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Stock Thread (20 Viewers)
- Thread starter St. Louis Bob
- Start date
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Insoxicated
Rattle and Hum
Footballguy
4th wave in Elliott Wave Theory.Capella said:
Lastly, I have said this many times before, and it is still worth repeating. The goal for most investors during a 4th wave should be CAPITAL PRESERVATION. You want to retain a sizable position in cash to re-deploy at much lower levels rather than burn through it during these whipsaws in the market.
culdeus
Footballguy
I shared two thoughts with a close friend yesterday:
- Stocks seem pretty range bound since early October. Jumping up and down around similar levels
- The yield curve has flattened fairly consistently over that same period
fantasycurse42
Footballguy Jr.
Alright, I'm ready to put another silly call out there. This is one I've been pondering for a long time, I'm a little biased on this one, but the numbers are staggering and the mismanagement has been as impressive as any Fortune 100 company out there.
AT&T, this company is a ####### disaster! Don't let that 6% dividend lull you to sleep.
Here are some numbers:
$6.5 billion - the amount of money they owe in 2019 on fixed rate interest, just interest lol. I'll repeat that, $6.3B on interest.
$9 billion - 2019 costs to redeem bonds due
$14.5 billion - 2019 dividend payouts
Around $30 of the $38-$40B of their 2019 FCF is earmarked for nothing but dividends, debt and interest. I mean, if I was a large shareholder, that would be a serious concern for me.
The $80+B they paid for TWC
If you go through some of the comments from their earnings calls and other press releases, they don't appear worried about the costs to refinance this debt... Maybe building a streaming business is inexpensive and easy, see NFLX (who piled on the debt when the competition was nothing, pretty sure AT&T is underestimating this one).
They're a few notches above junk bond status, if they are downgraded, even one notch, the closer they get to junk bond status, the more fire they play with. I'd imagine they see a downgrade during our next recession.
They could've had a much better and reliable business, phones/internet - Verizon is the polar opposite of AT&T and Verizon is also leaps and bounds ahead of them on 5G. Furthermore, VZ has much better service and their subscription plans are fairly close in cost.
Downside pressures:
- Gargantuan debt load
- Streaming business not growing as quickly and profitable as expected. We'll see about this one, but I anticipate with the competition from Disney coming online, along with NFLX, this will be realized and create a gigantic headache for them
- Lack of focus on recession proof ISP business
- Downgrade from BBB status and closer to junk status
- Dividend. While I'm early on this one, and they've raised for 34 straight years, if the previous bullet points come to fruition, at the very least, they won't be able to raise and that streak could die at 35 years. If they cut their dividend, forget about it, 30-50% drop in share price. If this happens and you have no position, instantly short it. Even if you miss the first fall, and get stuck in a bounce, this will be the start of the real collapse.
Upside pressures:
- The only upside pressure is from a decrease in debt load. While they just came out and said they're looking to cut debt load by $18-$20B in 2019, I'm skeptical they can do this without selling some meaningful assets. Things they prob shouldn't sell, like HULU where the initial rumors are.
- Streaming business becoming an instant threat to NFLX
I see the downside pressures materializing much more meaningfully than the upside pressures. While VZ has had quite the impressive run, and I'd wait for some pullback or at least consolidation, they appear to be much better managed and well positioned if you're looking for income from a telecommunications company.
I see AT&T as possibly becoming the next GE.
AT&T, this company is a ####### disaster! Don't let that 6% dividend lull you to sleep.
Here are some numbers:
$6.5 billion - the amount of money they owe in 2019 on fixed rate interest, just interest lol. I'll repeat that, $6.3B on interest.
$9 billion - 2019 costs to redeem bonds due
$14.5 billion - 2019 dividend payouts
Around $30 of the $38-$40B of their 2019 FCF is earmarked for nothing but dividends, debt and interest. I mean, if I was a large shareholder, that would be a serious concern for me.
The $80+B they paid for TWC
If you go through some of the comments from their earnings calls and other press releases, they don't appear worried about the costs to refinance this debt... Maybe building a streaming business is inexpensive and easy, see NFLX (who piled on the debt when the competition was nothing, pretty sure AT&T is underestimating this one). They're a few notches above junk bond status, if they are downgraded, even one notch, the closer they get to junk bond status, the more fire they play with. I'd imagine they see a downgrade during our next recession.
They could've had a much better and reliable business, phones/internet - Verizon is the polar opposite of AT&T and Verizon is also leaps and bounds ahead of them on 5G. Furthermore, VZ has much better service and their subscription plans are fairly close in cost.
Downside pressures:
- Gargantuan debt load
- Streaming business not growing as quickly and profitable as expected. We'll see about this one, but I anticipate with the competition from Disney coming online, along with NFLX, this will be realized and create a gigantic headache for them
- Lack of focus on recession proof ISP business
- Downgrade from BBB status and closer to junk status
- Dividend. While I'm early on this one, and they've raised for 34 straight years, if the previous bullet points come to fruition, at the very least, they won't be able to raise and that streak could die at 35 years. If they cut their dividend, forget about it, 30-50% drop in share price. If this happens and you have no position, instantly short it. Even if you miss the first fall, and get stuck in a bounce, this will be the start of the real collapse.
Upside pressures:
- The only upside pressure is from a decrease in debt load. While they just came out and said they're looking to cut debt load by $18-$20B in 2019, I'm skeptical they can do this without selling some meaningful assets. Things they prob shouldn't sell, like HULU where the initial rumors are.
- Streaming business becoming an instant threat to NFLX
I see the downside pressures materializing much more meaningfully than the upside pressures. While VZ has had quite the impressive run, and I'd wait for some pullback or at least consolidation, they appear to be much better managed and well positioned if you're looking for income from a telecommunications company.
I see AT&T as possibly becoming the next GE.
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I don’t know, their PE is 6, earnings per share is over 5, pays a dividend of almost 7%. Those are juicy numbers. I agree that VZ is the better company (their stock prices have been going in opposite directions) but you’re not going to get metrics like I stated above in too many other companies. Not a growth stock but not chopped liver either.
Since I’m 80-90% cash as of Monday, probably. I’d welcome a lower base maxing out 401ks they next few years and hopefully, guessing close to the lows to buy back. That’d be nice.Stay humble, fc42.
If my notebook is correct, aren't most of you guys here still a good 10 years or so (at least) away from retirement (Capella, fc42, GM, icon, culdeus, etc.)? Isn't a pullback at this time a good thing?
I'm 48, retiring in 18 years if all goes well. I'm positioned for a pullback and, while I'd prefer that a bull market run until I retire [not happening], I'd much rather have two to five years of pain right now, and then be able to reinvest into the next run-up.Stay humble, fc42.
If my notebook is correct, aren't most of you guys here still a good 10 years or so (at least) away from retirement (Capella, fc42, GM, icon, culdeus, etc.)? Isn't a pullback at this time a good thing?
Bob Sacamano
Footballguy
When was the last time the yield curve inverted?
fantasycurse42
Footballguy Jr.
2006 and uninverted in 2007. It initially inverted about 15 months before the actual economic contraction began.
culdeus
Footballguy
Probably although for someone that started earning/saving hardcore in 2000 much more of a pullback puts you in the range of a 20 year cycle that is in a CAGR range of under 5%. At some point you have to start hitting the metrics you need or start getting nervous about a late retirement or a lifestyle change.Stay humble, fc42.
If my notebook is correct, aren't most of you guys here still a good 10 years or so (at least) away from retirement (Capella, fc42, GM, icon, culdeus, etc.)? Isn't a pullback at this time a good thing?
48 as well. I’m hoping I can be done at 60 and let my wife keep working.
Honestly, she’s got a better job anyway. I’m just about burnt out, need to figure out something that pays close that I’d be happy with till retirement. At that point all 3 boys will be done with college and my house will be a few years already paid off. Move close to a beach and enjoy.
fantasycurse42
Footballguy Jr.
I’m closer to 25 years away, I moved about 20% of my 401k to cash Monday, that’s as large of a cash position I’ll take there for at least another 15 years.Stay humble, fc42.
If my notebook is correct, aren't most of you guys here still a good 10 years or so (at least) away from retirement (Capella, fc42, GM, icon, culdeus, etc.)? Isn't a pullback at this time a good thing?
Other equity accounts my mentality has shifted to preservation, I’ll return to growth prob within 2 years, but for now, I’d like to preserve.
The future has been mortgaged over the last decade, I get the sense it wants to collect soon.
fantasycurse42
Footballguy Jr.
I fully get all of this, and the call will sound silly, but the direction of this company is disgusting.
If they don’t properly execute on this TWC acquisition, I think odds of a severe devaluation are much higher than anyone is considering and they’ll buckle under this mountain of debt they’ve left themselves.
With how mismanaged they are, I don’t think they’ll execute. Furthermore, even with the best senior management team, it’s a tall task. They’re stepping into an arena with some established behemoths and another behemoth that has been executing much better (on the content side at least) in Disney.
They aren’t too many missteps away from junk bond status, and with that amount of debt, that’ll cause a serious deleveraging should it happen.
I could obviously be very wrong here, but my feelings are someone would be better suited looking for a big dividend elsewhere, AT&T is a disaster and a few more bad management moves and poor execution away from a large devaluation.
What a great line (in bold). I'm about 20% cash, 15% gold, 10% real estate, 20% in a staples ETF, about 15% AMZN and AAPL, and the rest in options or other stuff. I'm hoping to sell some AMZN on the next pop (my last two limit orders at $1780 just barely missed, which bums me out) and I'd like to get closer to 30% cash, but will hold AMZN and AAPL through the next downturn, just not as much of it as I have now.
Bob Sacamano
Footballguy
And it wasn't even a Casper.
what's the best place for this? haven't paid much attention but don't recall seeing rates that good.
I personally haven't seen 2.5% but I'm getting a little over 2% on a Synchrony money market account.
https://www.bankrate.com/banking/money-market/rates/
culdeus
Footballguy
PNC had it up to 2.45 recently, but pulled back. Rates in general seem to have pulled back some.
Rattle and Hum
Footballguy
VZ debt to equity twice as large as T, no? With a gun or cancer-causing-phone to my head, I'd prefer to be long the T/VZ cross instead of short.
No One
Footballguy
UnsilentMajority
@The_UnSilent_
·
Dec 4
Fun Fact: Donald Trump now owns 10 of the Dow’s top 20 worst single-day declines in stock market history... #1 2/5/18 -1175 #2 2/8/18 -1032 #3 10/10/18 -832 #4 12/4/18 -799 #7 /22/18 -724 #11 2/2/18 -665 #15 10/24/18 -608 #16 11/12/18 -602 #18 4/6/18 -572 #20 11/20/18 -551
@The_UnSilent_
·
Dec 4
Fun Fact: Donald Trump now owns 10 of the Dow’s top 20 worst single-day declines in stock market history... #1 2/5/18 -1175 #2 2/8/18 -1032 #3 10/10/18 -832 #4 12/4/18 -799 #7 /22/18 -724 #11 2/2/18 -665 #15 10/24/18 -608 #16 11/12/18 -602 #18 4/6/18 -572 #20 11/20/18 -551
GoBirds
Footballguy
Sand
Footballguy
Looked at them many times as they are consistently touted as a safe dividend bet.
Hard pass.
#PercentagesMatter
As Sand says, raw changes are meaningless. Whoever the next president is, he or she will own ten of the worst twenty days, too, before leaving office. Trump gives us plenty of ammunition as evidence that he is not a good president, no need to lean on bad logic.
Rattle and Hum
Footballguy
Disclaimer: I'm not a fundamental investor. Best guess, 5 years, probably fine. But FC is on to something with the debt issue. It wouldn't be my pick for a core hold over the next three years. The new black will be shedding debt as it will cost more to refinance it in the future. I'd guess the dividend is partially in jeopardy over the next 24 months as they de-leverage. I Know you are long from a good spot, so, if you are holding, at least consider selling calls 5-6 times a year against your position.
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No One
Footballguy
This Meng /Huawei arrest is stunning. Asian markers WAY down.
My sport account is all cash now, except 25% TVIX.
Retirement extremely conservative, bond heavy
My sport account is all cash now, except 25% TVIX.
Retirement extremely conservative, bond heavy
fantasycurse42
Footballguy Jr.
Gotta disagree, and I’m not a Trump fan either. The higher the market, the larger the point movements. When the market is near ATH, movements will be bigger, it’s just simple numbers.
Now, if he would’ve #### about taxes and saved them for 2019, we might’ve meandered higher with smaller gains in 2017-2018, but he would’ve had that bullet to propel markets heading closer to the election. Regardless, I was opposed to them, but they were poorly played anyways.
fantasycurse42
Footballguy Jr.
Yes, it is. I actually went in and looked at their average over the last decade with it being about 1.5, they’re around 2 now, T is half of that, but it’s misleading IMO, and the market by their treatment of the 2 companies this year agrees with that.Rattle and Hum said:
My concern for AT&T is simple, this TWC acquisition could be a flaming disaster in the making. They had excellent businesses, they’ve pivoted, which I can understand, but the focus looks to be away from what was healthy and their core.
Management has already made one awful acquisition in DirecTV. They bought an antiquated business for top dollar that has people put gigantic satellites on their roofs. They did this right as that business model was getting ready for a painful death.
Now they have a new acquisition for top dollar, money (while still cheap compared to history) is no longer free like it was when they bought DTV. If they don’t execute flawlessly (and judging by previous missteps I don’t think they will), they could find themselves in junk status territory. This could happen if you have two massive acquisitions that don’t produce the anticipated revenue and you need to refi at a higher rate. Streaming content is competitive and expensive.
A drop in their credit rating or a cut to the dividend starts the snowball effect. I don’t see VZ with the same risks. They sold some of their fiber optic network to Frontier, they’ve invested heavily and are leading the pack on 5G, which is the future, they’re positioning for a big lead there. Selling wires when they’re positioning for wireless, VZ has excellent management, T is a train wreck.
NREC34
Footballguy
Capella
Footballguy
Yea I’m not worried about the Dow, S&P etc. I have 17 more years so that’ll be fine.Stay humble, fc42.
If my notebook is correct, aren't most of you guys here still a good 10 years or so (at least) away from retirement (Capella, fc42, GM, icon, culdeus, etc.)? Isn't a pullback at this time a good thing?
My main complaining in here is about Amazon. I have so much of it I’m not buying anymore for a while, so the dips aren’t helping me. Even though, I guess they aren’t hurting me either since I have no plans to sell. Just makes me take a gulp when I see -6%.
NREC34
Footballguy
Capital preservation man. Someone else mentioned it the other day. Why not put retirement in cash and gradually buy back in lower when this stuff blows over?
As for amzn it has a lot of room to fall more. Everything is getting repriced and it’s not immune.
fantasycurse42
Footballguy Jr.
After a lot of thought, this is the problem with Amazon, imo. While there are others such as competition, saturation (this could be argued either way), and some others, the problem comes to profitability.
When really thinking about it, Amazon should’ve never showed a profit, ever! When showing profits, they can now be valued like a real company, should’ve kept flipping that profit into R&D. Now idk if they can go back to not showing profits.
When really thinking about it, Amazon should’ve never showed a profit, ever! When showing profits, they can now be valued like a real company, should’ve kept flipping that profit into R&D. Now idk if they can go back to not showing profits.
Rattle and Hum
Footballguy
I think the answer lies in your goals. If you have gains to offset this year I'd consider selling. However, I say this with a bearish bias on the market over the next 9 months. Who knows if I'm correct as I'm not a great timer. I'm a strategist.
However, if your goal is to be long no matter what to avoid the perils of investing emotionally with LT investments then you'll need to find something else to get in. Not easy as everything is pretty ugly right now so you may be jumping from the kettle to the fire.
If T keeps ratcheting lower you can easily generate 6% a year by selling calls against your position. That with the dividend is 12%/year. The risk is, T temporarily pops and your shares are called away below your break even. So, always sell calls about 8-10% higher than the current stock price. I know not everyone wants to learn about options but covered calls are the most simple strategy in my mind. This guy does an awesome job explaining covered calls and lays his poop out there for free,
culdeus
Footballguy
Dividend capture CC are a great plan, but you really have to have a lot of money tied up to make it worth the effort and fees.
I disagree completely. Their earnings growth is what will keep them going. It was 300+% over 2017 and estimated at 40% in 2019 but even with revenue not growing as fast in the last quarter they’ve blown away earnings estimates. 40% growth gets them to about a 50 P/E ratio down from 90 right now (it would be about 80 for 2018 with 2018 Q4 which will way higher than 2017 Q4). As another poster said to you when revenue growth isn’t 30% it’s a 2-300 stock. That’s bunk with $30+ per share earnings and earnings growth estimates of 40% that will likely be topped.
If Advertising delivers and whatever else they’ve got cooking delivers then it may get back over $2000. We just are in a bad stock market phase where the optimism is gone. No froth.
Rattle and Hum
Footballguy
I pay about $1.32 total to buy and sell one option contract (each contract is 100 shares). If one has over 1000 shares to write against it's probably cheaper to go with an all-in commission structure. If you are paying $9.95-$19.95 to sell a $.40 ($40) call then yes, it's expensive and cost prohibitive.
siffoin
Footballguy
I promised myself I wasn't going to post in here anymore. But, imo, unless you have a tremendous number of shares at a significantly lower cost basis than current share price - Writing Covered Calls is a bad idea. It wasn't always this way, but that's the way it is today.
Rattle and Hum
Footballguy
Anyone have extra insights into the risk for AMZN being broken up? I guess I assumed that's why it dropped 30% from highs when SP500 dropped 12%.... that and everyone and fund owns it so the exit was pretty crowded.
