What I'll be doing for the Taming Zeus Model Portfolio is buying 1/4 of the position in each of the following names once they come down another ~5% or so. Then I'll buy each of the other 1/4's of the position after an addition drop of 7% or another 30 days. So, 120 days after my initial purchase I should have the entire position on no matter what happens. I chose 7% because I've tried 5% and been unhappy because I felt I bought too early (not greedy enough), and I've tried 10% and had the stock not come in and never bought any (too greedy), plus I just think it's lucky 7's, and at the end of the day it's better to be lucky than good. The 30 days is just as arbitrary, but it makes me be patient, which I am certainly not by nature. It may not be the best plan, but a plan is better than no plan and it is always subject to change. The positions will be around $2k total per stock.
My Horses - Ride 'Em
Google (GOOG), Goldman Sachs (GS), MasterCard (MA), and The NYSE Group (NYX)
The GOOG - There's a good possiblity that in the coming years we could see an echo boom/bubble from the tech boom/bubble of the late 90's, and if we do, Google will certainly be leading the way. I love this company. They've managed to create an advertising marketplace on the internet, bringing together advertisers with viewer, and making a killing on the transactions. The whole idea is still in its infancy and will only grow as younger generations shun traditional advertising outlets for the internet. The company is growing at 33% or better and is estimated to earn $13 a share next yr, which puts its foward P/E around 37 and PEG near 1.0. Not a bad value, not at all considering we should be able to pick it up on the way down. It closed down 4% at 485, I'm going to let it come in another 5% to $460 and try to pick 1 share and then buy the other 3 shares on a drop of 30 points or after 30 days.
Goldman Sachs - If I ever go work on Wall Street, this is the firm I want to work for. Best brokerage, best investment bank, best hedge fund traders, best in nearly everything they do. The company is currently trading at a foward P/E of 11, which is a pretty good value in my opinion. In addition they've been repurchasing shares of common stock, so each one left on the market will be worth more. I just don't see much downside to the this company long-term. They're too good and too balenced to slip for very long. They closed down 4% at $193, so lets look to buy at look to buy at $185 and then a drop of 12 points or 30 days. If after two weeks we're not in at $185 I'll pull the trigger at anything below $190.
MasterCard - There is no better way to play the holiday season. No matter what you buy or where you buy it, you're doing it with a credit card. MasterCard makes 10 cents per transaction. They've just become public and had an unbelievable qtr (IPO at $45, now near $100/share). As an added bonus, they are the official card of the 2008 olympics in Beijing. Do you hear that sound??? Thats the sound of a billion people swiping they're MasterCards to the tune of $100 million dollars! Great toll bridge company; buy, buy, buy! It was down 6% today to $99. I'll look to buy at $95 then on drops of 7 points or 30 days.
The New York Stock Exchange - As long as people are trading stocks, the NYSE will be coining money. They're expanding globally through acqusitions (bought Euronext) and are integrating their electronic platform with the old-style floor system. They have the NASDAQ so scared about global stock market domination that the NASDAQ will bid just about anything to buy the London Stock Exchange. Again, the NYSE makes money on transactions, so the more people buying and selling the better, and the more markets you have (or better yet, have cornered) the more money you can make. Consolidation of markets will give them more pricing power and more profit. It was down 7% today at 101. I've picked entry points of $95, then on drops of 7 points or 30 days again.
Other things.
My past picks faired well today, with Yamana Gold being a big winner. Below is a look at the model porfolio. I have yet to find a good place to do this for easy online viewing but for now I'll post the positions once week.
Good luck,
MC
The Taming Zeus Portfolio
3 comments:
While I dont necessarily disagree with your assessments of the companies, I am not in full agreement of your advice. The stock market does not always follow the success of a company. All four of your companies are trading at rediculously high prices. Why dont we just throw Berkshire Hathaway in there as well. I mean A shares of that are trading at 105k per. These companies you speak of are topping out as far as the exchange is concerned. Buying a share or two of those stocks is like bying stock in the Pacific Ocean by buying a cup of salt water. The stock exchange operates almost solely on supply and demand (almost independent of financial performance). The way to make money in the market is to catch a company at the end of a slow time before anyone else and right before they turn it around. Once word gets out that the turnaround is on the demand begins to excellerate. The price ramps up until the demand is met. At that point people quit buying and begin selling high. Other potential buyers wait for the price to come down, which it will if you remember your supply and demand curves, and try to buy the stock low. Buying these stocks now is the same as buying high. Buying high and selling low is agains every fundamental rule in investing.
a lot of the cash that's been onthe side is coming in because it can't be left out with things continuing to go up. it will be the first to come out..very turbulent time....bop
My boy rocks :) What are your thoughts on DHR and UTX?
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