B2W: a Shit that was Once Sold as Gold!

B2W, an internet retailer company, originated of the merger of Submarino and Lojas Americanas in 2006. Since then, its price has dropped from an average of 80,00 to just 6,00, a stunning drop of more than 90%!

That is, B2W price has to go up more than 1.200% to go back to the level that it was traded in 2007.

The future's not ours to see

Orbe, an asset management, had Hering (HGTX3) in its portfolio since 2006 to the beginning of 2008. Since they sold it, Hering has been a spectacular growth, both operational and in price, as you can see below (numbers are approximated):

Revenue                 225%
EBIT                      650%
Income              >1.000%
Price                  >1.500%

Analysts (In)Accuracy Forecasts

I simply can’t understand why so many guys spend so much time engaged in forecasts. They are always too optimistic and with so little chance of success. In short, it's completely nonsense.

Here is what James Montier says about this:

Let’s say you invest according to the following process: forecast the economy, forecast the path of interest rates, forecast sectors which will do well in that environment, and finally forecast which stocks will do well in that sector. Let’s assume you are right on each forecast 70% of the time (massively above the rates actually seen). However, if you require all four forecasts to be correct, you have just a 24% chance of getting it right! (This assumes each forecast is an independent event).

How Things Work - Part 03

Following the previous post, this one is even better.

On November 2010, Itau gave a strong buy recommendation for Hypermarcas. They say (Google translated):

Hypermarcas shares is a good way to increase exposure to consumer goods sector, which has recorded strong growth in Brazil. The company gained market share recently, which helps to keep revenues growing.

In addition, Hypermarcas has a history of acquisitions "impeccable." With 2.4 billion dollars in cash, the expectations of analysts is that the company continues to make purchases that generate business value.

How Things Work - Part 02

On June, 2010, Bank of America reduced the target for USIM5 to BRL 66.00 (equivalent of BRL 33.00 after 50% split) but stressed the buy recommendation.
Please notice that the target price was even bigger before this.
Infomoney

Today, exactly the same bank says that the price paid by Ternium of BRL 36.00 was too expansive. How can that be?
Exame

Who on the earth still gives a shit to what these "experts" say?

Risk x Upside

Ex-richest man in Ireland declares bankruptcy

Before you can look to the upside potential as did this Irish guy, you need to take into account the risk of fatal loss. As said Klarman once:

By holding expensive securities with low prospective returns, people choose to risk actual loss. We prefer the risk of lost opportunity to that of lost capital, and agree wholeheartedly with the sentiment espoused by respected value investor Jean-Marie Eveillard, when he said, "I would rather lose half our shareholders...than lose half our shareholder's money".

People are so foreseeable

When the stock market goes down, the "specialists" start talking about "defensive" stocks.

Estadão: Ações defensivas para tempos de crise

Defensive stocks, according to the article above, are the stocks that pay high dividend yields.

I heard the same story in 2008/2009, just when the not so "defensive" stocks where incredibly cheap.

I think the contrarian investment strategy is more alive than ever!

I Love Reading these News

• Empresas elétricas são a luz no fim do túnel para a bolsa, diz corretora
• Queda das Bolsas europeias por medo da crise econômica
• Ibovespa em mais um dia de cão cai 6%; nenhuma ação em alta
• Ibovespa recua mais de 2% e investidor busca setores defensivos
• Com aversão a risco, brasileiro procura poupança em julho e captação é maior do ano
• “Há bastante combustível para a queda da bolsa continuar”, diz analista
• Carteira de ações para o mês deve ter companhias que paguem bons dividendos

• Pânico domina Wall Street e Dow Jones tem maior queda diária desde o fim de 2008

Why I can make money

I'm not a smart guy but I'm greatly happy to be surrounded by dumb people.

Look what happened with Mundial, a piece of shit that worth nothing.

• It has been trading for 30 cents since begining this year;
• Then, some crazy optimism soared company share price to above 5, an increase of greater than 1.500% in less than 3 months;
• With that valuation, company multiples were: P/E of 130, P/BV of 15 and EV/EBIT greater than 60 (high indebted company);
• During the gold time, average volume was nearly 200 million, one of the greatest of Ibovespa;
• So unexpected pessimism dropped prices over than 85% in just 3 days!

Also worth reading this article. Following are some highliths:

How things work

CARD3 Yesterday: -7%

News Today: Fator says that the decision of the Superior Labor Court (TST) to reduce the workload of telemarketers from eight to six hours per day must have a limited impact on call center companies

CARD3 Today: +2%

Major Seller of CARD3 Today:

As simple as that.

Why bubbles exists?

This news shows that Skechers (a sneakers maker) promised to a public haunted by obesity to lose weight without ever setting foot in a gym. Launched in August 2009, called Shape Ups, allowed the Skechers to became the second best selling brand of tennis in the United States in 2010 with 9% market share, behind leaders Nike and Adidas ahead, owner of the brand Reebok .

It's not directly related to investing, but it illustrates how people can be persuaded by dumb things like that. Who can dare to expect that bubbles are not recurring?

Haven't you seen that before?

LinkedIn jumps 90% in debut on NYSE

Papers had already been priced at the top of the range estimated by the coordinators of the offer. That's really very good and we can expect that some things never change! 

Always can get worse:

LinkedIn soars 150%

New toxic inventions

BIS alerta para teor tóxico de certos tipos de ETF


Human criativity and sound finance just don't match.

The Upside Down of Irrationality

You can see how crazy things can get in about 100 day trades of CIEL3...

We learn from history that we learn nothing from history

Look at what I've just read in Exame. It seems the same bullshit they're talking now. Any resemblance isn't purely coincidental. As George Bernard Shaw said "we learn from history that we learn nothing from history"

Just amazing!

The economic miracle of so blinded authorities and investors. The year was 1972 when the American daily The Wall Street Journal ran a laudatory article about the country. "Brazil, before a monumental mess, now stars in an economic miracle," the newspaper said.

The only exception was inflation, which was around 20%. But that did not take the sleeping then Finance Minister Delfim Netto. "An inflation of 19% in Brazil causes less harm than 5% in the U.S.," he said. The WSJ then predicted that within ten years, our economy would be the fifth largest in the world.

ETF

Today in CNBC Website: ETFs: New Warnings of Systemic Risk

They are creating leveraged ETFs, wich offer multiple of the indexes they track. There are also options on ETF shares.

The creativity goes on, leading us to the next big opportunity to buy cheap assets.

I told you so

Today, on the investment news site Infomoney:

A Cielo apresentou forte recuperação em bolsa no último mês, com alta de 10,7%, a maior da carteira. Além de apresentar um elevado dividend yield em relação aos demais setores, o papel é eleito pela corretora por conta da percepção de que o fim da exclusividade entre as empresas de cartões não prejudicou de forma tão significativa o case de investimento da empresa e os resultados negativos já estarão absorvidos pelo mercado a partir do segundo trimestre de 2011.

Klarman: The Forgotten Lessons of 2008

In this excerpt from his annual letter, investing great Seth Klarman describes 20 lessons from the financial crisis which, he says, “were either never learned or else were immediately forgotten by most market participants.” Below I try the highlight the main points, in my opinion. The whole excerpt goes here.

• Things that have never happened before are bound to occur with some regularity. You must always be prepared for the unexpected, including sudden, sharp downward swings in markets and the economy. Whatever adverse scenario you can contemplate, reality can be far worse.
• When excesses such as lax lending standards become widespread and persist for some time, people are lulled into a false sense of security, creating an even more dangerous situation.

Mr. Market x MisterX

Again, if you can't understand that, you should better be out of stock market:

In BRL Millions
Asset	Mkt Value	Equity	Revenue	EBIT	Net Income
LLXL3	3.265	954	17	-49	-100
MMXM3	5.774	887	669	-13	-102
MPXE3	5.454	1.658	98	-244	-256
OGXP3	64.213	9.225	-	-288	-41
OSXB3	5.942	2.389	9	-172	-77
PRTX3	3.791	20	-	-0	-2
Total	88.440	15.135	794	-766	-579

Behavioral Finance

If you can't understand that, you should better not be in the stock market.

Fluctuation	Earnings	Price
Decrease	-21%	-81%
Increase	28%	>600%