After a day like today, it's always good to take a long hard look at your portfolio and point out what is not working, and at the same time look for what is working that is not in your portfolio.
Here is what you should see in there:
As I came home today and turned on my favorite channel (CNBC) I first beheld the DOW closing above, or more exactly at 14,000, and thought "uhm, how bullish", my next observation was not as promising, as I watched the GOOG ticker followed by a red 39.40.
My heart dropped. I immediately checked the Dow Jones News to find out why my favorite stock was taking a 7% dip after hours.
As I remember, there was a couple of things that scared investors last quarter, one being the fear of rising expenses, and the other, the fear Google could not grow it's revenues fast enough anymore to justify this kind of PE. These two worries seem to have been put to rest for the time being, as traffic acquisition costs declined to 30% from 31%, and revenue came in for the quarter at $2.72 billion when analyst were expecting $2.68 billion.
Unfortunately, earnings came in at $3.56 a share compare to the expected $3.59, but since we are used to see Google's earnings beat the street expectations like a pinata, investor disappointment is high.
Time has taught us that any dip in price for Google share is usually a buying opportunity, but if CEO Eric E. Schmidt doesn't turn his recent acquisitions into earnings this company is going to have a hard time growing at the speed they have been in the past few years.
I was in a classroom environment last week, briefly discussing recent IPOs, when one of my class mates noted how poorly Blackstone stock had performed since its debut on the New York Stock Exchange. At first it didn't bother me..., but I then realized he had no idea why the IPO had a bad first week, and that did annoy me. The reason behind the poor start are the fears of tax law changes which could drop hedge funds and private equity firms into the 34% tax bracket from the actual 15% I believe.
Today the stock dropped an other 2.51% to $29.18 on corporate governance issue concerns, apparently the way the IPO was structured it did not follow NYSE rules imposed on other corporations trading on the exchange (operating company vs. investing company).
But as investors will learn tomorrow the first legal hurdle seem to have been passed, as Treasury Assistant Secretary for Tax Policies Eric Salomon had nothing positive to say about the new proposed tax laws.
I remember thinking, last week, "with all the money these guys have, I'm sure they'll be able to lobby successfully(Blackstone co-founder and CEO Steve Schwarzman made $7.7 Billion on the day they went public), plus if this guy says "sell" without knowing why, the odd lot theory would indicate "buy"".
Now it seems my initial prediction is holding true, I am sure they are smart enough to navigate around anything legislators might throw their way, and with BX now down 10% from its opening day, and FIG down 22%, I bet they are due for a pop.
Keep an eye out!
I know it has been a while, but it was a good while. Markets are going in only one direction and it’s up…for now. We just went through a great month of May the DOW was the biggest gainer with + 4.5% followed by the S&P +3.33% who set new record highs for the first time since 2000, and the NASDAQ +3.12%.
As far as my holdings go, this is the first time this year I failed to beat the DOW, my portfolio had a + 4.4% return, due to a slight down turn in gold prices, but my YTD (year to date) return is still far above the markets (+17.38% compared with +9.52% for the DOW). My performance for May was as such:
GOOG: +7.40%
NUAN: +9.21%
MRK: +3.00%
EEM: +4.92%
VLCM: +2.95%
GLD: -2.56%
COP: +11.58%
For June I think there should be a slight correction in energy prices, at least until we see the first hurricane come through the Gulf of Mexico, and I would take a good look a tech and semi-conductors in particular, since a few of them are back to 2005 levels, right before they had a real good run up.
Good luck out there.This week were are expecting some big financial names to release their earnings. Goldman Sachs tomorrow morning, Lehman Brothers on Wednesday, and Bear Stearns Co. on Thursday, both of them before markets open also.
While GS beat earning expectations last quarter the stock is now 10% from it's highs at about the same level as it was on its last earnings release. So the stock looks like a bargain, specially when you look at the PE and PEG compare to the industry(10.4, 0.7 to 18.2 and 1.4). It looks to me as the stock should double before it would reach average valuations. So what's keeping this stock from taking off? Guidance, I imagine.
Analyst only expect $21.15 EPS for 07 compared to 06's $19.69. That's only 7.41% earnings growth, could that be true? After 06 75.55% earnings growth and 5 year growth rate of 35.75%? I must be missing something.
If you see anything out there that could qualify as a big red flag, please let me know. Meanwhile I'm going to unlock some funds and start a very small position.
Good luck out there!
Well it’s the beginning of a new month and I want to keep sharing how I did. Plus it keeps me honest about my stocks.
For a total weighted gain of +2.17%
Not that my biggest gainers were my smallest cap companies and that I am expecting a reversing trend for the month of March. I wouldn’t be surprised if I end up giving back most of these gains. I expect a lot of red ink this month, down 1.1% on the first day, and probably continue to slide until the fed decides to lower the rates hopefully in May.
I hope Google will bottom out, and energy prices will help lift Conoco.
I still think Merk is a not fully valued, the new drugs coming out indicates great potential, I think most analyst underestimate the sales the will generate.
Nuance has made an other acquisition, and I still expect a lot of upside down the road, and Volcom is just getting started its European growth, and I have a strong feeling the Volcom culture will integrate itself well. European youth will receive well this type of “we’re not the big bag corporations” attitude.
