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Old 29.07.2011, 18:05
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Smi?

Is this a good time to invest in SMI? I know its impossible for anyone to give a definite answer but I see so much discussions on currencies, EUR CHF possible parity etc but dont see any specific threads discussing about SMI stocks and funds.

So, what do you all think? Which sector do you think is the best bet now? Individual picks?

DAX is doing so well compared to the SMI which is < 6000 now. So, is it a good time to invest in the Swiss stocks (for long term)?

Thank you!
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Old 29.07.2011, 18:17
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Re: Smi?

The SMI's current weakness reflects the strength of the franc and the problems that has brought Swiss companies. Since last November I am down 10%, but am in it for at least 5 years. However, if my investments were on dollars, pounds or euros, I'd be looking just as sad.

I wish I had bought now rather than November 2010, but maybe you will say that in November 2011 about today.

It is not a time for week nerves and "never invest what you can't afford to lose"...
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Old 29.07.2011, 18:33
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Re: Smi?

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Is this a good time to invest in SMI? I know its impossible for anyone to give a definite answer but I see so much discussions on currencies, EUR CHF possible parity etc but dont see any specific threads discussing about SMI stocks and funds.

So, what do you all think? Which sector do you think is the best bet now? Individual picks?

DAX is doing so well compared to the SMI which is < 6000 now. So, is it a good time to invest in the Swiss stocks (for long term)?

Thank you!
No my friend. Wait. Lots of demark signals all around and the CHF will get alot stronger when the US and EU go into recession (see chart attached). Once the Swiss banks start to worry about their solvency (it will be all over the news) and VIX doesnt seem to be too high right now. You want to buy when VIX is +35 or 40..... Taking your timing from the yield curve might also be a good idea.

Last edited by Zuger; 29.07.2011 at 19:03.
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Old 29.07.2011, 19:05
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Re: Smi?

Sorry, heres a decent chart
Attached Files
File Type: pdf eu recession.pdf (149.1 KB, 216 views)
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Old 29.07.2011, 19:34
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Re: Smi?

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I wish I had bought now rather than November 2010, but maybe you will say that in November 2011 about today.

It is not a time for week nerves and "never invest what you can't afford to lose"...
Why not invest more & more again if the price becomes more attractive?

You should not be buying shares like buying lottery tickets but thinking about part ownership of a business. You should only buy businesses that you like & understand how they make their money, if you do that you probably won't have a good reason to ever sell. If a business that you really likes goes down because 'Mr Market' gets nervous, it's not that you have lost but been given a chance to buy a bigger stake at a lower price.

I had this happen with Netflix
http://finance.yahoo.com/echarts?s=N...urce=undefined

I paid $28 in 2008, they dropped below $19, however I bought more around $24. Those shares today are $264, they were as high as $300 & have moved by more than I paid in a day! Do I want to sell them ? no way it's a great business!
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Old 29.07.2011, 19:50
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Re: Smi?

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Why not invest more & more again if the price becomes more attractive?

You should not be buying shares like buying lottery tickets but thinking about part ownership of a business. You should only buy businesses that you like & understand how they make their money, if you do that you probably won't have a good reason to ever sell. If a business that you really likes goes down because 'Mr Market' gets nervous, it's not that you have lost but been given a chance to buy a bigger stake at a lower price.

I had this happen with Netflix
http://finance.yahoo.com/echarts?s=N...urce=undefined

I paid $28 in 2008, they dropped below $19, however I bought more around $24. Those shares today are $264, they were as high as $300 & have moved by more than I paid in a day! Do I want to sell them ? no way it's a great business!
Some one has been reading WAYYY too many Warren Buffett books. Buy and hold is dead for the next few years my friend. I remember people have been saying to buy Microsoft, Walmart, and Pfizer and just keep buying them, for the last 15 years.... I dont think its that easy. Unless you know what a companies (or general markets) catalyst is you should steer clear until there is more clarity. But hey, if you think a recession in the US and a debt crisis in Europe is good for stocks then Im clearly wrong....
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Old 29.07.2011, 19:52
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Re: Smi?

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Why not invest more & more again if the price becomes more attractive?

You should not be buying shares like buying lottery tickets but thinking about part ownership of a business. You should only buy businesses that you like & understand how they make their money, if you do that you probably won't have a good reason to ever sell. If a business that you really likes goes down because 'Mr Market' gets nervous, it's not that you have lost but been given a chance to buy a bigger stake at a lower price.

I had this happen with Netflix
http://finance.yahoo.com/echarts?s=N...urce=undefined

I paid $28 in 2008, they dropped below $19, however I bought more around $24. Those shares today are $264, they were as high as $300 & have moved by more than I paid in a day! Do I want to sell them ? no way it's a great business!
That company has a PE of 75....... You should sell that shiit
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Old 29.07.2011, 21:00
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Re: Smi?

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That company has a PE of 75....... You should sell that shiit
I am interested in future earnings, I like the company it's got a long way to go it's a 'game changer'.
Another big winner I have is BIDU http://finance.yahoo.com/echarts?s=B...urce=undefined
, I have recovered 10 times my investment & it's still my 2nd biggest holding, my biggest mistake was selling half last year because the PE was so high, ! It's 86 at the moment.

As I intend to retire next year at 50, thats only possible by letting winners run, playing safe won't achieve the task.
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Old 29.07.2011, 21:22
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I am interested in future earnings, I like the company it's got a long way to go it's a 'game changer'.
Another big winner I have is BIDU http://finance.yahoo.com/echarts?s=B...urce=undefined
, I have recovered 10 times my investment & it's still my 2nd biggest holding, my biggest mistake was selling half last year because the PE was so high, ! It's 86 at the moment.

As I intend to retire next year at 50, thats only possible by letting winners run, playing safe won't achieve the task.
Both of these companies have a correlation of 1 to ISM. What happens if ISM goes to 45? The volatility profile will take both of these stocks down 40% to 60%...... I beg you to sell this stuff, especially if you are about to retire. ISM hit 35 last time. You would be wiped out if that happens again.
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Old 29.07.2011, 21:38
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Re: Smi?

What are the good picks in SMI/SMIM (individual stocks) now based on PE , dividends, etc assuming long term (say atleast 5 years).
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Old 29.07.2011, 22:03
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Re: Smi?

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Both of these companies have a correlation of 1 to ISM. What happens if ISM goes to 45? The volatility profile will take both of these stocks down 40% to 60%...... I beg you to sell this stuff, especially if you are about to retire. ISM hit 35 last time. You would be wiped out if that happens again.
Down 40-60% is fine, I can buy some more, normal trading ranges for both those stocks. I won't be wiped out at all if that happens! It's all about handling emotions.
Volatility is my friend, it used to spook me but not any more.
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Old 29.07.2011, 22:07
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Re: Smi?

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What are the good picks in SMI/SMIM (individual stocks) now based on PE , dividends, etc assuming long term (say atleast 5 years).
I would hold cash for now. If you REEEAALLLY want to invest it buy something that has a good CHF yield, like Novartis etc. Then keep some cash on the side to add to your position when the economy turns (i.e. exports have not collapsed yet even with the high CHF, so that will happen in due course).

Using Novartis, see attached, you can see that buying at a dividend yield of 6% is typically a good bet. Or even a price to book value of 1 or 1.5ish? A PE below 10 for a company with that predictable of a dividend yield is a good bet.

But thats just an example. If you wish to swing for the fences then perhaps the companys that this other gentleman is recommending will be better? But I just feel they will get cheaper in the next 12 months.

For me, Id rather buy some EDZ5 contracts and wait for ISM to go below 45.

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Old 29.07.2011, 22:25
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Down 40-60% is fine, I can buy some more, normal trading ranges for both those stocks. I won't be wiped out at all if that happens! It's all about handling emotions.
Volatility is my friend, it used to spook me but not any more.
When Netflix Breaks that channel you should just get out for 6 months. It will either go nowhere or it will drop 60%.... Baidu is crap in my opinion. I think it will get creamed by the Chinese government.

But I understand Netflix.

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Old 29.07.2011, 22:28
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Re: Smi?

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I would hold cash for now. If you REEEAALLLY want to invest it buy something that has a good CHF yield, like Novartis etc. Then keep some cash on the side to add to your position when the economy turns (i.e. exports have not collapsed yet even with the high CHF, so that will happen in due course).

Using Novartis, see attached, you can see that buying at a dividend yield of 6% is typically a good bet. Or even a price to book value of 1 or 1.5ish? A PE below 10 for a company with that predictable of a dividend yield is a good bet.

But thats just an example. If you wish to swing for the fences then perhaps the companys that this other gentleman is recommending will be better? But I just feel they will get cheaper in the next 12 months.

For me, Id rather buy some EDZ5 contracts and wait for ISM to go below 45.


About "I would hold cash for now."

I agree, I sold all my investments (except gold) in April 2010. For a while I was not sure if I did right but today I would be about 6% down if I had hung on (of course not including the fact that the gold rose).
Difficulty is knowing when to get back into investments; maybe in some months when the $ & euro positions are more transparent?

As others mentioned my preference would be for solid Swiss companies that have good dividend cover & a lower currency exchange risk like Novartis, Nestle, Syngenta whose shares are quoted in CHF.- but when to buy is the big question!!!
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Old 29.07.2011, 22:30
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Re: Smi?

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I would hold cash for now. If you REEEAALLLY want to invest it buy something that has a good CHF yield, like Novartis etc. Then keep some cash on the side to add to your position when the economy turns (i.e. exports have not collapsed yet even with the high CHF, so that will happen in due course).

The OP has think how he would feel if his investments went substancially down, volatility shakes out most private investors at the bottom. Of course the moment things look up then 'cash is trash' but by then it's too late. With the CHF so highly valued, there is a real risk to holding 'safe' cash, but thats another story!

Think how much money investors have lost owning 'Blue Chip' shares, UBS & Swiss for example, the upside is often more limited than the downside, however as it's 'low risk' it's accepted!
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Old 29.07.2011, 22:38
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Re: Smi?

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About "I would hold cash for now."

I agree, I sold all my investments (except gold) in April 2010. For a while I was not sure if I did right but today I would be about 6% down if I had hung on (of course not including the fact that the gold rose).

Difficulty is knowing when to get back into investments; maybe in some months when the $ & euro positions are more transparent?As others mentioned my preference would be for solid Swiss companies that have good dividend cover & a lower currency exchange risk like Novartis, Nestle, Syngenta whose shares are quoted in CHF.- but when to buy is the big question!!!
Has gold actually risen in CHF terms? I thought it peaked around the start of the year.

The Currency risk to Novartis & Nestle is huge as they don't earn the majority of their earnings in CH
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Old 29.07.2011, 22:38
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Re: Smi?

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Think how much money investors have lost owning 'Blue Chip' shares, UBS & Swiss for example, the upside is often more limited than the downside, however as it's 'low risk' it's accepted!
Thats right. The blue chips keep changing colors these days! I wouldnt own any financials until atleast 3 EU nations have defaulted.
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Old 29.07.2011, 22:42
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Re: Smi?




Flat for the year, but a nice consolidation going into 2012...



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Has gold actually risen in CHF terms? I thought it peaked around the start of the year.

The Currency risk to Novartis & Nestle is huge as they don't earn the majority of their earnings in CH
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Old 29.07.2011, 22:46
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but when to buy is the big question!!!
Huge head and shoulders and has been range bound since 1996.... Id wait to see if it goes down to 3,000 or 4,000....

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Old 29.07.2011, 22:51
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Re: Smi?

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Has gold actually risen in CHF terms? I thought it peaked around the start of the year.

The Currency risk to Novartis & Nestle is huge as they don't earn the majority of their earnings in CH
Gold has been pretty flat this year in CHF terms & in fact has fallen since its peak at end 2010.
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