Good morning,
I was at my bar last night when one of my partners told me that there is an offer to buy over the bar and the offer price was ridiculous. I was told that the buyer had visited the bar on numerous occasions over the past few weeks to observe the business flow and decided that his offer was good based on what he saw. This is interesting. I just wonder if he is interested to take-over the business or only the location. Didn’t he ask for our financials before he decide? Has not he research on the macros to know that we are the only wine bar in the whole vicinity and the authority will no longer issue any new alcohol license? Is he sure that our earnings will be good for the next 5 years and did he project the bar’s future earnings with all these considerations to discount back to today for the bar’s actual value?
Is not buying shares in the stock market the same? Successful stock traders do their homework to understand the macro economics, the industry the company operates in, the previous earnings and future expected earnings, the management and the company’s financial before they risk their money in the company’s share. They are interested in the company and not the share price. I sincerely hope that those who intend to trade the stock market to attend a short course on the fundamentals of stock trading before they get started.
So I was right about Dubai as mentioned in my last blog. The markets agreed with my prediction and US stocks ended little changed last night. Retailers were the main drag on the market on concerns over possible weak holiday sales. Banks led a late rebound in shares. The PMI report beats estimates and with the news coming out from Dubai that the debt in question is much smaller than previously been considered helped the market recovery. I am bullish for the ISM Index and pending home sales tonight and I believe I will ride on the shares I bought last night.
I bought NOV again last night at $43.13 and added another position at $42.49. The stock closed at $43.02, so on the average I am in the money. I am still holding on as the price did not hit my limits. I also bought a position in Forest Lab (FRX) at $30.53. It closes in the money at $30.66.
How did I trade when I was in my bar? That’s why I am beginning to love my 3GS iphone.
By the way the stock KUTE selected on Sunday, CGI Group, the symbol is GIB. I apologize for writing it as CGI on the blog. This counter closed 0.03% higher at $12.43. SIM gained 1.29% to close at $7.87.
Have a great day today.
Francies Cheng
BBus MAppliedFinance
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