Stock Market blues

[GG]

Bite me. No way I'm investing in an American steel company.

720613[/snapback]

 

Toss $0.02 my way, and you will find:

U. S. Steel is an integrated steel producer with major production operations in the United States and Central Europe. An integrated producer uses iron ore and coke as primary raw materials for steel production. U. S. Steel has domestic annual raw steel production capability of 19.4 million net tons (tons) and Central European annual raw steel production capability of 7.4 million tons. U. S. Steel is also engaged in several other business activities, most of which are related to steel manufacturing. These

include the production of iron ore pellets from taconite (rock containing iron) in the United States and the production of coke in both the United States and Central Europe; transportation services (railroad and barge operations); and real estate operations.

[Crap Throwing Monkey]

Bite me. No way I'm investing in an American steel company.

720613[/snapback]

 

What part of "read the annual report" sounds like "invest in American steel"?

[JimBob2232]

Bite me. No way I'm investing in an American steel company.

720613[/snapback]

 

 

Well for starters, if you refuse to "invest" in a company simply because of the industry it is in, or the origin of that company, you are not investing at all. You are Gambling.

 

Secondly, Look at the chart from 1991 to present http://finance.yahoo.com/q/bc?s=X&t=my

If you invested in 2003, you would have made nearly 700%. Hardly sounds like something not worth your time looking into.

 

Stop gambling and start investing. Would you rather buy a brand new honda civic for $100,000 or a 5 year old civic for $3,000? One is clearly a better vehicle, but the price you pay for it is ridiculously high compared to the alternative. Stocks work the same way. Just because its a good company doenst mean its a good investiment. And the converse is true as well. Just because its a bad company doesnt *necessarily* mean its a bad investment.

[Pine Barrens Mafia]

Well for starters, if you refuse to "invest" in a company simply because of the industry it is in, or the origin of that company, you are not investing at all.  You are Gambling.

 

Secondly, Look at the chart from 1991 to present http://finance.yahoo.com/q/bc?s=X&t=my

If you invested in 2003, you would have made nearly 700%.  Hardly sounds like something not worth your time looking into.

 

Stop gambling and start investing.  Would you rather buy a brand new honda civic for $100,000 or a 5 year old civic for $3,000?  One is clearly a better vehicle, but the price you pay for it is ridiculously high compared to the alternative.  Stocks work the same way.  Just because its a good company doenst mean its a good investiment.  And the converse is true as well.  Just because its a bad company doesnt *necessarily* mean its a bad investment.

720742[/snapback]

 

I take it you don't adhere to the Buffett philosophy of stock-picking. I'm more in the Lynch/Buffett mold.

 

Invest in companies you know, companies that have a brand-name edge, and companies that have good P/E ratios and low debt.

[Crap Throwing Monkey]

Well for starters, if you refuse to "invest" in a company simply because of the industry it is in, or the origin of that company, you are not investing at all.  You are Gambling.

 

Secondly, Look at the chart from 1991 to present http://finance.yahoo.com/q/bc?s=X&t=my

If you invested in 2003, you would have made nearly 700%.  Hardly sounds like something not worth your time looking into.

 

Stop gambling and start investing.  Would you rather buy a brand new honda civic for $100,000 or a 5 year old civic for $3,000?  One is clearly a better vehicle, but the price you pay for it is ridiculously high compared to the alternative.  Stocks work the same way.  Just because its a good company doenst mean its a good investiment.  And the converse is true as well.  Just because its a bad company doesnt *necessarily* mean its a bad investment.

720742[/snapback]

 

And the moral of the story is: there is a difference between the stock and the underlying company. The US steel industry may not be very competitive...but US Steel itself was a steal at $11/share.

 

You have to know, when you're buying a stock, whether your intent is to hold a share of the underlying company, or whether you're trading market risk. I've never gone wrong as long as I've kept that single thought in mind during a trade - I've made bad choices, but I've always been able to back out of them when they've turned against me. It's only when I didn't know why or what (market risk or the company) I was buying that I've gotten killed in the market.

[JimBob2232]

I take it you don't adhere to the Buffett philosophy of stock-picking. I'm more in the Lynch/Buffett mold.

 

Invest in companies you know, companies that have a brand-name edge, and companies that have good P/E ratios and low debt.

720748[/snapback]

 

Well, if you really want to get into it, Personally I take more of a Benjamin Graham approach, which (by the way), is who Buffett learned the lions share of what he knows. But thats neither here nor there. Its pretty similar actually.

 

I am not saying United States Steel is a good company, I am also not saying its a good investment. I dont have an opinion on this stock right now. I would need to do alot more research before I can even get close to that. This doesnt change the fact that it would have been a good investment a few years ago. There was a fundamental market shift in the price of commodities which drove the stock price to where it is today. You can learn from that, and maybe catch it the next time it happens. This wasnt just the market going crazy for no reason. The commodities market drove the price.

 

I dont disagree with your statement to invest in what you know, a wide moat and low P/E and D/E. But lets look at this a little closer.

 

What you know - One of the most important things you can know is to know what you dont know. But there is nothing stopping you from learning about the Steel Industry. There is nothign stopping you fom reading about what some of the industry experts and top investors think about the industry. There (should be) nothing stopping you from picking up an annual report and reading it to gain understanding. Just because its the steel industry and you dont understand it, doesnt mean you should just be content knowing nothing about it.

 

Wide Moat - For a long term investment, this is important. If it is a shorter term investment, not so much.

 

P/E ratios - I hate this ratio. Published ratios are often wrong, and are usually trailing P/Es. The fundamental idea of low P/E is good, I just wish the reliablity of the published numbers was more reliable.

 

D/E ratio - Anything less than one works for me. Financial stocks may be higher. Not necessarily sure lower=better, but too much=bad.

 

Price/Book Ratio is another one I like to use.

 

But all these are just ratios, numbers on a peice of paper. You need to dig further into a company than these numbers before investing. And to blindly state "I will never invest in a US Steel Company" is just ingnorance.

[Pine Barrens Mafia]

Well, if you really want to get into it, Personally I take more of a Benjamin Graham approach, which (by the way), is who Buffett learned the lions share of what he knows.  But thats neither here nor there.  Its pretty similar actually.

 

I am not saying United States Steel is a good company, I am also not saying its a good investment.  I dont have an opinion on this stock right now.  I would need to do alot more research before I can even get close to that.  This doesnt change the fact that it would have been a good investment a few years ago.  There was a fundamental market shift in the price of commodities which drove the stock price to where it is today.  You can learn from that, and maybe catch it the next time it happens.  This wasnt just the market going crazy for no reason.  The commodities market drove the price.

 

I dont disagree with your statement to invest in what you know, a wide moat and low P/E and D/E.  But lets look at this a little closer.

 

What you know - One of the most important things you can know is to know what you dont know.  But there is nothing stopping you from learning about the Steel Industry. There is nothign stopping you fom reading about what some of the industry experts and top investors think about the industry.  There (should be) nothing stopping you from picking up an annual report and reading it to gain understanding. Just because its the steel industry and you dont understand it, doesnt mean you should just be content knowing nothing about it.

 

Wide Moat - For a long term investment, this is important.  If it is a shorter term investment, not so much. 

 

P/E ratios - I hate this ratio.  Published ratios are often wrong, and are usually trailing P/Es.  The fundamental idea of low P/E is good, I just wish the reliablity of the published numbers was more reliable.

 

D/E ratio - Anything less than one works for me.  Financial stocks may be higher.  Not necessarily sure lower=better, but too much=bad.

 

Price/Book Ratio is another one I like to use.

 

But all these are just ratios, numbers on a peice of paper.  You need to dig further into a company than these numbers before investing.  And to blindly state "I will never invest in a US Steel Company" is just ingnorance.

720756[/snapback]

 

Let's see....American steel companies have been second-rate for what, now, 20 years?

 

Of course, this is strictly speaking of the large producers, not the mini-mills.

[JimBob2232]

Let's see....American steel companies have been second-rate for what, now, 20 years?

 

Of course, this is strictly speaking of the large producers, not the mini-mills.

720759[/snapback]

 

If second rate gets me a 700% gain in 4 years, I'll take it.

[Pine Barrens Mafia]

If second rate gets me a 700% gain in 4 years, I'll take it.

720763[/snapback]

 

There's an old saying about gamblers:

 

They only ever tell you about their wins.

[JimBob2232]

There's an old saying about gamblers:

 

They only ever tell you about their wins.

720767[/snapback]

 

I do not have a position in US Steel. I have never had a position in US Steel. This stock is up, not by some fluke, but because the price of commodities has increased due to years of low production and infastructure development. Coincidentally, many commodities stocks have similar charts. We should have seen this bull commodites market coming. The signs were there. Hopefully next time I will be able to get in before its too late.

 

Heck, i'm not even defending US Steel here. It may be a terrible investment. (And my personal opinion on commodities is that we are nearing the end of this Bull Market). I am simply stating that to rule out an entire industry when looking for stocks that meet your mechanical screening criteria is a bad plan.

 

But then again, I know people who still refuse to test drive a Ford because they had problems with the Pinto they had back in 77. Ford could be giving away new mustangs for $500 bucks and they wouldnt touch 'em.

 

Bottom line is this. If a company is making money, and will continue to make money in the future, then at some share price, that stock is a good buy. Whether the comany makes Cars, Paper Plates, Coal, Steel, Semi-Conductors or Chineese Fingercuffs, it doesnt matter. If the company makes 1M per year, It makes 1M per year. And if you can buy the whole company for 200k, BUY THE COMPANY (even if it makes chineese fingercuffs). If the same company is for sale at 50M, its probably not a good buy. The stock price (for a profitable company) determines whether a company is a good buy.

[Crap Throwing Monkey]

Let's see....American steel companies have been second-rate for what, now, 20 years?

 

Of course, this is strictly speaking of the large producers, not the mini-mills.

720759[/snapback]

 

So what? There are periods of time in the past 20 years that their stocks have performed well.

 

Every company has a fair price. You want to be a successful investor? Find the companies that have low debt, positive net margins, growing revenue streams, and are priced below their fair price on the market. Second-tier company or not, US Steel has met those criteria in the recent past more than once.

[Pine Barrens Mafia]

growing revenue streams

720848[/snapback]

 

This is kind of a suprise to me.

[Crap Throwing Monkey]

This is kind of a suprise to me.

721167[/snapback]

 

Don't know why. The price of steel's only shot up the past few years.

[Pine Barrens Mafia]

Don't know why.  The price of steel's only shot up the past few years. 

721171[/snapback]

 

As a long-term investor (buy and hold), I never really considered the Steel industry since it's had lousy fundamentals for a long time. High debt, bad competitive position, etc. All this talk may have me investigating a bit deeper.

[Chef Jim]

As a long-term investor (buy and hold), I never really considered the Steel industry since it's had lousy fundamentals for a long time. High debt, bad competitive position, etc. All this talk may have me investigating a bit deeper.

721175[/snapback]

 

When you do, thank China.