The market went up and down a bit today, but ended almost exactly where it ended yesterday. My portfolio pretty much stood still today too although it was up and down various amounts throughout the day, it finished almost exactly where it started.
I haven't done a whole lot in my portfolio since my January update. I've done a few small trades with mixed results, and I have a few options open now since I'm dabbling with that, again with mixed results. The only real big thing in my portfolio to happen this week was I sold off my investment in HLF after it got a takeover bid spiking the stock 21% in a day. After they reported last quarter the stock took a huge dive, where I added to my position since I thought the dive was too much. I sold the part I had added after it climbed up another 8-9% on its own, and then sold off the rest on this news. Overall I think the total gain was only 10% on the position though since I was in the hole a decent amount from the report. Once the takeover big happened though and I got that spike I was happy to leave the position.
Aside from that, I'm mainly doing some catch up from being out of town and being busy with other things, so I haven't been able to really research any new names to add. I'm still a little behind with various things, so I probably won't be looking to add anything new until next week at the earliest, even to just the watch list, which right now only consists of AUY, DIS, and ETFC. I'd have to catch up on those 3 names and what they've done in the last week or so to see if they even still belong on the watch list before I pulled the trigger.
-Rizen
Tuesday, February 6, 2007
Saturday, February 3, 2007
January wrap up
I know I haven't been posting much here, and I'll try and get back up to date with that soon. In the mean time, I'm going to kind of do a wrap up for the month of January. First, the good stuff. My portfolio returned 4.93% for the month of January, which is a pretty good number considering the S&P returned 1.41% that month, the DJIA returned 1.27%, and the NASDAQ returned 2.51%. So I got a pretty healthy return over the averages.
I mainly was able to accomplish this because January was a pretty high volatility month in the market, so while it may have gained 1.5% or whatever on average, it did so in an up and down fashion, not a straight line. That way, by trimming my positions as the market went up, then buying them back as the market went down I was able to use the market's natural volatility to capture some additional returns. I always kept enough cash in my portfolio to add to positions as they went 'on sale' and was always prudent enough to trim them as things went up.
Another thing that helped is I rode the NASDAQ's technology spike early in the year, but around mid-month I dumped all my technology names save AAPL, GOOG, and HPQ because I feel those 3 will still perform even though this is a seasonally bad time for technology. In AAPL, the iPhone news boosted the stock big time (around 10 pts) and I took off half my position very near the high. I bought it all back as it's since dropped those 10 points because I'm bullish long term, but it seemed irrational for any stock to jump well over 10% in a week on a product that isn't even out yet, so I used the market's overreaction to book some gains.
I also started dabbling a little in both short selling and options this month, although it really is just dabbling. I feel both of those are much higher risk than my usual strategies, and as such won't use them very heavily at all until I feel I have a true grasp on how to make good money with them. Even then, I tend to be somewhat conservative with my positions as I don't have a 'real job' to fall back on so capital preservation is much more important to me than capital appreciation, although I still strive to beat the markets for sure, I don't take super high risks either IMO. When I do, I do so with small amounts of capital I can afford to easily lose, and I usually do them in baskets to mitigate risk.
At any rate, I'm going to try and get back to updating more regularly now, but that's a quick summary for January, and if I can come anywhere close to duplicating the first 31 days of the year over the rest of the 365 it will be a profitable year indeed.
-Rizen
I mainly was able to accomplish this because January was a pretty high volatility month in the market, so while it may have gained 1.5% or whatever on average, it did so in an up and down fashion, not a straight line. That way, by trimming my positions as the market went up, then buying them back as the market went down I was able to use the market's natural volatility to capture some additional returns. I always kept enough cash in my portfolio to add to positions as they went 'on sale' and was always prudent enough to trim them as things went up.
Another thing that helped is I rode the NASDAQ's technology spike early in the year, but around mid-month I dumped all my technology names save AAPL, GOOG, and HPQ because I feel those 3 will still perform even though this is a seasonally bad time for technology. In AAPL, the iPhone news boosted the stock big time (around 10 pts) and I took off half my position very near the high. I bought it all back as it's since dropped those 10 points because I'm bullish long term, but it seemed irrational for any stock to jump well over 10% in a week on a product that isn't even out yet, so I used the market's overreaction to book some gains.
I also started dabbling a little in both short selling and options this month, although it really is just dabbling. I feel both of those are much higher risk than my usual strategies, and as such won't use them very heavily at all until I feel I have a true grasp on how to make good money with them. Even then, I tend to be somewhat conservative with my positions as I don't have a 'real job' to fall back on so capital preservation is much more important to me than capital appreciation, although I still strive to beat the markets for sure, I don't take super high risks either IMO. When I do, I do so with small amounts of capital I can afford to easily lose, and I usually do them in baskets to mitigate risk.
At any rate, I'm going to try and get back to updating more regularly now, but that's a quick summary for January, and if I can come anywhere close to duplicating the first 31 days of the year over the rest of the 365 it will be a profitable year indeed.
-Rizen
Wednesday, January 17, 2007
Mixed day for stocks
My portfolio is slightly up on the day while the indexes are slightly down. Overall I think this week is going to be pretty up and down with lots of important earnings as well as options expiration. I'm not looking to do a whole lot, although yesterday I did make a bit of a short term bet that oil and oil service stocks would bounce. I'm using VERY tight stops and hoping to catch a quick bounce then exit.
I did initiate new positions in CSCO and CCRT this week though, as I've freed up some space in the portfolio the last few weeks by closing out a few. I don't know if I put them all here, but I know I closed out MA and DEO in the last few weeks, and I closed out ARG for a nice 10% gain today. I also added CWTR to my watch list. Aside from that though I anticipate being pretty quiet this week perhaps making a few very short term moves and/or initiating perhaps 1-2 other new positions since I have a 25% position in cash right now. I don't really like to game options expiration or earnings though so I'll be pretty cautious deploying my cash.
-Rizen
I did initiate new positions in CSCO and CCRT this week though, as I've freed up some space in the portfolio the last few weeks by closing out a few. I don't know if I put them all here, but I know I closed out MA and DEO in the last few weeks, and I closed out ARG for a nice 10% gain today. I also added CWTR to my watch list. Aside from that though I anticipate being pretty quiet this week perhaps making a few very short term moves and/or initiating perhaps 1-2 other new positions since I have a 25% position in cash right now. I don't really like to game options expiration or earnings though so I'll be pretty cautious deploying my cash.
-Rizen
Tuesday, January 16, 2007
My Edge
I've been pretty busy the last 4-5 days, so I apologize for the lack of updates (see my poker blog for why I've been busy). Someone asked me the other day what my 'edge' is in investing, and why I feel spending the time managing my own money is more important.
I really think my current edge is two fold. I'll be up front and say that I don't think I'm better than a professional, but I expect that on a year to year basis I'll make more money than if I handed my funds over to a professional. Sounds counter-intuitive, right?
Not really. I feel my first 'edge' in investing is that I care about my money more than anyone I'd hand it off to. It seems simple, but when I hand my money over to a mutual fund investor or a hedge fund, there are other concerns that they have than simply making me the most money possible. Mutual funds are constantly concerned with bringing in new money. They get all their money in fees when you deposit in, but are not compensated at all based on performance. Now obviously when they perform better they bring in more money and get more fees, but the nature of their business tends to make them very risk averse and also leads to them doing some very artificial things (using their funds to walk up stocks they have existing stakes in at the end of quarters for instance) to boost performance for a given quarter. Mutual funds are also for the most part only allowed to own stock, not short it or use options. They also are required to keep a certain amount of their money invested at all times, regardless of market conditions.
Hedge funds are a bit different, since they are compensated based on their performance. The good ones tend to perform quite well, but they take a lot of your returns in fees (usually in the 20% range) both realized and unrealized, plus there is often a large barrier to entry (most have a minimum investment requirement in the 7 figures). They also have to deal with year end redemptions (when investors are allowed to 'cash out') which often leads them to sit on their performance if they have a good first 9-10 months and just try and preserve their lead the last 2-3 months rather than maximizing their return on invesment at all times. Hedge fund investors tend to care too much about day to day and even week to week performance as well, so they often won't put a lot of money into investments that may take some time to develop that may have great returns longer term.
I'm generalizing, and this certainly isn't true for all of them, but quite simply I believe my first edge is from the fact that I care about my money more than anyone else does, and anyone else I give my money to has motives other than just making me as much as possible.
My second edge I believe is mobility. Large institutions (in this case, mutual and hedge funds) swing around hundreds of millions or billions of dollars. When you move that much money around, you can't get in and out of positions without impacting the price, and finding buyers or sellers for everything you want can be complicated. The fact that as an individual investor I can move in and out of positions on a moment's notice without impacting the stock price is a huge advantage. I'm not even sure I can properly express what a huge advantage this is. A big mutual fund will take months buying their full position a little at a time as to not walk up the price to such a point as to not make a profit, and it can often take them weeks/months to sell positions too, often tanking the stock price in the process. I can start and close a position in the same day and not impact anything. This mobility gives me opportunites that don't exist for institutional investors.
With a lot of the new laws out there, the playing field is more level than ever for the individual investor versus the institutional investor. I'm not naive enough to think there isn't any inside information or tips that go around professionals get that I'm not privy to, but I think the advantages outweigh the disadvantages. I don't think it's for everyone, and I think a vast majority of people are better off leaving their money to professional. That being said, I believe if you have the time, inclination, and proper mindset for money that you're better off managing your own money than letting someone else do so.
In my first six months of investing I outperformed many hedge and mutual funds. Six months doesn't prove much, but I have very little doubt that with the right mind set and discipline I can continue to beat the averages and after fees do better for myself than the professionals I used to let manage my money did.
-Rizen
I really think my current edge is two fold. I'll be up front and say that I don't think I'm better than a professional, but I expect that on a year to year basis I'll make more money than if I handed my funds over to a professional. Sounds counter-intuitive, right?
Not really. I feel my first 'edge' in investing is that I care about my money more than anyone I'd hand it off to. It seems simple, but when I hand my money over to a mutual fund investor or a hedge fund, there are other concerns that they have than simply making me the most money possible. Mutual funds are constantly concerned with bringing in new money. They get all their money in fees when you deposit in, but are not compensated at all based on performance. Now obviously when they perform better they bring in more money and get more fees, but the nature of their business tends to make them very risk averse and also leads to them doing some very artificial things (using their funds to walk up stocks they have existing stakes in at the end of quarters for instance) to boost performance for a given quarter. Mutual funds are also for the most part only allowed to own stock, not short it or use options. They also are required to keep a certain amount of their money invested at all times, regardless of market conditions.
Hedge funds are a bit different, since they are compensated based on their performance. The good ones tend to perform quite well, but they take a lot of your returns in fees (usually in the 20% range) both realized and unrealized, plus there is often a large barrier to entry (most have a minimum investment requirement in the 7 figures). They also have to deal with year end redemptions (when investors are allowed to 'cash out') which often leads them to sit on their performance if they have a good first 9-10 months and just try and preserve their lead the last 2-3 months rather than maximizing their return on invesment at all times. Hedge fund investors tend to care too much about day to day and even week to week performance as well, so they often won't put a lot of money into investments that may take some time to develop that may have great returns longer term.
I'm generalizing, and this certainly isn't true for all of them, but quite simply I believe my first edge is from the fact that I care about my money more than anyone else does, and anyone else I give my money to has motives other than just making me as much as possible.
My second edge I believe is mobility. Large institutions (in this case, mutual and hedge funds) swing around hundreds of millions or billions of dollars. When you move that much money around, you can't get in and out of positions without impacting the price, and finding buyers or sellers for everything you want can be complicated. The fact that as an individual investor I can move in and out of positions on a moment's notice without impacting the stock price is a huge advantage. I'm not even sure I can properly express what a huge advantage this is. A big mutual fund will take months buying their full position a little at a time as to not walk up the price to such a point as to not make a profit, and it can often take them weeks/months to sell positions too, often tanking the stock price in the process. I can start and close a position in the same day and not impact anything. This mobility gives me opportunites that don't exist for institutional investors.
With a lot of the new laws out there, the playing field is more level than ever for the individual investor versus the institutional investor. I'm not naive enough to think there isn't any inside information or tips that go around professionals get that I'm not privy to, but I think the advantages outweigh the disadvantages. I don't think it's for everyone, and I think a vast majority of people are better off leaving their money to professional. That being said, I believe if you have the time, inclination, and proper mindset for money that you're better off managing your own money than letting someone else do so.
In my first six months of investing I outperformed many hedge and mutual funds. Six months doesn't prove much, but I have very little doubt that with the right mind set and discipline I can continue to beat the averages and after fees do better for myself than the professionals I used to let manage my money did.
-Rizen
Monday, January 8, 2007
Slight up Monday
Today was a slightly up day for all the major indexes with around a .15-.3% increase across the board. We had a dip in the open into some terrorism scare in NYC where there was a 'gas smell' I guess. The market finished strong and my portfolio was up about .75% for the day.
Most of the strength was due to VDSI spiking sharper on a positive report from Investors Business Daily today, and the bounce in HLF I was speaking of on Friday. After completely tanking Friday to the tune of about 23% by the end of the day, it bounced back close to 8% today. That's not near the amount of the loss on Friday, but the inevitable bounce I spoke of came today. A few analysts released reports saying the selloff was very overdone and reiterated their price targets as well. I'm less bullish about the stock than I used to be, but I still believe there is some upside so I'm holding on for now.
I closed out 4 trades this morning in BUD for a less than 1% loss, in MYGN for a 1.5% loss, in OGE for a 1.25% loss, and in WY for a 1.5% loss. Not a good day for trades getting stopped out, despite the overall portfolio performance. I also initiated short term trades in ROP and SIX.
That was it though, pretty much a quiet day. The indexes didn't move that much and I've done most of the buying I wanted to in the weakness in the last week or so. Nothing really happened today to change my overall outlook, although earnings season is nearly upon us and MacWorld starts soon, so I expect the coming weeks to be pretty busy for me.
-Rizen
Most of the strength was due to VDSI spiking sharper on a positive report from Investors Business Daily today, and the bounce in HLF I was speaking of on Friday. After completely tanking Friday to the tune of about 23% by the end of the day, it bounced back close to 8% today. That's not near the amount of the loss on Friday, but the inevitable bounce I spoke of came today. A few analysts released reports saying the selloff was very overdone and reiterated their price targets as well. I'm less bullish about the stock than I used to be, but I still believe there is some upside so I'm holding on for now.
I closed out 4 trades this morning in BUD for a less than 1% loss, in MYGN for a 1.5% loss, in OGE for a 1.25% loss, and in WY for a 1.5% loss. Not a good day for trades getting stopped out, despite the overall portfolio performance. I also initiated short term trades in ROP and SIX.
That was it though, pretty much a quiet day. The indexes didn't move that much and I've done most of the buying I wanted to in the weakness in the last week or so. Nothing really happened today to change my overall outlook, although earnings season is nearly upon us and MacWorld starts soon, so I expect the coming weeks to be pretty busy for me.
-Rizen
Friday, January 5, 2007
Harsh day so far
Most of the major indexes are down between .5 and 1%. The biggest harshness that's been done to my portfolio is that HLF has dropped some 20% after they announced that their sales growth in Mexico will be about half what expected, but they reiterated that their earnings will be on par. I think the 20% drop is too harsh, and I'm waiting to listen to their Q4 conference call to rush to any judgement, but at any rate I'm not going to sell into the panic. If nothing else, we'll get a bounce in 2-3 days I can sell into if I decided it's not worth holding onto.
The main concern for me is if this is a buying opportunity (their earnings are supposed to be the same since they have higher than previously anticipated margins), of in the case of HLF, which is a growth stock, is this the beginning of a growth decline. I'll need to decide this soon, as I'll either need to buy more down here to bring my cost basis down or sell off my position in 3-4 days when we get the bounce once the heavy selling panic is over. I'll feel better one way or another once I hear the conference call.
All in all it's been a slow day for me. Fridays I tend not to do a whole lot, and this weakness hasn't been pronounced enough for me to do much buying. So far today I've just initiated trades in AMAT, CAKE, and MYGN. AMAT and CAKE are pretty short term trades with very tight stops while MYGN is a bit longer term. As a reminder, for me trades are usually short term (days and/or weeks, but almost never months) where I just look to take advantage of oversold stocks or ones with good charts that I think I can catch a quick 2-5% gain on usually with about 1-2% downside risk. These are not names I'm buying because I like their long term prospects necessarily (although sometimes I do).
I also added to my longer term positions in HAL and GFIG today, both on weakness. Not much more to say than that, I may make another update after the markets close tonight, but I'm really not looking to do much this afternoon.
-Rizen
The main concern for me is if this is a buying opportunity (their earnings are supposed to be the same since they have higher than previously anticipated margins), of in the case of HLF, which is a growth stock, is this the beginning of a growth decline. I'll need to decide this soon, as I'll either need to buy more down here to bring my cost basis down or sell off my position in 3-4 days when we get the bounce once the heavy selling panic is over. I'll feel better one way or another once I hear the conference call.
All in all it's been a slow day for me. Fridays I tend not to do a whole lot, and this weakness hasn't been pronounced enough for me to do much buying. So far today I've just initiated trades in AMAT, CAKE, and MYGN. AMAT and CAKE are pretty short term trades with very tight stops while MYGN is a bit longer term. As a reminder, for me trades are usually short term (days and/or weeks, but almost never months) where I just look to take advantage of oversold stocks or ones with good charts that I think I can catch a quick 2-5% gain on usually with about 1-2% downside risk. These are not names I'm buying because I like their long term prospects necessarily (although sometimes I do).
I also added to my longer term positions in HAL and GFIG today, both on weakness. Not much more to say than that, I may make another update after the markets close tonight, but I'm really not looking to do much this afternoon.
-Rizen
Thursday, January 4, 2007
Volatility remains high
The indexes have been way up and down today. We started down, then went down pretty hard only to reverse quickly back to where we opened (but still down) then mostly tread choppy water until the last 30-60 minutes where the indexes have finally all gone into the green. Technology and the NASDAQ have been on fire most of the day though being up 1.21% as I write this.
The early action stopped me out of a few trades. I closed out my trades in CBS for a 9.5% gain, KFT for a 2% loss, MCD for a 1.5% gain, and XRX for a 2% loss. During the weakness though I added to my positions in ARRS and LWSN near the bottom and both have swung for 3-5% gains from today's bottom despite not being up much on the day.
I also trimmed my position in MA some on a nearly 3% spike today, and will probably look to trim that one into further strength in the future. I also closed out a longer term position in DEO after it hit my price target. I actually still like DEO and may buy it back if it goes lower again, but I felt the risk/reward no longer warranted the position.
I also removed BEBE from my watch list after it reported very weak same store sales numbers against a really easy compare. In general, the same store sales reports out of the retail sector were quite weak, which fits my thesis that Christmas was not as strong as many thought, and that plus the upcoming minimum wage increase (provided it gets passed) will hurt the retail sector overall early this year. All that said I believe retail is actually up at the moment despite the bad news.
-Rizen
The early action stopped me out of a few trades. I closed out my trades in CBS for a 9.5% gain, KFT for a 2% loss, MCD for a 1.5% gain, and XRX for a 2% loss. During the weakness though I added to my positions in ARRS and LWSN near the bottom and both have swung for 3-5% gains from today's bottom despite not being up much on the day.
I also trimmed my position in MA some on a nearly 3% spike today, and will probably look to trim that one into further strength in the future. I also closed out a longer term position in DEO after it hit my price target. I actually still like DEO and may buy it back if it goes lower again, but I felt the risk/reward no longer warranted the position.
I also removed BEBE from my watch list after it reported very weak same store sales numbers against a really easy compare. In general, the same store sales reports out of the retail sector were quite weak, which fits my thesis that Christmas was not as strong as many thought, and that plus the upcoming minimum wage increase (provided it gets passed) will hurt the retail sector overall early this year. All that said I believe retail is actually up at the moment despite the bad news.
-Rizen
Wednesday, January 3, 2007
Wild start to the New Year
It's an hour before market close, and it's been a wild Wednesday. The market peaked nearly 1.5-2% (depending on the index) half way through the day, and has plummeted down .5-1% (again, depending on the index). I've seen huge changes in my portfolio personally. The volatility can be nice, in that if you're active you can trade around it and turn a profit even if the market doesn't go much of anywhere. I've been caught more on the downside today, but I did do the prudent thing and trimmed 4-5 positions into this morning's strength and have added to 3-4 in the late afternoon weakness.
Let's see, I trimmed positions in ARG, DEO, JNJ, LOW, MA, and MRVL into the strength. I didn't close out any of the positions, but I had profits to protect and all of those were either getting somewhat close to my price targets or I felt the positions were too large now based on risk/reward. If they dip down lower I may look to add them back. As one user asked, this is the sort of action I consider 'trimming into strength'. When the market and/or individual stocks surge on no news or catalysts whatsoever, it's often prudent to trim and take some profits. Then, when the stocks pull back, you re-add your position if you care to and keep the profit. Worst case scenario the stock runs, you still have a position, but less of one. Best case scenario it pulls back, you get some profits from market overreaction, and you can buy it back if you choose.
Cramer says this a lot, and I really agree with it. It's arrogant to buy or sell all at once. No one can call exact tops or bottoms. If you think you're good enough to know the exact moment to buy or sell, more power to you. I don't. There are times opportunities present themselves where you must act quickly and decisively, but a vast majority of the time I choose to initiate a position, build it slowly over time with 3 or 4 separate buys, trade around it as it goes up and down adding and trimming to take advantage of volatility, then slowly selling off the position as it approaches my price target unless the thesis changes. I sell in the same 3-4 sells that I did buys, over time.
I also closed out some short term trades. I had a trade in WMT that spiked this morning so I closed it out for a nice quick 3.5% gain. I was also stopped out of 3 other trades, EGN where I protected a 2% gain, SNDK for roughly a 4% loss, and GG for break even.
I also put some money to work today adding to positions in both HAL and GW on this morning's energy downgrades. Energy has been hit really hard with the mild winter in the northeast. Both of these stocks I feel are severely undervalued and will gain long term, so I felt the weakness was a good spot to build my position a little more. First big snow storm in the NE will probably make these pop as well, at which point I might trim some into the strength. Later in the day on the massive decline I added to positions in HLF, PSPT, LWSN, NYX, and SHLD. In some of these cases, I was averaging down my cost basis (the stocks were cheaper than my average purchase price, so buying more brings my average cost down, which as long as I still believe in the stocks is a positive thing). In some of the others I felt they simply fell too much and will look to 'flip' them as they (hopefully) bounce. These are all investment positions, so flipping won't be selling off entirely, but simply trading around (unless I change my thesis on the stocks).
I also initiated trades in SNDK (which I later was stopped out of today for a loss) and PTIE. That's pretty much it. I may do some more today if I see opportunities. Overall it's looking like I'll post a loss today, but unless the indexes do something drastic in the last 40 minutes or so I will have lost significantly less than the indexes. I fell pretty good about my positions. I feel the spike today was out of line, but I feel the later selloff was a bit drastic and panicked. I'm still keeping a close eye on the action to start out the year.
-Rizen
Let's see, I trimmed positions in ARG, DEO, JNJ, LOW, MA, and MRVL into the strength. I didn't close out any of the positions, but I had profits to protect and all of those were either getting somewhat close to my price targets or I felt the positions were too large now based on risk/reward. If they dip down lower I may look to add them back. As one user asked, this is the sort of action I consider 'trimming into strength'. When the market and/or individual stocks surge on no news or catalysts whatsoever, it's often prudent to trim and take some profits. Then, when the stocks pull back, you re-add your position if you care to and keep the profit. Worst case scenario the stock runs, you still have a position, but less of one. Best case scenario it pulls back, you get some profits from market overreaction, and you can buy it back if you choose.
Cramer says this a lot, and I really agree with it. It's arrogant to buy or sell all at once. No one can call exact tops or bottoms. If you think you're good enough to know the exact moment to buy or sell, more power to you. I don't. There are times opportunities present themselves where you must act quickly and decisively, but a vast majority of the time I choose to initiate a position, build it slowly over time with 3 or 4 separate buys, trade around it as it goes up and down adding and trimming to take advantage of volatility, then slowly selling off the position as it approaches my price target unless the thesis changes. I sell in the same 3-4 sells that I did buys, over time.
I also closed out some short term trades. I had a trade in WMT that spiked this morning so I closed it out for a nice quick 3.5% gain. I was also stopped out of 3 other trades, EGN where I protected a 2% gain, SNDK for roughly a 4% loss, and GG for break even.
I also put some money to work today adding to positions in both HAL and GW on this morning's energy downgrades. Energy has been hit really hard with the mild winter in the northeast. Both of these stocks I feel are severely undervalued and will gain long term, so I felt the weakness was a good spot to build my position a little more. First big snow storm in the NE will probably make these pop as well, at which point I might trim some into the strength. Later in the day on the massive decline I added to positions in HLF, PSPT, LWSN, NYX, and SHLD. In some of these cases, I was averaging down my cost basis (the stocks were cheaper than my average purchase price, so buying more brings my average cost down, which as long as I still believe in the stocks is a positive thing). In some of the others I felt they simply fell too much and will look to 'flip' them as they (hopefully) bounce. These are all investment positions, so flipping won't be selling off entirely, but simply trading around (unless I change my thesis on the stocks).
I also initiated trades in SNDK (which I later was stopped out of today for a loss) and PTIE. That's pretty much it. I may do some more today if I see opportunities. Overall it's looking like I'll post a loss today, but unless the indexes do something drastic in the last 40 minutes or so I will have lost significantly less than the indexes. I fell pretty good about my positions. I feel the spike today was out of line, but I feel the later selloff was a bit drastic and panicked. I'm still keeping a close eye on the action to start out the year.
-Rizen
Sunday, December 31, 2006
Comments
I didn't notice that I didn't have this blog set up to send me e-mail notification of comments, so I was just assuming there weren't any. Turns out I missed quite a few. I'll go back over the weekend and respond to some as well as fire some e-mails off to those of you that left addresses. Sorry if it seems like I've been ignoring them, I just didn't see them until now.
-Rizen
-Rizen
January 2007
I'll probably make several 'looking forward' posts before the market opens back up on Jan 3. I tend to try and think 3 different ways. What's going to happen in the next month, next quarter, and next year.
For January 07, it's one of the first times in a while that I'm really torn as to what I think will happen. The bull and the bear camps make pretty compelling cases. Bulls think that the end of the year stall is just a stepping stone on a way to new highs. They cite the general lack of inflation, the overall strength of the economy, and relatively modest valuations (in terms of P/E multiples) against the historic averages.
Bears think we'll see a big selloff to start the year as people look to lock in their 06 gains after they no longer have to pay taxes this year on them. They also point to the poor housing market (bulls see a bottom forming, bears think it's going to get much worse), and a theory of 'stagflation' in 2007 where we have stagnant growth and heavy inflation.
So what do I think? Well, overall I'm not very sure. I think we'll see some quick policy changes in Washington as the democratic congress officially takes over. The most notable one being a minimum wage increase, which I believe will put pressure on low-margin retailers such as Wal-Mart and Target. I also believe that when the numbers come in that the holiday season will show record sales but lower than expected profits. I personally saw a lot of sales, and big ticket items this year like big screen televisions were heavily discounted with low margins (anyone who doubts this go look at that Circuit City quarter). I think both discount retail and big box retail will be bad places to be, but there could be some profits to be made in niche and high end retail. Half a stock's movement has to do with its sector though, and it's tough to fight that trend. I definitely won't be looking to add to any retail positions in early 07. I liquidated pretty much all of them towards the end of 06, although I do still hold a position in Sears (SHLD) and Lowe's (LOW). Sears is a long term play for me though and Lowe's always seems tied more to housing than retail.
Speaking of housing, I'm more in the camp that housing is starting to form a bottom now and it won't get much worse before it gets better. I'm actually putting my money where my mouth is because I'm planning on building a house in early 07 since I believe prices won't go much lower. That being said, I don't plan on buying any housing stocks directly, although I may look at stocks tied to housing. Lowe's is a good example, as well as things like American Standard and Black & Decker (neither of which I'm recommending, they're just good examples).
I also believe that some of the large cap technology stocks will do well in early 07. On a yearly cycle, usually January is the time to leave tech, and normally I despise fighting cycles too much (saying 'this time is different' is often a recipe for disaster), we do have a major new product cycle in Microsoft Vista that could drive a push in some of the larger technology names, especially those tied to networking and PC Hardware. The at home PC business has become such low margin I wouldn't recommend making a play on that, but looking at what companies may benefit the most as businesses upgrade to Vista may be a great play for 2007.
I think the drugs/pharma sector will be an interesting one to watch. I think January will be a good tell on if these stocks will be good for 07. The main downward pressure on them right now is that no one knows what the new democratic congress will do. They've typically been anti-pharma (and anti-oil) and there have been some talks that they may try and leverage Medicare Part D into favorable pricing from the drug companies, something that the old congress didn't do and allowed the drug companies to make a killing. I personally think that aside from the minimum wage raise and some general stick waving, we won't see much action and that the drug/pharma stocks will enjoy a good 07, but I'm not confident enough in that to put any money there until after I see how January plays out. If it goes as I plan, I think some of the small/mid-cap drug stocks will be the place to be. Not necessarily the 'miracle cure for cancer' type stocks, but mainly the smaller drug companies with strong pipelines and drug patents on strong products that don't expire for a while.
My reasoning is this. Some of the bigger names right now (I'm talking about you Pfizer (PFE) and Bristol-Myers Squibb (BMY)) have patents that expire fairly soon on key drugs and virtually no replacements in the pipeline. They do have a ton of cash though so I think they'll look to build their pipeline by acquiring others. I personally don't like to try and game takeover bids, but I think by finding some high-quality small/mid-cap drug stocks with solid fundamentals, you could do well with or without a takeover this year.
Energy is a tough call for me. Oil is stabilizing some IMO, and I don't think it's a bad place to be, but as the 2008 election campaigns start in force I think we'll see a lot of talk about alternative energy. I personally don't like alternative energy (the stocks that is), so I won't put any money there except for quick trades. I think a key to the whole energy sector will be how the weather works out. We've had a relatively mild winter so far, which has really hurt a lot of the stocks tied to natural gas. I don't like to game the weather, so I'll probably stay away, although I may look to add a high dividend oil stock to my portfolio in early 07.
There are lots of sectors I'm sure I'm not talking about, but those are the ones I have major opinions on. I personally think we could go either way in January. I've repositioned my portfolio in such a way so that a lot of my core holdings are high-dividend stocks or stocks with a big buyback. That puts a nice floor in the downside for me. I'll miss some upside if 07 comes out on fire, but I like my position overall. I also have a higher than usual cash position so that once I get a better feel for how things may play out in the first quarter I can put some of that money to work.
Overall I'm cautiously optimistic, and am mostly positioned that way. I'll really be keeping my eye on how the drug/pharma sector is doing and how the new congress starts out the year. The other sector I'm keeping a close eye on that I haven't talked much about are the banks/financials/brokers. They started to run some at the end of this year and I think there could be some money to be made there. Again though, I don't feel confident enough to put any money to work until I see how things start 07.
-Rizen
For January 07, it's one of the first times in a while that I'm really torn as to what I think will happen. The bull and the bear camps make pretty compelling cases. Bulls think that the end of the year stall is just a stepping stone on a way to new highs. They cite the general lack of inflation, the overall strength of the economy, and relatively modest valuations (in terms of P/E multiples) against the historic averages.
Bears think we'll see a big selloff to start the year as people look to lock in their 06 gains after they no longer have to pay taxes this year on them. They also point to the poor housing market (bulls see a bottom forming, bears think it's going to get much worse), and a theory of 'stagflation' in 2007 where we have stagnant growth and heavy inflation.
So what do I think? Well, overall I'm not very sure. I think we'll see some quick policy changes in Washington as the democratic congress officially takes over. The most notable one being a minimum wage increase, which I believe will put pressure on low-margin retailers such as Wal-Mart and Target. I also believe that when the numbers come in that the holiday season will show record sales but lower than expected profits. I personally saw a lot of sales, and big ticket items this year like big screen televisions were heavily discounted with low margins (anyone who doubts this go look at that Circuit City quarter). I think both discount retail and big box retail will be bad places to be, but there could be some profits to be made in niche and high end retail. Half a stock's movement has to do with its sector though, and it's tough to fight that trend. I definitely won't be looking to add to any retail positions in early 07. I liquidated pretty much all of them towards the end of 06, although I do still hold a position in Sears (SHLD) and Lowe's (LOW). Sears is a long term play for me though and Lowe's always seems tied more to housing than retail.
Speaking of housing, I'm more in the camp that housing is starting to form a bottom now and it won't get much worse before it gets better. I'm actually putting my money where my mouth is because I'm planning on building a house in early 07 since I believe prices won't go much lower. That being said, I don't plan on buying any housing stocks directly, although I may look at stocks tied to housing. Lowe's is a good example, as well as things like American Standard and Black & Decker (neither of which I'm recommending, they're just good examples).
I also believe that some of the large cap technology stocks will do well in early 07. On a yearly cycle, usually January is the time to leave tech, and normally I despise fighting cycles too much (saying 'this time is different' is often a recipe for disaster), we do have a major new product cycle in Microsoft Vista that could drive a push in some of the larger technology names, especially those tied to networking and PC Hardware. The at home PC business has become such low margin I wouldn't recommend making a play on that, but looking at what companies may benefit the most as businesses upgrade to Vista may be a great play for 2007.
I think the drugs/pharma sector will be an interesting one to watch. I think January will be a good tell on if these stocks will be good for 07. The main downward pressure on them right now is that no one knows what the new democratic congress will do. They've typically been anti-pharma (and anti-oil) and there have been some talks that they may try and leverage Medicare Part D into favorable pricing from the drug companies, something that the old congress didn't do and allowed the drug companies to make a killing. I personally think that aside from the minimum wage raise and some general stick waving, we won't see much action and that the drug/pharma stocks will enjoy a good 07, but I'm not confident enough in that to put any money there until after I see how January plays out. If it goes as I plan, I think some of the small/mid-cap drug stocks will be the place to be. Not necessarily the 'miracle cure for cancer' type stocks, but mainly the smaller drug companies with strong pipelines and drug patents on strong products that don't expire for a while.
My reasoning is this. Some of the bigger names right now (I'm talking about you Pfizer (PFE) and Bristol-Myers Squibb (BMY)) have patents that expire fairly soon on key drugs and virtually no replacements in the pipeline. They do have a ton of cash though so I think they'll look to build their pipeline by acquiring others. I personally don't like to try and game takeover bids, but I think by finding some high-quality small/mid-cap drug stocks with solid fundamentals, you could do well with or without a takeover this year.
Energy is a tough call for me. Oil is stabilizing some IMO, and I don't think it's a bad place to be, but as the 2008 election campaigns start in force I think we'll see a lot of talk about alternative energy. I personally don't like alternative energy (the stocks that is), so I won't put any money there except for quick trades. I think a key to the whole energy sector will be how the weather works out. We've had a relatively mild winter so far, which has really hurt a lot of the stocks tied to natural gas. I don't like to game the weather, so I'll probably stay away, although I may look to add a high dividend oil stock to my portfolio in early 07.
There are lots of sectors I'm sure I'm not talking about, but those are the ones I have major opinions on. I personally think we could go either way in January. I've repositioned my portfolio in such a way so that a lot of my core holdings are high-dividend stocks or stocks with a big buyback. That puts a nice floor in the downside for me. I'll miss some upside if 07 comes out on fire, but I like my position overall. I also have a higher than usual cash position so that once I get a better feel for how things may play out in the first quarter I can put some of that money to work.
Overall I'm cautiously optimistic, and am mostly positioned that way. I'll really be keeping my eye on how the drug/pharma sector is doing and how the new congress starts out the year. The other sector I'm keeping a close eye on that I haven't talked much about are the banks/financials/brokers. They started to run some at the end of this year and I think there could be some money to be made there. Again though, I don't feel confident enough to put any money to work until I see how things start 07.
-Rizen
Friday, December 29, 2006
2006 in review
I won't make this super long, and I'll start posting more now that my daughter is born and I'm back in the swing of managing my funds regularly again.
With Q4 and 2006 now officially at a close I thought I'd recap a little bit. For December I had a return of .89% vs the S&Ps 1.72%, and for Q4 I had a return of 7.21% vs the S&Ps 4.85%. I attribute some of my December underperformance to the fact that I didn't get to watch things very closely missing a lot of trading days dealing with the birth of my daughter (which was obviously worth it).
A lot of my outperformance in Q4 came from pretty much perfectly timing the sector rotation out of defense stocks (not like military stocks, but your soups/soaps/cereals stocks like Proctor and Gamble and General Mills) and into technology and retail stocks ahead of the Christmas season. My timing was nearly perfect in getting out of the defense stocks right as they were topping and getting into the technology and defense stocks just 2-3 weeks after they'd started to run.
For the year, I returned 14.44% vs the S&Ps 14.14%. This is a bit misleading because I didn't start managing my own money until July of this year, so I only have 6 months of performance vs the S&Ps 12 months. That being said, I also dodged the horrible May of the year and the first half of 2006 was not near as good as the second half. I still fell I outperformed pretty handily though, and am looking forward to seeing how well I can do in 2007 now that I'm a more 'seasoned' investor.
I'll try and make another post with some thoughts to 2007 before the markets open again on Wednesday. Until then I hope all of you had a good year as well!
-Rizen
With Q4 and 2006 now officially at a close I thought I'd recap a little bit. For December I had a return of .89% vs the S&Ps 1.72%, and for Q4 I had a return of 7.21% vs the S&Ps 4.85%. I attribute some of my December underperformance to the fact that I didn't get to watch things very closely missing a lot of trading days dealing with the birth of my daughter (which was obviously worth it).
A lot of my outperformance in Q4 came from pretty much perfectly timing the sector rotation out of defense stocks (not like military stocks, but your soups/soaps/cereals stocks like Proctor and Gamble and General Mills) and into technology and retail stocks ahead of the Christmas season. My timing was nearly perfect in getting out of the defense stocks right as they were topping and getting into the technology and defense stocks just 2-3 weeks after they'd started to run.
For the year, I returned 14.44% vs the S&Ps 14.14%. This is a bit misleading because I didn't start managing my own money until July of this year, so I only have 6 months of performance vs the S&Ps 12 months. That being said, I also dodged the horrible May of the year and the first half of 2006 was not near as good as the second half. I still fell I outperformed pretty handily though, and am looking forward to seeing how well I can do in 2007 now that I'm a more 'seasoned' investor.
I'll try and make another post with some thoughts to 2007 before the markets open again on Wednesday. Until then I hope all of you had a good year as well!
-Rizen
Tuesday, December 12, 2006
Stock Spotlights
I'm currently in the process of re-evaluating both my watch list and my portfolio holdings. I'm constantly evaluating and re-evaluating positions, and as I feel things start to get out of hand I tend to do a 'clean up'. Right now is one of those times. Since that means I'm doing a lot of research on various stocks, I thought I might share some of my research here. Let me be up front, I use a 1-10 rating system, and I typically stay away from looking at bad stocks altogether, so you'll probably see me not have many ratings below 5 in here. In my system, if a stock receives a 5 rating, it means that I feel about equal to holding it as I would just staying in cash and putting my money in a money market account or short term CD/Bond. A 10 is a stock I will load up on, while a 1 is one I'll stay away from at all costs. I don't short sell, so I won't talk about that, although at some point I may add that to my toolbox, I don't feel comfortable shorting yet.
Also, this is a good chance to say STAY DIVERSIFIED! Even stocks I feel are a 10 will never take up more than 7-8% of my portfolio, and most stocks take up 4-5%. I tend to hold 20-25 stocks at a time for investment purposes, as I believe too many more than that and you just become a giant mutual fund and might as well buy S&P 500 index funds, and too few and you can't be diversified enough. Jim Cramer's books say you need at least 5 stocks to be diversified and he prefers 10, if anyone is curious on that.
Another reminder as well, that this blog is mainly for me to get my thoughts into writing, and is not meant as financial advice for anyone. Do your own homework please and don't blindly take my advice. I've only been at this since June, I do not consider myself a professional, and I'm certainly not qualified to give financial advice to others. This is for entertainment purposes only and as a means for me to discuss my opinions. If it gives people ideas, great, but if anyone goes out and immediately buys anything based on my recommendation or sells based on my thoughts without first doing their own homework, well to be blunt, they're probably stupid.
With all that out of the way, I'll probably be highlighting a few stocks per week as I update my watch list. I'll let you in to a lot of the things I do in my research, and perhaps give you ideas on what to look for in yours.
-Rizen
Also, this is a good chance to say STAY DIVERSIFIED! Even stocks I feel are a 10 will never take up more than 7-8% of my portfolio, and most stocks take up 4-5%. I tend to hold 20-25 stocks at a time for investment purposes, as I believe too many more than that and you just become a giant mutual fund and might as well buy S&P 500 index funds, and too few and you can't be diversified enough. Jim Cramer's books say you need at least 5 stocks to be diversified and he prefers 10, if anyone is curious on that.
Another reminder as well, that this blog is mainly for me to get my thoughts into writing, and is not meant as financial advice for anyone. Do your own homework please and don't blindly take my advice. I've only been at this since June, I do not consider myself a professional, and I'm certainly not qualified to give financial advice to others. This is for entertainment purposes only and as a means for me to discuss my opinions. If it gives people ideas, great, but if anyone goes out and immediately buys anything based on my recommendation or sells based on my thoughts without first doing their own homework, well to be blunt, they're probably stupid.
With all that out of the way, I'll probably be highlighting a few stocks per week as I update my watch list. I'll let you in to a lot of the things I do in my research, and perhaps give you ideas on what to look for in yours.
-Rizen
Tuesday Rundown
Overall it was a slightly down day for the market. FOMC meeting was the key item today, and there was a huge selloff prior to the meeting that caused a rather large dip in the indexes.
I had been talking the other day about how I had a fairly large position in cash now and wasn't sure if I wanted to put it to work or sit on it, well with the selloff today I felt it put a lot of my favorite positions 'on sale' so while I didn't buy at the exact bottom today, I loaded up on a lot of my favorite stocks at a discount on the huge dip today. I'm not going to give reasoning like I do a lot of other days because there were too many to count, but the positions I added to today were: AAPL, ARG, COF, GOOG, HAL, LOW, MA, MRVL, PSPT, and VDSI. Those (plus a couple of others that didn't dip today) are all stocks I have rated '1' in my portfolio. I use Jim Cramer's rating system where 1s are stocks I'd add on to at current prices, 2s are ones I would only add on to at a significant pullback, 3s are stocks I'm looking to trim into strength, and 4s are stocks I'm looking to sell at any cost. I re-rate them every week based on position size, current price, outlook, etc.
At any rate I also initiated two short term trades today in CAAS and SGP, and got stopped out of 3 short term trades in NTES, YRCW, and TEVA on the dip today at a 2-3% loss for each trade.
My portfolio suffered a little more than the indexes did today, primarily due to significant dips in Mastercard and Apple, two stocks I like a lot and have significant parts of my portfolio invested in.
I still have a little bit bigger than normal cash position that I may deploy on further dips, but I'm also comfortable just sitting on it in the current market environment.
-Rizen
I had been talking the other day about how I had a fairly large position in cash now and wasn't sure if I wanted to put it to work or sit on it, well with the selloff today I felt it put a lot of my favorite positions 'on sale' so while I didn't buy at the exact bottom today, I loaded up on a lot of my favorite stocks at a discount on the huge dip today. I'm not going to give reasoning like I do a lot of other days because there were too many to count, but the positions I added to today were: AAPL, ARG, COF, GOOG, HAL, LOW, MA, MRVL, PSPT, and VDSI. Those (plus a couple of others that didn't dip today) are all stocks I have rated '1' in my portfolio. I use Jim Cramer's rating system where 1s are stocks I'd add on to at current prices, 2s are ones I would only add on to at a significant pullback, 3s are stocks I'm looking to trim into strength, and 4s are stocks I'm looking to sell at any cost. I re-rate them every week based on position size, current price, outlook, etc.
At any rate I also initiated two short term trades today in CAAS and SGP, and got stopped out of 3 short term trades in NTES, YRCW, and TEVA on the dip today at a 2-3% loss for each trade.
My portfolio suffered a little more than the indexes did today, primarily due to significant dips in Mastercard and Apple, two stocks I like a lot and have significant parts of my portfolio invested in.
I still have a little bit bigger than normal cash position that I may deploy on further dips, but I'm also comfortable just sitting on it in the current market environment.
-Rizen
Monday, December 11, 2006
Monday Morning
As has been the trend lately, we're up early Monday morning. So far lately between mergers and 'Mutual Fund Monday' for the last 2 months or so just about every Monday I can remember has been a pretty big up day. I haven't done a whole lot today, and I don't anticipate doing a whole lot today except I may trim a few positions into strength.
I did just close out my position in ARDI after it got a takeover bid this weekend. The stock shot up 8% and it was more of a speculative name in my portfolio too. Overally I closed it out with around a 20% gain which I'm quite pleased with. I'm sitting with a larger than usual cash position in my portfolio of about 20%. Normally I'd be looking to put that to work, but I don't anticipate doing anything today. If I do anything it will be later this week on a pullback, and I'm going to try and get a shopping list prepared today of some stocks that should they pull back I'll be ready to pull the trigger on.
I'm going to be very picky about what I go into right now though (not that I'm not always picky). I really think that we're going to see mostly churn for the rest of 2006 with overall very little up or down until then, although I think the ride will be very choppy up until then, so I may make some short term trades to take advantage of volatility.
I've been continuing to trim a lot of my video game, technology, and some retail exposure. I feel like video games and technology as sectors are starting to get a bit played out and have had huge gains worth protecting. We're at a point in the business cycle where the playbook says to buy retailers, but I have some big concerns over the retail sector due to the minimum wage increase I think we're very likely to see in early January. I also think the business cycle and the calendar cycle caused people to get into retail earlier than normal in anticipation of the holiday shopping season, as retailers had a pretty big run in the last few months, and I don't think the downside for the minimum wage increase is priced in at all yet.
I've considered looking at some higher end retail plays since I don't think minimum wage increases will impact them much, but 50% of a stock's move is usually tied to what sector it's in, and trying to pick good stocks in a bad sector is typically counter-productive. The playbook also says to get some financials, and I may very well look to do that after the FOMC meeting this week so we can get a handle on if and when we may see a rate cut, as the rate cut is really the upcoming catalyst for that sector. In addition I've been wanting to get some metals and oil stock exposure in my portfolio, as I'm pretty limited in those two areas. I've got a few names I'm keeping my eye on and I may pull the trigger on one or more of those later this week. Overall though I'd be perfectly fine sitting on my cash position through the end of the year and just getting the 5% return from my money market account if I don't see anything I really like. As always, I will also look to add to my some of my current positions if I can improve my cost basis or get a nice pullback in one of my favorite names.
-Rizen
I did just close out my position in ARDI after it got a takeover bid this weekend. The stock shot up 8% and it was more of a speculative name in my portfolio too. Overally I closed it out with around a 20% gain which I'm quite pleased with. I'm sitting with a larger than usual cash position in my portfolio of about 20%. Normally I'd be looking to put that to work, but I don't anticipate doing anything today. If I do anything it will be later this week on a pullback, and I'm going to try and get a shopping list prepared today of some stocks that should they pull back I'll be ready to pull the trigger on.
I'm going to be very picky about what I go into right now though (not that I'm not always picky). I really think that we're going to see mostly churn for the rest of 2006 with overall very little up or down until then, although I think the ride will be very choppy up until then, so I may make some short term trades to take advantage of volatility.
I've been continuing to trim a lot of my video game, technology, and some retail exposure. I feel like video games and technology as sectors are starting to get a bit played out and have had huge gains worth protecting. We're at a point in the business cycle where the playbook says to buy retailers, but I have some big concerns over the retail sector due to the minimum wage increase I think we're very likely to see in early January. I also think the business cycle and the calendar cycle caused people to get into retail earlier than normal in anticipation of the holiday shopping season, as retailers had a pretty big run in the last few months, and I don't think the downside for the minimum wage increase is priced in at all yet.
I've considered looking at some higher end retail plays since I don't think minimum wage increases will impact them much, but 50% of a stock's move is usually tied to what sector it's in, and trying to pick good stocks in a bad sector is typically counter-productive. The playbook also says to get some financials, and I may very well look to do that after the FOMC meeting this week so we can get a handle on if and when we may see a rate cut, as the rate cut is really the upcoming catalyst for that sector. In addition I've been wanting to get some metals and oil stock exposure in my portfolio, as I'm pretty limited in those two areas. I've got a few names I'm keeping my eye on and I may pull the trigger on one or more of those later this week. Overall though I'd be perfectly fine sitting on my cash position through the end of the year and just getting the 5% return from my money market account if I don't see anything I really like. As always, I will also look to add to my some of my current positions if I can improve my cost basis or get a nice pullback in one of my favorite names.
-Rizen
Wednesday, December 6, 2006
Repositioning day
Today was pretty flat, all of the major indexes finished down a little, and the overall trading range was pretty small. I took advantage of the lack of volatility to do some 'clean up' in my portfolio. I closed out a few positions that I felt had limited upside left, mostly because of big runs in the recent market upswing. I still felt they might climb a little, but I felt like most of the easy money was made, and that the risk/reward ratio was no longer near as favorable as it once was.
I closed out positions in TSRA, THQI, IGT, and FWLT. I felt all four still had some room to run, and I actually may re-open a position in IGT later, as I feel the 4-5 year horizon for it is a great one. IGT makes slot machines, and they're going to be on a replacement cycle 18-24 months out. The stock has had a really good run up though and I wanted to protect my gains. I feel the 6-9 month picture of it isn't quite as rosy. It's immediately moving to my watch list and I may look to add it back on in 2007 at some point.
THQI is a video game manufacturer. The entire video game sector has ramped really big with the debut of the Nintendo Wii and Sony Playstation 3. I fully expect THQI to have a monster 4th quarter as they make some of the best selling games for all systems, but I feel that most of the good stuff is already priced in with the recent run, and that if anything missed even slightly we could see a huge selloff. I don't really have any plans to add this name back to my portfolio anytime soon as I really only bought it as a play on the new systems and Christmas shopping season, and while those two things aren't complete, I believe most of the upside left is already priced in.
FWLT is an infrastructure stock. For a long time it was incorrectly trading along with housing, which was keeping it way down. Since September 25th though it's gone from 38 to 55, which is a rather large gain. It's P/E multiple is starting to get pretty big, and there is little growth as well as little catalyst I see to power the stock much higher in the near to mid term future. The stock may have a little more of a run in it, but my initial investment in this name was based on the fact that it had a low valuation and while it isn't exactly expensive now, it is certainly no longer cheap IMO, so I'm done with it for now. I don't forsee going back to the name anytime in the near future either.
TSRA is a technology stock that works with miniturization in semiconductors. This is another name that I had a nice gain in as it has gone from 32 to almost 39 in the last 3 months. Semiconductors as a whole haven't been on fire. I still think there could be potential upside to this name, but TSRA trades at 36 times next year's earnings. My general feeling about the market right now is that we're probably prime for a correction sometime soon, so I'm trying not to hold too many high multiple stocks right now unless they have solid, consistent growth. TSRA no longer fit that bill for me.
I also trimmed some of my shares in VDSI and GME. GME I trimmed for a lot of the same reasons I did THQI, it's a video games retailer and they've had a nice run. Also, I believe the retail sector in general is going to take a hit when the new congress passes the minimum wage increase. I still believe GME has room to run before then though, so I only pared back, I didn't close out the position completely. VDSI is actually still a position I really like, but it has expanded from a little over 8 to 12.25 pretty quickly and I felt it was prudent to go ahead and book some gains. Should it pull back I'd probably buy back my shares at a lower price. Both of these are really just some profit taking on the way up.
I added to my positions in AAPL and HLF as well today. AAPL has had several down days this week. A lot of that seems to do with the roll out of the Microsoft Zune to compete with the iPod. I believe that those worries are incorrect and that once Apple announces the iPhone (or whatever they call it, there's some issues with the naming too which has been hitting the stock) it will go to 100. Herbalife (HLF) has seen fantastic growth lately and has been benefiting a lot from international sales. This position is a bit more speculative in my portfolio, but it came down some in the early hours today to almost 40, so I added some to my position.
I also initiated two new trades, YRCW and TEVA. TEVA is a pretty short term trade while YRCW may take a while to pan out, as I believe there is a lot of room to run quickly there. I also sold a trade I had in Genentech (DNA) for a small profit today.
-Rizen
I closed out positions in TSRA, THQI, IGT, and FWLT. I felt all four still had some room to run, and I actually may re-open a position in IGT later, as I feel the 4-5 year horizon for it is a great one. IGT makes slot machines, and they're going to be on a replacement cycle 18-24 months out. The stock has had a really good run up though and I wanted to protect my gains. I feel the 6-9 month picture of it isn't quite as rosy. It's immediately moving to my watch list and I may look to add it back on in 2007 at some point.
THQI is a video game manufacturer. The entire video game sector has ramped really big with the debut of the Nintendo Wii and Sony Playstation 3. I fully expect THQI to have a monster 4th quarter as they make some of the best selling games for all systems, but I feel that most of the good stuff is already priced in with the recent run, and that if anything missed even slightly we could see a huge selloff. I don't really have any plans to add this name back to my portfolio anytime soon as I really only bought it as a play on the new systems and Christmas shopping season, and while those two things aren't complete, I believe most of the upside left is already priced in.
FWLT is an infrastructure stock. For a long time it was incorrectly trading along with housing, which was keeping it way down. Since September 25th though it's gone from 38 to 55, which is a rather large gain. It's P/E multiple is starting to get pretty big, and there is little growth as well as little catalyst I see to power the stock much higher in the near to mid term future. The stock may have a little more of a run in it, but my initial investment in this name was based on the fact that it had a low valuation and while it isn't exactly expensive now, it is certainly no longer cheap IMO, so I'm done with it for now. I don't forsee going back to the name anytime in the near future either.
TSRA is a technology stock that works with miniturization in semiconductors. This is another name that I had a nice gain in as it has gone from 32 to almost 39 in the last 3 months. Semiconductors as a whole haven't been on fire. I still think there could be potential upside to this name, but TSRA trades at 36 times next year's earnings. My general feeling about the market right now is that we're probably prime for a correction sometime soon, so I'm trying not to hold too many high multiple stocks right now unless they have solid, consistent growth. TSRA no longer fit that bill for me.
I also trimmed some of my shares in VDSI and GME. GME I trimmed for a lot of the same reasons I did THQI, it's a video games retailer and they've had a nice run. Also, I believe the retail sector in general is going to take a hit when the new congress passes the minimum wage increase. I still believe GME has room to run before then though, so I only pared back, I didn't close out the position completely. VDSI is actually still a position I really like, but it has expanded from a little over 8 to 12.25 pretty quickly and I felt it was prudent to go ahead and book some gains. Should it pull back I'd probably buy back my shares at a lower price. Both of these are really just some profit taking on the way up.
I added to my positions in AAPL and HLF as well today. AAPL has had several down days this week. A lot of that seems to do with the roll out of the Microsoft Zune to compete with the iPod. I believe that those worries are incorrect and that once Apple announces the iPhone (or whatever they call it, there's some issues with the naming too which has been hitting the stock) it will go to 100. Herbalife (HLF) has seen fantastic growth lately and has been benefiting a lot from international sales. This position is a bit more speculative in my portfolio, but it came down some in the early hours today to almost 40, so I added some to my position.
I also initiated two new trades, YRCW and TEVA. TEVA is a pretty short term trade while YRCW may take a while to pan out, as I believe there is a lot of room to run quickly there. I also sold a trade I had in Genentech (DNA) for a small profit today.
-Rizen
Tuesday, December 5, 2006
Today's moves
Before I get into today's moves, let me go over a bit of the terminology I'll use. If I make a purchase, it will be either as an investment or as a trade. The difference to me is that trades for me have very specific catalysts and typically very short timeframes. Usually a trade for me lasts anywhere from a day to a month, with most of them lasting a week or two. They're very short term in nature. I have very tight stops and won't allow them to go down much. Investments are typically positions that while I also may have a catalyst for, I have a much longer timeframe (usually 6-18 months) for that thesis to play out, and I build my positions in investments slowly over time and I genearlly trade around them. If they spike up I take some off the table if they drop down I usually add. I try to take advantage of natural volatility in stocks to improve my return.
On the trading side of things I initiated new trades in CAL, LUV, and SLB today. LUV is a very short term trade while the other two may take longer to play out. I did my own homework, but all of the ideas came from a newsletter so I'd rather not say much more. I also closed out two trades. I sold BIIB after 4 days for a small loss (bought at 51.89 and sold at 51.35) and BNI also after 4 days for a nice gain (bought at 74.65 and sold at 78.61).
On the investment front I pared back my position in GFIG because it had gotten too large and the stock has had a pretty nice run. I still hold a position in GFIG but I trimmed back about 40% to lock in some nice gains of about 8% of my cost basis. I added to my positions in MA and DEO as they both pulled back a little today and both are relatively new positions in my portfolio so I haven't fully built my position up yet. Jim Cramer is very big on MasterCard (MA) on his Mad Money show right now, and I agree with him that it's one of the best ways to play the holiday season. It makes most of it's money by taking a little bit from each transaction, and we're all shopping more and more with plastic instead of cash. DEO is an international liquor stock that deals mainly in higher end liquors (also recommended on Mad Money). I like it for it's good dividend (almost 3%) and steady growth. It's had a nice run but still sells relatively cheap in relation to its peers.
DEO is a relatively low risk stock IMO while MA is a much higher risk having just IPO'd this year and having already had a very big run. Both are two of my current favorite stocks in my portfolio and will continue to add to both if I can improve my cost basis.
I also took some gains I had made last week and put them into my money market account. Typically I like to keep 10-20% of my portfolio in cash. This allows me to always have capital to deploy if I see something I like.
-Rizen
On the trading side of things I initiated new trades in CAL, LUV, and SLB today. LUV is a very short term trade while the other two may take longer to play out. I did my own homework, but all of the ideas came from a newsletter so I'd rather not say much more. I also closed out two trades. I sold BIIB after 4 days for a small loss (bought at 51.89 and sold at 51.35) and BNI also after 4 days for a nice gain (bought at 74.65 and sold at 78.61).
On the investment front I pared back my position in GFIG because it had gotten too large and the stock has had a pretty nice run. I still hold a position in GFIG but I trimmed back about 40% to lock in some nice gains of about 8% of my cost basis. I added to my positions in MA and DEO as they both pulled back a little today and both are relatively new positions in my portfolio so I haven't fully built my position up yet. Jim Cramer is very big on MasterCard (MA) on his Mad Money show right now, and I agree with him that it's one of the best ways to play the holiday season. It makes most of it's money by taking a little bit from each transaction, and we're all shopping more and more with plastic instead of cash. DEO is an international liquor stock that deals mainly in higher end liquors (also recommended on Mad Money). I like it for it's good dividend (almost 3%) and steady growth. It's had a nice run but still sells relatively cheap in relation to its peers.
DEO is a relatively low risk stock IMO while MA is a much higher risk having just IPO'd this year and having already had a very big run. Both are two of my current favorite stocks in my portfolio and will continue to add to both if I can improve my cost basis.
I also took some gains I had made last week and put them into my money market account. Typically I like to keep 10-20% of my portfolio in cash. This allows me to always have capital to deploy if I see something I like.
-Rizen
Watch list changes
Today I added two names to my watch list and removed two others. For those of you unfamiliar with watch lists basically this is a list of stocks I'm currently keeping my eyes on and doing homework on. The stocks I keep on this list I have good feelings about, but I either feel that this is currently not a good entry point or I don't feel so strongly about the stock that I'm willing to abandon any of my current positions. You'll probably find that 90% of the new positions I initiate are put on my watch list first.
With that being said, here are the two names I removed from my watch list. I removed Bank of America (BAC) from my watch list because the CFO resigned. Typically any time a CEO or CFO resigns (or any important member of an institution for that matter) I typically shy away from it. Sometimes I miss out of good moves that way, but typically anytime an executive resigns that means there is some unknown bad news, and I don't like dealing with the unknown, so I don't go with the risk. The second name was Coach (COH), which had been on my watch list for a while. The reason I removed it was that it's had a 12 point move in the last 3 months, going from 31 to 43. That's a huge jump and I believe that most of the easy money has already been made. I obviously wish I'd gotten in much earlier to see that gain, but I had other picks I liked more at the time.
The new names? First is Oakley (OO), I believe that this stock will make it to the low to mid 30s, and I've been actually watching it for about a month now but didn't 'officially' add it to my list until today. This one is already at the upper end of 19 (it started the day at 19.23 when I added it). Still, a 2-3 point gain is pretty significant on a 19 dollar stock, and I believe that's where it's headed on a value basis. The downside is it's had a big run, particularly in the last 5 days or so, and I would be hesitant to deploy any capital until it digests its recent gains or pulls back a little. I also added Smithfield Foods, also as a value play. Unlike Oakley though, this one has actually been on a downturn for a while and has actually been building a nice base for about 2 months. It sells at a P/E discount to its peers, and I believe that it will move up nicely sometime in the near future. It's been hitting resistance at 27 repeatedly, so I'll be watching for this one to break through 27 before I will consider buying it. Once it does I think it will make it to the low 30s before it catches up to its peers in food processing.
I won't divulge all of the names on my watch list, but there are about 20 and I will make updates as I remove some or add more.
-Rizen
With that being said, here are the two names I removed from my watch list. I removed Bank of America (BAC) from my watch list because the CFO resigned. Typically any time a CEO or CFO resigns (or any important member of an institution for that matter) I typically shy away from it. Sometimes I miss out of good moves that way, but typically anytime an executive resigns that means there is some unknown bad news, and I don't like dealing with the unknown, so I don't go with the risk. The second name was Coach (COH), which had been on my watch list for a while. The reason I removed it was that it's had a 12 point move in the last 3 months, going from 31 to 43. That's a huge jump and I believe that most of the easy money has already been made. I obviously wish I'd gotten in much earlier to see that gain, but I had other picks I liked more at the time.
The new names? First is Oakley (OO), I believe that this stock will make it to the low to mid 30s, and I've been actually watching it for about a month now but didn't 'officially' add it to my list until today. This one is already at the upper end of 19 (it started the day at 19.23 when I added it). Still, a 2-3 point gain is pretty significant on a 19 dollar stock, and I believe that's where it's headed on a value basis. The downside is it's had a big run, particularly in the last 5 days or so, and I would be hesitant to deploy any capital until it digests its recent gains or pulls back a little. I also added Smithfield Foods, also as a value play. Unlike Oakley though, this one has actually been on a downturn for a while and has actually been building a nice base for about 2 months. It sells at a P/E discount to its peers, and I believe that it will move up nicely sometime in the near future. It's been hitting resistance at 27 repeatedly, so I'll be watching for this one to break through 27 before I will consider buying it. Once it does I think it will make it to the low 30s before it catches up to its peers in food processing.
I won't divulge all of the names on my watch list, but there are about 20 and I will make updates as I remove some or add more.
-Rizen
Introduction
Hello, this is my finance blog. Just a quick introduction, most of you who will be reading this are either family or already know me from my poker blog. Much like when I first started my poker blog, this blog is here because currently investing and the stock market are a passion of mine, but I do consider myself an amateur investor, and not a professional. Like when I started my poker blog, I feel that both forcing myself to put my thoughts and actions into written form will help make me a better investor. In the process, I hope all of you get something out of it, but I am by no means a market professional, and I do not recommend that anyone take anything I put here as "advice".
This is simply an account of my activities and thoughts on the current market. I will make updates when I make changes to my positions and/or watch list, and I will make updates on my current thoughts on the market.
As far as basic philosophies go, I really think a lot of the same qualities that make someone a good poker player will make them a good investor. Things like managing risk, +EV, and properly managing your bankroll are just as important in both worlds. So are not necessarily being results oriented (but always being aware of results) and not throwing good money after bad chasing losses. Poker players with good bankroll management skills and discipline I think make excellent investors, as at the heart of things both disciplines are about finding appropriate risk/reward scenarios and acting on them appropriately.
I'm a big Jim Cramer fan. I've read both his books (reading his newly released 3rd right now), follow most of his investing rules and philosophies, and I watch his TV show 'Mad Money' every day. For those of you who don't know him or don't watch him his methods are a bit eccentric, but his goal is to keep people (especially college aged people and my generation) interested in stocks. If you can get past some of the goofy gimmicks and noises, the information is the best out there I've found when used right. I visit his site The Street as well as the pay Real Money portion of his sight and a few of his newsletters. So a lot of what I will say here may sound like some of what he says. I do all my own homework, but his thoughts and resources weigh heavily on some of my opinions.
Here's what I won't do on this site though. I'm obviously not going to re-post or re-print any information I pay for, as I have no interest in finding myself in any legal trouble. I will discuss things freely available, I will discuss some of the moves I make daily as well as why, and post changes I make to my watch list. Hopefully it will prompt some interesting discussion and I'll learn here. I hope you all enjoy it, and as I said before, this is not intended as advice so I obviously accept no responsibility for any money anyone may make or lose if they listen to what I say.
-Rizen
This is simply an account of my activities and thoughts on the current market. I will make updates when I make changes to my positions and/or watch list, and I will make updates on my current thoughts on the market.
As far as basic philosophies go, I really think a lot of the same qualities that make someone a good poker player will make them a good investor. Things like managing risk, +EV, and properly managing your bankroll are just as important in both worlds. So are not necessarily being results oriented (but always being aware of results) and not throwing good money after bad chasing losses. Poker players with good bankroll management skills and discipline I think make excellent investors, as at the heart of things both disciplines are about finding appropriate risk/reward scenarios and acting on them appropriately.
I'm a big Jim Cramer fan. I've read both his books (reading his newly released 3rd right now), follow most of his investing rules and philosophies, and I watch his TV show 'Mad Money' every day. For those of you who don't know him or don't watch him his methods are a bit eccentric, but his goal is to keep people (especially college aged people and my generation) interested in stocks. If you can get past some of the goofy gimmicks and noises, the information is the best out there I've found when used right. I visit his site The Street as well as the pay Real Money portion of his sight and a few of his newsletters. So a lot of what I will say here may sound like some of what he says. I do all my own homework, but his thoughts and resources weigh heavily on some of my opinions.
Here's what I won't do on this site though. I'm obviously not going to re-post or re-print any information I pay for, as I have no interest in finding myself in any legal trouble. I will discuss things freely available, I will discuss some of the moves I make daily as well as why, and post changes I make to my watch list. Hopefully it will prompt some interesting discussion and I'll learn here. I hope you all enjoy it, and as I said before, this is not intended as advice so I obviously accept no responsibility for any money anyone may make or lose if they listen to what I say.
-Rizen
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