0 to 3 years.

    - The first REIT sale will probably start next year but this, also, is not clear.

    - We are going to have a substantial cash problem in 2021. There are only two highly interesting companies in my watch list. We are likely to sell one or two small positions and we will be onboarding a substantial amount of cash from other aspects of our life. That cash will end up in our investments and I don’t have enough places to put it. This is causing me to take a kinder view of some investments that I had previously ruled out. This is not a good thing.

    Perhaps the key take away from this is my lack of clear direction and only reasonable level of confidence (not high, as it has been at times). A major market crash will solve the cash problem, as we will buy heavily, and will probably cause these financial mechanisms to re-sort their levels of importance.

    I admire people who have a clear direction but those who always know what to do with 100% confidence are either blinded by hubris or have miraculous investing chops. The former being the only plausible explanation.
     
    #505 TomB16, Oct 11, 2020
    Last edited: Oct 11, 2020
  6. TomB16

    TomB16 Well-Known Member

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    "66% of companies plan to give bonuses amid waves of corporate layoffs"

    One of the filters I used for a decade was to look to 2008/2009 financial statements, in the executive compensation section, and look for bonuses and raises. Executives aren't nearly as important to most companies as they think. They are replaceable and yet they pay themselves as though they are key.

    2008/2009 information was getting pretty long in the tooth. Many companies have executive turnover so the data becomes obsolete, in many cases.

    What I look for is an executive that understands the pain needs to be equitable to all involved. Shareholders will take hits during downturns but executives need to feel that pain, also.

    There are two companies we hold which are run by executives that recently took a temporary 20% compensation cut and no bonuses. Kudos, gentlemen. Our holdings of your companies will be expanding, shortly. :thumbsup:


     
    #506 TomB16, Oct 11, 2020
    Last edited: Oct 11, 2020
  7. TomB16

    TomB16 Well-Known Member

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    Brace for the market to be surprised when Q3 earnings turn out to be better than Q2 but I suspect well off 19Q3.
     
    #507 TomB16, Oct 11, 2020
    Last edited: Oct 11, 2020
    T0rm3nted likes this.
  8. TomB16

    TomB16 Well-Known Member

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    I'm no longer confident in an election sale at the stock counter. While there will likely be a blip, I think there will be subsequent dips and blips well into 2021. Perhaps a large scale buy opportunity will present itself in 2021.

    I'm not sure it will make a lot of difference to the market who wins the presidency, either.

    This is based on a sense the market is hyper aggressive and ready to pounce on the smallest opportunity.

    I've never been one to buy a 5% dip or even 10. I'm no longer counting on a buy opportunity this election season.

    We still have our drips turned off and lots of cash. The drips are likely to be turned back on in mid 2021 but that will depend on the wbi, among other things.
     
    #508 TomB16, Oct 18, 2020 at 2:01 PM
    Last edited: Oct 18, 2020 at 2:09 PM
  9. roadtonowhere08

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    I am starting to think you might be correct, TomB16. I am giving it until New Year's. After that, I am going full steam ahead and forgetting about it.

    Then again, this could be the "capitulation" phase. :biggrin:

    Oh well. Still tired of waiting.
     
  10. TomB16

    TomB16 Well-Known Member

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    I will point out, once again, we are not out of the market. We haven't sold anything since January. Even then, we divested of two very small holdings that were doing well but were not strategic.

    We certainly don't engage in wholesale buying and selling. We might change or make a major adjustment to one position every few years.

    We picked up quite a bit of stock in early March.

    I also expressed interest in an ipo that was to be filled in q3. It has not filled, though.

    Just thought I'd share the reality that we aren't buying and selling shares. The most I will do is adjust our cash position by turning off drips or spending down cash when the wbi reaches certain targets.
     
  11. WXYZ

    WXYZ Well-Known Member

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    I think you are RIGHT TomB16. Right now it is STILL all about earnings. The markets seem to have resolved to just live with whatever they get.......it is not like they have any choice.
     
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  12. TomB16

    TomB16 Well-Known Member

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    I've been thinking about my investment approach since listening to the Tesla Q3 earnings call a couple of hours ago.

    I consider myself reasonable knowledgeable on Tesla. Above average, anyway. Even at that, I would not have expected such strong earnings or such a positive call. My expectation was the price would go down, slightly, after the call and then climb in Q4 as FSD, production ramps at Giga Shanghai, the first Roadsters are produced, Structure starts to take shape in Austin, etc. I was wrong, with regard to that prediction.

    With regard to Tesla's direction, BEV macro factors, strategy, and other industry events, I've been really solid.

    The only conclusion I can come to is that I'm an idiot when it comes to predicting the market. I can take solace in being reasonably smart when it comes to the company and it's future success and growth.

    This brings me to one inescapable conclusion: I must not take action based on my thoughts with regard to stock price. I must only act on my understanding of the company and it's future.

    This is why we have held our shares for four years and then added to them 18 months ago on a dip, instead of trading. I'm an idiot trader.

    Everyone else gets rich quickly with trading. Kudos. I wish I could get rich quickly, also. Sadly, I am not capable so I'm relegated to become rich slowly, over time.
     
  13. roadtonowhere08

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    Oh I think you know more about Tesla than about 99% of the public based on your posts.

    As to your last point. People's' perception of traders getting rich might be skewed due to the fact that the winners generate a lot of noise and attention. The much more frequent losers are busy getting divorced and jumping off of high things.
     
  14. WXYZ

    WXYZ Well-Known Member

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    Those are some really great gains over 4 years of holding Tesla.
     
    #514 WXYZ, Oct 21, 2020 at 10:41 PM
    Last edited: Oct 21, 2020 at 10:52 PM
  15. WXYZ

    WXYZ Well-Known Member

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    It will be an interesting open tomorrow for Tesla shareholders.
     
    #515 WXYZ, Oct 21, 2020 at 10:46 PM
    Last edited: Oct 21, 2020 at 10:51 PM

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