Dropped in on Herb, Sully and Mandy for Street Signs today to talk the latest developments at Research In Motion ($RIMM, $RIM.CA).
Its quite a moment in the history of this company with, essentially, their acknowledgement this morning of a brutal defeat on the handset side to $AAPL and Android ($GOOG).
At least they are making a go of it with this morning’s launch of Mobile Fusion to attempt to salvage the enterprise.
You can watch the full segment here:
Reading Josh’s take on the violence occurring during Black Friday door buster sales, I thought of a post I put up on the blog last year. Josh writes,
I’m very relieved to hear of the various incidents of violence brought on by the “doorbusters” and other Black Friday-related narco-shopping come-ons. This mad rush to buy garbage is the single best indication we have that America’s consumers (and the economy that belongs to their appetites) are alive and well.
I view this differently.
Rather than being a substantiation of underlying consumer demand, I see this morning’s mad rush more as an example of our largest retailers exploiting consumer vulnerability to behavioral conditioning to abandon restraint to satisfy material wishes.
The american consumer has little and diminishing self control after multiple generations of a cultural overemphasis on the status value of toys coupled with a collective chronic anxiety.
Last year on this date I published the post pasted below and am thinking that in the interim collective restraint has only continued to deteriorate incrementally. From this blog on November 25, 2010:
Let’s Be Honest, Wal Mart Washed Our Brains
Wal Mart ($WMT) did not invent America’s gluttony. That saga goes back to the post World War II era, and if you want to get really macro about it, you might say that humans are predisposed, given the right circumstances, to over consumption.
And they didn’t set out to wash our brains. When $WMT began running the Black Friday 5AM Brain Buster Sale some years ago, their intentions were honorable enough in the capitalist sense. They were just trying to destroy smaller competitors proximate to their giant stores by crushing their spirits and bottom line on the most important sales day of the year.
But Wal Mart wound up conditioning the American public to frenzy lunatic fringe style leading up to and then on the day after Thanksgiving. Pulling us about by our opioid receptors until we found ourselves waking up at 1130pm (a half an hour before we went to sleep) to stand in line so that we could buy a tv or laptop or xbox and save a few bucks.
Theyve conditioned their big box competitors as well to adopt the same behavior and the media who devours the consumption lust drama like m&m’s.
Im not really criticizing $WMT, more turning the mirror on ourselves for reflection. They’re just running a business and trying to maximize investor returns.
What’s more, and despite such seductive operant contingencies, we are ultimately free to choose our own behaviors.
So this is only getting worse…
Perhaps next year Wal Mart will offer free peanuts and shoppers will wear camouflage and carry shot guns to Black Friday sales which begin at noon Thanksgiving Day…
The new Galaxy SII Commercial Is Funny and Effectively Mocks $AAPL fanboys. Its worth watching a couple times…
Mutual funds remind me of AOL dial up…
A dwindling collection of old people who don’t know better contributing monthly to a comically inferior product..
And Miller was the symbolic figurehead of this beta minus fees charade.
Anxiety is extraordinarily complex and there are many layers to it.
With surface anxiety, there are specific things we worry about of which we are fully aware. Arachnophobics fear spiders and they know it. The situational cue could not be more concrete or explicit.
Presently, the acute and conscious (or surface) fear is Europe. The market, behaviorally, exhibits this collective participant anxiety to Europe, in part, via this choppy volatility we have been experiencing since end of July into August
Beneath the surface anxiety though, there is another deeper layer of anxiety that is unconscious and much more difficult to pin down. It is experienced as a general low grade chronic state of worry that does not seem to really be attatched to any one concrete thing.
The source of this deeper layer of anxiety often concerns more basic needs such as physical or financial security.
Presently, this deeper layer of diffuse chronic unconscious anxiety is abnormally high. It likely has its roots in a longer term environment in this country, and globally to some extent, which has been unstable dating back to the bursting of the NASDAQ bubble and also including the 9/11 attacks, the anthrax scare, the war, the credit crisis, the Arab Spring and now Europe as well as our perception of the poor performance and volatility of the market over this period.
This has occurred over a ten plus year period and has placed a heavy burden on our collective sense of physical and financial well being.
These two types of anxiety, the surface and deeper layers interact in a complex manner. When the deeper level is elevated, it makes our responses to surface anxiety that much more pronounced.
In the market, this manifests by increasing collective participant reactivity to surface fears, hence the dramatic sentiment oscillation over short periods of time skewing negative as well as the erratic price behavior.
Mama Mia!
One of the best pairs trades of the year has been Domino’s Pizza long Italy short.
As of Friday’s close, $DPZ has risen just over 100% since its December 31, 2010 close while $EWI has lost 19% over the same period.
I have no idea what this might say about history, world culture or Italian food much less the European crisis but pondering the implications cracks me up…
And with the 20 day moving average bouncing off the 50 at the end of October, it might still look good.
This is the first part in a series of posts that will focus on thriving in a tough tape.
2011 has been a tough year for traders. The market has been super choppy with huge moves up one day and down the next amid a complex and confused macro environment and illiquidity residing just beneath the bid.
I have heard from a number of pros who have shared with me their frustration and exhaustion. The significant underperformance of hedge funds this year across strategies confirms.
As such, its a good time to identify concrete steps traders can take to more adaptively cope with stress and improve trading performance.
First and foremost comes personal health.
Sleep, exercise and diet become even more important than they already are.
Your state of physical health directly affects your energy level, cognitive capacity and the ability to contain extreme emotions and abrupt emotional changes.
This is not rocket science and I am not telling traders anything they don’t know but simply offering a reminder and stressing that taking good care of yourself becomes even more important in this environment.
Into this weekend, you will want to first get some rest. You have three nights to recuperate which is plenty. Getting to sleep early and minimizing alcohol intake will leave you more rested come Monday morning and more prepared to conquer next week’s market marathon.
I’m not sure if it is too soon after Steve Jobs’ death to write this post but I’ve been thinking through it for a while and just want to get it off my chest.
With $AAPL stock getting hit today, moving below the bottom of the post earnings range (390), I’m getting media inquiries asking me about the action and so now is the time to write this up.
Steve Jobs was a genius, a true one, the kind that only comes along once every 50 years, with a transcendent epiphany and just the right circumstances to actualize it in the marketplace. A super rare set of events which set up and then played out over many years.
No matter how good Tim Cook and $AAPL management is, and they are great, it doesn’t and will never really matter.
Sure, some of what we are seeing here with the downside volatitlity is likely earnings related but at least some of it and maybe a lot is the genius premium coming out of the stock.
A delayed and gradual working into market expectations the fact that Jobs is gone and so no matter how much road map he left and no matter how good Cook and co are, it doesnt really matter because the engine of that genius will simply never return.
A few weeks back, I wrote a post called Getting Bullish Intel in which I began to lay out a thesis for my bullishness on the stock.
Yesterday, near the close, I began buying the stock on a day when the broader market got crushed and $INTC was down 4% and back into the 23s.
I want to lay out my thinking and actions here because it is a variation of what I have done many times over the years that has been successful and so it might be useful to others who are learning to invest. Plus, writing it out helps me define my process.
Here’s a bit about my thinking and strategy.
1. I want to stalk a stock that I like and wait for the opportunity to buy it right. This market is not one to chase and so when you have a plan you can get in when you want and not when you feel like you have to.
2. I am happy to miss the stock altogether as I am aware that new opportunities will always come along.
3. I am not going big here because the market environment is so volatile, complex and unpredictable.
4. Ideally, I will hold $INTC for a long time. All of my best trades, where real wealth has been created, have played out over years and not weeks. That said, I am prepared to close this position today and move on (see 2 above).
5. I like the dividend (3.4% yield as of my entry) especially in this low interest rate environment. Intel throws off a ton of cash, love that.
6. I want to reduce my cost basis diligently by selling near dated covered calls during periods of strength as often as the opportunity arises. Just as I was buying the stock into extreme weakness, I will be selling the premium when the stock is very strong. Over two years, I could lower my basis by 10-20%.
7. Usually, I like to enter these positions by selling near out of the money puts. This was not as attractive yesterday so I just bought the common.
8. I am managing risk in the following ways. First, this position is not on margin. Second, it comprises only a small percentage of my net worth and so even a zero would not ding me much. Third, I am prepared to sell for a loss, and will be watching most closely performance in Asia and the ultrabook initiative ahead of the next earnings report in January.
Overall, I am putting myself in a position where I may hold this stock for years (yes years) and make a lot of money while decreasing my basis slowly over time, may get taken out a lot sooner for a much smaller gain or may take a loss over the next few months. The key here is the opportunity – putting myself in a position to make a lot.
I usually post all trades and position changes in real time on StockTwits and you can follow along here.
Here’s the version of Conan’s “Triumph Visits Occupy Wall Street” that has not been taken down off the internet (yet).