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powayseller
ParticipantYou don’t buy a stock based on PE alone. I read the entire balance sheets of a stock, recent news, footnotes of financial statements, before I buy. COP ($62.xx/share) was an exception, since I’d paid Zeal for the research already.
If one of the underlying ratios is out of whack, like the debt/equity ratio, or PE ratio, I eliminate that stock.
Value investors only buy stocks with PEs under 10.
The PE ratio test led me to discard all those tech stocks in 1999. It’s a way of telling if you are paying too much or very little for a stock.
PSA might be a great company. It has little debt. It should be $14/share. Why pay $35/share, when it’s worth only $14/share? Stocks with high PEs cannot disappoint – one little thing happens, or the market starts correcting, and the selloff will start.
When you buy high PE stocks, you are playing the momentum game. You have to know when to get out. Perhaps you have a stop loss in place. But how much more overvalued can this overvalued stock get? How high can this pyramid scheme go? There is more downside than upside.
As far as the COP Nov 60 calls, I didn’t know how to do that. It was a better way to buy COP. I will make less money than the people who bought calls, but I won’t lose money from making some dumb entry mistake. I need to work in my comfort zone.
ParticipantFor momentum investors, PEs don’t matter. “It’s a new economy”. I’m a value investor. I look for good deals. Instead of chasing a runaway market ever higher.
I saw the momentum crowd get creamed in 2001. For me, high PE stocks are too risky.
COP trades at 6.4x earmings. My kind of stock.
ParticipantI lived in a rental house for 2 years while buiding my house. When I moved in September 2005, the landlord kept my deposit. I sued, and won. She appealed, and lost. Now I filed a rent lien, so her tenant has to send the next rent payment to the courts.
There are hassles with renting, same as with owning. I once bought a house which leaked in 8 places in the first rain. The inspector had not gone up on the roof. We had to replace the entire roof.
Please keep in mind the lawyer. He answers a rental advice column in the Sunday paper. It’s the front page of one of the Home sections.
ParticipantI don’t know about options, so I just buy long.
Any stock trading over PE 15 is overvalued, just as housing, and will have to revert to the mean.
ParticipantA professional would have taken your comments into consideration.
Instead of learning, she is digging in her heels. Too bad.
Why did she refuse to list the economists she mentioned in her article? Does she understand that medians are going up, because the distribution of homes sold has shifted? Prices are falling, so while the median is up, the trend is down.
Some people don’t want to believe prices are falling. These people cannot be convinced. They must experience it.
ParticipantThe PE ratio is 35. I wouldn’t touch that with a 10 foot pole
Recently I checked into all publicly traded pawn shops. They were trading at PEs of 20-35. So I dismissed my ideas.
You also need to look at the alpha and beta of your stock. The stock market is going down. Are you willing to take a chance that the stock you picked is going to move inverse to the market as a whole?
I bought COP today. Check that one out. It was recommended as the “best buy of all the major oils today” by Zeal. It was recommended yesterday by Barry Ritholtz (The Big Picture). Warren Buffett just bought $1billion in it. COP is trading at 6.4x earnings.
ParticipantRightSide needs this LEND trade to work out, to counteract for the $500K he’s going to lose on the purchase of his $1 million home.
ParticipantThere are 2 main types of buyers for used cars:
1) The people who need to get financing. Banks will finance a car only to a certain age, I think it’s 6 years. If your car is a tad older than that, you won’t sell it to a private party, because they won’t have the cash.
2) Cash buyers who’ll take anything under $4000, if it’s priced right. It will sell in a day.The car that will be hard to sell is the one that the bank won’t finance, but is over the $4,000 that most cash buyers have on hand.
There is the exception – my husband paid cash for his used Porsche. In a downturn, I think he would have tightened his belt too…
Boats are always hard to sell. Just check the Classifieds…
I don’t know how the car market will look in a recession. I can’t figure out either if rents will go up or down.
ParticipantYou’re right, I missed that it was an auction starting at 50% off.
However, that is very significant. Auctions usually start at market rate, so I assume either the market rate is 50% off, or they are hoping to get a bidding war going.
sdrealtor, how do the lenders usually price their auctions? Is it market rate?
ParticipantLook at the MLS – selling price vs. listing price, and add in that seller is now paying closing costs. Add in allowances which don’t show up in the contract.
Look at new homes: use 2005 figures, add price reductions, upgrades.
Check downtown condos. Many many are 10% off. See the bubble blogger section for a guy who tracks these.
Look at Bressi Ranch. Remember I asked you about the pendings, and you didn’t know. I kept asking, and I got an answer:
“Bressi Ranch is showing 11 pending, but 8 have already closed escrow. Two examples of what they have to hide:
In September 2005 they closed a house for $936,000 that was listed for $1,125,000. In May 2006 they closed a house for $900,000 that was listed at $1,079,000. Both still show pending.
I can see why they want to disguise those sales as long as possible.
They aren’t putting everything on the MLS either, if they did it would be disastrous. From what I can tell they have a lot of houses not selling.”Hope this helps…
ParticipantThose 3.8 million people – are they mainly illegal immigrants? If they are domestic migration, all of those are going to the inland Empire. Notice the ad, for a SD ZipRealty, did not claim they are coming to Southern CA. Because the Census Bureau just released data showing Southern CAs are leaving in droves, and going to cheaper places in Riverside and Inland Empire.
If I read that, I would ask, Where in CA? But then again, I guess I take control of my destiny, fashion my own “luck”, and don’t buy real estate at the top of the biggest liquidity bubble in world history!
ParticipantI’ll donate $250 to your signs.
The realtors will be terrified of you. The buyers will check out the website.
I bet that 95% of people in San Diego don’t know about piggington or the data we have. They only know the headlines in the paper. They have no conviction of where things will go.
Education is critical. If you can stop even 1 person from buying a house, do it!
ParticipantHey, read this!
The online article excluded the table, which shows RENTS ARE FALLING SINCE FALL 2006!!!!
It’s as with the median price: year-over-year is positive, but month-to-month is down, so they say the median is still climbing!
It’s too bad you didn’t see the table.
Rents went up Spring 2005 to Fall 2005, and have fallen back to almost Spring 2005 levels.
My landlord is so desperate to keep me, he’s giving me a 2 year lease and installing a $3700 a/c. There aren’t too many people in San Diego who can afford $2200/month rent and pay it on time. That’s the only conclusion I can reach.
If rents were really going up, he would not lock in a lease! He told me that rents are going up due to condo conversions. He’s a skilled negotiator, very crafty, so I know he threw that out to have me eager to sign the lease. He knows they are flat to down for SFHs, so he wants to lock me in.
ParticipantDocteur, I felt empowered just reading your prose. Thanks so much for sharing this with us. I’m glad you’re back, because I hope you read how much I appreciated that you gave us that personal insight into your wishes for your son to live in your home. I was thinking about that yesterday as I was running up that long mountain trail, what a lovely idea that is. You’ve also shown us that words can be used to uplift.
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