Thursday, February 10, 2011

10 February 2011 Things that popped into my head


10 February 2011 Things that popped into my head

As we suggested last night CSCO Cisco applied a wet blanket to the market today. Traders must be getting smarter as it did not impact the entire sector as we had suggested last night. The market crept up on word that Mubarak was ready to go to Hurgahada or Sharm to live out his legacy days in the sun and the sand as PADI Dive Master

(Shameless plug but now I don’t feel to badly about expensing that last set of printer cartridges to the company. Brilliant Brian, you have Board members and partners reading this.) At the end of the day, He and the market went nowhereville.

That the way uh huh uh huh I like!

Yeah I got one. Thanks to our resourceful IT department, I have the new Verizon iPhone 4. I must say it is slick as nasal secretion excretement. I can see why people are thinking they might move 9-12 million of these things. It took little old helpless me about 10 minutes to set up all the feature and start getting 186 e-mails, 78 text messages

(Donny Osmond sent me a note to tell me “One Bad Apple” turns 40 this week.) Jim Cramer let me know CSCO is a buy. Come on Jim that is called catching a falling knife.

ATVI Activision (which we hold via some calls) beat estimates but then gave some less than optimistic forward looking statements.) That stung a bit but we are still hopeful.

AKAM AKAMI did much the same. They had some solid number bit warned about next quarter.

Yesterday we had someone point out that we bailed on MCD Ronald McDonald and they jumped 3%+ on same store sales. How could we be so wrong? Ok we took an almost 3% gain, and same store sales rose. Keep an eye on profit. KO and PEP both said margins are under pressure because of cost of goods (Sugars syrups) All we have to do is look at wheat, corn, and beef futures to guess what will happen to MCDs gross margins next quarter. We still think we made the right decision.

So if we KNOW that basic food supplies are going up. (Just ask the folks in Tunisia and Egypt.) How do we protect our self?

Here are our suggestions. Do your homework and pay attention to the press release about the stocks you currently own or are seriously considering.

 For example, the press release about same store sales for MCD drove a nice gain for the stock. What if the press release said McDonalds same store sales are up 5% and they are only loosing one dollar on each Big Mac. Don’t worry that is not the case. Actually if you dig just a little you will see that sales were up and the increase can be attributably to the new Oatmeal item on the menu (Huge McMargin), McCafe Hot Choclate (nice margin but closing), and Chicken Nuggets (Good margin but will get squeezed as grain prices increase.)

Now that you are doing the homework, protect yourself. Practice safe investing. Keep an eye on the market. It is continuing upward for the moment but be ready for the change. Have your stops in place. If you have a stellar stock like SKWS or IDCC, be looking at the price and volume on the charts. If it goes down in lite trading, don’t be too concerned if it it goes down just little in heavy trading pay attention and have those stops in place.

If you do stop out, consider the ETFs associated with the commodities that are going up. GLD, SLV, PNG, JJG, DBA, PPLT, and play the probably volatility with VXX.

“And when the wind is right you can sell away to eternity”.

Ok maybe Christopher Cross may have said it a little different, but selling at the right time and the right place is a heck of a lot more important than picking a stock. Here is a good example to consider If you buy a stock at 100 a share and it goes to 105, you have made 5%, If that same stock falls to 95, you have lost 5.3%. In other words it takes 6% more inertia to get back to where you were.

That might be why IBD spent the last three weeks running a phenomenal series about the 22 rules of selling. It is available on their subscription site and well worth every penny of the subscription alone.

Salve Lucrum


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