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Tom Armistead
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I'm a well-informed retail investor and formerly posted on SA in order to expose my thought process to critical examination and comment from readers. It made me a better investor. I'm particularly proud of bullish macro articles posted in 2009 and later, in which I presented ideas that... More
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Tom Armistead's Instablog
  • Macro Punditry vs. Individual Stock Picking  0 comments
    Jan 21, 2010 7:17 AM | about stocks: WDC, STX
    Yesterday I spent much of the day wrestling with the implications of Scott Brown's win in Massachusetts. But late in the day I was surprised by a development on a short position (Seagate!?) drawing my attention very forcefully back to the immediate reality of earnings performance.  Maybe that is what I need to be looking at for now. 

    Brown is photogenic, has very white teeth and looks vigorous.  Massachusetts already has universal coverage for health insurance and he voted for it.  When it turned out he was going to win, he suddenly announced that he would vote against healthcare reform in the Senate, thereby denying other states what Massacusetts has already chosen for itself.  He moved along to an endorsement of waterboarding. My take: he is playing for a position as the next Sarah Palin. 

    Clearly when looked at as above, Brown's victory doesn't supply as much meaning as the pundits extracted.  

    After the market closed, Seagate (STX) announced earnings, 1.03 for their 2nd quarter, well above what I was looking for.  Trading was temporaritly suspended.  I was short, based on a belief that Western Digital is much better managed, has much less debt, and will outperform Seagate in the long haul.  However, Seagate had done some serious cost-cutting, taken big write-offs, and when revenue recovered there was a tremendous improvement in margins.  

    I updated my worksheets and came to the conclusion that I was seriously wrong on Seagate.  Placing a limit order in after hours, I bought to cover at 18.40, and watched the stock get up to the 19.60 area.  

    All this macro stuff is great, need to keep track of it.  But the stock market by its nature has to be equal to the sum of its parts. If individual companies such as Seagate continue to surprise the market will respond accordingly, whether Scott Brown becomes the new Sarah Palin or not.  

     

    Disclosure: No position in STX

    Disclosure: Long WDC, no position STX
    Stocks: WDC, STX
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