Sunday, October 04, 2009

BAGAKOAA August 31, 2009 Advice for a newbie

BAGAKOAA August 31, 2009

Here is some sage advice to consider for investing:

Only invest in what you know or understand. If you don’t know how they make money, don’t by the stock.

Know when to get in a stock.

Know when to get out of a stock, BEFORE you buy it.

My personal guidelines are out at 8% down and don’t look back. (Occasionally even rarely I do go back and ask myself why I bought it in the first place and buy it again at the lower price.)

Review and reset at 20% up. If the stock drops from the reset by 8%, get out and take your 12% gain and run.

Remember to annualize your gains. In other words if you make 10% in 1 month, that is a 120% annual gain.

Commit to at least one hour a week per stock in homework or don’t invest. (Cramer’s comment is don’t buy and hold, buy and homework.)

Understand the basic components of how to value a stock. 5 year revenue, 5 year earnings, 5 year cash flow, long term debt, and profit margins.

Diversify you portfolio. Cramer uses a clever acronym that helps insure diversification BOATS. Banks, Oil, Aerospace (Industrials), Tech, and Speculative. This is very general but the point is made you don’t want 5 bank stocks, or 5 oil stocks as if the sector gets clobbered you get broke. Speculative is fun money type investments that you are willing to take a risk with.

I hope this helps and if you want to swing by, you know where to find me.

OK here are a few that I am confident SHOULD show a 10% gain with in a year.

MDRX- Medical record management software. It is currently getting knowcke down due to the bad press about the Health Inusrance Bill, two weeks ago that was know as the health care reform bill, sublt but important distinction. This should be a 21-22 dolalr stock by first qrt 2010. Get in now and drop out at 13.75. Review at 21-22 and take some profits.

AAPL- The CHU deal and the 3G phone in China as well as the new Notebook will keep this ball rolling for at least a year or two. This 170.00 stock is good for a run to 200. (This is my largest holding in our and my family and several other portfolios.

BAC- yeah it had a good recovery but this is going to run to the 25 level by 1st quarter 2010. Caveat here keep an eye on the commercial bubble as I don’t know what kind of exposure they have.

BMY- this along with GSK and GILD has the bases covered for the H1N1 pandemic. Some of that momentum is already built into their prices. There are some target prices of 24-26 for BMY, 42-45 for GSK, and 48-50 for GILD, all more than 10% gains. Again these are getting blown around by the uncertainty of what is going to happen in the health insurance reform bills. Pharms could get whacked pretty good.

GME- My son got me into this. Batman and what will be a transformer game will do wonders for this stock. They have a solid balance sheet, a good income statement and we hold about 600 shares in several porfolios. Look for 27-28 by years end.

HAS- Transformer’s I bumped this stock about 35% in 2006. T II is a better franchise and the stock is only up about 4 % in the last month. Once all the golabal deals have been hashed out and aoll the games and toys make their way though Santa’s bag, future profits should be analyst estimates 4 qtr 2009. This is a 35 dollar a share stock looking to happen.

TGT- besides the strong reinvestment program my wife has into this stock, there is a shift from WalMart to TGT as the economy improves. They have a ton of real estate (although not properly valued) on their balance sheets and their margins are healthy.

WU- as migrant workers get an eased immigration policy coming soon to neighborhood near you along with the recovery that is expected, WU has the lion share of the wired fund transfer business. Look for this 19.00 stock to hit 24-25 by mid year 2010.

Hope this helps. Remember to do your own homework, and remember Bears make Money, Bulls make Money, and Pigs get slaughtered. I will add you to my BAGAKOAA newsletter as I mention these and other stocks I own and trade. That way if I change my position or recommendation you will know.


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