Archive for 2008

Follow The Money!

If I have seen further it is by standing the shoulders of Giants” – Isaac Newton
1976: Apple Inc.; Current Market Capitalization: $117.52Bn
1977: Oracle; Current Market Capitalization: $106.22Bn
1982: Cypress Semiconductor; Current Market Capitalization: $3.57Bn
1982: Electronic Arts; Current Market Capitalization: $15.31Bn
1992: Network Appliance; Current Market Capitalization: $8.18Bn
1993: Nvidia; Current Market Capitalization: $14.92Bn
1995: Yahoo; $39.58Bn
1998: Paypal; Acquired by Ebay for $1.5Bn
1998: Google; Current Market Capitalization: $161.39Bn
2000: Eharmony; International relationship service
2001: SourceFire; Current Market Capitalization: $168M
2003: LinkedIn; Privately held online network of more than 17 million professionals
2003: Netezza; Enterprise Vale $450M

2005: Youtube; Acquired by Google for $1.65Bn

2008:  Stock and Option Trades and PhilStockWorld;  (To be continued….)

Quiz Question: What do all these companies have in common?
Answer: Sequoia Capital
Sequoia Capital prides itself on being “The entrepreneurs behind the entrepreneurs”. The company invested in, or was the business partner in, companies that make up 10% of the NASDAQ. The company’s list of partners is a who’s who of technology: Steve Jobs at Apple, Larry Ellison at Oracle, Bob Swanson at Linear Technology, Sandy Lerner and Len Bozack at Cisco Systems, Jerry Yang and David Filo at Yahoo!, Jen-Hsun Huang at Nvidia, Dan Warmenhoven at Network Appliance, Michael Marks at Flextronics, Larry Page and Sergey Brin at Google, Chad Hurley and Steve Chen at Youtube, and countless others!
Sequoia likes to contribute to companies that have the chance to become very significant, believing that the best seed and early stage companies evolve into great growth companies. They typically invest $100K-$1M in the Seed Stage, $1M-$10M in the Early Stage and $10M-$50M in the Growth Stage. Interestingly, they claim proudly that “almost everyone we have ever invested in has been a complete unknown at the time we met; many have been immigrants or first generation Americans


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Monthly Maket Mayhem – V for Victory!

Have we made a perfect V bottom this month?

Check out the movement on the Dow – From Jan 7th through Jan 22nd we had 7 of 11 Down sessions, culminating in that disastrous Tuesday morning when we hit 11,508 at the open before "recovering" to 11,971 as the Fed gave us an emergency .75 shot of the good stuff.  Since then, the market has been positive 6 of 8 sessions and we are right back to 12,743, just 105 points below making a perfect V over 2 weeks (and, to be fair, it took 11 days to fall and, so far, we've only been on the mend for 8 days).

Before I get a big head and talk about how fantastic our results were on our new virtual portfolios, let's remember that we initiated the $25KP after expirations on 1/22, the lowest low in 18 months, and we had been treading water in the $10KP, just trying not to lose money during the chaos as we looked for a chance to deploy our capital.  As I always say, virtual portfolio balancing is all about keeping yourself in position so that you are able to take advantage when an opportunity like this presents itself.

No matter how we got there (Yahoo!), congratulations are in order for $10,000 and $25,000 virtual portfolio players who, in just 2 short weeks have become $23,237 (up 132%) and $45,720 (up 82.9%) players respectively!  It is our goal as PSW to help our members ladder up and last year we were able to hit our double up targets for small virtual portfolio players in 3 out of 4 quarters but this is the first time we've done it in 2 weeks – what a way to start the year!

While the $10KP and $25KP may have benefited from some YHOO inflation, our Bargain Basement Virtual Portfolio did not.  That virtual portfolio is up just 8.3% in its first two weeks and is our worst performer, but mainly because our most conservative virtual portfolio is new and we started with $100K and are still about 1/2 cash.  On the whole, it's a very nice group of holdings if this rally continues.

Complex Spreads managed to gain 29% for the month, despite being Google and Apple heavy.  We wiped out so many callers in both stocks and…
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Friday Morning – Yipee for Yahoo!

This will be a short post because we have a lot of work to do today!

The jobs report was TERRIBLE, down 17,000 in January.  December, however was revised UP 64,000 jobs, from 18,000 to 82,000 jobs so that's a 355% margin of error in government reporting of what is considered a VITAL economic statistic.  Like I said, I'll take those ADP reports anytime.

Asia did some stuff, Europe did some stuff – who cares – MSFT just offered $44.6Bn for YHOO!  This is so fantastic for us I can't begin to tell you.  Anyone who's been following the $10KP and $25KP on the free site knows that YHOO was one of our key positions and yesterday we followed our trading rules and took out the $20 caller for just .42, a very nice profit off the $1.85 we sold them for just a week earler!

There is no better way to start the year over at PSW than to double up our smaller players in the first month.  Thanks to our very aggressive moves yesterday, the STP is also close to a double and should be well over as there was plenty of YHOO in there as well.  This is just way too much fun.

On the dark side, Google was going to be our focus play of the morning but this news should put a damper on their recovery off what were actually fantastic earnings by any rational measure.  We are still in Google of course and will take out our caller, roll down our longs to $520 or lower and give sanity a chance to reassert itself as Microsoft just told us Yahoo was 60% undervalued and Google is certainly better than Yahoo and was, even yesterday, trading at a significantly lower multiple.

Wake up people, do you really think the creators of Zune will suddenly blow Google out of the water by buying the competitor Google has been tearing to shreds for 5 years?  I'm not saying it's a bad deal for Microsoft, they need to do something on the Web and Yahoo is a totally underperforming asset but it's no Google killer.  Also, this bid is HOSTILE, which means it's possible Google themselves…
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$25KP Update

We’re having a pretty good week and we are in a fairly bullish posture so let’s keep our fingers crossed that the jobs report doesn’t screw up what promises to be a good day.

Our 15 YHOO shares should give us a neat double and we are not so rich that we turn that down so we’ll be looking for an exit strategy today.  Congrats to all $25KP players for scoring a double in 10 days!  Yipee, this is how we do it over at PSW!!!

Since we have some newfound wealth, lets DD on CY, which I feel very strongly about.   NDAQ we can take off the table as 50% in 24 hours is good money (so I hear).  The others I can live with over the weekend.

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Description Qty Trans
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7 Long Calls

“);

  AIGEK May 55 CALL [AIG @ $54.97 $0.60] 5 1/31/2008 (106) $2,160.00 $4.30 $0.50 $4.80 $0.40 $240.00 11.1% $2,400.00

“);

  CYFT Jun 19 CALL [CY @ $21.24 $-0.01] 5 1/30/2008 (141) $2,260.00 $4.50 $-0.20 $4.30 $-0.20 $-110.00 -4.9% $2,150.00

“);

  EKCD Mar


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$10KP Update

We took  a hit on the $10KP so far this week but we eneed up in a super bullish posture and I’m feeling good about it

Cash is way down but that will be taken care of by the $20,000 worth of YHOO calls we’ll be cahing in today!  Congrats to all $10KP players as you have now graduated to $25KP players and we will be starting a new $10,000 Virtual Portfolio at the next expiration!  (insert graduation music here)

Let’s look to roll the June BUDs down to the $47.50s but that’s all the changes and we’ll deal with YHOO at the bell but, YIPEE!!!

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Info
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Issue
Symbol
Description Qty Trans
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8 Long Calls

“);

  AMQDW Apr 47.5 CALL [AMGN @ $46.59 $-0.69] 10 12/17/2007 (78) $4,230.00 $4.22 $-1.82 $2.40 $-0.75 $-1,830.00 -43.3% $2,400.00

“);

  BUDFJ Jun 50 CALL [BUD @ $46.50 $-0.76] 5 1/30/2008 (141) $885.00 $1.75 $-0.40 $1.35 $-0.40 $-210.00 -23.7% $675.00

“);

  BUDCK Mar 55 CALL [BUD @ $46.50 $-0.76] 5 11/30/2007 (50) $760.00


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Thrilling Thursday Wrap-Up

Wheee, that was fun!

It was a terrible day for hyenas as sanity returned to the markets and great companes, like our ISRG, reasserted themselves.  After hours we got in-line results from Google (OK, earnings were a 0.23% miss) and they tanked after hours but we'll see if they pull an Amazon tomorrow and gain it all back during the day.

Our morning plays of MBI and ABK were up huge off their opens for the day so we were in a great mood from the start.  MBIA was placed on negative watch by the S&P but Ambac had their AAA rating affirmed and the hyenas were chewing their own legs off to get out of that trap!  FGIC, the private bond insurer I didn't trust, was in fact downgraded by Fitch, but this was no surprise and the markets took it pretty much in stride.  MBIA held a marathon, 4-hour conference call where the company laid out the case that their capital plan will exceed all AAA rating requirements and that a downgrade would impact them by no more than $200M even if it occurred.   

Retailers were up across the board with the whole sector hitting the 5% rule during the day.  We still have the jobs report to get through tomorrow but things are looking very bright indeed as the Nasdaq broke and held the 2,380 mark we were looking for on Tuesday's Big Chart and the Transports blasted through 2,591 leaving only the SOX lying on the floor and we will be looking closely at this sector for opportunities if we get some follow-through from the Nasdaq into next week.

It remains to be seen how the markets will respond to Google's "miss" but the Nasdaq held up well in after hours trading (which is a shame since I bought some QQQQ puts on Google's announcement) but, on the whole, we've made huge progress for the week and all we have to do tomorrow is not blow it.

I'll cut this post short as I intend to do small virtual portfolio reviews for tomorrow.

 





Thursday Morning

Well I made my bull case in last night’s post, now let’s see what kind of mess we’re dealing with today…

As expected, MBIA reported far less than $12Bn in losses that were bandied about yesterday by Wall Street hyenas and an irresponsible MSM, but $2.3Bn lost in one quarter by a company with just $2.3Bn in SALES (not earnings) is simply not good.  MBIA wrote off $3.5Bn in credit derivatives giving them a tax break (oh sorry, I mean loss on paper) of $1.9Bn for the year, compared to a profit of $819M in 2006.

John Laing wrote an excellent article on how overdone the MBIA sell-off was in Barron’s last week so I won’t get into it here but we really need to get real with these financial companies.  Perhaps the company was a little overvalued at $70 in October but, had they not written off $3.5Bn (again, paper losses) they would have shown a profit of $1.6Bn for the year (and paid $500M in taxes).  Barron’s is not blindly stating a bull case, back in June they correctly titled an article "A Mortgage Meltdown for MBIA?" and were just a little bit ahead of the curve, as was I when I said way back in 2006 that Amaranth was just the "Tip of the Iceberg."

Even an iceberg forms a base if you go deep enough and MBI down 82% and ABK down 88%, we just may be near enough the bottom to hit something solid.  I’m not ready yet to dive back in there but I think I’ll begin a little speculative accumulation on both of these stocks with the MBI Jan ’09 $20s at $3 and the ABK Jan ’09 $20s at $1.75 and I will roll each down $5 for + $1.50 whenever it is offered.  This will be fun if this thing turns around and there will probably be a chance to get out down 50% otherwise.

[Go to story.]Well a 40% reduction in Fed Funds rates don’t seem to be exciting the markets today as jobless claims climbed 69,000 to a 3-year high of 375,000.  Personal Savings climbed to 0.2% from 0% last month and that is going to scare the retailers as Personal Income was up .5% which led to a very low consumption rate, up just 5.5% for the year.  Since food and energy are up close to 12%, that means pretty
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Option traders play Altria, UST faceoff for U.S. snuff market

Today’s tickers: MO, UST, YHOO, XLF, DELL, RMBS, ETFC, CCU, HWAY, BID

MO, UST – This morning’s earnings report from the world’s largest tobacco producer, Altria Group Inc., confirmed speculation that the company will spin off its international unit, acquiescing to shareholders who have demanded higher dividends. Philip Morris International currently accounts for two-thirds of Altria’s total profits, so the loss of the international unit will force the company’s US division to resort to innovative tactics to make up the difference. With US cigarette sales consistently falling, the obvious choice for Altria is to branch out into the $3.7 billion per-year market for smokeless chewing tobacco, which is growing by 6% annually – and which is dominated by UST, the maker of Skoal and Copenhagen brand chews.

Interestingly, as Bloomberg news reported yesterday that Altria would likely turn its attentions to the US snuff market, we observed a 10% spike in implied volatility in options of UST – which is currently sitting on three-fourths of the market for smokeless tobacco. Bloomberg reports that Altria is already in the process of conducting tests in Atlanta to determine whether consumers would be receptive to Marlboro-brand chewing tobacco. After news of Altria’s overseas unit spinoff was made official this morning, option traders saw the writing on the wall and sent option volume to more than 7 times the normal level, with puts trading at three-month highs, outnumbering calls by 3 to 1. A somewhat defensive view for UST shares was in evidence through put-spread plays in the February contract between strikes 55 and 60, with traders selling the 55 puts against the purchase of the 60 puts. Shares closed 3.5% lower at $53.22, with the current share price representing a 10% comedown from its 52-week high.

Altria shares, meanwhile, gained 1.1% to $76.96, and with 68,000-plus options trading it was one of the most liquid option families on our platform. Twice as many calls traded as puts as implied volatility has come down sharply, off 20% from pre-earnings levels. Heavy traffic was evident in February 80 calls, and again in the 75 puts. Total open interest shows 1.8 call positions open for every put.

YHOO – Yahoo! – A disappointing 2008 outlook coupled with news of very limited downsizing measures failed to satisfy a market weary of Yahoo’s executive malingering. Shares closed 8.4% lower this afternoon at $19.00, with 292,000-plus options trading more…
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WTF Wednesday Wrap-Up

Oh now I'm depressed!

A 1.25% rate cut in just over a week and this is the market's reaction?  Rates are at 3% now, there's only 2 cuts like that left before we become Japan.  Not only that but you have the President (the rally-killer in chief) very appropriately addressing the nation from a helicopter factory (one of his handlers has a good sense of humor) to discuss the $146Bn money drop on top of the Fed's $163Bn (that's what a 1.25% cut costs the government).

"There's some uncertainty in the economy, but in the long run, you've got to be confident about your economy," Bush said. "Inflation is down, interest rates are low, productivity is high. Our economy is flexible. It is resilient. We've been through problems before."   Let me tell you something – unlike this recent study detailing 935 false statements used by the administration to lead us to war, this is totally true!  I have never seen so much paninc in the markets over so little.

People are just ready to panic, they WANT to panic – they are disappointed if they don't have a good reason to panic.  Sometimes my kids happen to flip on a random "scary" movie on the TV and they watch it with the same indifference as they watch Pokeman but if I turn off the lights and put on the fireplace and TELL them we're going to watch a scary movie, they're ready to jump out of their skins during the opening credits.  That's what's going on in the markets now, pretty much anything will spook investors and every new piece of information is looked at by people who expect it to be bad.

Today's scary news was a report that the S&P MAY cut ratings on $534Bn of subprime mortgage securities and CDOs.  The CDOs include the securities, the $534Bn figure is double dipping and downgrading paper from AAA to AA MIGHT cause an accounting shift and create paper losses but will have little actual impact on the financials.  The real issue may hit the regional banks, who have so far used accounting tricks to avoid write-downs by hiding behind the still-AAA rated paper shield that kept them from taking losses last year.

If you're holding a AAA piece and it's now downgraded to AA, you might
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Which Way Wednesday?

We are just waiting for the Fed today.

Professional bond-broker Greenspan jumped the gun today with a well-timed attack from Berlin where the former Fed chief (the one who people respect) said this morning: "I believe the probability of a recession is at least 50 percent, but up to now there are few signs that we are already in one," Greenspan said in an interview with weekly newspaper Die Zeit published in German. "In my opinion, it will probably happen but the facts suggest we are not there yet."

Asked whether central bankers and financial policymakers could head off a U.S. recession, Greenspan said: "Probably not. Global economic influences today are stronger than almost anything that monetary or fiscal policy can counter them with."

Gee thanks Alan - when you're done killing our economy I have a puppy you can strangle too!

Greenspan has indeed done a complete 180 since becoming a bond pimp.  After spending 20 years telling Congress the Fed had things under control, on Oct 16th he told Fox Business news that the Fed is NOT necessary (6:30 on the video) and intimates that we would, in fact, be better off going back to a gold standard or else we are doomed to ever sprialing inflation.  Right at the end of the clip, Greenspan states that the nation did very well from 1870 to 1914 with the international gold standard.  For more on this, you can read my sadly precient March article "Are We Heading for an Economic Tornado."

Asia did not know Greenspan was going to rain on Bernanke's charade today but they took the time to sell off anyway, despite what seemed to be an encouraging US session yesterday (of course YHOO bummed everyone out last night).  Japan gave back 1% in a very rocky session while Hong Kong fell 638 points, saved only by the bell after giving up a week's worth of gains and not looking too healthy on a monthly chart.

As I mentioned on Monday, HMC officially reported yesterday a 38% rise in net profit led by very strong exports.  Overall industrial output in Japan EXPANDED 1.4%, slower than expected but far from what Goldman's Chicken Little report would have had us
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Zero Hedge

World Trade War I: US Asks South Korea To Join Anti-Huawei Campaign

Courtesy of ZeroHedge. View original post here.

The bilateral trade war between the US and China is gradually becoming a global trade war of global geopolitical and commercial dominance between the US and Chinese spheres of influence.

Shortly after the two largest mobile phone companies in the UK decided against launching Huawei-built 5G phones this morning, and roughly around the time a bevy of Japanese tech and telecom companies including ARM Holdings, Panasonic and SoftBank all imposed a boycott on supplying Huawei with mission critical components joining Australia, and New Zealand as major US allies to end commercial relat...



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Phil's Favorites

Overpriced tech IPOs sell grand visions but aren't worth their valuations

 

Overpriced tech IPOs sell grand visions but aren't worth their valuations

rblfmr / Shutterstock.com

Courtesy of John Colley, Warwick Business School, University of Warwick

The year of the tech IPO is 2019. Uber went public on May 10 with a US$82.4 billion valuation. Fellow ride-sharing app Lyft floated in March with a U$24 billion valuation and Pinterest had a US$10 billion IPO in April...



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Kimble Charting Solutions

Emerging Markets About To Submerge If 3-Year Support Breaks?

Courtesy of Chris Kimble.

Are Emerging Markets about to “Submerge” and head a good deal lower? What they do at (3) will go a long way in answering this question!

Emerging Markets ETF (EEM) has been lagging the broad market for the past 15-months. They hit their 50% retracement level of the last year’s highs and lows and falling resistance at (2) recently. The weakness of last has EEM trading below its 200-MA line.

EEM has spent the majority of the past 3-years inside of rising channel (1), which reflects that this trend remains up. The weakness of late has it testing the bo...



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Insider Scoop

Amgen To Buy Danish Collaborator Nuevolution For $167M

Courtesy of Benzinga.

Amgen, Inc. (NASDAQ: AMGN) took a logical step forward in buying a preclinical biotech it has been collaborating with since 2016. 

What Happened

Amgen announced Wednesday an agreement to buy Copenhagen-based Nuevolution for $167 million.

Th...



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Chart School

Weekly Market Recap May 18, 2019

Courtesy of Blain.

China – U.S. trade talk continued to dominate the week.   A heavy selloff Monday was followed by 3 up days, with Friday moderately down.

On Monday, Chinese officials announced retaliatory tariffs against the U.S., hitting $60 billion in annual exports to China with new or expanded duties that could reach 25%.

Then on Wednesday:

The Trump administration plans to delay a decision on instituting new tariffs on car and auto part imports for up to six months, according to media reports.

...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

Reminder: We are available to chat with Members, comments are found below each post.

 

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University

...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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