(Copyright by IBD)
A lot of the credit goes to YouTube.
The wildly popular Internet video-sharing site and other bandwidth-thirty applications are driving massive investments in Internet infrastructure.
That makes equipment makers such as Ciena (CIEN) very happy.
The Linthicum, Md.-based company is helping telecom giants such as Verizon, (VZ) AT&T (T) and BT Group (BT) expand capacity, converting old voice networks into wide data pipelines.
The demand has put Ciena back in the black in 2006 after four money-losing years. Halfway through this year, it's on track to deliver 270% earnings growth.
"The underlying demand drivers for optical networking equipment have never appeared to be more robust," Piper Jaffray analyst Troy Jensen wrote in a client note.
Ciena makes equipment used in citywide networks and long-haul data lines. It also makes switches that get data to its destination and access components that help customers deliver telephone and high-def TV over the Internet.
Its customers are telecom giants, cable companies, large enterprises and governments.
Collectively, those markets were worth $8.2 billion last year, Ciena said. It expects them to grow by about 18% per year through 2009.
Fiber networks transmit data rapidly over strands of light-transmitting glass or plastic. It was the hot thing seven years ago.
Telecom companies and service providers laid vast networks of fiber that were to be the backbone of the New Economy. Then came the dot-com bust.
Now, much of that dark fiber is being lit, thanks to video and a slew of other information-dense applications. Service providers are updating the switches in the system. And they're stringing fiber straight into homes to deliver even more services.
"If you don't get the core network updated, there's no way you can accommodate all the capacity that's required," said Stephane Teral, principal analyst with the research firm Infonetics.
For instance, Internet video uses 1,000 times as much bandwidth as a single e-mail, he said.
And then there's YouTube. The Google-owned video-sharing site now uses the same amount of bandwidth as the entire Internet consumed in 2000, computer pioneer Michael Dell said in January.
High-def TV, streaming videos on mobile phones, and other services will require still more broadband plumbing, analysts say.
Teral said the telecom industry's latest infrastructure spending spree began in 2004. But unlike previous binges, this one is more controlled and stable.
The company expects worldwide investments to hit $240 billion in 2008, growing at a single-digit rate through 2009 or 2010.
But carriers must also must maintain their existing networks.
Tom Mock, Ciena's senior vice president of strategic planning, likened that duel challenge to changing out a car engine, with the vehicle running. And the driver shouldn't notice, he said.
That's where Ciena's systems come in.
During the Internet meltdown a few years ago, Ciena placed its bet that fiber-optic networks and ethernet systems would converge to become the dominant Internet architecture. Ciena developed systems to help carriers lower costs by linking those two technologies together.
"We think we've got a good solution that takes into account not only where the service providers need to be, but also where they're coming from," Mock said.
Goldman Sachs analyst Brantley Thompson said Ciena has the right product mix. He sees solid demand from wired, wireless and cable service providers.
"The contract pipeline continues to improve with new opportunities at Tier 1 carriers in the U.S. and Europe," he wrote.
But it has been a bumpy road.
Ciena grew with the technology boom in the 1990s. It went public in 1997. By October 2000, its shares traded around 150.
With the collapse that followed, the company went from $4.20 earnings per share in 2001 to a $7.98 loss in fiscal 2002. Those losses gradually shrank as the market recovered. But by 2005, Ciena's shares traded under 2.
Over that time, though, the company was reinventing itself.
Once a solely fiber pure-play, it went on a buying spree, picking up six companies since 2001. That expanded its product and customer base, turning it into a broader-based network services firm.
The losses eased.
By 2006, Ciena posted a 30-cents-per-share profit.
The company initiated a 1-for-7 reverse stock split in September. Today it trades around 36.
Analysts surveyed by Thomson Financial expect $1.11 earnings per share this year, which ends in January, and $1.54 next year.
The company posted 26 cents per share earnings in its fiscal second quarter, up from 7 cents the year before. Revenue in the quarter was up 48% from a year earlier, to $193.5 million.
With the company back on track, Ciena's chief financial officer plans to step down at the end of the year. Joseph Chinnici has been CFO since 1995. The company has not yet named a replacement.
There are still risks.
Ciena typically relies on several customers for almost half of its revenues — four customers each contributed more than 10% last quarter. But because of various project cycles, that revenue is lumpy. And it faces fierce competition from giants such as Alcatel-Lucent, (ALU) Cisco Systems (CSCO) and Nortel. (NT)
Morgan Keegan analyst Simon Leopold wrote in a research note that some of those giants have head starts in some technology areas because of past Ciena cuts in research and development.
But he thinks the company has filled in some of the gaps through partnering with other firms.
And Piper Jaffray's Jensen isn't expecting broadband demand to ease anytime soon.
"The optical transport market has finally shown signs of life, and we believe the fundamentals are in place for several years of solid growth," he wrote in a research note.
Saturday, June 30, 2007
Thursday, June 28, 2007
Tomorrow Iphone debut, today RIMM rock
It has been quite exciting for market to wait for the show off of Iphone quite a while. Before that we have already heard so many rumors about iphone's performance , drawback, etc. Whether it would change the way of people's phone call life in short time? According to what we have seen in IPOD, fancy yet more streamline following on, similar in its macbook and mac book pro. If such pattern is followed, AAPL should have another improved version stuff under research before their release of iphone. This is not our hoping, it is our trust of AAPL's management, trust of steve jobs.
RIMM, also report blowing out ER after market close. Though many analysts have pointed that they are suitable for different customers, however, today's chart really interesting for us to look at. Any thinking? We will see tomorrow:)
Wednesday, June 27, 2007
What we need to look at AOB?
Recently a claim by barron really slam down the price of AOB which even true, should not be a big problem of AOB. What we really need to focus on is the action taken by AOB after its offering of $140 m last two weeks. Its acquisition only spend $30 m, compared to $140m, what does that mean , huh? Yes, more plan is going on. Well by so far, with little information about acquisition, I would suggest we start to load partial of AOB by taking some risk while watching carefully any buyout it may have in the future. If the buyout is not good , then get out quickly.
======================
Part One
An Exchange on a China Stock
To the Editor:
On June 25, Barron's published a negative column by Leslie P. Norton entitled "Chinese Medicine Show" about American Oriental Bioengineering (ticker: AOB). My firm is a shareholder of AOB. I have traveled to Harbin and Hezhou in China to visit AOB's offices, factories, managers, and distributors. The picture that has emerged is diametrically opposed to the portrayal in the column. I have found the company has quality products, fast growth, known brands, savvy management, and hardworking employees.
I believe that the issues raised by the article are immaterial to the fundamentals of the company. However, I would like to address them:
• Peptide products inhibit tumor growth.
AOB has never claimed inhibition of human tumors. A press release in 2004 stated that AOB researchers had shown inhibition of tumor cell growth in mice. Studies done by American researchers (including at UC, Davis) have shown similar results.
• AOB recently said that China will be its main market, whereas earlier filings mentioned international opportunities.
There is no inconsistency between AOB's past and current statements. In 2003 and 2004, AOB had two major products. A significant percentage of sales came from Korea and Japan, and expanding those products into foreign markets was a major objective. AOB has since acquired or introduced new products with sales in China that are much larger than the sales of legacy products. As a result, the company's current statement that China is its main market is not contradictory to past statements.
• Director Wang Xianmin aided the IPO of Daqing Lianyi, whose executives bribed officials.
Wang was a government official in Heilongjiang Province and not an employee of Daqing Lianyi. There is no evidence of anything improper by him. A background check on Wang run by AOB revealed nothing. This is a classic case of guilt by association based on speculation.
• Packaging for soy peptide claims use of technology from UC, Berkeley.
The company does not use technology from UC, Berkeley. AOB had been in past negotiations with UC, Berkeley, to license patents. During this negotiation, one of AOB's local marketing agents inadvertently put this claim on its packaging for the Hong Kong market only (less than 1% of sales). The company is correcting this problem.
Continue
• AOB was involved with CEOCast and MidContinental Securities. Controlling owners of these firms have questionable histories.
The fact that Michael Wachs controlled CEOCast was only discovered a year after AOB stopped doing business with the firm. AOB no longer has any relationship with either CEOCast or MidContinental and was not aware of either company's history at the time of involvement. There is no allegation of any wrongdoing occurring from AOB's involvement with either firm.
More important than whom AOB was peripherally involved with in the past is the people it is directly involved with today. AOB Board Member Lawrence Wizel was a partner with Deloitte and Touche for 26 years. Director Cosimo Patti was an arbiter for the NASD and NYSE for 18 years. It is unlikely that these people would serve as Directors if integrity or accounting problems existed.
AOB is a fast-growing company at an extremely cheap valuation with a phenomenal track record of creating shareholder value. Excluding cash, AOB trades at 9x forward (2008) earnings. EPS has grown at a 43% CAGR over the last four years, and consensus projections are for 37% growth in the next 2 years.
Most importantly, AOB possesses a unique opportunity to acquire at extremely attractive prices. This opportunity is illustrated by recent history. In 2004, AOB acquired HSPL for $7MM. Today that company generates an estimated $6MM in net income. AOB paid a little over 1x current earnings. In April 2006, AOB paid 2-3x year-end 2007 run rate earnings for GLP.
The case for AOB is simple. How many other NYSE companies trade at 9x earnings, are growing 30%+, and have the opportunity to acquire at 2-5x earnings?
My work in China has confirmed this story. I've seen AOB products on the shelves, toured their factories, and confirmed that its brands are known and demand for the products is real.
Sincerely,
Shaumo Sadhukhan
Managing Partner,
Lotus Partners
New York City
======================
Part One
An Exchange on a China Stock
To the Editor:
On June 25, Barron's published a negative column by Leslie P. Norton entitled "Chinese Medicine Show" about American Oriental Bioengineering (ticker: AOB). My firm is a shareholder of AOB. I have traveled to Harbin and Hezhou in China to visit AOB's offices, factories, managers, and distributors. The picture that has emerged is diametrically opposed to the portrayal in the column. I have found the company has quality products, fast growth, known brands, savvy management, and hardworking employees.
I believe that the issues raised by the article are immaterial to the fundamentals of the company. However, I would like to address them:
• Peptide products inhibit tumor growth.
AOB has never claimed inhibition of human tumors. A press release in 2004 stated that AOB researchers had shown inhibition of tumor cell growth in mice. Studies done by American researchers (including at UC, Davis) have shown similar results.
• AOB recently said that China will be its main market, whereas earlier filings mentioned international opportunities.
There is no inconsistency between AOB's past and current statements. In 2003 and 2004, AOB had two major products. A significant percentage of sales came from Korea and Japan, and expanding those products into foreign markets was a major objective. AOB has since acquired or introduced new products with sales in China that are much larger than the sales of legacy products. As a result, the company's current statement that China is its main market is not contradictory to past statements.
• Director Wang Xianmin aided the IPO of Daqing Lianyi, whose executives bribed officials.
Wang was a government official in Heilongjiang Province and not an employee of Daqing Lianyi. There is no evidence of anything improper by him. A background check on Wang run by AOB revealed nothing. This is a classic case of guilt by association based on speculation.
• Packaging for soy peptide claims use of technology from UC, Berkeley.
The company does not use technology from UC, Berkeley. AOB had been in past negotiations with UC, Berkeley, to license patents. During this negotiation, one of AOB's local marketing agents inadvertently put this claim on its packaging for the Hong Kong market only (less than 1% of sales). The company is correcting this problem.
Continue
• AOB was involved with CEOCast and MidContinental Securities. Controlling owners of these firms have questionable histories.
The fact that Michael Wachs controlled CEOCast was only discovered a year after AOB stopped doing business with the firm. AOB no longer has any relationship with either CEOCast or MidContinental and was not aware of either company's history at the time of involvement. There is no allegation of any wrongdoing occurring from AOB's involvement with either firm.
More important than whom AOB was peripherally involved with in the past is the people it is directly involved with today. AOB Board Member Lawrence Wizel was a partner with Deloitte and Touche for 26 years. Director Cosimo Patti was an arbiter for the NASD and NYSE for 18 years. It is unlikely that these people would serve as Directors if integrity or accounting problems existed.
AOB is a fast-growing company at an extremely cheap valuation with a phenomenal track record of creating shareholder value. Excluding cash, AOB trades at 9x forward (2008) earnings. EPS has grown at a 43% CAGR over the last four years, and consensus projections are for 37% growth in the next 2 years.
Most importantly, AOB possesses a unique opportunity to acquire at extremely attractive prices. This opportunity is illustrated by recent history. In 2004, AOB acquired HSPL for $7MM. Today that company generates an estimated $6MM in net income. AOB paid a little over 1x current earnings. In April 2006, AOB paid 2-3x year-end 2007 run rate earnings for GLP.
The case for AOB is simple. How many other NYSE companies trade at 9x earnings, are growing 30%+, and have the opportunity to acquire at 2-5x earnings?
My work in China has confirmed this story. I've seen AOB products on the shelves, toured their factories, and confirmed that its brands are known and demand for the products is real.
Sincerely,
Shaumo Sadhukhan
Managing Partner,
Lotus Partners
New York City
Sunday, June 24, 2007
Thursday, June 21, 2007
The key difference between June this year and Last year
We entered different market situation. Last year we have a big correction followed by a huge rally, this year we have a tiny 4% correction which doomed to follow by a rally later after this month.
If you have paid attention enough, each year's June won't be a good time to buy. It is not our fault, it is some mutual fund and managers' mistaken thinking that causing the sell off most of the time at the second half on June. This year, the same pattern.
You may wanna know why? Jim Crammer 's show one time clarified my question too. At the end of June, time for semi annual performance's count. What those mf and hedge fund's managers do or have to do are to sell and realize their account performance. Not kidding. but for a little bit longer term, no doubt, we are in bull market, and market will make new high in early or middle July. Any correction in June will lead to higher high in July.
If you have paid attention enough, each year's June won't be a good time to buy. It is not our fault, it is some mutual fund and managers' mistaken thinking that causing the sell off most of the time at the second half on June. This year, the same pattern.
You may wanna know why? Jim Crammer 's show one time clarified my question too. At the end of June, time for semi annual performance's count. What those mf and hedge fund's managers do or have to do are to sell and realize their account performance. Not kidding. but for a little bit longer term, no doubt, we are in bull market, and market will make new high in early or middle July. Any correction in June will lead to higher high in July.
Tuesday, June 19, 2007
Lighting up the skyscraper ---CLRK
This company got a decent move recently due to is fudmental change. It offers LED for decorating Skyscraper, seattle, nyx and sanfranscio have used its product. And It could easily expand their product line to other metropolitan and Asia.
Strongly recommend.
=====
Philips Offers $688M for Color Kinetics
Tuesday June 19, 9:10 am ET
By Toby Sterling, AP Business Writer
Philips Offers About $688M for the U.S. Lighting Company Color Kinetics
AMSTERDAM, Netherlands (AP) -- Royal Philips Electronics NV said Tuesday it is offering about $688 million for Color Kinetics Inc. and the Boston-based lighting company's management supports the deal.
ADVERTISEMENT
Amsterdam-based Philips is the world's largest lighting company, while Color Kinetics makes Light Emitting Diode lighting systems for professionals.
LEDs are relatively expensive, but have the ability to produce light in any color, and are both energy-efficient and long-lasting. They are expected to win market share as their cost falls in comparison with incandescent, halogen, and compact fluorescent lights.
Philips is offering $34 per share for Color Kinetics, a 14 percent premium over its closing price Monday of $29.79. Color Kinetics shares had risen by about 50 percent since April 1.
"There was quite a run-up during the process" of negotiating the deal, Philips Lighting CEO Theo van Deursen said in a telephone interview. He said the discussions were confidential as far as the companies knew.
Van Deursen said the offer for Color Kinetics in part reflects important patents it holds on how LED lighting is controlled, specifically the software and hardware that makes it possible to adjust color and brightness. These will become more important in the future as other companies -- including Philips -- have licensed the technology.
Color Kinetics had sales of $65 million in 2006.
"We believe that joining Philips ... is in the best interest of our shareholders, customers, partners, and employees," Color Kinetics CEO Bill Sims said in a statement.
Van Deursen said he expected the deal to win shareholder and regulatory approval and close before the end of the year.
Philips shares dipped 0.3 percent to 31.34 euros ($41.76) in Amsterdam trading.
Philips uses Color Kinetic's controls in its own "Living Colors" color-adjustable LED lamps for the home market. They were introduced in the Netherlands earlier this year and will be sold in five more European countries in September.
Van Deursen said the company does not yet have a date for when the product, which has drawn both praise and some skepticism from technology and design enthusiasts, will be introduced in the United States. He said sales are outperforming expectations so far in the Netherlands but declined to give figures.
Tuesday's acquisition is Philips' third targeting the LED market, as the company continues to bet heavily on the future of the technology.
In 2005, it bought Agilent Technologies Inc. out of their Lumileds LED components joint venture for $950 million.
In March, Philips completed a 53 million euro ($71 million) purchase of Canada's TIR Systems Ltd., which specializes in white light-producing LED modules.
Van Deursen said Philips expects the market for LEDs to grow at more than 20 percent per year and reach $20-30 billion in 2025. The company now has first-place positions in the entire LED supply chain from components and modules to complete systems.
Among major lighting rivals, Siemens AG is the second-largest LED components maker after Philips' Lumileds, but does not have a strong presence in other areas, Van Deursen said.
General Electric Co. does not appear to be pursuing the LED market outside of niche areas such as movie screens, as part of a larger reduced emphasis on its lighting operations, Van Deursen said.
"I don't know what our competitors are missing but we are convinced we're not missing anything," he said.
Strongly recommend.
=====
Philips Offers $688M for Color Kinetics
Tuesday June 19, 9:10 am ET
By Toby Sterling, AP Business Writer
Philips Offers About $688M for the U.S. Lighting Company Color Kinetics
AMSTERDAM, Netherlands (AP) -- Royal Philips Electronics NV said Tuesday it is offering about $688 million for Color Kinetics Inc. and the Boston-based lighting company's management supports the deal.
ADVERTISEMENT
Amsterdam-based Philips is the world's largest lighting company, while Color Kinetics makes Light Emitting Diode lighting systems for professionals.
LEDs are relatively expensive, but have the ability to produce light in any color, and are both energy-efficient and long-lasting. They are expected to win market share as their cost falls in comparison with incandescent, halogen, and compact fluorescent lights.
Philips is offering $34 per share for Color Kinetics, a 14 percent premium over its closing price Monday of $29.79. Color Kinetics shares had risen by about 50 percent since April 1.
"There was quite a run-up during the process" of negotiating the deal, Philips Lighting CEO Theo van Deursen said in a telephone interview. He said the discussions were confidential as far as the companies knew.
Van Deursen said the offer for Color Kinetics in part reflects important patents it holds on how LED lighting is controlled, specifically the software and hardware that makes it possible to adjust color and brightness. These will become more important in the future as other companies -- including Philips -- have licensed the technology.
Color Kinetics had sales of $65 million in 2006.
"We believe that joining Philips ... is in the best interest of our shareholders, customers, partners, and employees," Color Kinetics CEO Bill Sims said in a statement.
Van Deursen said he expected the deal to win shareholder and regulatory approval and close before the end of the year.
Philips shares dipped 0.3 percent to 31.34 euros ($41.76) in Amsterdam trading.
Philips uses Color Kinetic's controls in its own "Living Colors" color-adjustable LED lamps for the home market. They were introduced in the Netherlands earlier this year and will be sold in five more European countries in September.
Van Deursen said the company does not yet have a date for when the product, which has drawn both praise and some skepticism from technology and design enthusiasts, will be introduced in the United States. He said sales are outperforming expectations so far in the Netherlands but declined to give figures.
Tuesday's acquisition is Philips' third targeting the LED market, as the company continues to bet heavily on the future of the technology.
In 2005, it bought Agilent Technologies Inc. out of their Lumileds LED components joint venture for $950 million.
In March, Philips completed a 53 million euro ($71 million) purchase of Canada's TIR Systems Ltd., which specializes in white light-producing LED modules.
Van Deursen said Philips expects the market for LEDs to grow at more than 20 percent per year and reach $20-30 billion in 2025. The company now has first-place positions in the entire LED supply chain from components and modules to complete systems.
Among major lighting rivals, Siemens AG is the second-largest LED components maker after Philips' Lumileds, but does not have a strong presence in other areas, Van Deursen said.
General Electric Co. does not appear to be pursuing the LED market outside of niche areas such as movie screens, as part of a larger reduced emphasis on its lighting operations, Van Deursen said.
"I don't know what our competitors are missing but we are convinced we're not missing anything," he said.
Sunday, June 17, 2007
I don't expect any big thing happen next week
The market recovered so strongly, fully taking back all those 3% correction . And the reading on my radar are market neutral. Also because this weekend I start to learn Option now, that is why I haven't got time to write any market review. If any big issues happen, I will let you know.
Good luck , folks!:)
congratulation to Seth's goog Call.
Good luck , folks!:)
congratulation to Seth's goog Call.
Friday, June 15, 2007
Several observations about this OE
This OE is very very typical I think , flirting with big volatility. But as what I mentioned before, its intrinsic features are mostly expo expressed this OE. For example, the timing issue, the volume issues, the leader sectors issue, the leader stocks issues. Most of them are typical pattern matched with my statistics. Today is my first day to fully review all the option chain and you have found out those intrinsic relationship among each price and price movement. Double check with the option play by bobobobob on NMX, the option play on MA, get your own idea and thinking. Value will come for those people who get ready for it.
Thursday, June 14, 2007
Advanced Tech to play in High Volatile Market
Please note that this tech is based on statistics but can't guarantee certain thing. The description inside such a tech is for experienced trader or speculators because it requires dedicated judgement and cool mindset. Also such a method involves big risk if you are not familar with TA anlysis. Moreover it incorporates my strong personal bias or thinking which you may not agree , that is why it will look controversial but indeed a very powerful trick.
And for specific reason, I won't like to get this idea public ( could be searched by goog or other search engine ) therefore all my friends here, please leave with your email address.
Below is first part of this article.
=======================
Old technique to be thrown away 1
After watching NMX today and HMIN several days ago, I have realized that one technique that has been used for quite a while should be thrown away. The technique, here I mean, is the waiting for confirmation. My successfully catching bottom of AAPL and DXPE really assure me an era is coming for quick response, -- buying in panic while others are watching or selling. My own subjectivity with a quick and formative mind works much better without confirmation. We have learned from many books that you will be buying stocks or the market as they are going down, or shorting/selling them as they are going up. In other words, buying low and selling high when you see confirmation. Can they get lower? That is no doubt about that. Most of the time they will go lower than what you think to be, something similar to what people has consistently warned you “don’t catch a falling knife”, “don’t try to get into the bottom until you really see a bottom”. And most of the books sold in bookstore told you an approach: wait until you see a stock hit the bottom and then start to move up. Sounds genius, we reduce the chance of catching a falling knife, we raise our chance to follow the money trend, fabulous? It seems it is too true to be rejected. Let’s get a little bit deeper into this concept to find out whether this statement is true or not.
And for specific reason, I won't like to get this idea public ( could be searched by goog or other search engine ) therefore all my friends here, please leave with your email address.
Below is first part of this article.
=======================
Old technique to be thrown away 1
After watching NMX today and HMIN several days ago, I have realized that one technique that has been used for quite a while should be thrown away. The technique, here I mean, is the waiting for confirmation. My successfully catching bottom of AAPL and DXPE really assure me an era is coming for quick response, -- buying in panic while others are watching or selling. My own subjectivity with a quick and formative mind works much better without confirmation. We have learned from many books that you will be buying stocks or the market as they are going down, or shorting/selling them as they are going up. In other words, buying low and selling high when you see confirmation. Can they get lower? That is no doubt about that. Most of the time they will go lower than what you think to be, something similar to what people has consistently warned you “don’t catch a falling knife”, “don’t try to get into the bottom until you really see a bottom”. And most of the books sold in bookstore told you an approach: wait until you see a stock hit the bottom and then start to move up. Sounds genius, we reduce the chance of catching a falling knife, we raise our chance to follow the money trend, fabulous? It seems it is too true to be rejected. Let’s get a little bit deeper into this concept to find out whether this statement is true or not.
Reiterate my Rating on NMX
It has reached the 12 months FA target today, I wouldn't rec a buy or a short position to this guy. From FA perspective, its value has been fully appreciated at this point for its TTM earning.
Metronic
Metronic
Wednesday, June 13, 2007
What I learn from today's market
The market rebounces quite remarkable, and in a fast move. More than 11 stocks out of top 100 gains more than 2% with increasing volume. Can you tell that market has changed its direction? hehe,market has not changed its bull trend. More important, you should learn sth that is above superficial appearance of market rally. It basically states two things which normally won't be disclosed by any book or any market makers. First, the pattern of OE game. Second, the timing of OE game. As we pointed out yesterday, OE could produce potential great opportunity for us if this pattern and timing has been mastered.
I am a newbie to option, but from what I saw today, OE does create big chance for those who are ready for it. :)
I am a newbie to option, but from what I saw today, OE does create big chance for those who are ready for it. :)
Tuesday, June 12, 2007
When is the best time to play OE?
Many people may be confused that how to play with OE week?
Even though I seldom trade in OE, but according to my observation, the best time to play with OE is thursday, one day before Friday. And more surprising, you need to reverse trade the direction of what happen on Wednesday and Thursday , let 's check whether it is still true this OE.
But let's try to find out the logistics behind this. What move the OE? market maker?
Where does the market volatility come from? You bet. It comes from the battle between option writer and option buyers. Most likely the institution and hedge fund who use either the leverage to protect their position or just wanna maximize their profit. What would be most important day during such a process? Friday you may say?
Actually Thursday would be the best time , to be more specific, the last few hours during normal trading hours will be the best time to control everything. Institution won't be defeated by small investors, they normally defeat themselves. That is why they would allow volatility to flow while getting control in the last 100 m run during a 1 km race.
Just stay cool and build up our own thinking.
Even though I seldom trade in OE, but according to my observation, the best time to play with OE is thursday, one day before Friday. And more surprising, you need to reverse trade the direction of what happen on Wednesday and Thursday , let 's check whether it is still true this OE.
But let's try to find out the logistics behind this. What move the OE? market maker?
Where does the market volatility come from? You bet. It comes from the battle between option writer and option buyers. Most likely the institution and hedge fund who use either the leverage to protect their position or just wanna maximize their profit. What would be most important day during such a process? Friday you may say?
Actually Thursday would be the best time , to be more specific, the last few hours during normal trading hours will be the best time to control everything. Institution won't be defeated by small investors, they normally defeat themselves. That is why they would allow volatility to flow while getting control in the last 100 m run during a 1 km race.
Just stay cool and build up our own thinking.
Monday, June 11, 2007
What is special today?
My AAPL is stop out together with GOOG turns south. And only one stock out of top 100 increases more than 2% with increasing volume. To be frankly, this is not a good beginning for this week. But this week is OE week, and high volatility is expected. We should stay cool, don't get in or get out easily while keeping a clear mind with what may happen in the market.
I am thinking about the strategy and got some new ideas now:)
also news released today about HSC, which has received a lot of big contracts recently and indicated that they are growing faster into the global business. I maintain my buy recommendation in this stock. Target price hasn't changed.
===============
Harsco Receives Three International Formwork Contracts Totaling More Than $4.5
Million HARRISBURG, Pa., June 11, 2007 (PRIME NEWSWIRE) -- Worldwide industrial
services company Harsco Corporation (NYSE:HSC) announced today that its Huennebeck access services division has received three new contracts totaling more than $4.5 million to supply rental concrete-forming equipment systems for major construction projects in Germany and the Middle East.
Huennebeck has been selected to handle the pre-installation engineering as well as coordination of rental formwork supplies and materials for a new 675 megawatt power plant being built for Vattenfall Europe at Boxberg, in the Saxony region of eastern Germany. The project, Huennebeck's largest construction site in Germany at the present time, will result in a new lignite-fired plant equipped with state-of-the-art environmental systems to support Germany's growing energy requirements. Approximately one-third of the required electricityin Germany is generated from lignite. Huennebeck's wall and floor-shaping forms and shoring supports will be used throughout the pouring and curing of the plant's cast-in-place concrete joists, walls, and columns. The first construction phase is scheduled through 2008 and also includes the use of Huennebeck's highly versatile modular climbing scaffold during the erection of walls and columns.
Huennebeck's subsidiary in the United Arab Emirates has secured two formwork rental contracts in Dubai, including the new H.H. Sheikh Hamdan Awards Building Complex, a prestigious multi-story structure that will become the centerpiece for Dubai's internationally recognized academic and medical sciences awards program similar to the Nobel Prize program. The new complex will comprise three semi-circular structures totaling nearly 125,000 sq. ft. (116,000 square meters) . Huennebeck will supply a range of concrete form systems for the walls, floors and columns as well as shoring to support high beams and slabs during construction.
Huennebeck will also supply rental forms and shoring supports to the construction of the new IBIS Hotel Dubai-Al Barsha, a new 480-room mid-rise hotel scheduled to open to the public in 2008.
These latest contract wins are further examples of Harsco Access Services' expanding presence in the fast-growing global infrastructure markets, where independent estimates of the global investment needed over the next 25 years in such areas as transportation infrastructure, education and healthcare facilities, energy and utilities, and communications infrastructure are as high as $30 trillion.
I am thinking about the strategy and got some new ideas now:)
also news released today about HSC, which has received a lot of big contracts recently and indicated that they are growing faster into the global business. I maintain my buy recommendation in this stock. Target price hasn't changed.
===============
Harsco Receives Three International Formwork Contracts Totaling More Than $4.5
Million HARRISBURG, Pa., June 11, 2007 (PRIME NEWSWIRE) -- Worldwide industrial
services company Harsco Corporation (NYSE:HSC) announced today that its Huennebeck access services division has received three new contracts totaling more than $4.5 million to supply rental concrete-forming equipment systems for major construction projects in Germany and the Middle East.
Huennebeck has been selected to handle the pre-installation engineering as well as coordination of rental formwork supplies and materials for a new 675 megawatt power plant being built for Vattenfall Europe at Boxberg, in the Saxony region of eastern Germany. The project, Huennebeck's largest construction site in Germany at the present time, will result in a new lignite-fired plant equipped with state-of-the-art environmental systems to support Germany's growing energy requirements. Approximately one-third of the required electricityin Germany is generated from lignite. Huennebeck's wall and floor-shaping forms and shoring supports will be used throughout the pouring and curing of the plant's cast-in-place concrete joists, walls, and columns. The first construction phase is scheduled through 2008 and also includes the use of Huennebeck's highly versatile modular climbing scaffold during the erection of walls and columns.
Huennebeck's subsidiary in the United Arab Emirates has secured two formwork rental contracts in Dubai, including the new H.H. Sheikh Hamdan Awards Building Complex, a prestigious multi-story structure that will become the centerpiece for Dubai's internationally recognized academic and medical sciences awards program similar to the Nobel Prize program. The new complex will comprise three semi-circular structures totaling nearly 125,000 sq. ft. (116,000 square meters) . Huennebeck will supply a range of concrete form systems for the walls, floors and columns as well as shoring to support high beams and slabs during construction.
Huennebeck will also supply rental forms and shoring supports to the construction of the new IBIS Hotel Dubai-Al Barsha, a new 480-room mid-rise hotel scheduled to open to the public in 2008.
These latest contract wins are further examples of Harsco Access Services' expanding presence in the fast-growing global infrastructure markets, where independent estimates of the global investment needed over the next 25 years in such areas as transportation infrastructure, education and healthcare facilities, energy and utilities, and communications infrastructure are as high as $30 trillion.
Saturday, June 9, 2007
Comments on Short by bobobobo
关于short
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我很久没玩short了， 因为我不会再一个uptrend 的market去short/put, 也不会在一个downtrend 的market 去long/call.
这样的好处是不累。而且，当我确定去做一个方向后，我总是想方设法去推翻我的论据，如果推翻不了，那么我可以确定我是对的。
老实说我觉得mit stock board 上很多人对short的理解很好笑。一年前我和千户探讨过这个问题。 short 的依据在一句话，行情在犹豫中发展，但是下跌可是多半不会在犹豫中进行， 一般直接到支撑位。
理解了这句话，你就可以知道何时应当place short position 了。mit stock board 一个不好的地方是track不了record. 记得去年夏天，我常在大盘上升逾百点时放short. 我的第一个100%多半就里来的。
放short的两个好位置是， 1， 在downtrend的stock, 反弹到中期趋势线下时。
2， overbot 的stock，高位放量，又或有重要趋势线压制，或者接近布林通道顶端，rsi, 威廉系数高位钝化。
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我很久没玩short了， 因为我不会再一个uptrend 的market去short/put, 也不会在一个downtrend 的market 去long/call.
这样的好处是不累。而且，当我确定去做一个方向后，我总是想方设法去推翻我的论据，如果推翻不了，那么我可以确定我是对的。
老实说我觉得mit stock board 上很多人对short的理解很好笑。一年前我和千户探讨过这个问题。 short 的依据在一句话，行情在犹豫中发展，但是下跌可是多半不会在犹豫中进行， 一般直接到支撑位。
理解了这句话，你就可以知道何时应当place short position 了。mit stock board 一个不好的地方是track不了record. 记得去年夏天，我常在大盘上升逾百点时放short. 我的第一个100%多半就里来的。
放short的两个好位置是， 1， 在downtrend的stock, 反弹到中期趋势线下时。
2， overbot 的stock，高位放量，又或有重要趋势线压制，或者接近布林通道顶端，rsi, 威廉系数高位钝化。
Yield Curve Impact (by AUV)
Last week, we had a class discussion on yield-curve and perspectives on the interest rate. It started by reading a NY times article on 12/28/05 - Shares Plunge as Shift in Treasury Market Stirs Concern. That was when the yield curve first inverted (technically). We talked about the difference on the interest rate perspective (if any) between now and then. Here is the comment I made:
One main function of the FED is to adjust economy activity through adjusting over night interest rate. The higher is the interest rate, the higher is the borrowing cost, and less capital is flow into the economy. Yield curve reflects the supply and demand of bond at different mature terms. Rising interest hurts long term bonds, therefore when expect further interest raise, the long term bond yields raise, results larger yield different between long term bonds and short term bonds. When investors anticipate FED to cut interest which is beneficial to long term bonds, the demand on long term bonds drive the yield down, the yield difference between long term bond and short term bond diminished. When the long term bond yield is so low that it is less than short bond, the curve becomes inverted. Since banks profit from the positive interest difference between short term(loan) and long term(deposit), inverted curve will make it hard to get loan. Therefore, inverted curve result contraction in economic activities, and often see as a forecast of recession.
The low interest rate of 2001-2004 has been main factor that pull the US economy from the last recession, The low interest rate also results the latest housing boom market which many see as a bubble. After 13 consecutive interest rate, at the end of the 2005 when interest rate is at 4.25%. At that time, as indicated in the reference articles, many saw the interest rate raising phase is about to end and FED would cut the interest rate in the near future. That was the first time when the yield curve first became inverted. However, contrary to many people’s expectation, FED increased interest four more times instead of once, brought interest rate to 5.25% by mid of 2006, and left the rate at the level for a whole without indicating an interest rate cut is expected in the near future. Since the article published, the yield curve has been generally flat with some period of inversion. It indicated that the investors were continue to expect interest rate cut. It was until recently when the interest rate return flat but generally normal, which indicate investors are less expecting interest rate cut in the near future, even expecting an rise interest.
That is a truly surprise, and many people are worrying the high interest rate is hurting the economy, especially the housing market, which has been main driven force for the economy. The reason of such change in expectation lies in the other main function of the FED, which might be more important than the first one, that is maintain the value the US currency at a reasonable level, and control inflation. Since the US economy has been running on large deficit at country level, government level (and at individual level), it largely relies on borrowing from foreign investors and countries through new bond issues. The borrowing has been accumulated to such a high level that further issues of bond might not be absorb as before, which put more pressure on the US dollar. Also major US debtors such as China and Japan also have very low interest rate and are expecting to raise their interest rate. Such interest raise could draw capital out of the US economy if the US is to cut its interest rate. Comparing protecting the economy from a slow down, maintaining the US currency definitely has higher priority, therefore interest rate cut is not likely in the foreseeable future and it wouldn’t be a surprise to see interest rate continue to rise.
One main function of the FED is to adjust economy activity through adjusting over night interest rate. The higher is the interest rate, the higher is the borrowing cost, and less capital is flow into the economy. Yield curve reflects the supply and demand of bond at different mature terms. Rising interest hurts long term bonds, therefore when expect further interest raise, the long term bond yields raise, results larger yield different between long term bonds and short term bonds. When investors anticipate FED to cut interest which is beneficial to long term bonds, the demand on long term bonds drive the yield down, the yield difference between long term bond and short term bond diminished. When the long term bond yield is so low that it is less than short bond, the curve becomes inverted. Since banks profit from the positive interest difference between short term(loan) and long term(deposit), inverted curve will make it hard to get loan. Therefore, inverted curve result contraction in economic activities, and often see as a forecast of recession.
The low interest rate of 2001-2004 has been main factor that pull the US economy from the last recession, The low interest rate also results the latest housing boom market which many see as a bubble. After 13 consecutive interest rate, at the end of the 2005 when interest rate is at 4.25%. At that time, as indicated in the reference articles, many saw the interest rate raising phase is about to end and FED would cut the interest rate in the near future. That was the first time when the yield curve first became inverted. However, contrary to many people’s expectation, FED increased interest four more times instead of once, brought interest rate to 5.25% by mid of 2006, and left the rate at the level for a whole without indicating an interest rate cut is expected in the near future. Since the article published, the yield curve has been generally flat with some period of inversion. It indicated that the investors were continue to expect interest rate cut. It was until recently when the interest rate return flat but generally normal, which indicate investors are less expecting interest rate cut in the near future, even expecting an rise interest.
That is a truly surprise, and many people are worrying the high interest rate is hurting the economy, especially the housing market, which has been main driven force for the economy. The reason of such change in expectation lies in the other main function of the FED, which might be more important than the first one, that is maintain the value the US currency at a reasonable level, and control inflation. Since the US economy has been running on large deficit at country level, government level (and at individual level), it largely relies on borrowing from foreign investors and countries through new bond issues. The borrowing has been accumulated to such a high level that further issues of bond might not be absorb as before, which put more pressure on the US dollar. Also major US debtors such as China and Japan also have very low interest rate and are expecting to raise their interest rate. Such interest raise could draw capital out of the US economy if the US is to cut its interest rate. Comparing protecting the economy from a slow down, maintaining the US currency definitely has higher priority, therefore interest rate cut is not likely in the foreseeable future and it wouldn’t be a surprise to see interest rate continue to rise.
Anyone willing to share his idea for next week?
to accept is always not a way to learn. As bill gates said during his speech on harvard commencement on 1/10," I have realized that, to be odd can't guarantee your success" , a word to point out no people can be right all the time. And based on my experience to understand the big market, I strongly believe to learn from yourself or to overcome the barrier that stop yourself from further improvement is the trick to make your right. I have been writing the market review for about a year since my first attempt on STOCK board last year, and really enjoy sharing my view with all the friends here. All of the methods I have been using to predict the market have been totally introduced to all of you, without any reservation. And it is almost time for me to calm down and think about the new strategy to invest now. Carol has asked me so many times that when I can start to focus on the insider buying strategy? yes, I have to admit that not much time I have if I continue to monitor the market as what I am doing now. Therefore, to allow my focus onto new strategy development, someone must take the responsibility of keeping us posted about the market performance. Many friends here have improved a lot or have known a lot about market prediction such as bobobobo dude, brisk,bobby,auv and skiii. Carol, Fanzhi are both improving their technique. I would think it would be better that most of us contribute your thinking about market each week or daily here so that we all can benefit. Would it be a good idea?
Wait for you guys answer.
Wait for you guys answer.
Thursday, June 7, 2007
We experienced the biggest down day in the past 1 month
Today marks the third day since the correction we have anticipated. The sell off appear s in every sector from the leader sector energy, utility , transportation sectors to retailer, healthcare sectors. The market breath is really gloomy. The volume picked up while a distribution is monitored. What we have seen is that 27 stocks from TOP 100 stocks drop more than 2 percent with increasing volume and no stock increase for more than 2 percent. We normally would expect a 3% down from down starting from correction and it seems currently market gets into a little bit over reaction. If you wanna find the superficial reason is that market reacts to the economy data that inflation could keep the FED off the table to cut rate in the near future. This is the assumption that market rallied in the past month and it disappears now.However you should look at thing from different perspectives if you are familiar with how market works.
This provides us an good opportunity to review our investment strategy, right or wrong, speculation or investment. Most of the time, don't mix the two concepts and you can react quite well in front of such situation. For example, I am currently holding AAPL, trying to speculate it until the release of iphone by the end of this month. The stop sell is loose $120 (bought at $113) to guarantee this purpose. But people would say that why not hold AAPL if it dips below that point? Yes, that is a good question you have to ask yourself what your plan is before entering such a trade. If you believe AAPL will have an amazing future, current price would be cheap. However for me, I can't fully evaluate AAPL's price until I can see how well the iphone works. Its current strategy with T really concerns me about its spread. The market would come back and prove whether you are right or wrong.
Still, if the stocks are fundamental sounds stocks, and you are targeting the investment purpose through your due diligence, your future is there, bright and sunny:)
This provides us an good opportunity to review our investment strategy, right or wrong, speculation or investment. Most of the time, don't mix the two concepts and you can react quite well in front of such situation. For example, I am currently holding AAPL, trying to speculate it until the release of iphone by the end of this month. The stop sell is loose $120 (bought at $113) to guarantee this purpose. But people would say that why not hold AAPL if it dips below that point? Yes, that is a good question you have to ask yourself what your plan is before entering such a trade. If you believe AAPL will have an amazing future, current price would be cheap. However for me, I can't fully evaluate AAPL's price until I can see how well the iphone works. Its current strategy with T really concerns me about its spread. The market would come back and prove whether you are right or wrong.
Still, if the stocks are fundamental sounds stocks, and you are targeting the investment purpose through your due diligence, your future is there, bright and sunny:)
Wednesday, June 6, 2007
Calls for Registration-- Tracing Insider buying Strategy
The forum is closed temporarily.
===================================
Dear friends here,
Since the initialization of this activity last week, we have received kind offer from many friends here. Carol offers the conference call, and Brisk helps us to setup a forum to discuss such a strategy. The reason to keep such a forum a closed one is simple, we want you to join but not abuse it because it would become an asset of all the contributors here. And we would get it public after we got satisfied results.
Now the forum has been setup, friends here are welcome to join. To get into access, you need to register a username in http://www.fortuneseeds.com/ and then leave a note here with your username. I will add them into the access list. We don't have any limitation but welcome anyone to contribute.
Thanks for understanding and waiting you there!
Metronic
===================================
Dear friends here,
Since the initialization of this activity last week, we have received kind offer from many friends here. Carol offers the conference call, and Brisk helps us to setup a forum to discuss such a strategy. The reason to keep such a forum a closed one is simple, we want you to join but not abuse it because it would become an asset of all the contributors here. And we would get it public after we got satisfied results.
Now the forum has been setup, friends here are welcome to join. To get into access, you need to register a username in http://www.fortuneseeds.com/ and then leave a note here with your username. I will add them into the access list. We don't have any limitation but welcome anyone to contribute.
Thanks for understanding and waiting you there!
Metronic
Motley shares the similar opinions as us in term of AOB 's share offering
As we pointed out before that AOB is not in shortage of money, because it has a free cash flow. The reason he offers new shares could only be explained that he has a buyout task or expansion task in Queue. The motley fool shares the same idea as we did.
So if you want , can check which could be the buyout target for AOB
==============
Another Buyout in the Works for AOB?
By Brian Lawler June 5, 2007
34
Recommendations
Whenever shares drop by nearly double-digit percentage points, something bad is usually amiss. Yesterday Chinese health-care nutritional supplement provider American Oriental Bioengineering (NYSE: AOB) suffered this fate after it announced that a large dilutive share offering was in the works.
AOB has 65 million shares outstanding, not including warrants. So the new equity offering of up to 15 million shares (not including the 2 million shares the founder and CEO is selling) represents up to 23% dilution to shareholders. Ouch!
The good news is that the offering could raise close to $150 million. This would make AOB's coffers flush with cash, considering that it already has over $90 million on its balance sheet. AOB has made numerous acquisitions in the past, and this financing could mean that a major acquisition is in the works for the company.
There's no way of knowing beforehand whether the assets AOB is considering are a good value or not. But its main method of boosting its top line has been via numerous acquisitions of formerly state-owned companies, so AOB can't be called inexperienced with buyouts. This strategy has helped the company grow its revenues 10 times over in the past six years, from less than $10 million in 2001 to over $110 million in 2006. AOB had operating cash flow of $29 million last year.
I'm generally very wary of China-based companies, especially ones doling out nutritional supplements and other, often pseudo-medicinal products. Nonetheless, AOB and other supplement manufacturers like NBTY (NYSE: NTY) have proven to be strong outperformers over the broader markets in recent years. How AOB chooses to deploy the cash that it generates from this offering will determine whether it can keep up this streak in the future.
So if you want , can check which could be the buyout target for AOB
==============
Another Buyout in the Works for AOB?
By Brian Lawler June 5, 2007
34
Recommendations
Whenever shares drop by nearly double-digit percentage points, something bad is usually amiss. Yesterday Chinese health-care nutritional supplement provider American Oriental Bioengineering (NYSE: AOB) suffered this fate after it announced that a large dilutive share offering was in the works.
AOB has 65 million shares outstanding, not including warrants. So the new equity offering of up to 15 million shares (not including the 2 million shares the founder and CEO is selling) represents up to 23% dilution to shareholders. Ouch!
The good news is that the offering could raise close to $150 million. This would make AOB's coffers flush with cash, considering that it already has over $90 million on its balance sheet. AOB has made numerous acquisitions in the past, and this financing could mean that a major acquisition is in the works for the company.
There's no way of knowing beforehand whether the assets AOB is considering are a good value or not. But its main method of boosting its top line has been via numerous acquisitions of formerly state-owned companies, so AOB can't be called inexperienced with buyouts. This strategy has helped the company grow its revenues 10 times over in the past six years, from less than $10 million in 2001 to over $110 million in 2006. AOB had operating cash flow of $29 million last year.
I'm generally very wary of China-based companies, especially ones doling out nutritional supplements and other, often pseudo-medicinal products. Nonetheless, AOB and other supplement manufacturers like NBTY (NYSE: NTY) have proven to be strong outperformers over the broader markets in recent years. How AOB chooses to deploy the cash that it generates from this offering will determine whether it can keep up this streak in the future.
Tuesday, June 5, 2007
As expected, today marked the first day of correction
We have pointed out in last week's quick review that the market will have a short correction less than a week. Today will be marked the first day of that if later on we review. And of course today as you have seen, mms shift their holding into those traditional tech area such as AMZN, GOOG,AAPL, BIDU, NTRI, CMI. Also small tech like RACK continues to rally. Try to remeber the way they did this time, and do the similar thing in the future:)
Also From IBD top 100, only 2 stocks out of 100 increase 2% with increasing volume. They are SPWR and SPAR. Look similar? hehe.We haven't see any sign of recoverance yet. Keep our eyes open and watch how GOOG and AAPL, AMZN can play in the next day.
Pls also check TRT at this time, its performance today signal a bottom at this support level.
Also From IBD top 100, only 2 stocks out of 100 increase 2% with increasing volume. They are SPWR and SPAR. Look similar? hehe.We haven't see any sign of recoverance yet. Keep our eyes open and watch how GOOG and AAPL, AMZN can play in the next day.
Pls also check TRT at this time, its performance today signal a bottom at this support level.
Monday, June 4, 2007
The stocks tend to bottom out today
The bottom out is defined as they pull up from their latest 20 weeks low, and getting close to their low position again. Normally if double bottom patter is formed, they could have a nice chance. This is the logistics behind this method.
Those stocks include
SIRF ALK BDN ACTG ORA OSTE SONO AVZA
For those traditional stocks today,
GOOG : extremely overbought and close lower than 508, its previous high.
FMCN : close to its resistence level, likely to breakout.
ICE: though raise about $7 today but volume tamp,RSI tamp,not sure what he can do.
AAPL: though I haven't sold it but already add the $120 stop to this guy. Volme tank, extremely overbought.
HMIN: typical bottom out.
AOB: got hammer today due to the new offerings.
MA: its time to come back .
====== Update notes =====
Carol will like to hold a conference call, hehe
Brisk kindly offer a forum for our discussion during strategy building. Shall we keep the discussion public? or underground?
Those stocks include
SIRF ALK BDN ACTG ORA OSTE SONO AVZA
For those traditional stocks today,
GOOG : extremely overbought and close lower than 508, its previous high.
FMCN : close to its resistence level, likely to breakout.
ICE: though raise about $7 today but volume tamp,RSI tamp,not sure what he can do.
AAPL: though I haven't sold it but already add the $120 stop to this guy. Volme tank, extremely overbought.
HMIN: typical bottom out.
AOB: got hammer today due to the new offerings.
MA: its time to come back .
====== Update notes =====
Carol will like to hold a conference call, hehe
Brisk kindly offer a forum for our discussion during strategy building. Shall we keep the discussion public? or underground?
Sunday, June 3, 2007
Strategy Section--Trace the Insider Buying Stocks(1)
1) Introduction
Before start to discuss about this, I would like to clarify that even I just explore this strategy which first knew from the book " Finding the next starbucks " and further proposed by bobobobo. The inputs from all of you are necessary and appreciated so that we can build a reasonable sound model for consistent performance. Can we do that? I think we can.
Trade based on insider buying has been existing for quite a while and has been used by peter lynch quite a lot ( described in his book << One up on the street >> ). The method won't be obsolete even it has been used widely for its fundamental reasons which can be summarized as below:
1)Insider behavior matters because research based on real-time signals has shown that a properly modeled picture of insider actions can provide the most accurate reflection of the prospects for the company, industry, economic sector, or even the stock market in general, going forward.
2) This makes perfect sense from an intuitive perspective. Corporate insiders possess all the necessary skills and characteristics that one could use to describe the "successful" investor. These include: A deep knowledge and understanding of the company and/or industry; A demonstrated ability to produce success; The training necessary to understand risk and to control it; The wherewithal (capital) to take advantage of opportunity when it presents itself and finally; A tendency to go against the crowd.
3) Further, insider buys are especially useful. Since insiders have exclusive information on the company performance, if they are risking their own money on the stock, usually they should have good reasons, especially when several insiders buy the stock at the same time.
Pls pay attention here, we only care about insider buying not selling with an assumption of a long position in the stock not a short one. The insider selling have different explanation sometimes that we will further elaborate in the future. But as an initiative, we wanna focus on a long position first, not to be distracted.
In order to fully explore the benefits of such strategy, we propose to investigate from several perspectives highly related to potential gain in a middle term, i.e. 6 months, with an expected return on investment about 30%. You may argue it could be a little bit high, but through our further research, the portfolio build from such strategy could yield at least more than the general market yield. The perspectives will be divided into 3 sections which are 1) Building the universe of active insider buying stocks, a methodology to find those companies that have intensive insider buying in the past 3 months or 6 months for different time frame. 2) Reducing the trading candidate, a process that we use fundamental research to filter out those candidates that having high probability to succeed. 3) Entry and Exist Analysis, a strategy that describes how we are going to trade into those stocks after step two. Step 3 is quite important for implementation. We could find if we invest at a wrong time, loss could be huge even the company is pretty good. For example, if we pay $1000 for GOOG now, would it be a good one?
Those three steps are complementary to each other which can't be separated to ensure that our goal can be achieved. Each step in the strategy needs to be investigate the potential pros and cons so that drawbacks in each step could be minimized.
NOTE: if you have any ideas and thinking in each step, pls email me at totalmerrill@hotmail.com or leave your msg here. Any ideas would receive fully attention during such strategy building process. You know a strategy can't be improved without different sources.
by the way, all of the articles related to this strategy would be published at Investshuttle.com, the site that I built to upload our pdf files. The introduction page can be downloaded now.
Before start to discuss about this, I would like to clarify that even I just explore this strategy which first knew from the book " Finding the next starbucks " and further proposed by bobobobo. The inputs from all of you are necessary and appreciated so that we can build a reasonable sound model for consistent performance. Can we do that? I think we can.
Trade based on insider buying has been existing for quite a while and has been used by peter lynch quite a lot ( described in his book << One up on the street >> ). The method won't be obsolete even it has been used widely for its fundamental reasons which can be summarized as below:
1)Insider behavior matters because research based on real-time signals has shown that a properly modeled picture of insider actions can provide the most accurate reflection of the prospects for the company, industry, economic sector, or even the stock market in general, going forward.
2) This makes perfect sense from an intuitive perspective. Corporate insiders possess all the necessary skills and characteristics that one could use to describe the "successful" investor. These include: A deep knowledge and understanding of the company and/or industry; A demonstrated ability to produce success; The training necessary to understand risk and to control it; The wherewithal (capital) to take advantage of opportunity when it presents itself and finally; A tendency to go against the crowd.
3) Further, insider buys are especially useful. Since insiders have exclusive information on the company performance, if they are risking their own money on the stock, usually they should have good reasons, especially when several insiders buy the stock at the same time.
Pls pay attention here, we only care about insider buying not selling with an assumption of a long position in the stock not a short one. The insider selling have different explanation sometimes that we will further elaborate in the future. But as an initiative, we wanna focus on a long position first, not to be distracted.
In order to fully explore the benefits of such strategy, we propose to investigate from several perspectives highly related to potential gain in a middle term, i.e. 6 months, with an expected return on investment about 30%. You may argue it could be a little bit high, but through our further research, the portfolio build from such strategy could yield at least more than the general market yield. The perspectives will be divided into 3 sections which are 1) Building the universe of active insider buying stocks, a methodology to find those companies that have intensive insider buying in the past 3 months or 6 months for different time frame. 2) Reducing the trading candidate, a process that we use fundamental research to filter out those candidates that having high probability to succeed. 3) Entry and Exist Analysis, a strategy that describes how we are going to trade into those stocks after step two. Step 3 is quite important for implementation. We could find if we invest at a wrong time, loss could be huge even the company is pretty good. For example, if we pay $1000 for GOOG now, would it be a good one?
Those three steps are complementary to each other which can't be separated to ensure that our goal can be achieved. Each step in the strategy needs to be investigate the potential pros and cons so that drawbacks in each step could be minimized.
NOTE: if you have any ideas and thinking in each step, pls email me at totalmerrill@hotmail.com or leave your msg here. Any ideas would receive fully attention during such strategy building process. You know a strategy can't be improved without different sources.
by the way, all of the articles related to this strategy would be published at Investshuttle.com, the site that I built to upload our pdf files. The introduction page can be downloaded now.
Quick Market Review for last week
Hey pals , since my absence from big market last week due to my CFA exam, I haven't been following up the market for a while. But based on my quick review of several bellweather stocks and market performance indicator shown on my rador, I am here to say we are going to have over 80% chance to see a correction in less than 1 week. Why? the reasons include both the macroeconomics which points to housing market performance together with fiscal policy and stock market performance itself.
The stable housing market data together with the latest FOMC minutes lower market's expectation that FED will cut rate pretty soon before September. The forward rate of T bill hasn't shown any downward sign as it did last month,to our surprised, it reverses up. You know what the effect could it lead to big market right? This is just from macro aspects.
from stock perspective, I feel really surprised that AAPL has a negative divergence with the GOOG and big market on last friday. Whenever we see such a negative divergence, a warn signal should be sent into your mind right away. Also try to get that whenever we saw a positive divergence, a bullish sign is coming. Remember when overall maket sold off the day bobobobo dude warned, a positive divergence between GOOG and AAPL , big market was monitored. And you have seen what have happened later on when GOOG was green.
Above is just a quick review of the market based on my scan. As a result, the exact timing would be quite difficult for me to decide. Combining with the BH trading info (by bobobobo), it could raise our chance to avoid the loss. and here trying to remember, we got a double digit increase only in a month in index. If greenspan called bubble in Chinese stock market, we can call a short term bubble in us market now. The strategy to avoid such a caught up will be to switch your position into those stocks who has not increased as much in the last month. To be more specific, into those tech growth stock will be a good move. Reducing your exposure in commodity and energy could be a good and short term strategy even though we have called up a hedging strategy before.
the correction is expected to be 80 points down from NAZ and 300 points down from DOWS if it comes. All these expectation come from our experience for the second wave correction.Just for a reference, we don't wanna time the market but to watch it.
Cooling down hot water will take time!
And recently I will try to start to building a strategy with all of you into the insider trading strategy. Although not mature now, the idea should deserve deep investigation as many hedge fund managers use such a strategy to allocate their position.
****** Downgrade MA in my list ****************
Also I would downgrade my MA ratings from Buy to Hold since it has almost reached the target price in 12 months.Current price means overall market has fully appreciated its value for the whole year, I won't rec to add it into the portfolio at this moment.
The stable housing market data together with the latest FOMC minutes lower market's expectation that FED will cut rate pretty soon before September. The forward rate of T bill hasn't shown any downward sign as it did last month,to our surprised, it reverses up. You know what the effect could it lead to big market right? This is just from macro aspects.
from stock perspective, I feel really surprised that AAPL has a negative divergence with the GOOG and big market on last friday. Whenever we see such a negative divergence, a warn signal should be sent into your mind right away. Also try to get that whenever we saw a positive divergence, a bullish sign is coming. Remember when overall maket sold off the day bobobobo dude warned, a positive divergence between GOOG and AAPL , big market was monitored. And you have seen what have happened later on when GOOG was green.
Above is just a quick review of the market based on my scan. As a result, the exact timing would be quite difficult for me to decide. Combining with the BH trading info (by bobobobo), it could raise our chance to avoid the loss. and here trying to remember, we got a double digit increase only in a month in index. If greenspan called bubble in Chinese stock market, we can call a short term bubble in us market now. The strategy to avoid such a caught up will be to switch your position into those stocks who has not increased as much in the last month. To be more specific, into those tech growth stock will be a good move. Reducing your exposure in commodity and energy could be a good and short term strategy even though we have called up a hedging strategy before.
the correction is expected to be 80 points down from NAZ and 300 points down from DOWS if it comes. All these expectation come from our experience for the second wave correction.Just for a reference, we don't wanna time the market but to watch it.
Cooling down hot water will take time!
And recently I will try to start to building a strategy with all of you into the insider trading strategy. Although not mature now, the idea should deserve deep investigation as many hedge fund managers use such a strategy to allocate their position.
****** Downgrade MA in my list ****************
Also I would downgrade my MA ratings from Buy to Hold since it has almost reached the target price in 12 months.Current price means overall market has fully appreciated its value for the whole year, I won't rec to add it into the portfolio at this moment.
Saturday, June 2, 2007
Thanks God, back to normal life
finally done with the test and need to come back for the normal life. Thanks all of you for your caring, really appreciate:)
Pass or not is not important now, compared to the back of normal life with so many friends here!:)
Pass or not is not important now, compared to the back of normal life with so many friends here!:)
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