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Individual investor with a Top down approach. I don't believe in diversification. Spreading your chips across the table is senseless to me, when based on good old economic fundamentals only certain areas of the market are poised to benefit in certain stages of the economic cycle.
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  • "Facebook Pharma Inc." Trade It Like A Pharma Stock On The Brink Of Disaster.

    Facebook (NASDAQ:FB), met analysts targets on revenues and earnings per share. As we all know Facebook stock traded down after earnings. Facebook did not provide any future guidance about revenues or earnings for the next quarter. I do not view this as a positive for the stock and i am not optimistic about Facebook's short term future over the next few quarters for the reasons below.

    I view Facebook as a pharma company that is hanging by a thread. As the number of Facebook users utilizing mobile devices to access Facebook continues to grow, revenues from advertising will continue to be negatively impacted by mobile users. Not unlike a pharma company whose blockbuster drug is coming off patent. Couple that with increased spending on R&D to develop new revenue streams and welcome to "Facebook Pharma Inc.".

    There may be significant R&D expenses associated with developing and implementing a mobile advertising platform. I believe those expenses will grow in the future. I also believe this may be one of many reasons why Facebook has not provided forward looking guidance, as this is a big unknown to Facebook's bottom line. It may take a combination of R&D and future acquisitions at a currently unknown expense to successfully monetize mobile Facebook users, if it can be done at all.

    Facebook stock post earnings continues to make lower highs and lower lows,as evidenced by the chart below. I for the short term will remain bearish on Facebook stock and will continue to short it.

    (click to enlarge)

    Disclosure: I am short FB.

    Additional disclosure: This article is also posted on my personal blog www.stocktradingidea.com

    Tags: FB, revenue, earnings, r d
    Jul 31 11:08 PM | Link | Comment!
  • Facebook Potentially Wasting Advertiser Dollars

    What do advertisers want to spend their money on?

    Advertisers want targeted advertising. What is targeted advertising?Targeted advertising is advertisements users will find to be relevant based on the users interests. Facebook (NASDAQ:FB) displays ads at to users that the advertiser selects based on demographics such as location, age, and selected keywords for topics. Here is an example of how a Facebook advertisement is utilized.

    Example: XYZ pest control company, runs a Facebook advertisement for free home inspections. It gets displayed to users 18+ years old, located within 15 miles of Orlando Florida, using keywords pest control. The ad will potentially get displayed to users who have commented on posts about pest control, liked pest control companies, someone who has liked black widow spiders, anything bug related essentially.

    For the arguments sake, lets take a look at how Google (NASDAQ:GOOG) advertisements are utilized.

    Example: XYZ pest control company, runs a Google advertisement for free home inspections. The advertisement gets displayed to users who are actively searching the web, expressing a current and relevant interest for pest control and any related searches, located within 15 miles of Orlando Florida. Now let us take a look at where advertiser dollars are potentially wasted by Facebook advertisement delivery system.

    Here is where the potential waste of advertising dollars happens. A user posts on his timeline that he has a bug problem in his house, then multiple other users comment on his post "Sorry to hear about your bug problem." or something similar. A user that comments on another users post "Sorry to hear about your bug problem.", doesn't necessarily have an interest in pest control or find it to be relevant to their lives. When Facebook displays the pest control advertisement to the users commenting "Sorry to hear about your bug problem.", advertising dollars are potentially being wasted.

    This is why Google advertising model is superior to Facebook. It is hard enough as an advertiser to grab a users attention on Google, where a relevant ad is being displayed to the users based on a search topic the user is currently interested in. In contrast Facebook is social networking. It is even harder to grab a users attention that is "socializing", with an advertisement that the user has not directly expressed any interest in. Until Facebook can implement an advertisement delivery system to increase an advertisements relevance based on the users interest, Facebook can't deliver the same "bang for buck" that Google can.

    In the long this could contribute to advertisers spending their money elsewhere. This just yet another hurdle for Facebook.

    Disclosure: I am short FB.

    Additional disclosure: more articles and stock trading ideas can be found on my personal blog www.stocktradingidea.com

    Jul 31 9:29 PM | Link | Comment!
  • AAPL Earnings Trading Strategy, 3 Quarter Earnings Pattern

    AAPL stock has been very predictable at earnings time. Almost like clock work. October 18 2011 Q4 earnings, Apple Inc. stock traded up the week ahead of earnings and then sold off after earnings. January 24 2012 Q1 earnings, the stock traded down the week ahead of earnings, and the stock went up after earnings. April 24 2012 Q2 earnings, the week ahead of earnings the stock traded down and the stock went up after earnings. That is the clock work of AAPL. If the the stock trades higher ahead of earnings , short it. If AAPL stock trades lower ahead of earnings buy. Please reference the chart below. As always consult with a professional before making any investment or trading decisions.

    visit www.stocktradingidea.com for more of my ideas (free site)

    (click to enlarge)AAPL

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jul 17 12:30 PM | Link | Comment!
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