Leaders lead; investors invest
Market leaders assume leadership status via leading; i.e., these stocks decline less than the market when the market declines and rise more than the market when the market advances higher.
This type of action sounds precisely appropriate for what I seek as an investor, as I lack the necessary intestinal fortitude to own and hold weaker-than-the-market investments. Do not misunderstand; if I indicate I invest in something (e.g., Google/GOOG, of which more anon), that means I expect its declines to be comparatively shallow in price and brief in time. You should deem these bases as opportunities to invest. I do. (The past 3 months, and today's opening for GOOG, points to the validity and truth of this statement.) While it seems everyone everywhere caterwauls about the parlous state of the market, many stocks buck the obvious. And if it is obvious, might it be time to consider an alternate perspective?
Another difference between an investor and a trader, especially a trader reliant on incorrect and improper technical analysis, is that the investor invests (buys) whereas the trader looks for moments to sell or even not buy. Okay, okay, this last point is arguable, but I have seen too much and for too long to believe otherwise. You could argue differently (please do!), but the truth of this statement remains like so much effluvia. For example, while I have been screaming for the past two (2) years to perceive Google/GOOG as a Singular Opportunity™ and sui generis, others elsewhere have been exhorting that it is a head & shoulders top, overvalued, and headed down, down, down. Yawn.
My cash position and flexibility to maneuver increased substantially after selling earlier this month the less liquid trading opportunities I had owned. As I warned then (and will suggest many more times), these trades are fine in a rising market but when the market turns tail -- lose them. Do not hold awaiting breakdowns -- they will break down. Instead, reduce to the irreducible, cash and long term investments. This is a good moment to share once again my portfolio investments, including those I watch closely as pending opportunities...
Current investment holdings:
● Apple Computer/AAPL: strong up trend in all periodicities
● Coach/COH: long term up trend, intermediate term base. Left side (decline) of that base now complete.
● Google/GOOG: Today will be an important day. After hours trading yesterday and today's projected opening represent a breakaway gap, and not an exhaustion gap as suggested elsewhere. Moreover, block activity (1 block = 10,000 shares or more) during yesterday's after hours session represents a sea change in perspective: a sudden, fundamental revaluation upwards. This manifests immediately in the share price (and thus the market cap), as institutional investors purchased block after block after block. You do the math. But let's not gloat; plenty of investors, including many readers here, still have yet to invest in this opportunity. They believed then that GOOG would "decline big time from $100/share... er, make that $200... I meant $300." Whatever.
● Pan American Silver/PAAS: A hedge -- but also a losing position. With the $ gathering upside momentum, and the resources stocks (oils, commodities, uraniums, etc) all losing steam, this group quickly loses its luster.
● Starbucks/SBUX: Splits 2 for 1 effective Monday. Despite the contention of many, definitely was not a short. Much higher price yet to come.
● Teva Pharmaceuticals/TEVA: Recall the Daily Graphs relative strength line at only 73 when I recommended the stock ~3 weeks ago? Well, now it is at 87, and climbing fast. Great opportunity.
● Whole Foods Markets/WFMI: Only two weeks ago I was asked whether WFMI was a good short. I said, "No. Why short a leader? In fact, buy leaders and sell (short) losers. Unfortunately, most investors buy losers and short leaders (such as Google)." Go figure.
● Yahoo/YHOO: A massive base in the building. YHOO approaches the paid search market differently than does Google, focusing on content and human editors. Thus, it represents another investment opportunity in this sector. (Thanks, AP!)
Pending:
● Corning/GLW: building intermediate term base
● eBay/EBAY: Is this an intermediate term base or does the market fear for ebay's future in a Google world? We will know soon, as it nears a low risk entry point ($36)
● Genentech/DNA: building intermediate term base
● Hansen/HANS: building intermediate term base
● Qualcomm/QCOM: Building an odd base. Startling lack of volume on up days.
and the previously mentioned (in the post below):
● Dress Barn/DBRN: building intermediate term base
● Joseph Bank/JOSB: Fundamental #s especially intriguing, and building intermediate term base
● Urban Outfitters/URBN: building intermediate term base
In addition to these, add Cheesecake Factory/CAKE and PF Chang's/PFCB as likely bottoms. (Yes, that recent low quite probably is the low for PFCB.)
I could go on and on, listing one excellent opportunity after another. Each shares certain similarities:
● Each qualifies as institutional (the institutions can and do invest),
● Enjoy sufficient liquidity (average daily volume), and
● Each lies somewhere within its intermediate term base.
Which is also the key difference of each: where each currently places within its continuum. How early do you want to buy? Do you prefer (to purchase) the low of the intermediate term base, assuming the risk the decline will continue vs the sharp snapback (ala PFCB)? Do you prefer to purchase in the base, and if so when -- early at an assumedly lower price or later at an assumedly higher price? Do you prefer to purchase as it breaks out from the intermediate term base?
Each particular moment brings with it its own set of risks and rewards. You can do any or all of them; purchase for a fast upside trade as the price trends higher, but risk increases (price = risk) or purchase at the low end of the intermediate term base, thus subject to less immediate reward but also less risk.
While the market dances its minuet, and most investors focus on minutia, leaders lead. Oh, and investors invest. They do not seek reasons why they should not purchase and own Google/GOOG et alii, but instead seek reasons to do so. And are paid handsomely for that decision. I look forward to the opening for Google/GOOG. It promises to be 'fun'... if you're long. If not... oh well.
Questions? Comments?
This type of action sounds precisely appropriate for what I seek as an investor, as I lack the necessary intestinal fortitude to own and hold weaker-than-the-market investments. Do not misunderstand; if I indicate I invest in something (e.g., Google/GOOG, of which more anon), that means I expect its declines to be comparatively shallow in price and brief in time. You should deem these bases as opportunities to invest. I do. (The past 3 months, and today's opening for GOOG, points to the validity and truth of this statement.) While it seems everyone everywhere caterwauls about the parlous state of the market, many stocks buck the obvious. And if it is obvious, might it be time to consider an alternate perspective?
Another difference between an investor and a trader, especially a trader reliant on incorrect and improper technical analysis, is that the investor invests (buys) whereas the trader looks for moments to sell or even not buy. Okay, okay, this last point is arguable, but I have seen too much and for too long to believe otherwise. You could argue differently (please do!), but the truth of this statement remains like so much effluvia. For example, while I have been screaming for the past two (2) years to perceive Google/GOOG as a Singular Opportunity™ and sui generis, others elsewhere have been exhorting that it is a head & shoulders top, overvalued, and headed down, down, down. Yawn.
My cash position and flexibility to maneuver increased substantially after selling earlier this month the less liquid trading opportunities I had owned. As I warned then (and will suggest many more times), these trades are fine in a rising market but when the market turns tail -- lose them. Do not hold awaiting breakdowns -- they will break down. Instead, reduce to the irreducible, cash and long term investments. This is a good moment to share once again my portfolio investments, including those I watch closely as pending opportunities...
Current investment holdings:
● Apple Computer/AAPL: strong up trend in all periodicities
● Coach/COH: long term up trend, intermediate term base. Left side (decline) of that base now complete.
● Google/GOOG: Today will be an important day. After hours trading yesterday and today's projected opening represent a breakaway gap, and not an exhaustion gap as suggested elsewhere. Moreover, block activity (1 block = 10,000 shares or more) during yesterday's after hours session represents a sea change in perspective: a sudden, fundamental revaluation upwards. This manifests immediately in the share price (and thus the market cap), as institutional investors purchased block after block after block. You do the math. But let's not gloat; plenty of investors, including many readers here, still have yet to invest in this opportunity. They believed then that GOOG would "decline big time from $100/share... er, make that $200... I meant $300." Whatever.
● Pan American Silver/PAAS: A hedge -- but also a losing position. With the $ gathering upside momentum, and the resources stocks (oils, commodities, uraniums, etc) all losing steam, this group quickly loses its luster.
● Starbucks/SBUX: Splits 2 for 1 effective Monday. Despite the contention of many, definitely was not a short. Much higher price yet to come.
● Teva Pharmaceuticals/TEVA: Recall the Daily Graphs relative strength line at only 73 when I recommended the stock ~3 weeks ago? Well, now it is at 87, and climbing fast. Great opportunity.
● Whole Foods Markets/WFMI: Only two weeks ago I was asked whether WFMI was a good short. I said, "No. Why short a leader? In fact, buy leaders and sell (short) losers. Unfortunately, most investors buy losers and short leaders (such as Google)." Go figure.
● Yahoo/YHOO: A massive base in the building. YHOO approaches the paid search market differently than does Google, focusing on content and human editors. Thus, it represents another investment opportunity in this sector. (Thanks, AP!)
Pending:
● Corning/GLW: building intermediate term base
● eBay/EBAY: Is this an intermediate term base or does the market fear for ebay's future in a Google world? We will know soon, as it nears a low risk entry point ($36)
● Genentech/DNA: building intermediate term base
● Hansen/HANS: building intermediate term base
● Qualcomm/QCOM: Building an odd base. Startling lack of volume on up days.
and the previously mentioned (in the post below):
● Dress Barn/DBRN: building intermediate term base
● Joseph Bank/JOSB: Fundamental #s especially intriguing, and building intermediate term base
● Urban Outfitters/URBN: building intermediate term base
In addition to these, add Cheesecake Factory/CAKE and PF Chang's/PFCB as likely bottoms. (Yes, that recent low quite probably is the low for PFCB.)
I could go on and on, listing one excellent opportunity after another. Each shares certain similarities:
● Each qualifies as institutional (the institutions can and do invest),
● Enjoy sufficient liquidity (average daily volume), and
● Each lies somewhere within its intermediate term base.
Which is also the key difference of each: where each currently places within its continuum. How early do you want to buy? Do you prefer (to purchase) the low of the intermediate term base, assuming the risk the decline will continue vs the sharp snapback (ala PFCB)? Do you prefer to purchase in the base, and if so when -- early at an assumedly lower price or later at an assumedly higher price? Do you prefer to purchase as it breaks out from the intermediate term base?
Each particular moment brings with it its own set of risks and rewards. You can do any or all of them; purchase for a fast upside trade as the price trends higher, but risk increases (price = risk) or purchase at the low end of the intermediate term base, thus subject to less immediate reward but also less risk.
While the market dances its minuet, and most investors focus on minutia, leaders lead. Oh, and investors invest. They do not seek reasons why they should not purchase and own Google/GOOG et alii, but instead seek reasons to do so. And are paid handsomely for that decision. I look forward to the opening for Google/GOOG. It promises to be 'fun'... if you're long. If not... oh well.
Questions? Comments?
posted by David M Gordon | 4:43 AM
<< Home