Yep am looking to get back in to OPRA, maybe tomorrow already. I just can't not sell after such a large 1 day return... (It's in my DNA ¯\_(",)_/¯) Especially not since cap gains taxes are literally zero on trading in Sweden, and the cost of trading in-and-out is thus very low (only commission and, in this case, f.x. fee, usually totalling between 0,7% and 1% for the round trip, depending on how much commission you pay (which ranges between 0.09% and 0,25%, in its turn depending on trade size)).
And the 'trading around the position' seems to be the thing I do least badly. So I try to do that – in this case, I've already made up for the commission cost (sale was at $7.25, now its at $7.06, leaving me with a 1% re-entry gain in addition to the 11% gain yesterday – many 1% streams make a great river...)
I am liking FCF more and more, actually, not least to compare with reported earnings. If a co. reports great earnings year after year, but has stubbornly (and sometimes/often also increasingly) negative FCF, that's a warning signal (see e.g. Swedish co. Embracer). When it's the other way around – if a co. reports abysmal earnings despite good FCF, and a seemingly good business – that may be because the management wants too keep stock price low in order to buy it all up/keep it to themselves. The profits are of course real even if they aren't reported as earnings. They may take the form om dividends – the likely future development of which I am paying increasingly more attention to.
I was inspired to do this when reading about the great Hungarian-Swedish investor László Szombatfalvy, who averaged 30% a year for 30+ years, by using a self-made dividend discount model (a version of Gordon's formula, I am told, which he supposedly arrived at independently of this Gordon). Also, by this other guy who was a worker at Swedish railway all his life, saved some money and continually invested in dividend-paying stocks and became a billionaire. It does seem like dividends are a great way to become rich! Or preserve one's riches – which brings me to your bringing up QCOM: it seems that it might be causing you some headache worrying about it. Why not sell a part of it, enough so that you do not feel it is such a large part of your net worth? Might be better than selling puts on it, long term. (Do note that I do not know much about selling of options, though. May well be very wrong.) And then invest the proceeds into very safe, low-valuation div-payers?
That being said, if you have very high conviction in the co., and feel sure that it will be around for a long, long time, one can usually do a lot worse than hanging on to a seemingly great co. at a pretty reasonable multiple.
(P.S. You OBVIOUSLY do not want to take anything I say as advice, especially not when in regard to a specific stock, and especially, especially not one that I know close to 0 about, and you a lot. :-)) |
