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 |
| Aug 18 | FOUR | $2.80 | $2.66 | $342 |
| Aug 14 | APII | $2.66 | $3.30 | $1261 |
| 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).
51Goose
April 25th, 2008 at 11:42 am
Damn son…I dont got the balls for that man. haha
52Goose
April 25th, 2008 at 11:46 am
UNS anyone?
53ViciousChicken
April 25th, 2008 at 11:50 am
Hey I didn’t say I did short it, I just tested the waters to make sure TDA had share (which they do) :) . I’m getting itchy. I haven’t made a trade all week..
54Dan-O
April 25th, 2008 at 12:02 pm
VC I’m in the same mindset, but I always lose money when I chase a trade.
55ViciousChicken
April 25th, 2008 at 12:10 pm
Yeah, I know, I do too, yet I find myself toying with shorting RGN at the moment.. I’m like a moth to the flame…
56ViciousChicken
April 25th, 2008 at 12:13 pm
Correction- I now have a small position in RGN at 1.77.. Lets see if my luck changes..
57Mike
April 25th, 2008 at 12:20 pm
wow, RGN down to 1.70 already
58Jibri
April 25th, 2008 at 12:21 pm
Say it with me, Vissssssaaaaaaaaaa, ok as we go into a cashless society we will use our cards more. More some will use credit now more than ever because of the lack of cash. Others like myself will use debit. Either way Visa, Mastercard and the rest will profit. Somehow they take on no liability on their books.
Wait till christmas season, shopping ahhhhhhhhhh, the use of plastic.
If only Visa Inc was international for the IPO.
59Evan
April 25th, 2008 at 12:21 pm
Great entry ya vicious Chicken you! Let us know when you take the profit!
60Mike
April 25th, 2008 at 12:22 pm
what the heck is this? from e*turd:
Enter Order: Stocks
This stock cannot be sold short as its current price is below $3, or you have specified a stop or limit price below $3.
61ViciousChicken
April 25th, 2008 at 12:28 pm
Got tired of tempting fate.. Covered at $1.649. Too bad only 400 shares of my original limit had been filled… But hey $28 gained (after comission) is better than $28 lost…
62TT
April 25th, 2008 at 12:32 pm
short some PSTI 4.85. fail to break out $5 again.. should go back to low 4 or 3
63Mike
April 25th, 2008 at 12:34 pm
EDEN?
64ViciousChicken
April 25th, 2008 at 12:35 pm
You ever notice that day trading is like playing Deal or no Deal?
65Jibri
April 25th, 2008 at 12:47 pm
So let me get this right, to short a stock;
buy a stock that you think will fall in price, cover when you think it is going to rise again to cover your
loses?
And if your right you take the difference for the price which is your profit?
66Dan-O
April 25th, 2008 at 12:49 pm
It’s more like you get a stock loaned to you by your broker, you sell it to someone else and then hopefully buy it back cheaper and keep the difference.
67Jibri
April 25th, 2008 at 12:53 pm
VC I’m using you as a learning tool, plus Tim. Ok RGN just hit 1.62 so if you would have waited you would have around $60 correct?
68Eric T
April 25th, 2008 at 12:53 pm
Who here made money on the VMware IPO? I doubt there is anyone here who makes money consistantly trading IPOs.
69Dan-O
April 25th, 2008 at 1:00 pm
Don’t talk to me about VMW, I have nightmares about that stock.
Any thoughts on XFML, it’s not ideal (looks strong right about now) but it’s a small spike up in a major down trend.
70monkiman
April 25th, 2008 at 1:01 pm
vicious chicken, trading is almost like gambling, however you can tweak the odds in your favor. I am a gambler, so this fits my personality. And making $28 is great, you won man, any gain is a WIN.
71ViciousChicken
April 25th, 2008 at 1:02 pm
Jibri, that is correct, but always take into account commessions when you have a very small position.
Essentially with 400 shares shorted, every penny the stock went down was an extra $4, so the drop from $1.77 to $1.65 was a $.12 difference, which was $48 minus buy and sell commissions at TD Ameritrade, which are $9.99 each (not ideal for small time traders..), and I made $28. Had I covered at $1.62 the difference would have been $.15 which as you correctly stated would have been $60, for a net of $40
72Ryan
April 25th, 2008 at 1:02 pm
Eric T,
First of all, you need to be able to get an IPO at its IPO offering price, not the secondary price. For instance, if you had got any V at IPO price of $44, you made over 60% by now (if you sell and keep the profit) but if you bought at market at $56 the day V started trading, you did not make as much as who profited buying at $44. And there are only very handful of good IPO that go up, others suck. Look at MAKO, that I thought would go higher but failed. IPI looks okay for now, if you bought at its IPO price of $32, but if you paid $50 in the market, then you are toasted.
73bdog
April 25th, 2008 at 1:09 pm
look at ali baba what a joke trying to ride te chinese coat tails….IPO’s are like balls most of them stinks and there is only like 2 good ones a year. ; )
74bdog
April 25th, 2008 at 1:10 pm
Oh yeah and most of them drop
75Ryan
April 25th, 2008 at 1:13 pm
Anyone have any new opinion on FEED? Chart looks pathetic, and prone to drop like a rock but still moving in sideline.
76ViciousChicken
April 25th, 2008 at 1:15 pm
Monkiman- well said.
Jibri, be careful about trying to learn from me! I have always been more of a long biased investor, so trading is pretty new to me. If you add up all of my trades so far, I’m still a little in the red, so I have a lot to learn. Luckily my long(er) term investments are keeping me our of the hole..
77bdog
April 25th, 2008 at 1:20 pm
XJT…..rejected a buyout offer so stock spiked in hopes it would sell…im wondering if theywill make a higher offer or if stock will sell off due to rejection..anyone seen the DVD im guessing it says stay away from any stock with takeover hype
78bdog
April 25th, 2008 at 1:28 pm
Goota love this ticker…THC…no real big news they aquired a hospital and got some award nice runup and some sideways action big volume spike…might be worth watching
79Jibri
April 25th, 2008 at 1:29 pm
TIm, ok I took back some of what I said, just some. I see your theory or strategy. If everyone has it, its not as valuable. But if supply is short the value along with price increases. Visa’s market capitalization shares and outstanding shares is 2x or 3x the amount of MA. That will be a factor, either theory or time will tell how it will effect Visa’s stock.
80Jibri
April 25th, 2008 at 1:57 pm
anybody short Ford?
81Eric T
April 25th, 2008 at 1:57 pm
Ryan - thats exactly my point. Mostly underwriters at the investment banks get the IPO price before open.
But in V’s IPO case it looks like a lot of people who bought post opening in the mid 50’s are cashing out and profiting. Wouldn’t you say?
82bdog
April 25th, 2008 at 2:12 pm
Dont short F TIM method dont mess with earnings
83Jibri
April 25th, 2008 at 2:17 pm
bdog elaborate, Ford has been down all the way to 4.95
84Jibri
April 25th, 2008 at 2:17 pm
I looking for my first short. Ethanol anyone?
85Ryan
April 25th, 2008 at 2:21 pm
Eric T,
Publics like you and I can also get new IPOs at the initial offering price, if your broker has availability. One of the reason I opened account with Ameritrade, Etrade, Scottrade, and Zecco (and now going to open one with TOS) is because when the opportunity knocks, I can grab it. Before V became public, I contacted all brokers and Ameritrade told me they can offer me V at initial price, and I got it. V hit $72 just back few days ago, and I thought it had already made 63% for me since V became public, I went ahead and sold half of my position. And just after 3-4 days here comes $76 today, woulda, coulda, shoulda kept it.
The only reason people may not be tempted to sell it before earning is it could be like GOOG. I can see a lots of selling will happen whether or not its earning will be great.
86Dan-O
April 25th, 2008 at 2:23 pm
It’s Gub’mint subsidized, not a happy place to be if you are a short.
87Goat
April 25th, 2008 at 2:26 pm
VSCI moving!
88Jibri
April 25th, 2008 at 2:28 pm
With all this money being made, anyone have suggestions on a tax plan?
89Ryan
April 25th, 2008 at 2:32 pm
What tax? hehe…wouldn’t it be great if the next president (whoever is going to be) get rid of capital gain tax
90Mike
April 25th, 2008 at 2:36 pm
Too bad the next president will most likely raise the capital gains tax actually……….
91bdog
April 25th, 2008 at 2:37 pm
yea but it finally made money…I think 100 million…earnings related so the odds arent in your favor…i liked the chart too but too many institutions play that stock and its not a good risk reward thing like psti was or any other POS stock…Ford is a real company. I learned that the hard way. 4.95 could very well be its bottom not much downside.
92Wesley Snipes
April 25th, 2008 at 2:39 pm
Tax, what tax?
93Dan-O
April 25th, 2008 at 2:42 pm
CFSG is at a major testing point
94Jibri
April 25th, 2008 at 2:42 pm
A real company, blue chip? What should I be looking at for penny stock or fake company? Low volume, low price?
95bdog
April 25th, 2008 at 2:56 pm
like tim says %95 of penny stocks fail you shouldnt have trouble finding any.. He told me use caution with real penny stock companies for example commodity plays such as energy or gas in a time like this. Look at HPLF thats an example of a POS company. Just wait till it runs up %40-%100+ over some days over hype news…not earnings, or buy out or and real news….then let it go sideways and close in negative then short the lil puppy. Presto the odds are lined up in your favor for a drop… remember all those bitter shareholders want to get something from all the money they lost.
96Joseph
April 25th, 2008 at 2:58 pm
Do you have Tim’s DVD/book? Just buy either one or both, it will tell you what to look at man or go back and read some of the earlier posts.
97Jibri
April 25th, 2008 at 3:02 pm
Man, everyone here should have at least 6 to 7 figures net or at least had.
98Jibri
April 25th, 2008 at 3:02 pm
How do you guys cover your taxes at the end of the year??
99Mike
April 25th, 2008 at 3:18 pm
Jibri - find a CPA (like me soon)………….they will help you.
100Mike
April 25th, 2008 at 3:23 pm
Even though I hate taxes and do not do taxes at my job at all….
101Max
April 25th, 2008 at 3:30 pm
you could do your taxes yourself, they aren’t hard, just tedious
102JB
April 25th, 2008 at 4:42 pm
WOW.. pure entertainmnet. Who ever is ignoring VISA because of the logic made by this article is STUPIDDDD….
103JB
April 25th, 2008 at 4:44 pm
DAN-O is the biggest joke here!! LOL I wonder where he will be this time next year?
104Landon
April 27th, 2008 at 2:47 pm
I wonder how many people between the ages of, say, 25 and 32/33′ish got into finance because they were just the right age at just the right time during the whole baseball card thing.
If I look back on my three closest childhood friends- all of us who were voracious sports card collectors as 12, 13 and 14 year olds- 2 of them went into finance or related fields.
Many of those lessons learned in childhood with baseball cards, markets, false economy I carry with me today and oddly enough, I regularly find myself contrasting those ever-so-simple lessons learned from sports cards as a kid against far more complex financial matters today.
Good article.
105timofy psyches
April 28th, 2008 at 2:25 pm
yippity doo da, yippity day, i make money on visa all day despite what you say
106PETEKUSH(TIMBUCKS: $35)
May 7th, 2008 at 1:57 am
TIM CHECK OUT NLS CHART LOLOKS LIKE A SWEET SHORTS COMMIN UP?