OK, so that cements that it’s not as good of a play without a way to hedge against the peso strengthening, which it appears will cost me too much of the gap.
Well, that’s a separate issue than this as just an arb play. I got into IBA as a value investment at $40.50, thinking it was worth far more. The proposed offer is for about $49, and a lot of shareholders are angry and think it’s too low. The primary risk in the initial investment was that a lot of the value was cash on their books that they weren’t putting to use, which was holding back the growth. Basically the family that are majority owners are screwing the shareholders somewhat by setting up the situation to come in and buy the company on the cheap, but that’ll still end up being a decent return.
That’s their quarterly not annual. Since in my example I said if this were a normal company, let’s make it an imaginary one and ignore the war impact on their outlook. 27% seems pretty good in that scenario.
No, but if you’re willing to sell it to me for $0.60 per $1 of book value that’s a different story. Or if it’s turning a nicer profit.
Yeah this is a great point too. I would love it if there were some way to have index fund ETFs ex-certain stocks.
There are quasi-index funds that focus on a specific sector but I don’t think you’ll find much appetite for a fund that screens one or two specific holdings. It’s actually kind of hard to argue that product is widely suitable for many investors.
This is just way to broad of a statement with way too much certainty.
So if I offered to let you pick any 20 poker players in the world to bet on whether they’d collectively have a positive ROI after 50 years playing 100 tournaments a year live and as many as they could online in 30-40 hours a week, you wouldn’t take that bet and expect to have edge?
Oh and there’s another thing that really works in my favor: the only reason I ever sell anything is when it reaches a point where the way I feel about the underlying business changes. If I still think it’s good I keep it. This means most of the positions I’ve opened since starting to see things this way are still open.
I effectively have no slippage and pay effectively zero in transactional costs. I don’t need fast market data. I don’t need Bloomberg. I just go shopping for stocks every time I run a quarterly dividend from my S corp. It’s like doing a crossword puzzle at this point.
Meanwhile the pros are worrying about how far their bloomberg terminal is from the exchange.
On the general topic of picking stocks, I have had the (mis)fortune of being involved in the production of financial statements for both of the large corporations I have worked for and helped a bunch of other companies in consulting roles. I definitely have a “knows to much about how the sausage is made” problem when it comes to relying on published financial statements to make investment decisions about that company. Half the job of investment analysts is picking apart audited financials to figure out what is real and what is an artifact of accounting standards and what is possibly not being said.
Yeah, I exit my positions more than you, but I’d love not to have to. I got into GOOGL (or GOOG, I forget, whichever is the one with full voting rights) at what I believe to be a good price. I hope to just hold it forever/a very long time. I would have to deem it to be extremely overpriced to want to get out of it completely, or have it be way too much of my portfolio to want to trim the position. The dream would be to get into 15-20 somewhat diverse blue chips at reasonable prices and then more or less check back in 20 years.
But most of my positions are in much smaller companies that I’m generally not looking to hold forever because at some point that does become riskier. Like if I think a business is worth $1 and I can buy it for $0.35, that offsets the risk of it being a smaller business - as long as I can figure out why it’s on sale for $0.35, and I’m comfortable with that or can poke some holes in that and/or come up with some theoretical catalysts to move back towards $1. In a lot of these cases I feel like the downside risk is very low, I mean, if I’m buying a profitable business at way less than their tangible book and possibly close to their NCAV, shit, how much lower can they go while still turning a profit? Some are even fitting those criteria and paying dividends in the 15-20% range relative to my purchase price. How badly can that really work out for me?
But once it’s at $1, and the dividend yield is more like 5%, it’s hard to justify staying in that versus diversifying. Once I think my edge has been realized, I’m not looking to stay in the small caps just for the sake of being in small caps.
I’ve done really well on my investments because of PDEX, but I absolutely killed it from a top down perspective by opening a margin account early in 2020 and timing the absolute bottom of the market to the day to put in 35% margin on my investments which I reduced back to 0 when the market reached back to its pre covid high (I could have sold later, but that was against my strategy)
Now I wanted to buy 2 weeks earlier, but the brokerage was overwhelmed with requests at that time of the year so the margin account wasn’t opened until 2 weeks after I wanted to actually buy ( put in the application 3 weeks before it was opened)
If there’s anything I’ve noticed the last few years from the pandemic which was like poker 2004 with so many idiots and free money all over the place if you were paying attention (I wasn’t lol me) (since we’re not going to stay inside forever and oil was 0 at one point, we’ll never get that easy of a time ever again though, sad) and through various wsb pumps, it’s clearly beatable. Markets are mostly psychology.
That said, it’s just a lot easier and more profitable to be like a Cathie Wood or all those financial things out there on the net and get people to give you money thinking you can rather than actually doing it.
Couldn’t you just kind of manually create your own index fund by using a brokerage that allows fractional shares and buying the correct ratio of stocks across all S&P 500 companies excluding the ones you don’t want?
It would be a lot of work but I think you could technically do this with Robinhood? I guess the constant adjustments you’d have to make to make it really mimic the S&P 500 though might not be worth the effort?
If you really just want to eliminate one or two holdings from the index it would probably be easier to buy the index plus one or two short positions to reverse out the impact of the undesired companies from your index.
I’ve read that these kinds of customs index funds are coming soon, where you can choose to buy, for example, S&P 500 minus X, Y, Z. Will have to see the costs though as I can’t imagine it will be cheap.
In a taxable account there can be some tax convenience to owning all the individual stocks as well. If you need to sell something then you can selectively avoid stock with large capital gains.
Yeah it’s just a lot of work. You could probably get pretty close with a few sector ETFs then buying the rest of that sector and leaving out the one you want to avoid, but again, lots of work.
You could also just buy an equal-weight S&P 500 fund. Right now Apple, Microsoft, Amazon, Tesla, and Google make up somewhere around 23% of the weighted S&P 500. But if you’re super concerned about one or more of those companies being overvalued, they’ll make up like 1% of the equal weight index.
I think the optimal solution is to buy the index fund and then bitch and most constantly that the stupid fucking index has this piece of shit company in it you don’t even want. BURN IN HELL BOGLE YOU BASTARD!
This is the #1 reason I am opposed to buying property in CA, although lots of people I know are doing so, and that put them in this situation, it makes me super uncomfortable having lived through 2008
