My top Shorts

My ex girlfriend wore LULU before LULU became what it is today. I regret not buying it at that time (the stock, not the pants). She was a leading indicator. I didn’t listen to a lot of what she was telling me during our relationship, but I do remember her saying how comfortable and great the pants were and how she would be a customer for life.

I was talking to a girl at work who I’d love to see in LULU’s yoga pants talk about how its the first place she’s going once our bonus hits. It has an amazing chart, I’m just too afraid to buy it.

I think we should listen more to the street than analyzing balance sheets. Balance sheets tell us what has already happened.

Amazon is in my short-term short list… I think people are too exicted for its Kindle business. They sell well but are there enough online contents or will they ever be attractive enough for people to pay for them? Its online retail service is also being heavily attacked. More and more states are considering taxing Amazon online purcahses. Many physical stores, such as BestBuy theatened to match Amazon’s price. In the near future, I just don’t see how Amazon can retain the lead. Also, its business/data center is doing well but it also faces increasing competition. Not to mention its ridiculous P/E…

well, keep the names coming…i like to see what you think are game changing businesses out there…

NSR and Red Hat are beyond my understanding so they might be really cheap, but i got no expertise to decide that not even remotely…

NSR is a little difficult to understand, I agree. And I may be dead wrong in my analysis, but to me it seems to be a state sponsored utility with very high returns on capital, and significant barriers to entry. Furthermore the new business lines they’re entering provide interesting growth prospects. You might have seen Neustar’s ads on websites.

Red Hat is basically selling IT stuff for a lower price than most vendors because it is an open source solution. It is disruptive to businesses such as Oracle and saves client money. It is a popular stock, and I agree analyzing this stuff can get somewhat technical, but I believe it has a decent niche.

care to elaborate? do you see a new wave of foreclosures?

on shorting mtg insurers you’re too late to the party…those mortgage insurers may do really well over the next few years as the economy recovers…they can go up 2-3x easily if they don’t blow up

The housing recovery doesn’t seem too legit to me. The FHA isn’t doing so well at the moment.

If I had to have a position, I’d still be short anything to do with housing.

Housing recovery is just fine…its slow but its getting there…not sure what stats you’re looking at but the worst is over from what I see…the FHA has the worst of the bunch…

Facebook might be worth a look as a potential long. I feel like a bad value investor when I say this but there is good momentum and a changing business model.

why even think of yourself as a value investor? i mean, no matter what security you choose, you can always justify it with “margin of safety” and “discount to intrinsic value” anyways?

^Yeah, I find the term meaningless these days.

To me a value investor is someone who buys low multiple stocks because they’re “cheap” – these people often don’t do any substantive business analysis or really understand fundamentals (this is true even of some professional investors). A stock is only a value if you have a good reason to believe you will get more when you sell it than what you paid for it. Since that is the definition of investing, everyone is a value investor. I think Buffett has made some comments along those lines before.

There’s this worship with Graham & Buffett and I think it’s actually dangerous in a way. Real “value investing” takes years to learn. If you read a few books or whatever, you know just enough to get yourself in trouble. If someone wants to put real money to work in the stock market, they would be far better off going straight for the IBD 100 and buying a basket of “momentum” stocks with an 8% stop rule as in CANSLIM. That approach is definitely not better than “real” value investing, but it’s much easier to pick up and is actually safer for an off the shelf approach for Joe Retail.

Benjamin Graham has probably made almost as much money from “The Intelligent Investor” sales as he has from actual investing…

Could be. What he was doing worked a lot better at the time. Given computing power, that kind of system will never work like that again, except perhaps after a period of sheer panic (net nets did well after Lehman). Graham added a lot to the discipline obviously, all I’m saying is times have changed and it’s not so easy as buying low multiple stocks and waiting for reversion to the mean. Lots of low multiple stocks are on the way out and/or permanently broken.

i see a lot of value investors buy these stocks that loses money and way above stated book value like Overstock, Sears, etc…always like to see their rationale…i’m not too convinced by Berkowitz analysis of Sears though…

I think of value investors as investors that look at stocks with a focus primarily towards the balance sheet, who try to pick up liquid assets for less than intrinsic value, rather than those who try to invest in valuable businesses that grow substantially over time.

Personally, I think of myself as a cash flow investor, who looks only at firms who generate repeatable free cash flows year after year…that can be tiny little firms, megacaps, or fast growing tech stocks…time will tell whether I am right.

why do people think Kim K’s butt is too big? i don’t get it

it’s way out of proportion dude. It’s like the neolithic venus figurines they find in Europe.