How far can a spec stock fall?

[Pommiegranite]

Things are getty really very very silly now.

Question:

How far can a spec stock with great resources and cash in the bank realistically fall?

Is it possible for a company to have a market cap of less than the value of current assets on its balance sheet?

How would this affect this company?

If you were a director of one of these companies, would you next step be to buy back your own shares?

 

[Bushman]

Things are getty really very very silly now.

Question:

How far can a spec stock with great resources and cash in the bank realistically fall?

Is it possible for a company to have a market cap of less than the value of current assets on its balance sheet?

How would this affect this company?

If you were a director of one of these companies, would you next step be to buy back your own shares?

Very silly. Not many accountants out there. There are a few in my portfolio where the current market cap = liquid current assets i.e cash holdings let alone net assets.

If I was a director I would buy some of the shares back and take it out of the hands of the sheep lining up do jump over the cliff face. Then raise more funds from the longer term sophisticated investors who don't have such itchy fingers. Taking money from the etrade/commsec hedge fund (a giant hedge fund is all that is what the online investment accounts have created) and hand it back to the rich so they can get richer.

Gosh I wish I had the funds in my hands now. But what did I know about subprime, yen carry trade, a-alt loans, credit crunch and the like a few months ago. All I knew were balance sheets and global economic growth and these will win out in the end.

Good thing is now that I know what a credit crunch can do to market sentiment, I will be ready for the next bump in the liquidity highway.

 

[Rafa]

i guess a spec can fall all the way to 0...
that i can understand

but the strange thing is companies making billions... PE ratios of 5... i.e. ZFX, how far can they fall??? back to a PE ratio of 1 no way....

 

[Pommiegranite]

Very silly. Not many accountants out there. There are a few in my portfolio where the current market cap = liquid current assets i.e cash holdings let alone net assets.

If I was a director I would buy some of the shares back and take it out of the hands of the sheep lining up do jump over the cliff face. Then raise more funds from the longer term sophisticated investors who don't have such itchy fingers. Taking money from the etrade/commsec hedge fund (a giant hedge fund is all that is what the online investment accounts have created) and hand it back to the rich so they can get richer.

Gosh I wish I had the funds in my hands now. But what did I know about subprime, yen carry trade, a-alt loans, credit crunch and the like a few months ago. All I knew were balance sheets and global economic growth and these will win out in the end.

Good thing is now that I know what a credit crunch can do to market sentiment, I will be ready for the next bump in the liquidity highway.

Spot on Bushman. I'm not sure when to jump back in though. Surely there must be a bottom for some of these stocks i.e when the only holders left are those who can complete simple 1+1=2. They don't have to be accountants, just people who can add up!

So what happens if the DOW falls another 100 pts, or we head into a bear market...I wonder what happens to the cashed up spec stock?

I'm confused by this irrationality..but like you have learnt a lot over the past couple of months.

Oh well life goes on!

 

[powerkoala]

Spot on Bushman. I'm not sure when to jump back in though. Surely there must be a bottom for some of these stocks i.e when the only holders left are those who can complete simple 1+1=2. They don't have to be accountants, just people who can add up!

So what happens if the DOW falls another 100 pts, or we head into a bear market...I wonder what happens to the cashed up spec stock?

I'm confused by this irrationality..but like you have learnt a lot over the past couple of months.

Oh well life goes on!

simple thing as 1+1=2 not happening right now.
all i see is ppl ask GIMME MY MONEY BACK.
so whatever price at the bid section, they don't care.
they don't even care what is the company they are investing at.
P/E, market caps, or anything, even company with hundred of millions cash.
so as long this is happening, 0.1c will happen soon or later.

 

[nomore4s]

Spot on Bushman. I'm not sure when to jump back in though. Surely there must be a bottom for some of these stocks i.e when the only holders left are those who can complete simple 1+1=2. They don't have to be accountants, just people who can add up!

So what happens if the DOW falls another 100 pts, or we head into a bear market...I wonder what happens to the cashed up spec stock?

I'm confused by this irrationality..but like you have learnt a lot over the past couple of months.

Oh well life goes on!

Pommie, just be careful with the spec stocks in markets like this. They maybe cashed up and have good "resources" in the ground but they don't really have any income/profit making ability, so they could trade sideways for a long time. It will also be harder for them to raise money in a credit crunch type situation to get these projects off the ground.
IMO the days of spec stocks soaring on any bit of news are over for awhile, alot of the bullmarket hype is going to be missing from this market for awhile I would think, people have now been stung by these spec stocks and will be slow to return. As wavepicker said making money in the markets now might actually require some work.
IMO most of these stocks are falling back to what they are really worth.

 

[Bushman]

Spot on Bushman. I'm not sure when to jump back in though. Surely there must be a bottom for some of these stocks i.e when the only holders left are those who can complete simple 1+1=2. They don't have to be accountants, just people who can add up!

So what happens if the DOW falls another 100 pts, or we head into a bear market...I wonder what happens to the cashed up spec stock?

I'm confused by this irrationality..but like you have learnt a lot over the past couple of months.

Oh well life goes on!

I jumped in to early last week and have a deep paper cut sitting here today. So it might be too early to jump back in now. Given the rule that DIJA gives up 1.5%, ASX 200 gives up 3 to 4% and the speccies give up an arm and a leg, it must be wise to wait for the DJIA to settle down. That will happen when the Wall Street Press stop seizing on every 'hickville mortgage loan company catching nose bleed in the stratosphere' story, further fuelling the fires.

The last bear market lasted 3 years. But the way I read it, cashed up speccies funds with good ground will start producing regardless of a bear market given that, unlike financials who have securitised dodgy debt, near term producing specs have commodities in the ground that have a real and measurable commercial value and a market to sell it to. I am not talking about 'wing and a prayer' speccies (even though I did gamble on a few - ouch).

The one I keep looking at is CBH - it has $200m + in the bank, an operating mine, 2 more close to production and a host of other projects. I just cannot accept that this company is only worth $300m? That is mad.

ZFX does not make any sense to me either. It paid a $1.40 dividend last year! I mean it did rise out of the ashes of Pasminco but that was at a time when zinc was not worth much.

Anyway that is the way I read it. But panic is panic and I cannot see where this will end given the way it is playing out in the world markets.

Good luck!

 

[prawn_86]

IMO most of these stocks are falling back to what they are really worth.

What about stocks that were already undervalued and have continued to fall?

Too much panic selling going on. I have held everything and am sitting on a big loss but i am confident that most, especially near term producers like qol and azc will have a cashflow shortly which may change peoples perspective.

 

[powerkoala]

and now we see GREEN for some of them ?????
what the ???

 

[dubiousinfo]

In 87 there were spec stocks that couldn't find a buyer at any price.

I noticed that a few of the spec oppies had no buyers at times today.

 

[dj_420]

look at URA, 1.68 to 0.18 today! almost a 90 odd % loss

GDN from 1.30 to 0.11 today! huge losses

 

[powerkoala]

look at URA, 1.68 to 0.18 today! almost a 90 odd % loss

GDN from 1.30 to 0.11 today! huge losses

how about pen, ags, rmi, gbe, ntu, and others ????
if we quote everything, whole all ord list will be here

 

[Fab]

how about pen, ags, rmi, gbe, ntu, and others ????
if we quote everything, whole all ord list will be here

AGS might have found a bottom so. Back up almost 10% today Not sure why so

 

[powerkoala]

AGS might have found a bottom so. Back up almost 10% today Not sure why so

that's the only one green on my portfolio today though
so can't complain anymore.
at least one is up.

 

[tech/a]

look at URA, 1.68 to 0.18 today! almost a 90 odd % loss

GDN from 1.30 to 0.11 today! huge losses

You must be on drugs?

 

[Boyou]

Very silly. Not many accountants out there. There are a few in my portfolio where the current market cap = liquid current assets i.e cash holdings let alone net assets.

If I was a director I would buy some of the shares back and take it out of the hands of the sheep lining up do jump over the cliff face. Then raise more funds from the longer term sophisticated investors who don't have such itchy fingers. Taking money from the etrade/commsec hedge fund (a giant hedge fund is all that is what the online investment accounts have created) and hand it back to the rich so they can get richer.

Gosh I wish I had the funds in my hands now. But what did I know about subprime, yen carry trade, a-alt loans, credit crunch and the like a few months ago. All I knew were balance sheets and global economic growth and these will win out in the end.

Good thing is now that I know what a credit crunch can do to market sentiment, I will be ready for the next bump in the liquidity highway.

Well written ,Bushman.I am sitting on a fairly substantial paper loss at the moment...and ,of course looking back to how I could have handled my portfolio better. Was planning to take some profits very soon,but now, have been overtaken by the market.
BUT ,my basic philosophy is still in tact and in place.AND I am still valuing this learning experience

Let the sheep be slaughtered! I am in for the long haul

Cheers Ya'll

 

[wayneL]

Let the sheep be slaughtered!

Bears are indiscriminate, they'll eat anything.

 

[Bushman]

Bears are indiscriminate, they'll eat anything.

Ultimately bears bite the hand that feeds them...

 

[DOC]

Ultimately bears bite the hand that feeds them...

but honestly today was ridiculous, how much can a koala bear?

 

[BIG BWACULL]

but honestly today was ridiculous, how much can a koala bear?

The way things are goin I think i'll wait till Gum leaves