Friday, September 28, 2007


AMZN will need to grow earnings 40% per year or better over the next 5 years to justify its current valuation. If GOOG was able to grow earnings 40% per year over the next 5 years, its present stock price would be $1200+, more than double its current $567. Now you tell me, which company would you pick to grow quicker over the next 5 years - AMZN or GOOG ?
An online retailer vs the most dominant force in the internet world ? Seriously folks, either AMZN is massively overvalued or GOOG is massively undervalued. The truth is probably somewhere in between.

Of note, AMZNs largest shareholder at 22% - Legg Mason and its legendary manager Bill Miller is preparing to tone down risk in the portfolio by reducing sizeable positions . Could this mean cutting down the $8.5 billion worth of AMZN stock he currently owns ? Me thinks so. AMZN is Millers largest position. AMZNs second largest holder T. Rowe Price is also cutting back.

Market Update

Consumer spending Up. Big surprise there. With home equity being tapped out, its likely consumers will be turning to the plastic. Thats good news for MA and DFS.

Business activity continues to rise. Strength in exports is a big factor.

The Dollar continues its slide. Thats good news for the Euro, Gold, Silver and commodities. Long FXE GLD SLV DBA.

Stocks to watch : AAPL GOOG BIDU CMG GS CROX GRMN RIMM When these stocks are having a good day, so is the market.

Thursday, September 27, 2007


  1. GE
  2. SLV
  3. GLD
  4. HANS
  5. BIDU
  6. LVS
  7. NYX
  8. NTRI
  9. SBUX
  10. AMGN


  • DBA
  • OMRI
  • DFS
  • COGT
  • AKAM
  • NTES
  • UNG
  • FXE
  • QLD
  • SSO
  • DDM
  • BWLD
  • MPEL
  • GDX
  • ORCL
  • FMCN
  • AA
  • OXPS
  • OVTI
  • HNR
  • MMS
  • SNDK
  • MU
  • IBKR
  • FFIV


  • RACK
  • BRLC
  • JSDA
  • JADE
  • LLNW
  • BBND
  • INAP
  • GRZ
  • UXG
  • KRY
  • GNPI
  • DIVX
  • KNOT
  • VCLK

Wednesday, September 26, 2007

Market Commentary

The market defies gravity and continues to soar higher. The bears are full of excuses and concoct imaginative reasons as to why the market should fall. It seems the bear trade is over crowded and thus the market continues it ascent. All time highs are round the corner.

New speculation involving Buffett taking a stake in Bear Stearns continues to propel this market as another buyout falls through the cracks. Seems like Buffett is rumored to be taking a stake in every company out there from Countrywide to Hovanian and this time Bear Stearns. What next ? Home Depot ?

How do you help a mentally challenged President ? This is how.....

WHAT NOW ? Thats the question on a lot of investors minds. Do we invest for the long haul here ? Do we go into cash and wait for a fallout from the coming recession ? The best strategy is probably to stay long and wait for a breakdown in the leading stocks such as GOOG AAPL AMZN BIDU GRMN CROX BCSI CMG . Once they breakdown its likely the overall market will fall soon after.
TCG TIP: The leading stocks breakdown well in advance of the overall market.

Friday, September 21, 2007


The market continues to advance. Oil, technology and housing are some of the sectors leading the way. Solid earnings growth from Oracle and Nike are contributing tho this wave of bullishness. Billionaire Wilbur Ross bid for American Home Mortgage servicing unit is another bullish factor.

Shares of Harman International are plunging on speculation that KKR and Goldman Sachs will abandon their bid to buy the audio equipment maker.Buyout and private equity transactions are going to be more select going forward . Money is not as easy to come by these days. Interest rates may be lower but, the cost of debt financing has increased. Investors will only do deals that make absolute sense. Nothing of a speculative nature that we so in the not so distant past.

The Dollar continues its decline into the dustbin of history. Great for Gold, Silver, the Euro, Oil and anything that is denominated in the greenback. Foreign banks will reduce their dollar holdings. Eventually oil and other commodities will be priced in a currency other than the USD.

A quick review of some of my holdings. NYX is looking to break out of its slump. The past few sessions have been bullish as Borse Dubai takes a 20% stake in the Nasdaq and Qatar takes 20% of the LSE. I reduced my position in LVS which continues to advance in relentless fashion on news of strong turnout in Macau. HANS continues its rise to new 52 week highs. Same with OVTI. My biggest holding at 8% GE has been another solid performer. I sold off my GS position between $204 and $210. BRLC and JADE have been very frustrating do I've increased stakes in both positions to around 4% of the portfolio combined. My AMZN short continues to leave me with a headache. Amazon needs to grow earnings 40% annually over the next 5 years to justify its current valuation. A recession and retail slowdown will not help. Once Bill Miller starts selling the fall will occur. Patience is required.

Tuesday, September 18, 2007

Market Recap

"Hell hath no fury like a Bull scorned" - The Capital Game 09/18/2007

All of last week and leading into todays Fed meeting the consensus was that the bulls were treading on shaky ground and a rate cut would lead to a sell off. Time and time again, the strength of the bull was questioned and today the answer was provided in resounding fashion.

Did the Fed really need to drop rates by half a point ? Maybe not. Is a half point cut a sign that the economy is a lot worse than the Fed are letting on ? Probably. Will we have a recession ? Very likely. So why did we rally 336 on the Dow, 43 on the S&P 500 and 70 on the Nasdaq ? Optimism, jubilation over a rate cut,more buyers than sellers and the fact that the stock market operates independently of the underlying economy. Traders see a rate cut as a sign that the economy will improve down the road. I would use todays rally as an opportunity to lighten up on some positions especially the more speculative names.

Today was a ridiculously good day in the portfolio courtesy of some huge gains in GS DFS OXPS BIDU HANS GE LVS AKAM QLD DDM SSO . I expect some continuation of this rally tomorrow though I intend to reduce around 5-10% of my long exposure. September is not a good month historically especially the latter half and sitting on cash will allow me to pick up some bargains when they come.

Thursday, September 13, 2007

Markets Mexican standoff - "the asymmetrical nature of a Mexican standoff means that - in the event of conflict - each party will face a tactical decision as to which other party to strike first."

USD moves to record lows against the Euro as a Fed rate cut looms. How will our biggest creditors Japan and China feel about this ? Not too good I'm sure.

Paulson points his finger at the mortgage lenders for the subprime crisis. Paulson needs to remember that for the finger he points towards the mortgage lenders, there are three finges pointed back at him. Was he not the boss at Goldman Sachs during this period of subprime excess. Did Goldmans not help securitize and sell mortgage CDOs to investors ?

The market so far has opened very bullish. Probably a good move would be to fade this rally. Gold and Silver are weak though with a falling Dollar I expect them to gain strength.

Tuesday, September 11, 2007

Good One

A fictional (or real ?) conversation between LCD maker Syntax-Brillian Corporation BRLC CEO Vincent F. Sollitto and CFO Wayne A. Pratt. BRLC postponed their earnings release today for no apparent reason.

..." Hey Wayne....aren't you supposed to deduct operating costs instead of adding them?


..." Oh @#$% Vince, you might be right...let me double check on my Accounting 101 book. You are right!!...damn...hey Vince do you have a calculator?


.." are you nuts? we don't make calculators....we make LCD TVs here"...besides, if you buy one you will lower the EPS by one cent. Keep doing what you have been doing. Do it by hand"


...Don't we have a CC today?....or is that tomorrow??


..."@#$%, today is the 11th....we have to issue a quickie PR to postpone this @#$%. I hate CCs, I much rather be counting money...."


..." Okey Vince are the boss"


..."there goes your bonner you idiot"

.......and so on....

Funny Stuff.

Market Update

The market has put on a solid showing so far perhaps as a patrotic gesture on 9/11. The last two hours will be crucial as always.

Bernanke gave no hints as far as whether rates would be cut in a speech in Berlin today. He did say global interest rates were very low. Perhaps the Fed will not cut afterall. I don't believe they will cut.

Stocks moving up on heavy volume include URGI CORT IMCL GIII ASIA COGT DLLR DRL TSL IVN CRZ

Gold and Silver continue their strong up move today. The strength in precious metals has been unbelievable as of late. And to think I nearly gave up on Gold a few weeks back.

Friday, September 07, 2007

Market Update

The world is ending today or so it seems based on the bearish drop to start proceedings on Wall Street here on Friday September 7th 2007. The reason for the drop is ostensibly the deteriorating economic situation made visible in todays payroll numbers which showed the first loss of jobs in 4 years. Job losses in construction, manufacturing, transportation and government swamped gains in education and health care, leisure and hospitality, and retail. Employment in financial services was flat. Well now we have a good snapshot of the sectors which are expanding and those which are contracting.Keep in mind the last job decline was in August 2003 and the US stock market was coming out of recession and expanding at a phenomenal rate back then.

Gold, Silver and precious metals are going through the roof today along with the Euro. Gold finally seems to be distancing itself from the overall market. A move over $700 and perhaps closer to $800 in the coming months. GLD SLV GDX FXE are all doing brilliant this morning.

Wednesday, September 05, 2007

Market Update

STOCKS cheapest in 12 years ? This seems to be the consensus based on this article. However despite the fact stocks are 'cheap' , one needs to take into consideration the fact that we are closer to the end of a multi year bull market and past the peak of the economic cycle. In other words, I believe stocks can still get cheaper.

Mortgage insurers MGIC Investment Corp. and Radian Group Inc have agreed to terminate their merger agreement some two months after the deal became jeopardized by losses at their subprime-mortgage joint venture. MTG and RDN are both great stocks to short. Mortgage woes are going to get worse and these insurers are going to bear the brunt of the fallout.

U.S. private employers likely added 38,000 jobs in August, far fewer than analysts had expected and the slowest rate of growth in four years, a report by a private employment service said on Wednesday. With slowing job growth, increasing unemployment, slowing consumer spending, decreasing home values and slower economic growth, I am surprised we are not already in a recession.

Yahoo, the struggling internet giant, has acquired BlueLithium, the online advertising group, for $300 million in cash, in a renewed effort to close the yawning gap between it and the market leader Google. I believe this should be a big boost for online advertiser ValueClick which is the biggest independent internet advertiser left. VCLK was rumors of a takeover at $40+ a share and right now the stock is $21 and change. VCLK is growing at an amazing rate and a buyout is likely on the cards.

Currently the market is taking quite a dip as investors fear the Fed will not cut rates. It appears Tuesdays are not good days for the market. We have had quite a few large market drops on Tuesdays over the past few weeks. Tuesday July 10th, 148 point Dow drop, Tuesday July 24th, 226 point drop, Tuesday July 31st 147 point drop, Tuesday August 14th, 208 point drop, Tuesday August 28th 281 point drop. Thats a 1000 points lost on the Dow on just the Tuesdays I've mentioned. And the other Tuesdays I have not mentioned from July and August were a break even if added up. Maybe the theme should be to not be long on Tuesdays or short Tuesdays.

Tuesday, September 04, 2007

Market Update

The pain from higher borrowing costs may be spreading as consumers and businesses follow investors in shying away from risk, increasing the odds of a recession.

``While there is no basis for predicting a recession right now, the risks have surely gone up,'' says former Treasury Secretary Lawrence Summers, now a professor at Harvard University in Cambridge, Massachusetts. ``The combination of softness in the housing sector, contractions in credit, increased uncertainty and volatility, and losses in wealth make the chances significantly greater now.'' Bloomberg

As Wall Street lowers economic forecasts and increases the odds of a recession the markets are jittery this morning. Its all about adding 2 plus 2. The market is in trouble, home equity is decreasing and consumers are no longer able to use their homes as an ATM. The net effect will be seen in consumer spending which will drop of significantly. A recession in the US will be felt across the globe since we are the worlds biggest consumer. We decrease our buying of Chinese imports which in turn leads to a recession in China as layoffs there increase due to lower demand for their goods. The effect will be like a domino as it spreads all over the globe. I am not suggesting this will happen but, thiere is a strong possibility.

This morning, tech is looking very strong with solid gains in AAPL GOOG SNDK GRMN AMZN . Other stocks making big moves include LLNW JADE BBND RACK KALU SPWR FSLR TNH NFLX VDSI BCSI CREE LEAP HOKU LOCM ASTSF.