What does one do in this situation?

[Prepper Pete]

What trading advice would one give when a stock flatlines for over 2 years. Here is an example (CSX) CleanSpace.

 

[tech/a]

Well if it was me I would swallow it and take the tax loss particularly if I bought at $6.

Ugly.

If you were thinking of buying a flatliner then Id be looking for life and buying into momentum NOT BEFORE.

 

[dyna]

Thanks for posting that chart . I'm sure it will be of interest for many others , here .
All I can add to the advice so far , is this.
One of the major advantages of a diversified portfolio is that you can readily write off the dogs against ( hopefully ) your capital gains before the end of the current fiscal year.
For example , in my own case for 2022- 23 , I'm on the hook for about 13 grand in C. G . Tax . So , in this "plus and minus "game , I'm in front . Pay the goddamn tax and move on to the next financial year.
By the way , try not to carry forward those capital losses for later tax returns . In these inflationary times , they lose their value at that same inflationary rate .

 

[divs4ever]

Acorn Capital Limited

Sell

27 Apr 23

7.90%

5.37%

1,944,313

now from what i have seen ( of Acorn ) they are patient and forward looking investors

and CSX should have been REALLY popular in the last three years ( nuking those pesky airborne pathogens )

do you see another airborne disease scaring the planet , if no , i would consider reducing/selling

however if you think the next super-bug is just around the corner ( like some conspiracy nuts do ) MAYBE this has legs and MIGHT be worth a few more bucks if the price keeps slipping ( get your average down and be ready to harvest a small profit , high risk , but maybe this isn't just a R&D money-pit )

BTW i would NOT be bringing the suitcase if you plan to buy more , it hasn't retained popularity after the pandemic this might take years to gain traction , if it does at all

 

[Value Collector]

It depends on the company, I know nothing about the company in question, but it is possible I would buy a company with a chart like that if I thought it was good value and paid a decent dividend.

I mean a company that had no real options to grow, but is highly profitable in its little niche might flat line, especially if it’s paying out all its earnings as dividends.

I mean if it was earning say 16% in dividends, it wouldn’t require any capital growth to be a fantastic investment, provided that earning power was going to stick around.

 

[tech/a]

It depends on the company, I know nothing about the company in question, but it is possible I would buy a company with a chart like that if I thought it was good value and paid a decent dividend.

I mean a company that had no real options to grow, but is highly profitable in its little niche might flat line, especially if it’s paying out all its earnings as dividends.

I mean if it was earning say 16% in dividends, it wouldn’t require any capital growth to be a fantastic investment, provided that earning power was going to stick around.

VC
Where do I find one of these !!!
The only real risk is that it gets delisted.

 

[divs4ever]

VC
Where do I find one of these !!!
The only real risk is that it gets delisted.

look VERY hard in unloved places , but yes the risk of delisting ( going broke , just delisting from the ASX but still operating , or being taken over ) is very real , and probably offsets the 10% div. yields ,

however some need a bit of active buying , being unloved can reveal some large SP drops when impatient investors attempt to leave ,

fortunately or unfortunately , the majority of the market seems to desire capital gains and company growth , so a boring unambitious company is rarely a market darling

 

[Value Collector]

VC
Where do I find one of these !!!
The only real risk is that it gets delisted.

I haven’t actually personal invested in any such situations, was just saying that I would.

But, I remember Buffett going on a buying spree about 12 years ago buying up local newspaper’s, at the time he could buy them for only 2 times their earnings, he knew they would be dead in 5 years, but the dividends in between his purchase and their death was a good enough return.

 

[tech/a]

I haven’t actually personal invested in any such situations, was just saying that I would.

But, I remember Buffett going on a buying spree about 12 years ago buying up local newspaper’s, at the time he could buy them for only 2 times their earnings, he knew they would be dead in 5 years, but the dividends in between his purchase and their death was a good enough return.

Interesting that there were companies returning well more than 20% in Dividends for 5 years before their demise.

 

[Value Collector]

Interesting that there were companies returning well more than 20% in Dividends for 5 years before their demise.

Dividends were 20%+, not because the company was strong, but because the share price was so low.

Earnings at the newspapers were in decline for years, and everybody knew they would be dead soon. so the price they were selling for was so cheap that it made their cashflow look large.

Sometimes the share price can be so low that even a terrible company is attractive, these are called “Cigar butts”, they are a bit disgusting, and only have a couple of puffs left in them, but because you can pick them up for free/cheap they are worth it.

Ben Graham (Warren Buffett’s Mentor), built a career buying cigar butts.

 

[tech/a]

Dividends were 20%+, not because the company was strong, but because the share price was so low.

Earnings at the newspapers were in decline for years, and everybody knew they would be dead soon. so the price they were selling for was so cheap that it made their cashflow look large.

Sometimes the share price can be so low that even a terrible company is attractive, these are called “Cigar butts”, they are a bit disgusting, and only have a couple of puffs left in them, but because you can pick them up for free/cheap they are worth it.

Ben Graham (Warren Buffett’s Mentor), built a career buying cigar butts.

Learnt something thanks
You still have to purchase $100k to return $20k plus. So although its cheap it doesn’t mitigate risk.

For me though — not knowing how long the dying process will take or the dividend % to be paid going forward to me it’s only a risk capital investment. Not for me

 

[Value Collector]

Learnt something thanks
You still have to purchase $100k to return $20k plus. So although its cheap it doesn’t mitigate risk.

For me though — not knowing how long the dying process will take or the dividend % to be paid going forward to me it’s only a risk capital investment. Not for me

Yep, it can be risky, but that’s why the market is sometimes willing to drop them for next to nothing.

In Buffets case he was buying 100% of the newspapers. So had control of how much of their cashflow got paid out, and when he would finally shut them down and liquidate their remaining assets.

 

[tech/a]

Yep, it can be risky, but that’s why the market is sometimes willing to drop them for next to nothing.

In Buffets case he was buying 100% of the newspapers. So had control of how much of their cashflow got paid out, and when he would finally shut them down and liquidate their remaining assets.

Ah and there lies the secret sauce.

Buffet and others like him OWN the risk!
if we look around those with extreme wealth own more than property and Shares they own and create Companies.

Here is where Dynasties are born

 

[divs4ever]

Learnt something thanks
You still have to purchase $100k to return $20k plus. So although its cheap it doesn’t mitigate risk.

For me though — not knowing how long the dying process will take or the dividend % to be paid going forward to me it’s only a risk capital investment. Not for me

remember some of those businesses can/will reinvent themselves , for instance some newspapers moved into the digital communications realm , and Buffet in particular offers bridging loans to carefully selected businesses

so say four of the 5 wind-up in the 5 years , but the survivor remodels into a PR and image consulting firm and grows nicely ( or in Australia would become the target of a reverse take-over , but still stay listed )

investing is still gambling , but investing you try to reduce to potential for a total loss of capital

 

[tech/a]

Investing in anything from stock to property to business to people —- Life itself is a risk
the best we can do is learn how to mitigate it.
Those who don’t fear others perceived risk but understand how to use it to their advantage
live very different lives to those who fear risk.

 

[Value Collector]

Ah and there lies the secret sauce.

Buffet and others like him OWN the risk!
if we look around those with extreme wealth own more than property and Shares they own and create Companies.

Here is where Dynasties are born

Kind of, there are definitely things you can do as you get bigger, that smaller portfolios can’t do. But these special situations aren’t the reason he got rich, he does them because he was rich, and he got rich in ordinary investing.

But, even Buffett started out from the bottom, and grew his investment funds buying into value situations on the share market like the rest of us.

Many of his biggest financial wins have come from regular stocks he bought on the share market, not special situations.

Take for example his big gains made on the Washington post, Coca-Cola, American Express and many others, anyone could have bought these when he did.

 

[rcw1]

What trading advice would one give when a stock flatlines for over 2 years. Here is an example (CSX) CleanSpace.

View attachment 167223

Good afternoon Prepper Pete
rcw1 fast trades … wacky do the cows went moo … ha ha ha

So for mine:

Stop loss contingency mate?; rcw1 would have sold at a loss well before the capitulation of SP and wrote it off at tax time … also put the experience down as a big learning … we all learn and punk up at times

Then ask yourself this should you wish to do so:

What earn would you have generated with that cash loss over the 2 years whilst CSX flatlines ???

Have a safe and happy Christmas

Kind regards
rcw1

 

[Value Collector]

remember some of those businesses can/will reinvent themselves , for instance some newspapers moved into the digital communications realm , and Buffet in particular offers bridging loans to carefully selected businesses

so say four of the 5 wind-up in the 5 years , but the survivor remodels into a PR and image consulting firm and grows nicely ( or in Australia would become the target of a reverse take-over , but still stay listed )

investing is still gambling , but investing you try to reduce to potential for a total loss of capital

I don’t agree that investing is gambling, yes it has risk, but just because risk exists does not mean you are gambling.

Although you can definitely gamble in the share market, but I wouldn’t class the gamblers as investors.

 

[divs4ever]

i class gambling as anything that has even a minuscule risk of total loss , be that crossing the road , or having a bank deposit in the 'bail-in era '

however the stock market also has a solid potential upside

 

[Value Collector]

i class gambling as anything that has even a minuscule risk of total loss , be that crossing the road , or having a bank deposit in the 'bail-in era '

however the stock market also has a solid potential upside

At that point then the word loses all its meaning.

“Gambling” to me is making bets in a game of chance, especially where the odds are against you.

Take a roulette table for example.

If you bet $50 on black, you are gambling because your outcome is determined by a very short term game of chance, and the odds are against you eg 18 chances to get black and win vs 19 chances to get red or green and lose.

But if you are the casino taking the opposite side of that bet, it’s not gambling at all, yes there is risk, but the system is set up to make you win, the roulette table becomes an investment, not a gamble.

——————

This is similar to how the stock market works.

Eg people making bets that the shares will rise or drop tomorrow, are a bit like gamblers betting on black or red.

But people taking rational, long term ownership interest in a range of businesses based on values that put a margin of safety in their favour are not gambling.

Yes, both the casino and the long term value investor are taking on risk, but it’s not the same as gambling.