Week 20 Performance - Up 3%

Week 20
Dow 0%
S&P -.3%%
NASDAQ +0.3%
LiveRocket +3.04%

YTD
Dow 5.25%
S&P 4.41%
NASDAQ 4.9%
LiveRocket 9.36%

Since Inception
Dow 7.2%
S&P 6.9%
NASDAQ 6.6%
LiveRocket 19.77%

This was a good week for several reasons. Many stocks hit 52 week highs. Additionally, some stocks that have been down (NTRI & MRVL) are getting back out of their hole.
I remain somewhat concerned about the Fed meeting next week. My thoughts are that the market could soar or tank but that these are short term reactions. Eventually, these stocks will be fine. I don't want us to be victims of a false STOP, but I also like the idea of a market collapse where we can buy back in and get more of the same stock at the same cost.

We bought back into JLG, JOYG and MDR this week.

FINANCIALS
Nervousness over interest rates dominates the mood, even in light of strength from Goldman Sachs and Lehman Brothers. Last week Schwab even upped its forecast.
ET – Down 2%. It's easing off its 52 week high from last week.
GHL – Up 3.5% on strong volume. Close to its 52 week high

COMMODITIES & EQUIPMENT
GRP – Up 1%. Frankly, this stock has been soft and except for today's gas price driven growth, it hasn't shown the potential I want to see. The earnings are April 4th and I think, between now and then, other oil/gas related companies will report and create more positive sentiment. Analysts currently expect earnings to double Y/Y. Bear in mind that GRP has beaten estimates the last 5 quarters (maybe more - my data doesn't go back further). If they hit earnings estimates, that's a trailing $2.03 in earnings or ~20 P/E. Pretty low P/E for a company growing by 100%. The PEG ratio is 0.62 today. This stock should be trading around $80.
TIE – Up 5%. Solid volume and it hit a 52 week high. Oh baby! Also, next quarter's earnings expectations were raised.

HI TECH
STX – Down 1% on low volume. The delay in Microsoft shipping Windows vista drove PC companies lower this week.
MRVL – Up 6%. I will celebrate when they get back to $70
TRID – Up 11%. A new 52 week high on very strong volume.

HEALTH
NTRI – Up 6%. Since hitting a low of $37 2 weeks ago, it's nice to see NTRI touching $43.
TEVA – Flat

Why I no longer like the Motley Fool

After reading this article
http://www.fool.com/news/commentary/2006/commentary06032315.htm?source=eptyholnk303100&logvisit=y&npu=y
I recalled why I no longer pay attention to the Fool.

The Fool starts like a carnival barker. Look at this, the Amazing Amazon! Stupendous Starbucks! Delightful Dell.
That's right folks, it isn't like hitting the lottery, anyone can find a wonderful investment and ride it to riches.

Yeah, well, maybe. But not if you actually follow the advice of Motley Fool's picks. But they tease you in with their lures of how they have been able to pick winners.

Except they haven't. I actually find the Fool to be playing on your short term memory.
1. They pick more dogs than winners - A cursory review of the past few years' picks shows a few winners and a lot of losers
2. They never own up to the dogs. They'll never say - this stock was a mistake. Instead, they tell you to stick with it - be a long term investor. But that stock mysteriously vanishes from their picks
3. They misrepresent performance. Sure they have a few stocks that they rode hard to money, like Amazon and Ebay. But they continue to brag about these same companies even after those companies have showed poor performance for 2 years! they like to ride a bit to hard on the past, and very little on recent history.

I would lik eto take a ten year review of their top picks and then see how those companies have actually performed.

I look to the Fool as a stockpicking source, one of many. Because I do believe that they have a lot of solid talent. They don't offer active investment advice, so it's really a stockpicking resource.

Their stock picks are very hit-or-miss. They pumped up XM radio and Sirius - two obvious money bleeding, over-hyped dogs that have fallen ~50% in value. They have winners too, like MIDD and ISRG.
Sometimes I like what they say, sometimes I don't (MIDD seemed a bit wierd to me, and I missed a nice climber).

When I read an article like the one I attached, that's when I start to have deeper questions.
The article is looking at a rival's stock picks (many of those same stocks are ones I too have been following). The article says
1. Don't focus on earnings - earnings can be baked
2. Be wary of climbing stocks - they may be ready to retreat
3. The Fool gives better, more well-rounded advice

I absolutely start with earnings. I go in many different directions to understand the nature o fthe earnings and I look at the trends, but the market bases the price off earnings and I base my interest in a company off of its earnings strength.

If you don't focus on earnings, what do you focus on?

As for not investing in climbing stocks, they flat out contradict themselves. And it's actually one of the dumber things I've ever seen. That's exactly what you want to do - buy a stock that is climbing. Sure, there may be near term price movements (NTRI is one of our classic examples), but a climber is a climber.

The alternative is to buy a stock that is either flat or falling. That's a major gamble that you know something the market doesn't. That is, that the market is pounding a stock for the wrong reasons or that the market is missing the boat. That may be true (I pointed out that the market had missed the AKAM opportunity). But that is much more rarely the case. The fact is that it is extreme hubris and incredible greed to play the value game - it is true lottery investing.

I always look at market sentiment. Based on the mantra of not buying in a climbing stock, nobody would have bought in Ebay, Amazon, Dell, or Starbucks over the 10 years that they were climbing. When I bought Hansen last year at a split adjusted 16 (it's now at 115), Hansen had already been soaring. At any point in time, buying Hansen over the past 15~24 months meant buying a climbing stock.

It's sloppy thinking.

Interesting take on semiconductors

http://biz.yahoo.com/twst/060308/zbs400b.html?.v=1

This is a transcipt of a discussion by industry gurus.
The companies most liked are: BRCM, MRVL, TRID & SIRF. MRVL and BRCM duplicate each other. The analyst also says what I said earlier about TRID - its competitor Genesis really isn't as strong. SIRF makes GPS chips for Garmin and others. I don't know them, but will look at them.

I like seein g the TRID positives - expectations are that ASPs (average selling prices) will remain flat. That is huge because prices always tend to fall and fall fast. So that cpuped with enormous growth and strong penetration, TRID is positioned nicely.

Up on a down day?

I like to look at what stocks do up when the broader market goes down. In my mind, they will also go up on a good day.

In my personal portfolio, today was a great day. For LIVEROCKET, 7 of 11 stocks were up for a ~1% yield today. Anyway, here's what I own and what happened today.
CELL (not in our blog) - down <1%. But near its 52 week high

Finance companies got pressured by interest rate fears so...
ET - Down ~1%. Near its 52 week high.
GHL - Down 1.3%.

Oil went up today so.... GRP - up 2%
JBLU (I follow them, don't own them)- Down 2.9%
JLG - Down 1.5%. I think that's just because it hit a 52 week high yesterday so some profit taking.
MDR - Up 2.9%. Hit a 52 week high
JOYG - flat

High tech was oversold IMHO so some buying has been creeping back in
MRVL - Up 4%. Still undervalued IMHO.
SNDK (I own but not in our portfolio) - Up .3% after rising 1.5% over the past week.
STX - Up ~1%. It's bouncing around a bit and was hit by the delay in Microsoft's release, but they win whether it's a Mac or a PC.
TRID - Up ~4%. Near its 52 week high.

INFRASTRUCTURE
TIE - Up <1%.
WCC (owned but not in portfolio) - Up 2.4%. Near its 52 week high.
WIRE (owned but not in portfolio) - Up 2.2%.
WSO (owned but not in portfolio) - Up 2.6%. Near its 52 week high.
PWR - (owned but not in portfolio) - Up 2.6%. Hit a 52 week high today.

OTHER
TEVA - Down <1%. Part of a lawsuit. The entire future of the generic drug makers will be a non-stop onslaught of lawsuits as big pharma struggles against the tide.
NTRI - Up 2%. I think good news is probably starting to leak out.

Bought at open MDR, JLG, JOYG

JLG 100 shares @ $59.52
JOYG 100 shares @ $58.70
MDR 135 shares @ $51.15

Week 19 Performance - Up 1.9%

Week 19
Dow +1.84%
S&P +1.79%
NASDAQ +1.72%
LiveRocket +1.93%

YTD
Dow 5.25%
S&P 4.73%
NASDAQ 4.58%
LiveRocket 6.58%

Since Inception
Dow 7.2%
S&P 7.2%
NASDAQ 6.3%
LiveRocket 16.73%

We are still recovering from the horrible performance of week 18 when we were stopped out of stocks that rebounded and then some AND we didn’t act fast enough to take advantage. That was easily a 15% combined swing.

Jitteriness continues in the market. For example, Manufacturing reports came in and showed strong performance. This is important in light of the potential for inventory pile-up.
Other positives were the job market – very good performance.
But nervousness about the Fed next Monday is dominating the mood.

I continue to rely on the strength of these stocks and look froward to the earnings reports starting next month.

We bought TEVA and then jumped back into TIE and STX. I believe that a surge in hard drive demand will continue as cable companies drive digital set top boxes into the home, and most of them will have DVR capability. We have $18,827 in cash which I want to use. I think AKAM is fairly valued, otherwise I would get back in. I see JLG, JOYG and MDR as tasty.

Of other interest, notice the recent French request of Apple to share its DRM code. I mentioned in a previous post that a key milestone in the fall of Apple would be when Apple is forced to share the iTunes DRM code. After all, if everyone can use the same code to distribute and sell music, then any music library can be used. This is a step towards the commoditization of music and video sharing.
The impact on Apple’s bottom line is slight – iTunes revenue is ~$100M annually. But the path towards commoditization of the iPOD took a big step today.

Also, TIE reported earnings. Wow.
Earnings up 110%
Sales increased 61%
Profits almost doubled the rate of sales - that's a sign of margin strength.
More incredibly, prices increased 39%. And volume production is increasing. Meanwhile, the backlog has almost doubled.
They forecasted a 35%~50% sales increase this year and a 100% earnings increase.
And the stock didn't move.

FINANCIALS
Goldman Sachs had a great quarter, further bolstering the case for financials. I like the way that filtered down to ET but I don’t like the way GHL stayed flat especially after LAZ rose ~8% as well.
ET – Up 8%. So that counters last week’s 5% drop and adds to it. This is a 52 week high.
GHL – Flat after hitting a 52 week high the previous week.

COMMODITIES & EQUIPMENT
GRP – Up 9%, countering the previous week’s 6% drop and adding a bit. I don’t like the way GRP is trending down especially in the face of (1) magnificent financials, (2) continued oil demand and (3) announced increased spending by oil companies in drilling. I think this is very much driven by fears of natural gas problems.
TIE – Up 2%.

HI TECH
STX – Up 1.5%.
MRVL –Down 5% this week. This is ~15% in 2 weeks. I continue to believe strongly in their growth and am willing to wait out its short term softening. There is a general softening towards high tech which I think is a matter of sentiment versus facts.
TRID – Up 3%. They are still close to their 52 week high, so I am not worried.

HEALTH
NTRI – Up 8%, countering the previous week’s 4% drop and adding a bit. I am still a true believer and looking for a strong quarter. But we have a ways to go to get back positive
TEVA – Up 1%