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Stock lessons 2009/10: sold stocks for tax reasons

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Sold stock ((NYSE:BEE) at a loss for tax deduction (in year end of 2009), but forgot to buy it back in Jan 2010. Now the stock doubled the price from where I sold it. I am not trying to predict the stock price in near term, or think “what if” from hindsight here. I think one key reason I did not hold the stock is still due to my ignorance: I don’t know how to value it (as REIT). I saw someone put an quite optimistic est. at around $2.50 in last Dec.

Back the topic, another reason I think I did not hold the stock is because it dropped precipitously in last Dec., and I started to sell some after initially bought quite a few shares. As I sold when the stock started bouncing, I sold too early. After a while I only have a few thousand shares, I sold them at around $2: thinking to take advantage of the loss for tax deduction, and hope to get back when the price drop again the the Jan.

But obviously I did not jump back to this bandwagon in Jan.

Think long term and trade less

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Investing lesson I in 2010: pharmaceutical stocks

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Maybe speculation lessons will be more appropriate. I bought 3 pharmaceutical stocks recently. With the outcome of MA senate race, US healthcare reform is unlikely be massive, which is good news for the pharmaceutical companies. I learned some lessons in the short span of trading small pharma stocks. I think it’s a good idea to summarize here:

1) Pay attention to the trial phase of drug under development: Typically the earlier in phases, the more risk, sounds simple both from common sense and probablity point of view. Apply this to real world, for Athersys (Nasdaq:ATHX) all drugs are in phase I or earlier. On the other hand, pSivida (Nasdaq:PSVD) has drugs are in all phases (from preclinical, phase I, II and III and marketed); 4 out of 5 drugs from Lexicon (Nasdaq:LXRX) are in phase II.

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Why I don’t like Gold as long term investments?

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The Gold has been doing very well lately, partly due to the depreciation of dollar, partly due to the fear of inflation, and last but not least, due to speculation. I think this Yahoo Tech-ticker interview explained why I don’t like Gold as long term investments very well. More importantly, it suggested alternative investments for gold.

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Check into Strategic Hotels and Resorts

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(Update 21Oct09) Baird analyst downgraded BEE. The stock dropped quite a bit. Also, I found the web site of Vector Group Ltd here. Vector Group bought a 7.1% stake in BEE on July 8 (SEC filing here). Note the owners of BEE includes Bill Gates (via. his Cascade Investment). A Hotel REIT list.

(Original) Ticker symbol (NYSE:BEE), other hotel REITs for comparison: DRH, LHO.

Company web site. Note Bill Gates private investment fund bought a 5.6% stake on Oct. 2008 (Reuters; Seekingalpha).

National Real Estate Investor/Matt Valley: No Respite for Hoteliers
The epic downturn in hotel fundamentals is forecast to slow, but not before inflicting widespread pain.

CEO Lawrence Geller blog ( a bit old)

Other recent developments

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Portfolio management: lessons learned from Buffett

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“Be Greedy When Others Are Fearful”: Why Buffett Didn’t Buy More at the Bottom (Yahoo Tech-ticker)

More importantly, I think controlling one’s emotion is key in this market (like yesterday and today :-(. Obviously easily said than done. Yesterday I read the WSJ top page story on people trading AIG stock, most of them lost money eventually (I believe so, at least most people gave back the gains). Trading AIG stock is an extreme example, because of its volatility in last month (August).

Other lessons from Mr. Buffett:

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Brookfield Properties

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(Google finance NYSE:BPO) company web site

Wikipedia: link
Brookfield Properties Corporation (TSX: BPO, NYSE: BPO) is a Toronto-based North American commercial real estate company. Brookfield Asset Management owns 50% of its outstanding common shares.
Brookfield owns, manages and develops premier office properties in the downtown core of New York City, Washington, D.C., Boston, Denver, Minneapolis, Toronto, Calgary, Ottawa, and Vancouver. Brookfield’s properties include One Liberty Plaza and the World Financial Center in New York City; Brookfield Place (formerly BCE Place), First Canadian Place, and Queen’s Quay Terminal in Toronto; Canadian Western Bank Place and Enbridge Tower in Edmonton; Suncor Energy Centre, Fifth Avenue Place, Altius Centre, Herald Building, and Bankers Hall in Calgary; and Royal Centre in Vancouver. It also operates real estate service businesses and has a land-development business primarily based in Canada.

Secondary offering August 12
(From Reuters) Brookfield Properties Corp. Prices $900 Million Common Share Offering
Wednesday, 12 Aug 2009 10:23am EDT (F-10 here)

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Portfolio management: lessons learned from Lehman collapse

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I have NOT added any new money to my brokrage account since Sept 15 2008 Lehman Brothers collapse, so it’s easier to calculate the performance of my portfolio (+25%, from Sept 30 2009 to today Sept 14 2009), and compare to benchmark (S&P -16.75%, from Sept 15 2008 to Sept 14 2009). We can not predict catastropic events, if we really want to predict future or talk about any lessons for industry, I think one thing is clear:

one either becomes too big to fail (like AIG), or becomes the first to fail (like Bear Stearns), the last thing one wants to be is being No. 4 investment bank, leverage heavily and caught in the financial and political turmoil. We all know the day before Lehman fall, Merril Lynch (No. 3 investment bank) got bought by B of A, and shortly after that No. 1 Goldman and No. 2 Morgan Stanely converted into bank holding company.

For me personally, I can think of the following.

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Portfolio management: trade to lower cost

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Buy and hold, long term investing? I hold CROX from $75 to $20, hoping for a rebounce. It never came. Sometimes we got to trade stocks to take advantage of price volatility (up and downs). I was successful on this aspect from time to time, especially since the stock rally started this March. I made some money back from NRG Energy (NYSE:NRG) and Huntsman (NYSE:HUN), to cover the loss from holding Berkshire Hathaway (BRK.B). Here again the lesson of “buy and hold”, even for a good company like Berkshire, I bought it at wrong time (April, May 2008).

BRK.B Berkshire Hathaway Inc. Buy Apr 9, 2008 1.00 4,349.89 7.00
BRK.B Berkshire Hathaway Inc. Buy May 12, 2008 1.00 4,130.00 7.00
BRK.B Berkshire Hathaway Inc. Sell Mar 23, 2009 1.00 2,894.25 7.00
BRK.B Berkshire Hathaway Inc. Sell Mar 26, 2009 1.00 2,939.51 7.00

Pros and Cons of low cost trading: Sogotrade
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Portfolio management: keep some cash

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This is the second piece of Portfolio Management series. I started this series, mostly to record what I have learned in last few years, since I wrote Stock Lessons (as a beginner). The stock market since last year is humbling, but I also learned quite a bit in the process, with some real results. For instance: my stock portfolio is up about 51% YTD (year to date), vs. Dow’s +6.21% YTD, and S&P 500 +11.16%. Note I only use cash account and only long stocks in my account.

One thing I learned more recently is always keep some cash at hand, I can think of two reasons:
1) This one is easy, if I have some cash at hand, when some good stocks really go on sale (like at March 5 market lows), I can pick up them and feel good about it.

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Portfolio management lessons: don’t sell all at once

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Was talking to this to a close friend yesterday. My rationale of “not selling all at once” is because: it’s usually happens a stock (or something else) will go up in price after a person sells it. Very simple.

Appearently that’s what happened to some Tongkang Zijin shareholders in recent years (FT article “Woes after a windfall“). The story is a bit long, so let me summerize. Apprearently in June 2001 the residents in Tongkang villiage (in Fujian Province) received around Rmb1,338.85 ($196, £117, €138) Zijin stock for the compensation of their land use right. At the time Zijin was not in good financial shape and its stock was not listed. Eight years later, after the public listing at Hongkong and Shanghai (and fundamental change of the business), the stock is worth Rmb 800,000. Obviously not everyone kept the stock. Quote FT:

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