Back on October 9th, I posted about how despite thinking that Apple (AAPL) is a great company, I wouldn't buy the stock. Furthermore, I suggested Zynga, Radioshack, and Citibank were safer buys and also mentioned Research in Motion (RIMM) and Nokia (NOAA) of all companies.
I decided to make a Google Finance Portfolio to track these things. First the graphics:
Vs. Major Indecies:
Vs. each other
Radioshack spiked for a bit and then went back down. Zynga has also kind of bumped along although I expect after their 90 million$ write down last quarter and reduction in staff (voluntary and involuntary) they may actually make money this quarter... who knows. Anyway, it's a long term bet that they can become either a successful casino or somehow figure out mobile. The former seems more likely and I suspect speculators will drive the price up if that starts to look good, at which point I'd probably bail. Then there's always acquisition, but I doubt that will happen.
Citibank did nothing until they announced they were laying off 11k workers. People hate that, investors love it. There's good reasons why, but in any case that recently bumped them up and so my writing of this blog has lucky timing for citibank returns. I still have confidence that banks will survive and thrive somehow, and I think Citibank is one of the bigger ones and therefore more likely to benefit from whatever the next big banking "strategy"might be.
It turns out the ultimate dogs, Nokia and Research in Motion, had very strong increases in the last 6 weeks. This is, again, driven by speculation and so I consider it a fake gain that is likely to drop back down again so the growth in my portfolio is luck based on the time I decided to write this update. RIMM is desperately trying to put something out that people want, but Nokia is making strong plays in Windows 8 phones as well as lower end, cheap, smartphones in secondary markets... there are a lot of people in those and they have low expectations.
As a result, my sample portfolio did not include RIMM but did include NOAA. At this point I actually believe Nokia may come back, but with the 40% gain, the stock is too overpriced to warrent an increase in position. If greed drives the speculators out and they drop 50% or so, I might pick up some more. If I was a day trader or a technical trader, I'd sell... but I'm not - so I'm waiting to see if the real value of the company goes up, which I think it can.
Return graphic here:
At a 2 month time horizon this is still all luck or noise, depending on your definition; but I actually think my position on all these stocks hasn't changed, except maybe Radioshack. I'm about the same on Apple - despite the fact that I believe they are about to have one of the best quarters that any company has ever seen in history. The iPad Mini is awesome and all the kids want one.
You can see I'm also tracking a few new stocks...not technically dogs per say, but definatelt in the dog house. I bought Intel (INTC) the other day because I suspect they will succeed in finding a great CEO and will make the transition to mobile while keeping PC domination. I think AMD has a much harder road...nothing in their restructuring plan talks about mobile which is surprising. They seem to be going the cost cutting route which seems dangerous. That could help Intel pick up more of the PC market.
I'm very skeptical about THQ as well. I suspect they will refinance their debt but their upcoming products do not seem like they will generate a billion or so in revenue which is more or less what they need right now.
Microsoft is starting to look attractive, but I suspect after 4th quarter earnings they will take a beating and the doom and gloomers will take to MSN/CNBC and push the price down to irrational levels.. or maybe something else will, who knows. But at the current value it's still too high, though I think they will somehow make it as a company
I also dumped a bunch into an S&P index fund which means that I'm investing about 4% of that in Apple by proxy (Yes, Apple is 4% of the S&P 500... amazing) along with a bunch of other biggies. I feel like it might be cheating a bit but the S&P has been pretty crappy the last couple of months and having a bunch of cash in an account seems silly to me, even if it isn't real :)... or perhaps especially because it isn't real.
I've been trying to diversify out of tech, which is what I have a more intuitive understanding for, but it's been very hard. Exceed, for example, is a Chinese Footwear manufaturer with decent earning, reasonable cash holdings and low debt. Their sales have dropped quite a bit, however, seemingly because of competition and economic slowdown in China. Nevertheless it seems quite undervalued, but I can't get enough information to make a decent decision here.
Strangely, it's incredibly fun athough I subscribe to the value investor assumption that in a short time horizon it's pretty much guesswork and in a longer time horizon companies regress to their actual value, which is subsequently very difficult to calculate since you have to make vast assumptions. So I believe it remains a game of probabilities that when your guesses are wrong or right, you minimize the loss and maximize the gain... that's why it's reasonable for me to invest in companies that I don't necessarily believe in, and avoid companies I think are great.
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