A Quick Philosphy on Long Term Investments

I bought POWI today, even though it’s up after a great earnings report, because I believe the incandescent light bulb is a thing of the past. POWI plays an integral part in making the LED bulb successful, through its parts. On top of that, they will soon be in millions of smart phones, providing ‘quick-charge’ technology to the masses.

Many months ago, I asked you “when is a good time to buy a winner?” The answer is, with very few exceptions, “any price.”

Sometimes we lose the forest for the trees, attempting to market time. If you have a stock that you feel will do great, long term, just buy it and quit worrying about short term moves.

(I am talking to myself more than you.)

My condensed philosophy for investing in stocks, longer term, is quite simplistic, but entirely logical.

If you worked at XYZ corp., right now, would you participate in a stock options program and do you think there is significant upside to the company?

Forget about the stock. Is the company in a position to undergo rapid growth, which can lead to wealth creation for its employees who participate in a stock options program?

If the answer is yes, go long and dollar cost average, every month, as if you were an employee.

Having said that, I am a buyer of POWI, longer term, and if I can contain myself, I hope to sell it north of $100.

They are, without a doubt, a game changing company in the smart phone space.

I added to my POWI position, following a strong earnings announcement.

Treasuries get hit and stocks take off? What!?

This is a new entry into the definition of bizarre. Inherently, it’s bullish for rates to go a little bit higher, since it means the economy is strengthening. However, the rate of change is too fast and one would assume this would jar the markets.

Perhaps the market has finally accepted a higher rate environment?

I am pleased to see POWI, CXO and IMMR lifting off. It makes me feel good to not entirely miss out on this rally. Truth be told, I’ve been on guard for a pullback ever since this rally started in 2009. I am sure many of you feel the same.

Maybe it’s time to let the old guard down and run naked through the alleyways of Wall, screaming “Boom-shacka-lacka.” Perhaps the market will never trade down again and I am wasting my time attempting to time the market.

Either way, it’s a bull market and the only strange thing about it is the lack of enthusiasm or believability in the retail client. This is so different from the dot com run, when my barber and bartender played the game. Nowadays, people think it’s rigged and scoff at anything to do with equities.

Maybe that’s a good thing.

Well…are you?

Today I started a small position in POWI, just to be long into earnings. I really like this company and didn’t want to miss out on a potentially blockbuster  number.

Other than the token small position to fulfill my inner gambler, I doubt there will be many earnings plays for me this quarter, aside from IMMR of course.

For me, this downside is too much to risk, considering my gains are more than 40% for the year. There isn’t a reason in this god forsaken world to hold anything of size into earnings. The market continues to melt up and there are trades to be had on a daily basis.

In the short term, my efforts will be fixed on finding swing trades.

Ideas will be forthcoming tomorrow morning.

I’ve been box-watching, gnoshing (sp?) on snacks and working out like a man committed to steroids–all the while my cash positions sits here at 50%.

I am tempted to buy AMBA, ANGI and ONVO, but not sure.

I want to own POWI ahead of earnings, but also not sure.

Then again, what is sure?

Leaving the bosom (no pervert or tits) of cash is a frightful thing. After all, I can’t lose if I’m not playing the game. Then again, am I even playing?

There is a psychological disadvantage to being in cash for an extended period of time. It dulls the blade and makes you soft, afraid almost, to venture out and play the sport.

Knowing this, but also aware of the pitfalls that earnings season presents, is a delicate line to tow.

BUT I WILL TOW IT, NONETHELESS.

Maybe not today, but very soon, I will begin redeploying my cash, in order to sharpen the blade and get back to risking my life in the greatest sport of all: The Stock Market.

UPDATE: I bought POWI.

I added to my CXO position, waiting for the inevitable $100 roll.

You are now in the black. Granted, it took you more than a year to break even on this pig, after the sleaziest elements of Wall Street had their way with you. But thanks to the stewardship of Zuck (and I really mean that), the stock has risen from the ashes of hell, and is now loitering on the 52 week high list, chilling like a gangster, sans all of the degenerate stuff.

The turn around has been spearheaded by mobile and Zuck needs to be acknowledged for steering his company in the right direction, unlike the peasant morons at ZNGA who don’t even know what a cellphone is. They just expect you to play their stupid desktop games, brainlessly, forever.

In the real world, innovators and go getters are rewarded, while peasant morons are placed in the proverbial ‘fag box‘ for temporary storage.

With a cost basis of  $33 for FB, I am up on the name, finally, and pleasantly surprised by the expediency of the turn around.

Why are you surprised to see Ag stocks getting rolled on? Granted, the reaction is a little harsh, but SQM, MOS, POT, AGU, IPI and CMP have been dead money for more than a year. Haven’t you been looking at the price of corn, or better yet, the general direction of commodities, sans oil?

Following today’s decline, perhaps these stocks are ripe for a bounce. However, the trend is lower because the fundamentals suck. Just know that before you rubber stamp one of your stupid charts.

Just avoid commodities and stick with tech/healthcare.

3-D stocks are getting hit too, off a DDD earnings miss.

COH is sharply lower and we all know why: KORS.

One thing to keep an eye on are the residential construction plays, like MTH, HOV, BZH and LEN. Is this a bump in the road or a warning shot across our mustaches? If housing is heading down, we’re completely doomed. This market will be savagely raped.

MU has been slashed, due to pricing concerns. Although some firms insist this isn’t true, the price action says otherwise. Buyers beware.

Finally, AMBA has dropped to a reasonable price and I might buy it back. “The Fly” is all about finding good prices to buy, then selling them when they get too high.

NOTE: At the moment, I have only two core positions, IMMR and CXO.

I like to follow breadcrumbs to find clues about companies, small little things that might lead to big moves. Case in point, PSMI smoked numbers this evening and the stock is lifting more than 9% in after hours trade.

So what you say?

What you don’t know is PSMI is a major customer of RBCN’s, the sapphire play from hell, that’s been stuck in its retarded trading range for a thousand years now.

VECO reported a milquetoast number and that might weigh, mind you, on the shares of RBCN. A betting man might step in tomorrow, river boat gambling on the future of sapphire, tasting the breadcrumbs, like a bird, that PSMI left behind this evening.

In other news, The Option Addict is 90% ready to launch his new service. It will compliment our suite of products like a 2005 Lafite Rothschild with a medium rare rib eyed steak (lightly peppered, heavily salted). I am hoping to give you fine top hatted folks a free trial for a day or two, sometime this week or at the latest next.

http://www.youtube.com/watch?v=p70pWujbf5c

HLF Herbalife beats by $0.23, beats on revs; guides Q3 EPS below consensus, revs in-line; guides FY13 EPS above consensus, revs above consensus (60.57 +2.12)Reports Q2 (Jun) earnings of $1.41 per share, $0.23better than the Capital IQ Consensus Estimate of $1.18; revenues rose 18.2% year/year to $1.22 bln vs the $1.16 bln consensus.

Co issues mixed guidance for Q3,sees EPS of 1.09-1.13 vs. $1.16 Capital IQ Consensus Estimate; sees Q3 revs growth of 11.5-13.5% (Approx $1.13- 1.15 bln) vs. $1.15 bln Capital IQ Consensus Estimate. Sees Volume Point Growth in the range of 11.4-13.5%; Net Sales Growth 16.5-18.5%; CapEx in the range of $40-50 mln.

Co issues upside EPS guidance for FY13, sees EPS of $4.83-4.95 vs. $4.80 Capital IQ Consensus Estimate; sees FY13 revs between 16.0-18.0% (approx $4.72-4.80 bln) vs. $4.63 bln Capital IQ Consensus Estimate. sees Volume Point Growth between 11.5-13.5%; Expects net sales growth in the range of 16-18%; Sees CapEx in the range of $165-185 mln.

$HLF up to $63.20 at the time of this post.