Tuesday, March 29, 2011

Selling Some Phillip Morris

Took some profits in Phillip Morris (PM) today. I was watching patiently while stock grew over $60, but $65 is too much. It's not a bad company, quite opposite, it's a great company. And eventually it might be worth much more. But for now... Tobacco company with 4% yield is not something I call exiting. So I decided to sell some of it. I'm still holding a sizable position and might add on weakness.
On the big scale, it looks like we are up to another round of Wall Street rally. And most probably it's going to be a rally in growth stocks. PM is a staple, it might grow faster than domestic tobacco companies, but my bet is on high growth stocks with four letter tickers...

Full disclosure: at the time of publication author had long positions in PM and MO. Positions can change any time.

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Saturday, March 26, 2011

Business Travel: Bad Time for Investing

This week was mostly spent on business travel. Didn't have much time to think about investing or to do something. Had just enough time to catch drop in AGNC on Tuesday (Mar 22) and add to position on weakness.

Well, can't complain, this week was just great. If we are to believe technicals, correction is over and a lot of good days are ahead.

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Thursday, March 17, 2011

Next Victim of Internet: TV

Well, it' official now: Internet killed music industry, newspapers and bookstores. Sales of CDs fell through the floor, Borders (BGP) is in bankruptcy. People don't want to pay $15 for a CD to listen to one hit (maybe two). They buy this song alone on iTunes or on Amazon (AMZN). They don't want to carry a trunkload of books going on vacation or on a business trip. It's much easier to read books on your phone, computer or Kindle.
Not so obvious is the future of DVD and Blue Ray. I think it's the way of dodo, deadwood press and bookstores. I know some people who owns DVDs. But most of us don't want to watch the same movie over and over again. Once is quite enough. Netflix (NFLX) is doing a great job of internet movie delivery. Competitors will be there, sometimes. Blockbuster (BBI) is walking dead, no matter what Icann thinks.
But all this is yesteryear news. Internet is not done, it's just starting.
Next, very obvious target is TV. And I mean everything in TV: content, news, delivery (cable and satellite). Almost nobody can see it now, with one small exception: TV related companies. They see it and their reaction is exactly the same which destroyed any hope of music industry and bookstores. They are trying to fight back. First line of defense: net neutrality. Because cable companies provide significant part of broadband access, they are trying to selectively set transfer rates for different types of content, effectively  killing TV over Internet. There are two reasons why this will not work: competition from phone companies (DSL) and government regulation. I am not a big fan of government regulation, but here it's just necessary. Imagine that phone company charges you different rates for speaking over the phone with different people (in the same area) or depending on the subject of conversation and prevent some conversations from happening. What cable companies want is the internet analog of such approach. Competition should work as well, but in many areas of the country there is none.
Second line of defense: government regulation. Media and cable companies are only against regulation when it doesn't let them screw consumer and all for regulation which helps to screw us. So media companies are inventing new ways how government should help them. Copyright is the most obvious option. I'm all for copyright for 28 years, maybe even for 42. But 100+ years like it is now? And Congress increasing this term all the time, so there is a possibility that works which are copyrighted now will never get into public domain. Attempts to enforce DRM (digital rights management, rights of the corporations, not the consumer) are also in the works.
Funny thing, this is all for nothing. In the worst case, we will have to pay dear for some content, owned by corporations, which we really want to see. But there is a lot of content already created, it's free or very cheap, it's on YouTube or other video sites. Yes, most of it is unprofessional and worth the money you pay for it. But there is some which is good and even great. And it's the way of the future.
Of course, TV as we know it is not going away tomorrow. It will live long, long time. After all, there are hundreds of thousands of horses in this country, 125 years after invention of the car.
What does it mean for investors? Don't even think of broadcast and cable companies. Be very afraid of satellite TV operators. There might be good trades there, but not long term investments. For good (multibaggers) investments look into NFLX and likes. Watch for new companies inventing new business models in this area. Look for content creators which embrace internet, although I don't hold my breath here, content prices will come down, as did music and as books doing right now.

Full disclosure: at the time of publication author had a long position in NFLX and no positions in other companies mentioned. Positions can change any time.

Wednesday, March 16, 2011

Still Buying Panic

Added yesterday to my position in ARM Holding (ARMH). I have no doubts we are in correction right now. Nasdaq composite is trading below both 13-day and 50-day moving averages. If this correction is like last one, in May-September 2010, Nazz should drop below 200-day MA before recovering. But, I don't even pretend I know everything and can predict the future. So I'm buying more with every good panic. ARMH was my trade of choice yesterday because it dropped a lot and it's a terrific growth stock. Almost every smartphone, every touchpad computer has ARM CPU inside. No, company doesn't produce them, but it's the beauty of the business model: no inventory, no plants, just a bunch of people designing chips and selling licenses to producers.
I'm planning to buy more if price drops more.

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Tuesday, March 8, 2011

Closing General Mills Position

Closed General Mills (GIS) position today. Stock is trading mostly in 35-37 range. I might consider buying it back under 35.50.

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