Stock Market Prediction

[whodoyoulike]

Originally Posted by reckless

In a word, yes. I spent all this past week buying shares of companies I have owned for many years while adding 3-4 new positions. Today I put in some more orders but because of the election in France, the market just took off from jump street, as you probably know.

In no particular order, this is what I look at when researching and buying a stock.

Price to free cash flow.

Yield on free cash flow.

Annual and longer term free cash flow growth.

Return on equity.

Return on Invested Capital.

Free cash flow return on invested capital, a powerful and rarely used metric. It's dynamite.

A somewhat consistent growth in sales and to a smaller extent, earnings.

I am going to guess that you might not agree .... that's OK, of course. No one on this site agrees with me on anything and that's OK, too. I actually like that since I've been right so very often. But, yet, the critics never offer any alternative or differing commentary. Why is that? I always thought a discussion between differing points of view is good and educational.

Okay. I haven't paid much attention to free cash flow because it widely fluctuates. I look at a number of things i.e., earnings, pe, sales, debt (and it's growth/reduction), cash flow pretty much where they spend their money etc.

I'm not as optimistic as you and don't see widespread valuations below intrinsic value however one defines it.

Are these really major companies or the ones you have been focusing on?

[reckless]

Originally Posted by whodoyoulike

Okay. I haven't paid much attention to free cash flow because it widely fluctuates. I look at a number of things i.e., earnings, pe, sales, debt (and it's growth/reduction), cash flow pretty much where they spend their money etc.

I'm not as optimistic as you and don't see widespread valuations below intrinsic value however one defines it.

Are these really major companies or the ones you have been focusing on?

You tell me if you think these are major companies. I think they are.

Apple, Gilead, Accenture, Viacom, Lazard, Travelers Insurance, United Therapeutics ... that's a nice place to start. Diversified too. A giant company, large cap, mid size and a smaller cap. All are great companies selling at a huge discount to intrinsic value.

The only one I'm really angry about is Gilead. My average purchase price is now $68, but it's been almost a direct drop since my first buy. This year and next they'll generate about $10-15 in FCF. If they sell anywhere close to their historic norm, it's a $200+ stock. I just hope I don't go broke before I'm 'proven' right.

I buy companies, I do not buy 'the market.'

[_______]

Originally Posted by reckless

You tell me if you think these are major companies. I think they are.

Apple, Gilead, Accenture, Viacom, Lazard, Travelers Insurance, United Therapeutics ... that's a nice place to start. Diversified too. A giant company, large cap, mid size and a smaller cap. All are great companies selling at a huge discount to intrinsic value.

The only one I'm really angry about is Gilead. My average purchase price is now $68, but it's been almost a direct drop since my first buy. This year and next they'll generate about $10-15 in FCF. If they sell anywhere close to their historic norm, it's a $200+ stock. I just hope I don't go broke before I'm 'proven' right.

I buy companies, I do not buy 'the market.'

The problem with Gilead is that they continue lowering guidance on HCV. They have a nice franchise in HIV but it's tiny compared the shrinking gorilla of HCV. Their pipeline has some potential in NASH which is another liver disease but outside of that there is nothing for the market to grasp onto that looks like a long term driver of growth.

As you know, I was into Gilead with an average cost in the mid-90's. I sold out around $69 after their last quarter. Solvedi and Harvoni are cash cows but they are curing the disease, not treating it. The patient pool is shrinking faster than I thought it would. It's great for humanity but terrible for a business.

I hope Gilead manages to do something with the cash pile they have. I know they've shown some interest in oncology but it's not their area of expertise. They would need to do a fairly significant acquistion. Which might be great long term but is unlikely to do anything positive for their price when it occurs.

Gilead is a great company. I'm no longer sure it's a great investment.

[lamboguy]

Originally Posted by lamboguy

fortunately i learned not to listen to anyone.

for my prediction here i am using cycle work based strictly on time. i threw in a possible fundamental reason, but i don't know for sure even if the market cracks that its going to be the reason.

by my work it looks like the market can take a big hit tuesday or wednesday.

just to warn you ahead of time, i can't believe how many times i have predicted a big move in the market ahead of time and if i predicted down it would go up huge on that day. the prediction i have right now is a pretty strong one, things really point strongly on this move. we shall see next week what happens.

tthis was the day that i had zero'd in and it went completely opposite. i got stopped out and will wait for my next day that should come up within 2 months.

[PaceAdvantage]

Originally Posted by lamboguy

tthis was the day that i had zero'd in and it went completely opposite. i got stopped out and will wait for my next day that should come up within 2 months.

I hope very much the market takes off the upside RIGHT NOW and for the rest of the day...then I will close the position I took around 10:20am at about the price the S&P is right now...

[PaceAdvantage]

of course now that I posted the above, feel free to fade me...

[PaceAdvantage]

Two and half hours later and I'm at the price I bought at despite an attempt at going higher...

[AltonKelsey]

not so easy to lift much off two gap up days. you take what they give you.

be grateful you didn't take the advice offered here and come in short.

[PaceAdvantage]

Ended up losing three quarters of a point on the trade...ho hum

[Tape Reader]

Originally Posted by AltonKelsey

not so easy to lift much off two gap up days. you take what they give you.

be grateful you didn't take the advice offered here and come in short.

If I were you I would reserve that “smugness” for a few days.

[ReplayRandall]

Originally Posted by Tape Reader

If I were you I would reserve that “smugness” for a few days.

TP, give us a taste of what you believe will happen in the next few days...

[AltonKelsey]

Originally Posted by Tape Reader

If I were you I would reserve that “smugness” for a few days.

Is that what they call not imagining the market is about collapse in a heap?

[lamboguy]

Originally Posted by Tape Reader

If I were you I would reserve that “smugness” for a few days.

i had predicted the market to tank on tuesday, so now that i am stopped out with a $7500 loss its probably going to tank the rest of the week. that is just the way things work out, i am only human and get things wrong often and if anyone read my previous post's i admitted that lately i have been getting the move in the opposite direction. if i was smart enough i would have straddled the position and had a big win, but that is not how i play the game and never will play it that way. i got another big turn day coming between the last part of june and early july and i will probably go short again when i have the date pinpointed.

[Tape Reader]

Originally Posted by ReplayRandall

TP, give us a taste of what you believe will happen in the next few days...

My original post was “I think we have a short term pull back from here." I will add that sometimes cycles/waves miss by a few days/price bars.

[PaceAdvantage]

Oh look...there's the breakout I was waiting and hoping for yesterday...