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Michael Kudrna
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"The market can remain irrational longer than you can remain solvent.” John Maynard Keynes In an industry which caters to the greedy and already wealthy, it has become increasingly complex for the individual investor to find a path to success. “Buy and hold” is an inadequate investing... More
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  • 1-27-10 AFTERNOON MARKET UPDATE

    1:50pm  (originally posted on Kudrna's Stock Market Blog)

    Apple (AAPL)  finally released the Ipad and pricing associated with it.  Apparently it was great news as AAPL jumped on the news after an initial sell the news reaction happened leading into the event.  I've sold some more shares on the excitement but will hold a core position and buy back if the price dips under $200 for long-term.  Steve Jobs is truly a unique and amazing businessman with well-rounded skills.  He is not only amazing with technology but he is an amazing businessman and salesman as well.   He truly shows how powerful well-rounded skills can be if you strive for it.  In an uncertain market, AAPL makes me feel safe when my money is invested in them.  Altria (MO) also makes me feel safe but doesn't have the upside potential that AAPL possesses.   It's nearly impossible to find a stock with low risk and huge upside...AAPL may just be one of them.  I hope to have the opportunity to buy back under $200 when the excitement dies down but I might have to settle for low $200's and I plan to hold for the long-term.

    The Fed announced they have kept rates unchanged with one hawkish comment out there.  Nothing really unexpected but will be more criticized in the next few days when the AAPL excitement comes to pass.  Financials are starting to give up their gains and I don't feel comfortable just yet adding to my position in JP Morgan (JPM) or others I have been watching.

    Instead, I'm looking to initiate a trade in SPDR Gold Trust (GLD) with some of my cash reserves.  I feel confident that Gold will at least bounce from these lows.

    The good news is AAPL created some optimism in the market which we haven't seen much of lately.   Will it continue?  I hate to sound too bearish but I'm not trusting any moves up just yet.  Keep your eyes and ears open in the meantime. If you like what you've read, be sure to check my website/blog out and follow me on twitter.  Good luck out there!

    Mike



    Disclosure: Long AAPL, MO, and JPM
    Jan 27 3:08 PM | Link | Comment!
  • 1-27-10 Morning Market Update

    10:01am  (originally posted on Kudrna's Stock Market Blog)

    The market is trading down this morning as the buyers wait on the sidelines and the sellers continue control.  New home sales numbers were not too good which doesn’t help the bulls.  The Shanghai Exchange was down yet again (down 1.58%) and that puts more negative sentiment on us.

    Biotech is up as Cord Blood America, Inc (OTCPK:CBAI) is trying to stay in the green for 2 days straight which is much more than most stocks out there can say.  I’m waiting on a pullback before I buy more…I have a solid position in CBAI at a great cost average so I do not feel the need to build it up more unless prices drop more.  Gilead (GILD) reported a great quarter and is up over 6% as I'm writing this so I’ll be responsible and pare back some shares to lock in gains while the market figures itself out.  Nothing wrong with sitting in a good amount of cash right about now with the potential downside we have.

    Apple (AAPL) releases its tablet around noon central.  It is currently trading around $203 which to me says this information isn’t priced into the stock.  I’m still hopeful for some Verizon-Iphone news as well but haven’t heard anything recently about it…that could be a nice wildcard for the stock if it is announced today but I’m not holding my breath. With the poor market activity, it seems we have a sell-the-news type potential that traders are expecting in AAPL.  I think we will get a small spike to sell into though and I’ll be looking for it.  Than I hope to buy back some shares lower as the more I look into AAPL, the safer I feel in putting my money in them long term.  They put out a conservative guidance which makes me feel they won’t set themselves up for failure.  But lets be real here, AAPL has a proven track record of success.  UFC may be as real as it gets but so is Apple.  I feel my money is safe long term in AAPL.  I even had the opportunity to watch Cramer this week and he seems to agree.

    Protect your capital until we get some more clarity.  I still think we end the week with sellers in control.  Good luck out there.

    Mike



    Disclosure: Long CBAI, AAPL, AND GILD
    Jan 27 11:49 AM | Link | Comment!
  • 1-26-10 POTENTIAL SHORT SELLING RESTRICTONS IMPACT - LESSON 3

    8:52pm  (originally posted on Kudrna's Stock Market Blog)

    After much request…Here is my input on the potential short selling restrictions.  Hope it helps.

    Per this article:  SEC May Approve Restrictions on Short Sales when Stocks Plunge

    We may have new regulations on short selling this year…especially if the growing negative overhang in the market lasts longer than anticipated. Though this wouldn't be an overnight change…as stated in the article, it would take effect months (possibly 6 or more) after the decision is made to make sure that all the brokerage systems have plenty of time to update their software for the new regulation(s).

    The new regulation(s) should have a positive impact on the market in general knowing that there are new rules in place to protect bulls/longs from being beaten down by heavy short activity. Sirius XM (SIRI) comes to mind as a perfect example of a stock very heavily shorted in the past. For years Sirius and XM were attempting to merge but those who wouldn’t benefit (I’m sure you can read between the lines here on who I’m talking about) from the merger were doing everything they could to block it and point the finger that they would somehow be a monopoly. Well, finally they were rightfully allowed to merge after far too many delays.  By that time, they were in very bad financial shape.  The bad financial news spurred rumors of bankruptcy to which the shorts gained momentum and beat the stock down all the way to 5 cents!   That’s right, 5 pennies a share for a company that had numerous satellites in the sky and a huge amount of subscribers though significant debt.  Had these regulations been in place, many people would not have jumped out of the train wreck stock that SIRI had become. Many people would have made some decent money.  This kind of situation of shorts beating down a stock further than it should be happens frequently to various stocks everyday.  They get beaten down and the bulls jump ship. You can see if you get a negative market mentality (like we have now) combined with the shorts jumping in aggressively (which we don’t have just yet)….it’s a formula for disaster. Most individual investors won’t get out in time and end up losing a significant portion of their investments.   What typically happens to those investors is that by the time they finally get out of their positions is when the market starts to become bullish again and they now miss those big early gains. It is a very terrible situation for most individual investors yet through education and awareness, can be a controllable situation most times.  That is when you must protect your capital and not be afraid of selling (See Lesson 1)

    However, these shorts can be used for our benefit as well. Using the SIRI example again, I bought SIRI all the way down to 5 cents. I noticed the growing size of the shorts in the stock (yes, you can track the short interest in a stock) and thought that while it’s quite possible they could go bankrupt, they are far too valuable (satellites, numerous subscribers, less competition, etc…) to need to go that route. If shorts were heavily regulated, I don’t think we’d be anywhere near as low as 5 cents a share. If they didn’t have the pressure put on the Bulls so much, many would have stayed in the stock and rode the rollercoaster for some decent gains. I learned to welcome the shorts though. I had conviction in my beliefs that SIRI would overcome these obstacles. I had friends who pulled out of the stock while I was buying more and more….averaging down. They thought I was crazy….however it turned out to be one of my best calls yet.

    I loaded up as close to 5 cents as possible. When SIRI found its financing, the stock catapulted up. The short sellers had to cover and they helped fueled the long path up. I was able to sell between 60 and 70 cents! I’m now playing with some of my winnings and letting it ride…I think we have more room to go up but I’ll go into those details in another post. My point is without those shorts, I would never have been able to buy so low to reap such huge gains. With these regulations in place, I would not have been able to make such huge gains.

    I can accept that though…I don’t teach always hitting home runs. I teach hitting singles and doubles consistently. So bring on the short regulations…this market (and the Bulls) need all the help it can get right about now. I fully expect these regulations to come to fruition this year as I think we will have some shaky trading for the next few quarters. I expect these regulations to be in place by the 4th quarter. If you have questions or comments about this article, post them on my blog or twitter. Also, if you enjoyed my insights, sign up for email notifications when I update my blog.  Everything can be found on my website.  As always, good luck out there.

    Mike



    Disclosure: Long SIRI

    Disclosure: Long SIRI
    Jan 27 1:03 AM | Link | Comment!
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