lilredrooster
lilredrooster
Joined: May 8, 2015
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March 1st, 2017 at 3:23:07 AM permalink
Quote: teliot



I think GLXZ is a good stock -



At the risk of being hugely unpopular in this thread I am nonetheless going to say that any recommendation of buying a penny stock should include a warning regarding the huge potential downside to doing so. Maybe everybody posting or reading already knows this. But maybe not which is why I posted. GLXZ is a company that I found to have a tiny net income of 190K last year. There are APs on this site that made more. Here are some of the reasons for caution:

Lack of Information Available to the Public
The key to any successful investment strategy is acquiring enough tangible information to make informed decisions. For micro-cap stocks, information is much more difficult to find. Companies listed on the pink sheets are not required to file with the Securities and Exchange Commission (SEC) and are thus not as publicly scrutinized or regulated as the stocks represented on the New York Stock Exchange and the Nasdaq.

No Minimum Standards
Stocks on the OTCBB and pink sheets do not have to fulfill minimum standard requirements to remain on the exchange. Sometimes, this is why the stock is on one of these exchanges. Once a company can no longer maintain its position on one of the major exchanges, the company moves to one of of these smaller exchanges.

Liquidity
When stocks don't have much liquidity, two problems arise: first, there is the possibility that you won't be able to sell the stock. If there is a low level of liquidity, it may be hard to find a buyer for a particular stock, and you may be required to lower your price until it is considered attractive to another buyer. Second, low liquidity levels provide opportunities for some traders to manipulate stock prices, which is done in many different ways - the easiest is to buy large amounts of stock, hype it up and then sell it after other investors find it attractive (also known as pump and dump).
everybody wants to go to heaven. but nobody wants to die.
teliot
teliot
Joined: Oct 19, 2009
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March 1st, 2017 at 6:19:16 AM permalink
Quote: Zcore13

Eliot, congrats on your retirement and good luck on all your new ventures. It's been an honor and a privilege to meet and talk to you a few times.

Many thanks for your kind words!
teliot
teliot
Joined: Oct 19, 2009
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March 1st, 2017 at 6:21:25 AM permalink
Quote: lilredrooster

At the risk of being hugely unpopular in this thread.

Fine by me! You make excellent points. I have only bought about 5 penny stocks in my life. GLXZ is the first one that turned a profit. Selling is very hard, as you say. Yesterday was not the first time that I tried to sell my GLXZ shares.
Paradigm
Paradigm
Joined: Feb 24, 2011
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March 1st, 2017 at 3:37:14 PM permalink
Quote: teliot

Even with the 15% CG tax?


With today's Trump Speech bump to this infrastructure play...you are looking at almost 15X earnings for a company that is growing at 10-12% annually. Once a stock is above this: 1.25 * (Growth Rate X Next Year's Earnings), I think there ends up being not a lot of upside left. Unless we think this is the next AMZN, FB, NFLX, GOOG, etc....and I don't ;-).

That being said, I have underestimated URI as fair value for me would be 12X earnings and that would have meant selling at $109...ahhh that was 25 points below current levels so take that for what it is worth.

You are going to pay CG Taxes at some point, unless you tell me you have held for less than 12 months and I don't think that is correct. If you are under 12 months, I would hold until you get LTCG treatment...I believe that is what just happened with the GLXZ holdings ;-).
Attempting to add value one post at a time
teliot
teliot
Joined: Oct 19, 2009
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March 1st, 2017 at 4:13:58 PM permalink
Quote: Paradigm

With today's Trump Speech bump to this infrastructure play...you are looking at almost 15X earnings for a company that is growing at 10-12% annually. Once a stock is above this: 1.25 * (Growth Rate X Next Year's Earnings), I think there ends up being not a lot of upside left. Unless we think this is the next AMZN, FB, NFLX, GOOG, etc....and I don't ;-).

That being said, I have underestimated URI as fair value for me would be 12X earnings and that would have meant selling at $109...ahhh that was 25 points below current levels so take that for what it is worth.

You are going to pay CG Taxes at some point, unless you tell me you have held for less than 12 months and I don't think that is correct. If you are under 12 months, I would hold until you get LTCG treatment...I believe that is what just happened with the GLXZ holdings ;-).

Thanks for your advice. I held GLXZ for about 3 years. URI on 9/15/2015, so it's long.

The whole market is feeling very bubble-ish. Bonds too. Hence CD ladder + TIPS for about 60%, equity is about 15% right now. Also REITs and other stuff is in there. And some cash.

Oh, and a couple of QLACs.

After I made my move, my Fidelity adviser told me that she was giving exactly the advice that I was already doing.
teliot
teliot
Joined: Oct 19, 2009
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March 2nd, 2017 at 8:12:59 AM permalink
Quote: Paradigm

It is time to sell URI...expectations are now to perfection. Ring the register ;-).

Done. Bought at 66. Sold at 131.

Now ... where to invest?????

I think I'll just buy CA tax free municipal bonds.
Paradigm
Paradigm
Joined: Feb 24, 2011
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March 2nd, 2017 at 11:29:24 AM permalink
To me there is nothing wrong with cash and waiting for another opportunity...the market has a tendency to swoon a bit in March and early April as people pull out of positions to pay their 4/15 tax bills.
Attempting to add value one post at a time
WatchMeWin
WatchMeWin
Joined: May 20, 2011
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March 2nd, 2017 at 11:50:57 AM permalink
Quote: teliot

Thanks for your advice. I held GLXZ for about 3 years. URI on 9/15/2015, so it's long.

The whole market is feeling very bubble-ish. Bonds too. Hence CD ladder + TIPS for about 60%, equity is about 15% right now. Also REITs and other stuff is in there. And some cash.

Oh, and a couple of QLACs.

After I made my move, my Fidelity adviser told me that she was giving exactly the advice that I was already doing.



It sounds like you probably know more about the market and different investing strategies than your advisor. You don't need to pay any extra commissions to FAs that dont serve a purpose (unless she is hot and wears tight skirts at meetings). If someone has money and doesn't know about the market and where to put their money, then that is a different story.

I have many many stories of people I know that were FAs.... and they didn't even know what shares outstanding meant nor able to calculate the market cap of a company. Fundamental stuff. They were just good and swoozing people and getting their investment...thus taking 2-5% management fees, etc.

Dont get me wrong, there are many smart, ethical, and good FAs out there... just not needed as much anymore with the internet and people educating themselves and trading themselves.
'Winners hit n run... Losers stick around'
teliot
teliot
Joined: Oct 19, 2009
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Thanks for this post from:
mrsuit31
March 2nd, 2017 at 2:53:06 PM permalink
Quote: WatchMeWin

It sounds like you probably know more about the market and different investing strategies than your advisor. You don't need to pay any extra commissions to FAs that dont serve a purpose (unless she is hot and wears tight skirts at meetings). If someone has money and doesn't know about the market and where to put their money, then that is a different story.

I have many many stories of people I know that were FAs.... and they didn't even know what shares outstanding meant nor able to calculate the market cap of a company. Fundamental stuff. They were just good and swoozing people and getting their investment...thus taking 2-5% management fees, etc.

Dont get me wrong, there are many smart, ethical, and good FAs out there... just not needed as much anymore with the internet and people educating themselves and trading themselves.

I absolutely don't pay anything for a FA. Fidelity gives me the service for free, based on my balance. I ignore their advice with regularity. For "only" 1%, they will manage my account for me. NO THANKS!

A few years ago I did this thing where I bought and sold CA Muni bond funds several times, chasing capital gains from timing ups and downs in the NAV instead of the tax free income from the bonds. My FA thought I was crazy, but I made a lot more with my strategy than the bonds ever returned.

My FA at Fidelity three years ago tried to give me some advice on annuities. I asked for his credentials. He said he didn't have a college degree, but listed all sorts of other credentials. So I went online and looked him up in the CA FA database, and he had about 5 jobs in 8 years. So I figured he was way over his head and I ignored everything he said. I complained to the office that they would let someone give advice at that level without having a college degree. About 6 months later he was gone.

But yeah, I pay attention and read all the time. That's why I am big on TIPS and CD's right now.

BTW, I also listen to Paradigm. He's awesome.

Cheers.
odiousgambit
odiousgambit
Joined: Nov 9, 2009
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March 2nd, 2017 at 4:25:48 PM permalink
Now that you're retired, you must see the movie "About Schmidt" if you haven't. Especially if you have a daughter about to get married as well.

The book is good too - but quite different
"Baccarat is a game whereby the croupier gathers in money with a flexible sculling oar, then rakes it home. If I could have borrowed his oar I would have stayed." .......... Mark Twain

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