The Life of a Speculator

When GPRO hit $85 yesterday, it was all but assured that it’d keep heading higher, amidst the fanfare of being the hottest product this holiday season. People were tripping over themselves to get long. Then the market closed and the company priced a secondary 4 points below the market, revealing a weak hand to the scoundrels on Wall Street. The retail heavy clientele got locked into a doomed deal and those very same people sold with reckless abandon today.

Now no one is talking about GPRO heading higher anymore. The lies and the fear mongering that was purported by short sellers must be true. We must sell because of an avalanche of new shares heading to market. No one wants GPRO cameras anymore.

It’s funny isn’t it? But this is what makes the stock market great. Sure, I lost a small fortune from yesterday until today; but the lesson is priceless. I am a student of this market and have read the tales of Jay Gould, James Fisk, Commodore Vanderbilt, Uncle Drew, Henry Clews and others, and know that what we see here on a daily basis is just noise–utter nonsense. Stocks will fluctuate based upon the caprices of man. You can go broke trying. Plenty of great men, legendary traders, have died penniless.

But why?

Every once in awhile we let our guards down and believe we are Hercules, god amongst men–indestructible. Then that moment comes, the time when that perfect trades eludes us and drags us down into the dungeons of hell to exact punishment. Such an occasion has not befallen me on this day (down 0.5% for the session), despite GPRO being down a cool 7. But it’s this entire year of hand-wringing exercise, dodging bullet after bullet, that has exhausted me into a capitulatory demeanor.

It’s probably the reason why I didn’t sell GPRO when it was at $85, marked by The PPT as overbought–when it was destined to trade higher.

At least I made a solid $5 on that hamburger stock today.

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Mrs. Fly wants me to shave my beard, so that we can dine tonight like civilize people amongst our peers. I refused her request.

The stock market was supposed to tank today, amidst talk of horrible global growth and a cataclysmic oil price decline. That didn’t happen either.

Someone that I know is obviously on ‘tank chocolate’ and believes business trumps ethics. He will be wrong too.

Hell, I was wrong for letting a monster gain in GPRO wither away into a small one, thanks to a very weak shareholder base.

I can go on and one forever.

We are a fallible creature, pre-disposed to act upon our emotions instead of logic. Some of us hide our mistakes in dark closets and carry on as if nothing had happened, continuing life, miserably, like a bunch of Eddie Barzoons.

We seek happiness, ultimately. Its why we buy HABT at $33.5 and sell it at $36, then go to the internet to brag about our exploits. Justify everything with platitudes and account for nothing because we are Gods special little creature, just like Eddie Barzoon.

I started a small position in HABT, sub $34. The newly minted burger chain IPO has enjoyed 40-50% growth in recent years and fits perfectly in my “fuck Mcdonald’s investment philosophy, where people actually pay for quality food over cheap synthetic crap.

I will be adding to this names for months to come.

So I wake up to GPRO down more than $5, below its secondary pricing of $75. For an investment banker, this is a worst case scenario. However, the deal is already paid for and accounts have been debited. But you don’t want to screw over retail too badly, otherwise they won’t buy your next deal.

Then I head on over to the ever-so-trustworthy StockTwits, using my iPhone app. There I find the stream to be dominated by bearish fellows, chastising others for being long ‘such a stupid stock’ etc, etc, etc. The overall picture is a cabal obsessed with lower prices. Most of these fellows don’t know why they want lower prices– they just want them.

The truth is, their displeasure with life has led them to a fork in the road. They can either cave in and eat gallons of iced cream and gain 500 pounds. Or, they can go to the StockTwits website and talk shit about ‘stupid stocks.’

Shortly after I finished cobbling through the commentary on the StockTwits app, I moseyed on over to Briefing.com, a website dedicated to news and information. Top notch service, if you’re interested in that sort of thing. I read that BBY reported a blow out quarter and the stock surged. Now I know, being a long investor in that ‘stupid company’ called Gopro, that BBY makes up more than 25% of their revenues. Because of the great demand for GPRO’s products, they’ve recently cleared significant shelf space in order to accommodate consumers who are interested in buying their products.

So what is the bottom line, after all?

Well, GPRO is pricing a large secondary in the hole. The dynamics of the supply versus demand aspect, coupled with a bad tape, has led to a poor pricing environment. Unlike FEYE and other bubble stocks that popped, GPRO is still growing very rapidly and exceeding estimates. The stock isn’t trading 20x sales, like your run of the mill bubble stocks, but instead 8x. Fundamentals appear to be gaining momentum, heading into what might be the best holiday shopping season in over a decade, save the city of Buffalo who has been wiped clean off the map.

If my crystal ball had not been in the shoppe, I might’ve sold GPRO at $85 yesterday. However, as fate would have it, I am still in the stock. Silly ole me.

You know, there’s a fantastic iced cream shoppe down the block. You really should give it a try sometime.