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Thread: Some thoughts...

  1. #1 Some thoughts... 
    I like money Hamilbet's Avatar
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    This is from an uncle that I use as a sounding board before pulling the trigger on things. The guy knows his shit. But like everything else, take heed and make your own desicions.




    Hey smart man!

    You figured correctly. Casinos should work. They may take a little longer than the airlines because people will start flying before they start throwing their money away again. But they WILL come back to the casinos for sure! They'll start cruising again, too. But I can see those companies tanking a lot more before the "all clear" bell is sounded.


    I've probably been too early on this one. But I've developed patience and am pretty confident that although I wasn't smart enough to get a 3-bagger, I think I can get a double.




    Here's the background behind what I've been doing. It's been pretty risky. I moved to a 20% cash position in January and have moved 80% of my savings account (which wasn't all that much) in to my E*Trade account. I did most of my buying last week (a little early) but am buying something every day.
    Yesterday and today, I sold some of my steady Eddie blue chip things that had declined only 10% to go bottom fishing.
    Even with the transfer of some money from my savings to my E*Trade account the total balance is STILL only 67% of what it was in January. I.e., I'm down 40% at the moment! I've lost so much money on paper that it would make your parents sick to their stomach. But I'm getting pretty excited about all of this. This will not be a great depression that lasts 10, 5 or even 3 years. I think we'll be in good shape after a year.


    Principles:
    1. Because I'm closer to retirement I'm looking for long play dividend (income) stocks when I can get them. If I can get a portfolio that averages 5% dividend yield now, then that will mean (for me) that I won't have to ever sell anything. That's why I'm going heavy in to energy. I know this principle won't apply to you.
    2. Oil prices have crashed for very good reason. Three years from now the price of oil will be nearly triple where it is today (e.g., $80-90). No question. Tesla will change the world in 20 years, not 5 years.
    3. Everything is genuinely very bad now. The second quarter will probably be one of the worst ever recorded, and THAT's where stock prices are pricing things.
    4. Some things will snap back quickly. E.g., Travel, banking, and infrastructure (build, build, build).


    What am I buying.
    1. Occidental Petroleum (OXY). Yes it's an oil company that is losing gobs and gobs of money now. Warren Buffet and Carl Icahn have added to their positions in it. AND there's been a lot of insider buying this week. I bought some when it was over $40 a share after it bought out another oil company a few months ago. I bought more at $30, more at $20 and more again for $12. It's nearly my biggest holding now.
    2. Delta Airlines (DAL). This is a gift. I bought it yesterday morning and will try to buy more. It was making money in January and (again) Buffet invested in it. It's one of the strongest airlines out there. Southwest is stronger I think. Here's the deal with these:
    a. Consolodation: Many airlines will go bust. That means more for those who survive.
    b. Air travel is like banking. It is a necessary industry. The government will take care of the big guys.
    c. This crisis will allow airlines to NOT BUY those 737 max planes, or enable them to get them on the cheap.
    c. The crisis will allow airlines to simply not fly, which will save them oodles of money.
    e. When people do start flying then they'll fly normally. In fact, they'll fly a lot more because the prices will be cheap. Air travel will surge like crazy this summer.
    f. I think something like 40-70% of airline expenses is fuel. You can look it up. It's crazy. Airlines are probably hedging their fuel prices because of this generational low. Even if air fares are cut 30% this summer and fall and everybody's flying the airline's profit per person will be the highest its ever been.
    3. I bought 2 shares of Amazon. I wish I could buy more.
    4. I bought a lot of a coal company (ticker symbol ARLP). It's one of those master limited partnerships that require crazy complicated tax filing's so don't buy it unless you are willing to get somebody to help you with it. It's the major coal producer around the great lakes region. It's been hovering between $12 and $19 for the past 5 years. Because it's an MLP it has a crazy high dividend that ranges from 10%-30%. This means that if it doesn't go bankrupt you'll get your money back in 3 to 7 years through this dividend. I've been buying it every day for the past week. Coal (and oil for that matter) are dying industries for sure. But there are still too many coal furnaces and power plants and too many gas powered trucks on the world for these things to go bust this year. So, I'm buying as much as I can for under $5 expecting to catch an easy double within 12 months.
    5. Exon Mobile (XOM) under $30 will be a good bet too but I don't have any more money for that.
    6. I think Citibank (C) or the UYG if you like action, will be an easy double but you might have to wait 2 years and suffer some wild swings. If UGY goes below $15 then I'll probably put some credit card money in to that one.
    7. Finally, for a safe bet, I'll probably spend my last cache on QQQ (Nasdaq 100 etf) if and when the S&P 500 gets near 2,100.


    Here's something you might like. The biggest European online gambling company (ticker PDYPY) was written up last fall as one of the blue chip companies of the past 20 years in Europe. They were buying large positions in Fan Duel and other American online gambling companies. I made a note to myself in December to buy it if it ever went below $50. I gave up when it broke $60 a little over a month ago. Now it's $34 and change. Online gambling will go ballistic over the next 5 years. But now, they'll suffer their worst losses in revenue ever. But they don't have much of a payroll to worry about so the bounce back will be quick. I think PDYPY will be an easy double and it will/should be a core investment holding.

    NOTES: All of the above might lose money over the next 30 days. But I think they are all easy doubles over the course of 12 months.

    Then there's KYN, which is a lot like ARLP. It's a midstream oil transport closed end mutual fund. I think there is a 10% chance (a real chance) that it may have to liquidate but if it doesn't anything you buy now will be a triple in 2 years. I'm not recommending this, but I happen to be rolling some big dice on this one.

    Personally, I'm worried about all things retail and food and even health care. I'm not crazy about pot stocks, or cyber security either. I think GOOGLE, BABA, Tencent and a chinese shipping company (ZTO) are fantastic investments (20% per yer for 10 years) but they are not going to double in the next 12 months. So, I'm hoping to track everything I'm buying now and then whenever a particular investment hits a double, I'll just swap in to one of these long term companies no matter what they are doing at the time.




    Oh, maybe you'll like this idea, which I won't do because I don't have the stomach for it. There's a company called ZOOM Industries (ticker symbol ZOOM) that people are mistaking for the video conferencing company that just went public. It's a funny situation. The stock is up 50% today. It's been around for 10 years and is not a good company. It's stock price was around $1.10 6 months ago but today, it's selling for above $12. That's over 10 times what it's worth because people are confusing it with the real ZOOM company. Here's the story I read about it.

    https://finance.yahoo.com/news/little-known-companys-shares-surge-035141603.html

    GET THAT $$$
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  2. #2  
    RX Junior stretchrunner147's Avatar
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    Great research and I wish you well.......I think William Hill U.S. is a great long term buy, before this shit show hit they were doing good in the US , a lot of talk about them being bought out by a big casino , but I hope not because I think they'll be the top dog in the US and worth more in the long run, love Delta also and Jet Blue airlines will get a lot of help from Gov't.....we'll see Wish you well
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  3. #3  
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    thanks for sharing
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  4. #4  
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    When I was young and Lee Iacocca took over Chrysler on the verge of bankruptcy someone older and wiser told me to buy their stock. I was young and knew everything and couldn't see the trees in the forest.

    His reasoning was how valuable it was to the country and how many people they employed. In those days it seemed like military contracts were rotated among contractors to make sure that they all survived. Part of his reasoning was that the government would do everything possible to help them. They had a military division that made tanks and military vehicles. They will pump them with contracts to help them survive. They got billion dollar military contract to make tanks and other vehicles.

    He did real well by looking at the Chrysler as a total business and not just a car manufacturer.

    With that said I will be buying Boeing (just not sure when I will jump back in but I jumped out at $320). This is similar to the Delta play but I think is stronger and here is why. Their stock over the last 10 plus years has been dynamite. Airlines is a tough industry. Boeing for practical purposes has only one competitor. The entry point to compete with them is too big. You wont see Elon starting a company to compete with Boeing. They are one of the largest exporters in the USA. Plus similar to Chrysler they have a military arm and the government will send them contracts to help them out. In terms of employment they employee twice as many as large as Delta. The problem with their plane will be figured out.

    A wealthy friend of mine still reminds me of my call after 9/11. Similar to now stocks were getting hammered. If stocks were down 40%....Boeing was down 60 or 70%. I said this market has it all wrong....Boeing should be going up because there are a bunch of planes that just got shot down and they will need to be replaced. We bought Boeing and when the market went up.....it was up more than the rest of the buys.

    Similar strategy that your uncle is suggesting.

    Look at stocks with cash too.
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  5. #5  
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    Thanks for those perspectives, Hamilbet and Northern Star.
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  6. #6  
    Their undisputed masterpiece is "Hip to be Square." The Falls's Avatar
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  7. #7  
    Their undisputed masterpiece is "Hip to be Square." The Falls's Avatar
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    My thoughts are...another leg down significantly lower but ultimately a strong, but slower time frame.
    Basically like most markets...it wonít be easy short/medium moneys.
    Though I have no issue with other that since Iím an analyst for an asset mgr and my job is immediately in jeopardy because of a blowup by another location (option-oriented) over the past week+.
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  8. #8  
    Everybody Got Dey Cups But Dey Ain't Chipped In.... RapStar's Avatar
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    Great insight, everyone. I enjoyed all the reading and education.
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  9. #9  
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    Thanks for the info.

    I've loaded up on MRO (Marathon Oil) and Boeing.

    I'm going to add OXY and will look into ARLP (it shot up 71% today!).
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  10. #10  
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    great info, ham. thanks for sharing, from a fellow new jerseyian.
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