Hot Market or Sitting on Your Hands?

This market sucks.  And that's why I love the markets so much...sometimes they encourage you to go read a long non-business book, play a PopCap.com game, or take a long hike with your kids.

For reading, I've been reading J. M. Barrie's Peter Pan to the kids for bedtime reading.  It's free via the iBook store, and it's a cool un-adapted-for-new-audiences story. For PopCap I'm stuck on Plants vs. Zombies, a delightfully maddening title which can be a source of wasted hours...or a rapid training ground for young minds eager to unknowingly learn the military arts of asset allocation, supply logistics and battlefield strategy (that's how I explain it to the boy's Mom... ;-).  And finally, hiking, well heck, its Summer!

Personally, with the markets, I'm finally in a holding pattern.  No buying, no selling...and it's about time too.  I've been way too "day trader" (though, not really), and not enough Berkshire Hathaway buy-and-hold.  All my options have months before expiration (hopefully that's good), and stocks are locked down to the bare essentials: FB -- I bought in a 43, but kept buying down, so that I'm about even now -- and CROX, which I've considered a long-term holding in a fairly sound globally-based retail gamble.

Now, having said that, I asked my friend what he thought of things - here's what he said:

me:  What's the hottest game in this market? new housing? or sitting on one's hands? :-)
he:  companies that are mainly in u.s. markets that provide dividends.
me:  may I quote you on that for this hot little finance blog I'm helping with? (I won't use names...)
he:  sure
he:  what's the link?
me:  you may have heard of it:  http://swansandcrows.blogspot.com
he:  hmm
he:  i've heard about them somewhere.....

What do you think - are American dividend plays where all the actions at, or housing (as new home sales were up a bit for May), or AAPL (not RIMM), or nothing at all, sitting on your hands? Leave a comment, let us know.

..TS.

LuxeYard (LUXR)

Some three weekends ago I got a glossy 8-page penny stock advertisement "newsletter" via snail-mail.  Before chucking it into the trash, I decided to give it a once-over, realizing that my slate of investing ideas had fallen somewhat lackluster of late.  Touted in the center of the infomercial newsletter was an article about up-and-coming ecommerce site Luxeyard (LUXR.PK).  On a whim, I decided to research the company a bit, and found this initial description on Yahoo! Finance:

Luxeyard, Inc., through its subsidiaries, operates as a member-based online marketplace for luxury home and other consumer products at a discount to retail prices. It offers its products to the members of its Website via a "flash sale" or "daily deal".

Well, the following Monday (this must've been April 16th, as the price was still below $1.00) I decided to nibble abit, picking up several K shares.  Over the ensuing weeks, the stock in this no-as-yet-reported-revenues ecommerce "flash sale" site of "luxury" goods has zoomed up 100%.  Is this destined to last?  Will this company, building itself through acquisitions of similar sites (just bought LeatherGroups.com site earlier this week, and pumped up its authorized share count to 550M), really grow into an ecommerce powerhouse, or will this growth-by-website-gobbling land it in the pennystock trash heap with MobilePro, a failed wi-fi telecom company which I followed into the stratosphere and back to earth 5+ years ago?  What do you think?

..TS.

[Note: okay, I'm wrong about revs - in their 10-K they reported some $2,038 in revs for fiscal year ending 12/31/2011.  But that's close to none...]

[5/15/2012 - I followed my normal sell rule (sell only when you need funds for another venture), and got out of LUXR at about $2.00/sh. In hindsight, since it has sagged 25% in the intervening days, I may reconsider and move back in should the price approach $1.00 again. Otherwise, I'm watching my long-time fave penny, LSCG, which has been gapping higher due to exposure at an annual lighting convention, coupled with a 10-Q filing.  ..TS.]

Petabyte the Hand that Feeds

Several interesting quotes can be found in Kevin Davies' "Dagdigian's Trends in IT Highlight Bio-IT World Expo" at bio-itworld.com, as he describes Chris Dagdigian's review of the Bio-IT World Expo:

"Petabyte-capable storage is trivial to acquire in 2012".

"The [science] is changing faster than we can refresh datacenters and research IT infrastructure." 

Dagdigian was excited about new NGS compression techniques, such as CRAM. "We need order-of-magnitude changes in compression,” he said. “Be glad you are not Broad/Sanger/BGI/NCBI." 

"...storage offerings from vendors such as DDN, Panasas, Isilon and BlueArc all run Unix on standard architectures." 

"I would not deploy a private cloud solution … that does not have Amazon API compatibility." 

Dagdigian said he was bullish about the Siri voice control ... [h]e predicted growing popularity for ... pNFS as well as smart storage systems from Drobo and DataDirect.  

The local private Pittsburgh HPC company I follow in the news (as I know the CTO, Garth Gibson) is Panasas.  While terabyte-scaling-to-petabyte storage has long been the domain of supercomputing initiatives, businesses and governments globally are quickly snapping up storage systems to support research across many disciplines: biosciences, energy, finance, manufacturing, etc. While "apps" currently control home lighting systems,  drone aircraft and smartphone-based gaming, why not data-gathering tools such as space-based telescopes, deepsea submersibles, etc?  Computing giants EMC, IBM, Hitachi, HP, and Dell all have their HPC components (and both Isilon and BlueArc are now divisions of two of these), but for start-up potential, watch the bleeding edge of this industry and see what shakes out - despite the 100 million smartphones/tablets out there, HPC is the stealth user of both SSD and platter technology.

..TS.
(note, the title is just silly - couldn't pass up the potential for punning... ;-)

RIMMworld

There has been no more pivotal point for RIMM than it faces today.  Way too cliche to even say anything about being on the "rim", Research in Motion stands atop a pile of subscribers, scrambling to retain them with edgy products that're merely playing catchup.  Similarly, I've been in and out of near-term 2012 RIMM Puts trying to play catchup with a market that's been pushing the company down from Mt. Olympus since July of 2008, not allowing the global recovery to (barely) affect RIMM's Belerophonesque plunge.  My catchup plays have been about as eventful as RIMM's ability to combat the AAPL/iOS juggernaut.

As Tamara Rutter reports on Fool.com in "What Blackberry 10 Really Means for RIM" the introduction of the Blackberry 10 at the company's annual partner conference is met with mixed emotions: those stuck in the Triassic with their love of a physical keyboard (guess you can figure the colors I fly) dissed the keyboard-less demon, while AAPL, Samsung and Motorola licked their chops, ready to attack via their respective IP law firms a competitor who may or may not have paid for the relevant technology licenses.  Ms. Rutter points up the historical nature of RIM as "innovative", yet it took them 3 years to produce this tablet phone.  While we can all see the mass of Microsoft's ocean liner that gives seasoned captains the world over the willies in figuring out how to steer the behemoth, RIM's relative tiny size seems like a PT-boat pulling a submerged iceberg (which is probably the combination of their installed base with their proprietary network).

I closed out my Puts today, figuring I'd just take the friggin loss and stop trying to guess what this silly company was gonna do next--therefore didn't jump on the potentially cheap Calls that beckon if the 10 is RIMM's savior.  The touch-screen 10 may save them, but are there content and apps ready to wow the public?  Does their tablet phone have a halo device, ready to serve the function of AAPL's iPhone vis-a-vis the Mac computers?  I truly think that RIMM has bit the dust, is beyond the event horizon, but there are far easier ways to make money than trying to be a Phillip Falcone with RIMM.

..TS.

The Developing Story of Crocs - You Have an Option

Like any other growth company that started life as a fad, Crocs has its share of detractors and supporters.  The detractors are sure that the company is still just a fad, based on the sales of their fad product, and the next quarter holds certain ruin, so "Sell, Sell, Sell!".  The supporters may wear the shoes, have read and understand the company's financial documents, and see tons of potential in all those Croslite-shod feet worldwide.

I've undeniably thrown in with the latter crowd, with both equity and several different OTM calls (Jun12 at $21, Jan13 at $35 and $45). I've been long Crocs since mid-2008 when the freefall was still in effect, and have been reading positive things from the quarterly & annual reports all the way back up from the depths. Matt Andrejczak has good points from the recent quarterly report in his article "Crocs should quit quarterly outlooks: Hodges Capital", and he soberly points up some of the reasons why the equity tanked immediately following the report.

Ideally, you know, people should just sit on an equity position, like CROX, through thick and thin while Mr. Market sorts out just when the reality of an increasingly valuable company should be priced per it's value.  But we're all impatient for the quick profit, which is why I'm sure options were created.  While the underlying equity goes up or down a couple of percent, the options can move much faster, netting a profit (or loss) for the cautious, wary options fisherperson.

But Rocco Pendola, writing at TheStreet.com, really sums up the option strategy (game) in the title of his article "You Can Lose It All With Apple Options".  If you're truly not equal to losing your entire investment very quickly--as Call holders found with both CROX and AAPL over the past week--then you need to re-evaluate your use of options.  If people are messaging you asking when the best time is to exit a position, then they're no better situated than Croesus, king of Lydia, when he got the prognostication from the Oracle of Delphi "If you cross the river, a great empire will be destroyed."

..TS.

So what if I called the earnings release

So I called the earnings release.....Yea..Wow....Great....
But, the most important thing is can I repeat that call. It was a mixture of knowing the sentiment and knowing what to ignore. [ or maybe ignorant of what I was suppose to know] Anyways, coming from a left-brained analytical background, I usually want to know everything about a stock before I jump in.

What others' don't know
My approach has always been to figure out what other traders don't know about a stock or special situation. But the lesson here is that traders, at all levels of experience, were watching what they were suppose to be watching. They were following the rules of prudent day/swing trading like they were suppose to.

Don't get me wrong. I'm not advocating that you don't use safe guidelines or rules. But there are different levels of how deeply a trader gets engaged in data and facts. Each level has a self-interest and motivation. Each level has a standard set of best practices learned through experience and knowledge.

Invert the Process
I will paraphrase the adage made famous by Howard Marks, What do I know that other trader don't?
Invert the thinking process into the following. What knowledge do others have that they should be ignoring?

At a different level, what knowledge exists that other trader's are totally ignorant of?

Regardless of experience, the other half of the world that is right-brained and guided by intuition may be looking at something from a completely different point of view.

OmniVision action today

I think OmniVision (OVTI) is going to pop today, after Apple reports its quarterly earnings report.

I will write more after tonight's market close.