Week 7 Performance - Up 1.8%

Week 6 Performance
Broader market gain/loss: -0% Dow, +0% S&P
LIVEROCKET gain/loss: +1.8%

Year to Date Performance (since inception Nov 3rd)
(Nov 3rd - Dow closed 10522, S&P closed 1219)
Broader market gain: 3.4% Dow, 4% S&P
LIVEROCKET gain: 7.2%

Weekly Performance
LIVEROCKET beat Dow/S&P: 4 out of 7 weeks
Dow/S&P beat LIVEROCKET: 2 out of 7 weeks
LIVEROCKET tied Dow/S&P: 1 out of 7 weeks

Individual Stock Performance
Stock growth >20% 2 out of 14
Stock Growth >10% 2 out of 14
Stock Growth 5%~10% 5 out of 14
Stock growth 0%~5% 3 out of 14
Stock growth <0% 2 out of 14
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What a difference a week makes.
ACL was down 13% and has recovered a bit and is down only 8%
JOYG surged to a new high but has pulled back a bit (profit taking and a HOLD rating)
JetBlue has surged ~12%

Today was a quiet day on Wall Street - very few stocks traded at even 30% of average volumes.
It is impossible to draw any conclusions about the direction but things are looking good. We will be aggressive with the limits to stay where we need to be.

As a reminder - we want to beat the market by 2% each month (annual Dow returns + 24%).
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CERN - It's back to almost pre-drop levels, with strong demand. I'd like to wait until post split (Jan. 6th I think) to understand if this is pre-split excitement - holders of record Dec 30th get the split shares.

Portfolio Moves – Part 2

Stop Limits Update
JOYG – 38.5
ACL - 130
MDR - 40
BCSI – 42
WFMI - 150
GILD – 51.5
MRVL - 53
JLG - 44
JBLU – 20.5
So we raised WFMI up $5, GILD up $1.5, JLG $2, JBLU $3
These prices guarantee net profits on 7 out of 10 stocks: JOYG, BCSI, WFMI, GILD, MRVL, JLG, and JBLU.
To date, we have bought and sold 4 stocks and seen net profit on all but 1.

Portfolio Stocks
We have the following shares and purchase prices:
Shares Purchase Price
JOYG 242 37.17
ACL 55 144.9
MDR 211 42.74
BCSI 227 39.5
WFMI 68 146
GILD 200 50
MRVL 200 49
JLG 263 38
JBLU 540 18.5
Cash $5,015

Stocks showing particularly noteworthy movement:
JOYG: They continue to show superior strength. Today’s earnings release shot them up ~14%.
Revenues up 36% and earnings are increasing: from 89% last quarter to 169% this quarter. And they are completely booked. Meanwhile, they have raised the 2006 outlook to the $1.85~$2.15 range, which tops Wall Street targets of $1.82.
No wonder volume was up 4x today.

MDR also a big mover on strong volume. An interesting note: they were part of a 4 way consortium that just won a deal to support Los Alamos for 7 years. Actually, their subsidiary won – the same one I pointed out as emerging from bankruptcy and adding earnings.

BCSI – I don’t like the low volume. It shows weakness, and there is no earnings for another 8 weeks. We are tightening our stop loss.

JBLU – This is my baby. As I mentioned a few weeks ago, I believe that JetBlue is poised for major takeoff (pun intended). The holidays will stuff cash in their piggy bank. After the airline sector fell out of favor over the summer due to gas prices, it looks like some sanity is returning. More interestingly, I wonder what the potential is for JetBlue to fly to Heathrow. I expect more market openings in the near future and JetBlue could either expand into Europe or at least partner with a major EU carrier. After all, they have solidified their hubs in JFK and Logan.

The following stocks hit a 52 week high today
MDR
JLG
JOYG

Next: Review of stocks I’ve been watching and have mentioned in the past. RTLX, USAK, SRCL, RMD, and a few others.

Week 6 Performance. Part 1 of 3

Week 6 Performance
Broader market gain/loss: +0.69% Dow, +0.32% S&P
LIVEROCKET gain/loss: -0.5%

Year to Date Performance (since inception Nov 3rd)
Broader market gain: 2.8% Dow, 3.7% S&P
LIVEROCKET gain: 7.2%

Weekly Performance
LIVEROCKET beat Dow/S&P: 3 out of 5 weeks
Dow/S&P beat LIVEROCKET: 2 out of 5 weeks
LIVEROCKET tied Dow/S&P: 1 out of 5 weeks

Individual Stock Performance
Stock growth >20% 2 out of 14
Stock Growth >10% 1 out of 14
Stock Growth 5%~10% 3 out of 14
Stock growth 0%~5% 4 out of 11
Stock growth <0% 4 out of 11

PERFORMANCE REVIEW
In general, the last few weeks of the year is always tricky given the asset re-allocations and the lack of news.
The drop in value is attributed to 3 new stocks: ACL, JOYG, MDR. In particular, ACL has continued its dramatic slide due to a major lawsuit loss. The impact of that lawsuit is potentially $0.70 per share. That would reduce earnings ~30%, and the stock has fallen 10%+. I am extremely bothered by the lawsuit - the judgement says that Alcon deliberately committed fraud, a decision that tripled the damages to $213M. While there is room for that decision to be reversed, I am very bothered that the company would be involved in criminal behavior. I will wait to decide if we should stay.

Additionally, we have seen some sudden drops in value of select stocks over the past 2 weeks:
CERN – After rising 12%, we sold at a 5.7% gain. The stock is down 10% off its high
GILD - After rising 12%, it has dropped 10% from its high
GYI - After rising 8%, it dropped to our stop loss and we netted only 1.1%
DESC – After rising 26%, it dropped to our stop loss and we netted 8.2%. The stock has since dropped 35% from its high
PWR – After rising 13%, it dropped to our stop loss and we netted 3%.

In the face of Alcon and these other large drops, the portfolio value has dropped 2.8% from its high.
The points here are:
1. Despite dramatic rises and drops, the portfolio continues to beat the broader market. We are ahead in 10 out of 14 stocks
2. Stop losses are key. We would not have locked in many of our gains without setting limits.
3. Should we tighten the limits on the more volatile stocks? Quite possibly.