It's been over two months since my last posting, and the markets have roared. In fact, when examining a calendar year, it's one of the best starts in decades. Since early October of 2011, the NASDAQ is up almost 30%. That's more than a nice return in a short period of time if you are long the cubes (NASDAQ:QQQ). Because of the acceleration in stocks, in early January I liquidated my leveraged/short ETFs, which are the ProShares UltraShort S&P 500 (NYSEARCA:SDS) and the Direxion Daily Small Cap Bear 3X Shares (NYSEARCA:TZA). I'll just take the tax write-offs and move on.
However, I still don't believe we're out of the woods yet in regards to a double dip in the overall indexes. For every prognosticator of a new bull market, you get your Jim Rogers, George Soros, or Rick Santelli warning of some serious reckoning in the next year or two. A reckoning that likely will be much worse than 2008/2009. With IPOs like Yelp (NYSE:YELP) gaining 65% on the first day of trading, it seems a bit like the late 1990's. I'm airing on the side of caution still, and, will remain in cash, although I have limit orders in on two securities that need to drop significantly in price before I buy them.
A few things have caught my eye in the last month. One is a statistic that: "Mobile devices will account for about 80% of all broadband Internet connections in the G-20 nations by 2016, according to Boston Consulting Group.". I enjoy my iPhone and fully understand what all the fuss is about. This is why I am going to begin writing a series of articles on primarily small, pure-play companies in the tablet and smartphone sector.
For the past 18 months, I've been blogging almost exclusively about cloud computing companies, and most of these securities have extremely elevated valuations. Sure, they will continue to grow at a rapid pace, but I wouldn't want to put my money behind them. I learned my lesson in 2000 when I sold stocks like EMC (EMC), Oracle (NASDAQ:ORCL) and Cisco (NASDAQ:CSCO) before the crash, only to get burned by investing in technology stocks with "decent" PEG Ratios. Everything got taken down in the aftermath of the crash, and I left some money on the table.
What I want to do with this new series, is look at the young upstarts that may be big winners as the wireless Web engulfs the globe. Many of these equities are dangerous because of their brief trading history, but what stock isn't? Just look at the recent history of "sure things" like General Electric (NYSE:GE) or General Motors (NYSE:GM). It's always what your risk/reward is. The type of equities I am going to cover in depth are primarily small caps or micro caps. I'll try to stay away from the pink sheets, but some of the companies I'll be looking at haven't made it to the major exchanges.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: I am in cash with limit orders in on selected securities.