3SOF

Good morning :)

I know about the Chinese stock market 9% fall overnight and former Chairman of the FED Alan Greenspan's words yesterday (http://money.cnn.com/2007/02/26/markets/bondcenter/bonds/index.htm).

But that doesn't change the fact that there are 10 stocks outthere that need coverage today :)

You have until 10:30 am ET to place your suggestion to today's poll on which stocks to be analyzed.

Thank you for your participation, have a nice and safe day in the markets (especially, don't jump into conclusions just because of an ugly open)

JMBA is my vote

Good Morning,

IPT has been moving recently.  Are people in the US partying that hard these days?  ::)

Thanks.

Please take a look at ANGN

please check PTCH !!

http://www.wallst.net/audio/audio.asp?id=2936

tia
Oliver

Hi David,

What's going on with CPNE?  Why is it dropping so much?

Humm looks like a 200 point down day for the Dow... the way things are going.

Hi David,

Just joined the 3sof message board today and have not yet posted, but I wanted to call your attention to the fact that on the 3-year weekly chart for ETLT you can see formed a very nice two and a half year reverse head and shoulders pattern. This could indicate incredible future upside potential.

Regards,

gwfox

David:

Good morning. If you have time, please take a look at WZEN, thanks!

Quote from: tocitygirl on February 27, 2007, 09:41:17 AM
Hi David,

What's going on with CPNE?  Why is it dropping so much?

You mean, other reasons besides the general market weakness? I update that stock's analysis everyday in the Premium area.

I guess it went down so hard yesterday and today, because Jeffrey L. Feinberg has been hedging his 3,037,500 restricted shares bought at $1.90 by selling the stock short (hedge funds usually do that - maybe he's already completely hedged now).

Touching the 50 days SMA support as I write, after a nasty gap down.

BRCD

Good stocks will recover from this very deep intraday sell off, bad stocks will stay down.

This will be an interesting session, volume is so high right now that my quotation system is having trouble keeping up with all transactions.

Have a nice day :)

Hi David!  Could you check JAKK please.  It's just a little over 500 M  market cap. Thanks

Quote from: chinaguru on February 27, 2007, 09:47:36 AM
David:

Good morning. If you have time, please take a look at WZEN, thanks!

It doesn't depend on my time, but on the election that will start in 17 minutes ;)

So far we have just 7 stocks for the poll, that way they will all be winners :)

I guess you're too busy looking at quotes ... did you know that Warren Buffet never looks at intraday quotes, that he doesn't even have a quotation system in his office?

I wouldn't mind using this opportunity to buy something like GIGM, though.

Good luck :)

How about DLSL.ob.  Not on fire today....but small solar company with actual profits and little debt.

ACKH recen t news regarding a lawsuit settlement .. already up 80% today

Nice buying windows for JADE, AOB, and GIGM. The chinese stock correction scared weak hands out.

How about SPWR?  It is a solar play, but it is profitable with rising EPS.

Quote from: David Randolph on February 27, 2007, 10:19:56 AM
So far we have just 7 stocks for the poll, that way they will all be winners :)

I guess you're too busy looking at quotes ... did you know that Warren Buffet never looks at intraday quotes, that he doesn't even have a quotation system in his office?

I wouldn't mind using this opportunity to buy something like GIGM, though.

Good luck :)

In the same way Nicholas Darvas made his 2 million in the market back in the fifties. But I have not been able to trade in that manner. No yet

Was a great buying oppertunity for EXM this morning. Was down 7% or so and now only down -2%.

Hello David,

I hope that you are having a fantastic day where you are. I would like to hear your thoughts on the upside potential for OPBL.ob and ACY. Do you believe that the opportunity exists for these stocks to double from where they are at today?

Thanks so much for your input, and great move on selling CPNE.ob when you did. I am confident that the stock will be at new highs within the next couple of months, and the current selloff will look like a small blip in retrospect. What a great buying opportunity we have today!

Take Care,

Bourbon   ;D

Hi David,

too true, I think everyone is glued to their ticker screens (I know I am!!)  Is it too late to include OMNI??  Made a nice breakout above key resistance yesterday, but has since come back down with the rest of the market.  Still looks strong right now though

cheers,

ST

Hi Bourbon :)

I don't know about OPBL.OB, because that is already a $427 M market cap company, but I like ACY, a $23 M market cap showing revenue and EPS growth.

I agree with you on CPNE.OB, but I'm not absolutely confident that will be the long term outcome. My hands aren't as strong on the stock as they used to be. I'm holding it on the Main, though, bought that position at $2.30, so around my entry level.

You should have posted before 10:30 am ET to figure on the poll, but it's ok, this time will pass ;D

David whats your thoughts on JMBA? (I dont think JMBA is going to win the poll and its under 500mill cap so I cant post under the members area) I love the their drinks and personally go there all the time. They are well established in Southern California and have a following like starbucks but for healthy smoothies and drinks.

Quote from: ScottishTrader on February 27, 2007, 10:55:22 AM
Hi David,

too true, I think everyone is glued to their ticker screens (I know I am!!)  Is it too late to include OMNI??  Made a nice breakout above key resistance yesterday, but has since come back down with the rest of the market.  Still looks strong right now though

cheers,

ST

Yep, too late ST, sorry for that, I need to start working on the 10 winners of today (I want to have dinner with family today :)). Please ask for that one again tomorrow before 10:30 am ET.

Thanks and good luck :)

Quote from: nullzero on February 27, 2007, 11:01:03 AM
David whats your thoughts on JMBA? (I dont think JMBA is going to win the poll and its under 500mill cap so I cant post under the members area) I love the their drinks and personally go there all the time. They are well established in Southern California and have a following like starbucks but for healthy smoothies and drinks.

Please ask for this one again tomorrow nullzero, it seems interesting. If you have nothing better to do you could spend some time investigating how come it shows $0 in quarterly revenues, while EPS is quite positive (I guess it is because this is a ... how do we call that type of companies, a ... one of those that are valued at the net asset value per share ... ah, a portfolio company!)

The 10 winners of today's poll, by the following order, were:

1 - GIGM
2 - JADE
3 - BRCD
4 - AOB
5 - PTCH
6 - SPWR
7 - DLSL.OB
8 - IP
9 - ANGN
10 - JAKK

Thanks :)

Here is a nice article done by fool.com on JMBA.

http://www.fool.com/investing/high-growth/2007/02/09/i-love-jamba-juice.aspx?source=eptyholnk303100&logvisit=y&npu=y

Here is the link to their offical site.

http://www.jambajuice.com/

A little profile of JMBA.

Jamba, Inc. was formed as a result of the merger between Services Acquisition Corp. International and Jamba Juice Company. Jamba Juice Company is a leader in healthy blended beverages, juices and good-for-you snacks. Founded in 1990 in California, today Jamba Juice Company has more than 595 company and franchised stores in 23 states nationwide with approximately 8,500 team members.

Just a small note about JAKK.  It was on fire yesterday and I the fundamentals are good. Also had good news yesterday.

cxti.ob os another China stock to get whacked.  I'm back in at 5.26

We already talked a lot about JADE, as one can see on the Stocks Covered List (http://www.3stocksonfire.org/trading/index.php?topic=8875.0). I put some questions to ravenquork (http://www.3stocksonfire.org/trading/index.php?topic=9021.msg90108#msg90108) that he was kind to answer yesterday: ravenquork's post (http://www.3stocksonfire.org/trading/index.php?topic=9021.msg90108#msg90108)

I believe his estimates are conservative enough and I enjoy the way they were constructed (applause for ravenquork), with implied dilution and all. He sees 2007 EPS of $0.44 and 2008 EPS of $0.58.

Considering his 2007 EPS estimate and the stock now trading at $10.11, I say the forward earnings multiple is 23. That seems high to me, because I don't think the market will attach an above average valuation to JADE, because the company doesn't file forms 10 with the SEC (just the form 20) and, well, dilution from last year levels is 32% (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=jade&lstStatement=Income&stmtView=Qtr), not just 10% as ravenquork is estimating.

I would say that at 15 times 2007 estimated earnings JADE would then be attractive, and that means 15*$0.44 = $6.6 (oooppsss)

Anyway, my current rating is neutral, I like the idea of taking precious metals out of mines and then sell jewelry in the Chinese market.

Rating

Neutral.

This analysis was written by David Randolph from www.3stocksonfire.org after a very brief study. He might have missed several important issues about the stock that you may add to this message board and complete the analysis. David makes 10 new analysis per trading day on www.3stocksonfire.org member's request. He already covered 250+ stocks which you can find on the Stocks Covered List (http://www.3stocksonfire.org/trading/index.php?topic=8875.msg87075#msg87075). This effort is also a way to find very attractive picks for the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php), a very concentrated Portfolio with the objective of turning $15,000 into $150,000 using small cap momentum+value stocks. To know more please read the 3 Stocks on Fire Portfolio FAQ (http://www.3stocksonfire.org/trading/index.php?topic=8739.0). To receive our newsletter, be able to write on the message board and vote on polls, all you need to go through is a free 10 second registration process. (http://www.3stocksonfire.org/trading/index.php?action=register)

on CPNE, I think their biz model is working great now. the onlinesupplier.com problem of not having good dicounted products is not an issue right now. they have enough time to improve on that.

David, what's your stop on EXM?

1. Introduction

BRCD is a $3.6 B market cap company, so it is way out of our league here on the 3 Stocks on Fire Portfolio message board (please read the FAQ (http://www.3stocksonfire.org/trading/index.php?topic=8875.0)). But since I put it on the poll and people voted for it, I'll cover it.

2. Technical analysis
2.1. Long term chart

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=33936;image)

The medium term chart shows a bullish picture, as BRCD is trading above the 50 and the 200 days moving averages.

2.2. Short term chart

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=33937;image)

Over the short term the stock opened with a gap up towards the $9.42 resistance level. Candlesticks say it will come back down to close that gap at $8.73 over the short term, but I still didn't check which were the news out.

3. Fundamental analysis
3.1. Market Cap & Business Description

Market cap is $3.6 B. Brocade Communications Systems, Inc., through its subsidiaries, engages in the design, development, marketing, sale, and support of data storage networking and data management solutions.

3.2. Share count evolution

I don't see significant dilution since 2003 (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=brcd&lstStatement=Balance&stmtView=Ann).

3.3. Balance sheet analysis

Balance sheet (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=brcd&lstStatement=Balance&stmtView=Qtr) looks healthy, with a current ratio of 2.43 and $542 M in cash.

3.4. Revenues

Revenues (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=brcd&lstStatement=Income&stmtView=Ann) were stable until 2005, but got a 31% boost in 2006 to $750 M. The price to sales ratio is 4.8, and the industry average is 1.15.

3.5. Earnings

Diluted normalized EPS for 2006 (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=brcd&lstStatement=Income&stmtView=Ann) was $0.33, and that puts the trailing earnings multiple at 28. The industry average earnings multiple (http://finance.yahoo.com/q/co?s=BRCD) is 27.

Estimates for fiscal 2007 (ends in calendar October 2007) call for very strong revenue growth, to $1.26 B. EPS is expected to come in at $0.42, putting the forward earnings multiple at 22.

3.6. Recent News

The news moving the stock today is:

• Brocade 1Q Profit More Than Triples (http://biz.yahoo.com/ap/070226/earns_brocade.html?.v=1)
AP (Mon 4:37pm)

Without special items, EPS for the quarter came in at 17 cents, 4 cents above the consensus estimate. Several analysts upgraded the stock following the news. If they just maintain this kind of profitability for the next 4 quarters, they'll earn $0.68 per share, and then the forward earnings multiple would be 13.53, not considering potential growth from this quarter.

4. General Overview

BRCD is a big company already, but I enjoy the sector very much and indeed, it looks cheap when compared to its industry peers.

5. Rating

Positive.

This analysis was written by David Randolph from www.3stocksonfire.org after a very brief study. He might have missed several important issues about the stock that you may add to this message board and complete the analysis. David makes 10 new analysis per trading day on www.3stocksonfire.org member's request. He already covered 250+ stocks which you can find on the Stocks Covered List (http://www.3stocksonfire.org/trading/index.php?topic=8875.msg87075#msg87075). This effort is also a way to find very attractive picks for the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php), a very concentrated Portfolio with the objective of turning $15,000 into $150,000 using small cap momentum+value stocks. To know more please read the 3 Stocks on Fire Portfolio FAQ (http://www.3stocksonfire.org/trading/index.php?topic=8739.0). To receive our newsletter, be able to write on the message board and vote on polls, all you need to go through is a free 10 second registration process. (http://www.3stocksonfire.org/trading/index.php?action=register)

Taking advantage of the market today

ETLT @ .75

CPNE @$2.23

ACKH .. Risky but added some .515

I hope the market isn't like this the rest of the week

I'm still holding my CPNE.OB and my ETLT. I did not buy more of either. ;D

Quote from: mbaugh on February 27, 2007, 01:03:11 PM
David, what's your stop on EXM?

Stop? I don't use stops. My experience tells me they don't work over the long run.

However, I bail out when I feel I have to like everybody else. Not today, though.

Quote from: David Randolph on February 27, 2007, 11:59:38 AM
We already talked a lot about JADE, as one can see on the Stocks Covered List (http://www.3stocksonfire.org/trading/index.php?topic=8875.0). I put some questions to ravenquork (http://www.3stocksonfire.org/trading/index.php?topic=9021.msg90108#msg90108) that he was kind to answer yesterday: ravenquork's post (http://www.3stocksonfire.org/trading/index.php?topic=9021.msg90108#msg90108)

I believe his estimates are conservative enough and I enjoy the way they were constructed (applause for ravenquork), with implied dilution and all. He sees 2007 EPS of $0.44 and 2008 EPS of $0.58.

Considering his 2007 EPS estimate and the stock now trading at $10.11, I say the forward earnings multiple is 23. That seems high to me, because I don't think the market will attach an above average valuation to JADE, because the company doesn't file forms 10 with the SEC (just the form 20) and, well, dilution from last year levels is 32% (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=jade&lstStatement=Income&stmtView=Qtr), not just 10% as ravenquork is estimating.

I would say that at 15 times 2007 estimated earnings JADE would then be attractive, and that means 15*$0.44 = $6.6 (oooppsss)

Anyway, my current rating is neutral, I like the idea of taking precious metals out of mines and then sell jewelry in the Chinese market.

Hi David,
I appreciate the kind words regarding the format of my post. I have never written a report for other peoples eyes, only for my self, which is a much simpler process . I learned a few things in writing it. One thing is that I routinely accept single source data, which is not always accurate. You are of course right regarding the form 10. Without them I had to piece some data together.  Jade does report  on a form 6  several times a month. I am not familiar with form 6, but it seems to cover almost any event from press release to financial information. Any advice on using the form six or the significance of filing 6 versus 10? The seemingly best figures I could come up with for share expansion were:
Diluted Weighted Average Shares
06  17.64  (23%)  05 14.32 (18%)  04 12.11 (24.4%)   03 9.71 (15%)    02 8.498.67
Average Dilution is 18.8%  Share

I do not want to beat a dead horse here, but receiving feed back on my comments (agree or disagreeing) on this board are very informative and useful to me.
While browsing google for additional information for JADE, I came across this:
http://www.newratings.com/headlines/LJ-International_USG553121058.html

"NEW YORK, February 23 (newratings.com) - Analyst Sally H Wallick of JM Dutton reiterates her "speculative buy" rating on LJ International Inc (LJI.BER), while raising her estimates for the company. The 12-month target price has been raised from $9 to $16.

In a research note dated February 22 and published this morning, the analyst mentions that the company has posted its first positive quarterly EBITDA in 4Q06 on account of the robust performance of ENZO's Macau store and strong demand during the Christmas season. ENZO's increasing contribution to revenues and earnings is expected to boost LJ International's growth potential in the next two-to-three years, the analyst says. The EPS estimate for 2007 has been raised from $0.35 to $0.57"  My analysis showed  07  $0.44 and $15.4 :o  This would put Davids estimate, using a PE of 15, at an 07 share price of $8.55

How much faith does anyone here put in a research note like Dutton's? It would be very easy for me stroke my own ego by agreeing with Dutton since they came up with a share  price very close to mine. I know from experience that making any kind decision based on ego is doomed from the start. Also, I have a basic distrust of analysts public reports.  What are your thoughts on the value af a report like Dutton's.
Bye the way, I have a very small, in the money position, in JADE and view the value of these posts as educational.

Thanks again for your comments.

1. Introduction

AOB is also a $500 M plus market cap that I previously held. Back then I thought it was a great long term holding, but I guess my hands were weaker or something, because I didn't grab the majority of the move (as it happens with most novice players, they get burned so often holding bad stocks that they can't let the profits run when they're holding the good ones).

2. Technical analysis
2.1. Long term chart

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=33945;image)

AOB's long term chart is bullish, however perhaps now is a good time to revisit the 200 days moving average, coming up at $7.91 today. Technically that would be a nice place to establish a long term position.

2.2. Short term chart

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=33946;image)

The short term chart looks like the one of a stock that is indeed topping, but that is always very hard to know. One can try to pick a top and then the stock rallies and the long term trend resumes (as it happens on the majority of occasions).

AOB opened with a gap down today ... the chart doesn't tell me if it is a buy/hold or sell. Let me make some fundamental tests to see if they provide any help.

3. Fundamental analysis
3.1. Market Cap & Business Description

Market cap is $717 M. The Company is engaged in the development and production of plant based pharmaceutical products and plant based nutraceutical products.

3.2. Share count evolution

There was dilution in the past, but not over the latest 3 or 4 quarters (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=aob&lstStatement=Balance&stmtView=Qtr).

3.3. Balance sheet analysis

Current ratio is almost 5, so the balance sheet (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=aob&lstStatement=Balance&stmtView=Qtr) is strong. But the book value is just $141 M, so the price to book value ratio is high, at 5.1.

3.4. Revenues

There was strong revenue growth over the years (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=aob&lstStatement=Income&stmtView=Ann) and in 2006 revenues for the first 9 months were $45.73 M, up 38% from 2005 levels. For the full year of 2006 analysts are expecting revenues of $107 M, so the price to sales ratio is a very rich 6.7. Well, if you consider AOB a Biotechnology company, the price to sales ratio is about half the industry average.

3.5. Earnings

EPS for 2005 was $0.31, and analysts are expecting (http://finance.yahoo.com/q/ae?s=AOB) $0.45 for 2006 and $0.58 EPS for 2007. The trailing earnings multiple is 25 and the forward earnings multiple is 19. I can't consider that cheap, even more so for a Chinese company with all the risks that involves.

3.6. Recent News

• American Oriental Bioengineering to Release Fourth Quarter and Full Year 2006 Financial Results (http://biz.yahoo.com/prnews/070214/nyw087.html?.v=85)
PR Newswire (Wed, Feb 14)

The company will release 4Q results on March 12.

4. General Overview

I guess AOB could use that correction, so those multiples come back down to more realistic levels in my opinion. If the fundamental trends persist a dip to the 200 days moving average could be a nice buying opportunity.

5. Rating

Neutral.

This analysis was written by David Randolph from www.3stocksonfire.org after a very brief study. He might have missed several important issues about the stock that you may add to this message board and complete the analysis. David makes 10 new analysis per trading day on www.3stocksonfire.org member's request. He already covered 250+ stocks which you can find on the Stocks Covered List (http://www.3stocksonfire.org/trading/index.php?topic=8875.msg87075#msg87075). This effort is also a way to find very attractive picks for the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php), a very concentrated Portfolio with the objective of turning $15,000 into $150,000 using small cap momentum+value stocks. To know more please read the 3 Stocks on Fire Portfolio FAQ (http://www.3stocksonfire.org/trading/index.php?topic=8739.0). To receive our newsletter, be able to write on the message board and vote on polls, all you need to go through is a free 10 second registration process. (http://www.3stocksonfire.org/trading/index.php?action=register)

Man, I hate days like this. I didn't add to stocks I already held but I did buy GIGM at a low price and now that's even dropped further.

Stupid question really but I will toss it out there...why don't markets go up like this? Why do they only go down like this and then take a couple weeks or so to recover or longer?

QuoteHow much faith does anyone here put in a research note like Dutton's?

Well, I like to read Dutton's analysis, but they're obviously biased to the bull side, or else they would be out of business soon.

Companies pay to get a credible analyst coverage, but of course they would stop paying if those reports were negative. Moreover, other Dutton's potential clients would walk away, saying "I'm not going to pay for you to issue a negative report on my company, like you did on XYZ".

I also don't trust coverage coming out of big powerhouses like Goldman Sachs, Morgan Stanley, JP Morgan and firms like these.

Although I like reading what others think and enjoy learning from their methods, ultimately I trust my own analysis and strategy.

Thanks for your post ravenquork, keep up :)

Man the only stock I see on fire today is the QID. DOW looks like it may see -300 points today. NASD -100 points maybe... All from the Chinese and Greenspan. I think its time to short the market this is the change in tide I been watching. I was waiting for early summer to enter but this may be the turning point on the markets. David time to pick some shorts on fire for the portfolio? :P

Quote from: lancefur on February 27, 2007, 02:13:54 PM
Man, I hate days like this. I didn't add to stocks I already held but I did buy GIGM at a low price and now that's even dropped further.

Stupid question really but I will toss it out there...why don't markets go up like this? Why do they only go down like this and then take a couple weeks or so to recover or longer?

They go up like this and more, in bear markets ;D

Once I saw the Nasdaq up 14% in just one trading day, I believe it was the 3rd of January 2001, after the FED cut rates by 50 basis points by surprise when the market was open!

Me too, I hate days like these, when I looked to the Main (http://www.3stocksonfire.org/3stocksonfire.php) and saw it down almost 4% on the day I felt like vomiting.

But then I remember some days where I lost 30 or 40% in one day, years ago when I played futures so I put things in perspective.

What I'm going to do is finish these analysis because that's my job and my life, I can't let the market interfere with the normal course of life, it can't! I suggest you do the same ... anyway, I've seen several big market breaks starting, and this doesn't feel like one, there wasn't enough optimism in the air prior to this, in fact, the media and the general sense of the public has been quite bearish lately. Not the right environment for a big crash, they always come as a surprise.

But a 5 or 10% correction? Unfortunately, it can happen ... good luck for us.

Quote from: nullzero on February 27, 2007, 02:25:01 PM
Man the only stock I see on fire today is the QID. DOW looks like it may see -300 points today. NASD -100 points maybe... All from the Chinese and Greenspan. I think its time to short the market this is the change in tide I been watching. I was waiting for early summer to enter but this may be the turning point on the markets. David time to pick some shorts on fire for the portfolio? :P

I went to cash, this is crazy!  I am glad I sold QID cause it was weird to be long and short at the same time, but it was good to prepare for a correction cause I had NO compunction about axing all my stocks, it was just something I had to do.  Sucks to have lost some money, but I am looking at what is left and happy I have a nice profit for the year so far.  Off to apply for a margin account now.

Quote from: nullzero on February 27, 2007, 02:25:01 PM
Man the only stock I see on fire today is the QID. DOW looks like it may see -300 points today. NASD -100 points maybe... All from the Chinese and Greenspan. I think its time to short the market this is the change in tide I been watching. I was waiting for early summer to enter but this may be the turning point on the markets. David time to pick some shorts on fire for the portfolio? :P

I don't feel that way, but I must be honest and say I haven't been paying all the necessary attention to the general market. I guess this paradox had to be presented to me shortly, because I've been thinking about it and still didn't come up with a solution.

The thing is:

- Does one trust the specific company's fundamentals and if they're very attractive, hold it through good and bad times, through bull and bear markets?

Buffet would say yes, Livermore would say no.

- Or else, do you remain a bull for as long as it is a bull market, and therefore long stocks, and a bear for as long as it is a bear market, and therefore short stocks?

Buffet would never short a stock, Livermore would say yes.

Buffet is the most successful investor in stocks ever. Livermore killed himself after his fourth or fifth bankruptcy. You be the judge.

What do I have to say about this? Well, I guess I'm still too young to have a definitive answer (just turned 31, 11 years of stock market experience - most of it spent trading futures), but I'm loving to invest on the perspective of the business, and businesses don't shut doors when the market goes down. Several of them just keep growing.

It's an open debate.

Quote from: David Randolph on February 27, 2007, 02:29:43 PM

Quote from: lancefur on February 27, 2007, 02:13:54 PM
Man, I hate days like this. I didn't add to stocks I already held but I did buy GIGM at a low price and now that's even dropped further.

Stupid question really but I will toss it out there...why don't markets go up like this? Why do they only go down like this and then take a couple weeks or so to recover or longer?

They go up like this and more, in bear markets ;D

Once I saw the Nasdaq up 14% in just one trading day, I believe it was the 3rd of January 2001, after the FED cut rates by 50 basis points by surprise when the market was open!

Me too, I hate days like these, when I looked to the Main (http://www.3stocksonfire.org/3stocksonfire.php) and saw it down almost 4% on the day I felt like vomiting.

But then I remember some days where I lost 30 or 40% in one day, years ago when I played futures so I put things in perspective.

What I'm going to do is finish these analysis because that's my job and my life, I can't let the market interfere with the normal course of life, it can't! I suggest you do the same ... anyway, I've seen several big market breaks starting, and this doesn't feel like one, there wasn't enough optimism in the air prior to this, in fact, the media and the general sense of the public has been quite bearish lately. Not the right environment for a big crash, they always come as a surprise.

But a 5 or 10% correction? Unfortunately, it can happen ... good luck for us.

Strong hands here...almost lost my grip on a couple poorly timed purchases such as JADE but still holding strong.

Quote from: nullzero on February 27, 2007, 02:25:01 PM
Man the only stock I see on fire today is the QID. DOW looks like it may see -300 points today. NASD -100 points maybe... All from the Chinese and Greenspan. I think its time to short the market this is the change in tide I been watching. I was waiting for early summer to enter but this may be the turning point on the markets. David time to pick some shorts on fire for the portfolio? :P

Hey Nullzero I hear ya, "shorts on fire", may be the time.  As David says its a risky business, but if the markets do turn then you are trading with the trend.  And from 3SOF data and members we should be able to identify the really inflated fluff, thats the stuff we would never never buy long for the portfolio.

Also agree on the QID, almost bought some couple of days ago just above $50.25, but hadn't quite convinced myself.  I think it might now be the time to enter, if we get a general bounce tomorrow the QID's may come down into the low $52's.  Will wait and see.

What do you think David, stocks on fire shorts, if the market turns??

Sitting tight for the most part today, sun is shining, just above zero, have been out shoveling some snow and went to the car wash to get rid of some salt on the truck.

Quasi

I keep an eye on the general markets by going to this site that shows the weekly, daily, and 60 minute charts on the markets direction (dow, qqq, nasdaq).  Here is the web link (I hope it copies okay...).

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID897936&cmd=show

INSM is up today on big dip day on high volume.  You would think on a day like today it would be a perfect candidate to tank, because all it has going for it is speculation right now.  Must be some pretty strong speculation.

David,

What made you decide to choose exm over btj to add to the portfolio.

Thanks

HOLY SHIT! -460 on the DOW

Quote from: nullzero on February 27, 2007, 03:00:24 PM
HOLY SHIT! -460 on the DOW

INSANE, very glad I went to cash, I have never seen anything like this.

I know I still have PTCH.OB, SPWR, DLSL.OB, IPT, ANGN and JAKK to cover, but I feel it is more important to think about the general market now, so I'll pass this on for tomorrow (not really in the mood too), so tomorrow I'll pick just 4 new ones to analyze.

Still on the Buffet/Livermore debate, perhaps if Buffet had lived through the 1929-1932 bear market he wouldn't be, not even close, one of the richest men in the world, because back then the Dow Jones Industrial Average fell by 90% :o

Buffet also lived through, and was heavily invested over that time, the biggest and longest bull market in the entire US history, the 1982-2000 bull market, that saw the Dow rise almost 12 fold in just 18 years.

So, the fact that Livermore died poor and Buffet is the second richest man in the world doesn't prove that one's theory is better than the other, maybe it was just a matter of timing.

I believe Livermore went bankrupt again in 1933 not because he was wrong in the market, but because banks simply went bankrupt too, so he was left without his money.

Anyway, for the next post let me look at some indicators I used to use when I played the general market futures, like the e-mini S&P500 and the DAX.

I cant trade through scottrade I guess their systems are overloaded. Either that or trading has been halted... the Plunge Protection Team must of stepped in to rebound the markets.

Quote from: tokyopua on February 27, 2007, 03:02:23 PM

Quote from: nullzero on February 27, 2007, 03:00:24 PM
HOLY SHIT! -460 on the DOW

INSANE, very glad I went to cash, I have never seen anything like this.

The Market sure is interesting today! 

Stephen Roach from Morgan Stanley raised the "complacency" flag on Monday:

The World Drops Its Guard (http://www.morganstanley.com/views/gef/archive/2007/20070226-Mon.html)

He's not a market strategist, he's a global economist. I respect his views a lot. Then Greenspan said there could be a recession in late 2007. I respect him too.

I saw the latest Commitment of Traders Report and indeed it shows complacency, with commercial hedgers heavily on the short side and speculators long.

The $VIX is jumping 58% today from a very, very low level on an historical basis.

China has been growing on an average of 10% a year for the past 20 years or so, it sure is ready for a sharp recession.

Valuations of several stocks seem cheap in relative terms, but in absolute terms they seem quite expensive on average, trading at what, 18 or 19 times 2007 estimated earnings?

I guess I'll have to concede bears are right in selling off today. This isn't even the start of a new bear market, the one that started in 2000 never ended, since the S&P 500 didn't break to an all time high. I guess this is looking more and more like the 1968 - 1982 bear market, a prolonged sideways market, going up 100%, then down 50%, then up 100%, then down 50% ...

I'm worried >:(

I've decided to let go of the 3 holdings of the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php) until the close. I'll just go smoke a cigarette before I'll do it.

For the Main (http://www.3stocksonfire.org/3stocksonfire.php), which is still up 10.7% on the year (it was up 17% yesterday), I'll have to think overnight which ones I should hold and which ones I should drop, or if I should just dump them all on a Livermore style type of thing.

Yes just read that the NYSE has been using the breakers, Plunge Protection Team?? not sure, also are they just slowing the rebound bounce at this point.

Yes a bad down day, just came back in from some snow shoveling, checking things out, scary, panic, I think automatic stops are being tripped all over the place.

However when I look at my holdings, (which are down somewhat) volume is below average.  When I look at stocks on my close watch list, most are also down, but again very few are down on above average volume and many are down on very low volume.

So for now I'm just gonna let the dust settle.  I will review tonight if I should reduce exposure anywhere and make a list of bargains worth the risk.  And look into the QID or QQQQ puts as some insurance for the short term, although the puts are a little pricey today.

Quasi

David. If our fearless leader is worried then I am more than worried. Mortified might be a good word. I will not hold my stocks much lower than they are now. I must cut my losses at some point and move on. The sad thing is that I had just traded my way back up from my previous loss. At least what I lost today was the houses money and not my capital. Have a great day!!!

Looks like maybe there was some trading program algorithm that might have panicked and dropped the DOW so much?  Of course it is likely to drop below this level in days to come, but still intersting if so to see the effects of computer trading... 

The only good thing here is that if this is just a correction, it is happening fast and furious, which means buying opportunities could present themselves in as little as a week.

David should quit that smoking habbit! Anyway I bought some SILC, BFLY, OFI, IMOS, and EXM today. I cut my position in MSI with a 10% gain... Hoping for a rebound in MCZ tomorrow.

Its going to be all eyes on china later tonight. Lets see if the Chinese stock exchanges rebound.

Quote from: tokyopua on February 27, 2007, 03:54:37 PM
Looks like maybe there was some trading program algorithm that might have panicked and dropped the DOW so much?  Of course it is likely to drop below this level in days to come, but still intersting if so to see the effects of computer trading... 

The only good thing here is that if this is just a correction, it is happening fast and furious, which means buying opportunities could present themselves in as little as a week.

From Briefing.com:
Follow-up on this afternoon's gap down in the market

   Regarding today's afternoon plunge, a CNBC commentator notes that at first traders on the NYSE floor thought it was a bad print. Then traders believe that a series of trades were queued up against the curbs, and when the curbs were released, then the Dow gapped down another 200 points in a matter of minutes. Says traders have never seen such an instantaneous gap down... It's worth noting that at least for the moment, the Dow seems to have held its initial test of its Dec low of 12,090

Will be interesting watching Fast Money today. Like to see what the consensus of the market by the traders on there is.

The 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php) went down 8.17% on the day as I liquidated the 3 holdings for small losses. It was its worst day ever.

Still up 58.75% since inception on January 19, 2007. My concern is that it won't be that easy to make money going forward.

If this is the start of a bear market downturn, I know that trying to grab oversold stocks for a brief bounce is a losers game, and that shorting is also very difficult, as short squeezes keep happening.

Some men made money on previous bear markets, but not a lot.

Well, tomorrow is another day, I'm glad the market closed so I can ease my mind to look things over and put them into perspective. A speculator needs to be prepared to change his mind when the market forces dictate him to do that.

However, should an investor also change his course of action because of the possibility of a 20 or 30% general market fall?

I guess he at least should become more demanding when looking at valuations. History says a market is cheap only when trading at 8 times earnings. That's the average. For small caps it should be less than that.

I'll think some more, thanks for your insights, see you tomorrow :)

(I'll close the board so I can rest. You take a rest too)