Taking a Calculated Risk

What I am about to say will befuddle many of you, but I want YELP to trade down after earnings. For the love of calamity, I want to own YELP 20% lower. But I think it trades much higher, maybe over $100 within two years. So, clearly, I had to own some ahead of earnings. If this is their breakout quarter and I missed it, I would’ve never forgiven myself. You can view my position as a hedge against my ego.

GPRE is a killer ethanol play, who just beat numbers. The stock is down, classically, post earnings in a ‘sell the news event.’ The stock will trade higher.

Lastly, I bought AMBA because I’m a HUGE fan of the police state trend that is spreading worldwide. These are the guys who will eventually record you, as you are taking a dump in your corporate bathroom.

Regardless of what the stock does in the short term, longer term, this company is a keeper.

Don’t forget, as I mentioned earlier, I doubled the size of my POWI position. I believe the stock should be trading 30x 2014 earnings or $90 per share.

Oh, and I sold some IMMR, just to free up some capital. I let some get yesterday and again today because it was 30% of assets. My goal is to reduce it to 15-20% ahead of earnings.

I bought YELP ahead of earnings and initiated positions in both AMBA and GPRE.

Additionally, I’ve reduced my position in IMMR, to mitigate risk ahead of their quarterly earnings report.

This story has now taken a new leg higher and I believe it is priming for the history books. Ackman is now being savagely squeezed by not one, but two, industry titans: Carl ‘give me 3 seats on your board’ Icahn and George ‘I break your central bank’ Soros.

Without a doubt, I regret selling my HLF position and lament the idea that I am not punching Bill’s head too.

This HLF short is not only costing Bill a tremendous amount of money, but it’s ruining his reputation and might lead to redemptions, which can precipitate him to cover his short, effectively sending HLF even higher.

I think the Soros team is aware of this dynamic and are fixed on ruining Pershing Square.

More color on the story.

HLF is up nearly 10%, which means Ackman is down another $100 million. Jesus Christ!

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.