My Thoughts On Investing
ByFinance— — Posted in
Recent purchase: SUTL, first tranche. Stock is on the downtrend and balance sheet makes modified profits very attractive as an exclusive owner. Yes, but dirt cheap? Not really. You can find possible downsides still, but when it will go lower, I shall not wait to add. The next was written some time back and I hesitate to create it for several reasons.
Just last month, I published about divesting PC Partners. Friday They released results last, and I wasn’t aware of it (I don’t track stocks that carefully, much less the ones that I no longer keep). I experienced quite sick to the tummy because one of my mates have it. I take time to pause and reflect on events like these.
What exactly is trading? Or purchasing dirt cheap, unpopular, troubled companies at open fire sale prices, way lesser than its altered world wide web current property preferably? Or focusing on special situations, such as spin-offs, restructuring, arbitraging? It is a little of everything Maybe. Trading is all about taking advantage of the discrepancy of value and price.
Price changes, and so does the value. Investing in a quality company is very much like cycling with the wind behind your back again. But such opportunities seldom come across. The only exception I could think of is a special situation investing. Easy and simple thing to do is to look at an ongoing company and say it is cheap. I sure OKP is fairly cheap quite.
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But when will things work out? I won’t pretend to be a genius here. Nobody knows. Maybe something devastating can occur and my investment will not work out. But I believe my odds are good. Talking about (a) right price and (b) time component, consider the situation of Cowell. The stock was unpopular in the beginning of the year, trading at 0.91. It has adjusted current property of at least 1.2 to.
Yet the news headlines were bad: the primary customer, Apple, was not doing this well. Cowell had also reported a loss for the first fifty percent of its financial yr. Yet, it can endure 4 years of cash burn in its books. A good investor can look at a discrepancy of maybe 10% and most likely not act.
Even if one choose to take profit earlier, a 20-25% profit isn’t too shabby. Achieving (a) is easy enough. Cowell a great investment. It really is an example of bad potential customers in income but cheap regarding assets. The currency markets love a good revenge tale always. Betting on earnings, and winning the bet, reward the investor very directly. But it is a hard game to play. So an average value investor can look at its balance sheet and think: cool, it has about 50% of the benefit on altered current assets only.
Maybe I buy some. Hence, the buyer fulfills (a), right price, but will have no idea when (b) will come out. As luck has it, it is trading at 1.Today 41. 55% returns in 3 months. What a fantastic investment. Let’s not pretend here. This isn’t something that one may foresee with intellect.