Those are all of my trades. I don't do much public stock investing and as you can see I'm not so good at it. But that doesn't stop me from blogging about it
MassMan
· 1 year ago
Like your friend, I, too, have been bearish for a very long time. It is true that "value" is starting to reveal itself across a broad spectrum of assets but I firmly believe that most assets will only get cheaper over the next 6 to 12 months.
Here's why:
- On a valuation basis, markets tend to overshoot to the downside (buyer beware) - The markets have not priced in a very deep recession (it's going to get a whole lot worse) - Recent (eg, past 50 years) historical comps are useless, one needs to look back to the 30s for perspective - As America's influence wanes, the world will become more (not less) stable - Technology (like leverage) is a double edged sword, it can produce greats benefits but can also be highly destructive in the wrong hands - IMO, the stimulus (fiscal and monetary) will not work (I hope I'm wrong but giving a drunk another drink rarely works. it just prolongs the day of reckoning)
Great opportunies will eventually reveal themselves. Value investors will be rewarded for the patience.
Sorry I can't be more optimistic but that's what I see.
MassMan
"Lethargy bordering on sloth remains the cornerstone of our investment style" - Warren Buffet
fredwilson
· 1 year ago
That's what the comments are for - discussion and debate hopefully making us all smarter and better investors
I appreciate your thoughts and agree with them to a degree which is why the fills I am waiting for are more like antes than going all in
jrh
· 1 year ago
I agree with MassMan, plus one more big factor: debt. As Fred's partner posted last week, there is a huge overhang of corporate debt. All of it is senior to equities, which means that many shareholders will get wiped out as the leverage seeps out of the system. The companies Fred likes are exceptions sitting on huge piles of cash. But their customers and advertisers still have debt, and it will impact their businesses.
Face it: good entrepreneurs and venture investors are usually way too early on the markets...right in principle but way too early...
howardlindzon
· 1 year ago
i mostly agree I just dont like to put percentage guesses on where we go. check in on the all-time highs over time and see if the list starts expanding before you even need to think about the market. markets need leadership, we have none, so might as well focus efforts elsewhereuntil some industries start showing it.
druce
· 1 year ago
right now you can sell a GOOG $320 Jan put for $29. If you get hit (stock below 320) your net cost is $291. if you don't it's $29 free money vs. leaving a good-til-canceled out until then which is a free option to the market.
you can also sell a GOOG $370 Jan put for $55 which is in the money, if you get hit (stock below 370) your net cost is $315.
so you can get filled right now on a pretty close substitute... good time to be a seller of volatility
fredwilson
· 1 year ago
I just don't think this way, which is why I am not a good public stock investor
gregorylent
· 1 year ago
wow .. this really IS a highly structured ponzi-scheme ... :-) betting against the bettors ... the culture needs more win-win for all, but in this crowd that will sound like moralizing .. good luck making your fortune .. toss me a dime when you see me beside the road
enjoy, gregory
druce
· 1 year ago
surprised by these replies... if that isn't win win then I don't what is? someone wants insurance because they're afraid the price will drop, you're interested in buying if the price drops. They buy an option from you, everyone is happy.
only way it's not free money is if you don't really want to commit to own the stock at that price ... might as well pick up some free money when the market gives it to you which is not that often.
most of the time options are kind of expensive but now it's just ridiculous so might as well be a seller if you're in a position to be, which is what it sounds like.
druce
· 1 year ago
Spock: He is intelligent, but not experienced. His pattern indicates 2 dimensional thinking.
Khan: FULL POWER! DAMN YOU!
Spock: If I may be so bold, it was a mistake for you to accept promotion. Commanding a starship is your first, best destiny; anything else is a waste of material.
Kirk: I would not presume to debate you.
Spock: That is wise. Were I to invoke logic, however, logic clearly dictates that the needs of the many outweigh the needs of the few.
Kirk: Or the one.
I have no idea why I cut and pasted that but it seemed oddly relevant at the time
gregorylent
· 1 year ago
cool .. you are an artist as well as a financial wizard... nice .. me, i haven't got a clue ab out the money game .. not even close
Hammer
· 1 year ago
I think you're partially right about the stimulus packages stabilizing the ship for a while, but positive growth for '09 is very ambitious. Sometime in mid '09 we're going to see second wave of the mortgage crisis in the "Alt A" category, and I don't think the market is pricing it in yet.
Chris
· 1 year ago
The stimulus/pumping money will only prolong the inevitable liquidation of malinvestments made during the boom of the business cycle. The more you try to artificially correct the market the worse the recovery will be. Just the basics of Austrian business cycle theory.
David G
· 1 year ago
Fred,
I've also been buying APPL and GOOG. You seem to be trying to call the bottom. What made you choose those price targets? If you're truly long you should be asking yourself if you'd be more upset about missing these prices or missing the next 3 years' gains.
fredwilson
· 1 year ago
I've got positions in all three
Just trying to get some more at prices that are no brainers to me
David G
· 1 year ago
Got it. Since I'm already all in I'm sorry to say I'll be rooting against you filling these but GOOG is looking very close ;-) Good luck!
David G
· 1 year ago
You just got GOOG - congrats!
fredwilson
· 1 year ago
Well, to be exact, I got more GOOG.
I think I'll put in another good to fill order at $300 or maybe even $290
I am just starting to build a position
toddsavage
· 1 year ago
Interesting post Fred. For know reason other than luck, I have been 75% in cash during this crisis. I have recently put that money to work over the last three weeks, and I now have about 20% to 25% in cash. I plan on putting the rest of that to work over the next quarter or two. If you don't need this money for at least five years, I think you will do well dollar costing in to this market over the next several quarters. Good luck!
fredwilson
· 1 year ago
I think so too but you have to dribble it and put it only in rock solid companies with no debt, lots cash, and strong profitable franchises
PackMan
· 1 year ago
Fred - The obvious thing for you to do while "waiting for your fill" is to SELL PUTs at the strikes where you want to buy.
For example, sell GOOG $320's and either pocket the premium, or be assigned stock for a net cost of $320-premium if stock gets down there.
If the stocks don't go that low, rinse, repeat and do it again.
Easy money if you want to own the stocks at those prices. Where you get hurt is if the prices crash much much further below your target buy points, but if you are a buy and hold guy at the levels that you say, it shouldn't matter to you.
PackMan
· 1 year ago
Druce, I see you beat me to the "sell puts" strategy. I could say "great minds think alike" but I'll leave it that selling volatility is a good strategy as the premiums expand, and if you really like those stocks at those prices, then its a no brainer to do just that.
fredwilson
· 1 year ago
I just want to own the stocks. I am not a trader. I don't do this for a living. In fact, I'm not very good at public stocks. I just like to buy stocks in companies in understand and like.
All Comments
http://www.covestor.com/mbr/fredwilson
It's ugly but there it is
Here's why:
- On a valuation basis, markets tend to overshoot to the downside (buyer beware)
- The markets have not priced in a very deep recession (it's going to get a whole lot worse)
- Recent (eg, past 50 years) historical comps are useless, one needs to look back to the 30s for perspective
- As America's influence wanes, the world will become more (not less) stable
- Technology (like leverage) is a double edged sword, it can produce greats benefits but can also be highly destructive in the wrong hands
- IMO, the stimulus (fiscal and monetary) will not work (I hope I'm wrong but giving a drunk another drink rarely works. it just prolongs the day of reckoning)
Great opportunies will eventually reveal themselves. Value investors will be rewarded for the patience.
Sorry I can't be more optimistic but that's what I see.
MassMan
"Lethargy bordering on sloth remains the cornerstone of our investment style"
- Warren Buffet
I appreciate your thoughts and agree with them to a degree which is why the fills I am waiting for are more like antes than going all in
Face it: good entrepreneurs and venture investors are usually way too early on the markets...right in principle but way too early...
you can also sell a GOOG $370 Jan put for $55 which is in the money, if you get hit (stock below 370) your net cost is $315.
so you can get filled right now on a pretty close substitute... good time to be a seller of volatility
enjoy, gregory
only way it's not free money is if you don't really want to commit to own the stock at that price ... might as well pick up some free money when the market gives it to you which is not that often.
most of the time options are kind of expensive but now it's just ridiculous so might as well be a seller if you're in a position to be, which is what it sounds like.
Khan: FULL POWER! DAMN YOU!
Spock: If I may be so bold, it was a mistake for you to accept promotion. Commanding a starship is your first, best destiny; anything else is a waste of material.
Kirk: I would not presume to debate you.
Spock: That is wise. Were I to invoke logic, however, logic clearly dictates that the needs of the many outweigh the needs of the few.
Kirk: Or the one.
I have no idea why I cut and pasted that but it seemed oddly relevant at the time
I've also been buying APPL and GOOG. You seem to be trying to call the bottom. What made you choose those price targets? If you're truly long you should be asking yourself if you'd be more upset about missing these prices or missing the next 3 years' gains.
Just trying to get some more at prices that are no brainers to me
I think I'll put in another good to fill order at $300 or maybe even $290
I am just starting to build a position
For example, sell GOOG $320's and either pocket the premium, or be assigned stock for a net cost of $320-premium if stock gets down there.
If the stocks don't go that low, rinse, repeat and do it again.
Easy money if you want to own the stocks at those prices. Where you get hurt is if the prices crash much much further below your target buy points, but if you are a buy and hold guy at the levels that you say, it shouldn't matter to you.