Week 29 Performance - LiveRocket up 0.79%
Week 29 (versus previous week)
Dow 1.21%
S&P 1.03%
NASDAQ 0.73%
LiveRocket 0.79%
YTD
Dow 5.24%
S&P 2.56%
NASDAQ 0.23%
LiveRocket 27.97%
Since Inception (Nov 4, 2005)
Dow 7.2%
S&P 5%
NASDAQ 1.9%
LiveRocket 40.15%
We continue to hold about $40K or just under 30% of the portfolio in cash. Really, that is because I see continued nervousness and volatility - which means opportunities.
To be honest I was surprised by the extent of the recent volatility. Not that we were experiencing it, but that the degree was as severe. In just 2 weeks:
* BSE and Sensex (India's exchanges) dropped 20% in 3 days, falling almost 10% in one day, and trading was halted. This was after a 20% runup from February to April.
* NASDAQ lost 8% before recovering
* Saudi Arabian stock market is down 50% since the beginning of the year, 25% in May alone.
* Indonesia was down 6%
* Russia was down 5%
WHAT IS GOING ON
Several things emerge. There is a lot of global money sloshing around and pursuing very few quality investments. Saudi Arabia and India are obvious examples of this. The crash of these markets is driving a 'flight to quality': sending money to gold and dollars and the US exchanges. In fact, one could argue that the crash of developing world stock exchanges has bolstered the US exchanges. The US is strong because of flight to strength, and that creates a virtuous cycle as the strength became self-fulfilling.
So what made the US market crash and send other exchanges down (Russia, Indonesia, etc).
Put simply, the US market has lost visibility. For almost 2 years, the US Federal Reserve has been signalling slow and steady rate increases. Moderation was the operating key word and the Fed was delivering.
Moderation came under attack last year with the oil price surge following Katrina. Stability re-emerged as the oil impact seemed minor and Iraqi stability began to emerge. Stability lent strength to the markets.
Now stability is again under potential threat. The key word being potential. The potential housing bust. The potential peak in the boom-bust cycle. The potential for more interest rate hikes. Potential inflation.
So...profit taking in the face of huge gains. And that leads to massive volatility - India had huge margin calls. Copper fell 11% May 23rd and then surged 7% the next day.
Uncertainty breeds fear. Fear brings opportunity.
The volatility that I remarked upon back in February had disappeared and now is back.
We sold at the higher levels and even took some losses. But we also bought back in at lower levels. The volatility has actually worked somewhat in our favor. (TRID is a major exception with a stock specific event.)
I am investing as if it is business as usual, at least for the next 3~6 month period.
I also think that the dollar will continue to soften. That will drive up the price of commodities which are quoted in dollar terms. TIE should benefit.
TRID is a very special situation. It drove our gains down 1.5%. In under 1 month, TRID went from $31 to $21, finally ending up ~$23. I did not leave this stock or leverage a STOP to get out higher and then re-enter. I should have. There is nothing fundamentally different about this company. It has what one analyst called an overhang - the stock option stink has raised shadows over the company. Again - uncertainty drives fear and that drives opportunity. I am tempted to buy even more and average down our average price. Several analysts have come out declaring this a $34 stock and commenting that this oversold price is an excellent buy.
I have been fighting for TRID respect for some time. I'm a lover, not a fighter, but this stock feels like a repeat of NTRI, and I think that a 6 month ownership window will prove to be worthwhile.
Although we did not enter at the absolute bottom, we entered at some pretty good price points. I think that some ongoing jitters will allow more opportunity, so I kept some cash.
FINANCIALS
ET - Flat after falling 12% over the week. We are up ~2%. ET announced strong activity for April. I think this recent volatility will add to it instead of driving away investors. Hey - it's the only game in town.
COMMODITIES/ENERGY/INFRASTRUCTURE
JLG - Flat. We are up 4%+.
JOYG - Up 2%. We are up 8%+. And that wasn't even the low point for the week!
TIE - Up 10%, we are up 20%. Could it return to $45 soon? Maybe not soon, but they could double again easily in 6 months when the new factory comes on line.
HIGH TECH
The theme here is the next wave of digital entertainment. I like chip stocks and am cherrypicking a couple while they are somewhat out of favor and down from their highs.
TRID - Down 15%, we are down 13%. Hang tight, it is going back up. Flat panel TVs are here, and TRID owns the market.
ISIL - Down 3%, we are flat. I like ISIL because they are willing to take a lower margina nd steal business from its competitors.
* Earnings growing 100%
* Margins strong
RFMD - Down 2%, we are up 1.6%. This is a cell phone and GPS play. Looking beyond the iPod, mobile entertainment will hit the cellphone very soon. That massive growth is showing up in RFMD:
* 88 P/E but a forward P/E of 15
* Next quarter expectations are 50% Sales growth and 1000% earnings growth. Four straight quarters of stock surprises.
* Margins: Gross margins are up from 29% to 36%
It has been outperformed by SIRF, but SIRF is incredibly dependent on GPS and RFMD has a broader product potfolio.
MISCELLANEOUS
DIS - Up 1%, same with us. Something I especially liked about DIS was its resiliency during the recent bout of anxiety.
NTRI - Down 7%. We are down 5%. Considering that it fell 17% at one point, I am not complaining. It actually speaks to strength behind the stock.
Dow 1.21%
S&P 1.03%
NASDAQ 0.73%
LiveRocket 0.79%
YTD
Dow 5.24%
S&P 2.56%
NASDAQ 0.23%
LiveRocket 27.97%
Since Inception (Nov 4, 2005)
Dow 7.2%
S&P 5%
NASDAQ 1.9%
LiveRocket 40.15%
We continue to hold about $40K or just under 30% of the portfolio in cash. Really, that is because I see continued nervousness and volatility - which means opportunities.
To be honest I was surprised by the extent of the recent volatility. Not that we were experiencing it, but that the degree was as severe. In just 2 weeks:
* BSE and Sensex (India's exchanges) dropped 20% in 3 days, falling almost 10% in one day, and trading was halted. This was after a 20% runup from February to April.
* NASDAQ lost 8% before recovering
* Saudi Arabian stock market is down 50% since the beginning of the year, 25% in May alone.
* Indonesia was down 6%
* Russia was down 5%
WHAT IS GOING ON
Several things emerge. There is a lot of global money sloshing around and pursuing very few quality investments. Saudi Arabia and India are obvious examples of this. The crash of these markets is driving a 'flight to quality': sending money to gold and dollars and the US exchanges. In fact, one could argue that the crash of developing world stock exchanges has bolstered the US exchanges. The US is strong because of flight to strength, and that creates a virtuous cycle as the strength became self-fulfilling.
So what made the US market crash and send other exchanges down (Russia, Indonesia, etc).
Put simply, the US market has lost visibility. For almost 2 years, the US Federal Reserve has been signalling slow and steady rate increases. Moderation was the operating key word and the Fed was delivering.
Moderation came under attack last year with the oil price surge following Katrina. Stability re-emerged as the oil impact seemed minor and Iraqi stability began to emerge. Stability lent strength to the markets.
Now stability is again under potential threat. The key word being potential. The potential housing bust. The potential peak in the boom-bust cycle. The potential for more interest rate hikes. Potential inflation.
So...profit taking in the face of huge gains. And that leads to massive volatility - India had huge margin calls. Copper fell 11% May 23rd and then surged 7% the next day.
Uncertainty breeds fear. Fear brings opportunity.
The volatility that I remarked upon back in February had disappeared and now is back.
We sold at the higher levels and even took some losses. But we also bought back in at lower levels. The volatility has actually worked somewhat in our favor. (TRID is a major exception with a stock specific event.)
I am investing as if it is business as usual, at least for the next 3~6 month period.
I also think that the dollar will continue to soften. That will drive up the price of commodities which are quoted in dollar terms. TIE should benefit.
TRID is a very special situation. It drove our gains down 1.5%. In under 1 month, TRID went from $31 to $21, finally ending up ~$23. I did not leave this stock or leverage a STOP to get out higher and then re-enter. I should have. There is nothing fundamentally different about this company. It has what one analyst called an overhang - the stock option stink has raised shadows over the company. Again - uncertainty drives fear and that drives opportunity. I am tempted to buy even more and average down our average price. Several analysts have come out declaring this a $34 stock and commenting that this oversold price is an excellent buy.
I have been fighting for TRID respect for some time. I'm a lover, not a fighter, but this stock feels like a repeat of NTRI, and I think that a 6 month ownership window will prove to be worthwhile.
Although we did not enter at the absolute bottom, we entered at some pretty good price points. I think that some ongoing jitters will allow more opportunity, so I kept some cash.
FINANCIALS
ET - Flat after falling 12% over the week. We are up ~2%. ET announced strong activity for April. I think this recent volatility will add to it instead of driving away investors. Hey - it's the only game in town.
COMMODITIES/ENERGY/INFRASTRUCTURE
JLG - Flat. We are up 4%+.
JOYG - Up 2%. We are up 8%+. And that wasn't even the low point for the week!
TIE - Up 10%, we are up 20%. Could it return to $45 soon? Maybe not soon, but they could double again easily in 6 months when the new factory comes on line.
HIGH TECH
The theme here is the next wave of digital entertainment. I like chip stocks and am cherrypicking a couple while they are somewhat out of favor and down from their highs.
TRID - Down 15%, we are down 13%. Hang tight, it is going back up. Flat panel TVs are here, and TRID owns the market.
ISIL - Down 3%, we are flat. I like ISIL because they are willing to take a lower margina nd steal business from its competitors.
* Earnings growing 100%
* Margins strong
RFMD - Down 2%, we are up 1.6%. This is a cell phone and GPS play. Looking beyond the iPod, mobile entertainment will hit the cellphone very soon. That massive growth is showing up in RFMD:
* 88 P/E but a forward P/E of 15
* Next quarter expectations are 50% Sales growth and 1000% earnings growth. Four straight quarters of stock surprises.
* Margins: Gross margins are up from 29% to 36%
It has been outperformed by SIRF, but SIRF is incredibly dependent on GPS and RFMD has a broader product potfolio.
MISCELLANEOUS
DIS - Up 1%, same with us. Something I especially liked about DIS was its resiliency during the recent bout of anxiety.
NTRI - Down 7%. We are down 5%. Considering that it fell 17% at one point, I am not complaining. It actually speaks to strength behind the stock.
posted by Andrew at
11:24 AM
2 Comments:
If You like RFMD , Look at the SWIR. Their earning are growing fast.Not to mention contract win with HP .
Andrew,what about our stop losses?.I would like to have stop losses for each and every stock.Please advise the SLs.
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