Wednesday, December 30, 2009

Dominant Companies

It occurred to me that one investment strategy might be to invest in companies that seem to be taking over the world. I'm calling this 'king of the heap' strategy. Take for instance Goldman (GS). 1 in 5 IPO dollars went to them. Enough said. Verizon (VZ) - 20 cents to send or receive a text, which is basically an email. Just send an email to a phone instead and at least avoid the send fee. Enough said. Apple (AAPL) - a small fortune for a computer and 3x as much for an mp3 player (Ipod). Enough said.

I could go on, but when some companies are able to charge so much more than competitors and still command a large share of the market. Enough said.

Disclosure: long AAPL, VZ

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Saturday, December 19, 2009

Opportunity Or Trap in FSYS?

Here's another talked about stock I've followed for sometime, since the $10 days, Fuel System Solutions (FSYS). I like the company and the industry, but hedge funds and short timers moved in about 6-9 months ago and now it looks unsafe for the rest of us.

If you're looking for a classic set up stock, look at the historical price and volume over the past few weeks. It was run up on low volume after a great quarter and added hype, then they pulled the rug out from under the longs on sky high volume! That suggests some longs moving out and a lot of shorts moving in. The associated call holders got killed because those options were/are expensive.

We'll see what happens over the next few weeks. They did the exact same thing a few months back.

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Friday, December 18, 2009

Reasons For Derivatives Talk

I'm getting some mail over our posts on options and futures. I'm not a conspiracy theorist, but as we hinted at before, we have reasons why we believe retail investors are being hustled. The stock market is less of a mystery these days, so retail investors are more informed which makes it more difficult to scam you on regular equity trades. If you're not working with a financial advisor and doing it all yourself then you've had to get up to speed on something and that something is buying and selling stock. So the typical scam is more difficult.

Look at the numbers. When a highly traded, talked about stock has a lot of options at certain strike prices, notice the peculiar price movement. Most importantly, the professionals know that retail investors tend to be long only, so you only buy calls. That makes it real easy. This scam is to get the short timer, the person trading on margin, and the person trading options.

By the way, I've mentioned this before, but don't you find the advertisements for currency trading and options just a bit overdone. You'd think the government would crack down on that, as 99% of us have no business doing that business.

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Fertilizers Up To Their Old Tricks

Or I should say that the hedge funds are up to their old tricks. Potash (POT) and its brethren have been hammered the past few days. This looks like the old days. POT was trading at $122 a week ago and now the stock is at $105. Of course you only need to look as far as the options expiring today!

This is starting to become too predictable. These guys in the back room run stocks like this up and then step on their throats right around this time. All the message boards are on fire with conspiracy theories and everyone is dumbfounded. All I can do is shake my head because that used to be me just a couple of years back when that scam was still someone new.

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Thursday, December 17, 2009

Like Lambs To The Slaughter

Commodities and options dictate how equity markets move. In case you weren't paying attention, Friday is Quadruple Witching day, so options and futures contracts expire. Everyone who ran in to gold, grains, equity calls the past month, has to be feeling hustled. If you bought equities the past month looking for a quick buck, then you feel the same way.

Beware those strong moves to the upside like we had in early Oct and then again in early Nov followed by a pullback that appears to be brief. You're being pulled in and tempted by short term bets, then those bets never payoff. As I wrote in an early post, the new scam is in the derivatives market. Ignore those commercials and that junk mail that tells you to trade in these markets. The same people taking your money, supports this advertising. Stay informed and stay aware.

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Looking Ahead

December has been a strange month. We've slowly moved up, but it feels like we've gone no where. I'm going to call this month trader month, as all we've done is churn. We've had plenty of news, most of it good, but it seems to have gone unnoticed. Today is a good example. The weekly jobs number was a non event, leading economic indicators were solid, and BofA finally found a captain.

All I read is "...jobs number disappoints and government not selling Citi shares...". Those are just reasons after the fact. Get used to it. The market moves for no real reason and the prognosticators attempt to explain later. This is the short term reality.

On a happier note. I like what I heard from GE. GE is one of the best indicators out there, as they have their hands in everything. If you listened to, or read the call, they're signally good things ahead for the economy. I'm a believer and I like GE stock.

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Sunday, December 13, 2009

Do Fundamentals Matter And Options?

In a time of 'high frequency trading', 'dark pools', and who knows what else, I ask myself and have been asked if fundamentals really matter anymore. I've come to this conclusion, If you're in it for less than a year, then fundamentals don't necessarily matter, I've witnessed this, but over a year, it's hard to keep a good company down and harder to keep a bad company up.

This is why I don't encourage trading options by retail investors or even day trading. If you're a professional technician and disciplined, that's another story, but most educated people look at the fundamentals and apply that to short and intermediate term goals which can be a big mistake.

If you are trading options, look for this easy to spot trick. The market goes up, up , up for a couple of weeks and then pulls back a little. Options that were almost in the money are now out by a buck or two, but the premiums are sky high. You buy thinking it's a short term pull back. but you and everyone else were just hustled, as those stocks linger and never get back. Also, see my old post about the '1' in the market. Ever put in a bid and the market maker add a 1, then your bid sits there and never gets filled then suddenly someone jumps in between your bid and the ask in the blink of an eye and gets filled.

Most people belong in funds any way. For those looking for a few good funds, consider these - MCHFX, DODGX, FLATX, AMANX.

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Sunday, December 6, 2009

Watch Dendreon Over The Next Few Months

So the word is the FDA let's Dendreon (DNDN) know in May. They're calling it May Day. Wrong, the FDA let's DNDN know by May. With all the data out there, my money says the FDA returns a decision before April.

This is a novel treatment, safe, and clearly saves lives. I think the 10% short interest gets burned believing May is it.

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Saturday, December 5, 2009

Commodities On Friday

In case you weren't looking, commodities and commodity related stocks were punched in the mouth on Friday. The move down was pretty dramatic. Freeport (FCX), Mosaic (MOS), Alcoa (AA), to name a few were all down hard. If you ask me, it's all profit taking. I'm sure traders have all been sitting around looking to see who was going to head for the door first. Given the big run up this year, especially in FCX. Some tried to blame the fall in the dollar, but that's nonsense, the dollar didn't move that much.

We still like commodity related names, as well as infrastructure names. The recovery is just underway and those doubters will find it costly to be against it.

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BAC back from TARP

I admit, I'm a bit surprised at how soon Bank of America (BAC) paid back the money, or are paying back the money. This is great news for the company and a great indicator for the overall market. I like the stock down here and would be a buyer at these levels.

It's true, banks are returning to profitability on the backs of consumers (23% credit card rates, fees out the wazoo, etc.) Seems the only way to get a little back is to own the stock, maybe.

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Saturday, November 28, 2009

Dubai Crisis=World Systemic Crisis?

Is this really a problem or just an excuse to sell? So Dubai is looking to postpone principle and/or interest payments on it's $60 billion in loans. How does this translate into some major crisis through out the world? It doesn't. In a few months this will just be another blip on the map. It certainly didn't warrant the sell off we saw in every major world market.

Let's get on with the bull market and put this nonsense behind us. Remember, if you're not leveraged, you can ride times like this out and actually find bargains. DOW and some of the insurers look good in here.

On another note, the FDA says they'll give DNDN an answer by May 1st. In my humber opinion, that answer comes much sooner.

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Monday, November 23, 2009

Don't Fall For The Hustle!

I keep hearing the 'talking heads' say that the volume isn't there on the big up days. That's probably why they're big up days because those big program traders aren't in the market. It should come as no surprise that most of the hedge funds and program traders tend to lean to the short side.

Low volume is good these days. Anyway, most of the volume is a result of flash trading anyway which isn't real buying and selling, just churning.

Also, have you noticed that every time you turn on the tv or get on the net someone is trying to get you to trade options or currencies. Wall St gangsters are having a harder time hustling you out of your money in the stock market, as more of you have become savvy, so they're moving it to the options and currency market. Don't be fooled. If you think you were robbed in the 'pump and dump' wait until you buy a bunch of call options just out of the money only to watch the stock fall for no apparent reason just long enough for your options to expire worthless then rise shortly afterward. Watch this happen a few times and you'll know the game hasn't changed, just the playing field.

Some of the trader/hedge fund favorites - GNW, HIG, DNDN, VVUS... Feel free to add your own.

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Sunday, November 22, 2009

A Few Random Notes On A Few Random Companies

In case you haven't been paying attention, many of the material stocks have lifted off. See Cliffs (CLF), Petrobras (PBR), and Freeport (FCX). While analyst after analyst comes on the tube and say the market is overdone and the economy is weak, they continue to buy these names which says a whole lot more about what they think, or at least what the market thinks. CLF actually doubled the dividend!

Look at the insurance names, Genworth (GNW), Hartford (HIG), and Aflac (AFL). They've taken off too. They're among the most volatile stocks, but they continue to climb and GNW and HIG are still trading at a discount to book value! Historically, this makes them cheap.

Finally, look at some of the tech names, Apple (AAPL), Microsoft (MSFT), and Intel (INTC). AAPL is at an all time high and MSFT is near a 2 year high and INTC raised its dividend!

I'm not letting anyone tell me this market isn't going higher or that the economy is due for a double dip because aside from the volatility caused by professionals, this market looks pretty healthy. Waiting for unemployment to straighten out is usually a loosing strategy, as by then the market will be topping out.

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Tuesday, November 17, 2009

Tee Up Vivus

So Vivus is out with Phase 3 results for their erectile drug Avanafil. The stock has been beaten down lately and I think this news caught a lot of people off guard, as the stock shot up after hours. Phase 2 results were good to go and many expect the same for Wednesday morning's results.

We're long VVUS over here and are hoping they knock it out of the park. There's a lot of potential over at that little company and my money says big pharma is paying attention.

Pg

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Monday, November 9, 2009

A Few Good Names To Consider

Okay readers, here are a few bones to chew on. Besides the usual suspects we looking at Energy Conversion Devices (ENER) under 12, Verizon (VZ) under 30, Bank of America (BAC) under 18, Cliffs Natural (CLF) under 35, and Nasdaq (NDAQ) under 20.

These names are in addition to the other names we've talked about. Remember, this isn't advice, but rather opinions that the stocks of these companies represent good value.

I won't get in to the reasons, because for most of them except VZ, it's the same story - economic rebound and these stocks have been beaten up to the point where much of the risk has been taken out. Do your research and let us know what you think or comment with questions on specific names.

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Sunday, November 8, 2009

GE and DOW Opportunity Or Trap?

GE and Dow Chemical have had pretty big pull backs, even though GE was upgraded Friday. What to do, what to do? We like them both. As you know DOW is a '2011 Model Portfolio' member and GE was strongly considered for the list. The recent drop has created a great buying opportunity. Why?

Let's see DOW only defied all critics by digesting Rohm Haas a lot quicker and more efficiently than all the critics thought and the company continues to blow away estimates. We expect the dividend to be increased at some point late next year when the company feels the coast is clear in the economy. Also, as economic activity picks up this company is basically on the ground floor.

As far as GE goes, the company was priced to go out of business a few months back and critics still talk like the company might be in trouble. Not sure what they're thinking. Look at how much cash this company generates. Look at the diverse product offering. And oh yes, the stock is still yielding over 2.5%. Enough said

When GE is trading over $30 and DOW over $40, then everyone will jump on the bandwagon, but then it's too late.

PG2

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Friday, November 6, 2009

Actual Hedging Or Speculation

It's clear the big programs that buy and sell mass quantities are back. Coincides with the return of hedge funds. You can't tell me the intra day swings of 2-5% in commodities is normal or healthy. I'm tired of traders saying it's good for the market and it provides liquidity. It's not good and it increases volatility which hurts retail investors.

I think there should be a limit on how large your position can be if you're not actually in a business that necessitates hedging. I mean you should actually be dealing in the physical commodity. The limit should be daily and overall.

It's risky buying stocks tied to commodities like the fertilizer stocks, metal stocks, energy, and others because so many traders/hedge funds trade this stuff back and forth. You know it's the case when stocks like Petrobras or Freeport move 5-10% because the underlying commodity moved. The fundamentals of the company didn't change over night. It's just someone's computer program buying or selling large amounts because one of the model inputs changed. Ridiculous.

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Tuesday, November 3, 2009

Things Are Playing Out Like We Thought

The insurers we wrote about are in with their numbers for the 3rd quarter and things look great. Aflac (AFL), Genworth (GNW), and Hartford (HIG) had outstanding quarters. What a great buying opportunity the insurers represented over the past few months and we still like them. GNW's book value is 25 and HIG's is 38. Both stocks are trading at a significant discount to book and both stocks increased guidance. AFL is still paying a 2.7% dividend. HIG's unrealized losses decreased by 50%! The upgrades should be on the way, in fact GNW was upgraded yesterday.

That's not the only news. Human Genome (HGSI) is on fire after great Phase 3 results. Earlier in the year this stock traded at .45. Yes, 45 cents, now it's at 28.

The recent pull back has created an opportunity to still get in to some of these names. By the way, AFL and HIG are 2011 Model Portfolio members. Good going.

Disclosure: long all.

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Sunday, November 1, 2009

Human Genome In The Batter's Box Again UPDATED

So on Monday we get the final word on Human Genome's (HGSI) Phase 3 trial for it's Lupus drug, Benlysta. The stock is trading around $19 and looking at the November straddle, the market is factoring in a move of about $9 up or down. So it should be a wild day.

The news will probably be out just after midnight PST, as GSK, Human Genome's 50/50 partner is a European company and this is how they did it last time.

Some put the market value on this drug between $3-$5 billion. Given HGSI's pipeline, this could be the start of a beautiful thing.

UPDATE - The news is out. I give it a B and the July result an A+. While the 10 mg dose was effective, the 1 mg dose wasn't. Also, there were more side effects and 3 deaths, but remember, the trial size was twice as large as the placebo size. We'll have to wait on the rest of the data. Also, we don't know the details around the deaths. They could have nothing to do with the drug. With that typed, the drug seems to work.

Expect a wild ride on Monday, as results like this can be spun either way. It'll most likely depend on which side of the trade an analyst is on.

Disclosure: long HGSI

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Saturday, October 31, 2009

Flood Of Orders Causes Problems For The NYSE

You may have heard that the stock exchange had problems Friday morning due to what they called "...a flood of orders..." I'm assuming they were sell orders given the direction of the market. Sounds like the recent downturn is probably driven by hedge fund redemptions. Oh well, we'll get through it. These things wouldn't be nearly as dramatic if momentum traders didn't pile on, but like I said, oh well, we'll get through it.

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Wednesday, October 28, 2009

Efficient Markets Go Bye Bye

Our colleague wrote a good one on the markets at seekingsigma. Here's the link

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Plenty Of Volatility To Go Around

The Dow is up while the NASDAQ is down 1%, the S&P is down .5% while the NASDAQ is up 1%, oil is down $2 in the morning then up $3 in the afternoon. Sound familiar? Schizophrenic markets point to inflection points. They're also dangerous for retail investors with weak stomachs and also point to larger negative issues within our markets. To think, last year regulators concluded there was no speculation in the commodities markets - yeah right.

This smells like the short side is trying to change momentum, but that's hard to do without the masses. Many people left the market and haven't returned. Many people who used to leverage up, aren't anymore. Many people that used to take huge risks, aren't at the moment. It's true, the vast majority of trading is done by professionals, but a lot of that professional money is backed by people like you. Also, to create real panic, they have to have the retail investor involved, or it just doesn't take.

So this latest pull back is starting to look tired. We're about 4.5% down from the recent high on the S&P (that's intraday with the S&P at 1047). Someone told me yesterday, that it looks scary, so that's when you buy.

Note: Aflac (AFL), 2011 model portfolio member, reports after the close.

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Tuesday, October 27, 2009

Opportunities Abound In An Irrational Market

As expected, this recent pullback has created more than a few opportunities. We like Dow Chemical (DOW) anywhere around 20 after that much better than expected quarter. Also, what can you say about the biotechs. They've come down quite a bit, and some for no reason, like Vivus (VVUS). We haven't had a good lie or bogus story spread in a while until today. 'They' took 1 1/2 points off the stock on no 'real' news. Other biotechs of interest include Arena (ARNA) and Human Genome (HGSI), but look out for final Phase 3 results for their Lupus drug on 2 Nov and they're also going to seek approval for their Hepatitis C drug within the next couple of months.

The a fore mentioned biotechs have such rich pipelines, developing drugs that address key health issues, and NO funding issues, we'd add to our positions. We also still anticipate consolidation in the biotech industry to ramp up, soon.

The sell off has definitely opened the door for some to get in, if they haven't already.

Disclosure: long everything mentioned

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Monday, October 26, 2009

Stop Trading

The past week or so is another lesson why the average person has no business trading. Invest your money, don't trade it. The market has sold off the past week and many retail investors were caught chasing stocks after the market ran up. This thing will get turned around, but you've got to be willing to stick with it for more than a month.

If you've borrowed to trade or you're the nervous type, you're in trouble. Those with a time horizon longer than a month will find plenty of opportunities. What's going on now looks a lot like what went on in late June/early July.

Funny thing is, many professionals who have been waiting to get back in, still won't get back in, then after we start to move up again will still be standing around waiting for some great pull back. Those people waiting for the kind of pull back we had in Feb and early March, keep waiting. When this market is down 5% from its high, I buy more. Why, because 5-7% seems to be the limit. I'm thinking about 1040 on the S&P and I start buying more of the same - insurers, materials, industrials, and select banks.

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Saturday, October 24, 2009

Moving Right Along

'Buy the rumor, sell the news' seems to be in action. We've had a lot of good news lately and stocks seem to sell off. We were due for another 3-5% sell off and they seem to come toward the end of the month. Nevertheless, we think this gets turned around by late next week.

We like the usual suspects we talked about here and believe November/December will be very good months. One stock of note is GE. The pull back has created a very nice opportunity there.

For those that don't think the economic rebound is real, look at companies like Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN). They had great quarters and talked about good things going forward. If things were so bad, these a fore mentioned companies would not be at or near 52 week highs.

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Monday, October 19, 2009

Back To Business

The next 2 weeks should be interesting. Now that most of the big banks are out of the way with earnings, except Wells. After seeing the BofA number, I'm not sure how Wells comes in with a good number. I just keep thinking about Wachovia. They probably won't add much to loss reserves, so things may not look too bad, but you can't play that game forever.

We believe the numbers from many well known companies over the next couple of weeks will come in better than expected and I think this fuels the rally. We still believe the story unfolds with a big rally into the end of the year, as many people are still waking up to the reality that the world didn't end.

The dips are shallow and the moves up are long. These people who keep calling for the market to revisit the March lows may eventually be right - in March 2012 (I heard that's when the world is suppose to end).

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Thursday, October 15, 2009

I Don't See Citi Losing Almost $4.5 bil This Quarter

About 4 or 5 hours until Citi (C) reports Q3 numbers and the most up-to-date analyst estimates call for a loss of $4.3 bil. No way. Last week it was a loss of about $2.5 bil. Analyst don't know a lot. Maybe that 4.5 loss number was a misprint. Either way, they have it wrong, as usual. From where I'm sitting, C is being set up to win.

If they come through like I believe they will, the stock could finally start to make it's push towards $10. With interest rates on the floor, bank fees sky high, trading back in vogue, deals starting to come back, and banks still playing the waiting game with housing (refusing to write down those assets to where they should be), banks are set to do quite well.

Disclosure: long C

pG2

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Wednesday, October 14, 2009

Same Story With The Insurers

We still like the big insurers like Hartford (HIG), Aflac (AFL), and Genworth (GNW). These names have been on fire the past few months. First they were priced for destruction and now buyers can't get enough of them. For the record PaperGains readers have been on to this for a while and nothing has change, except things have gotten a lot better.

Here's something to think about. HIG had factored in, what now appears to be a low return for the S&P this year with the S&P reaching low 900s. Well we've blown past that already. This means their formerly poor performing assets are performing quite well which will boost book value by a lot and take much of the risk out of the stock. Think of it this way, it's the exact opposite of what happened a year ago when asset prices were falling and business had dropped off.

The other large insurers have a similar story. Their portfolios are performing nicely and this should create a bonanza this earnings go round. Also, many probably haven't noticed, but analyst have been quietly raising estimates. After they report great numbers, they'll say it's phony, as it's directly related to marking up assets. So! On the way down they didn't say it was phony when the primary issue was marking down assets.

As far as that analyst who downgraded some of the insurers and said while they'll probably have a good quarter he didn't like them. Just another example of why you should pay them almost no attention. Smart people know nonsense when they hear it.

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Tuesday, October 13, 2009

Novartis And Vanda Doing Business

Looks like Vanda (VNDA) wasn't able to sell, I say that because I'm guessing they really wanted to sell outright. They sold North American rights to their psych to Novartis for at least $200 mil. I say at least because details are still fuzzy. I was hoping for a straight acquisition, as I believe the little company may be in over it's head and would have been better off selling.

Vanda is about a $300 million market cap company and I can only assume a garage full of employees, but if the price wasn't right, then the price wasn't right. So much for that, I'd be a seller in here.

On to the next thing.

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Thursday, October 8, 2009

So Commodities Are Back In Vogue

What a surprise. I guess people realized the world wasn't about to stop spinning! Alcoa (AA) is back from the brink, as are a number of other commodity stocks. Now the upgrades will follow, but where were the upgrades when these stocks were a real bargain?

I am neither surprised nor concerned at the recent movement in commodity stock prices. The only stock that does open my eyes a little is Freeport (FCX). Wow! Look at it go. To think, it was sitting at 12 bucks earlier in the year.

Cliffs (CLF), Arch (ACI) and Steel (X) have yet to lift off, but I think they will.

pG2

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Saturday, October 3, 2009

2011 Model Portfolio Update



Here's an update on the portfolio. Up about 90% from inception in March versus 27% for the S&P, so that 62% relative return you see is percentage points!! Our portfolio has tripled the return of the market.

Reminder, we did buy GE and ditched NYX and had we included GE, our return would be higher. Our returns include dividends this time.

tm

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Tuesday, September 29, 2009

We Were Right, Something Was Starting To Smell At Sequenom

So it's all bad news. The Downs test is no good and everyone was fired and they don't know when things get right. I sold my stock, as I have no tolerance for bad behavior. This one was a big loser and I thought we might be in for it in mid August (see my post on 8/15), but the upside was too tempting.

Look out below on this one, as those two big holders will more than likely be forced to sell to salvage what's left. Remember them from last time. Those staying long may see some relief, as there is large short interest and they may decide to cover. Shame on management and shame on PaperGains for falling asleep on this one.

Part of being a good investor is knowing when to cut your losses and I can find better places to put that money going forward.

Now we know what was taking so long, they were reading those 300,000 documents. They can't all be winners, but when I lose, I like to lose for the right reasons.

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Saturday, September 26, 2009

Great Quarter And Month

So September was suppose to be a terrible month, so much for that. Not only was the quarter great, but with a few days to go, dreaded September is shaping up to be great as well. For those that didn't get in at some point over the past 6 months, they're going to be chasing stocks these next 3 months.

As for the 'talking heads' on the two main business networks. They sound like broken records. For months, we had to listen to them say the same thing, "...the market has gotten ahead of itself..." These people need to wake up. Had you listened to them, you'd be standing on the sidelines, cash in hand, watching the rest of us make money.

Just my 2 cents. I will be updating our '2011 Model Portfolio' next week and the numbers are crazy! For new readers, search older posts under stocks for the picks.

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Sunday, September 20, 2009

A Portfolio Allocation Exercise



After hearing horror story after horror story from people close to retirement and people with children about to enter college being set back years because of the rout in the market I thought walk through the subject of 'portfolio allocation' with this short presentation.

Have a look at the following presentation through the player above or the link provided. Portfolio Allocation. It's larger and you have a bit more control here.

Wait a few seconds for it to begin after starting.

This is a very basic explanation to give you one of the ideas behind properly allocating your portfolio over time.

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Thursday, September 17, 2009

Tee Up Arena, Big Announcement In The Morning, UPDATED

Arena Pharma (ARNA) is up in the morning with phase 3 results for their weight loss drug Lorcaserin. This is part 2 of a 2 part trial and while VVUS wowed everyone with their results earlier this month, critics expect ARNA results to be less than stellar. Short interest in the stock is more than twice that of VVUS and both the short interest and lowered expectations should create a potentially huge move in one way or the other.

I'm holding the stock and yes, my fingers are crossed.

I believe the competition between ARNA, VVUS and OREX is good for the stock prices, as it creates a whole lot of buzz! See you in the morning.

And what's going on with DNDN - huge move on no news.
----------------

So the news is out. Lorcaserin met one of the FDAs requirements which is good enough. Most important, there were no safety issues. Company moving forward with FDA submission in December.

Here's the skinny- the numbers look good, not great, but good. See the press release for the details. I expect the short side of the trade to bash heavily, as there are many, many shorts and Friday is options expiration which complicates things. Don't be surprised if you see a rash of negative analyst reports. In the intermediate to longer term, the drug should be approved and when you consider teh rest of the drugs in their pipeline, I believe the stock is worth holding for a few years.

There's my 2 cents.

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Monday, September 14, 2009

Our Big Winners Continue To Move Higher

Since March, I've mentioned more than a few stocks I thought were screaming buys and I have to admit, I'm not surprised that many of them have gone through the roof! Remember these picks - DOW, GE, GNW, HIG, SWIR, DNDN and I could go on. We've had no losers here, as even Arch Coal (ACI) is starting to come around.

Some of these names are up more than 10x. I see most of them moving even higher and although I've sold a little, I'm still holding a lot.

By the way, ignore the rumors about Dendreon (DNDN) being bought. Just another lie spread by dubious traders.

My thesis is still in place. Many professionals are behind their benchmarks and are going to be chasing stocks in the 4th quarter trying to catch up. With that typed, I'm looking for a crazy 4th quarter.

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Wednesday, September 9, 2009

Let The Buyouts Begin

Like many other investors/traders, I've been waiting on well capitalized companies to start buying the not so well capitalized. I also expect a flurry of activity in the biotech space. We're already starting to see a pick up in M&A and I'm betting on a lot more.

I expect a pick up in the industrial and metals space, as many of these companies had one foot in the grave over the past year. I find the biotech space just as interesting, as big pharma has to be salivating at the prospect of buying one or more of the small biotech firms with very promising drugs. Investors who do their due diligence and cast a wide net should do good here.

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Biotech September Marches On Updated

So Spectrum (SPPI) fell flat. The company received expanded approval for its cancer drug, but the powers that be took it down and the situation looks bad. I suspect the sell off will be short lived, but so much for 10+. The timing of the analyst downgrade was suspicious of course. He waits until the news is out and downgrades on valuation and the stock price is where it was days ago, but with better business prospects now.

Next up Vivus (VVUS). The company released a statement after the close on Tuesday saying they would release Phase III results for their obesity drug before the market opens on Wednesday. So I'm waiting, as I'm holding long. For those that don't know VVUS' drug is competing with Arena's (ARNA) obesity drug. Arena has the deeper pipeling, but VVUS tends to be more volatile.

Pick your poison. I picked some of both. More of ARNA, but some of both. Remember, with these little biotech stocks, a little goes a long way. Think of them as concentrated stocks.

UPDATED: Looks like VVUS is a winner and up more than 70%. It also looks like it's dragging many of the other biotechs higher. Put a check mark by VVUS, another winner.

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Sunday, September 6, 2009

Previous Market Poll 31Aug-4Sep

When asked "Will the S&P 500 sell off in September", 60% responded "Yes" (lower by 5%) and 40% responded "No" (higher by 5%).

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Tuesday, September 1, 2009

Another Day, Another Rumor

This time the rumor is about Wells (WFC). Who really believes that Wells is about to fail? It's hard to believe people are actually talking about it like it's a real possibility. I'd like to draw your attention to the large number of puts around 24, 25, and 26 that are set to expire in less than 3 weeks. Call me cynical, but my money says whoever owns those options might be behind the rumor (lie)!

Anyway, this was expected. There are lots of dubious characters out there betting on a market sell off in September/October and they're willing to do most anything to get it. Actually they've been betting on a sell off since May. We're due for another pull back either way. Let's take a breather now and sprint to the finish in Nov/Dec.

For those with long term positions, this is just a blip. If you have short term positions, it might be prudent to ditch and buy back, as a large, sudden sell (especially at the beginning of the month) usually signals more selling over the next 2 to 3 weeks.

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Monday, August 31, 2009

More Sequenom Rumors, True, False, Maybe?

Sequenom (SQNM) is up big today, but is there anything behind the move? Who knows. We live in a time of lies, rumors, and manipulation so act with caution. I'm still long and like some of you, I've been waiting for news on the investigation.

I don't know why it's taken so long and can only guess that they are waiting on more than an investigation, but possibly a new test. If that is the case and the new test confirms the previous test then we probably go back to 20.

We'll have to wait and see, but be careful as it seems like every day some company is the subject of a rumor that turns out to be false. Why the SEC doesn't do anything is a mystery. Let's keep our fingers crossed on this one.

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Thursday, August 27, 2009

More Biotech Ideas

With the FDA in a more pleasant mood these days, it's prudent for the long term investor to have exposure to biotech. I wouldn't go 'all in' like some people do because that's usually a recipe for disaster, but if nothing else, these are good diversifying stocks. Remember a well balanced portfolio has assets that move in different directions, so everything doesn't go up on the same day, but more importantly, everything doesn't go down together!

So here are a few names in the biotech space I'm holding. Dendreon (DNDN), Human Genome (HGSI), Arena (ARNA), Spectrum (SPPI), Vanda (VNDA), and Vivus (VVUS). I have an approach where I spread it around, which decreases the risk. Remember, these are what I call concentrated stocks, so a little goes a long way.

My reasons are varied, DNDN will be submitting their application to the FDA for their prostate cancer drug in Q4 2009 and most of the free world is sure it's a lock after seeing the data. HGSI and ARNA have released interim data on their drugs for Lupus and obesity respectively and confidence is high the remaining studies will be positive when released between September and November sometime. SPPI and VVUS are expected to release data on their cancer and obesity drugs in September. VNDA of course has an approved drug for schizophrenia and in my opinion with a market cap of under $500 million is one of the most undervalued companies on the street. For the record, I own some Sequenom (SQNM), but this isn't a biotech in the same way the others are.

DNDN, ARNA, and HGSI may be companies I hold for an extended period (2+ years), as they have great pipelines. The others are short term plays. Remember my biotech playbook says look for companies that have nice pipelines and address situations that affect large groups (e.g. diabetes, obesity, breast/prostate cancer), with small market caps (under $1 bil).

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Tuesday, August 25, 2009

The Insurers Have Left The Building

Now 'they' have upgraded Hartford (HIG). Tell us something PaperGains readers don't know. We were buying the insurers like HIG, Aflac (AFL), and Genworth (GNW) when these same analyst were saying they were all going out of business. We bought these names just a few months back at a fraction of their current prices, HIG under $5, AFL under $20 and GNW under a buck! And I'm still collecting a nice 6+% dividend yield from AFL.

Research analyst just kill me. They don't upgrade until the coast is clear and everyone already knows. Anyone paying attention to the recent news on one large investment bank knows how that works - buy in and let your big clients buy in, then tell the little guy it's safe to buy, but only after you and your favorite clients have bought.

By the way, I love Citi (C) down here. It's the next big thing.

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Monday, August 24, 2009

Market Outlook

I expect the S&P to be much higher by year end, but expect bumps in the road in mid September through early October. My reasons are as follows. Many traders who have participated in this rally are probably looking to lock in gains before year end and September/October are always scary months for people, so our bumps in the road are a result of these short timers.

I believe any dips will be shallow, as I stated in an earlier post, money managers that didn't take part in the rally need to, as they have to be way behind their benchmarks. After we get past October, most retail investors and many professionals will feel like the coast is clear, thus piling on and driving the market up. My 2 cents

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Wednesday, August 19, 2009

Buy A CD Or High Yielding Stock

I've had friends talk about buying CDs lately, but let me through this at you. Why buy a CD when rates are at best 2% for a year with a 1 year and maybe 3.25% per year with a 5 year CD when you can get 5+% elsewhere. Here are my reasons I can buy any number of household names with safe dividend yields over 5% (VZ, BMY, T, PBI, POR, SO, LLY). I really like the first 3.

If you buy one of these stocks, there are no minimums and you cash in at your discretion. Some argue that there's risk in that the stocks can decline. While this is true, if you were going to buy a 3 or 5 year CD that money would be unavailable to you and I argue at some point over the 3 to 5 years you're going to be up and more than likely up at the end of 3 or 5 years.

So you collect 5 or 6%, will more than likely see capital gains on top of that and enjoy the flexibility to take your money when you want it.

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The Truth From The Mouth Of Traders

I heard one of the 'talking heads' say what's really on the minds of professionals, both the longs and shorts. From the floor of the NYSE he reports traders tell him, 'they want this market to go down so they can buy!' Too funny, as these are no doubt the same people bashing the market and instructing their minions to do the same.

Once again, if you haven't participated in the current rally then you're missing the buying opportunity of our generation.

They wonder why the short side can't put together 3 routs in a row. Because with every dip money runs in to buy, so the dips are shorter and shorter.

Beware when so called experts give a thumbs up or a thumbs down, as they are no doubt thinking about their own pockets. A while back these 'experts' had to disclose their positions and/or business relationships, now they don't even bother. I guess it's too much of a pain having to disclose that you're long or short a stock you're discussing. I believe they should have to report how much cash they are sitting own when discussing the market in general.

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Monday, August 17, 2009

Another One Of Those Days

Red across the board- stocks, metals, oil, grains, foreign currencies. There was a time when everything didn't sell off at the same time and actually that isn't suppose to happen. At least gold should be steady on days like that. Oh yes, I forgot, it's options expiration week, so all of the calls the professionals sold to non suspecting buyers have to be made worthless by Friday!

Get used to it. This is the new market, an irrational one. A winning strategy is still one where we buy good companies and hold them until our investments mature. Looking for daily or weekly hits is dangerous aside from the occasional bio-tech play.

Pick your entries wisely. Check the options that are closest to expiration. If the stock has been moving up fast and approaching a strike price that has had a lot of volume lately then there's probably a good chance someone with deep pockets is going to hit it hard sometime soon so the calls they sold don't get exercised and they get to keep the premium. Shorting has become to easy. Rumor has it a new revised 'uptick' rule is on the way.

By the way, a mature investment is one that hits your predetermined price, unless you're in it for the income/dividend, then we may hold it longer.

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Saturday, August 15, 2009

Yes, The Short Story Is Dead

The shorts took us down right away on Friday, but they weren't able to pick up any real momentum. Look at the chart and look where most everything else, (e.g. oil, copper, gold, foreign currencies, etc.) traded - down. When I see that, I think someone came out early, probably with some computer program and shorted a whole lot right away, like back in Feb and March. See my post on SeekingSigma on market correlation.

A few months ago that would have started a chain reaction, as rumors and lies would have followed and everyone else would have sold, but that didn't happen. The market actually finished with a lot of buying.

I also believe there are quite a few shorts sitting out there sweating and quite a few money managers that haven't gone long yet and are going to end up being killed by their benchmarks.

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Something Is Starting To Smell At Sequenom

How long should an investigation last? Either something is very wrong over there at Sequenom (SQNM) or it's more than just an investigation. We're moving in on 4 months and they have nothing to say. I'm hoping they are doing something more, like re-validating or looking to provide something in addition to the investigation results.

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Thursday, August 13, 2009

And So The Beat Goes On (still)

This is a pretty easy market to make money in these days and I continue to be optimistic. As long as the 'talking heads' say it won't last, I say it will. I listened to someone on tv say he expects a pull back... so he can take up more long positions. What sense does that make?

These people have said since May, the market was going to dive and here we are, moving forward. I'm keeping the course, I like my 2011 Model Portfolio, although I ditched NYX in favor of GE some time ago. Has anyone noticed Alcoa (AA) lately, and how about Sierra Wireless (SWIR), wow!.

Disclosure: long SWIR, AA, GE

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Tuesday, August 4, 2009

Is Sequenom Going To Payoff?

It's been really quiet at Sequenom (SQNM) regarding the investigation into the delay in its SEQureDx test. The company reports their second quarter on Thursday and I suspect there will be news on the investigation and test. The stock has been on fire lately and of course the message boards have been on fire.

I've got my fingers and my toes crossed on this one because if the news is good, the stock probably goes back to 20. Short interest is enormous and the company has a number of products that if brought to market could push the stock over 100 in a few years.

One more thing, if the news was bad, as in the product was no good or it was back to square one, I believe you get that news early. Clearly what went on was a bit harder to decipher and the company must be putting a plan together for re-launch. Also, if it was a bust, it would have leaked and and the stock would be at 2 bucks. That's just my 2 1/2 cents.

Disclosure: long SQNM

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Friday, July 31, 2009

Can You And I Trust Analysts, See SWIR!

After Sierra Wireless' (SWIR) quarterly report, about 6 analyst issued recommendations or reiterations. About half for and half against. It's a joke. Their main competitor released results on the same day and received almost no attention. One analyst actually had the nerve to lower his rating on SWIR and price target from C$7.40 to C$7.20. Why waist the ink.

When is the SEC going to do something about analyst who clearly have dubious motives. By the way, SWIR had a good quarter. Top line and bottom line of the business excluding Wavecom and items was superior to Novatel (NVTL) and I believe management is superior.

Here's my rating, strong buy, price target $100.

disclosure: long SWIR

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Wednesday, July 29, 2009

The '1' In The Options Market

Have any of you option traders noticed the '1'? You put in an order to buy say 10 or 20 contracts in between the current bid/ask and your 10 contracts become the bid. All of a sudden they tack on a 1, so the bid size becomes 11 and it sits there forever.

It's like some sort of signal to the pros not to fill your order. I remove my order and the extra 1 contract goes away as well. This has happened so much it can't be coincidence. The bid/ask spread in the options market can be huge and I wouldn't be surprised if the professionals don't want you and I cutting in.

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Monday, July 27, 2009

Earnings Revisions

Analyst revised earnings up on S&P companies 889 times and down 886 times in June. This is the first time since 2007 that more companies have been revised up than down. This brings down the market valuation. This is what the 'talking heads' haven't told you. Most of them have been telling you that the market was too rich, but what happens when earnings are revised up. Over night the markets becomes cheap.

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Big Week

So this is a big week for PaperGains followers. Many companies we follow are reporting earnings. I expect to get what I didn't get last quarter from the insurers. Genworth (GNW), Aflac (AFL), and Hartford (HIG) all report this week. I'm holding all three through the reports.

We're also waiting on Dow Chemical (DOW) and I also expect good things there. By the way, we've had a nice run in Dow and I expect Dow to get up over 30 before the end of the year.

Oh yes, then there's Sierra Wireless (SWIR). Still one of the most undervalued companies on any exchange.

Disclosure: long all

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Friday, July 24, 2009

Previous Market Manipulation Poll 20Jul-24Jul

When asked "Are some large, well known firms freely manipulating our financial markets?", 100% responed "YES".

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Thursday, July 23, 2009

Biotech Buyout/Valuation

Bristol Myers' (BMY)acquisition of Medarex (MEDX) provides more clarity for the sector. BMY paid about 45 times trailing sales and 25 times forward sales. That's a lot and confirms what we've been thinking, biotech is one of areas where you have to have exposure. With a friendlier FDA and many large drug companies thirsty for new product, I expect a lot of action over the next few years.

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Wednesday, July 22, 2009

Biotech Investing

Those of us who were in Dendreon (DNDN) and Human Genome (HGSI) before their announcements have profited nicely. While I still hold positions in both companies, I have lightened up a bit. I'm now looking at Arena (ARNA) and Vivus (VVUS). Both have weight loss drugs in Phase III trials and expect to announce results over the next few months.

My criteria for investing in biotechs is as follows; 1)must address an issue afflicting many people which would result in potential blockbuster drugs/treatments (e.g. diabetes, prostate/breast cancer, obesity, etc.), 2)must have access to enough cash to carry through key clinical trials (decent balance sheets), 3)I prefer companies with fewer than 100 million shares outstanding, 4)I prefer a decent pipeline (i.e. no single drug companies).

With that typed, I still hold both Dendreon and Human Genome because I feel confident both companies could end up being giant companies over the next 15 years, provided they are not acquired. I also hold Vanda (VNDA) even though they don't have a deep pipeline, the valuation argument is too strong. The market puts a $300 million dollar valuation on a company with a potential $1+ billion drug. I feel like they'll be acquired, soon.

I currently own ARNA and looking to buy some VVUS. Both fit all my criteria.

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Monday, July 20, 2009

DOW and Goldman

So Goldman finally added Dow Chemical to their 'conviction buy' list. Well we've known about DOW for some time now, at least PaperGains readers have. I know this probably means they're getting ready to sell the stock, but I'm still a holder, as I believe the stock moves past $30 next year, regardless. Where were they when the stock was at $6, probably buying like me? If you bought at $6, then you're enjoying a 6+% yield and a triple play, so far!

I expect a similar move in GE soon. $169 bil backlog and bids on $200 bil in stimulus work. It's a steal under $12.

Disclosure: long DOW, GE

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Sunday, July 19, 2009

Human Genome Updated

So Monday morning is the big day, or at least, the first of several big days for Human Genome (HGSI). For those that don't know, the company is to release the results of their Phase III trial for Benlysta. Of course if the news is good, the stock probably moves up in to the teens. Bad news cuts the stock in half. Any bad news I see as a buying opportunity, as the company has a rich pipeline.

THEY DID IT. LONGS WIN, SHORTS LOSE ON THIS ONE.

In my view, given HGSI's rich pipeline, this is a huge company in the making, bigger than Dendreon. I see this going to at least $15 real quick. Best thing is many of the drugs are in late stage trials and treat major illnesses.

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Friday, July 17, 2009

Does Anyone Care That Our Markets Appear 'Rigged', See Mosaic

Earlier this week the rumors started that Vale was looking to buy Mosaic (MOS), so of course the stock traded from 40 to 54 this week and closed under 50. Now this isn't the first time these rumors have surfaced, but something seemed more sinister this time. Recall today was options expiration and many of the options that were way out of the money, ended up being in the money in no time at all.

Now I don't think there's a conspiracy behind ever corner, but with 3 minutes left in the trading day Reuters reports that Vale releases a statement saying that they're not looking to buy anyone. MOS started to tank with about 30 minutes left in the trading day, and the 50 strike calls expiring today were on fire! The story was obviously out at about 30 minutes left, although much of the market didn't get it until near market close. This all seems very orchestrated.

The 50 calls traded as high as $440 then close worthless like they were at the begining of the week. I'd like to see who held the majority of those calls going in to this week. I wonder if the holder of those calls and who ever started the rumor were the same. By the way, I had that feeling earlier in the week that this might be yet another scam. If more financial reporters actually had financial backgrounds they wouldn't be so easily used and manipulated.

Beware the rumor mill. It can be hazardous to your portfolio. If it doesn't make sense, then usually it isn't a rumor, but a lie and that didn't make sense. The rumored price was too low and then there is Cargill to deal with, as a major MOS shareholder and they've expressed no interest in selling (at least not publicly).

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Thursday, July 16, 2009

Human Genome Action Looking Like Dendreon

I've been watching the trading and analyst write ups on Human Genome (HGSI) and it's starting to smell like Dendreon (DNDN) and Provenge all over again. Nearly all of the analyst say 'no way', nearly of retail says 'yes', message boards are on fire, and trading in the stock has become erratic. What I like about HGSI is their rich pipeline. They have quite a few drugs at various stages, so whether or not this lupus drug, Benlysta, works out, I'm still a holder of the stock long term.

I believe this is one where you buy a little for the IRA and put it away. With stocks like these, a little goes a long way. As far as what I expect with Monday's result, I don't know, but I do tend to be a contrarian, as I believe you do better to bet against the talking heads. Whatever the masses think, usually doesn't happen.

If the results are positive on Monday, this thing will rocket. With all of the negative sentiment, relatively high short position, and potential of a drug with no competition sets the stage for a home run (hopefully).

I believe mature drug companies are worth between 2 and 3 times sales. Young drug companies are worth 2 to 3 times mature companies, so 4 to 9 times sales, so let's say 6 times. You see this when companies are acquired. Small drug companies typically get taken out somewhere north of 5 times sales

Disclosure: long HGSI

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Tuesday, July 14, 2009

Intel

Is anyone actually surprised that Intel (INTC) had a blow out quarter and raised guidance? If you were then you weren't paying attention because the company telegraphed the quarter a couple of months back telling the street that orders were picking up and customers weren't as pessimistic as analyst. I believe they actually used the term 'bottoming out'. Also, the company is saying what other companies are saying, 'customers are optimistic about business'. I'm paraphrasing, but you get the idea.

If that wasn't enough, look at Alcoa (AA) and CSX (CSX). They said similar things about their customers. These company's products and services are core inputs to many, many things. You might even look at some of the statements made by DELL, 'input costs (components) were high'. You mean components like those Intel makes.

I like where we're headed in the market and believe you want to be in companies that are at the lowest level first, like the Alcoas, Dow Chemicals (DOW), Arch Coals (ACI), etc. Don't wait until it's obvious to everyone that the recovery is under way, because at that point the recovery is more than likely behind us and the easy money has already been made.

Think about this, I mentioned Dow Chemical and GE when they were around $6. At that time the talking heads were saying GE was going to $2 1/2 and Dow was going out of business. Had you kept your head, like some of us, and bought these bellwether companies, you'd be collecting a 6 plus percent dividend today and already seen your combined investment more than double - that was about 4 months ago.

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Sunday, July 12, 2009

AIG and Other Insurers

What are investors/traders to think about AIG? I guess management didn't get the memo about reverse splits. They almost never work. All they did was caused the short sellers to reload - more powder for the cannons. Another way to look at the situation is that this is further proof that short sellers are in control and continue to manipulate markets.

Last week it looked as if someone's 'market manipulating code' was set loose on AIG. Then some analyst comes out and says equity holders will be left with no value. The stock goes from about $22 to 8 in no time. It all seemed orchestrated. I thought it was October/November 2008again.

Retail investors beware, these are dangerous waters.

Looking at the broader market, ever wonder why the market moves 1, 2 percent or more for no apparent reason in about 5 minutes. It's them. Then their flunky reporters jump up and justify the market move with bogus stories.

On a brighter note, I believe the big life insurers will due well this quarter. The market had a great second quarter, so their expected return on assets has to look better. Accounting rules are in their favor and many of the big firms took their bad tasting medicine in the first quarter. Short sellers and short timers have to be bored with the sector by now. Anyway, I'm still holding Hartford (HIG), Genworth (GNW) and Aflac (AFL).

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Wednesday, July 8, 2009

Alcoa

Earnings season kicked off with Alcoa (AA) today and after listening to the call I'm convinced the recovery is underway. It wasn't only the China talk, but the talk about customers being optimistic and even talk of the automobile sector picking up. What more do you need to hear - autos picking up!

Yes, the last couple of weeks have been bad in the market, but we knew this. Recall an earlier post where we talked about the markets looking safe through mid June. I see this as a buying opportunity and I'm not the least bit concerned when I hear the talking heads going at it, preaching gloom and doom.

One more thing to point out, the talking heads keep insisting that the S&P is rich trading at about 15 times (I believe forward earnings). They fail to take into account that those earnings estimates will be revised 'up' when the economy gets back to normal. This suggest a forward PE of no more than 10, assuming earnings would be 50% higher than current depression levels.

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Sunday, July 5, 2009

Retirement Strategy

When thinking about investing for the long run, we should think about more than just which stocks to buy. I was explaining to someone the other day that I treat my IRA different from my regular brokerage account in at least a couple of ways. While I've talked about my Model Portfolio which I plan to hold until sometime in 2011, I admit there are a few other things I hold which I refer to as 'core holdings'.

A core holding is something I'll hold in my retirement account for 10 years or more. I also elect to have the dividends payed in more stock instead of cash. Core holdings include Verizon (VZ), Bristol Myers (BMY), Mathews China (MCHFX), and now GE and Dow Chemical (DOW). The last two were added this year.

Core holdings excluding mutual funds have a few things in common; hefty dividend, large cash flow, a great brand, and will be around for decades to come. Other stocks come and go depending on which way the wind is blowing, but core holdings stay. I see them as a base or foundation for my portfolio and they tend to lower the volatility.

By the way, collecting the dividend in stock is a critical component of my retirement strategy, as it cost you nothing and you're able to average in to new shares over time.

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Tuesday, June 30, 2009

Model Portfolio Update


Time to check in on our model portfolio started on 26 March. The market has been good to us longs over the past few months, so the benchmark was a tough benchmark to beat. I can say that unlike the so called 'smart money' I actually jumped in back in March!.

A few things to note:
1) The S&P had a return of 10.4% from 26 Mar - 30 Jun.
2) MOS was purchased on 20 Apr when it hit our $40 target.
3) Dividends were not factored in.
4) See my March post for background.

Drum roll please dadadadadada. The model portfolio returned 34% from 26 Mar - 30 Jun which is about 10% over the S&P!

Overall, I'm happy with the portfolio, but I confess to being concerned about ACI. Other coal companies have done quite well, but ACI seems to lag. We'll watch it this next quarter.

I received a bit of mail saying the portfolio was too risky. My response is this - you were made to believe that many stocks were much riskier than they were. The talking heads had us believe half the companies in the S&P were going out of business. I also have a confession to make. I sold NYSE and bought GE recently. GE was just too enticing, but we'll work with NYSE.

By the way, many of these names have traded a lot higher recently than today's price, such as AFL, MOS, and HIG!

m

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Friday, June 26, 2009

Previous Housing Poll 22May-26May

When asked "Has the median price of US homes bottomed" 42% said yes, 42% said no and 16% said maybe.

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Wednesday, June 24, 2009

Vanda

I'm not sure if there's something going on behind the curtain that I'm unaware of, or if the market is missing something with Vanda Pharmaceuticals (VNDA). The company's schizophrenia drug was approved by the FDA weeks ago, the stock price jumped from a buck to trade around 12 now, but the stock has stalled. Why? The current laggard drug in the space has about $1 bil in annual sales, so one has to assume Vanda's Lloperidone will do at least that well, yet the company has a market cap of just $300 mil.

Valuing the company on an acquisition basis would suggest at least four to five times sales, as seems to be the case in the biotech area for small, fledgling companies. The valuation the market has on the company is crazy. Assuming they bring the drug to market later in the year, as they state and there are no bombshells between now and then, I expect the stock to double or triple easy.

Before that I kind of suspect they may be taken out. At these levels, why wouldn't a large drug company just buy them and pay a billion dollars for the expected cash flow over the next decade or so.

Disclosure: long VNDA

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Sunday, June 21, 2009

Market Assessment

So the market has moved up nicely over the past few months, the VIX is under 30 and JP Morgan (JPM) is over 30, people are actually buying houses in California (despite 11.5% unemployment), and companies are actually issuing stock (and people are buying). Sounds like we've seen the bottom and if you haven't bought, maybe you should.

By the way, GE is still around 12 bucks and Citi is around 3 bucks.

I still believe there's a lot of cash on the sidelines, as every day I have to listen to so called experts say "...the market has gotten ahead of itself...". Translation, "I'm not in yet, so sell some so I can buy". This is why the down days are short. The shorts can't get three routs in a row, so the short story is dead as far as I'm concerned.

Disclosure: long C, GE

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Friday, June 19, 2009

Update

So I've been in the Caribbean for 10 days and I get back and find that nothing exciting has gone one. Same story in place. I like biotechs and the economic rebound/infrastructure play. More to come.

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Sunday, June 7, 2009

The New Bull (bubble) Market

For those that aren't paying attention biotech happens to be the new big thing. I believe we're in the early innings and most small biotechs are fair game. Over the past month I've watched more than a few small company stocks triple or more in a few days. Surprisingly, most seem to have staying power. It seems many are betting that this new FDA is going to be open minded about approving drugs and devices.

If you're still not a believer, watch the ticker and about a third of the symbols going across on the NASDAQ and AMEX are biotechs. Here's a list of just a few that have had crazy moves, HEB, CTIC, KERX, NEPH.OB, NVAX, XOMA, XTNT, HGSI, ARNA, and on and on.

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Wednesday, June 3, 2009

Talking Heads/Talking Nonsense

I think I need to say this one again, STOP PUTTING YOUR FAITH IN REPORTERS AND OTHER TALKING HEADS!. I listen to one or the other of the two main business networks every day (which ever is the least offensive that hour). I won't mention them by name, but you know the two and I'm just amazed by how many viewers think these people reporting the news are experts.

For the most part, the experts are the people they interview and they interview people they know will put whatever spin they want to put on a story that day. Have any of you ever looked at the backgrounds of some of these reporters? Most of them have no financial market experience at all. They give their opinions and prognosticate anyway, and the general public seems to think they actually know what they're talking about.

By the way, one of the networks is incredibly bearish and the other sounds more like a political show than a business network. Anyway, the best research is your own research.

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Sunday, May 31, 2009

Citi

This may sound strange coming from me, but I'm bullish on Citigroup (C). My reasons are simple, the feds have said that no large, systemically important bank will be allowed to go under, Citi needed a lot less capital than both Bank of America (BAC) or Wells Fargo (WFC) after the recent stress test, and Citi has significantly underperformed the other large banks.

This seems like a no brainer, buying Citi under $5. Keep in mind that this is a long term play, so think 2 - 3 years out. It's hard to believe Wells has a market cap of about $108 billion and JP Morgan $138 billion. Even BofA has a market cap of $72 billion with all of their problems, which I believe to be on par with Citi.

With a market cap of $20 billion, Citigroup represents tremendous value at the moment. Remember, they're not going out of business and even though the feds own a large piece, I believe the mood in the financial markets is changing and they'll be able to pay that money back and fix their capital structure sooner than people think.

Something to think about, in 2006 Citi had revenue of nearly $150 bil and net income of about $21 bil. When the economy gets back on track, I see this stock moving up significantly from here, then the equity analyst will finally upgrade.

Disclosure: Long C

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Saturday, May 30, 2009

Previous Banking Poll 25May-29May

When asked "Should the 4 largest banks, JPM, BofA, Citi, Wells be broken up once markets return to normal?" 39 (67%) said Yes and 20 (33%) said No.

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Monday, May 25, 2009

Market Indicators

Has anyone noticed where commodities, the dry bulk index, and the dollar have gone over the past few months? The current environment is starting to look a lot like the beginning of the last bull run. Oil has almost doubled from its recent low, grains have followed, the dry bulk index has almost tripled (see the chart on this page), and the dollar is trading at 1.40 to the Euro after trading at 1.25 a couple of months back.

There's been a lot of discussion about whether we've bottomed or not. I say it looks a lot like the start of a bull run. If you don't believe that argument, look at stocks like Potash (POT), Petrobras (PBR), and Freeport (FCX). The professionals know where to put money during bull markets, especially bull markets where inflation may be an issue.

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Sunday, May 17, 2009

Previous FDA Poll 11May-15May

When asked if the current FDA is an improvement over the FDA from a year ago 20 (80%) said yes, 1 (4%) said no, 4 (16%) said no different.

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Thursday, May 14, 2009

Fanning the Flames

I've posted before on the rating agencies at seekingsigma and here's another. I can't help but wonder what goes on in the back office of one of these organizations. Recently, one of the large rating agencies lowered the credit rating of a large life insurer stating that they didn't like something they heard the CEO say on the conference call (very scientific). Then today they lowered another large insurer saying they thought the business would suffer this year (oh really).

I wasn't surprised when the stocks showed little reaction. Finally, I think the market gets it, the rating agencies are as clueless as many of the equity analyst at buy side banks. They've become close to irrelevant and they have only themselves to blame. I'm looking forward to the day when we don't need them at all. They've cost investors and companies billions. They've increased market volatility and they continue to be allowed to go about unchecked.

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Friday, May 8, 2009

Previous S&P Poll 4May-8May

When asked "Will the S&P 500 be lower at the end of May than the 1st of May" 104(49%) answered yes, 81(38%) answered no, and 30(13%) answered even within 2%. The S&P was at 877 on May 1st. Interesting point to make is that as the days went on, opinions changed (of course). The first 2 days of this 5 day poll tracked at 62% answering yes!

These polls present useful information assuming you know what to look for and understand that maybe 95% of the respondents are retail investor/traders such as myself and probably you.

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Thursday, May 7, 2009

The New Improved FDA

Looks like I'm not the only who has noticed that the FDA seems to be in an approvable mood these days. Where ever I look I see small biotech companies moving up big. Did anyone catch Vanda (VNDA). That little stock went from a buck to trade over $10 over night after receiving FDA approval when no one thought they'd get it.

I've noticed many biotech penny stocks surging on high volume, CTIC, KERX, NEPH.OB, HEB, just to name a few. I'm no big biotech investor, although I did well on Dendreon (DNDN), but the sector has gotten my attention. To be truthful, I always thought it was too much of a crap shoot, but the prospect of an FDA that actually wants to put new, safe drugs on the market that aren't necessarily marketed by large drug firms can't be ignored.

Send your hot, little biotech/drug stocks my way, I'm listening.

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Sunday, May 3, 2009

The Sequenom Effect

After the stock of Sequenom (SQNM) plummeted about 75% on 30 Apr, I thought I'd post on the subject. The company said there were data issues and it's under investigation. The CEO also called it a minor set back. It should also be noted that the company has had issues in the past with data and/or tests.

I don't know how this will turn out, but I will walk you through my own approach to deciding whether or not to speculate. I believe there are 2 likely outcomes 1) data issues that will eventually be resolved or 2) total fraud and manipulation. Without knowing anything more than you, I place 70% probability on the first and 30% on the second. Any other outcome is probably not worth discussing at this point because with most small companies like this, it's all or nothing.

By the way, I placed these odds because fraud is rare and unlikely. I usually place 50/50 odds when I know nothing, but again, I have to believe no one wants to be sued or go to jail, so fraud is the less likely scenario.

So if the issues are resolved, the stock goes back to $15 (where it was before the announcement) and if it's fraud, it goes to a buck. So 15*.7 + 1*.3 = $10.8 expected stock price. If you went long since the announcement then you probably bought somewhere between $3.5 - $4.5 (I did). We'll see where this goes.

Most of the drop and volatility can be attributed to two very large shareholders. You know the names. One of the funds had 90% of their portfolio invested in the company and the other had 50%. Clearly, these funds had no risk management rules (see SeekingSigma for commentary on financial risk management). They more than likely were forced to sell, OUCH!

By the way, no one outside of the company knows the details yet, so all the talk on the boards is just that, talk. Should be an interesting few weeks.

Disclosure: long SQNM

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Sierra Wireless Revisited

Sierra Wireless (SWIR) is one of my Model Portfolio names and after the Q1 announcement is worth talking about again. This is one of the most undervalued companies I see. Looking at the financials, it has no significant debt, almost $5 per share in cash, they blew away the 1st quarter number and forecast 2nd quarter numbers that beat.

The company has sound management and is diversifying their product line into the business area. Wireless mobile broadband is a growing business and there are two main providers, Novatel (NVTL) and Sierra Wireless. I believe Sierra is the superior company and actually trades at a lower valuation to Novatel.

This company is a prime time buyout candidate and they must know as they've put a poison pill in place.

disclosure long SWIR

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Saturday, May 2, 2009

Previous Bank Stress Poll Result 27Apr-1May

When asked if any of the 19 banks would fail the stress test, out of 310 voters, 201 (64%) answered Yes, 109 (36%) answered No.

Earnings Trader System

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Tuesday, April 28, 2009

Dendreon Day/Crooked Business! Updated

(At risk of this becoming the Dendreon blog, here's another post. The stock is surging today ahead of the data announcement. The news is said to be out at about 11am pst, but I suspect it will be leaked before. Stock isn't halted yet.) That was my post before the looting began! What a scam! Someone raided the stock at about 10:25 am pst for about 2 minutes.

I happened to be watching and I was shocked, to say the least. In my opinion, this was a heavy short position allowed to get out at a low price. If you used stop loss orders and were stopped out, then you learned a very important lesson - for 'all or nothing' stocks, don't use stops as they are meaningless. Remember, just because you put a stop order in at 20 doesn't mean you get 20.

By the way, there was a very suspicious post on one of the message boards at around 8:30am pst. Someone said there would be a bear raid on the stock at about 10:30am pst. There are crooks among us.

Who's going to do something about blatantly illegal acts like this? Who's going to protect the retail investor.

Show your outrage by contacting the enforcement arm of the SEC at enforcement@sec.gov


disclosure long DNDN

BY THE WAY, HERE'S A COPY OF A REALLY GOOD LETTER TO SEND TO THE SEC AND/OR DOJ. FEEL FREE TO COPY AND SEND. I CREDIT TECHNICHART AT YAHOO FOR THE LETTER.
------------------------------
"How can you protect us from Bernie Madoffs if you cannot protect us from what happened today???

I feel morally obligated to bring to your attention a crime I witnessed today yet sanctioned by the NASDAQ. It is my sincere hope that you will review the information I have taken the time to present below and consider your duty and responsibility to respond appropriately.



Just minutes prior to a trading halt at 1:27 PM today in Dendreon (NASDAQ: DNDN) for the public release of trial data on their revolutionary drug, Provenge, an orchestrated raid on shareholders took place taking the stock from the mid-twenties to under $8 in less than 70 seconds. During that 70 seconds over 4000 trades for over 3 million shares were reported to have been made ( http://www.bloomberg.com/apps/news?pid=n... ) suggesting to me that this was orchestrated and forced onto the market and not part of the normal market forces that drive a stock. Certainly, such actions are beyond the capability of the retail market. When the stock resumed trading later in the evening it had returned to the mid-twenties, but the damage had already been done.



For many small investors who are careful to invest their savings, stop losses had been placed to protect their investment from too much erosion in case sentiment changed. However, the rapid execution and manipulation of the stock prevented those shares from being filled at a reasonable level as these stop loss orders activated and issued market sell orders. These market sell orders actually pooled with similar unfilled orders causing a cascade of falling prices hitting more stops and forcing more market orders onto the market. I have no doubt that whoever orchestrated this manipulation did so to scoop up those shares at bargain prices as opposed to where the market had been trading just seconds earlier, essentially stealing the hard earned equity of these smaller investors. And, as the stock returned afterhours to previous highs for the day, the profits that rightfully belonged to these individual investors were also stolen.



Analysts and journalists commenting on the story were dumbfounded to explain the trading action and reluctant to offer their theories openly. And, after a brief investigation the NASDAQ quickly announced that all trades would stand leaving all affected investors with no recourse. However, I am writing to you in the hope that the Obama Administration represents a new ethic for the nation and for Wall Street and that a sense of responsibility exists to investigate this incident and publicly report on an explanation.



Although I was not affected by today's trading manipulations, I see what happened today as one of the most outrageous and obvious attempts by professional traders to game the system at the expense of smaller retail investors. And, a more thorough investigation would go a long way to building back confidence in the markets for small private investors and reform what I consider to be a very corrupt system that favors hedge funds and professional traders at the expense of individual investors!

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Thursday, April 23, 2009

Here We Go Insurers

Some of the talk has died down related to the insurers and I think it's because they're about to report. I expect the insurers to report much better than expected numbers like I expected the large banks. To bring up a previous point I made; market volatility has come way down, so I expect insurance portfolios to look much better than they did just a couple of months ago.

Just look at the performance of MetLife (MET), Genworth (GNW), Hartford (HIG), and Aflac (AFL) over the past two months. The last two are on my 'Model Portfolio list. We were led to believe that most large insurers were about to have a going out of business sale any day.

The smart money knew the truth and the smart money jumped in when it seemed darkest. Hartford and Aflac have almost tripled from their lows! I expect these companies to report much better than expected numbers and I'm willing to go on the record before it happens.

As the market continues to move up, and yes, I believe this rally has legs into early Summer and as long as I see more than a few talking heads saying the rally is over and continue to use scare tactics on the general public, I'm bullish. Sounds too much like people missed the rally and want a chance to get in. Have you noticed the pull backs are becoming more and more brief. Not like a few months ago when the bears could mount a rout that lasted a week or more.

Disclosure: Long HIG, AFL, GNW

m

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Sunday, April 19, 2009

The Vix

Stock Tables - 1 year
It hasn't gotten the press it got on the way up, but the Vix has come down under 35 after going through the ceiling over the past few months. This is a real good sign for the market and for investors. I heard someone talking to one of the talking heads about how market volatility is good for investors - WRONG! Market volatility is good for traders.

The market has moved up nicely over the over the past few weeks and investors have benefited as the volatility has come down. Actual investors don't want to sit in front of a monitor guessing where the highs and lows are. The data shows that retail investors lose when they do this. Besides, that behavior isn't what we call investing, but trading.

Not long ago we were seeing wild swings, down 350 points, then up 200 points, all within an hour. Retail investors/traders tend to buy high and sell low when the markets swing wildly. The typical behavior is to get scared and sell when the market is down hard, then turn around and buy high believing they're missing the rally only after the market is up big. Sound familiar?

If the Vix stays down under 40 and should it get under 30 and stay, investors will see nice returns in their properly allocated, well diversified portfolios.

You can find the Vix on the right side of the screen.

m

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Tuesday, April 14, 2009

Dendreon Updated

As you know, Dendreon (DNDN) reported on 14 April that the Provenge trials were successful! Now investors should be thinking about fair value for the company. Although the company says they are going to market the drug themselves in the US, it's good to have an idea of what the company is worth. My value for the company is $10 billion which is about $101 per share.

I get that number through comparative analysis. Remember ImClone. They looked a lot like Dendreon before they were purchased. They had a different approach to cancer and had one main drug and I believe another. They're pipeline would have been good too, had they remained a seperate company.

ImClone was purchased for $10 bil which was about 10x sales, as they had about $1 billion in sales. Analyst estimate Provenge would be good for about $1 billion in sales early on.

I believe if Dendreon isn't purchased and brings another drug to market, as they've talked about colon and breast cancers, which would be huge, the company could be the next Amgen, Biogen, Genentech 10 years from now.

Of course this assumes they get FDA approval, which should happen.

By the way, looks like the previous poll was right on, as 86% of you said DNDN would meet or exceed the desired Provenge result.

Recent Dendreon news.

Market Watch Story

Health Care Hospitals PRN Story

New World Investor Story

Seeking Alpha Michael Murphy Story

Market Intelligence Story

Care To Live Story

UK Story

Market Guardian Options Story

Xconomy Story

WSJ Article

Hot Stocks Story

Dendreon & Hedge Funds

Disclosure long DNDN

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Sunday, April 12, 2009

Mutual Funds

Getting away from stocks for a minute, I thought I'd bring up a few funds that I like. For the record, I believe most retail investors should have the majority of their assets in mutual funds. I like China and South America, so the funds I like tend to be focused there.

Mathews China MCHFX and Fidelity Latin America FLATX. I've done well in both of these funds during bull markets. They tend to track those markets pretty closely which is important. It irritates me when I buy a fund and the tracking error between the market is says it tracks and the fund is huge.

These funds tend to be in the big names in those markets, so you get exposure to many different stocks you might buy anyway, but at lower costs.

I also like Janus Overseas JAOSX. This is a very good overall overseas fund. You may notice that my top 3 picks are overseas, so for anyone within 2 or 3 years of retirement might want to consider the risks associated with these types of investments before investing a substantial portion of your portfolio there.

Remember, two of the most important things to think about when evaluating a mutual fund besides how it fits in to your plan and expenses, is how it performs compared to its benchmark (and peers), and are you actually getting what you think you're getting. So if you're buying an Indian fund, but it doesn't track the Indian market, that may not be a good fund for you.

Disclosure, long MCHFX

m

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Friday, April 10, 2009

Previous Dendreon Provenge Poll Apr6-Apr10

On the question of whether or not Provenge would meet/exceed the 22%, 245 (86%) said yes and FDA approval, 21 (7%) said no and no FDA approval, 17 (6%) said something other. This was pretty predictable from my point of view.

m

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Genworth

Genworth (GNW) has become a favorite stock of the day traders/hedgies and even retail traders. They announced on Thursday that they missed the TARP/CPP deadline. In my opinion they didn't want it (after further review). I don't blame them. I don't think they need it. At this point it was all psychological and made investors feel better. But after all the scrutiny, rules, and pink people with banners, don't take it if you don't need it.

In the short run (very short run) it hurts the stock - think 2 day event. In the intermediate and long run it's best. Don't forget, that money wasn't free or cheap and now banks that can, want to give it back. They probably didn't really want to buy that bank either. Who wants to buy a bank right now, especially since any bank you buy now is a troubled bank.

I see their action as a back door way of saying no thank you because I have to believe they would have made a bigger stink and would have made sure the paper work was good to go and on time if they REALLY needed it.

I'm sure the professionals will use scare tactics (again) to create more volatility in the stock following this news, but keep your eyes open. The company isn't going out of business anytime soon.

I found it rather humorous to read the Citi analyst criticize management and basically call them incompetent. It's hard to take anyone over at Citi serious or most any bank when they critique management at some other company.

Disclosure, long GNW.

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Sunday, April 5, 2009

Dendreon

I felt compelled to post about the company, as it should prove to be a pretty volatile month if Friday was any indication of what we can expect. I tend to believe the last FDA decision was more political and thus I think they'll get the approval this time assuming they meet/exceed the 22% threshold. I also think they get to 22% this time around like last time. Comments?

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Previous Market Poll Mar 30-Apr 3

Results of a recent market poll, Did we hit bottom? 345 respondents, 20% said yes we hit bottom and now the market heads up, 27% said yes we hit bottom and now we move sideways, 53% said it was it's a suckers rally/head fake and we're headed back down.

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Tuesday, March 31, 2009

ETF Dreams & Nightmares




I believe someone with a loud voice should pull the curtain from behind the ETFs and let us all see what's going on with them because in case you aren't paying attention, many of them don't work. I think there just another way for bankers to make money.

Case in point, the financial ETFs are the biggest offenders and perpetrators in this area. XLF, FAS, SKF, and FAZ are among the most highly traded ETFs in the market. You would think for that reason alone the pricing and valuation would make more sense than in some thinly traded ETF. Wrong.

Have a look at the accompanying chart and draw your own conclusions. The chart shows the return for the four ETFs year to date. Question, if some are long and some are short (2 and 3 times short), how is it all are in the red for the year (3 months)? There's more going on there than meets the eye. Treat these things like derivatives even though they trade like stocks (more risk than meets the eye.

These are better as volatility or momentum plays. So when there are days and days of buying or selling in the sector, there's an opportunity to profit or lose, A LOT. Other than that, retail investors should avoid.

By the way, my point is that these things are for the average retail investor.

CLICK ON THE IMAGES TO ENLARGE

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Thursday, March 26, 2009

Model Portfolio

I've been thinking about and asked about a model 2011 portfolio and here it is as I see it. I had a few things in mind for my portfolio. This isn't a trading portfolio, but rather a good portfolio for the IRA or any intermediate to long term portfolio. I realize 2011 isn't 'long term', but this is 2011 and beyond. Notice, it's all stock and don't tell me it's too risky, because when companies like GE are taken out and nearly shot, everything has gotten risky. I ruled out any company that might not be around, like Ambac or Fannie. Growth was important and yield was a bonus. I especially like companies that happened to just be caught in the downdraft. Household names that were the subject of negative rumors, but remain sound companies were given special attention.

This is a $20,000 hypothetical portfolio where the funds are split evenly among the 10 names. The far column is the suggest highest entry price and I suggest buying at the lower of the entry price or the current price. We've had a pretty powerful run-up, so even though many of these names are trading below the suggested price, I'd wait for a general market pull back.

The project growth is the project company growth(i.e. sales and earnings), not stock growth. Notice I give no target price, as I'd look to re-evaluate in 2011. These are interesting times and there are many names that could have made my list, but I believe these companies represent exceptional value. Other companies I considered were GE, Cliffs Natural, Petrobras, Apple, and Metlife. Type any of the names on this list in the search engine on this site for company specific information.

It's good to note that the projected growth of these companies should increase substantially over the next year, so while you may be looking at a projected 5 year per annum growth of 15% now, next year that may be 25%.

I won't go into a lot of detail on the individual names, as this post is long enough, but email or comment if you'd like to know more.

Disclosure: Long all names except MOS at the moment.

CLICK TO ENLARGE IMAGE

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Window Dressing or Something More?

So are we looking at end of quarter window dressing or are we going higher for good? This is most likely a bear market rally, but if you got in during the last sell off you'll probably do well to hold at least through early next week. This is fairly typical, as we've had a couple of really good weeks toward the end of the quarter so funds may be looking to dress up their portfolios.

Some of the names I've talked about recently have done quite well, like the insurers, commodity related stocks, and sierra wireless. I'm a long term holder of stocks like these, but I would be looking to take up short positions in the big banks early next week, as I believe they've gotten carried away with this talk of returning the TARP money.

They still have major problems and are talking about throwing back the life line.

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Friday, March 20, 2009

Value & Growth?

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After being asked, I decided to post a list of some of my favorite stocks that fall into both the 'value' and 'growth' category. These are strange times and these are just a few of the stocks out there. I remember days when a company's stock was in one (value) camp or the other (growth). So here they are and a few things to note. Most of the metrics probably look familiar to most viewers except maybe the PEG ratio which is the price to earnings growth ratio and the last column, oper cf to equity and debt. A PEG ratio of less than indicates the a company's earnings per share are growing faster than the company's stock price. The last column is a good indicator of the value of a company's core business to the perceived value in the market place, as well as how well the company utilizes capital (equity and debt) - higher numbers are better here. Also I listed quite a few different metrics, as some metrics have more importance to some industries.

I went through and placed an asterisk by the standouts for each metric. I took the top 3 and each has it's own story. Aflac is the standout and I believe best on the list. It generates plenty of cash to service the relatively small amount of debt, it's projected to growth at 14% per year for the next 5 years, earnings have been revised up and it's yielding over 5%!
Sierra Wireless is another standout. I can't think of a better pure value play. It's been on a few lists lately as a great value stock. It trades at a discount to cash and has zero debt! This is one I don't understand and believe it will be bought out if it lingers down here for long.

Lastly, Genworth is one of the most beaten down highly traded stocks. The insurers have been killed as a group and my readers know how I feel about the insurers and the sham rating agencies. For starters this company is actually going to make! It's projected to grow 14% per year over the next 5 years. While I understand it has a large amount of debt, it also generates plenty of cash to service it. I believe when the traders move on to another industry this will rise quickly. Be advised, it's the riskiest of the 3, but the potential rewards are 10x. Think 2011.

Some of the other stocks are nice as well. NYX is a nice balanced play with a nice yield, growth, and business that isn't going anywhere. Hartford, just another beaten down insurer that will be around years from now. Arch Coal, I believe coal is the commodity to be in over the next few years and Arch is the number 2 coal producer in the US. Not much I can say about RIMM. Great growth story, no real debt, trading at a fraction of the price it will be trading at in 2-3 years.

CLICK ON THE IMAGE TO ENLARGE

Disclosure, I'm long in some way every stock on the list and plan to be in them for about the next 2 years

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Tuesday, March 17, 2009

Trading & Driving

It's often said that good traders and investors are both disciplined and patient. The same can be said of drivers. Have you went long a stock only to watch it not do much while the market moves around a lot? Then you sell and move to something that's exhibited a good deal of volatility and moved up a lot. Then what you just purchased sells off and the first stock begins showing signs of life. You scratch your head and think some unseen force or shadowy figure must be playing with YOU.

Now, we've all been sitting in heavy traffic and looked over at the lane next to ours and watched traffic moving along while we sit. We switch lanes and don't you know as soon as we do that our old lane takes off and our new lane sits.

Both of these people tend to get to where there going after everyone else, or at least no sooner and they suffer more stress. Sometimes stocks lie dormant while attention is focused elsewhere, but eventually fundamentals move stocks (mid and long term). Gossip, rumors, speculation, fear, ect. move stocks in the short term. So decide whether you're a thrill seeker with cash to burn or an investor.

There's a huge difference between traders and investors. Most people are/should be investors, as they have day jobs, but they behave like traders. Retail traders tend to LOSE. All the data supports this. They lose in the short and long term. Disciplined retail investors tend to make money. If you're an investor, stop constantly switching lanes looking for the shortcut home. Find a good lane based on your experience/research and you'll get home before or no later than your neighbor.

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The Vix

About This Blog

Where we rant and rave about the market and of course give our opinions on stocks we love or hate. We're not advisors and urge you to conduct your own due diligence.

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