Monday, April 26, 2010

Selling more Netflix

This is ridiculous! This stock doubled in three months! I expected it to go up, but now, with a parabolic chart, it's downright insane. I sold one more portion of it today. I might be wrong again, like I was when sold part at 75, but I have 100% profit and it must be taken. Now playing with house money.

Netflix (NFLX) is a great company. They created excellent DVD by mail distribution system, deliver a lot of movies over the internet, service is great, management is great. And forward P/E of 31 and change isn't that big, if we consider that company managed to beat expectations in the last four quarters. But parabolic chart is always a bubble. The only way of making money on a stock market that I know is to buy good stocks when they go down and sell them when they go up.

Full disclosure: at the time of publication author had a long position in NFLX. Positions can change any time.

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Thursday, April 22, 2010

Netflix: Parabolic Chart

Netlix (NFLX) just reported quarterly earnings yesterday and the are GRRREAT! What is not great is a pure technical perspective. The chart is absolutely parabolic and parabolic chart is always a bubble. I have a long position in NFLX, sold a little bit at 75 and now feel stupid looking at price above 100. How long can it continue? I am not complaining, remaining part of my position is growing at breaknecking pace. The question is: how long can you ride this tiger?
I'm holding my position for now. Maybe overbought condition can be worked out as a function of time... I doubt it though. The main question is: when to take more profits?

Full disclosure: at the time of publication author had a long position in NFLX. Positions can change any time.

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Monday, April 19, 2010

SEC vs Goldman: Where's The Case?

Maybe I am stupid. Maybe my mind is clouded by the fact that I hold a small long position in Goldman Sachs (GS). But for the life of me i don't understand the case SEC is trying to make.
They say that CDO sold was created with purpose that it goes down in price. Please name me one company which creates and sells derivative it thinks will go up in price. This is how the derivative game works: there is a seller, who thinks that product goes down in price and a buyer, who thinks that products goes up. In derivatives, there is always a seller. Because every derivative is an artificial product, it only exists when somebody sells it short. Anyway, Paulson is not charged, so shorting derivatives is OK.
Apparently, the charge is that Goldman didn't disclose to buyers that derivative was sold short. What!!? Come on, derivative can't exist if it's not sold short. I am not sure Goldman has the right to name the seller to the buyers, but as far as I know, they just don't have to. SEC is waiving disclosure rule as a flag, but how much they really had to disclose?
SEC didn't file a criminal complaint. It's only a civil suit. But the most suspicious thing is timing. In the middle of option expiration trading session, just tell me why doesn't it affect market. If company releases material information in the middle of the day, usually stock is halted, why wasn't it done with GS this time? Is it legal for SEC to make announcements in the middle of trading day? If so, maybe it's time to make it illegal.
I think this whole case stinks with politics to high haven. Looks too much like a part of the push of financial reform package.

Full disclosure: at the time of publication author had a long position in GS. Positions can change any time.

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Last Week's Quant Trades.

Monday, April 12:
2.5x2: sold RIMM at .23% profit.

Wednesday, April 14:
2.5x2: bought ETR, sold HTS at 0.79% loss.
3.5x2: bought ORB, WMT, sold HOLX at 1.88% profit and KMX at 2.42% profit.

Thursday, April 15:
2.5x2: sold OTEX at 1.09% loss
3.5x2: bought COST.

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Friday, April 9, 2010

Selling Brocade

Sold Brocade (BRCD) on Tuesday. Was way too busy, forgot to post it. Just took profit and reduced number of positions in my portfolio.

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This Week Quant Trades.

Monday, April 5:
3.5x2: bought PFE

Tuesday, April 6:
2.5x2: sold MS for 1.79% loss, ORCL for 1.43% profit.
3.5x2: sold CYTX for 5.78% loss.

Wednesday, April 7:
2.5x2: bought HTS
3.5x2: bought HOLX, sold PFE for 0.17% profit.

Thursday, April 8:
2.5x2: bought DHI
3.5x2: bought KMX

Friday, April 9:
2.5x2: bought SAY, sold DHI for 1.69% profit.

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Monday, April 5, 2010

What Baen Universe Death Means for Internet Publishing

Not so great news: Jim Baen's Universe internet Sci-Fi magazine just published its last issue. Magazine is going out of business. One more internet failure.

But why? Can we assume that internet publishing doesn't work? Not so fast. Here is an article by Mike Resnik, editor-in-chief. In short, subscription based model of Baen Universe was beaten by advertisement based model of a dozen plus Sci-Fi magazines.

It's amazing. The model which shouldn't work, in opinion of all major publishers, like Rupert Murdoch etc., managed to beat the model which should. Instead of paying money for the stuff, people chose to get it for free. Surprise!

I don't know if this story can tell us something about other periodicals. Newspapers are in completely different world. News and entertainment magazines are very different from literary ones. But, at least in one area, free information model managed to beat subscription model.

I regret demise of Baen's Universe. I was a subscriber from the day one. But now I have a choice of multiple free high quality Sci-Fi internet magazines and learned something about internet publishing business.

This story doesn't affect any investment decisions. Not right now. But it might tell us something about future developments in internet publishing. It's possible that free model will coexist with subscription or paid model. But there is also a possibility that free will kill subscription. We'll see. So far I'm staying away from any company related to publishing, especially periodicals.

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Saturday, April 3, 2010

Taking Profit on Netflix

I took some profits last Thursday on my Netflix (NFLX) position. Still think that it's a great company, with huge growth potential. But it's up 50% in a little bit more than 2 months, such profits must be taken. I hold a significant long position, just in case I'm wrong. Planning to buy back shares if/when it falls below 65.

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This Week Quant Trades.

Quant 2.5x2:

Tuesday, March 30: bought ORCL, sold MFA at 0.69% profit, GOL at 10.97% loss.

Thursday, April 1: bought RIMM

Quant 3.5x2:

Tuesday, March 30:

sold MDT at 1.94% profit, EXC at 0.89% loss

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