timwest
Long

GM reached key valuation level at the August low

NYSE:GM   GENERAL MTRS CO
555 7 9
a year ago
In several previous posts I have made on GM             , I have pointed out the 0.85 x's book value level. Most recently last fall when GM             was below $30.

The key to any investment strategy is also having an exit plan. GM             traded up nearly 40% in valuation from the low last fall to the high last spring before turning back down last summer. Any variety of exit plans could have helped you exit with decent profits on the way up or on the way back down.

Is there a reason the MAGIC 85% of BOOK VALUE LEVEL Has NAILED the bottom the last 3 times? I think so. It is because VALUE INVESTORS utilize these ratios to determine entry levels. Why is 0.85 x's book value important? Because that is the level that gives value investors a margin of safety to buy $1 of assets for 85 cents. It is a pattern of valuation that we can find using TradingView fundamentals and is really the same as technical fundamentals, or the patterns in fundamental analysis and valuation.

Here's wishing us an entry into GM             at 27.65 or lower to get this position into the portfolio.

Another way to accomplish this is to sell $30-strike puts going out 3-6 months where you collect at least $2.35 in premium, which will net you an entry price of $27.65 as long as GM             is below $30 at expiration. $30 is the price you will buy the stock , less the premium that you collect on selling the put options, if GM             is below $30 at expiration. That is a risk, that you miss any returns beyond $30.

GM             - it's on my shopping list - because of the healthy earnings it has generated in the last 4 quarters: 1.29, 0.86, 1.19, 0.97 for a whopping $4.31 in earnings or 15% earnings yield ($4.31/$28.74 last = 14.99%)

Fears of a recession and rate hikes by the Fed have investors unnerved, but you have a large margin of safety when you are investing with returns that are 15%, which is a far cry from Treasury bonds, notes and bills             which are yielding a small fraction of that.

$28.71 last GM             11:19AM EST 9/29/2015
10 months ago
Comment: Cheaper now....
snapshot
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timwest PRO
a year ago
Going to Yahoo to view options -

30.00 strike, January 15, 2016 puts are $2.90, providing an entry price of $27.10

31.00 strike, January 15, 2016 puts are $3.50, providing an entry price of $27.50.

I prefer the $31 strike, because I'd rather take in more premium and profit up to the $31 level.

Tim 11:39AM
+1 Reply
timwest PRO
a year ago
GM has been completely ignoring the weakness in the stock market. This tells me the sellers have completed liquidating their positions and that GM is surrounded by value investment managers who are lining up to buy GM here. Market action tells us a story.
+1 Reply
timwest PRO
a year ago
I see that TradingView now labels a green "carrot" on the NEXT DAY, the day AFTER you post a chart. I guess this is to prevent people that post charts on the day of a big move to make it look like they posted a buy at the low. That makes sense. Either way, that is why I time-stamp my posts to the minute, so you know when I post my chart, including the price at the time. Be aware and beware of people trying to manipulate their forecasts to make themselves look better.
+1 Reply
Amazing rally.
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UPPgrayyed
a year ago
awesome how that Key Levels work most of the time. I'm now trying to learn that technic. Is there a link or a book with more Information about "Key hidden levels" and "time at mode" ?
Reply
G13Man UPPgrayyed
10 months ago
would be nice if there was a book or such
it would be nice if they answered you
Reply
IvanLabrie PRO G13Man
10 months ago
There will be ;)
Reply
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