Seasonality Data Dump: A Mirror Image

Draw Downs greater than 30% in two months, looking at the third.

MSFT

2000

April: -34%

May: -10%

June: +34%

1987

October: -27%

November: -8%

December: +12.5%

2000

November: -16%

December: -24%

January: +40%

 

CSCO

1997

Feb: -20%

March: -14%

April: +8%

2001

Feb:  -37%

March: -33%

April: +7%

2002

Feb: -27%

March: +18%

2001

August: -15%

September: -25%

October: +39%

2002

September: -24%

October: +6%

November: +33%

2000

November: -11%

December: -20%

January: -2%

 

ORCL

2000

January: -11%

Feb: -35%

March: +5%

1990

March: -17%

April: -16%

May: +24%

2002

March: -22%

April: -22%

May: -21%

1990

July: -26%

August: -32%

September: -44%

2001

July: -5%

August: -33%

September: +3%

1987

Oct: -21%

November: -13%

December: +31%

1998

November: -7%

December: -32%

January: +4%

SPLK

2014

March: -23%

April: -8%

FEYE

2014

March: -28%

April: -23%

WDAY

2014

March: -17%

April: -15%

 

Discuss, if you please.

COWARDICE into The Bell

What a milquetoast close.

I do not consider this a vital trading session, since we’ve been through a lot over the past two weeks. Cowards got flat into the long weekend. It could’ve been a lot worse.

On the constructive side:

Analysts are out pumping growth names hard again.

Treasuries got smacked today.

It doesn’t sound like Putin will invade Ukraine any time soon.

Earnings have been impressive, thus far.

As far as my positions are concerned: FEYE is in such a depression. It’s hard to believe this is the same stock touted by a certain analyst as a “once in a decade opportunity.” The street could not get enough of its shares; now no one wants them. Singular indeed.

I sold half of my WDAY position, for a loss, and have begun allocating into YELP.

I was flat for the day, -22.5% for the year.

I am down 28.3% in FEYE, -10.44% in YELP (after today’s adds) and -16.4% in SPLK. I expect to eliminate the entirety of my WDAY position over the next two weeks. It’s down 18% from my basis.

Ideally, YELP sprints higher, I sell my lower basis shares and swap into SPLK, then with the profits from SPLK, load up on FEYE for the grande finale. If I can pull this off, it will be one of my greatest turn arounds ever.

Stay tuned.

A Decision Has Been Made

I sold off half of my WDAY position, based upon it being the favourite stock in the online poll. By far, you hated FEYE, as do I, which is why I’ve decided to hold it for a little bit longer.

With some of the proceeds of WDAY, I began allocating it into YELP.

GET ‘EM: The Horsemen Shall Ride Again

The WB offering was much better than expected. It opened up at $16.70 and is now trading above $18. This gives full license for the bulls to press their case into the close. Let’s see if they step up, or wallow away like Ukrainians.

 

 

The Four Horsemen Shall Be Reduced to Three

Decisions, decisions.

Just in case you’re wondering why I want to sell one of them, quite frankly, you’re retarded. I don’t like being in the position that I am in. My basis on these 4 stocks are all very high and, realistically, if I do not put some real money behind 2 of them, I am going to be holding them for a long, long time.

So what’s wrong with holding them for a long, long time?

Well, I do not like the market to control me. I invest creatively and need to have moving parts in order to maximize my potential. Keeping me constricted to these four stocks has hurt me in many ways over the past 6 weeks.

I threw these stocks into The PPT to analyze their metrics, have a look.

FourHorsemen

As you can see, FEYE is down the most, while the other three are pretty much in lock-step to the downside, with a correlation around 1. I think the reason why FEYE is down more is due to a lower institutional shareholder base, which as you can see is markedly lower than the other three. In the social media poll posted in the previous post, the majority of you said to sell FEYE. The reason is pretty simple: it was the first option in the poll and has underperformed the other three.

As humans, we tend to avoid pain and most normal people avoid conflict (with marked exception to the lunatics in my comments section). So I expected FEYE would be tossed into the volcano. Quite frankly, I chose FEYE too, as it is my largest position and is the main source of loss for me, over the past 6 weeks. The size of my FEYE position is almost twice as large as the other three. Selling it will certainly leave a scar, but allow me to raise a lot of cash to be put to work smartly.

Even though FEYE has the highest growth, they also have less cash than the other three, lower gross margins than two of them and a much higher price/sales ratio.

But SPLK has the slowest growth, largest float and smallest short position, which is important to have if the market reverses higher. With YELP’s 9.4% of the float short, should this market rally, those fools will run for  cover at the first site of danger–sending the stock screaming higher.

Another option would be to really leverage up and swing for the fences. However, that would be hard-core gambling and I am not up for the risk.

I guess it will come down to price action, at the end of the day. I will make my final decision by Monday.

More Whipsaw Please

Just before the long holiday weekend, I want nothing more than some whipsaw. Let’s sell off the NASDAQ with reckless abandon due to growth being present. Any company that is growing their revenues by more than 20% should be sold, immediately. In its place, a good utility or REIT might do.

I’ve started off the day 0.7% in the hole, almost giving back yesterday’s gains. I’ve been combing over my pnl and have decided one of my four horsemen of financial disaster must be sacrificed. I must sacrifice one, not because its not totally awesome and worthy of my time and money, but because I need to raise capital in order to nimbly reduce the cost basis of the other three.

In other words, If I am going to escape this pickle with dignity, I need to absorb a loss, move on, then put that money to work in the other 3 to bring my basis back in line with reality.

At the present, I am -29% in FEYE, -16% in SPLK, -15% in YELP and -21% in WDAY, with WDAY being the smallest of the four. Other down positions include EGRX (-11%) and IFON (-14%).

If I do nothing, I will probably have to ride these stocks through earnings, something I am not exactly keen on, considering my recent foray into high beta hell. However, if I can reduce my cost basis in 2 or 3 of the four to a level that can be reached with any strong market uptick, why, I might be able to reduce my losses from -23% to -10% in fairly short order.

The stated goal here is to get down to at least -15% within the month.

UPDATE: I utilized some leverage to average down in SPLK, YELP and WDAY, bringing my basis down to $78.77, $75.6 and $97.40 respectively.

I Hope You Live Forever

I feel like I need torches of fire around these parts just to write a blog. I have to back down these dogs, subhuman monsters, on a minute by minute basis, with the chards from broken bottles and lash them with the ends of my belt buckles. When I told you about my “many enemies” I am sure you said to yourself “surely he jests.” After leaving the gates open, allowing the prisoners of the iBankCoin dungeons roam freely, you now see that I was not exaggerating.

Multiple positive bullets points are hitting my screen this morning, from price target increase for GOOG at Credit Suisse, to a GE/PEP/GS and MS beat to a massive beat for CMG, effectively shoving all of the Einhorns back into their burritos pressers.

This is day 4 of the recovery. I expect nothing less than an all-out rout to neutralize the idea that any measurable pullback is cause for alarm and crash-worthy. These monsters will all be put back into their rightful places, the dungeons, in due time.

A Proper Portfolio

I’m afraid my recent foray into the land of Mad Max has diluted what I once preached and practiced for a long, long time, which is diversification. Now this post is for those of you who are interested in self-directing your accounts, without big turnover, minimizing the chance of a blow up.

Let’s start with the foundation. Most managers are unable to beat the S&P 500. It’s not that the folks at S&P are great stock pickers, but has a lot more to do with the structure of it. When building a portfolio, you have to think macro, and try not to get hung up on any one cog in the wheel. You can fine tune the wheel as you go; but it’s vitally important to set yourself up for success.

The S&P 500 is made up of 8 principle sectors.

Tech: 20%
Healthcare: 13%
Financials 15%
Energy and Materials: 13%
Industrials: 11%
Consumer Goods: 10%
Services: 15%
Utilities: 3%

What I like to do, just like I did with my semi-annual managed portfolio inside of The PPT, is pick two stocks per sector, weighted equally, except for utilities. With just a 3% weighting, I just go with 1. The stated goal is to assemble a portfolio that will be judged per quarter, adjusted per quarter to correlate with S&P weightings, and of course beat the S&P. In other words, if the S&P is 20% tech and your tech holdings soared, sending your weighting to 25%, you’d have to sell enough to get back down to 20%. The same goes for underperformance. If your energy stocks tanked, lowering the weighting to 8%, you’d add to those positions to get the weighting back to 13%.

Now the median market cap in the S&P is $17 billion. With smaller market caps, more concentrated on high growth, I am confident anyone can crush the S&P; it just won’t be nearly as fun as trading in and out of pin less hand grenades.

Here is what a typical portfolio of this nature would look like:

Tech: SNDK (1.2% yield), SFUN
Healthcare: BIIB, AET (1.3% yield)
Financials: BX (7.8% yield), IEP (6.3% yield)
Energy and Materials: CXO, OII (1.3% yield)
Industrials: ETN (2.8% yield), TOL
Consumer Goods: KORS, CREE
Services: LVS (2.7% yield), EBAY
Utilities: TRP (3.7% yield)

Or, you can just ebb and flow between TNA and TZA positions, using The PPT‘s propietary Overbought/Oversold signals as your guide.

The Next Step In the Resurgence

Despite FEYE holding me down, I managed to make a little more than 1.25% today, putting my year to date losses around 22.5%. I realize it will upset many of you to see me make even a slither of my coin back. Moreover, anything less than total loss, 100%, is reprehensible to you. Perhaps one day “The Fly” will blow up in spectacular fashion, even more so than now. However, I still have my wits about me and haven’t lost an edge. By the time I lose my edge, you will already be dead;therefore, as logic dictates, it’s as moot point.

When is a good time to buy a winner?

Remember the answer, always: anytime.

Most can’t grasp it, as they’re too busy conducting themselves as ‘non-gentlemen’, cavorting about the market place with noses filled with cocaine. Sometimes you have to endure a little pain; and that’s just part of life.

If FEYE wasn’t already down 50%, I’d sell it now. There isn’t a reason to hold a stock that is down on an up day. Then again, it could be going lower due to another hedge fund blow up or some other sort of liquidation. I am convinced it is a mechanical mess, not fundamental. I am owning the stock for the month of May. I believe the downside is limited to 5% and I shouldn’t rush towards the exits now, after being so very patient with it over the last, tortuous, six weeks.

We have ourselves a 3 day rally, albeit a quiet one. Let’s build upon it tomorrow, refresh ourselves over the long weekend, then kill all of our enemies on Monday.

Seasonality Data Dump: A Mirror Image

Draw Downs greater than 30% in two months, looking at the third.

MSFT

2000

April: -34%

May: -10%

June: +34%

1987

October: -27%

November: -8%

December: +12.5%

2000

November: -16%

December: -24%

January: +40%

 

CSCO

1997

Feb: -20%

March: -14%

April: +8%

2001

Feb:  -37%

March: -33%

April: +7%

2002

Feb: -27%

March: +18%

2001

August: -15%

September: -25%

October: +39%

2002

September: -24%

October: +6%

November: +33%

2000

November: -11%

December: -20%

January: -2%

 

ORCL

2000

January: -11%

Feb: -35%

March: +5%

1990

March: -17%

April: -16%

May: +24%

2002

March: -22%

April: -22%

May: -21%

1990

July: -26%

August: -32%

September: -44%

2001

July: -5%

August: -33%

September: +3%

1987

Oct: -21%

November: -13%

December: +31%

1998

November: -7%

December: -32%

January: +4%

SPLK

2014

March: -23%

April: -8%

FEYE

2014

March: -28%

April: -23%

WDAY

2014

March: -17%

April: -15%

 

Discuss, if you please.

COWARDICE into The Bell

What a milquetoast close.

I do not consider this a vital trading session, since we’ve been through a lot over the past two weeks. Cowards got flat into the long weekend. It could’ve been a lot worse.

On the constructive side:

Analysts are out pumping growth names hard again.

Treasuries got smacked today.

It doesn’t sound like Putin will invade Ukraine any time soon.

Earnings have been impressive, thus far.

As far as my positions are concerned: FEYE is in such a depression. It’s hard to believe this is the same stock touted by a certain analyst as a “once in a decade opportunity.” The street could not get enough of its shares; now no one wants them. Singular indeed.

I sold half of my WDAY position, for a loss, and have begun allocating into YELP.

I was flat for the day, -22.5% for the year.

I am down 28.3% in FEYE, -10.44% in YELP (after today’s adds) and -16.4% in SPLK. I expect to eliminate the entirety of my WDAY position over the next two weeks. It’s down 18% from my basis.

Ideally, YELP sprints higher, I sell my lower basis shares and swap into SPLK, then with the profits from SPLK, load up on FEYE for the grande finale. If I can pull this off, it will be one of my greatest turn arounds ever.

Stay tuned.

A Decision Has Been Made

I sold off half of my WDAY position, based upon it being the favourite stock in the online poll. By far, you hated FEYE, as do I, which is why I’ve decided to hold it for a little bit longer.

With some of the proceeds of WDAY, I began allocating it into YELP.

GET ‘EM: The Horsemen Shall Ride Again

The WB offering was much better than expected. It opened up at $16.70 and is now trading above $18. This gives full license for the bulls to press their case into the close. Let’s see if they step up, or wallow away like Ukrainians.

 

 

The Four Horsemen Shall Be Reduced to Three

Decisions, decisions.

Just in case you’re wondering why I want to sell one of them, quite frankly, you’re retarded. I don’t like being in the position that I am in. My basis on these 4 stocks are all very high and, realistically, if I do not put some real money behind 2 of them, I am going to be holding them for a long, long time.

So what’s wrong with holding them for a long, long time?

Well, I do not like the market to control me. I invest creatively and need to have moving parts in order to maximize my potential. Keeping me constricted to these four stocks has hurt me in many ways over the past 6 weeks.

I threw these stocks into The PPT to analyze their metrics, have a look.

FourHorsemen

As you can see, FEYE is down the most, while the other three are pretty much in lock-step to the downside, with a correlation around 1. I think the reason why FEYE is down more is due to a lower institutional shareholder base, which as you can see is markedly lower than the other three. In the social media poll posted in the previous post, the majority of you said to sell FEYE. The reason is pretty simple: it was the first option in the poll and has underperformed the other three.

As humans, we tend to avoid pain and most normal people avoid conflict (with marked exception to the lunatics in my comments section). So I expected FEYE would be tossed into the volcano. Quite frankly, I chose FEYE too, as it is my largest position and is the main source of loss for me, over the past 6 weeks. The size of my FEYE position is almost twice as large as the other three. Selling it will certainly leave a scar, but allow me to raise a lot of cash to be put to work smartly.

Even though FEYE has the highest growth, they also have less cash than the other three, lower gross margins than two of them and a much higher price/sales ratio.

But SPLK has the slowest growth, largest float and smallest short position, which is important to have if the market reverses higher. With YELP’s 9.4% of the float short, should this market rally, those fools will run for  cover at the first site of danger–sending the stock screaming higher.

Another option would be to really leverage up and swing for the fences. However, that would be hard-core gambling and I am not up for the risk.

I guess it will come down to price action, at the end of the day. I will make my final decision by Monday.

More Whipsaw Please

Just before the long holiday weekend, I want nothing more than some whipsaw. Let’s sell off the NASDAQ with reckless abandon due to growth being present. Any company that is growing their revenues by more than 20% should be sold, immediately. In its place, a good utility or REIT might do.

I’ve started off the day 0.7% in the hole, almost giving back yesterday’s gains. I’ve been combing over my pnl and have decided one of my four horsemen of financial disaster must be sacrificed. I must sacrifice one, not because its not totally awesome and worthy of my time and money, but because I need to raise capital in order to nimbly reduce the cost basis of the other three.

In other words, If I am going to escape this pickle with dignity, I need to absorb a loss, move on, then put that money to work in the other 3 to bring my basis back in line with reality.

At the present, I am -29% in FEYE, -16% in SPLK, -15% in YELP and -21% in WDAY, with WDAY being the smallest of the four. Other down positions include EGRX (-11%) and IFON (-14%).

If I do nothing, I will probably have to ride these stocks through earnings, something I am not exactly keen on, considering my recent foray into high beta hell. However, if I can reduce my cost basis in 2 or 3 of the four to a level that can be reached with any strong market uptick, why, I might be able to reduce my losses from -23% to -10% in fairly short order.

The stated goal here is to get down to at least -15% within the month.

UPDATE: I utilized some leverage to average down in SPLK, YELP and WDAY, bringing my basis down to $78.77, $75.6 and $97.40 respectively.

I Hope You Live Forever

I feel like I need torches of fire around these parts just to write a blog. I have to back down these dogs, subhuman monsters, on a minute by minute basis, with the chards from broken bottles and lash them with the ends of my belt buckles. When I told you about my “many enemies” I am sure you said to yourself “surely he jests.” After leaving the gates open, allowing the prisoners of the iBankCoin dungeons roam freely, you now see that I was not exaggerating.

Multiple positive bullets points are hitting my screen this morning, from price target increase for GOOG at Credit Suisse, to a GE/PEP/GS and MS beat to a massive beat for CMG, effectively shoving all of the Einhorns back into their burritos pressers.

This is day 4 of the recovery. I expect nothing less than an all-out rout to neutralize the idea that any measurable pullback is cause for alarm and crash-worthy. These monsters will all be put back into their rightful places, the dungeons, in due time.

A Proper Portfolio

I’m afraid my recent foray into the land of Mad Max has diluted what I once preached and practiced for a long, long time, which is diversification. Now this post is for those of you who are interested in self-directing your accounts, without big turnover, minimizing the chance of a blow up.

Let’s start with the foundation. Most managers are unable to beat the S&P 500. It’s not that the folks at S&P are great stock pickers, but has a lot more to do with the structure of it. When building a portfolio, you have to think macro, and try not to get hung up on any one cog in the wheel. You can fine tune the wheel as you go; but it’s vitally important to set yourself up for success.

The S&P 500 is made up of 8 principle sectors.

Tech: 20%
Healthcare: 13%
Financials 15%
Energy and Materials: 13%
Industrials: 11%
Consumer Goods: 10%
Services: 15%
Utilities: 3%

What I like to do, just like I did with my semi-annual managed portfolio inside of The PPT, is pick two stocks per sector, weighted equally, except for utilities. With just a 3% weighting, I just go with 1. The stated goal is to assemble a portfolio that will be judged per quarter, adjusted per quarter to correlate with S&P weightings, and of course beat the S&P. In other words, if the S&P is 20% tech and your tech holdings soared, sending your weighting to 25%, you’d have to sell enough to get back down to 20%. The same goes for underperformance. If your energy stocks tanked, lowering the weighting to 8%, you’d add to those positions to get the weighting back to 13%.

Now the median market cap in the S&P is $17 billion. With smaller market caps, more concentrated on high growth, I am confident anyone can crush the S&P; it just won’t be nearly as fun as trading in and out of pin less hand grenades.

Here is what a typical portfolio of this nature would look like:

Tech: SNDK (1.2% yield), SFUN
Healthcare: BIIB, AET (1.3% yield)
Financials: BX (7.8% yield), IEP (6.3% yield)
Energy and Materials: CXO, OII (1.3% yield)
Industrials: ETN (2.8% yield), TOL
Consumer Goods: KORS, CREE
Services: LVS (2.7% yield), EBAY
Utilities: TRP (3.7% yield)

Or, you can just ebb and flow between TNA and TZA positions, using The PPT‘s propietary Overbought/Oversold signals as your guide.

The Next Step In the Resurgence

Despite FEYE holding me down, I managed to make a little more than 1.25% today, putting my year to date losses around 22.5%. I realize it will upset many of you to see me make even a slither of my coin back. Moreover, anything less than total loss, 100%, is reprehensible to you. Perhaps one day “The Fly” will blow up in spectacular fashion, even more so than now. However, I still have my wits about me and haven’t lost an edge. By the time I lose my edge, you will already be dead;therefore, as logic dictates, it’s as moot point.

When is a good time to buy a winner?

Remember the answer, always: anytime.

Most can’t grasp it, as they’re too busy conducting themselves as ‘non-gentlemen’, cavorting about the market place with noses filled with cocaine. Sometimes you have to endure a little pain; and that’s just part of life.

If FEYE wasn’t already down 50%, I’d sell it now. There isn’t a reason to hold a stock that is down on an up day. Then again, it could be going lower due to another hedge fund blow up or some other sort of liquidation. I am convinced it is a mechanical mess, not fundamental. I am owning the stock for the month of May. I believe the downside is limited to 5% and I shouldn’t rush towards the exits now, after being so very patient with it over the last, tortuous, six weeks.

We have ourselves a 3 day rally, albeit a quiet one. Let’s build upon it tomorrow, refresh ourselves over the long weekend, then kill all of our enemies on Monday.

Previous Posts by The Fly