Congratulations Supreme Court

Congratulations Supreme Court of the United States.

In the way you ruled and stated your judgement, it now appears that congress has the power to do ANYTHING they want as long as its called a tax.  Giant ramifacations for the future.

Oh and remember when Obama kept saying over and over again that this wasn’t a tax.

Fresh Del Monte Analysis and Valuations, Disgusting politicians, and Hopefully no one owns stock in these companies.

Article on Fresh Del Monte published on seekingalpha.com here, for those that want to follow along in the comments section.

Here is a disgusting article on this countries stellar leaders, sarcasm intended, and how they made money during the Great Recession from inside information they got after meetings with the Federal Reserve and Treasury Secretary.

Here is another article I found to be interesting this weekend.  Hopefully no one here owns stock in these companies or your portfolio could end up like this.

Rejection and the need to get better.

The Value Investors Club is a website for professional investors to exchange and talk about their ideas.  You have to apply and be accepted to put your ideas up on the site, and most of the people on there either work for or own their own investment firms/hedge funds.  You can get guest access and read ideas that are 45 days or older.  It is a fantastic site to learn from and see other people’s reasonings why they are buying or selling an individual security.

I recently applied to the Value Investors Club website, and I just got an email saying that at this time I had not been accepted into the website.  Kind of what I was expecting since I don’t think I am at the same level as most of the people on the site.  I figured I would apply and see what happens and go from there.

Now that I have been rejected though it shows me I need to work even harder, get even better, learn more, and reapply when I can, and earn the $5000 monthly prize they give for the best investment ideas that are posted.

Thanks for the extra motivation valueinvestorsclub.com

Some more of my many investing mistakes, why I love them, and why I can’t wait to make more.

In the last post I got into one of my major mistakes.  In this post I will get into some of the specific stocks that I bought when I first started “investing”, why I bought them, what I did wrong, and what I would have done differently, so hopefully you can learn from me and not lose some of your own money.

When I first started investing actual money my version of research was looking up the specific stocks ratios, seeing how much cash and debt they had, and seeing what people online were thinking about  the companies, and the “Vast potential” the company had.  That was it.

At that time I did not read any annual reports or quarterly reports.  Did not even look at their competitors at all.  Took the numbers I found online at face value, without any questioning of the numbers or adjusting them to look more realistic.  I did not do any type of valuation or strategic analysis.  And I took what the analysts and other random people online were saying about these companies as the factual truth, not just speculation, which is what it was.

So pretty much when I first started using my own REAL money to buy these stocks I was doing everything you were not supposed to do.  At that time not only was I way overpaying in most cases for these companies, but I was also buying a lot of bad companies.  Not a good combination of things to be doing, and boy did I pay for it.

The following are the tickers of some of the early stocks I bought: NPD, LLEN, C, PRGN, YONG, SMED, LPH, TGB, and GA.  All of those stocks I bought doing the above, which as it turns out is nothing, and I was pretty much just throwing my money away.  Combined on the stocks I have sold above I lost at least $600.  Including TGB which I still hold, brings that number up closer to an $800 total loss.

Luckily I was smart enough at that time to have small positions or the numbers would have been even higher.

I now read annual and quarterly reports.  Dig into the numbers and scrutinize them more.  Research competitors, do valuations, and just do better, and more diligent, overall research that sometimes takes me up to a month on one single company before I even think about buying.

It sure would be nice to have that money now to put to use, but I am glad I made those mistakes and would not take back those losses.  If I would not have made those mistakes then my knowledge, experience, and pace of learning would have been stunted and I would not be doing what I am doing today.  Making those mistakes made me want to get better at what I was doing and learn faster so that I would not make those mistakes again.

So keep coming mistakes.  Keep coming so that I can keep learning at a fast pace.  Keep coming so that I can gain the proper experience and perspective.  Keep coming so that when my health finally gets better, I am not making as many mistakes, and that I am ready to either open up my own investment firm, or work for someone else at an investment firm.

Why do companies keep using derivatives?

It’s an always a big question why do companies keep using derivatives?

I know what their intention is when they try to use them, to hedge against some of the following risks; commodity prices, currency fluctuations, interest rate changes, etc. However, after reading another 10K on a company I am researching, making that a total of at least 30 since I have started doing serious research into the stocks I buy.  I have come to the conclusion that they are using derivatives because they feel they are supposed to use them, and/or arrogance that they are smart enough to use them, not because they are good at it and it saves them money.

The best case of using derivatives I have seen was a gain of $50 million for the year, not bad.  Too bad almost all of the rest of the companies I have researched have either had small gains or lost hundreds of millions of dollars with the use of their derivatives.

Even worse than the lost money is the amount of money that is “locked” into derivatives contracts which is held for the duration of the contract until payment.  In a lot of cases I have seen hundreds of millions or even billions of dollars that is essentially just sitting there, that could have been better used in their operations, paying down debt, paying a dividend, or buying back stock, etc.

For example another one of Dole’s current problems is their horrible use of derivatives.  In their last 10K they reported a $20 million dollar loss on long term Japanese Yen hedges. http://media.corporate-ir.net/Media_Files/IROL/23/231558/2011DoleAR/docs/Dole-Food-Company-Inc-2011-Form-10-K-As-Filed.pdf They have a total of almost $200 million more in long term Japanese Yen derivative contracts.  Couldn’t that have been put to better use paying down debt or improving their operations?  In my opinion an emphatic yes.

Corporate management; what happened to keeping things simple, concentrating on improving your core businesses, not worrying that other companies are hedging so you should too, and being a good steward of the shareholders and debtors money?

Keep It Simple Stupid, and do what you are good at.