Contributor since: 2011
Company: Investanomics
Great article. I use the same 1% stop loss rule in my dividend portfolio which has been working well for me. I do tie it in with basic support and resistance technical analysis which help me time my entries. For profit taking I sell half my position after a 50% move or if I get a pivot break on a weekly chart.
I just recently started to build some positions in the sectors you mentioned. I just bought CVX and BP with the anticipation that oil can't stay at these lows due to production costs being unsustainable here for some companies which will cause some production to come off.
I'm watching RIG and SDRL to build a position but I like the sector as a whole over the next couple of years once demand catches up. If these prices hold I will probably buy over the next few days.
Thanks for the heads up on UL, that one does look interesting and I will look to buy if it gets closer to the 200ma.
Tim excellent article. I have a couple questions regarding any effect the Fed purchases may have on NCT.
1) Do you believe the recent announcement by the Fed to purchase an unlimited amount of mortgages, to have a positive impact on NCT's CMO portfolio? I believe there may be a chance that the Fed may create a sharp rally in the mortgage market and I have been looking for the best way to play it. This is assuming that purchasing $40 Billion a month in mortgages continues for an extended period.
2) On the same note, what effect do you believe Fed purchases may have on the MSR portfolio? Do you believe there is a chance prepayments may actually cause the MSR portfolio to miss return targets due to refinancing. What effect does a refinancing have toward the MSR if any?
Thanks again for putting MSR on my radar.
If you are looking for breaking news you should get a Bloomberg terminal. If you want an investment opinion then Seeking Alpha is the place. I did not say this was breaking news anywhere in the article. A lot of investors see all the news as it's released but don't know how to interpret it. I like to provide an additional side that investors may not have realized. It's up to the investor to act on it or not. I don't just write up an opinion as soon as news is released. I still do a lot of research before I decide how to trade it.
This is my update to a couple of previous articles I wrote about the possible launch of the iTV. I wrote my first article about the iTV in September. Here is one of them
I have to agree with Bryce here. I expect the content to be the big selling point here. I expect to see the same type of application development explosion that occurred with Apple's other products. I actually wouldn't be surprised to see niche channels that will start launching geared toward the iTV. This is just like what happened with the iPhone and iPad apps.
The phone and computer industry used to be the same way as the television market. Consumers used to upgrade devices after several years making due with their existing devices. The iPhone and iPad spearheaded the electronics revolution. Consumers now upgrade their wireless devices at an astonishing pace. I do believe the strategy may be a little different for the iTV. Subscription revenue is where Apple is going to make the big money not the hardware. Apple only needs to sell the device once and get paid every month for as long as the customer keeps the service. That's a new real nice high margin business with a predictable revenue stream.
I'm not worried about Apple's pricing. Apple has yet to release its price for the iTV but the company has yet to have a failed product launch due to mispricing. I can't say the same for RIMM but that's a whole other story. Apple knows its market extremely well and they will keep the price in line. Apple will price it at the high end like it always does and consumers will pay it like they always do.
Thanks for the comment. I believe the strategy will be much different with the iTV than Apple's other devices. Unlike the iPhone and iPad which generate revenue from hardware sales, the iTV will be a play on subscription and application content. Apple will only need to sell the TV once and gain subscription revenue every month for the life of the customer. The best part is that will create extremely high margins for Apple. This is the reason why CBS didn't want to participate in the iTV. Networks are used to licensing agreements not profit sharing, the problem with licensing agreements is that the price keeps going up every renewal. This is the problem that Netflix and cable companies are constantly facing. With a profit sharing model Apple and the networks are closely tied which requires the networks to remain competitive on price. Networks of course don't like that. I think the networks will cave once they realize the potential in generating revenue from new subscribers. Consumers are turning to online sources to watch shows and networks know this. I believe this is the best chance that networks have to turning around their declining business. I also expect they will charge more for an a la carte type service but consumers will pay it. I wouldn't mind paying $20 for 5 channels I actually want than $80 for 200 channels when I only watch 5.
Franc that is what I expect. I actually wouldn't be surprised to see people and company's launch niche channels, very similar to reality TV. Companies may use it as a platform to show users how to use their products or people could create their own subcription channels that target their niche interests. Apple did this for apps for its other products, I don't see any reason why they wouldn't do it for this one.
If you like watching on your device that's fine, the main driver here is the content not the iTV hardware. If Apple could get its content together this will be a big revenue stream for Apple.
I like to trade ahead of news and have been doing doing quite well with that. If you like to wait for confirmation and then buy, best of luck to you. Doing the opposite of "buy the rumor sell the news" doesn't really work well.
Read the links if you still believe that a new iTV won't launch.
Thanks for the comment. Because of the way I trade it seems that way. I still have a small short position left on the company which I'm still riding. I will cover that little by little if the company continues to fall. I have a trail stop right above the $19 area right now which will take me out of the rest of my position when that happens. I'm long term bullish on RIMM but not yet ready to just flip my position at current prices. I said wouldn't be surprised to see RIMM test the next level of support at $8 because there really isn't a catalyst that will change the company's direction, its line of QNX phones, buyout offer or management change are the only rumored catalysts circling the company but are all still up in the air. Business will continue to slow and that is why I'm still willing to ride out my short just like you are riding your puts. I think there will be a certain price that private equity says that this is to crazy and RIMM is worth a shot. I believe we start seeing interest once the 8$ area is hit. Markets like to exaggerate moves and RIM may be the next one.
I agree that RIMM needs to reinvent itself real soon or risk eroding the value of whatever assets it has left. This doesn't only include its intellectual property but creative assets as well. There is a risk that talent may leave if they don't see a light at the end of the tunnel.
To answer your first statement,"based on what?" I would consider the fact that Apple can't use the trademark iPad in China, a country that produces 16% of the company's sales a difficult situation.
To answer your second statement. I never claimed to be a legal expert. This is obviously my opinion since I clearly stated "I believe", if you choose not to follow then don't. I based this off similar trademark situations with other companies but I never stated anything as certain. You obviously missed that.
Next, who claimed to know what Apple will or will not do? "I foresee" is hardly a statement of fact. Again it's my opinion, if you don't like it who said you had to follow it.
"Everything is speculation" this is interesting considering I included the links to the court ruling that denied Apple's trademark application. My credentials are clearly stated in my profile and have been there ever since. I don't see any information in your bio let alone any credentials. I never asked anyone to put their faith in me, it's up to you to make your own decisions afterall, I'm just giving my opinion.
Thank you for your comment and highlighting the prior arrangement. Yes, Apple did purchase the trademark from Proview for 35,000 pounds which was supposed to include China. It appears there may have been an issue with the mark assignment in China or Proview may have pulled a fast one on Apple and some how found a loop hole to leave the China market out of the transfer. We will get more detail in the coming days when the case goes to court. The fact that the China Trademark Office still recognizes Proview as owner is a big problem for Apple. Many foreign courts often side with the local owner which ends up being a problem for the true patent and trademark owner especially if the owner is from another country. I expect the same type of ruling from China.
Excellent point with the stock spllit, I would love for McDonald's to have a stock split. I think it would bring a ton of new investors if it did that.
Definitely good value at the $85. I would really like a stock split like mbkelly has mentioned. Even though stock splits don't create much value by cutting its share price, it creates more demand for shares that brings appreciation as more investors are able to buy at lower prices.
Thanks for the comment. I'm looking to add on the next pullback that holds above the $90 area. The $100 mark is usually a very tough resistance area for stocks so I'm looking at taking some profits there then adding back to my position on the pullback if it holds. If McDonald's fails to hold the $90 area, I will re-evaluate the trade.
Paku, yes I agree that Liberty Media got the company for almost nothing but like Bluejay said Mel didn't have a choice. SIRI was in a very difficult situation and had very few options. If SIRI filed chapter 11 existing sharehholders would have been wiped out because of the debt load.
Thanks for the comment. Yes, I was actually eyeing $19 in the article because of the 52 week high and usually buyouts occur with a premium above the high. I wanted to be conservative for those reading but I really wouldn't be surprised to see the deal done at $21.
Yes, that's why at this point it's like I have a call option in a way. If Yahoo accepts the minority offer from SIlver Lake or TPG the stock will usually stay around that price and I will take my 14% and run but if I get a nice premium offer in the $20 area for the whole company then I get a nice reward. That's why I liked the risk reward scenario. Yes, there is risk that Yahoo could sell off hard if it takes the $16.60 minority offer but doesn't usually happen because the market usually sees the bid as the current value of the stock because that is what private equity is buying shares for. That gives me a cushion but nothing is 100%, there are always exemptions when it comes to trading.
I recommend you focus on a industry and add one industry at a time as you get comfortable. I like to focus on the market leaders in that industry first then work my way down. This will allow you to better follow the trends and seasonality of some industries. It is also important to narrow down your investing style as well. Are you comfortable investing in turnaround situations which could get real rough at times or are you only interested in companies that are doing well and are in strong uptrend's? It will definitely take some time to learn but don't stop learning.
My trading and investing style has evolved over the years due to me learning new ways to better fine tune my investments. Just learn from your mistakes. When I first started my losing trades taught be so much and helped my tweak my style.
Thank you for the comment. RIMM is in a interesting situation because phone makers heavily rely on product launches to make it or break it. In this case RIMM and just about every other manufacturer have released their arsenal of devices for the year. Manufacturers usually save their best devices for this time of year because it's the busiest. Going into the holiday season you will know which devices will be the top stocking stuffer for the year.
These are the latest marketshare rates I have Normally RIMM should be able to maintain itself around its current market share but this year is different because of two big factors.
The first factor is that Apple launched the iPhone 4S. As crazy as that may sound, Apple is the 500 pound gorilla when it comes to smartphones. Unfortunately that RIMM's category. The new SIRI program is making it extremely popular this year and I expect this to have a big cut in sales this holiday season. Samsung is doing extremely well with its Galaxy S2 as well. This device was popular internationally as well which makes it even more of a challenge for RIMM. I believe that the market may be surprised on the earnings miss in the next quarter.
The second factor is the tablet business. The iPad2 and the Kindle Fire which I talked about here will be a big winner. This of course will be very bad for the Playbook.
Regarding the smartphone recession, business has been pretty busy this year and don't see signs of it slowing yet. The reason is because wireless is in an interesting phase where customers are upgrading from older basic devices to smartphones. Currently about 30% of US customers own smartphones. This trend should carry on into the next couple years which should keep the industry afloat. This doesn't include the mobile broadband devices like tablets that are now becoming popular as well. Only about 5% of wireless customers own a mobile broadband product. So even if market size may be growing slowly smartphone sales should continue to grow because of this trend.
Regarding sales this quarter, I believe you could play RIMM two ways. If your short I would ride it till about the next earnings release or QNX phone launch. I would re-evaluate at that point to see if consumers are getting on the RIMM bandwagon. This of course would only be a short term trade. The other option is you could play it from the long side but you have to have a much longer term time horizon and strongly believe in the turnaround that will occur in the future. I would average into the position the way I detailed here I won't be to worried about the earnings miss because I've seen companies come back from the dead several times. What would be key for RIMM though is they change management and adapt to the changes in the business. Their new phone looks promising you could see it here.
Thank you for the comment. I would have to agree that sometimes sales reps will steer customers because they are comfortable with certain devices. In many cases sales reps like to start with the most popular phones in the store and in this case would be an Android or Apple device. This is because the more features the easier it is to show the capabilities of the phone. This is why manufacturers have such wild swings in our business. One quarter Blackberry is the hottest thing on the planet then next quarter it's Samsung. A product launch could literally make or break a company.
Like I said in the article "Research In Motion is still out of touch with reality and will continue to fall. Research In Motion should restate its projections instead of surprising investors next year." Interesting how today they came out and restated its earnings. I wrote about it a good 7 days before RIMM's surprise announcement.
RIMM said," In its warning, RIM said it no longer expects to meet its full-year earnings forecast of $5.25 to $6 per share because of weaker than expected smartphone shipments, a $360 million after-tax writedown on PlayBook inventories and a $50 million charge related to the October outage." You can find it all here
All that yet GMCR is almost at $60 as of this writing. which is 40% higher from the $40 lows. Interesting.
Thank you for the comment. I actually think a Liberty takeover is a real possibility. I feel Liberty is starting to see the possibilities of its SIRI investment and might want to try to buy it early to maximize its return. I do expect to see a pretty good premium if this were to happen which of course would be huge for existing SIRI shareholders. SIRI will not sellout for a low price now that things are starting to change. I expect a 30-40% premium above current prices would be reasonable, this would place it around $2.50.
I see a Liberty purchase of more shares or complete buyout as a big positive for SIRI. Shareholders will benefit either way as long as SIRI doesn't issue new shares. The only downside to the buyout is SIRI shareholders will miss out the big moves after the buyout.
I was just trying to drive a point. I said," Now I'm not predicting that Apple will reach $10,000 anytime soon; I'm trying to open up your mind and bust a long-time investment myth. Many investors are calling the top of Apple purely because the company failed to break its high of over $426 share.".
I'm trying to get investors not to focus on the share price but the factors beneath it. To many investors get to distracted when a stock hits $100 or $500 and lose focus. Investors feel that it might sell off because now they feel it's expensive. The company could still be performing well but the investor ends up selling because of fear of loss and in most cases will miss the next big move up. This article is for new investors who are frustrated why they always miss the big move. You sell when the underlying factors tell you to not when the stock scares you.
You obviously missed this, "Now I'm not predicting that Apple will reach $10,000 anytime soon; I'm trying to open up your mind and bust a long-time investment myth. Many investors are calling the top of Apple purely because the company failed to break its high of over $426 share."
This was in response to critics that make investments based off price. Obviously $10,000 is an exaggeration but sometimes you have to exaggerate to drive home a point. In this case it appears you missed the point and was to focused on the fact that the article had the words $10,000 and Apple together.
I also like to trade Post Bankruptcies. I like to play them differently though,I like them better the first time they get relisted. You get a smoother ride to the upside in some cases I play them before they list. I did this on Visteon and got a nice move. I got it in the $40's in the pink sheets and sold it in the $70's when it listed. A lot of the bigger companies trade on a "To Be Issued Basis" in the pink's.
Thank you for the comment, sorry for the confusion but I view price more as a range since it's impossible to say a stock will stay above an exact price. So when I say investors who have a position above the $1 area, I mean if you have a position with an average price of $1 and whatever cents would be rewarded. So it could be $1.25 or $1.40, etc. I'm bullish on SIRI and expect it to get above $2 next year so I use pullbacks as opportunities to buy and lower my average price when possible.
This article explains how I build a position
I've been short on RIMM since September at $30. Here is my article
I just say it like it is and its up to the stock to react to the news. I'm not completely bearish on RIMM and feel when the line of QNX devices are launched they have a chance to complete a turnaround. You can find that article here
I own several wireless stores and RIMM products are just not selling right now. I want RIMM to do well but unfortunately consumers are just not buying like they used to 3 years ago. The Samsung Galaxy 2 and iPhones are what's selling. I don't even remember the last time I sold a Bold or Torch in any of my stores.
If you read the article completely I said I planned to accumulate a position, this means to gather a increasing quantity if you didn't know. I buy on the way down on many of my trades to get an average price which I specified. This is a very advanced strategy that I don't recommend for many investors. I detailed the specifics on how I do this in my S&P 500 strategy that I linked at the bottom of my article. My strategy is very similar to how hedge funds and mutual funds enter in a position. For many investors it is prudent for them to just buy at one price since they will most likely get in trouble if they don't understand.
To answer your statement of," You should just give up investing", I have been investing this way for over 10 years and has been working great for me. If you have any investments in any funds you would know that they invest this way. I used to manage money and when you buy a position you just can't buy 100,000 shares at one price.
So if you are wondering why I do this, it is because you never know how low the stock will go. If I had a crystal ball and could predict the bottom every time the this then obviously I would just be doing that. This of course is impossible so I buy in a range. This gives me an opportunity to build a position in the area I feel would be near the bottom. Compare this to buying at one price and taking a stop loss when you are wrong.
Thanks for the comment, couldn't agree more.
Thanks for your comment. As much as possible I try to write in advance of moves I plan to trade. In this case you could short Green Mountain if you wish just as you are doing with the ability to flip your position much lower. I just feel I find it safer for new investors to trade it from the long side at this point. There is significant risk that the company could suddenly pop if it were to be confirmed that the rumors surrounding the company are false.
The company has yet to respond to the rumors which is very common for most company's but in this case they may be waiting for its next earnings announcement. I expect a lot of investors to be surprised that the company will perform much better in its next earnings announcement.
Yes they do but Amazon did not invest hundreds of millions in developing and marketing those phones its currently selling. All smartphones its selling are from third party manufacturers. It's primarily a retailer and the risk is much less reselling a device than actually developing, marketing and selling it.
Now don't get me wrong, private label items are great ways to increase revenue but smartphones is not the one. I think the Fire was a smart move but I've just seen to many failures in the smartphone arena.
I own several T-Mobile wireless stores and I've seen Dell, Garmin and now Blackberry get beat up. Can Amazon be the exception? maybe, It's gonna be a tough road but that's why I said, "It may still be too early to tell the fate of the Amazon smartphone, but the prospects aren't bright." I will keep an eye on them to find out more about their strategy and if I think it has legs, I will put money to work.