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Mr. Market Has An Addiction
This last week, was an interesting week for the markets. We broke threw 14,000 on the DOW and stayed above 1,500 in the S&P 500. That really did not have me concerned (perhaps cautious), UNTIL, I read Barron's this morning.
It was one of the most bullish editions I have read in 4 years. Nearly every articles correctly stated all the known fears, but moved on and talked about how cheap equities are and how 70% of equities so far reporting better than expected this quarter, and how the BRIC nations are back on their feet, and how billions are leaving the sidelines (and bond funds) to get in the equity side of the equation, and how the disappointing employment numbers are a vilification of continued quantitative easing measures, and, well the list goes on and on and on.
Almost every article suggested that you'd have to be a fool not to be or get into this rally. That makes me very, very nervous. Don't get me wrong, I have utmost respect for Abelson, Kopi Tan, Andrew Bary, Vito Racanelli, and Randall Forsyth as well as the dozens of associate editors and writers, but where was the balance this week.
Is it a sign of a bubble drunkfest driven by cheap liquidity? How much of the sizable pop on Friday was the result of good economic news, or the addictive cravings of the markets assurance of excessive liquidity because of the .1% jump in unemployment.
If it is the latter, then Mr. Market is a mainlining junkie oblivious to the fiscal uncertainties headed our way at the end of February when, again, decisions must be taken or punted to deal with unanimously agreed unsustainable debt.
Wow, that was pretty good. I wrote that. Scare myself some times. I will have almost both hands a week from today. Fair warning.
She did it again.
Last week we explained my shame for being out homeworked by Jerene H. and helping set up my Spike pick for the week. Two weeks ago we worked together for the 2% gain in BAX, and last week it was MPW. (Which was misreported to be announcing earnings last Thursday, but will actually report this Thursday. We remain LONG BAX and MPW.)
Her was a note I got from SpikeTrade.com after the close yesterday.
"Dear Brian Cronin,
Congratulations! During the latest week, your pick MPW has outperformed the bronze Spiker.
You have earned a $17 performance bonus, which we will credit towards your next monthly renewal.
We are glad to see that your homework is paying off!
Best regards,
Alex & Kerry"
Thank you Jerene, as she did all the heavy lifting. She then spent a couple of days researching small and micro caps for this coming weeks harvest. This is her Gem this week.
GLUU Glu Mobile Inc. designs, markets, and sells mobile games worldwide. It develops original games based on its intellectual property comprising Big Time Gangsta', Blood & Glory, Bug Village, Contract Killer, Contract Killer: Zombies, Eternity Warriors, Frontline Commando, Gun Bros, Men vs. Machines, Stardom: The A-List, Super K.O. Boxing and Toyshop Adventures. The company also develops games based on licensed intellectual property consisting of Build-a-lot, Call of Duty, Deer Hunter, DJ Hero, Guitar Hero, Family Feud, Family Guy, Lord of the Rings, Paperboy, The Price Is Right, Transformers, Who Wants to Be a Millionaire?, and World Series of Poker. It offers a portfolio of action/adventure and casual games to smartphones and tablet devices users through direct-to-consumer digital storefronts, as well as to feature phone users served by wireless carriers and other distributors. The company was formerly known as Sorrent, Inc. and changed its name to Glu Mobile Inc. in May 2005. Glu Mobile Inc. was incorporated in 2001 and is headquartered in San Francisco, California.
Jerene's six pages of homework (including several chart screen shots) describe an equity with questionable fundamentals, beautiful charts, but more importantly a stock that got brutally punished because the C Suite was very honest in there fourth quartet guidance.
If you care to see, check out the huge gap downs in late October and early November. There is significant support at 2.50 a share. We are looking for an earnings report that just has to meet expectations and some solid guidance from the C Suite on the 5th of February, and we might see a return to the 3.50-3.75 range.
Just in case we are suggesting a real tight protective stop at 2.15. this could be a fun ride?
In other portfolio news, we stopped out of ABX, a gold stock idea we got from Stansberry and Associates back in November. We set a 7% stop and it triggered on Thursday.
January was a great month for the Salve Lucrum portfolio. Realized gains were significant monetarily and 10.17% percentage wise. We would attribute that to an accommodating market (Green Flag), but more importantly the discipline of using the tools provided at SpikeTrade.com.
It takes some time to do the necessary homework to fill in their blanks, but doing so keeps me from making emotional stupid mistakes, and get me out of positions before they become an earnings anchor.
The market was up 6.4% in January. Salve Lucrum enjoyed 10.17% in realized gains and 7.4% in unrealized gains.
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Since 12/31/2012
