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Adam Gefvert, CFA
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Adam Gefvert is the head researcher for White Diamond Research, a research firm for hedge funds and high net worth individuals. Primarily a short seller, he has saved investors millions of dollars by exposing highly overvalued small cap stocks. He has a 90%+ success rate with his Seeking Alpha... More
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  • Jumped the gun with NFLX, made a good trade with AAPL 0 comments
    Oct 10, 2011 2:03 PM

    I bought AAPL in the premarket at 377, and NFLX at 129.80. AAPL kept going up, NFLX pulled back a little. The difference here was in the news affecting earnings. With AAPL, there was record iPhone 4S sales, that news directly affects earnings positively in the near term.

    With NFLX, the news was they're getting rid of Qwikster. This may or may not affect sales in the medium term, so it shouldn't have as powerful an effect on the stock. Always before making a news-based trade ask yourself: "Will this news itself directly affect earnings in a big way?" If the answer is "no" then look towards shorting or not buying, if the answer is "yes" then look towards buying or not shorting. Furthermore, it isn't even a surety that this is good news! Maybe NFLX would be better off with Qwikster? So in analyzing the news itself, it was a bad play on my part. Based on this hindsight, NFLX was a good shorting opportunity, not a buying opp.

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