Intelligent Investments: S&P Decimated!

Tuesday, February 20, 2007

S&P Decimated!

My stock portfolio decimated the S&P 500 by almost 100 basis points today. It was a good start to the week as EMVL has a last minute jump right before the close. It had been up .06 all day and within minutes of the close, it skyrockets up .31 (23.6%). Other strong players were MHJ (up 8.3%), ARTX (up 4.77%), SUNN (Up 4.57%) and PFSW (Up 6.47%).

The portfolio finished up $1,657.97 on the day, up 0.66%. The portfolio was weighed down by my fund holdings Wasatch Core (up 0.23%) and Fidelity International Discovery (-0.08%) and Fidelity Leveraged Co. and Low Priced (0.55 and 0.52%, respectively).

Also notable is the potential merger between Sirius and XM satellite radio. When satellite radio was first born, the government issued just two licenses for satellite waves. Both of these companies were formed within a year of each other but both have remained unprofitable. Capital intensive and marketing initiatives have cost both companies. Sirius gave Howard Stern $100 million a year for the next 5 years.

I bought Sirius with some spare cash back in 2003 for $1.60 a share. The stock then went up to $9, a 465% increase in the course of a year and a half. It then slid down to $4 a share over the next 18 months where it has been ever since.

This merger will not help profitability much in my mind. In the end, it is going to take several years for the benefits of this merger to be realized on the bottom line.

1 comment:

QUALITY STOCKS UNDER FOUR DOLLARS said...: The standard and poor five hundred is still the benchmark for US stocks.; January 3, 2013 at 12:24:00 PM PST

Buffett's Value Formula (?)

Warren Buffett hasn't exactly published his formula for what he calls the intrinsic value of a company, but he has dropped a number of hints. He apparently multiplies estimated future earnings by a confidence margin between zero and a hundred percent (a bird in the bush being worth 0.5 birds in the hand, and all that; bush birds are the earnings you hope for, and hand birds are the earnings you're confident will materialize). He then compares these probable earnings with something he has total confidence in, by using a U.S. treasury yield as his discount rate. In calculator form it looks like this:

This calculator doesn't use fancier math than the original one did. Its advantage is that it forces you to be explicit about your earnings expectations. It also automatically provides you with a hard-headed investment strategy: always invest in government bonds, unless you can find something else you are confident will yield more cash.

One other hint that Buffett has dropped over the years is that he can estimate value in his head in about five seconds; so whatever he does he keeps it simple, slugger.