I have written several times that I think the way investors access market related information is evolving and the blogosphere will be an important part of this evolution. I expect that do it yourself will be more that thumbing through a guide of open ended mutual funds and picking last year's winner. The blogosphere may also be important to people that work in the business. I get a lot of traffic brokerage firms and buy side shops, this can't be the only blog with that kind of readership.
It thrills me that I can help a few people learn more about how to manage their portfolios. I hope this website continues to be useful and relevant.
To that point I am rolling out a new free thing. If you want a second opinion on a stock, CEF, ETF or something else you can email me or post a comment on the blog. At a minimum I will reply in the manner you ask the question. If you post a comment to ask, that will be how I respond so check back to the comments of whatever post you leave your question on. If you email me a question I will send an email reply. If your question might be useful to other I may write an article about it, but keep private any personal info you share.
What I hope to do with a second opinion is give some top down analysis, give my opinion on what needs to go right, what could go wrong and ask a question or two that you may not have thought of to challenge your idea. If possible I will try to offer up a substitute idea too. I will disclose if I have an interest in the stock you ask about.
I have no idea if there will be any demand for this or not. At this point I will limit people to two second opinions per month. One other thing is that if you ask me about some five letter stock with a $100 million cap I will probably tell you it is a lottery ticket and ask if you can financially withstand it going to zero. I'm not likely to have much more insight than that for most bulletin board stocks.
Hopefully some people will take me up on this.
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8 comments:
Thanks for your offer. I definitely appreciate your insights. What do you think about Merck?
Merck:
From the top down I would say Merck is unlikely to be much of a proxy for the health sector. The stock, to me, is clearly a special situation. To own it becomes a bet on the problems not being as bad as they seem and you get paid 5% to wait.
I would ask how sure are you about the dividend? They pay $1.52 in dividends, and have $3.14 per share in cash and we know cash flow will take a hit. How much is the question and I'm sorry i don't know.
My conclusion is I don't see it outperforming the sector or the market. I think it would take some sort of positive, for now unknown event to create a positive surprise. Clearly this could happen but its not the type of trade I would do. Hope that helps, thank you for the question.
Roger...this is a very generous offer on your part. I have been reading articles from TMF for years now and recently purchased some shares of Quality Systems Inc. (QSII), which was recommended in one of their newsletters. What do you think the longer term prospects are for this medical office software maker are. I believe that during the State of the Union Address Pres. Bush mentioned the need for converting the medical practices to a more paperless operation. I can see QSII participating in this initiative going forward. How do you feel about this one. Your insights are appreciated. Thanks
QSII:
This is a tricky one. some of the numbers are great and some are not. The story is a good one, but that is often the case, good story. I am confused by the dividend. $3.00? They will earn less than that in 2005. Plenty of cash to cover, but it is such a small company and I see it as a growth stock, I wonder why the div is so high. Thisngs like p/s and p/b are VERY high.
From a technical view the stock is 30 points above the 200 dma. Some would call that overbought.
From a top down look. Small cap has lead big cap for the last 5 years. QSII has trounced the Russell 2000 so I don't think the RUT lagging would be important but it is worth knowing.
It looks like it is up 40% in about a month. If yhou have most of that gain (good for you) I would suggest as stop order of some sort at a minimum. If it is more than 10% of your holding and you have most of the gain I would not wait for a stop to elect.
I have nothing bad to say about the company, but it is tough to keep something that is up 40% in such a short time. Hopefully this helps a little and challenges the thought process. Thanks again.
The conventional wisdom on REITs is that they're overvalued and I can't understand why. Granted they've appreciated about 75% in just two years, but I feel that's more a factor of the increasing awareness of REITs as an asset class than of them being in a property valuation bubble.
I think analysts overlook the fact that at heart, REITs are just landlords that have to pay out 90% of their profits as dividends. The business is focused more on profiting on leasing than speculating on property.
Many of the REITs I follow are paying dividends 2 percentage point higher than a 10 year treasury. As long as the REIT isn't using significant leverage, would that be considered a fair spread?
REITs:
Thanks for the question.
A spread of less than 2% would be fair. REITs obviously offer the chance for price appreciation, that combined with anything close to the ten year treasury yield makes them compelling. Sometimes more compelling than other times.
I think your question may be overlooking one important thing. You provide a rational analysis to something that is not always rational. As with all areas of the market, it is logical to expect REITs to rotate in and out of favor. Sometimes an investor will be in front of this rotation and sometimes not. I own two REITs for some clients and at least one for everybody. I don't think the value is very compelling and so am not overweight. I think some degree of exposure is always appropriate but too much of any one area of the market means taking on a lot of risk. Hope that helps a little. Thanks again.
I've recently started following your blog, and I've read quite a bit of discussion about the BRICs. But what about Central, Eastern Europe and Russia, particularly the closed-end fund CEE? Thanks for your insight and your generous offer to comment; I've learned a lot about investing and ETFs from here.
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