3SOF

Good morning :)

Over the weekend I received various suggestions, reflecting the different trading styles and needs of the 3 Stocks on Fire Community members. Some of those suggestions entered in direct conflict with others, some people only like short term trading, others prefer long term investments, some want options, others say they're too risky, some are pure technicians, others say they prefer fundamental analysis.

From what I've been reading and learning from this board, and especially considering Quasi's post saying the objective of turning $15,000 into $150,000 with a short term trading strategy is very, very hard and even if it could be done, most people following the strategy, because it would be so short term driven, would lose money anyway. I fully agree with him. The fact that I saw some of your buying driving ETLT.OB higher has led me to turn it into a long term investment, or else I would be selling my shares to you, the people following my recommendation, and that would be a thing I would never do.

To make a long story short, I've decided to transform the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php) into a "Top 3" of the Main Portfolio (http://www.3stocksonfire.org/3stocksonfire.php) holdings. Since the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php) holdings will be, at least in my mind, the best holdings of the Main Portfolio (http://www.3stocksonfire.org/3stocksonfire.php) (only accessible to subscribers), the 3 Stocks on Fire Portfolio had to be closed to non-subscribers.

Therefore, this message board no longer supports that Portfolio's management.

Instead, this message board will be used for 3 SOF members (subscribers and non subscribers) to post their ideas, strategies, stock picks and analysis, whatever they (you) please. The objective is for each one of us to express ourselves and look for other's views on stock market related issues.

My contribution to this free board will be three in depth video technical and fundamental analysis per trading day. I'll choose the stocks to be analyzed.

I hope we can continue learning from each other as we exchange stock trading experiences, this has been and hopefully will continue to be a great joy and life experience.

Thank you, have a nice day :)

David,

Good strategy. I am current subscriber. What is you current plan for the current holdings in the 3 stocks portfolio, especially the options nearing expiration. I sti

Thanks,

Eric

David, would you take a look at cspi?

Quote from: eggman11 on March 12, 2007, 10:35:22 AM
David,

Good strategy. I am current subscriber. What is you current plan for the current holdings in the 3 stocks portfolio, especially the options nearing expiration. I sti

Thanks,

Eric

Thanks for asking Eric, I couldn't fit that information on the initial post. Ramsburg will be selling those two puts in the next few minutes (man, I thought the market was closed as I went for a coffee, didn't know the hour would be changed).

Quote from: txo066 on March 12, 2007, 10:36:40 AM
David, would you take a look at cspi?

I'm sorry txo066, starting today I'll be making just 3 analysis per day (I want them to be more in depth, instead of making 10 to 20 per day) because I need those analysis to eventually support long term investment decisions. I'll be the one choosing which stocks to cover.

But it would be great for you to express your views on CSPI, the chart looks great, good luck :)

SIGA again on fire, new 52wk high!  :)

Ok, Ramsburg sold those two put options with a big percentage loss, as they are closer to expiration now. I will never touch options again, but I respect and understand people who like to trade options.

The 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php) "closed its doors" to the public with a 44% return since inception in January 19th, 2007. As my hand was hot the portfolio went as high as a 80% return, but profits were almost cut in half as my hand got cold. This has been my experience with short term trading over the years, a never ending boom and burst cycle. But of course it is possible and I hope other people can achieve a nice long term return playing stocks or options for the short term, even though I feel I can't. I'm too old now (in stock market terms, 11 years in the game).

I want to do what I'm loving more now, and that is to study a stock very well, and if I really like its business and fundamentals, buy it and stick to it for the long term. I plan to study 3 stocks per trading day, that will be about 66 stocks per month and a nice source of the best of the best picks, I believe.

I'll post those analysis on this board. The first I'm interested in making one of those 10 minute videos is JADE.

Have a nice day :)

David,

In a previous post from last week. You mentioned SILC as a potential 10-bagger and were planning to do some more research. Do you still feel this way? and if so, wouldn't be a prime addition to the 3 stocks on fire portfolio.
Maybe you can do a video analysis of SILC today.

Thanks

Quote from: eggman11 on March 12, 2007, 11:05:08 AM
David,

In a previous post from last week. You mentioned SILC as a potential 10-bagger and were planning to do some more research. Do you still feel this way? and if so, wouldn't be a prime addition to the 3 stocks on fire portfolio.
Maybe you can do a video analysis of SILC today.

Thanks

eggman1, I don't understand, you have the SILC thread on the Main Portfolio message board (http://www.3stocksonfire.org/trading/index.php?board=1.0) (in the future I won't disclose the Main Portfolio's holdings), why not pose that question there?

Thanks :)

Quote from: David Randolph on March 12, 2007, 10:53:59 AM

I'll post those analysis on this board. The first I'm interested in making one of those 10 minute videos is JADE.

Have a nice day :)

Hi David,

Are you still holding JADE?  For now, is it a long term hold or short term hold?

Thanks.

dcrlin

Quote from: dcrlin on March 12, 2007, 11:10:25 AM

Quote from: David Randolph on March 12, 2007, 10:53:59 AM

I'll post those analysis on this board. The first I'm interested in making one of those 10 minute videos is JADE.

Have a nice day :)

Hi David,

Are you still holding JADE?  For now, is it a long term hold or short term hold?

Thanks.

dcrlin

Hi Ms Randolph, nice to see you :)

As you can see on the 3 Stocks on Fire Portfolio page (http://www.3stocksonfire.org/3stocksonfire_3sof.php) (since you're a subscriber to the Premium service) I'm still holding JADE. I'm making a more in depth analysis to see if I should consider it for the Main Portfolio (http://www.3stocksonfire.org/3stocksonfire.php), which I'll post in a couple of hours.

Hi David!!  I would like to know which is your opinion for JSDA.  The company reported earnings with net income more than tripled.  They'are opening the channel distribution for the beverages wich will include Walmart.  I really do think they have a bright future.  The stock closed at 14 on thursday.  Today is trading at 18.

Thanks

OK, I will share some current picks .. I am short FD (May puts) and ready to short NUCO (will close trade if it gets above 25 with volume)
For longs ... OVEN (and today is a good entry) and AWNE .. again a good entry as it is resting on the 100 ma so the stop can be tight (the way I like 'em)
Also AWNE is recently being touted by a lot of those 'services' that send out flyers by mail and email saying it is the "next hot thing".  That kind of stuff can move the little ones in the short term. 
I am purely a technical trader, which is why I am here learning from David about the fundamental side .. so have no idea if the above longs are actually worth anything fundamentally  ;)

PS  if the home builders can rally for more than 2 days, I will happily be buying puts on some of them as well.

cimt is on fire today!

Hi David,

What do you think about CPNE at these levels??  Are you still holding?  Thanks in advance.

Quote from: tocitygirl on March 12, 2007, 11:56:37 AM
Hi David,

What do you think about CPNE at these levels??  Are you still holding?  Thanks in advance.

Hi tocitygirl, nice to talk to you :)

No, I'm not holding CPNE.OB, I sold it at $3.2 for the Fire Portfolio and at $2.39 for the Main Portfolio. I believe the current low trailing earnings multiple of about 11 is due to the fact that www.onlinesupplier.com, the main source of revenues for the company, has an extremely high churn rate (more than 50% a month). This happens because the company's service sucks (it couldn't be any other way in my opinion).

As the word spreads their acquisition costs per new subscriber will rise a lot and the business won't have long term viability. They need new and quality revenue sources. Anyway, I believe management will be able to come up with something in the future, I'll keep it under the radar.

David, what's your take on CIMT.  They just reported a nice profit and have completed a major turnaround with new products.  I believe this has some long-term potential.

Thanks,
Mbaugh

Quote from: David Randolph on March 12, 2007, 10:37:21 AM....(man, I thought the market was closed as I went for a coffee, didn't know the hour would be changed).....

GM  David,  (some strategic thoughts)

The markets are open early ! !,  Yes gotta keep up your DD and not just on stocks and companies, Ha Ha, but don't feel bad, even Stockcharts.com had the same glitch in their system this morning.

It must have been a long weekend of soul searching which is always difficult at these pivot points.  Well for me it has been a very enjoyable learning experience / experiment being involved with the 3Stocks on Fire portfolio team, I will miss it.  As I'm not a premium member I won't be able to directly follow or input to the main portfolio, but I will whenever possible continue to offer suggestions and I wish you all the best of luck, "may the force by with you".

I fully agree with and understand your decision, just like investing and money management, if what you are doing is not working, you must re-evaluate, cut your losses and carefully consider a change in direction which will offer better reward / risk premiums.

I'm not that familiar with the main portfolio, but I understand that it can hold up to 15 equally $ weighted holdings and I'm not sure if you re-balance the $'s from time to time.  But I just thought I would offer a few comments at this time of strategic change, for the teams consideration. 

The objective is to hold long term good companies based on fundamentals and using some TA input for finding the entry points, exit points and pivot points.  With the standard format being that you buy the entire position, (6.66% of portfolio dollars),  and hold it until you sell the entire position.

My long term strategy in many areas is similar, however I do tend to scale into a position and then scale back or out if it is starting to turn, ie reduce the risk.  But at the same time never being too overweight in any one stock.  I know this is against your strategy David of being all in or all out, (off or on, no middle ground), but sometimes it is wise to take some profits.

Now as it is often wise to take some profits along the way and do some re-balancing, this will usually trigger a gain and tax implications which I may not want at the present time.   So when I'm long term bullish on a stock but there is significant short term risk, I consider buying some insurance PUT options.  Now yes it does cost a little, but it basically takes me to neutral risk on the stock thru that time of high downside risk and does not trigger a tax event which would occur if I took some money off the table.   

Just an idea where one position (1/15) of the portfolio could be reserved in cash for these types of situations.  That cash value would be more than sufficient to hedge several long positions and also buy calls where a current holding has a huge upside potential short term, but you can't increase the actual stock position to more than 6.66%.  Now I'm not talking of risk swings on the 60 min / daily chart, this is a long term portfolio, so I'm talking about the daily / weekly charts.

JMHO
Quasi

COR on fire.  Glad you sold CPNE, David. It was a scam stock and any new projects they come up with will be variations on the Ponzi scheme they were running.

Not to make your feet cold, just out of curiosity, if you ever wondered how the 1929 crash unfolded in technical terms:

Quote from: David Randolph on March 12, 2007, 01:22:43 PM
Not to make your feet cold, just out of curiosity, if you ever wondered how the 1929 crash unfolded in technical terms:

Are you going to liquidate all of 3SOF's positions again? 

Quote from: buddjas1 on March 12, 2007, 01:42:48 PM

Quote from: David Randolph on March 12, 2007, 01:22:43 PM
Not to make your feet cold, just out of curiosity, if you ever wondered how the 1929 crash unfolded in technical terms:

Are you going to liquidate all of 3SOF's positions again? 

??? I don't understand the question. I just shared that chart out of historical curiosity, it has nothing to do with my outlook for the market now. Look here, the biggest bull market in history:

Hi David,

I am a new member here, and I also have experienced this recent big dip and the change of 3 stocksonfire portfolio. But I think your strategy has nothing to do with current  shrinkage, so just stick with your own way, and I am sure there wont be a problem leading us to gain 20-40% annually even with this bearish market.
Also, I bought SDS before your entry, and i saw you mentioned we should sell it if SPY reaches 141.69. Could you give a brief analysis?

Thank you

did something change in 3stocksonfire.org. Now only premium member can see 3stocks and the its message board?

Quote from: David Randolph on March 12, 2007, 01:48:53 PM
??? I don't understand the question. I just shared that chart out of historical curiosity, it has nothing to do with my outlook for the market now. Look here, the biggest bull market in history:

Good; I thought for a moment that you had turned super bearish again.

Quote from: gix330 on March 12, 2007, 01:51:54 PM
Hi David,

I am a new member here, and I also have experienced this recent big dip and the change of 3 stocksonfire portfolio. But I think your strategy has nothing to do with current  shrinkage, so just stick with your own way, and I am sure there wont be a problem leading us to gain 20-40% annually even with this bearish market.
Also, I bought SDS before your entry, and i saw you mentioned we should sell it if SPY reaches 141.69. Could you give a brief analysis?

Thank you

I update SDS's analysis everyday in the proper thread, here: http://www.3stocksonfire.org/trading/index.php?topic=9065.msg92107#msg92107

If you want to make questions about any trade, please do it in that trade's thread.

Thank you :)

Quote from: automountus on March 12, 2007, 01:52:44 PM
did something change in 3stocksonfire.org. Now only premium member can see 3stocks and the its message board?

Yes, please read the first post of today's thread, thanks.

David,

Thanks for the suggestion a few days ago to check SPY, QQQQ etc for volume.

Looking at them today the volume is extremely low compared to recent days, I will continue to look at them.

BTW, very sobering picture on that 1929 crash chart.  That chart did look a bit parabolic, but crazy how far down it fell.

Quote from: tokyopua on March 12, 2007, 02:09:43 PM
David,

Thanks for the suggestion a few days ago to check SPY, QQQQ etc for volume.

Looking at them today the volume is extremely low compared to recent days, I will continue to look at them.

BTW, very sobering picture on that 1929 crash chart.  That chart did look a bit parabolic, but crazy how far down it fell.

I'm glad you enjoyed it. By the way, look here the 1966-1982 sideways action (but in those years inflation was very high, so in real terms the market performed a lot worse than what it seems. Ramsburg has a deflated long term Dow Jones chart, I have to ask for that one too):

Hi David and all

Yes does history repeat itself, some always say things are different now, the same rules no longer apply.

As Tokyopua said interesting parabolic chart from 1929, but also parabolic chart for the 80-90's time frame. 

Greatest Bull run of all time, thus we should just hold the course and hold strong for the long term, Right ?

Well I changed from long term hold thru ups and downs to more of listen to Mr. Market and invest with the trend and be conservative when the overall trend is trendless or sloppy.  Now I know most like to be perennial Bulls month to month, year to year etc but we also have to be flexible.

So lets continue Davids chart of that DJI up to now, and we'll see that those Bulls went thru a 6 & 1/2 year period of being in the red.  Now the flexible long term guys would still have been in for part of the drop and missed out on part of the rise, but for many of those years they would have been on the right side or at least elsewhere.

Just another thought on the subject.

Quasi

Ok, made a more complete video analysis for JADE:



I come to the conclusion that historical dilution and the weak balance sheet pose a problem to JADE's long term outlook. Not good enough for the Main Portfolio (http://www.3stocksonfire.org/3stocksonfire.php), so obviously not good enough for the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php), which from now on will be the Main's "Top 3 holdings".

By the way, if you want to receive my daily video analysis on your e-mail box, please subscribe the 3 Stocks videos at www.youtube.com (http://www.youtube.com/profile?user=3stocksonfire).

Thanks :)

David and all, 

Just read my last post again and it sounds like I'm totally against long term holding, sorry that's not true.  I was just trying to indicate going with the long term flow, markets go up, go down and go sideways.  Thus add and reduce positions over time as necessary and try to spend most of the time in the up legs.

The following are long term investment sectors I'm in or have liked for some time.  These are not recommendations for blind entries at this time, just sectors I've been interested in for a while and have great potential for many many years.

Internet infrastructure, Global scale.

Backbones all over the world are loading up quickly, basically driven by all the compressed video and audio being transmitted.  In the short term I hate this as I feel it's a waste of real time interactive communication,  one guy downloading one movie is equivalent to a years worth of email.  As things load up it can have a negative affect in areas such as VOIP telephone and interactive research on the internet.  I know people don't like to hear it but I see selective bandwidth requirements coming in the future as bandwidth is not unlimited.  Bulk transmission broadcasts (radio, TV, video) are best suited for the airwaves and satellite one way distribution.  Where two way high speed is required the land based internet is ideal as most of this communication cannot tolerate the time delay involved in satellite transmission.   IE just because there is a flat rate on the Concord that doesn't mean you can just get in line and airfreight bulk, some things should go by rail or boat.

Now back to the internet infrastructure commercial hardware, routers, cards, fiber optics, etc.  As mentioned before, SILC is in this area in addition to others such as AVCI, CSCO, NORTEL, LUCENT/ALCATEL, and I'll add in Corning GLW because of their leadership in fiber (and also I like the LCD glass exposure).

Internet distribution, Local area

We all desire more bandwidth to our homes and businesses, however plowing more fiber directly to your PC is very expensive and time consuming.  Recently WiFi has shown promise but is limited to about 1/2 mile between repeaters so there is still considerable infrastructure to cover a city.  Now have a look at WiMax the next generation with stated ranges up to 30 miles, well lets say we just use 5 miles for practical real life applications.   With that kind of range a city can easily be covered with just a few repeater towers.

Companies on my short list are:  ALVR and AIRN

RFID,  Barcodes for the next century

Radio frequency identification (RFID) tags, Walmart provided the insight and started the push a few years ago.  You all know them as those little tags with the little coil of wire you occasionally see on items you buy.  Now think about how bar codes have changed how companies do business, well RFID will move that performance up by several orders of magnitude.   Most companies are using them now and as the cost comes down you'll see them being used on everything.  In a grocery store you will just push the cart past the checkout and they will know everything that's in the cart and just hand you a bill, while simultaneously updating inventory and shelf re-stocking lists.  Note the military has also jumped on this bandwagon.

Companies on my short list are:   IN, RFMD, ZBRA

The following are other sectors I own or have on my short list.

O&G, but specifically domestic NA natural gas.  Big short supply squeeze coming over the next few years.

Uranium, again short squeezes starting to happen now.  Invest in companies with proven reserves and existing mining operations.  Speculate or gamble on the explorers, no reserves or production.

A little longer term I like alternative fuels, CTL coal to liquids, CBM coal bed methane, clean coal technology etc.  At the present time I'll forget about ethanol, to me its all hype as the current energy ratio is between 0.75 and 1.25, ie for every equivalent barrel of oil energy you get out 1 barrel of equivalent ethanol energy.  To me this is a no brainer bad energy strategy for the future.

Just a few sectors for your consideration.

Quasi

Indeed, those are very appealing sectors Quasi. I picked ZBRA to cover on a more or less random basis, let me make a video analysis on it (it takes about 2 hours to do it because I make those bar charts by hand).

Thanks :)

Video analysis for ZBRA:



ZBRA is almost perfect, see you tomorrow :)