FMG - Fortescue Ltd

[Prospector]

i dont understand-u dont use a stop loss-

i understand we need to make jusdgements but take the stop loss out of it and i feel we are left with judgements vs the current price-

Just checking, are you talking about a trailing stop loss or a stop loss that ensures you dont lose more than say, 5% from what you paid.

Well, until this last rout, my shares have always gone up! : Well, not actually, but the only times I have been blindsided are with MFS, which, while trending downwards, didnt really cause any real concerns until 1 day it just collapsed; and with Bradken - again it fell instantaneously but still managed to get out ahead. A stop loss wouldnt have helped in both cases. And most of my shares are held in my superfund, so I cant really trade in and out of a share too much or else the ATO would consider me a trader, and then I would lose the SMSF 'privileges' and a significant penalty.

 

[gav]

Gav,

Not much to say (it won't get your $$$ back), but these are times for learning. That said (some things to think about)...

1. William O'Neil suggests a stop at 4% (from memory)

2. Recall journo at Courier Mail told readers to have stop at 10%

3. Other "educators" put stops at 4, 6 or 8%

4. Alternative is to use some sort of pivot as stop loss so that you don't lose too much of capital.

Need to work out whether you are in this for the long(er) term or (buys) are a short-term trade. Seems you are caught between the two? (To do this, you also need to know why you bought the shares in the first place.)

Tim

Thanks Tim. As for the part highlighted in bold, you are not the first person to mention this to me.

 

[BrownHornet]

Geez this forum can be a good psychology lesson. I can't believe those that continue to call the bottom. Started about $9. I'm with Prospector...well done. Sure supporters will call told you so as it bounces for a few days on rate drop but give this a month I am confident this will be lower than $3.50.

WOW. Didn't really expect under $3.50 this week but hey. Keeping checking SP as a chance to buy back in. Had an alert set for $3.45. Now, no chance more likely to set an alert at $2.50. Can't see this correcting in near term. Need to remember in times like this that current SP is not a reflection of the company's value. Iron ore prices are taking a bit of a hammering regardless of 12 years of contracts. All the supporters of this what do you think Andrew needs to pull out of his hat to reverse this? My historical data shows it is very unlikely for a company to reverse fortunes from this position particularly now that the US Hedge fund is out of favour...and credit...on FMG

 

[Trembling Hand]

1. William O'Neil suggests a stop at 4% (from memory)

2. Recall journo at Courier Mail told readers to have stop at 10%

3. Other "educators" put stops at 4, 6 or 8%

Tim I'm not sure what % figure you are talking about, SP or capital, but they all seem wrong. IMHO.

Its generally accepted that risking any more than 2% of your capital as a trader will end in a blow up. Now that has nothing to do with actual share price movements.

And of course most people who fall in love with a stock like FMG are not actually traders. And I would guess completely blowing away sensible position sizing.

WOW. Didn't really expect under $3.50 this week but hey. All the supporters of this what do you think Andrew needs to pull out of his hat to reverse this?

Not another rabbit with myxomatosis I hope.

 

[tcoates]

TH,

There were/are all initial stops.

Obviously (?) when the share price moves in the intended direction then you can move the stop as appropriate.

The percentage has nothing to % of capital risked. That is, if you only want to risk 2% of capital, then using a stop placed at 4% (or 6 or 10%) from entry, MUST ensure that in your worst case (assuming no slippage) would not lose greater than 2% of total capital.

Hope that makes sense.

(The reply was in relation to deciding to sell after the share price lost 55% of value. And if you looked at prev. posts there seemed to be confusion between a trade vs investment (even if these have a stop).

Tim

 

[tcoates]

Further to prev post...

... if I were to follow Jim Berg's example, he does not want the initial stop to be greater than 10% from entry price.

Regardless of where the initial stop is set, he would not be risking more than 2% (or less) of capital.

Tim

PS. The only time when it might be acceptable to lose 55% and remain in the game is if you had not lost more than 2%. But then you might query why you still had the share if it had gone down that far.

 

[afinno]

Thats correct, 55% down in FMG. Originally in this for the medium-long term, and did not set a stop loss. But now I just dont know...

Trying to learn from my mistakes, I set a stop loss for IPL. I get stopped out in less than 1 week. Today, IPL is in the green and well above where I sold it.

It seems the more I learn, the worse off I am

I'm relatively new to this game and i'm in a similar position to gav with FMG where i'm down by about 55%.

I researched the company and liked it so decided to invest. Of course i don't like to see the price drop but i figure i've hit the point of no return. I don't really want to sell with that amount of loss. Would almost prefer to sink with the ship. I guess my question is, should i buy, sell or just sit and wait it out for the next year?

Buy: This could allow me sell sooner at a lower price in the future with profit.

Sell: Essentially means i'm out 55% of my acquisition cost.

Sit: I'm in no rush to get my money back so could probably wait it out for up to a year.

Also, if i decide to sit would it be good to tack on more volume at a lower price if i can afford it?

At the moment i don't really see selling as an option. But on top of that i don't think that FMG is a bad company so would consider staying long term (especially if they eventually do dividends).

Obviously i'm looking for other peoples perspective on my situations and will ultimately make my decisions based on many factors.

Cheers.

 

[Prospector]

I hate to sell a share and realise a loss. Unfortunately I am sitting on a few at the moment I have decided to look on all this as a positive, and review the portfolio. And look at shares that pay good dividends, that actually helped pay for my tax this year. But I wouldnt have done this a few years ago.

 

[jackson8]

I'm relatively new to this game and i'm in a similar position to gav with FMG where i'm down by about 55%.

I researched the company and liked it so decided to invest. Of course i don't like to see the price drop but i figure i've hit the point of no return. I don't really want to sell with that amount of loss. Would almost prefer to sink with the ship. I guess my question is, should i buy, sell or just sit and wait it out for the next year?

Buy: This could allow me sell sooner at a lower price in the future with profit.

Sell: Essentially means i'm out 55% of my acquisition cost.

Sit: I'm in no rush to get my money back so could probably wait it out for up to a year.


Also, if i decide to sit would it be good to tack on more volume at a lower price if i can afford it?

At the moment i don't really see selling as an option. But on top of that i don't think that FMG is a bad company so would consider staying long term (especially if they eventually do dividends).

Obviously i'm looking for other peoples perspective on my situations and will ultimately make my decisions based on many factors.

Cheers.

in the current ecomomical climate with recession looming in the distance the demand for commodities quite possibly could recede just check out mgx latest announcement

for me averageing down is a bit like trying to bury s##t by covering it up with more s##t . noone knows how far this downturn will go

maybe work out how much you are or can be prepared to lose and set a stop loss or ride it out to see where it takes you but many stocks never reach their previous highs again

 

[SenTineL]

Funny how everyone is now talking about selling....

There's not going to be a rabbit out of the hat in this climate, no matter what Andrew does, share price isn't going to go through the roof. Too much negativity around.

There's no way I'm selling at these prices, I don't need the cash anyway, I'm not a trader so I'm going to sit tight and see what happens. If I have to re-asses in another year or so I will do that then.

In saying that, what would everyone here do if it ever returned to the all time highs of $13.00? Just a hypothetical. Would you cash in or hold in hope of a bigger rise? There has been a lot of greed around for a while now so I think people have to hurt and learn.

 

[renim]

firstly, its worth trying stop losses, but don't depend on them, my very limited experience with stop losses is, it was triggered, but the drop was so quick that the trade did not occur ;(

secondly, general sentiment/momentum downwards is strong, fmg is volatile, bad news for fmg, i like buying fmg using rising buys.

thirdly, aus at 70c just effectively increased fmgs revenue by approx 30%

fourth, australia has plenty to go with interest rates cuts, but i don't know if that will further affect the dollar.

so unless fmg's cash burn kills it, its cashflow just got better

personnally i'm holding, someone is selling at these prices, and someone is buying at these prices.

 

[nunthewiser]

thirdly, aus at 70c just effectively increased fmgs revenue by approx 30%


so unless fmg's cash burn kills it, its cashflow just got better

personnally i'm holding, someone is selling at these prices, and someone is buying at these prices.

um correct me if im wrong. BUT isnt FMG,s debt obligations payable in U.S dollars too? so effectively there Debt levels have risen by 30% too going by your scale .

on a side note , since the shorters cant be blamed for FMG,s dumping of late , any idea what twiggy can blame next ?

 

[renim]

one other thought about stocks, TIME
fmg has retraced about 1 year, (black)
stw (asx 200 index stock) has retraced about 3 years (red)
i would say that that as it stands, andrew has pulled a rabbit out of the hat, we just don't recognize it.

 

[renim]

i would expect that most of fmg's debt to be in US denomination, agree.
i don't have their accounts in front of me, they would be interesting.
but fmgs operating costs would mostly be AUD, (labour, tax, hire) as would their current capital expenditures.

fmg's debt while large, is not large on a Projected earnings basis

 

[dat111]

Since I am an investor and not a trader, I looked at this company determined that they have a great idea and a group that could bring this idea to fruition. I planned on purchasing the stock in increments over the past year. I am leary about purchasing the last increment. I also made the plan that I would hold onto the stock for up to 5 years realizing that a start-up operatoin has ups and downs but I have long term belief in this company. The biggest cause for the stock price to go down right now is the world economy. Since the world behaves in cycles and I have a 5 year plan for this stock, i have been asking myself the following:
* Do I think that the world economy can force this company to go bankrupt.
* Amost equally bad, do I think that some other company will come along and buy out this company for a low share price.
* Do I think that the current ownership of this company will continue to devalue the shares that we own by offering other investors opportunity for growth at a better return.
Of the three above the last one is the most worrisome to me. If the board of FMG continues to offer preferred shares that will take up the profits of the company, how long will the initial investors have to hold on before we will see a P/E ratio that will cause this stock price to become respectable.

I firmly believe that we live in a world where people will continue to want more. I believe that China/India will increase their purchase of FMGs product over time. This will create a company with value. I only hope that over the next 5 years maybe more, I can share in this value. I also hope that I am not sold out by FMG as they allow more preferred shares or they sell to another company.

 

[nunthewiser]

i would expect that most of fmg's debt to be in US denomination, agree.
fmg's debt while large, is not large on a Projected earnings basis

yes very large and at current conversion rates roughly 30% larger.

lol gotta love projected earning statements aint they a blast funniest bit is tho they actually mean squat when it comes to the bottom line but hey they read well for holders

cheers

 

[chops_a_must]

yes very large and at current conversion rates roughly 30% larger.

lol gotta love projected earning statements aint they a blast funniest bit is tho they actually mean squat when it comes to the bottom line but hey they read well for holders

cheers

Let me get this straight...

They have a large amount USD denominated debt?

And didn't hedge their currency risk?

Are these clowns for real? LMFAO!

 

[Warren Buffet II]

Andrew is a sucker, it is too easy to manage a company when everything is going very well. Now let see how this keep dropping like a rock.

WBII

 

[afinno]

for me averageing down is a bit like trying to bury s##t by covering it up with more s##t . noone knows how far this downturn will go

I guess this is true, and it's an activity more inline with a habitual gambler.

Funny how everyone is now talking about selling....

There's not going to be a rabbit out of the hat in this climate, no matter what Andrew does, share price isn't going to go through the roof. Too much negativity around.

There's no way I'm selling at these prices, I don't need the cash anyway, I'm not a trader so I'm going to sit tight and see what happens. If I have to re-asses in another year or so I will do that then.

In saying that, what would everyone here do if it ever returned to the all time highs of $13.00? Just a hypothetical. Would you cash in or hold in hope of a bigger rise? There has been a lot of greed around for a while now so I think people have to hurt and learn.

I think if that were to happen i'd sell 50% so i can try investing in some other companies. But i'll probably hold FMG as long as they are floating. I see your point though. I suppose you'd say i'm more of an investor than a trader. So i'm happy to wait however long it takes as i'm not in desperate need of an immediate return. That said i'd be upset if the company collapses, not just because of my investment but i also like the company and would like to see it prosper.

Thanks for all the input so far. It's been helpful. I think for now i'll just sit and watch. If FMG sink and i lose my investment then i guess i'll move onto something else. Now for my next question. Any predictions for FMG the bottom, my uneducated guess is $2.04

Would anyone agree that FMG is getting hit harder than BHP and RIO because it is a younger company offering a slightly more inferior product?

Cheers.

 

[Prospector]

on a side note , since the shorters cant be blamed for FMG,s dumping of late , any idea what twiggy can blame next ?

I was wondering when, in the midst of general market mayhem, that someone would be silly enough to be posting that remark! Seriously, what is happening to FMG now is happening across the board. FMG was documented in the financial section of the Australian (and not by Twiggy) for one of the reasons its price was falling.