Serious Industry

Posted on Monday, 23rd November 2009 by Cheyne

For the past month or so, I have been trading nothing but stocks with earnings due in the next week or so, buying nothing but stocks which are in line with the following criteria:

- trending up
- have been rising well since mid March
- have good growth potential based on industry and past highs
- Positive earnings expected, in any range
- Not a pennystock
- Traded on NYSE or NASDAQ

I have been buying these about a week prior to earnings and holding through the report.

Most have been beating the street, it almost seems that Wall Street is now underestimating EPS constantly. I have found that most of the time, if the earnings are after the close, the stock moves relatively quickly in after hours trading, than doubles early the next day.

eg. Stock is at 15, earnings are good, moves up 4% in after hours trading until 8pm, than by the open the stock is 8% up on the previous close. The inverse tends to go for the poor earnings reports.

So, my strategy of late has been to scour the upcoming weeks schedule, shortlist some than slowly remove less than perfect candidates for good earnings. From there I look for a good entry price, buy, set a relatively wide stop loss (I am swing trading after all) and keep an eye on news and price over the coming days. On the day of the earnings, I make a decision whether I am still confident on earnings, if I am not, I sell, otherwise hold and wait. I generally keep the stock until the next day – My broker doesn’t allow after hours trading anyway, the only time I would use that would be to sell my position, in which case if this was occurring often I would need to revise my strategy rather than my broker.

I particularly like to see emerging market or emerging industry stocks, as even slightly beating Wall Street’s estimates tends to see these stocks gain very explosive momentum. A good example here is SINA, a Chinese Internet media company, where better than expected earnings plus an emerging market and industry has pushed the price up a lot on the day after earnings trading, when I sold, and following that the price bounced back to earnings reality to where they should have been priced based on the reports.

SINA (NASDAQ)

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Posted on Tuesday, 5th May 2009 by Cheyne

I bought a second laptop about a month or two ago, a much smaller one so I can take it away with me, or use while on my commute to work.

I assumed I would buy a USB stick with wireless Internet and will be fine. Turns out they are more expensive than I thought considering I wouldn’t be using it so much so I still am yet to purchase one.

I resorted to using Google Reader’s ‘offline’ product, where it will download the latest 2000 entries of your feed which you can use offline than allow you to sync it back. This is brilliant, in most cases.

The majority of the sites/blogs I read publish a full feed which is more than adequate, some images don’t get downloaded for some reason which is somewhat annoying, but not the end of the world. If I see something I want to follow up I can just star the story and check back when I am back online.

Nowadays I refrain from starring news stories as this results in hundreds of posts to follow up, which I never do.

Looking through my most read feeds, they are:

- TechCrunch (diss it all you want, they still break more stories than anyone else)

- Mashable (I have actually since stopped reading this blog altogether, too much pointless nothing posts to wade through to read the gems)

- VentureBeat (MG Seigler has since left which will see this blog decline surely)

- Alley Insider (Henry Blodget is a very intelligent person and I enjoy the hard core business angles of the stories rather than from a product perspective)

- GigaOM (mostly for Om’s posts)

- Business Insider (brilliant and easy to read, also for Henry Blodget posts)

- AllthingsD (because this is actual real journalism)

There are plenty more but these really stand out due to the fact that they publish so many posts per day.

One blog which I read every single day is not in my feed reader. This is because it got to the point where I would always click through to the website every single time.

I would award this the best blog on the Internet, and has had that crown for a couple of years now, and that is Fred Wilson’s AVC.

Why do I click through every time? Because with every brilliant post published comes with hundreds of intelligent comments which are not displayed in the feed reader.

So every single day I visit this website and carefully read each post, than digest the excellent commentary and debate that takes place in the comments.

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Posted on Thursday, 23rd April 2009 by Cheyne

Yahoo is closing Geocities. After acquiring it in 1999 and leading the free web hosting space for so many years, Geocities holds a place in every experienced Internet user’s heart, as we all once had a website hosted there. Yahoo missed a big opportunity to convert those users into the first major social network back in the early 2000s.

Since Carol Bartz took over as CEO there has been a few of Yahoo’s services shut down – Jumpcut, Farecast – which are only the beginning The company needs to focus on what they do well, and cut out the ‘fat’ of the properties that are essentially just sitting around wasting resources.

Let’s quickly go through their major services that should get the cut.

Sell Flickr and Delicious.
Flickr is one of the best websites on the Internet.I don’t imagine that it is extremely profitable though, There will be plenty of bidders for this business. Delicious should never have been acquired. We thought that maybe they would integrate this into their search results pages somehow, but this clearly isn’t happening. Despite what people say, Delicious isn’t dead, it is very much alive, and it is time to sell it.

Widgets
Yahoo bought Konfabulator about five years ago. There is no real revenue here. Sell it

MyBlogLog
It sounded like a great idea when Yahoo snapped up this company early in it life, but while most users have stayed around, how exactly does this service help Yahoo?

Pipes
Sure, this is a cool product, but if there is any more than two people maintaining this, than it’s time to cut it. What future does it really have?

So what should Yahoo be doing? Yahoo is a media company. Not a search engine. They have properties with enormous amount of value and some are leaders in their niche, be it Yahoo Sports, or Fantasy, or Health, or Hotjobs.

These all need to be integrated into the search engine. When I search for baseball I want to see a bar with todays results with a Yahoo Sports logo. When I ask somehting in question format I want to see a Yahoo! Answers box with that exact question saying one of the yahoo users has asked that before. Same goes with Everything they own. Google does a great job at pushing outside content into the SERPS, why isn’t yahoo doing it? They have that content already and should be telling the users.

A search engine pushes traffic around the web. Why isn’t Yahoo! pushing it’s users to their other properties?

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Posted on Monday, 13th April 2009 by Cheyne

With Wells Fargo’s positive earnings last week, and earnings reports for JP Morgan, Citigroup and GE coming up in the next fortnight, I expect some very big moves this week in the financials.

I forsee traders will start buying up the above mentioned stocks and take a pretty big gamble that the results will be good, which will see them take some big gains if the news is positive. Obviously we will be back into a bear market if the news isn’t good.

Earnings are due on the 16th and 17th for these companies, and I think during this week we will see the majority of the upwards momentum taking place.

Direxion have two ETFs which are made up of the Russel 1000 financials index which are some of the most actively traded stocks by volume. The tickers are FAZ (short/bear) and FAS (long/bull) and both are triple leveraged and are daily. They both started at 60 and FAZ quickly moved up to a peak of around 110 and FAS fell to about 2.

In the last our weeks FAZ has lost 90% of it’s value due to the market rise and its leverage.

This week I expect to see them cross over on speculation that the upcoming financials earnings will be positive.

This is a pretty big deal, these ETFs are watched closely, once they cross over you will see some FAS movement unlike any of the massive gains we have seen before. And I’m talking big, FAS moved upwards 40% on the Wells Fargo earnings.

FAZ is at $10.78 and FAS is at 8.71. It should be a very interesting week indeed. I would have included a nice chart, but I can’t remember how to make a price overlayed chart use the same price index for both stocks on stockcharts.com so any other chart wouldn’t look pretty.

JP Morgan Chase earnings are due on the 16th and Citi and General Electric are due on the 17th

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Posted on Wednesday, 8th April 2009 by Cheyne

I am an avid user of StockTwits. Anytime I am at my computer I have it running in the background, and contribute occasionally. CNBC did a little story on it today and had founder Soren Macbeth on for it. They do diss it quite a bit indicating how very exploitable it is by stock promoters, I was quite surprised that they mentioned how incredibly anti-CNBC StockTwits is.

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Posted on Tuesday, 24th March 2009 by Cheyne

Two bullish weeks in a row, and one hell of a Monday which pushed the Dow Jones up over 7 percent. Things are looking pretty good at the moment. Everyone loves trying to call the bottom, but it is all really just guesswork. Let’s spend a few minutes looking at just how much nobody has a clue.

CitiGroup stock has tripled in a couple of weeks. Bank of America has almost done the same. Leveraged bull funds are expediently higher than they were and leveraged bears are tanking close to where the inverse was two weeks ago.

When this is the case, it is pretty clear, that for the time being, fundamental analysis is out the window. Technical analysis it is than, right?

Wrong.

The US Government is interfering way too much with the markets to make technical analysis accurate in most cases. We have the fed deciding they want to buy treasury bills, and Timothy Geithner announcing the public-private plans to rid the banks of their toxic assets. This constant news is pushing the markets way out of whack, which is scary.

So what is Mr. Market basing his prices on?

Nothing. Nobody knows what is oversold or undersold, nobody knows anything anymore. And that is what makes times like this scary as hell, and pushes most into swing or short trades, get in, get out, it’s all educated guesswork for the short term.

We have been fooled by the dead cat bounce before, be wary.

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Posted on Monday, 23rd March 2009 by Cheyne

A tirade of public outcry has been pointed at AIG execs who used about 160 million of the 180+ billion in TARP funds from the government to give themselves bonuses. The government has no legal right to block it, so there is nothing that can be done.

There are reports that most of the AIG execs that received bonuses have returned them., This is actually astonishing to me.

The media, the market, and everyone else has demonized AIG execs already for what they have done to the company. Is returning the bonuses going to help the business? Not really. Is it going to help their personal reputations? I don’t think so. They are still going to be those evil fatcats who ruined the stock, the business and needed the taxpayer money to bail their mistakes out.

Why bother returning it? It won’t change anything. I probably wouldn’t as wrong as I know it is. Take it and run…

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Posted on Sunday, 1st March 2009 by Cheyne

Today we are going to have a quick look at the differences in the top publicly traded companies by market cap. It probably isn’t anything you don’t know already, but it is always good to have it all laid out and exposed.

The top 10 publicly traded companies in the world in 2006, according to Forbes, in Billions of US dollars, were the following:

• 1 ExxonMobil United States – was 362 now 337 result: Even
• 2 General Electric United States - was 348 now 89 result: Down
• 3 Microsoft United States - was 279 now 143 result: Down
• 4 Citigroup United States - was 230 now 8 result: Dead
• 5 BP United Kingdom – was 225 now 121 result: Down
• 6 Royal Dutch Shell Group Netherlands – was 203 now 132 result: Down
• 7 Procter & Gamble United States – was 197 now 141 result: Down
• 8 HSBC Group United Kingdom – was 193 now 88 result: Down
• 9 Pfizer United States – was 192 now 83 result: Down
• 10 Wal-Mart Stores United States – was 188 now 193 result: Up
• 11 Saudi Basic Industries Saudi Arabia – was 184 now 112 result: Down
• 12 Gazprom Russia – was 184 now 310 result: Up
• 13 Bank of America United States – was 184 now 19 result: Dead
• 14 Toyota Motor Japan – was 175 now 99 result: Down
• 15 American International Group United States – was 172 now 1 result: Dead
• 16 PetroChina China – was 172 now 128 result: Down
• 17 Johnson & Johnson United States – was 171 now 138 result: Down
• 18 Total France – was 154 now 105 result: Down
• 19 Altria Group United States – was 149 now 31 result: Down
• 20 GlaxoSmithKline United Kingdom – was 147 now now 76 result: Down

Companies in green made a US Dollar profit, red lost money, black moved sideways. Any red company with result listed as ‘dead’ either went bankrupt or have had the US government bail them out.

Looking at the list closely, there are a few extra things to point out. The benchmark here is the United States dollar, which has declined considerably over the last two years. This means that a company whose stock moved sideways, such as ExxonMobil actually lost money as the $350 billion the business was worth in 2006 was much more than the $350 billion it is now worth.

This is very notable for Russia’s Gazprom, who trades in Moscow and London and mostly exports gas and oil to Europe. Their market capitalization once converted to USD from the Russian Ruble has seen an enormous gain.

ExxonMobil are still doing very well, posting the largest annual profit in world history in 2008, mostly due to the rising cost of crude oil during the year.

The banking sector was obviously hard hit, especially Citibank and Bank of America who were heavily exposed to the sub-prime meltdown and required US government intervention. If the list were longer than 20 we would have seen businesses like Lehman Brothers, Bear Sterns, Merrill Lynch and American International Group, which either no longer exist or were sold off amid tumbling stock prices. GM and Ford would have been on there too listed as ‘dead’.

Wal-Mart look to do even better in 2009 as their discount department stores around the United States are only attract more sales and customers when money is tight on main street.

A concerning drop can be observed in General Electric, a holding company whose brands stretch across entertainment, banking, electronics, aviation, defense and industrial machinery, most of which were hard hit, leaving the business in dire times despite their diversification.

What do we look to now? Foreign investments look hot but many of them rely heavily on a strong United States economy. Banking is as low as ever, but just can’t quite bottom out. Industrial production is slowing which in turn slows everything.

We can’t keep shorting the markets forever. My beleif is that once we begin to see signs of the US economy gaining some upward momentum, the futures market will explode, which will in turn see the stocks of solid companies move which will move the Dow Jones Industrial Average up, which will push the economy further. We just need to make sure we don’t get ahead of ourselves this time around.

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Posted on Sunday, 22nd February 2009 by Cheyne

What is the credit crisis? How did it start? Who’s fault is it? These are all questions that get thrown around a lot. They are also somewhat difficult to answer when the person you are talking to has no idea what ’sub-prime mortgages’ or ‘leverage’ means. These two simple videos give visual answers to these questions in a way that anyone can understand.

Part 1

Part 2

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Posted on Friday, 20th February 2009 by Cheyne

Yesterday Rick Santelli went on a huge rant on CNBC about the Obama Government bailing out the ‘losers’ who can’t pay their mortgage with the money of the ‘winners’ who paid theirs or didn’t opt for the enormous house they knew they couldn’t afford. It is a 5 minute video, worth watching whether you care about this or not.

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