Archive for January 2014

Weekend Open Thread   16 comments

Another week and month gone, so let’s open up the weekend open thread, where you can discuss anything you like.

I offer, for your consideration, the topic of the “rock opera”. The Who’s Tommy is considered the first great rock opera. Although I have never really liked Tommy as a whole, I did enjoy Elton John’s version of Pinball Wizard:

But Tommy was an entire album. What about rock opera songs? Admittedly, by definition, the rock opera is an entire album. However, there are two classic songs which manage to condense the rock opera into a single song with several movements.

The best is clearly Queen’s Bohemian Rhapsody:

But the runner-up is one of the most unusual (and funny) songs in rock history: Meat Loaf’s Paradise by the Dashboard Light.

That’s it for me folks. Enjoy your weekend!

PORTFOLIO UPDATE: My IRA easily topped the indexes, finishing up 0.40%.

Advertisements

Posted January 31, 2014 by edmcgon in Music, Open Thread, Portfolio

Sell Liberty Media Corporation (LMCA)   Leave a comment

It is hard to justify keeping Liberty Media Corporation (LMCA) in a bear market, especially with the attempted Sirius acquisition hanging over the stock price. I am eating a small loss on this sale at $132.07, but keeping it on my watchlist for the future.

The final line:
LMCA: -0.08 today, -3.12 overall to $132.07 (-0.06% today, -2.31% overall)–bought at $135.19

Posted January 31, 2014 by edmcgon in Portfolio Moves

Sell Caesars Entertainment Corporation (CZR)   Leave a comment

As part of my overall plan to liquidate some positions, I sold Caesars Entertainment Corporation (CZR) today at $21.97. The stock will remain on my watchlist for acquisition later.

The final line:

CZR: +0.52 today, +0.02 overall to $21.97 (+2.42% today, +0.09% overall)–bought at $21.95

Posted January 31, 2014 by edmcgon in Portfolio Moves

Traders Corner   32 comments

bear

The bears might have taken a nap yesterday, but don’t expect it to last. I will go out on a limb and say we are seeing the start of a cyclical bear market. I say this based on the first rule of investing: “Don’t fight the Fed.” With the Fed tapering QE, that means less liquidity flowing into markets. We have already seen the reaction from emerging markets, and it is only a matter of time before that impact reaches American shores.

I will also predict when this cyclical bear market will end: This summer, roughly between June and August. It will happen as soon as the U.S. economy starts to show weakness in response to the QE tapering. Whether it is a little weakness, or the economy comes to a screeching halt, remains to be seen. But I expect the Fed will reverse course, and the markets will react appropriately.

My macro strategy for this:

1. As far as the long-term holdings in my 401k, I plan no changes. They are all dividend stocks (except Google, which I plan to hold anyway), so I have no reason to sell them.
2. For my shorter-term IRA, I plan to liquidate most of it, with the exception of my biotech stocks, GWPH and NNVC. While biotech can be impacted by a bear market, they also tend to be more responsive to company-specific news, even on down market days. Selling now would defeat the purpose of owning a biotech stock in the first place.

As for today, S&P 500 futures are down right now, so it looks like the bears will open the market today. With the technicals looking neutral, don’t be surprised by a down day.

The S&P 500 levels to watch today:

UPSIDE: 1795 (January 27th’s high), 1798 (January 30th’s high), 1812 (50 day moving average), 1815 (January 13th’s low), 1820-1821 (2 data points), 1823 (January 6th’s low), 1824 (20 day moving average), 1826-1832 (8 data points), 1835 (January 17th’s low), 1837-1840 (7 data points), 1843-1847 (7 data points), 1849-1850 (January 21st’s high, December’s high and the all-time high), and 1870 (top of the Bollinger Bands).
LAST CLOSE: 1794.
DOWNSIDE: 1793 (January 28th’s high), 1790 (2 data points), 1779 (January 28th’s low), 1778 (bottom of the Bollinger Bands), 1777 (January 30th’s low), 1775 (October’s high), 1772 (January 27th’s low), 1770 (January 29th’s low), 1767 (December’s low), 1746 (November’s low), 1729 (September’s high), 1709 (August’s high), and 1705 (200 day moving average).

Ed’s Daily Notes for January 31st   13 comments

Bloomberg: Google Sales Top Estimates as Retail Ads Bolster Results

Google Inc. (GOOG) posted fourth-quarter sales that topped estimates as retailers spent more on advertising during the holidays, making up for lower ad prices.

Revenue, excluding sales passed on to partners, rose 11 percent to $13.6 billion, while profit excluding certain items was $12.01 a share, the company said in a statement yesterday. Analysts on average had projected sales of $13.4 billion and profit of $12.25, according to estimates compiled by Bloomberg.

Even though Google missed on the bottom line, you have to weigh that against increased revenue (which beat estimates), as well as the fact Google is selling Motorola, which weighed on their bottom line. In that light, it was a good earnings report.

CNBC: Amazon may hike Prime cost, earnings disappoint

Bad news for Amazon shareholders, as well as customers:

Amazon.com posted quarterly results Thursday that fell short of expectations and handed in a weak revenue outlook.

Additionally, Amazon said during its conference call it may increase the cost of its popular Amazon Prime subscription by $20 to $40 due to higher fuel and other shipping costs.

…In December, Amazon said that its Prime service had a “record-setting holiday season.” According to the company, more than 1 million people signed up in the third week of December alone. Prime members get free two-day shipping on eligible items, free streaming of 150,000-plus movies and TV episodes, and free e-book borrowing from a library of more than 475,000 titles.

The world’s largest Internet retailer posted earnings of 51 cents a share on sales of $25.59 billion, versus expectations for 66 cents a share on sales of $26.06 billion, according to a consensus estimate from Thomson Reuters.

In addition, the company posted current-quarter sales guidance of between $18.2 billion and $19.9 billion, missing expectations for $19.67 billion.

The company said international sales gained just 13 percent, lower than Wall Street forecasts for around 14 percent to 15 percent.

An across-the-board miss, combined with lower guidance, is a recipe for share price disaster. Maybe now Amazon will get a reasonable valuation? Do you think their previous trailing P/E of 1,460 and PEG ratio above 4 were a tad optimistic?

That said, I will add AMZN to my watchlist now. It is still a good company, just absurdly overpriced.

Bloomberg: Microsoft Said to Be Preparing to Make Satya Nadella CEO

I didn’t see any of this coming:

Microsoft Corp. (MSFT)’s board is preparing to make Satya Nadella, the company’s enterprise and cloud chief, chief executive officer and is discussing replacing Bill Gates as chairman, according to people with knowledge of the process.

One person the board is considering to take the place of co-founder Gates as chairman is Microsoft lead independent director John Thompson, said the people, who asked not to be identified because the process is private. Even if Gates steps down as chairman, he may be more involved in the company, said two people familiar with the matter, particularly in areas like product development.

…Microsoft has only had two CEOs — Gates and Ballmer — in its history. In turning to Nadella, the company would get an enterprise-technology veteran who joined Microsoft in 1992 and has had leadership roles in cloud services, server software, Internet search and business applications.

As president of Microsoft’s server business, Nadella boosted revenue to $20.3 billion in the fiscal year through June, up from $16.6 billion when he took over in 2011. That unit became cloud and enterprise when Ballmer overhauled Microsoft’s structure in July to focus the company on devices and services.

I can’t say I know enough about Nadella to say whether he will or won’t be a good CEO. As a shareholder, I will take a “wait and see” approach.

However, I like the choice of John Thompson as the new chairman of the board:

If Thompson, 64, takes over as chairman, Microsoft would have a more than 40-year technology executive in the role. Thompson was a longtime International Business Machines Corp. executive before joining technology-security company Symantec Corp. (SYMC) in 1999. He took the company from $600 million to $6 billion in sales over a decade-long tenure, before stepping down in 2009. Thompson currently runs Virtual Instruments Inc., a San Jose, California-based maker of software that tracks application and hardware performance.

Thompson joined Microsoft’s board in 2012 and has asked tough questions of top executives including Ballmer, people familiar with the situation have said. That helped to create an environment that sped Ballmer’s decision to retire by this August, the people have said.

I would rate MSFT as a “hold” right now. For people looking for a safe dividend-paying stock for a retirement portfolio, I would rate MSFT as one of the best.

The Daily Caller: Government shuts down 11-year-old’s cupcake business

The government has pulled the plug on an 11-year-old Illinois baker’s oven.

A day after a local newspaper ran a story about the young and ambitious Chloe Stirling, who operated a cupcake business out of her parents’ kitchen, the local health department came calling.

“They called and said they were shutting us down,” Heather Stirling, Chloe’s mother, told the St. Louis Post-Dispatch.

Read the entire article. But the money quote is from the government bureaucrat:

When reporters approached Amy Yeager, a health department spokeswoman, about the county’s decision to shut down Chloe’s business, she said that she was doing it for the sake of the public.

“The rules are the rules. It’s for the protection of the public health,” Yeager said, according to the Post-Dispatch. “The guidelines apply to everyone.”

“People will react how they choose to react,” she added. “But it is our job.”

So Amy Yeager, your job is to ruin the aspirations of a young girl? God forbid 11 year old Chloe Stirling should show an inkling of self-motivation and entrepreneurial‎ skill, instead of goose-stepping in line like we expect everyone to do.

Amy, if you want to know why I generally question the effectiveness of ANY government-run programs, it is mindless and soul-less bureaucrats such as yourself. I pray there is a special place in Hell for people like you, right alongside Nazi soldiers who ran concentration camps.

Posted January 31, 2014 by edmcgon in Editorial/opinion, News, Politics, Stocks, Technology

January 30th: Ed’s Daily IRA Summary   2 comments

BID: -0.85 to $47.90 ( -1.74% , -0.81% overall)– bought at $48.29
CZR: 0.50 to $21.45 ( 2.39% , -2.28% overall)– bought at $21.95
GNW: 0.08 to $14.95 ( 0.54% , 59.55% overall)– bought at $9.37
GWPH: 2.48 to $54.01 ( 4.81% , 63.92% overall)– bought at $32.95
LMCA: -0.87 to $132.15 ( -0.65% , -2.25% overall)– bought at $135.19
NNVC: 0.18 to $4.75 ( 3.94% , 87.01% overall)– bought at $2.54
SIRI: 0.00 to $3.59 ( 0.00% , -2.18% overall)– bought at $3.67

OVERALL: +0.73%

Posted January 30, 2014 by edmcgon in Open Thread, Portfolio

Traders Corner   28 comments

The markets have made it clear they don’t like the Fed’s taper. However, yesterday’s drop brings us a lot closer to extreme oversold conditions. But we aren’t there yet, so the bears still rule the markets, although S&P 500 futures are up slightly this morning.

The S&P 500 levels to watch today:

UPSIDE: 1775 (October’s high), 1779 (January 28th’s low), 1781 (bottom of the Bollinger Bands), 1790 (2 data points), 1793 (January 28th’s high), 1795 (January 27th’s high), 1812 (50 day moving average), 1815 (January 13th’s low), 1820-1821 (2 data points), 1823 (January 6th’s low), 1826-1832 (8 data points and the 20 day moving average), 1835 (January 17th’s low), 1837-1840 (7 data points), 1843-1847 (7 data points), 1849-1850 (January 21st’s high, December’s high and the all-time high), and 1872 (top of the Bollinger Bands).
LAST CLOSE: 1774.
DOWNSIDE: 1772 (January 27th’s low), 1770 (January 29th’s low), 1767 (December’s low), 1746 (November’s low), 1729 (September’s high), 1709 (August’s high), and 1704 (200 day moving average).