Stocks Update: PFE Sold Today, 1.3% in One Day

I sold the 2000 shares of Pfizer today that I bought yesterday, netting a 1.3% gain. Thus far, my short-term trades have been 100% successful, while my other trades have a mixed record. Some of the ongoing debates in the stock market are as follows:

a) Does active trading reduce gains?
b) Can investors time the market?; and
c) Do long-term investors always do well if they buy-and-hold for several years?

Conventional wisdom would say "Yes" to (a) and (c), and "No" to (b). One of the reasons I disclose my trades is to see whether the conventional wisdom is actually correct. Warren Buffett and Charlie Munger believe that investors can time the market and view the "efficient market hypothesis" (i.e., all public information is immediately factored into a company's stock price, making it almost impossible to time the market) with disdain. Thus far, I am in the Berkshire camp. But we will see as the years go by.

Open Positions
CNB = -5.40
EQ = -5.54
EWM = -1.17
GE = -3.75
ICE = -2.11
IF = -6.53
PFE = -7.64
PNK = -2.97
PPS = 0
WYE = -3.52

Total: losing/negative average of 4.29%

Closed Positions:
Daytrades: PFE (+0.5%)

Held less than 7 days: MMM (0.5%), MRK (0.1%), PFE (1.3%), SCUR (15%) (Overall record in this category is a 4.23% average gain)

Total: up/positive 3.48%

Stocks Update: Beware the Ides of June?

Between June 3 and June 11, my portfolio took a hit. I had sold almost everything prior to June 3, but put a small toe back back in the water recently to buy Pfizer. As a result, I am now down almost 3,000 dollars since June 2, 2008. Given the overall size of my portfolio, I am not concerned (although my ego has taken a severe hit). Most of the open positions are in a retirement account, and I am perfectly happy waiting four or more years for Pfizer, my current largest holding, to get back on its feet.

Have we hit the bottom yet? Probably not in all sectors. Future earnings per share (EPS) for almost all companies need to be adjusted downward. But with respect to the shares below, I would not have bought them unless I believed they were near a bottom. I still believe that the shares below are near or at a bottom. One year from now, I will issue a new "Stocks Update," and I expect each and every stock below, except for EWM, ICE, and IF, to be in positive territory. ICE probably will be so volatile it won't make much money until it merges with another exchange or is bought out. EWM and IF, two international ETFs, were bought as long-term hedges.

Open Positions
CNB = -2.6
EQ = -4.44
EWM = -2.26
GE = -1.52
ICE = -1.31
IF = -7.2
PFE = -8.57
PNK = -1.36
PPS = -2.24
WYE = -2.43

Total: losing/negative average of 3.39%
(DJIA lost 3.35% from June 2 to June 11)

Other Open Positions
06/11/2008 Bought 2000 PFE @ 17.65

Closed Positions:
Daytrades: PFE (+0.5%)

Held less than 7 days: MMM (0.5%), MRK (0.1%), SCUR (15%) (Overall record in this category is a 5.2% average gain)

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.

Stocks Update: Not Time Yet to put Pfizer on Ice--It's Still Not at its Pinnacle

Here is what I bought today:

06/11/2008 Bought 100 PNK @ 12.46
06/11/2008 Bought 17 ICE @ 118.67
06/11/2008 Bought 2000 PFE @ 17.65

Let's take these one at a time--

PNK is Pinnacle Entertainment Inc. Although their HQ is in Las Vegas, they don't own casinos there. The six casinos they own are in Louisiana, Indiana, Missouri and Reno, NV; in addition, they operate casinos in the Bahamas and Argentina. This is a fairly small company--its market cap is still under 1 billion. Why choose this stock over WYNN, LVS, or MGM?

I watched a PBS documentary on Vegas recently, and let me tell you, Steve Wynn and his vivacity are a hoot to watch. The documentary reminded me of how cool Vegas used to be, starting with the Mafia and the Rat Pack, moving to JFK/RFK and Howard Hughes coming in to clean it up, and then ending with shareholders and Wall Street finishing the job. What struck me most during the documentary is that Vegas seems like it's all out of gimmicks. The old Sands, where the Rat Pack used to play, is gone. Steve Wynn's Mirage is no longer the epitome of cool. By focusing so much on the future and demolishing anything older than a decade, Vegas has neglected to preserve its history, which would have been a tourist draw (who wouldn't want to walk on the same stage that Sammy Davis Jr. danced on?).

To be fair, when I went to the new Wynn hotel in Vegas, I was impressed. I wasn't impressed in the sense that this hotel was something wild, something fun--but it was a darn nice hotel and casino, and the no-smoking sports book didn't hurt (of course, it's impossible to find a seat). Would I fly out from California to Vegas just to see the Wynn hotel? That's the million dollar question, isn't it? I wouldn't--and if I did, there's nothing in that particular hotel that I couldn't get by staying at another hotel nearby and, say, walking over to view the Wynn's Ferrari display. The problem with sinking so much money into these hotels is that it's based on the hope that the high rollers will come to you and make up for the initial costs. But other than Charles Barkley, it's unclear why an international client would fly to the Wynn rather than another more exclusive resort, say, in Macau.

The next stage for Vegas hotels is to do what the Hard Rock Hotel has done--make each room unique so that customers are paying for the inside of their room, not the outside. I genuinely look forward to staying at any Hard Rock Hotel (HRH), because you don't know ahead of time which rock star your room will be based on. The problem with the HRH is that they don't have good locations (the one in Vegas is off the strip), and it's harder for them to expand in a saturated nationwide market. But Vegas as a whole doesn't seem too much different than it was ten years ago, and so far, other than making its hotels more lavish, there's no new major attraction. With a looming recession, people might go to Reno or a cheaper hotel instead. Even I will be going to Reno in a few weeks rather than Vegas because 5 dollar blackjack tables are easier to find in Reno, and I am tired of the Vegas crowds and not being able to find a good seat at the sports book.

What does any of this have to do with why I bought PNK? Simple. PNK is building casinos in areas where they are a unique, new attraction. It's like a Walmart coming to a tiny town--even if it's not fancy, even if it's just downright ordinary, the lack of competing attractions will still allow a steady stream of business.

Also, labor costs are cheaper in Indiana, Missouri, Louisiana, etc. A major cost of any Vegas casino is their unionized workforce and sheer number of employees needed to run all the attractions (or did you think the lions at the MGM fed themselves all day?). Especially in a slower economy like Indiana, casinos won't have as hard of a time finding cheaper labor and good employees. That's good news for the Midwestern and Southern-based casinos.

Today, the St. Louis Business Journal confirmed that PNK's Missouri branch was doing well: "Admissions at Lumiere Place grew almost 22 percent from 510,448 in April to 622,088 in May. Revenue in May was $15.3 million, a 17 percent increase from April's revenue of $13.1 million."

I didn't buy much of PNK--but I definitely like it better than MGM or LVS shares. (I don't include WYNN in the previous sentence because its shares seem to hold up better on down days.)

ICE is InterContinental Exchange, Inc. It's basically a trading forum for commodities. It has enjoyed a spectacular run-up to 194 dollars per share because of the rise in commodity prices, which forced many companies to use futures contracts and take more of an interest in managing their cost of materials. But it's now trading at 118 dollars, probably because of the fear that commodities themselves are in a bubble and the Dems will regulate traders/speculators out of existence. It's a tough call between buying this company or CME Group, Inc. (CME). As you can see, I did not buy much of this stock, either. It's just a small hedge, and I expect to lose money on it in the near term, because it is so volatile. This is a long term hold--if I could just erase it from my screen until five years from now, I'd probably save myself some gray hairs.

Finally, we are back to Pfizer (PFE). Why buy over 35,000 dollars worth of this stock? Two reasons: one, this company is still a blue-chip in a business with excellent margins. If I have to hold onto it for the next five years, I don't mind, especially not with a 7% dividend. Second, the Wall Street Journal is showing that it has the fourth highest money flow of all traded stocks on June 11, 2008. Either someone knows something we don't, or it's possible this stock has finally hit the bottom. I will look to flip soon, because I still have 700+ shares in a different account.

Stocks Update

For some reason, I have always tried to highlight the bad news rather than the good. I suppose it keeps me humble, but really, I do it to ensure a sufficient amount of fear. Mark Cuban, owner of the Mavs, was once asked why, after making billions, he kept going. His answer: "Fear." In that vein, I am going to provide a "stocks update" on a day when the Dow and Nasdaq went down over 3%:

Open Positions
CNB = 0
EQ = 0
EWM = (slightly negative; 150 shares)
GE = 0 (slightly negative; 179 shares)
IF = -2.1
PFE = -6.4
PPS = +0.1
WYE = -2.6

Total: losing/negative 2.75%

I am not worried. Except for IF, these are all good dividend plays (meaning, they have enough cash flow or cash to pay their dividend over the next year). Even if Pfizer (PFE) has to "repatriate" (bring some money to its U.S. operations from abroad, thereby taking a tax hit) some cash to pay its dividend, I am guessing it will still do whatever it takes to pay the dividend.

Here is what my friend, who is a tax lawyer, said about repatriation--and it sounds like good news, rather than the bad news the general media is making about the possibility of repatriation:

I took international tax in law school but I am fuzzy on the subject not having reviewed it in awhile. The only thing I remember about repatriation is that foreign earnings of controlled foreign corporations were not subject to tax until they were brought back into the U.S. When the funds were brought back to the U.S., or repatriated, a corporation could then file some sort of election to exclude up to 80 - 90 percent of the repatriated funds from income.

I would guess that PFE would try and take advantage of that generous tax break on repatriated earnings if they did not want to risk cutting their dividend to U.S. shareholders.

If the tax hit is only 10 to 20%, that isn't so terrible. My hunch is that Pfizer's board sees its stock as a "widows and orphans" stock and won't cut the dividend for another year a half at least.

(Today, I bought 100 GE @ 30 and change; also, on June 9, I bought 29 more shares of GE at around 30.)

Overall, I am down about 1400 dollars since I sold off almost all of my holdings earlier. Most of the 1400 dollar loss is because of my recent large buy of Pfizer. My prediction last month or so was correct; i.e., that the market would suffer a large hit. For the most part, I heeded my own advice; otherwise, the damage would have been more severe.

Closed Positions:
Daytrades: PFE (0.5%)

MMM (0.5%), MRK (0.1%), SCUR (15%) (held less than seven days; record in this category is a 5.2% average gain)

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.

Stocks Update

Today, I sold my 100 shares of MRK @ 38.57. Including the fact that a dividend will be paid, I am slightly ahead, but only by a few dollars. That lowers my averages in my closed positions.

In other news, Goldman Sachs cut Pfizer (PFE) to "neutral," with a price target of 22, causing PFE to go to 18.50 a share. I am not worried--if anything, this means the bad news is finally out of the way (and being cut by Goldman is definitely bad news). Now, value investors will enter as disenchanted stock holders exit. Plus, I only need PFE to go to 20-ish before making a decent short-term profit on the trades. I figure PFE will hit 20-ish in about a month or two, if not sooner.

I bought and sold a large position of PFE in about an hour today: bought 2000 PFE @ 18.49 and then sold at 18.57--made 200 bucks. Now, if I had held the shares for another 30 minutes, I would have made another 200 dollars in an hour and a half (400 dollars total). That's the issue with day-trading--if you blink at the wrong time, it costs you. As long as I am in the black, however, a few hundred here and there is inconsequential. Rule #1: don't be greedy. Or, as Cramer likes to say, "Bulls make money, bears make money, pigs get slaughtered." 'Tis true.

I bought some shares of PPS today at 34.37 as well. Pure value play and potential buyout target.

I bought 500 shares of CNB at $5.00/share, a little-known bank in Alabama (or, as they like to say down South, 'Bama). This one is a value and dividend play. Just two months ago or so, CNB sold 350 million dollars' worth of its stock for 8 dollars a share. I like the shares at 5 dollars, but don't ask me what I'll do if it hits $6.50.

I also bought 15 shares of YHOO so I could attend their shareholder meeting on August 1, 2008. For purposes of this blog, however, I will not report on trades consisting of positions with a cost basis (money spent to buy a company's shares) below 1,000 dollars.

Closed Positions:
Daytrades: PFE (0.5%)

MMM (0.5%), MRK (0.1%), SCUR (15%) (held less than seven days; record in this category is a 5.2% average gain)

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.

Stocks Update

Big pharma looks like one of the cheaper sectors in the market. Today, I bought

60 shares of PFE (Pfizer) at 19.33
50 shares of MRK (Merck) at 38.61
65 shares of WYE (Wyeth) at 44.41

In my tiny, self-made pharma fund, I like WYE the most. MRK will issue a dividend soon, which is one reason I wanted to own it. I bought 100 shares of PFE before (at around 20.70) and am averaging down. It will probably take years for the pharmas to get out of the doldrums. In the meantime, I am sure it will be a bumpy ride. If a Democratic president is elected, chances are that any universal health care plan will squeeze big pharma. In addition, Congress may decide to cut consumer prescription costs by supporting generics and reducing patent rights. But with money market yields at around 2%, I could do worse than put my money in these dividend-generating stocks. I am not necessarily a long-term investor--once MRK pays its dividend, for example, I will look to get out.

Update on June 2, 2008: Bought 50 MRK @ 38.12 (have 100 shares total now)

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.