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No. of Recommendations: 1
just a random question - would you keep a stock that looks cheapish but doesn't do much to charge shareholder value? I'm looking at you JNJ, which should have broken up the devices and consumer a long time ago, but remains steadfastly unwilling to do it. Thing is, JNJ is a cheapish looking stock, but with consumer at 0 to 1% top line, device maybe 2% at best, and pharma hitting tougher compares the stock looks dead in the water. The dividend used to be a lure but is kinda irrelevant now with rates where they are so I want it to 'do something'.

I mean, you look at other companies and they are proactive with doing 'things' to make their stocks go up - spinning and merging and so forth. At would point would you penalize something for not doing these things? It isn't like JNJ needs to answer to me, but I don't have to own it either.

thoughts? would appreciate feedback/thought process - I'm leaning to jettison here (small position)
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Good question and one I wonder about with my large position in BRK/B. Warren says conglomerate is a big advantage. You want spinoffs and events to unlock value. Different mindsets.

If I owned 100% of JNJ I wouldn't do anything. As a renter I guess I'd vote for anything that causes volatility, up or down.


With my limited knowledge of your situation I would say sell IF you have somewhere better to put the money or keep it until you get a higher price or have a better option for the funds.
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No. of Recommendations: 1
thanks fate!

kinda funny the way you put it - if I was an employee, I wouldn't want them to do anything (flat growth is still lots of cash flow to make my pay safer). If a 100% owner, I could control the cash flow (so if I wanted I could do something with the cash flow - maybe this is some creeping doubts about their ability to use the cash flow wisely). As a renter, I want them to do something, anything. I guess I would always call myself a renter if I'm not sure of the value of the people doing the capital allocation.

compare to berk is interesting - I guess my reply there is I believe that JNJ's structure has led to mismanagement of the other areas (esp. consumer) based on my limited read. It is hard to blame WEB for having done anything wrong.

I don't have a better option for it, but worry that if I don't act now then I will continue to obsess over it. In my last evaluation I termed it a sell at a better price, but...

thanks!
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p.s.

JNJ has also been engaged in a persistent pattern of charges and non-GAAP numbers which while it doesn't fall into the practices of more chronic offenders does tend to lessen my tolerance for the investment.

I reduced it to dink size - don't want to completely let it go but don't want to have much exposure...thx fate
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It isn't like JNJ needs to answer to me, but I don't have to own it either.

If you don't have a reason to own it then why own it? At that point you are assuming potential price decline, company related issues, economy related issues risks. You will be assuming all those risks for no potential gains.
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thanks for asking

Why own it?

*they could do something, eventually. Past action isn't permanent
*growth rates in the various businesses could surprise on the upside
*the valuation could go up anyway - if you believe the 2019 estimates (less than 18 months away), trades for 15.8x which leaves room for growth

to be clear, the charges - those have become normalized with most companies, right? There are always two sides - why I am waffling. I also don't like to go to zero in a stock I can see owning in quantity in the right situation. Long term, there is reasons to be optimistic about pharma despite ongoing patent issues. I agree, assuming risk but these might be overblown and it doesn't account for potentially happy news.

Not a ringing endorsement but I'm happy with my dink now.
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No. of Recommendations: 2
If you don't have a reason to own it then why own it?

He said,
would you keep a stock that looks cheapish

cheapish is cheapish. cheapish in this market can be tricky to find. I should have gone all-in on SHOP! :)


I think GM tends to be super conservative. A trait I like in a fiduciary. Last I heard he had lots of cash. If he says JNJ is cheapish I believe him so I thought keeping it might be prudent. That said, his obsessing over it and being concerned they might be mismanaging asset allocation changes my mind.

But being cheapish was why I originally suggested keeping it, GM.

I like Berkshire. Buffett isn't going to do anything dumb. He will make mistakes and be wrong often enough but being flat out dumb about asset allocation is unlikely. And certainly less dumb than I. But it is huge, ultra-conservative and has limited options so I obsess a little over my large position in it too. Having tons of cash pile up at 1.2 x value isn't so bad I keep telling myself.

Not an easy endeavor, investing.
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I think GM tends to be super conservative. A trait I like in a fiduciary. Last I heard he had lots of cash.

everybody loves talking about themselves so I'm not going to resist temptation and ignore this :-)

if it matters, I run client portfolios IDENTICAL to my own. The plus option is just larger allocations. So I am conservative? I have lost the aggressive gene - that seems to be true - but my issues are more related to the typical behavior neurosis than other things, and I'm older as a person (and I have the triple - my income is involved in the market, my performance is linked to the market, and my retirement is coming fast). That said, my stocks picks are almost always more aggressive than the market in terms of performance (though ZERO like Saul's). A client can easily remove this factor if they wanted, so I wouldn't accept the classification that I am 'super conservative'. I do HATE to loose money, and I do like a smooth ride, and I acknowledge and act on my emotions - assuming they don't do too much damage. But comfort comes from an inherent confidence in a pick - you can't fake that based on someone's recommendation (unless they always go up).

To be clear, mismanagement - that's tough. Maybe I would suggest that they don't 'do things' like all the other kids do. I'm trying to figure out on a public board if that's something I need to address. One of the things I really, really like about Saul's approach is his unwavering discipline in what he wants to see. Maybe mine has become more restrictive - I was buying IBM instead of putting more money into GOOG.

P.S. I should make it clear that I am aware of my own vast and huge limitations - just cause I think something, it doesn't mean it is so. After all, I am the guy who sold Google a while back based on 'ad blocking software'. I bot the stock back, but that's enough to show you how dense I can be, and it is a constant threat - we are dealing (or I am) with pieces of data. I don't do exhaustive work cause I can't operate that way, so I have to account for my own limitations - like trading slowly and rotating for example

far more than you want to know

how would you classify yourself as an investor? fate? anyone?
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p.s.
average median age of my model is 65-66
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But being cheapish was why I originally suggested keeping it, GM. I like Berkshire. Buffett isn't going to do anything dumb. He will make mistakes and be wrong often enough but being flat out dumb about asset allocation is unlikely. And certainly less dumb than I. But it is huge, ultra-conservative and has limited options so I obsess a little over my large position in it too. Having tons of cash pile up at 1.2 x value isn't so bad I keep telling myself.

well...I think there is a virtue in just being able to ignore an investment - all the research shows us that is so, and we just a had a thread on cash and all that. I trade too often, but it is who I am. Only problem with the above is the immortality issue, or the cloning problem, cause we can wake up tomorrow and a new guy/gal is in charge.

I can't own Berk in quantity cause I can't quite fathom why it will go higher but that was true for me 20 years ago and that didn't make me right about anything.

just make money!

--

have a friend who is considering and RIA that does the MPT ETF thing - but he is going to charge him 1.25%...lots of way to go wrong, but this friend has no alternatives cause he doesn't know anything
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Investing is hard, but buying FB after the 'scandal' that maybe, slightly, just perhaps they played fast and loose with customer data [the whole point of FB seemingly] led to as easy a 60 points as I'll ever make.

Earnings in a few hours, natch.
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how would you classify yourself as an investor?

Bottoms up? I'd classify myself as clueless!

But I think I have some common sense and a decent temperament(that means I do a good job of staying away from rocket rides that would let me retire like Saul). And I think I am a good judge of talent and if I can benefit from that talent.

I am aggressive because I am almost always fully invested and I do have one oversized position in Berkshire.

But I am conservative in being heavily invested in Berkshire, SPY, and positions vetted by people I trust, can follow closely and measure my success easily.

I'd much rather be good at bottoms up GARP investing but think I can do good enough with my model with A LOT less effort. The 20% effort for 80% return rule.
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If you don't have a reason to own it then why own it?

He said,
would you keep a stock that looks cheapish

cheapish is cheapish


Cheap alone is not a good enough reason for me to own something like JNJ. They have higher regulatory risk, product risk, etc. I own Gilead for a while now, it is cheap and remained cheap, it is showing some life but.. I wrestle with the same problem. I reduced GILD to such a tiny position, it didn't matter whether I own or sell and I think there is $65 bottom. But I am not spending any time on that.

If you are spending time, obsessing about it, then cheap alone is not enough, you have to have a catalyst to justify owning. Again, there is no single approach or even one approach is superior etc. May be owning allows you to trade around the ebb and flow...
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LOL 20 points handed right back on top line miss. But call can change that either direction.
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42% revenue growth
me thinks they will be fine
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The stock is down $51+ or 23.5%, must be something real awful was mentioned in the conference call?
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Investing is hard, but buying FB after the 'scandal' that maybe, slightly, just perhaps they played fast and loose with customer data [the whole point of FB seemingly] led to as easy a 60 points as I'll ever make.

Happy to hit the 'easy button' once again in extended trading thanks to FB guidance.

ET
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how much would you own?

A few anecdotes:

here is Cramer's line: Although many of Facebook's core business trends remain intact, it has become abundantly clear that expenses are catching up to the company, squeezing margins.

This strikes me as 'weird'. When you spend like this, it is intentional, and there isn't 'catching up' at all - it is simply a choice. Google faced this choice a few years ago and spent up and then all of a sudden changed the narrative to spending but not quite as much. FB can easily make this shift in a year or two or whatever, but they aren't spending to just stay still.

with a ML report, they suggest GAAP 8.12-9.12 for 2019 and 2020, or 177/9.12 or 19.4x. But this gives ZERO account for the BS which is 10% of the current cap. I'm a ZERO expert on this company but the idea of paying less than 20x for one of the current market leaders (social media) strikes me as a very good bet. It is was Dorsey that suggested that FB is in the public eye and has to appear more conservative than they really will be, the better to keep regulators at bay. But this all strikes me as a nothing-burger at this valuation.

thoughts? And what would you bet? The decline is ugly today but all it does is wipe out the 2018 gain to zero, so the narrative is not all that different than it was a while ago, so I don't want to add just cause it is down from a higher price.
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p.s. those estimates assume all of 12% EPS growth for each year...
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how much would you own?


I've got 4% in FB and 5.2% in GOOG. 2% in AAPL. 0% in MSFT but I want some. 0% in AMZN but I think it, like FB, GOOG, APPL, holds the keys to a lot of information and has a long healthy life ahead of it.

I own SPY too so have a little of each there. I'm surprised how much owning a chunk of SPY puts my mind at ease. When I hear happy news on most companies (like AMZN, MSFT) I can usually say -- I own some of that. Dumb mindset but it keeps me from having 200 stocks in my portfolio and gives me a little emotional hedge! The bad news on companies never bothers me -- funny that.

I'd go to 5% on FB too at the moment but am not sure what I'd sell. BRK or WFC probably.

I'm guessing everyone here thinks FB is the better buy at the moment, yes?
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I'm guessing everyone here thinks FB is the better buy at the moment, yes?

better the Berkshire? Or WFC?

don't know - don't have a clear view on Berk and zero idea on WFC
I'm 3% FB (model), 6% google, 1-2% softie, but no apple or amazon or netflix
rop had another solid quarter - jockey type acquisition models

re: spy - thanks for sharing
ironically, I get comfort in not owning it, but I do use exchanges as a replacement

I am choking with cash now - have sold off a lot of dinks (said goodbye to jnj today - after thinking about it another day, I decided to go to zero - find a happy home elsewhere) in order to simply my universe. I did sell of my chs and will look to buy it back - it fluctuates w/no news.
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one day, i will my posts before hitting submit....(there, just REVIEWED it on this post)

Or did i?

honest omission of 'review' up there - my mind saw it TWICE in automatic fill in mode EVEN THOUGH IT WASN'T THERE and only caught it a 3rd review - makes it very hard to not have typos - why I always run the Word voice reader on other 'professional' communications
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rop had another solid quarter - jockey type acquisition models

I own rop (happy dance) -- in SPY. See how well it works! :)

Don't remind me that I owned GE during the fall too, please...
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Happy to hit the 'easy button' once again in extended trading thanks to FB guidance.

Buy or sell?
i.e. did you get a better bargain (buy) or avoid today's rout (sell)?
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No. of Recommendations: 4
9%+ goog and 9%- amzn
7.5% bkng
6% MA and FB
0% aapl
2.7% msft
5% adbe


17 longs and 3 shorts.


Thinking about AAL or DAL.
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No. of Recommendations: 5
Buy or sell?
i.e. did you get a better bargain (buy) or avoid today's rout (sell)?


I purchased additional FB in extended trading last night.

Originally I established a terribly small position after the Cambridge Analytica scandal and told myself that I would add if given a similar purchase opportunity. Even today it's a very small position.

Certainly in relative terms to the SP500 I think FB is a fantastic bargain and in absolute terms I think it's a solid deal particularly on a risk-reward basis(20% return for a few years?), although my lack of knowledge in this area is significant and my small position sizing hints at my comfort level with social media.


I emailed these thoughts to a friend earlier this morning (I also don't think all R&D should be expensed and FB profits are perhaps understated):



1) I don’t know why the CEO led with the currency issue first when explaining the reason for decelerating revenue growth in the near-future. Leading with currency is always a yellow flag. Moreover, the entire management team did a poor job of signaling the potential upside of the ‘Stories’ transition and further Whats App and Instagram monetization. It was so bad that I am tempted to believe that this was a purposeful kitchen sink quarter meant to reset expectations to a very low level.

2) The way I see it the crucial issue is user engagement. The golden goose is maintaining and strengthening user engagement and near-term profit should be sacrificed if action can be taken to further increase user engagement on the various FB platforms. Thank you again for forwarding me that Zuck interview and I thought of this passage during the earnings conference call:

Longer term, as a technologist, one of things that just excites me is there are always new computing platforms. Every 10 or 15 years a new one comes along. They’re always more native, they capture your human experience more. Immersively, you share more naturally what you’re experiencing. I just think that VR and AR are going to be a really big deal. You can just see this trajectory from early internet, when the technology and connections were slow, most of the internet was text. Text is great, but it can be sometimes hard to capture what’s going on. Then, we all got phones with cameras on them and the internet got good enough to be primarily images. Now the networks are getting good enough that it’s primarily video. At each step along the way, we’re able to capture the human experience with greater fidelity and richness, and I think that that’s great.

Now, I do think that we’re gonna move towards this world where eventually you’ll be able to capture a whole experience that you’re in and be able to send that to someone. I think that that’s just gonna be an amazing technology for perspective taking and putting yourself in other people’s shoes, for being able to feeling like you’re really physically there with someone even when you’re not. One of the criticisms of technology today is you’re sitting and looking at your phone, and we could be sitting together but we’re actually fragmented.


Although I am not an active Facebook user (I do use Instagram quite often but as a spectator) it seems to me that the legacy Facebook is too “text” and “photo” dependent and the Zuck is following through on his vision to transform it to video and beyond. If he succeeds, this should increase user engagement and ultimately increase the value of each platform user to Facebook and advertisers. I think FB stock sellers at this price are acting very short-sighted. Sheryl and Mark did a poor job of expressing this upside on the call although I am sympathetic to a degree because the next question for the analyst community will be “On what exact date will all this good stuff occur?” and the answer evidently is, “We’re not sure yet” which analysts despise.

3) As AI improves the efficiency of policing content should get easier and more efficient … I’m not worried about the short-term cost.

4) European privacy rules from what I understand hurt the big boys much less than start-ups and small competitors; regulation tends to entrench incumbents like Facebook.

5) Given the large cash position FB is trading at a very enticing EBITDA multiple, I am enthusiastic about stock repurchases at the current price, and I also think the risk-reward setup is particularly attractive.

ET
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Naj,

I'm sniffing around the airlines as well. Giving slight edge to DAL right now over AAL, though admittedly that is more based off or customer satisfaction (particularly my own) and slight edge in hub growth potential than present valuation. Some recession fear, but given the oligopoly nature of the business these days risks seem pretty benign vis-a-vis much of the market when valuation considered.

GOOG at 15%, AAPL at 7%. Think the former may eventually take over the world (AI), while Amazon runs the consumer "farms." No love for AAPL? I know it's hardware, but the ecosystem is legit. And with Warren/Todd/Ted buying, we get a runway to exit, right?
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Re JNJ, it is a big position for me. My plan for it is to kick back and do nothing until I need the money for living expenses. I've found that the more I trade the worse I do. Best results have been to find something cheap that I love, buy it and then do nothing. Not seeing anything that I like enough to buy now, so cash is accumulating.
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Are we sure this is easy button easy?

Hindsight sure makes things easy. Let's hope we look back in a year and laugh at how easy this was.

Small add to bring this back up to 4% at $160.72 -- darn near the price I paid back in Apr2018 and lower than what I paid in July2018. Sold more WFC.
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