Tuesday, October 8, 2013

Forget Logic, CYA

In about 10 days, if nothing happens, the US debt ceiling will not be raised and the government will start defaulting on it's debts. The details and specifics of this are unimportant, and most unexplainable. Bottom line: we've never done this before so there's really not a whole lot of certainty what will happen. Suffice to say, if today was any indicator, the stock markets are going to be running more and more scared. Because of the unknown.  

I've often said that you have to suspend logic when thinking about the stock market. Whether we raise the debt ceiling or not, companies like, for example, Apple or Amazon, will continue to make just as many iPhones and sell just as many widgets the day after we default as they do the day before. They won't report any good or bad earnings, or introduce any new products or services. But conventional wisdom says their stocks, along with many other companies, will probably get hammered. Why? Because people won't know what will happen when the debt ceiling doesn't get raised. And when people don't know what to do, they sell. And when people sell, the computer programs sell. Everybody sells. And when everybody sells, prices drop. 

I'm no certified financial advisor, this is just my personal opinion and you may take it with the biggest of grains of salt. But in my opinion, now is not the time to stay in the market. Over the next 10 days or so, a few things can happen with the markets: 1) the debt crisis problem gets solved and the markets continue smoothly, 2) the debt crisis gets worse and the markets crash.  I know what that means, the $50 stock I own today might be worth $20 in 10 days. In 2007 I was lucky enough to get out of the markets about 6 months before the crash. I was able to buy a lot of stocks for very low prices and they have since rebounded. I see the same thing happening in the next 2 weeks and I'm going to sit back and watch. I hope I'm wrong.  

Tuesday, October 1, 2013

Showdown Day

The government shut down at midnight last night at the same moment that Obamacare kicked in. And the markets are up today. Seems they like when the government isn't working and people are getting health insurance.  Anyway, still kicking myself for not paying attention to Facebook. They've pretty much tripled since they went IPO and crashed. Well, always more fish in the sea. Going to keep my eye on Suntech Power (STP ), they got a sweet deal from their government and made a nice run yesterday. Giving a bit of it back today. When the market's up, it gets harder to spot the bargains. Another weird one is Cray (CRAY). On the same day they announce some new accelerators, they take a 4% haircut.  Fannie Mae (FNMA) and Freddie Mac (FMCC) are still holding at around the $1.30 level. And GM is down 1%. Go figure. Will keep watching all these this week.

Thursday, August 22, 2013

Stock to Watch - August

It's been a little while since Marissa Mayer took over, but things seem to be going well @ Yahoo! (YHOO).  At least a lot better than they were a year ago.  The stock has doubled since September and it's been a nice, smooth climb.  It's now around $28/share, I think it's got a $40 by the end of the year.

As for Fannie (FNMA) & Freddie (FMCC), they're still about triple what they were in March, but they're also falling from where they were in May. To make matters worse, earlier this month the President urged they be shut down. There's the writing on the wall, then there's the movers taking out the office equipment. Unless something really crazy happens, I see them becoming less and less relevant.

Wednesday, July 10, 2013

Catching lightning in a bottle...

Fanny Mae (FNMA) and Freddie Mac (FMCC) have both settled down substantially over the last few weeks, down from their meteoric run a few months back.  I caught a little of the magic and did pretty well, getting out before they settled too far down to earth. They're still about 100% higher than they were 2 months ago, but "past performance is no guarantee of future returns". Today they're down about 7%, and have been slowly dropping over the last month. I see them getting back in the $.50-$.75/share range within the next month or two. Bottom line, the run up was the result of headlines, but I don't think they're going to hit $60/share before hitting $.60/share.  On to other opportunities.

Wednesday, June 5, 2013

Staying the Course

Today is an ugly day in the market. Don't know why, don't care. But I see that not just my portfolio is getting slammed. That's a good thing. I take it to mean none of the fundamentals of my holdings have changed, just a beat down day for everyone.  My 2 current favorites, Fannie Mae & Freddie Mac, have been up or down at least 10% every day for the last 3 weeks. On average, more ups than downs.

My point is that on days like this, it's very easy to panic and sell. Or just panic. The stock market is all about ups and downs. If you can't take the downs, don't ask for the ups.

As I've said many times, when the market drops for no identifiable reason (ie., recessions) and takes a lot of stocks with it, this is a buying opportunity.  Why? Because when everyone comes to their senses, and this may take a little while, they're realize that those companies haven't changed fundamentally. And if they haven't changed, chances are people's perspective of them hasn't changed either. So any huge dip will probably get reversed. 

Tuesday, May 28, 2013

Fannie & Freddie: This is not rocket science!

It was around May 9 that I first said I was looking at Fannie Mae (FNMA) and Freddie Mac (FMCC).  They were both under $1/share.  In about 3 weeks they've tripled, including +25% today, on top of a +40% day last week.  I'm not bragging, it was pretty much luck on my part, but my point is, for you folks that have "financial advisors", how many gave you a head's up on this one?  Exactly. No one could have predicted this. I only looked because it went from about $.30 to $.74 in a day.

Picking stocks is not rocket science. I've had bad days, but today so far is really one of my best ever. My point is, and always has been, this is not rocket science! Any advisor that makes you think you can't pull a good stock pick out of your derrière just like they do is lying to you!

I am not a certified financial analyst, stock broker or anything like that. I have a full time job so I don't have the time to spend 40 hours a week analyzing stock tables. I don't have any insider information on any stocks I look at.  And I'm not the smartest person I know, maybe not even the smartest in my family. Yet I was able to pick these two. Things that make you go hm.....

Last thing, I don't think their ride is finished. I don't think it's too late to get in on it.  Just my opinion....

Thursday, May 23, 2013

Poor People Save. Rich People Invest.

One thing you rarely hear discussed at job networking events, but everyone is thinking about, is money. It's the scariest part of being in job transition. If you don't have an income coming in, all you want to do is replace it.

Growing up, we were told to work hard, save our money and we would will be fine when you retire.  That's not going to work out for most of us anymore. Not just those who have lost jobs, but also the new kids just starting out. It's nice to think that you can spend 5-10 years being "irresponsible" after college because you know when maturity kicks in your are going to be killing it on the saving side. Unless right before you "grow up" you get laid off. BAM. Yeah, it happens, and it's still happening.

My point is this: unless you can look at your savings balance and be sure you have enough money to last you 30-40 years at your current lifestyle and taking into account and unforeseen health issues, you need to save more.

You know how rich people got rich? Not by putting their money in a bank and getting 1-2% interest.  Like the title says: Poor people save. Rich people invest.  Once we accept that premise, we can move on.  But you have to accept that. You have to wrap your mind around the fact that just putting your money in the bank will probably not allow you to retire to a lifestyle"in the manner to which you have become accustomed. If that's not high on the importance scale, fine. Just don't be surprised when you're getting the gold watch if it's not looking pretty.  Like the Boy Scouts say, the secret is to be prepared. From day one you have to prepare for that unexpected moment when the fertilizer hits the ventilator. Because at some point it most likely will. And it will be at the worst possible moment.

By definition, whatever you choose to invest in will have some risk attached, be it real estate, stocks, bonds, derivatives, MLM, tea, a small business, education, the lottery... Whatever you choose to invest in, educate yourself on it, make sure the risk level is acceptable as is the potential return, that you can do it long term, that's it's legal, doesn't look too good to be true (Bernie Maddoff's victims thought they had found the goose that laid the golden egg. Had they - or anyone - took a realistic look at what returns he was getting they would have quickly realized that something wasn't right. I'm not saying they were stupid, but good news blinds smart people. Remember Circuit City?  They were making money and ignoring the problems in their system - because they were making money.  Totally off topic, that's exactly why I won't buy Walmart stock, no matter how well it does. In my opinion, they got issues. Sure, they're making money, but when they hit the wall I think they will, it's going to be a massacre.  I digress.)

The bottom line, your chances of retiring comfortable by saving, unless you are extremely disciplined and deny yourself all your life, aren't that great.  Change the game....

Wednesday, May 15, 2013

One more reason to do your own investing....

I came across this article, the title says it all: Hedge Fund Partner Earns $33.5 Million For a Year While Losing Almost 10% of Fund Money.  It's like paying a babysitter to be home with your kids, but not necessarily to watch your kids. Just be there if the cops come by.

If you've been reading these for a while, you know how I feel about fund managers.  While I think they provide a valuable service, I think the pricing model is simply the stupidest thing from an investor standpoint I've ever seen.  Fund managers get paid by how much money they manage, not how well they manage that money.  It seems like such a small number, 1/10 of one percent, but when they have several hundred million or billion dollars under management, that adds up quickly.  The problem, or trick as the fund managers know it, is that people are generally lazy. Sorry to put it out there like that, but it's true. People will give a fund manager x dollars to manage. At the end of the year, the fund manager will send out a portfolio, showing what he/she is invested in at that point. There's the rub.  If all the stocks in the portfolio increased by a minimum of 4% last year, you would expect your portion of the fund to increase in value by at least 4%.  But nobody does that math. If they did, they'd probably realize that their portion may even have decreased? How is that? Maybe the fund manager was invested in crap all year and sold it off a week before they had to report it to you. Again, when they report, it's based on what they are investing in at that time.

I'm not going to spend the next hour venting against fund managers. If you are in a mutual fund, when you get your annual report, ask the following questions and do the following math:

1. How have the stocks in the fund done over the past 12 months?  Have they increased? How much? Whichever stock increased by the lowest amount, that's your baseline. Assuming you didn't do any withdrawals, your balance should have increased at least that percentage.  And don't let them tell you anything about needing to know the mix. The lowest increase is your baseline.

2. What are the fees? Usually represented as a percent of a percent of the funds managed, multiply this by the total fund value (not just yours, everybody's). You can probably find this in the marketing materials. This is a rough estimate of what they made off you.

Bottom line, fund managers should come with a money back guarantee.  

Tuesday, May 14, 2013

FNMA Be Rockin It, Rockin It, Yes They Are Rockin It

If you're paying attention, today (so far) is a good day for my BFFs Fannie Mae (FNMA) and Freddie Mac (FMCC). They are both up over 10% today, that's after a similar increase last week. All I can see for what's driving it is this article on Freddie rolling out a delinquent borrower program early. Whatever it is, I got a feeling this is about to get good. As I mentioned previously, they were both $90 stocks a decade ago. They won't get there overnight, but it looks like they're headed in that direction big time. I may get some more..

In technical terms, these two stocks have a higher beta than the rest of my portfolio. In laymen's terms, that means market moves impact them more aggressively than others: when the market goes up a little, they go up a lot, when the market goes down a little, well, you get it.

That is the challenge of investing: accepting a beta you're comfortable with.

In my smaller portfolio, Advanced Micro Devices (AMD) is up 18% in about 2 weeks. Sweet.  LDK Solar is up 5%, even though it's down 4% today.  I'd forgotten I'd bought WebMediaBrands (WEBM) some time ago, at $7.  It's now $1.70. Yeah, losing my shirt and some draws on that one. Luckily, the investment wasn't ridiculously big (even before the fall) so it doesn't make much sense to sell now, just to take such a small amount out. Better to let it ride and see if I can recoup some of it in the future.  In ArQule (ARQL) I'm pretty much even right now.

Thursday, May 9, 2013

The market is getting interesting...

Today for a brief moment Fannie Mae (FNMA) and Freddie Mac (FMCC) were both up about 11%, this on top of the 20% they both rose earlier in the week. They're trading in the $.90/share range, this past week they posted some crazy, multibillion dollar profits so I think they're about to do some serious long term gaining. I may pick up some more. And interest rates are creeping up too.

Looking at one portfolio, everything (except Facebook) is up at least 14%.  Facebook is down 4% and in serious danger of getting deleted.  As for the others I bought this past week, AMD is up 8% already, but ArQle (ARQL) and LDK (LDK) are both down about 4% and 7% respectively.  Yes, they are about to go on the chopping block.

From time to time I do read what others think. Saw this article and will be keeping my eye on Citigroup (C)now. Why? because they're up about 50% over the past 6 months.  The Dow hit an all time high this week. I think we have at least 3-4 years of nothing crazy, so it's time to really start pulling some levers....

Tuesday, May 7, 2013

Just because you are a CEO, doesn't mean you have a clue.

Over the past 7 years there's no better example of "we didn't see that brick wall directly in our path" than Blackberry, aka Research In Motion.  A few months ago, their current CEO (not to be confused with the previous CO-CEOs, neither of which saw said brick wall in their path) Thorsten Heins said The user interface on the iPhone, with all due respect for what this invention was all about, is now five years old.” The irony of this is that he's the CEO of Blackberry. Those of you old enough will remember the term "crackberry". For those of you not old enough to remember, before there was the iPhone, Android or Angry Birds, people were sleeping with their Blackberry phones just for email access.

But before you think I'm off my rocker, or too Apple-sensitive, here's a response article that pretty much says the same thing.

My point is just because someone has a title doesn't mean they know what they're talking about, or that they are not trying to blow smoke up your butt.  I only care from the standpoint of investing. Full disclosure, I bought some RIMM stock a few months ago, and almost immediately got waxed like a new Bentley.  Not bitter because I cut my losses, had I known this guy was in charge I'd never have bought it.

Friday, May 3, 2013

The Final Five

Nothing sucks like time.  I looked at all the stocks I'd researched last week one last time.  Here are the 5 I chose and why:

Authentidate Holding Corp (ADAT) - up 6% today. Look like they're stabilizing the last 5 days.

Alcatel Lucent (ALU)  - at first glance, today's $1.33 looks like their ceiling, but they did hit $1.38 a few days ago.

ArQule, Inc (ARQL) - Been spiking in the mornings, but the spikes are getting higher.

Advanced Micro Devices (AMD) - missed the boat big time, this one is up 28% in a week. Nope, not a typo. Had I jumped in last week.....

LDK Solar (LDK) - this one is spiking a bit, but the general trend seems to be positive.

Caveats up the wazoo: I am not a trained, certified or licensed broker, stock analyst or financial advisor. At the time of this writing I have no financial interest in any of these companies, nor do I have any insider information. I make no guarantees on which way any of these will go. Invest at your own risk.  The point I want to make is that picking stocks that go up is not rocket science.

Thursday, April 25, 2013

5 $100 Investments

First, Netflix is up 24% two days ago. Booyah. Before I get too happy, even a broke clock is right twice a day.  I didn't expect that when I bought it a few weeks ago.

I'm looking at buying $100 worth each of 5 stocks. My point is that you don't have to have a lot of money to start investing. If $500 is too much, buy $10 worth of 5 stocks.  You can start there and work your way it.

Ideally, I want to get stocks with very low prices so I can buy several shares. Since I already bought Fanny Mae and Freddie Mac at about $.76 each I'll leave those alone, here are some I looked at:

WebMedia Brands (WEBM) - Up 8% today to $1.86/share. They lost $6.4M last quarter, even without a non recurring charge, the loss was bout $900k, the worst quarter last year.  Looking at the headlines, I don't see anything exciting.

Zaap (ZAP)  - this maker of hybrid engines is up 2% today, to $.15/share. Their historical best price was about $1.80, 3 years ago. The headlines look like they're doing things to keep the lights on....

Suntech Power Holdings (STP) - the world's biggest maker of solar inverters, used to trade at $90/share. Now it's $.64. Wow.  They also just defaulted on some convertible notes and are trying to restructure. Any other time I'd say run for the hills, but if they do pull off a miracle, that $100 investment might soar....

LDK Solar (LDK) - another solar supplier, up 3% today.  This company looks like they're having serious financial problems, but are further down the road than Suntech in fixing them. Doesn't mean they can or will be fixed, but they've  been dealing with them longer. It's sold off a few subsidiaries and other interests, but the US's countervailing duties tax of 15% is seriously hurting Chinese solar suppliers.They're also looking at $23M in convertible senior debt they can't pay back right now. Their historic high is about $80/share, which makes today's $1.14 look crazy.

ArQule, Inc (ARQL) - This biotechnology company engaged in the research and development of next-generation, small-molecule cancer therapeutics. Yeah, a mouthful. Up 2% today, to $3.07. Their historical high is about $40. They caught the mother of all stock beatdowns back in October 2012 when they stopped a lung tumor study, losing 54% in one day. Their low was about $2, so they've climbed 50% since then. Yeah, they got my attention. But their 6 month chart looks like a mountain range after the Enterprise skidded across it.

Advanced Micro Devices (AMD) - this long time Intel competitor was once a $50 stock, now it's a $2.69 stock. It and Intel are both feeling the "post PC" heat. Intel's handling it better. They're up 3% today.

Alcatel Lucent (ALU) - This was once an $80 stock, now  it's $1.41.  They just installed a high speed network in Italy, so they're still working. Deutsche Bank recently upgraded them from HOLD to BUY, not that that means anything, other than somebody somewhere with a nice office likes them. Two years ago, it was $7, now it's $1.41. It's been as low as $.98.  They're still in business and can't go anywhere but up.

 Authentidate Holding Corp (ADAT) - Twelve years ago this was a $40 stock. It's now $1.35. They've lost at least $2.5B each of the last 3 quarters. That's with a B. Most articles on them are about their filing financial statements. Very little company info other than here's a new 10k report.

I'll let you know shortly who I go with....

Thursday, April 18, 2013

More evidence that logic does not live anywhere near Wall Street

The last 2 days have been ugly on Wall Street.  Pretty much everybody is down. Don't believe anyone who tells you they know why, they don't. Again, the stock market is like a cruise ship powered by 1,000 people rowing and no one is coordinating their rhythm or direction. Eventually the ship will move in a direction from sheer dumb luck. 

I came across this article, talking about how all the cell phone companies are down.  It said something interesting about Nokia: "...The company’s current share price is around $3.5 even though it has $3.7 per share in cash alone."  That's because probably 80% of the people who are taking actions that are causing the price to change have no idea how much cash Nokia has, nor how to calculate the stock price based on the cash balance alone.  

The point is that people are doing stuff, buying stocks, selling stocks, holding stocks, whatever. And they're doing it not based on what the last quarterly report for Nokia was. Heck, they probably haven't even seen the last quarterly report. Then there are the computer programs, making perhaps millions or billions of decisions a second. Apple's down, sell Nokia. Nokia's up, buy Samsung. Samsung is up, buy Intel. All day, every day. That's why the markets are always all over the place. Don't try to understand it, just roll with it.  Especially when we have days like today, lower prices make great buy opportunities....

Tuesday, April 16, 2013

I missed the boat, but it looks like a long voyage

A few weeks back I jump on a few stocks, Delta (DAL), Facebook (FB), Netflix (NFLX) and Whole Foods  (WFM). So far the results are still mixed to suck, up 5% in Delta, down 1% in Whole Foods, down 7% in Facebook and down 4% in Netflix.  If the last 2 don't start performing soon, they're going bye bye. My concern with Facebook is I still just don't see them as being worth what the market says they are. Yeah, I bought it, but it was more trying to catch the wave from $17-27 than having real faith. I'm getting my just deserts. Netflix I have more faith in right now.Whole Foods is looking more like a very long play. Go Delta.

This morning I jumped on 2 that I got beat down big time on last year: Federal Home Loan Mortgage Corporation (FMCC) and Federal National Mortgage Association. (FNMA)."Fannie Mae" and "Freddie Mac".  I had bought both a few years back at about $1/share. They dropped to $.33 and stayed there after the housing crisis.  I tried to hang on but finally bit the bullet and took my losses.  Here's the thing, if you look at their 7 year chart, Freddie Mac used to sell for $80/share before the crash, Fannie Mae about $90. They're now around $.75. No, that's not a typo. On about March 14th they both shot up to about My perspective is they were backed by the government then, and they still are. If they never hit those levels again, heck, if they only hit $8 and $9/share, that's a hundred fold return. I've been watching them a week or so and they both look like they're holding at the current rate. As a matter of fact, FNMA is up 7% already. Sweet...

I had a McDonald's coffee this morning. It tasted like grilled water. Subway has passed McDonalds as the largest fast food outlet, and McDonalds coffee tastes like grilled water. Seems like somebody is phoning it in....

Tuesday, March 26, 2013

Portfolio Update

Last month I jumped into a few stocks, let's see how they're doing:
Delta (DAL) - very nice, up 11% as of today
Netflix (NFLX) - up 6% but all of that is pretty much from today.
Whole Foods (WFM) - down 1%
Facebook (FB) - down 12%
I looked at Nokia (NOK) but didn't pull that trigger. Good thing, it's down from $3.80 to $3.20 in the last month.

I'm pretty much in a holding pattern with everything except Facebook. Back when it IPO'd I predicted to myself it was going to be a $4 stock in 3 years.  I'm starting to believe it. In the last 9 months they've gone from the 40s to the teens to the 30s now in the 20s. So many analysts have painted rosy picture of the "genius that is Zuck". Not saying he's not a smart guy, but I've always felt FB was more lucky than good. Lucky that Myspace was horrible.

Anyway, I don't own much, but I'm about to get rid of the few shares I have. It's currently at $25.12 and I see $20.00 before $30.00.

I'm going to keep my eye on Carnival Cruise Line(CCL). Sure, they're having trouble keeping their ships working. Not making light of some really horrific situations, but a wounded stock is sometimes a good investment.

Friday, February 15, 2013

Down day in the market - looking for bargains

As I write this, the Dow is down .5%, and when it's sneezes, many stocks get colds. So far my dump Blackberry strategy is holding, they're down another 5% today. Time to put my eye on some that got hit and some who defy the market.

Ruth's Hospitality Group Inc. (RUTH) - up 5% today, looks like "due to a 4Q that beat expectations". They're showing an overall increase the past 2 years, but there's some drops in there too.  But the restaurant industry is kinda fickle in my book. Will keep an eye on them.


 - this up 7% today, but their graph looks like they're trying not to go out of business. I think this gain is a fluke. No news announced other than some federal filings.  Heck, I couldn't even figure out what they do.

NVIDIA Corporation (NVDA) - down 2%, which isn't a surprise, their 1 year chart looks like a snow-capped mountain range outline.  The Motley Fool wrote an interesting article about them, but I put absolutely not faith in the Fool. Not saying I think their lying, but I used to follow their recommendations and I didn't like the results. The article is long and has lot's of computerese, seems like they're saying NVIDIA is turning a corner. Maybe, I'll just keep watching.

Thursday, February 14, 2013

Good Bye Blackberry

Ok, the experiment officially ended this morning. I bought Blackberry (BBRY)- formerly Research In Motion last week in hopes of riding any short term gains they might accrue as a result of finally rolling out the Blackberry 10.  As of today I'm down 18%, and that's to poor for my blood.  Maybe it will rebound, but I'm not willing to lose more to find out. Looking at their history, 10 years ago they absolutely owned the cell phone market. For those too young to remember, imagine today if either Apple or Google didn't get into phones, and there was only one of them. It would rule the market. Period. That's how Blackberry (RIMM) was 10 years ago. There was even a term for it: Crackberry, because it was so addictive.

What happened?
In 2007 Apple rolled out the iPhone, and a short time after Google started giving away Android. RIMM obviously thought it was a fad that would pass.  Put simply, they didn't realize their world had suddenly changed, like the final scene in Aplocalypto.  For the next 4 or 5 years RIMM had 2 co-CEOs who obviously could not find their own butts in the dark.  They ignored the onslaught (and profits) of iPhones and the ubiquity of Android phones, choosing to "stay the course".  The stock, once in the $160 range, cratered over 3 years.  That little rise at the end is hope that the new phone will sell. 

Anyway, my point is that you have to draw a line in the sand. Frankly, I don't believe they will have their "Act II". Never did. I bought hoping they could keep it together for 3 months. They still might, but I don't believe it at this point.  And I think I can find other uses for my money.  As the song says, you gotta know when to fold 'em.

Thursday, February 7, 2013

5 Stocks I'm Watching

Here are 5 stocks I'm going to buy and why....

Delta (DAL)- Delta is up about 50% since September. Really quiet too. Over the last 5 years they haven't been too much higher than that, but I'm thinking as the economy continues to improve they might be able to ride that wave. This is a SWAG if ever their was one, but on a day like today when just about everything I'm watching is down, they're up 2%.

Nokia (NOK)- this company seems to finally be getting their act together too.  They had a strong 4Q and according to this article, they're ready to pop. At $4/share, they're back to where they were a year ago, but their historic high is in the $60 range. People still know the name so I doubt they're going out of business anytime soon.  If things go well, this could be a smoker....

Blackberry (BBRY)- Just rolled out a new phone. Finally.  A day late and a dollar short would be an understatement. Blackberry, formerly known as RIMM, ignored iPhones and Androids for the last 7 years and not only got their clocks cleaned, their watches, walls and minor children are also sparkling and springtime fresh.  Even though the reviews haven't been stellar, the phones are sold out in some areas.  Granted, maybe they only shipped 25 to some of those areas. Anyway, it remains to be seen if they can successfully un clusterscrew their business model. Nothing will really be known until the next quarterly earnings report.  Between now and then, I think the stock will move up on hope alone.  I don't see this as a long term play, unless they really blow the cover off everyone's expectations.

Facebook (FB)- Like I said last week, they've turned the corner now, the rose colored glasses have been taken off.  What we're seeing now is what people really feel like it's worth. I have no faith in Zuckerberg, and I suspect sooner than later he will put a grown up in charge.

Netflix (NFLX)- Yeah, I missed the 70% increase around January 25. Looks like the postal delivery cutbacks might help them, according to this article.  The math is weird, but it does kinda make sense. After getting burned by Starz a few years back, they're getting into producing their own content. On a separate note, my local Blockbuster, one of a few still open, is closing. Looks like Netflix won....

Friday, February 1, 2013

I can't prove it, but I think someone is manipulating Apple stock

Last week Apple announced quarterly earnings that were the 4th largest ever recorded. This is over a year after the passing of Steve Jobs, an event everyone thought would mean the demise of the company. In return, "the street" knocked 12% of the value of Apple's stock price. Say what you want, that makes no sense. I can't prove it, but I would not be surprised if someone made out like a fat rat.  The stock has slowly rebounded since this crazy drop.  By contrast, Amazon's earnings fell short of analyst's expectations... and it rose.  Yeah, The Street is logical.

Anyway, I missed the sub $20 price, but at about $29/share, I think Facebook might be a good stock to buy. I don't know what their expected earnings are going forward, but the fact that in the span of about 4 months they've risen about 50% after dropping 30% from their IPO price says to me that investors are behind them. 

Wednesday, January 16, 2013

Letting Go of a Stock You Love

One of the hardest things in investing is knowing when to walk away.  Especially when you're making money. Remember, a gain isn't a gain til you cash out. What was worth $50 yesterday can be worth $.50 today. I'm wrestling with this because my biggest and best performing stock has been getting trashed for about 6 months now. Apple once hit $700/share and is now around $500/share.  My purchase prices range from $100 to $385 so I'm still up, just not as up as I was a few months ago.

Why do I think Apple's been down when they're still selling iPhones, iPads, iPods & Macs like crazy?  Not to sound like a broken record, but a lot has to do with analyst's published expectations, which have been and continue to be all over the place. In addition, Steve Jobs has been gone over a year and no one believes Apple can still innovate. Apple has gotten trashed the last 2-3 days because someone reported that Apple reduced it's orders for replacement parts for the iPhone 5, and someone made the logical leap that this means the current "Jesus Phone" isn't selling as well as previous versions.  But at the end of the day, no one's opinion of Apple really matters but mine, since I'm the one holding the bag.

As I type this on my MacBook Pro and listen to BBC Business Daily on my iPhone, my perception of the company hasn't changed in any negative way in the last 20 years. I remember when the stock was selling at $4/share and everyone was just waiting for the doors to closed. I remember when people thought the company's name was really "Beleaguered Apple" because that's what it was called in every article written.  I remember when I had the pleasure to meet Steve Jobs at the Boston Macworld Expo on 1997.  I remember when Microsoft invested $150 million just to keep Apple on life support so the Department of Justice wouldn't call them a Monopoly.  I remember my SE/30, upgrading the chip in my PowerMac 7500 myself, Systems 7, 8 & 9, the clones, the first iMac, the switch to Intel. I remember my user group and trying to tell my Windows-using family and friends that the Mac was a better machine. And I remember then politely tolerating me.

My point is, there are very few people who have loved a company more than I have loved Apple over the years. And Apple has loved me, not just with great products, but with a great return in the stock price.  But what trumps all this love is the fact that my goal for buying Apple stock was not to show them  love or to get the annual report. My goal for buying Apple and every stock I've owned is to get a return. To make money.  Unemotional money. Period.  To do so, the stock has to rise. And it has.  But I cannot forget that the most important factor in the continued rise of the stock is OTHER PEOPLE'S PERCEPTIONS of the future of the company. And people are not logical.  And they have short memories.

Blah, blah, blah.

Here's the bottom line. While I still love Apple, I don't think it's stock will rise over the next few months as high as some other stocks I may be able to find. I'm not saying it won't rise, I'm saying from a pure percent increase perspective, there may be better opportunities out there. At least right now.  I'm not going to sell it all, because it just might rise and I want to be in on that.  But I am going to take some money off the table.

Tuesday, January 15, 2013

Dollar a Week Challenge And Save $1,378

I can't take credit for this, saw it on Facebook, but it's a pretty interesting idea. Every week for 1 year, put away a little money into a shoe box. The first week put away $1, the second week $2, the third week $3 and so on up to $52 in the last week of you. If you do this each week, you will have over $1,378 by the end of the year.  That's $1,378 that you probably wouldn't even notice until the end of the year.

What's the challenge?  Simple. First, you have to remember to do it every week. Sure, you could make it up if you miss a few weeks, but the real challenge is in training your mind to remember this every week and to make a deposit, every week. Second, financially it will be a whole lot easier in the first half of the year when you're putting away only a few dollars a week, but come October when you're putting a couple hundred dollars a month into the shoe box, you will probably notice it.

Maybe you don't need $1,378. But can you train yourself to remember to do it every week. That's the real challenge.

As of today it's going on the 3rd week of January. Want to start now? Put $3 (1+2) in your shoe box. See how long you can keep it up....

Monday, January 14, 2013

Companies Phoning It In - Krystal

For the 2nd time ever, I recently went to a Krystal fast food.  I had to do some digging, but Krystal is owned by Argonne Capital Group, which is HQ'd in Atlanta, although Krystal's headquarters remains in Tennessee.  Why do I say Krystal is phoning it in?  First, their drive thru menu is a hot funky mess.  Sure, people who frequent there will probably know the menu by heart, but if they do then they don't need a menu. Who needs the menu?  NEW CUSTOMERS!

Ok, why is it a mess?
First, it's way too busy. It's like the person who built it played a lot of Tetris.
Second, it's trying way to hard (and too obvious) to steer you towards the combo meals.  All I wanted was a single burger and it wasn't listed. But every combo meal you can imagine was listed. I had to ask how much was a Krystal burger ($.79 in case you're wondering).  I consider myself to be reasonably intelligent, so I can imagine more than a few potential customers have given up and pulled off.  When I got to the drive thru window I commented on the mess of a menu. The response I got was "I agree, that's why I go to McDonalds."  Not oh snap. Double oh snap.

You might ask, how can I evaluate a whole chain based on one visit to one location?  Simple, and I'm going to make a few assumptions....

  • The drive thru menu was not designed by the location I went to. Any company worth more than $20 would have menus at all locations consistent, so the menu board is the same at every, if not most of their locations. Someone in the corporate office signed off on this box of 64 Crayola Crayons. I think it is blatantly designed to push you towards buying combo meals. Did it even go through consumer testing?  
  • The location is within 50 miles of Atlanta, where the parent company is headquartered.  If you let a location this close to the mother ship go, I can only imagine what more remote locations are like. Again, one of the employees felt no concern in referring a competitor. That says to me that there is no consistent hidden shopper program to assess quality. If there where, this employee would never have said that to a customer.

For most of my analysis, I consider 2 corporate models : Apple and Bradlees.  Why? Apple is doing it right, at every Apple Store, every minute of the day. Bradlees, before it closed down, was a perfect example of employees going through the motions (at half speed) and a corporation just trying to hang on long enough the distribute senior exec bonuses.

Avis used to have a slogan "We're #2, we try harder." I don't know where Krystal falls (not in the top 10) but I don't think their trying harder. They exchanged owners last year, so it might be that they are in the process of a massive redesign. The scary part is the current image was most likely part of some massive redesign.

As for an investment opportunity, Krystal is not publicly traded so even if I wanted to invest I could not. Why even write about it? Because the problems it has are not problems that would only be seen in a privately held company.  Sears (full disclosure, I used to work there) (SHLD) was $200 a share a few years ago, it's now $44. Have you been in a Kmart lately? Yeah, exactly.  I digress.
My point is if you consider investing in a company, one thing you need to consider is the customer experience.  When companies stop caring about what the customers experience, they've taken their eye off the ball. But I would imagine the corporate bonus structure is probably still intact.

Oh yeah, the burger was pretty good.

Friday, January 11, 2013

The Cost of Money

Because of the recession (and maybe even a layoff) there are a lot of people who find themselves in a lot of credit card debt, and trying to increase their savings.  How do you decide what should take priority?  Conventional wisdom with credit cards is that you pay off those with the highest interest rates first,  because they are carrying the highest cost of renting money (when I say renting money, understand that every time you use a credit card, not a debit card, you are renting money from the issuer of that card.  The interest rate is their charge for that money rental.), but you should also consider what return you can get on savings. It may be better to not try to save so much when the return is minor (around 2% in savings accounts) and you are borrowing at 19% or 29%.

For example, if you have a credit card balance of $5,000 at 29.9%, if you make the minimum payment it will take you 29 years and cost you over $18,000 in interest alone. If you have $5,000 in your savings account, you might be tempted to leave it there to collect interest. But unless you've found that unique bank that pays interest of 30%, you will lose a whole lot more than you gain by paying the minimum. By making the minimum payment you suffer "death by a thousand cuts". Each month over 80% of the minimum payment goes toward interest.  Read that again. The lender takes their cut first. Then pays off some of your balance.

The bottom line is this: If you can't lend money (invest) at a higher return than you can borrow it, then pay off your debts first.