Saturday, April 19, 2008

Googily Moogily

First, I apologize for my brief, semi-lame, and incomplete last post. I am still figuring out how to work this thing and I will consult Google and my fellow bloggers to figure out how to make this thing a little fancier with graphs and pics.

But, while we're talking Google, it's not everyday a stock jumps $90. I bought Google long ago at a very high price, so no one was happier than me yesterday. Google is not a trade, it's an investment. Even with yesterday's gain, it's still only 8x higher than it's IPO debut. If you look at Apple, Microsoft, IBM, etc., those companies have returned thousands of percents over their histories. Is there any reason to believe Google should be any different? NO. Google literally has a chance to make world change and they are the most innovative company in the world. They blasted earnings projections and apparently they're still able to sell a little advertising.

The market did not present the buying or shorting opportunities I was hoping for this week. False optimism catapulted stocks on such great news as a $5 billion dollar loss and the cutting of 9K jobs at Citi. Microsoft is back over $30, XHB is over $23, and COF approached $50, but actually lost yesterday. If we review a past reco, PXJ, an oil services stock that owns studs Halliburton, Schlumberger, and Transocean, has been up almost 30% over the last few months. While thinking about "new energy" and peak oil, even if we do find new technologies, it's not like Exxon and Conoco are just going to go away. No, I think they'll be able to find some use for their $11 billion/quarter earnings. Just look at the excitement over Petrobras' potential 33 billion barrel discovery.

Some of ag/solar companies I posted recently hit 52-week highs. This bodes well for our shorting plan. The only question is will this boom last 1 year or 5 years? We can short out til' 2010, is that a long-enough time frame? I think so. As P/Es hit triple digits, they won't sustain for very long. We'll keep following these guys for the most mispriced/biggest potential losers going forward.

An interesting thought arose on the credit crunch this week. Students can't get loans anymore. Who will this hurt the most? On-line and pseudo schools that have popped up everywhere over the last few years. Karen Finerman brought this forward on CNBC, and while I'm not a big believer in the Fast Money crew (Macke said Google was a dead trade, and Finerman has been recommending Crocs all the way from $60 down to $10), she is the most conservative of the bunch, and probably the most pessimistic.

A little fun has been attached below as it's never too early to think about opening weekend!

1 comment:

Tiger Coach said...

AX...Good to see you back... While I believe my picks are fundamentally strong, last week was not a good debut...

While the fundamentals of this market have not changed, I wonder if we are failing to recognize the continued power play of perto. and financials. Maybe just maybe Uncle Sam's check book could eventually revive this sector.

Student loan sources drying up? Will students be left hitting mom and dad up for home-equity loans...or financing education on a credit card...regardless, pretty scary.

A friend of mine in school registered for food stamps and ate steak while the rest of us had macaroni and cheese.