Search This Blog

Sunday, February 28, 2010

Timeless Portfolio projections

Last week I put together a 'timeless portfolio' and shared via the linked post. Now that I am going to be married, I will have to explain some of my financial transactions, at least the ones involving my new wife.

Since I plan on using the timeless portfolio for savings (that is cash I am not trading or cash I am not allowed to trade with :), I put my projections that were in my head on an Google Doc spread sheet so I can convey the benefit to my future wife.

Since I created it, I figure I share it. If interested, the projections are here. The projection are compiled in three categories: 1. tracking (in line expectations), 2. low (low-end expectations) and 3. high (high-end expectations.

(remember, I'm an anonymous blogger, should not be taken seriously)

Friday, February 26, 2010

Market Thought... nothing new

Nothing has made me change my view from my Feb 19th post 'protect'. The market has not really moved, but the Vix declined.

Still cautious enough to keep my protection, but see signs of bullishness from names like AAPL and IBM. (With a declining market, their declines will be at higher levels than I thought. AAPL most likely at 200, and IBM at 125-126.)

GOOG is a very oversold, and am looking to go heavy in the name with the right market set up. It is currently holding the 520 level, but it might break it. GOOG may see 510ish. For a very conservative play, the weekly indicates support at 483 via the 50SMA. (I am not holding my breath on the 483 level.)

The thought of GOOG in an anti-trust complaint, as the reasons are laid out, are utterly ridiculous. It is a joke. The reason Microsoft was in clear violation was due to the fact that costumers had no choice, but to use Microsoft. And Microsoft used that lack of choice to muscle out competition on various products. Google on the other had, does not do that. No one forces anyone to use Google. (Case in point, Google could not leverage their search biz to muscle out YouTube with Google Video.)

IMO, Microsoft is simply trying to distract Google so they can drop the ball on search, and Bing can gain market share. The tactic is pretty pathetic, and I for one will never buy a thing associated with Microsoft again. I wish Microsoft would just compete and innovate, instead of resorting to asking 'mommy and daddy' (aka EC) for help. Pretty pathetic.

Thursday, February 25, 2010

Trade - SGG

Sugar looks interesting here. Its oversold and at the top end of some major support.

From Aug. to Dec. it consolidated between 62 and 67.5, and now it is at 67.5.

I understand the short-term concern regarding too much sugar coming from Mexico, but technically SGG looks interesting here.

If a more conservative approach is desired, and play off the 200 SMA is the most likely area for a nice bounce.

I will look to play it at the 200 SMA.

Are Greek Officials Children?

Greece's Government is run by children. They are desperate to blame other people for their own mistakes.

-Borrowed too much, blame the borrower.

-Germany will not help you, blame them for events that took place a generation ago. (Talk about biting the hand that feeds you)

Are there any adults in their Government?

This is the one Country I am very familiar with. I am of Greek descent. My parents came to the US from Greece in the late 70s. Most of my immediate family is still in Greece. I have been consistently going to the country since I was 7 years old. I have seen the cultural transition, and have plenty of friends who probably participated in some of the protests that are going on right now.

The vast majority of people in Greece have every right to protest. There was no reason for the country to enter the EU when it did, and it did nothing but fuck over the vast majority of low wage earnings by spiking up inflation. (Think about it... a bottle water that was cost 50drachma spiked up to 50euro cents. The drachma/euro conversion was pegged at 333/1. Groceries and everyday items like bottled water saw a spike in real inflation by 3000%. )

The Government borrowed too much, and it can not afford to pay its debts. The situation is that simple. Because elected officials allowed huge inefficiencies in the systems and massive avenues of corruption to occur, they will try to fuck the little guy again.

The average citizen has every right to strike, but they have to strike for a good reason. Whoever will be in charge of Greece will need to remove the inefficiencies and corruption, and implement taxes on the plenty of well-to-do in the country (not the vast majority of the low wage workers).

Wednesday, February 24, 2010

We are laughing at you Italy

Italy made a joke of the court system today. (article) It also wreaks of corruption, given Google is in a copy right dispute with the Italian Prime Minister. (Who is far from a 'clean' character.)

Whatever happened to following the rules, and making a decision without prejudice.

The court clearly does not understand how the Internet operates. The Internet is predicated on user generated content, in order to have a free and open exchange. TV and Newspapers are not, they generate their own material, and screen all their material prior to broadcast or publication.

Internet hosting companies can not be governed by the same rules as TV and newspaper institutions.

Monday, February 22, 2010

the timeless portfolio

Over the weekend, tragedy struck, and as tragedy usually does, it puts in perspective just how helpless we truly are. No matter how much we try to control things, we can only take step to produce the most favorable outcome. After that, its god's will.

This got me thinking about a 'timeless' portfolio. A portfolio that would last, outperform and one that would not require multiple trading. Just minimal homework to ensure the companies continue to produce smartly and efficiently. Its a tight concentration of stocks that have high dividends and are inexpensive enough to outperform due to their management culture and product positioning to benefit for the long long-term.

The stocks include:

1. KMP - high yielder. Will benefit from the increased energy usage.

2. NAT - high yielder. Will benefit from continued globalization, and improve global economic prospeects.

3. BKE - a hidden high yielder. The company has a normal 2.7% annual dividend, but since (the fantastic) management team owns so much of the company they have consistently dished out a 'special' dividend year-after-year. With this special dividend, BKE has consistently yielded about 8% a year.

4. IBM - Its yield is a joke, at 1.7%, but IBM has positioned themselves beautifully with a multi-product assault for the mid-to-long term. We already got a glimpse of their product benefit in the Jan. report.

5. F - Its a whole new culture at Ford. Mulally has been doing a tremendous job streamlining the business. Ford is also seeing huge benefits from Toyota's pain, and the fact that it is the lone US survivor. It is still in the transition phase, but with the trajectory continuing to be very positive, and as these benefits from the streamlining fade, Ford will be a solid great US company that will increase their dividend. (But that will happen in a few years, after its stock has passed 20.)

There are plenty of other companies that I really really like as long-term holdings, that will do very well. But the above names are simple, straight forward, yield very nicely and not held hostage to cyclical trends. They will benefit from continued economic recovery, economic growth, (company specific/product) secular growth and have a minimal negative downside. Their culture of management has consistently performed, continue to perform and allow an investor to truly 'buy and hold'.

If I could produce a 401k with just the above 5 names I would. If I was ever in a position to not be able to trade for an extended period of time, all my cash would be in these 5 names.

(But remember, i'm an anonymous blogger, and should not be taken seriously.)

Friday, February 19, 2010

Market Thought... protect

I make no secret that I feel valuations are really compelling with respect to a bunch of names. (ie GOOG, AAPL, IBM, GS... etc.) But the rise the market saw this week, becoming as overbought as it stands at the moment, in relation to the decline in the Vix, has me concerned. Especially since I still see the SP500 in an atmosphere of negativity.
The Vix declined to the horizontal blue line to which it may bounce off of. And if the Vix bounces, the SP500 should decline.

Fundamentally, there is nothing stopping the market to continue to rise. I truly believe this, hence did not sell my GOOG, AAPL and IBM.

Technically, the hurdles for the SP500 are present. This is why I added to my protection.

Thursday, February 18, 2010

Market Thought... surprise!

The Fed raises rates on the discount window. This is not really a surprise. We knew it was coming, and its gonna be coming through the year, and next year. We all know rates are too low, we all saw Australia increase the rates, and China doing what they can on multiple fronts.

All this is good news. It means things are working. The after hours does not reflect that because many were surprised that the Fed specifically didn't tell them they would raise a now irrelevant rate.

The SP500, as expected, rose to the SMAs, and with this rate hike, it is a good excuse to sell off.

The economy is getting better. I know this because pretty much every company I follow told us its gotten better in all the conference calls.

I see the continued efforts to facilitate job creation, which make it difficult for me not to like this market.

On the China front, anyone thinking China's issues will hurt the global economy in the short to mid term is mistaken. China is providing stimulus in a very smart way. They still continue to pump the money in, but are taking it out a different way. IMO, in such a way that they are facilitating a consumer orientated economy.

There will always be negatives, and potential instabilities, but we must put these negatives in perspective. To me, the only real uncertainty is the potential instability created by a deconstruction of the Euro. The EU community has a ton of problems they must address to save that currency. But because I am not an expert in currency trading, I do not know the ripple effect the destruction of the Euro will have. Hence my uncertainty. But if it survives, I know the out come.

(ps. I am still waiting to go heavy AAPL, IBM and GOOG)

Trade - GOOG

There appears to be a trade setting up for GOOG.

Looks to be hovering on the 20SMA as resistance. IMO, it looks to want to break it. If it does, it will move to the high 550s or 560s.
If it does not, it will move to test the 520 level.
How I will play it... I have a position now. If it breaks upward, will close out the position in the high 550s. (And will look to buy back after market mid-term bottom is observed, ie SP500 reaches its 200SMA.)
If it breaks down, will double down at 520s, and double down again if it breaks the 520 level at 500. (I do not expect the 520 level to be broken downward.)

Tuesday, February 16, 2010

Market Thought... ho-hum

I hate it when the markets are closed. The work day goes by so slowly. (I am so addicted to the markets, I think I have a problem :)

What a nice day. A day like today makes me question my market hedge. Look how the SP500 just took out the 14SMA.

But with this move, it is no longer oversold, and approaching overbought within an aura of negativity.

The market may move up to the 62 SMA (and other SMAs), but I do not know if there is enough umpf to power through.

My current thesis is to be range bound until we get better clarity regarding job creation. I just do not see the SP500 breaking 1150 unless that happens.

Stocks like AAPL, GOOG, GS and IBM will (imo) outperform the market based on individual performance and very inexpensive valuations. At the moment, I am waiting for the SP500 to test the 200 SMA, and then go heavy into the above names. The overall assessment I gather from the current market dynamic suggests it will happen within the mid-term. I do not think the SP500 will break it, and think it will be an awesome entry point.

Thursday, February 11, 2010

Market Thought... free Tibet! :)

No. I did not become a hippie, but there is a point to the title. I was going to cover some of they market Puts I took on, to protect against AAPL, but then I saw this article.

Obama to Meet Dalai Lama Feb. 18

This has obvious implications for anyone following China. Especially when the Chinese gave a specific warning over this very issue. (article)

I am not one that accepts such a warning as acceptable political diplomacy. And Obama meeting with him effectively gives China the finger. (rightfully so, who the fuck are they telling the most powerful man on earth what to do)

Anyway, its no surprise China has been getting more and more aggressive with their diplomatic tactics. Add this to the list of things China will be pissed about, but they have to be realistic towards its expectations and warnings. If Chinese diplomats were stupid enough to make this warning, and start acting more and more aggressive, they are stupid enough to do something very stupid.

IMO, there potential stupidity may merit market protection. Hence, I did not remove the protection.

Also, my trigger to remove protection was not achieved yet. (Despite that, AAPL's chart looks so juicy now. Look how the negative trend was broken. It smells like a change in direction :)

Wednesday, February 10, 2010

Apple's new estimates

With the proper accounting in place, AAPL now has a trailing PE of 19. The fastest growing PC, mobile computer maker, and a company growing EPS north of 25% a year is trading with a multiple less than 2o.

All I can do is smile.

I already own the name, and will enter more. I think now is an interesting point for an initial entry. (assuming anyone is interested)

The market looks to want (or need) to capitulate before a real push upward is seen. Apple will no doubt be hostage to that capitulation. But in the mean time, while waiting for this capitulation to take place, there appears to be strength within AAPL, GOOG and GS to which I do not see them breaking there recent lows. AAPL may not break 192, GOOG may not break 520 and GS may not break 148.

If you want to be hedged, buy AAPL with Puts against the market. As the market capitulation takes place, close out the puts and keep AAPL.

Monday, February 8, 2010

Market Thought... almost

Nothing really new I can say other then I think we are almost there.

I am aware of all the negative stories, and horrible possible outcomes. The fundies simply do not merit such outcomes.

Don't get me wrong, I am not trying to have delusions of grandeur here either.

Obviously this is going to be a consolidation year, tailored for trading.

Whatever scenario the markets are in, IBM is about to trade with a forward PE below 10. There is a name for a situation like that... opportunity. (and I will take it)

A word on Nassim Taleb

The more and more he opens his mouth, the more and more I find him to be irrelevant. (Not that I ever had high regard for the defeatist mindset of this guy.)

Basically, he called Buffett "lucky" in regards to Buffett's investment success. (article) I mean, that is just annoying.

Buffett created north of $170 BILLION dollars with Berkshire. Let me repeat that, Buffett has overseen his company grow to an enterprise value of $170 BILLION dollars.

So, creating $170Billion in value is potentially considered "lucky" now-a-days?

I am sure Buffett would consider himself the luckiest SOB in the world, but to simplify such an huge achievement and even consider to brand it 'luck', is just asinine.

Thursday, February 4, 2010

Market Thought... clarity

When I see this Fast Money clip, I am fairly amazed at the level of uncertainty. (video, first 5 min) I am no stranger to this confusion. I spoke of my own personal confusion the other day, and how I gained clarity.

IMO, listen to the underlining business of strong companies. Fuck the noise.

I will still go heavy when my trigger is achieved.

If you don't know what to do, follow my trigger to start entering the market.

FYI... I did enter KMP today. TOO oversold, and yielding at 7% with very little to doubt the dividend after they just reported.

Tuesday, February 2, 2010

Market Thought... a coin

There are two sides to every coin. The two sides of this market are no different, just a tad more complex.

I have made the case that the market valuation is not optimistic when recent earnings are taken into account, and yet have given the purely technical view of the bearishness that can potentially bring the markets to their 200SMA.

To put it bluntly, it is a mix signal and its confusing. That confusion can be annoying.

So its time to stop being annoyed, and gain clarity.

When we look at this SP500 chart, with the July as the starting point, there were clearly buy signals.

Buy signals were triggered around Aug 17, early Sept, early Oct and late Oct/early Nov.

These were triggers because for the dynamic of this rally, the fear level was too high at those point.

However, look at mid Jan. There is no inversion yet, the fear has not triggered a bottom. IMO, we need to see a SP500/VIX inversion to trigger short-term bottom to this weakness.

Based on this, we need to see more weakness. BUT, when that weakness comes, I will enter heavy. As that weakness will bring individual stocks to levels that can not be ignored.

My fundamental thesis has not changed. When I see the inflection, I will go heavy in IBM (120 jan 2011 calls), AAPL (190 jan 2011 calls) and GOOG (520 calls).


Another company that does everything right, yet it sells off. It beat the street at pretty much every measure, but apparently is too expensive and sold off.

(I do not understand this. How can a company beat, and guide higher, yet is deemed too expensive.)

If anyone was ever interested in the name, there is support around 34-35.

(I will not be entering. Will look to play it at 32, but my current strategy does not fit the 'initial buy' at 34-35. Will explain my strategy later in the day, with my end of day Market Thought post.)

YouTube rentals

Many are playing down the fact that YouTube made a little over $10K from 5 independent films in 10days.

When I first saw the news I thought it was a good number. The engineer in me forced me to extrapolate the potential. Let me explain.

1. 5 movies were used as a test.

2. of the 5 movies, they were independent films. Which means they grossly lack critical mass.

3. it was 10 days.

This tells us a few things.

1. Basic Algebra: YouTube made $1K a day ($10K/10) from movies not designated to a mass audience.

2. Obviously there are people who are willing to rent videos off of YouTube.

3. If #2 exists, and the YouTube library expands nicely to titles that have more critical mass, we will obviously see more revenue coming in. And it will come in exponentially.

3. With #2, and an expanded library of movies/tv shows/'pay for clips', a subscription models is definitely in the cards. Especially since devices like Apple TV allow you to stream YouTube video. And the more inclined techies know how to connect their laptops/computers to their TV to watch the video directly on a big screen.

Ladies and Gents, this is good news. YouTube is correctly attacking all sides of the video angle from advertising, to ala chart and eventually subscriptions.

Monday, February 1, 2010

I agree, in a different way

Reading Paul Volcker's opinion in the NYT, its hard not to agree with him. Simply put, he is right. But I fail to see how a large over leveraged hedge fund under the GS umbrella would cause less harm than one that is independently owned. Case in point, Long-Term Capital Management (LTCM).

LTCM was a large over leveraged fund that sent a shock wave through the entire system when it was failing. The fact that it was independent meant nothing. It was large, and over leveraged. That is the key here.

The tools are available to prevent, too large and too leveraged. For starters:

1. all trading vehicles must go through a clearing house. (to ensure margins and capital requirements are met. This must be a requirement prior to given the approval to trade.)

2. the less liquid and more exotic the trading vehicle the more capital is required. (The holding company should not be taken into consideration w/respect to the capital requirement. The capital requirement must come from the subsidiary trading, as the subsidiary will be the company that can then fail without systemic risk.)

3. the new regulator must have power over any company, regardless of title, if the company is 'trading' any vehicle. The regulator should approve the ability of the company to trade and should actively monitor capital levels with respect to potential losses. (To prevent another AIG situation)

I definitely agree with Mr. Volcker, I just do not see how breaking up banks for the sake of making them smaller will do anything. But for those banks that can not have their trading subsidiaries have sufficient capital requirements, to prevent failure of the entire bank, then the trading subsidiary must be independent or raise capital.

And we, as a society, can not have this new regulator asleep at the wheel, they must be proactive regulators.