Exile From the Herd - This is not investment advice

Tucows may be overlooked as a value stock (no, really)

nospam@example.com (Mark Jeftovic) — Mon, 07 Jul 2008 09:15:00 -0400

Some time ago Tucows (AMEX:TCX, TSX:TC) issued a press release reminding the world that they hold a sizable portfolio of premium domain names, the subtext to which was ostensibly "look at us, we're undervalued". Jay Westerdal over at DomainTools commented in his blog in essence that the premium domain portfolio of Tucows was not priced into the stock and in his estimation he could see the stock doubling within 2 years. Jay's assessment was an estimate. After looking at this in detail, I personally think Tucows has an intrinsic value between 0.94 and 1.58 per share (currently trading at .60) - Note that everything that follows is based on the CDN listing price.
Continue reading "Tucows may be overlooked as a value stock (no, really)"

What is wrong with this picture?

nospam@example.com (Mark Jeftovic) — Fri, 06 Jun 2008 09:33:35 -0400

Ad from Craigslist:

Pro Day Trader (Millions_) (Toronto)

Pro Day Trader Looking for venture capital
High return possible (potential Millions)Glad to negotiate
Several years experience in equities,futures
Only serious inquires !200k to do it right
Thank You Don

I've seen ads like this many times. It begs a few obvious questions:

Why seek outside capital to daytrade? The risk premium to the investor would make the cost-of-capital quite prohibitive
If these daytraders are so good, where is their own pile of cash that they've taken out of the market? And why aren't they using that to stake themselves?
What kinds of gains are these guys promising? I've talked to daytraders advertising on craigslist, some of whom claimed consistant, repeatable returns of 20% per month but couldn't explain to me why they weren't several orders of magnitude wealthier than Warren Buffet or George Soros who have managed 15-20% annual returns for decades (and who eschew daytrading like the plague, btw)

I have been following a couple of high-end daytraders (Wall St. Window and The Informed Trader) over the course of this last bear market after the credit markets locked up. They are both saying the same thing: this has been one of the toughest markets to trade that they have ever seen. They've both spent most of their time sitting on the sidelines, in cash watching the market for some feel of where it's going.

As professional daytraders know, "cash is a position" - often the best trade is no trade.

My suspicion when I see ads like this is that I'm reading the ad from a guy who's addicted to daytrading, gone bust and looking for somebody else
to stake him so he can wipe out again.

I've come to the conclusion that the only way to become a successful daytrader is to do it fulltime. You can't run a business and daytrade on the side. So personally I don't daytrade (anymore). But I do highly recommend The Investors Quotient: The Psychology of Successful Investing in Commodities and Stocks - which teaches us that the most important aspects of trading are having a coherent system one sticks to, mental discipline and other psychological factors. In other words, becoming a successful trader is not about conquering the markets, it's about mastering oneself.

In a couple weeks I'm off to the The Search for Value seminar at Western for a week where I hope to hone my acumen at fundamental analysis and value investing.

Q: How do you get out of a mess? A: don't cause one.

nospam@example.com (Mark Jeftovic) — Mon, 17 Mar 2008 14:05:58 -0400

I had to laugh out loud when I watched Jim Rogers interviewed on CNBC, after he lambasted Bernanke for his abject mishandling of the credit market implosion, one interviewer asked: "Tell me two things you would you do if you were Bernanke tomorrow?" - Without missing a beat he said 1: Abolish the fed and 2: Resign
Continue reading "Q: How do you get out of a mess? A: don't cause one."

Time to jump off the parabola

nospam@example.com (Mark Jeftovic) — Tue, 05 Jun 2007 14:29:49 -0400

As readers of this blog know, I typically stay away from "hot" investment sectors because I'm antisocial and dislike crowds. Over the last few days I have seen what can only be called red flashing warning lights from a few different places like The Privateer ("Warning lights flashing worldwide"), Larry Wallman's "Sunday Comments" ("We are someplace in the "mania" segment of the bull run." and George Ure's Urban Survival.

I have yet to read Marc Faber's May GloomBoomDoom but then again, he already said this last month. So imagine to my surprise when my memory jogs and I realize: I've been socking somewhere around 40% of my company RRSP contributions into emerging markets for over 5 years! Those same markets Bucker is calling "parabolic" and in the "blow-off" phase and with China taking near-weekly 8% dumps in the stock market. Oh my!

I nearly forgot about these holdings because I simply did a "set and forget" about 6 years ago, when I setup my corporate RRSP contribs go into 1) Emerging markets 2) Japan (don't laugh), 3) income producing real estate funds and 4) natural resources. I managed to average about a 20% annual return with that formula but I don't think his mix can continue that pace.

As such I've redeemed my emerging markets into cash (money markets) and lowered my contributions into Japanese equities. I've added an income fund and allotted more into money markets.

In short, as far as this particular RRSP goes, I've bailed on emerging markets, stuck it out with Japan (hey, they're due) and gone "above weight" in cash. Which bankers hate, but hey, when everything is overvalued what the hell else am I going to do with it? Buy domain names on the aftermarket?

Remember, this is not investment advice, remove cellophane before eating, etc.