BAGAKOAA; 11 October 2011 Euro Wobbles But It Don't Fall Down

Post 518 CLICK HERE To See Past PostsOctober/2011

Euro Wobbles But It Don't Fall Down

weebles

Half the fun of doing this blog is coming up with titles that pique your interest but are relevant to the subject matter at hand. That means something interesting must have happened in our daily life or in the market and then we have to come up with a relevant title to get you to open the e-mail. This is important as the 47 people who get this e-mail, we are enjoying all time high opening ratio of 65.957446808510638297872340425532%. Really, I didn't make that up. 31/47 and that is the result. Cool. I am simply amused today sorry.

 

We woke up this morning and it was good day to get prepared for some up and coming meetings as it was light schedule. We got the dogs squared away, got Jack to School, cleaned up 712 e-mails in the deleted file, watched the market do NOTHING, then Devin reminded me about a vaccine I was supposed to get for whooping cough, tetanus, hair loss, and obesity, or something like that? It is called Pertussis? Then I remembered it was Flu Vaccine day at the office. We pay for employees to get flu shots as an employee benefit. We also do open heart surgery for free down in the lunch room but we don't have many takers for that program. At least no repeat takers.

 

Since I had so much running around to do at lunch today I called in my lunch to Hanna's. I was craving one of their poached pear, prosciutto, buffalo mozzarella honey drizzled salads. It really hit the spot and had a nice visit with Kyle the barkeep who tried to seduce me with single malt. It was lunch guys, give me a break. I did see people enjoying drinks at 12:07 PM. It felt like the 80s for a few minutes.

 olivia

Hanna, (the charming young lady not the patron of one of the best places in OC), the 80s were magical times when people began drinking at lunch and didn't finish till their car hit something on the way back to the office. Once back at the office, you made inappropriate comments about the race, religion, and sexual preference of your co-workers and the better you were at it the faster you moved up the corporate ladder. The coolest device was a Xerox machine because you could take pictures of various parts of your anatomy and send them in inter-company envelopes (think really slow e-mail that required more than a click to open) to admire in every corner of the office. Almost everyone had a Rubik Cube to waste time in the office as we did not have Facebook or Ebay. Guys, Gals, and Guys and Gals who shouldn't, wore miles of spandex and leg warmers. Scary Times. Why are we talking about this? Oh yeah Kyle trying to ply me with Glenmorangie.

 

Anyway, while running around at lunch I went to our local Urgent Care, where they know us by name. Mmmmmm. How urgent could it be if we are there often enough to have a parking space. I don't even have parking space at Hanna's. (Dave we need to work on that.) But I digress. I went to get this whooping cough, tetanus, tumor, gout shot thing, but had to walk across a parking lot under repair. Not paying attention I walked across a large area that was being sealed with asphalt even though it was roped off. Checking in at the counter, Sheila the girl behind the counter pointed out the stupid high school kids who went under the rope and walked across the newly sealed asphalt. "What is wrong with those kids?" I asked, hoping she had not seen me do the same things 11 second before.

Anyway got my Pertussis vaccine and figured while I was there I would get an ear flush. Yes I get ear flushes occasionally. I do this a couple of times a year because of I don't it causes some really big problems. I remember one time I went about 18 months without a ear flush and they pulled out a wine cork dated 1967 from France, really disgusting.

cork ear

See It Happens

 

During the afternoon I visited sever employees and waited for my turn to get my flu shot. The needle did not break off in my arm like last year. That might be because I did not go running from the room before they were done. After words I realized I have a shot in each arm and I began wondering whether I would be able of do my blog tonight? I was sure my arms wudn     be3     hhhhhhhhe         vyy s bnnsd diffiiiiiiiiiiiiihncultt to tippppppppe, but I new eye was tufffffff1f1f1f NS DND and couldk== make i I I i5 it throoooo sum   hnnn0www. But I digres. 

Well the market did not do a heck of a lot today and the news was a bit shaky out of Europe about the Euro debt. The market finished flat on a slightly busier day then Monday. The readers of this blog could have made today a busier day than yesterday just by buying a round block of stock. (Archaic stock speak for 100 shares.) AAPL, AMZN were up today as was BIDU and ISRG. We are long AAPL and AMZN.

 

AA kicked off the new season and as we suggested a few weeks ago (though I can't find the blog for the day we said it. If anyone can, please correct me if I misquote.) We expected a miss of earnings from AA because Aluminum pricing has been falling now for 9 weeks. Now when we said this, the expectation for earnings was 27 cents a share. It had been down graded to 13 cents a share by yesterday and they only hot 9 cents a share. This could put a scare into Mr. Market at the opening. We will see.

scream mr market

We are going out on a limb here, but we reinitiated our positions in WY Weyhauser as the stock is at a stupid low value and we feel it has a 2-3 year window of opportunity. We were vascilating deciding whether to get in or not them Jimbo Booyah Cramer dropped me a note after lunch and said BUY BUY BUY. So like and idiot we did. DO YOUR HOMEWORK.

 

So we promised you some homework on NUAN. We liked everything we saw on the SEC filings tonight. After doing the homework, we can see this stock being a part of our core holdings in the Salve Lucrum portfolio. We liked the core segments of the company as laid out in the 10Q, "Healthcare.  Our healthcare products and services enable our customers to automate manual functions, and manage information and workflows, Mobile and Consumer.  The majority of sales in our mobile-consumer market are for voice recognition, text-to-speech and enhanced keyboard functionality that is embedded in a device (such as a cell phone, car or tablet computer) or installed on a personal computer, Enterprise,  sales in our enterprise market include on-demand solutions hosted by Nuance and priced by the volume of services used by the customer, as well as professional services to design, implement and integrate custom call center applications, and Imaging,  Sales in our imaging market include document capture and print management solutions embedded in copiers and multi-function printers and packaged software for document management."

 

Then they provided a great explanation of their Key Metrics for the quarter, total revenue increased by $142.5 million to $951.7 million, net income increased by $64.6 million to $43.3 million, gross margins decreased by 1.3 percentage points to 61.8%; operating margins increased by 4.3 percentage points to 4.6%, cash provided by operating activities increased by $74.8 million to $259.5 million, including non financial metrics like annualized line run-rate in our on-demand healthcare solutions increased 12% to approximately 3.706 billion lines per year. The annualized line run-rate is determined using billed equivalent line counts in a given quarter, multiplied by four, enterprise professional services backlog hours increased 1% to 316,000 hours, and estimated 3-year value of on-demand contracts increased 21% to $1.3 billion.

 

We know, we are killing you with information, but we do keep this as a record for ourselves when we look back and say, "Why did we buy that stock?" The only negative thing we could find was a single little post on Stocktwits.com. It was a tinyurl to a web page at 9to5mac.com, a programmers site for developers for Apple Products. There is a patent number recently awarded to 5 engineers at AAPL for a program that would learn from and adapt itself to the user's voice in a manner the AI-driven Siri gets better over time the more you use it. Remember Siri is the free app that started our whole inquiry into NUAN. So you could extrapolate that AAPL is developing their own voice recognition. A possible threat to value?

 

Our game plan will be to buy this stock for a 3-5 year holding assuming no major correction. We are going to get in below $22.00 tomorrow. We would like to have this be about 2-3% of our current portfolio so that means we will by, yeah you thought I was going to tell you that huh? Let's just say we are going to chunk into this stock slowly. The 2-3% position will be bought in 20% blocks over the next couple of weeks. Our entry is below 22.00, we will stop out at $20.25 and we will be looking for 28 by Q1 2012. You will be hearing a lot about this stock.

 

What's the trend, as it is your friend.

 

We have mentioned our golf buddy Tim T, a Muckety muck in the real financial advising world currently hanging his hat at the Wealth Advisory Division of UBS. He sends me really good fodder everyday. Some days it's too much to read. He does a great job of summarizing the many attachments to his e-mal blast. I have been noticing something in his notes over the last few weeks. Part of his update is UBS's Price Target announcements. This is where their very competent analysts take a shot at what the stock price of an equity might be 6-12 months down the road.

 

Here is what today's looked like with the company names removed. (Sorry, that would be a Bozo No No)

XXX from $14 to $13; rated Overweight.

X from $50 to $48; rated Overweight.

XXX from $22 to $20; rated Overweight.

XXX from $38 to $35; rated Overweight.

XX from $151 to $128; rated Equalweight.

XX from $55 to $54; rated Overweight.

XXX from $40 to $38; rated Overweight.

XX from $7 to $6; rated Underweight.

XX from $3 to $2; rated Underweight.

 

See any trends there? No its not they all start with X. Pay attention, I have to write all this crap and I am still awake. All the price target movements are DOWN. A tell of things to come?   Perhaps.

 

So how do you find winner in this or any market? First you want to learn from your mistakes. We keep this blog so we can go back and figure out what the heck we were thinking when we choose a stock or strategy. Today's IBD had a great article in the Investor's Corner section. It was titled, "Learn Wrong From Right; Review Your Past Trades", BY DONALD H. GOLD.

 

Without stealing his whole article (which I strongly recommend you read.), he actually tells you a simple way of tracking your wins and losses in a way that make it easy to discover your faux pas and reinforce your confidence to repeat success. Simply put he suggests go back into your trading account 90 days and print a chart on every stock you have sold in that time period. We would suggest using a six month chart, daily prices, showing a 50 day, 100 day, and 200 day average and a 20,2,2 Bollinger Band. On that chart for each stock make a note of the date you bought the stock and mark the price you paid. Now take the same chart for SPY the S&P 500 index. Then you can overlay each chart with the SPY chart and see if your moves were market related or stock related. If you see a significant move in one direction, and the market does not reflect that move, go to a website like FINVIZ and check that stocks news for the day. Make a note of what news drove your stock up or down.

 

That is an easy way to see what you think you know about why your stocks did what they did. We are going to try that right now. Just kidding we are really tired.

 slumberland

Now before we send you off to slumber land, there was a great piece in the AAII newsletter today about how to find great stocks. It revolved around an old book by an author named Reinganum. He wrote a book called "The Greatest Stock Market Winners: 1970-1983." Reinganum studied thousdands of stocks and widdled the list down to a couple of hundred great perfromers and then looked at what they had in common. Here is what he came up with:

A Price-to-book-value ratio less than 1.0, accelerating quarterly earnings, positive five-year growth rate in earnings, positive pretax profit margins, relative price strength of at least 70, relative strength rank in the current quarter that is greater than the rank in the previous quarter, an IBD rating of at least 70, current stock price that is within 15% of its two-year high, and fewer than 20 million shares outstanding.

 

So go find them. No, just kidding this weekend I will be setting up a stock screen and excel spreadsheet that will help us cull through 7800 stocks on FINVIZ or Schwab. Well provide some candidates when we do.

 

Salve Lucrum

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Brian Ireland
BAGAKOAA;

I am not a professional investment advisor. Anybody reading my blog and investing accordingly must be out of their minds. I have made more money than I have lost. There are many more qualified people than I to actually tell you how to invest your money.

BAGAKOAA=Boys And Girls And Kids Of All Ages

Salve Lucrum=Latin for Hurrah for Profit.

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