My Take On Visa Inc (V) aka Baseball Card Collecting In The 1990s
No matter how many times I say stick to trades with ideal risk-reward ratios for the smaller investor—those being media-hype plays and pumps and dumps courtesy of your friendly local stock promoter, the questions about random real companies keep streaming in—none moreso than Visa (V). The emails came from far and wide and helped inspire the thesis of THIS AOL article I wrote about the company the morning before its IPO. Yup, I was dead right. So how did I know it’d follow a VMware (VMW)-type trajectory; because simple theories work best.
Think about it, everybody and their other mother is comfortable with the strategy of buy what you know, buy blue-chip companies—blehhhhhhh! The absurd popularity of that strategy makes me gag because while it’s worked well in the past, it’s sooooo old news now. I’ll use the example highlighted in my book An American Hedge Fund by comparing this strategy to baseball card collecting—everybody growing up in the 1980s and 1990s who collected those stupid little pieces of cardboard dreamed of their values soaring into the thousands of dollars, just like those cards from back in the 1950s and 1960s.
Unfortunately, the card companies took advantage of this great track record and us suckers, producing those cards en mass and us kids—ignorant to the laws of supply and demand—bought them en mass, only too happy to pack them away and wait to collect our inevitable rewards.
Whoops! Too many people used the exact same strategy and now we’re all sitting on cards of which there is waaaay too much supply and waaaay little demand. Now, I’m not saying Visa will go down—the fact that it’s come this far helps the prophecy stay true a bit longer now since people who bought in at $55-$60 are bragging to their friends and how they expect it to go to $100+. Now their friends are thinking, those people are smart, maybe they know something, maybe it will go to $100, maybe they should also buy in…
I can’t tell you how disgusted I am—here I am sitting on a strategy that’s like a broken slot machine that pays out far too often (but mostly only quarters and half-dollars) and you bastards want to me to guess what number will pop up next on the roulette wheel cuz it’s more fun and scalable. Homey don’t play that game!
In fact, I have no opinion on Visa right now—it’s a classic case of market randomness as the easy money has been made, even if the odds slightly favor it going higher. Forget this, back to higher percentage plays for me. Being able to profit form blatant stock mispricings—no matter that it’ll take me a few years to be remade into a millionaire…now that’s my idea of fun!
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| Date | Stock | Buy | Sell | Net |
|---|---|---|---|---|
| Sept 4 | COIN | $5.70 | $6.21 | $745 |
| Sept 3 | COIN | $6.49 | $6.30 | $305 |
| Sept 3 | COINW | $2.75 | $2.85 | $180 |
| Sept 2 | TAYD | $7.51 | $8.13 | $545 |
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| Aug 12 | APII | $3.25 | $3.40 | $285 |
| Aug 7 | NOBL | $5.02 | $5.49 | $680 |
Total: $26,508 (
114%)
1Dan-O
April 25th, 2008 at 9:17 am
Good morning everyone,
I avoided Visa as well, because of all the discounted stock given to various parties prior to the IPO. (I learned that reading yr. book, by the way).
It’s built in buying pressure, and I told anyone who would listen that if they really wanted to buy it to wait for the eventual dip.
Also, the prospectus detailed some risks that made me uncomfortable. Namely the potential for huge lawsuits and the possibility of companies like Wal-Mart winning the right to process their own payments.
2timsykes
April 25th, 2008 at 9:21 am
there’s always risks and freebies, it was a great buy at the IPO, especially given the phenomenon i detail above, and it probly still isnt too bad, the risk is just up more now
3Dan-O
April 25th, 2008 at 9:35 am
Yeah, you’re 100% right. There definitely is some kind of feedback loop with name brand stocks.
I still have my upper deck cards if anyone is interested in buying them. It has a Bo Jackson rookie card, don’t you know he’s the next big thing?
4Dan-O
April 25th, 2008 at 9:36 am
PSTI is worth a look
5Dan-O
April 25th, 2008 at 9:41 am
I guess I’m too new to short selling but I don’t understand how a stock price can gap up on decreasing volume .
Can you explain that?
6Jibri
April 25th, 2008 at 9:50 am
Remember I’m the newbie here. I went for Visa, so in your theory or your strategy would you short Visa eventual? Even if you got in at 63?
7Jibri
April 25th, 2008 at 9:51 am
Tim, ok I’ve done my homework. I had the concept that the market was buy low sell high. I kept reading about something called ’short selling’. To the blogger, thanks for the tip about investopedia.com
Wow, you’ll are betting against the stock, against the trend. I see the edge now. Thats risky business, but hey isn’t life. You mean that every time a business’s stock falls someone just made money. You should have your 2 mil back in no time. Now that I think about 2 mil is not alot of money.
Man, just think I use to work 2 jobs and not make half of what I made yesterday. I need more info, I’m all over this site and more. Thanks guys.
8Dan-O
April 25th, 2008 at 9:52 am
Just shorted DGLY
9bdog
April 25th, 2008 at 9:53 am
I hope whoever was talking bout shorting PGNX didnt it would be squezzing some juice out of you!
Tim can you tell us the stocks to keep an eye on today….
10vijai - moneyreallymatters.com
April 25th, 2008 at 10:00 am
I just shorted CSIQ has it seems to be breaking its support at 24 and tends to move down..
11Ju
April 25th, 2008 at 10:01 am
any thoughts on possible short for PGNX?
12Ju
April 25th, 2008 at 10:01 am
around when it hits $16
13Dan-O
April 25th, 2008 at 10:03 am
Covered, for a loss.
14Ju
April 25th, 2008 at 10:07 am
what would u guess the percentage for PGNX to rise to $16 mark today? i felt it was possible during the pre market but wanted to just watch this one but it certainly looks like it would or atleast come very close to it.
15InvestorsLive
April 25th, 2008 at 10:09 am
PGNX FDA approval kinda scary it filled the entire gap down from a month or two ago… could do anything if it loses $15 it probably consolidates right under it for a while before heading back up
16vijai - moneyreallymatters.com
April 25th, 2008 at 10:10 am
Investors live, what do you think about CSIQ?!
17Jibri
April 25th, 2008 at 10:11 am
I like how you took a neutral standpoint on Visa. From your story you relate hyped up baseball cards that where suppose to increase in value to Visa.
MA has been on the market 2 yrs and it seems they have 300 dollar potential.
I don’t know guys, looks good.
18Randell
April 25th, 2008 at 10:11 am
Good advice staying away from V. over the last 2 days I’ve profited about 1000. Meanwhile on your “igher percentage plays” you made a whopping 27 bucks!
Yeah, yeah, tell me how the charts looked good, you should have made better entry/exit, blah blah.
19InvestorsLive
April 25th, 2008 at 10:14 am
PGNX nice sell off - to many big boys influencing the price to use Tims strategy but it is a good trade if your quick and know what you are doing…
20Dan-O
April 25th, 2008 at 10:14 am
VISN is up again
21ViciousChicken
April 25th, 2008 at 10:16 am
Could have gotten in 1000 long on CSGH at $1.03 (now at $1.13), but hesitated, and now I’m doubting there is much more upside on the day. Too many losses have made me to conservative.. This pisses me off..
22InvestorsLive
April 25th, 2008 at 10:17 am
PGNX beautiful!
23Jibri
April 25th, 2008 at 10:21 am
Randell, hey give up pick. What you betting on?
24ViciousChicken
April 25th, 2008 at 10:23 am
PGNX beautiful indeed. Of course Ameritrade has no shares.. I’m transfering my trading acct. to TOS…
25InvestorsLive
April 25th, 2008 at 10:23 am
Goode - tell me you found VDTI shorts and your in at an avg of $1 !! haha oh man what a drop
26S Adams
April 25th, 2008 at 10:24 am
JRJC is on fire. I’m long right not but am watching for a short conversion.
27Jibri
April 25th, 2008 at 10:25 am
PGNX closed @ 10.64 yesterday, so if you put an order in before the bell, buy limit order @ 10.64 will you more than likely get it? Even though after hours shows $3 +
28Keith E
April 25th, 2008 at 10:27 am
Checkout WAVE possible TIM play
29Davey
April 25th, 2008 at 10:28 am
Jibri,
You gotta go to investopedia and study up a bit, you need to know something that simple before trading.
30Tony Ellis
April 25th, 2008 at 10:29 am
don’t short JRJC, just add fuel to the fire.
31Brewster
April 25th, 2008 at 10:29 am
I’ve been posting about going long with PGNX for a couple of days now — been jumping on & off it since it was in the 8-9 range. I see it flirting with the $16 range and never going much higher/lower, but you never know, it’s getting a hell of a lot attention already, look at the volume..!
32InvestorsLive
April 25th, 2008 at 10:30 am
Jilbri - no, it gapped up on news after hours. Stocks can trade before the open and after the close… if they do they can open much higher or lower… like today, the cheapest you could have purchased it today is 12.9101 if you were fortunate enough to nail the low of day.
33Adam
April 25th, 2008 at 10:42 am
IMO V is a major factor in creating profit for banks right now which is helping to offset subprime losses. The publicity of this is helping to attract more people to V thus increasing the price (hype). Visa doesn’t carry any consumer debt like the other CC companies, they just process payments…. and a lot of them. And a ton of people use Visa CC’s and Debit Cards myself included. So, im pretty hot on this one for right now at least… the hype has helped me make a healthy profit thus far.
34S Adams
April 25th, 2008 at 10:47 am
WAVE has a possible 3 billion in assets they can sell. Don’t short it.
35lmsmith
April 25th, 2008 at 10:49 am
PDO ~>> on fire for some reason.
36Ju
April 25th, 2008 at 10:53 am
im punching myself in the face for not playing PGNX the way i thought it would.
37Keith E
April 25th, 2008 at 10:53 am
Just watching at this point
38Keith E
April 25th, 2008 at 11:00 am
Kudos to whoever saw the gap open and waited for the short opportunity onPGNX not dont be greedy.Good luck to all
39Dan-O
April 25th, 2008 at 11:03 am
Heads up, the US Navy fired a warning flare at an Iranian boat. Oil traders buy your f’n asses off!!!!
40monkiman
April 25th, 2008 at 11:04 am
TITN looks like it wants to go back up, it hit mid 19’s
41Rambone
April 25th, 2008 at 11:06 am
Short PDO at 8. Should test 7.40 by end of day. Confirmed peak top.
42lmsmith
April 25th, 2008 at 11:13 am
Rambone- I am looking for a good entry point to short PDO …….Maybe 8. 20 but I will give it a few- might go higher
43lmsmith
April 25th, 2008 at 11:21 am
HAHA right on the money—– entered short at 8.20——
44lmsmith
April 25th, 2008 at 11:23 am
covered @ 7.75…… bouncing too much
45bdog
April 25th, 2008 at 11:31 am
PDO doesnt fit the pattern yet get ready to feel some pain with commodity plAYS LIKE KOG…Be warned
46Dan-O
April 25th, 2008 at 11:32 am
I’m not a sea captain but how exactly do you pilot a boat in a taunting manner?
47Iranian Sea Captain
April 25th, 2008 at 11:35 am
I do whatever I want, whenever I want to whomever I want….Stupid American.
48ViciousChicken
April 25th, 2008 at 11:36 am
Anyone think IVVI is a good short?
49Goose
April 25th, 2008 at 11:38 am
on 2K volume?? woa.
50ViciousChicken
April 25th, 2008 at 11:39 am
Hahah, just gotta be patient (and ballsy).