Absolute Strategies: HD

Wednesday, June 3, 2009

HD Email 5-18-09

To: Friends
Subject: who is buying this stock

Saw a good post tonight on Home Depot...
http://stockcharts.com/h-sc/ui?s=HD&p=D&yr=3&mn=0&dy=0&id=p90711668046

Does RayJay have an analyst that follows HD? What are their thoughts? It is literally only 20% lower than it was before the bottom fell out of the property market 2 years ago... I was at Lowes today and there wasn't a single car/truck at the loading dock...not even any parked down there. I remember in 1999 when I was the loading dock guy at Home Depot in Mandeville...I barely had time to gather carts they were so busy down at that end...anyways... Looks to me like a great short candidate once this summer rally is over...prolly same for all consumer discretionaries.

Investing Philosophy

I believe that at any given moment market prices are never fairly valued. Everyone has a different model with different expectations, but these models do not necessarily average out to a fair price. Often times models all incorporate the same wrong assumptions or some variant of (see any 2008 wall street analyst's earnings expectation). Also, many market participants buy and sell for reasons other than the future expectations of earnings, book value, or anything that has to do with a company's underlying fundamentals. An example of this is when a company gets added to or taken from a market index such as the S&P500. Many market participants must add or drop that security for the sole reason of its involvement in the underlying index; Nothing to do with fundamentals, just keeping up with a benchmark. Another example is specific company fundamentals don't necessarily change on a minute by minute basis, so why do share prices? Or, maybe a CEO sells his shares to buy a second home. Nothing at all to do with the company. These examples introduce the human factor to the markets. The human factor is the primary reason markets are inefficient. The human factor cannot be modeled because we are not always rational and we are always affected by our emotions, which cannot be modeled. I seek to take advantage of this thru technical analysis.

I believe in fundamental analysis to a point. I believe value investing using fundamental analysis can and does work over the long run. Value (conservative) investing should prevent you from buying a company that will go bust, and it should provide you with a reasonable expectation of an earnings stream. I suggest fundamental investing for the sole purpose of income generation (dividends) and not price appreciation, though. That is what technical analysis is for.

Disclaimer

This is not financial advice. This is my independent opinion and there is no guarantee as to the accuracy of the postings on this blog. Some of my friends and family have expressed an interest in what I am personally doing, and this blog is a way for me to easily share that with them. Nothing more; nothing less. Only you know what is best for you as far as your finances are concerned. None of this blog is to be used as recommendation or advice. It is strictly my personal opinion and personal trading plan. Absolute Stategies or any party associated with it shall not be deemed liable for any losses or damage that arises from the use of or reliance on this blog. The only certainty is that my views and scenarios will certainly change in the near future!

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Wednesday, June 3, 2009

HD Email 5-18-09

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Absolute Strategies

Wednesday, June 3, 2009

HD Email 5-18-09

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Investing Philosophy

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Uniquie Visitors Since 06-08-09

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