The Comcast-iPad app announcement to stream live television along with 3,000 hours of video on demand demonstrated another catalyst capable of bringing down defenseless Netflix (NFLX). Keep in mind, I love everything Netflix has done, but the investor side of my brain recognizes that they are defenseless against competition. If Netflix had exclusive content and if Netflix owned a patent on streaming video then I would load up the portfolio. Unfortunately Netflix has neither and Time Warner CEO Jeffrey Bewkes was right when he referred to them as the Albanian Army trying to take over the world.
On Wednesday Netflix dropped $1.60 as Apple (AAPL) rose $2.70, BAIDU (BIDU) rose $3.66, Google (GOOG) rose $7, and the Nasdaq was up 20 points. There is a high probability that this early year performance will be indicative of a 2011 trend. We are getting ready to add Netflix puts to the portfolio. The problem with shorting Netflix right now is that the market is so strong. Even though it's the right play it still isn't the right time.
Another 2010 momentum play that is having a rough start in 2011 is gold. I chuckled as I browsed today's headlines of gold articles that relied on ideas like ‘faith’ and ‘mania’ to justify holding the position. The most difficult job in the media right now is to concoct an argument in favor of higher gold prices, when you end up with stories about ‘faith’ and ‘mania’ you find yourself in uneasy territory.
The ultimate irony is that typically conservative investors are the ones who buy gold. Ever since the potential of a euro collapse was dismissed back in August I was one of the first to sound the alarm on the gold bubble. In the absence of fear, gold is a speculative momentum play destined for
