anthony's Account Talk

[anthony]

The Market Doesn't Care About You

Great article for your attitude going into a new year:

Don't Forget: The Market Doesn't Care About You, by C. Roche

Some of my favorites out of the points he makes:

"But much like an approach to trading, your approach to conducting research must be unbiased, flexible and mechanical. ... If you allow the emotion of a macro outlook to infect your work your results will suffer."

"It’s unlikely that we will experience as many beneficial learning experiences as the most recent cycle. And while this environment continues to cause great pain there are also great lessons to be learned."

Good luck.

 

[Birchtree]

I dumped my life savings into the chasm of the Oct-Nov '08 lows and have been richly rewarded by this current cyclical bull residing inside the mega trend secular bull market. The secular bull started from 1982 and continues. At the bottom the furry bear caused me a $1M devaluation but I refused to dump my base and added to my pain. When March'09 rolled around I was sitting pretty to take the ride and so far have made $1.6M and I plan to make a great deal more. All investment knowledge is cumulative and experience can mean the difference to success. Snort. You have the right approach.

 

[anthony]

Earnings Outlook

Earnings season approaches. I think we will continue to see good earnings from a lot of companies as we have for a while. Folks like to blame (overly) bullish sentiment for the run, but you can trace just about every new equities uptick to good earnings and beaten expectations by most companies.

Companies have gotten "lean and mean" as a result of the last two years economic action. This may suck for employment but at the end of the day it is having positive impacts for net profits at companies of all sizes. Equity prices are profit driven, not emotion driven.

Bottomline: Despite the attitude of a 'topping out market' I see little reason to expect more than the customary 5-10% breaks along the way to a continuation of the profit-driven bull. I may or may not try to catch those 5-10% drops as they can be dicey at best to predict. If I think I can predict them (probably not) I may pull aside a little.


Here's the good support read by Roche at PragCap:
"The deeply negative sentiment and solid bottom line growth has created an investment environment that is ripe for outperformance," in What to Expect This Earnings Season.

 

[anthony]

Large and Small

I will remain in small caps for the time being with a price relative to DOW 12,000 being my near target; however, indicators are there that large caps are becoming more attractive.

If I can estimate when this recent leg up will take a breather, I'll likely use it to shift some S to C in the near future. Some additional reading to do this weekend, but below is an interesting piece on the matter:

"t’s likely that the divergence between small caps and large caps will close as the bull market matures."

C. Roche, 'Small Cap vs. Large Cap: Is Bigger Better?', pragcap.com


Have a good weekend everyone.

 

[anthony]

Protectionism or Fear

It's one of the two, but I folded a little today. We're close enough to DJI 12,000 for my taste and while we may see it or even surpass it, it marks my target for the start of an intermediate pullback of 5-10%. I wouldn't be surprised by net gain for this week of about 3-5% followed by a late-month drop, and positive net gain for the entire month.

Lacking the ability to nail that precisely, and expecting a 5-10% correction to set in rapidly when it does happen, I'm protecting a little with a move COB today to 40-F and 20-each C/S/I.

When things level out a little I'll use this new position as my start point to re-establish a stronger large caps holding than I have in the past. I still believe long term this will be an up year and large caps will get their turn at big returns versus small caps.

Good luck, all.

 

[anthony]

Unexcusable ...
J.P. Morgan Acknowledges Wrongful Military Foreclosures

"J.P. Morgan Chase & Co. admitted that it wrongly foreclosed on 14 active-service military families and overcharged thousands more on their mortgages."

 

[anthony]

Netflix Leads

I really don't care too much about the doubters and pessimists on NFLX. I still think its a great stock. I bought more yesterday at $183 on the assumption of a good overnight earnings report. That's working out pretty good so far ...

No real change on my other views. We're heading into third-stage bull where large caps lead. I'm holding some cash back on the expectation of a little breather here soon. That's hurting my gains a little, but I'll start working it back in over the next month.

Currently 50G/25C/25I.

 

[anthony]

Amazon Preview

I just bought more AMZN. Preview for earnings looks good (reports after COB). The stock's been in a minor slump since Christmas, but I'm looking for an earnings jump and I seen the slump as a great chance to pick up some more. I hold most of my stocks on a 3-5 year horizon but I may never sell one like AMZN.

More preview info here: http://seekingalpha.com/article/248835-earnings-preview-amazon-com

 

[anthony]

Foreclosures and Other Real Estate Problems for Military

Saw just a blurb about this the other day. This version has a little more depth.

The short version of the story is some banks have gone against the Servicemembers Civil Relief Act both in foreclosures and in overcharging servicemen during deployments.

If you are active military or know someone who is, keep an eye out for them and watch their backs. If you are an employer of a reservist or guardsman, keep such things in mind when you send your employees forward and please keep them in your thoughts while they're away.

"A Reservist in a New War, Against Foreclosure," New York Times, 27 January:
http://finance.yahoo.com/news/A-Reservist-in-a-New-War-nytimes-3743202323.html?x=0&sec=topStories&pos=9&asset=&ccode=

 

[Birchtree]

AMZN took an $18 hit in after hours trading - if you're long term now would be a perfect time to DCA for more pain.

 

[Tsunami]

AMZN took an $18 hit in after hours trading - if you're long term now would be a perfect time to DCA for more pain.

Let's see, AMZN has a P/E ratio of 75...NFLX about 80....BIDU about 90...sure they have high growth rates, but these look more like amazing shorting opportunities to me.... but not until their bubbles finally break, whenever that is.

 

[anthony]

AMZN took an $18 hit in after hours trading - if you're long term now would be a perfect time to DCA for more pain.

I will certainly take a bite out of that cake! I'd probably buy this thing all the way back down to last year's lows and beyond if that's the opportunity presented.

Let's see, AMZN has a P/E ratio of 75...NFLX about 80....BIDU about 90...sure they have high growth rates, but these look more like amazing shorting opportunities to me.... but not until their bubbles finally break, whenever that is.

That is true, and there's plenty of people shorting them. They're among the highest shorted stocks around. I think it depends mostly on your market perspective. When it comes to individual stocks, I'm much more buy, hold and DCA more as it goes. I'll let other folks get their 'shorts squeezed' while some companies defy the laws of P/E. People were screaming to dump these with P/Es of 50 too, but that was also when the stocks were half their current price. Frankly I just don't trust P/Es too much without other context.

 

[Birchtree]

I'm reminded that revenue growth is a P/E growth event.

 

[anthony]

I'm reminded that revenue growth is a P/E growth event.

Absoulutely! Hence P/E Growth and associated revenue growth (especially real earnings-driven growth and not just fuzzy math) is far more important to me than a high, seemingly unsustainable P/E alone. Earnings drives equity prices.

All these things need context. Beyond earnings, I also put a mountain of faith in good company leadership, as well as company leaders who own a stake in the companies they run. I value that just as much as P/E.

 

[anthony]

Haven't posted in a little while, but then not a whole lot's changed. Still holding my current one foot in, one foot out allocation, which I regret only a little bit. I'll see what happens through mid to late Feb, then I'm back on board I suppose. How silly to buck the trend, but oh well.

Did a little stock 'nibbling' of my own since my last AMZN buy in Jan. So far this month I've picked up DLB as a new stock on its correction. This week I've added to existing positions of IBKR and LUV (you know, for Valentine's Day...).

I also have limit orders out on a couple dividend stocks, CGNX and TNC, plus an order to add F shares. I was hoping a broad-based 5-10% market drop would help push those L.O.s through, but no joy so far. 30 days to wait though, so no sweat.

Good luck, all.

 

[anthony]

One more L.O. in the bag for tomorrow -- nibbling a second bite to add to my existing position in NUAN (technically L.O. but more of a bid-ask spread that should catch the open market price or close to it during the day).

Long term view on the stock holds. To heck with the the BS upgrades and downgrades from the "pros." I still see a lot of potential in the company, diversity in contracts, and very high level of inside ownership means the folks running the company have a big stake in making it a success.

Good night to all.

 

[anthony]

ATVI: So Long, Guitar Hero!

Not like I ever played it, but I can tell you plenty of my men do. Oh well, I can also say that lots more folks are playing COD and WOW. I walk through the barracks and nearly every room has a gaming console of some variety. Anyway, the company's plan to drop Guitar Hero, plus some below expectations estimates on future revenue spooked the market on ATVI a bit.

I added to my position on the bad news, keeping my long term view on the company. I love the near $3 Billion cash hoard, zero debt, and off the charts insider ownership.

 

[anthony]

More nibbling this morning. CGNX getting whipped pretty hard so I picked up shares at $31.50. Couple more LOs pending on other stuff but I doubt they'll hit today.

Enjoy your weekend!

 

[anthony]

Putting the buys in for the week. Hopefully we'll get some pain and all my LOs will hit. Buying serious pain in tech retail already this morning with DLB and HHG buys. Older LOs still out of F, TNC, CGNX, NUAN. New LOs in on AAPL, TECH, WPRT. Shopping spree!

 

[anthony]

Hello, gang! It's been a little while and I'm busy as usual, but still finding time to buy!

I went on another shopping spree over the last week, plus the world's events have cleared out most of my limit orders. From last Thursday to Tuesday I bought: WPRT, DLB, NVDA (up 8% today, woohoo!), CGNX, NKE, DWA, TTMI, and IIVI. A couple of those are pretty close to bonafide wallflower ugly stock status on the B/T scale, especially DLB and DWA! Still a couple L.O.s out there on TECH, TNC, and AAPL.

TSP side, I'm still in crappy fencesitter mode. I'm getting pretty close to an increased stake, but for now I'm still trying to digest things.

On the personal side, pretty soon I should have the chance to give some 'live report' action from Japan. Orders are in for Camp Fuji (on Mount Fuji/Fujiyama/Fuji-san) and I'll be over there in less than two months, depending on flights. Hopefully the triple-disaster doesn't turn into a volcanic quadisaster while I'm there.:worried:

Later Days!