Wednesday, July 21, 2010

Bookkeeping: Cutting Back Netflix (NFLX) and F5 Networks (FFIV) Ahead of Earnings

A very strange session today - despite a bevy of good reports this morning (especially in the industrials) to go along with Apple last night, we have almost no movement.  It appears speculators are waiting for demigod Ben Bernanke to give them assurance all is well in their world, and indeed he has new and innovative ways to hand out free money.   (of course in his last round of magic almost all that free money simply went into the capital markets to push asset prices up, rather into the real economy).  So we're on hold into the man who Wall Street loves speaks.

Either way, if you are a newer reader, my general gameplan going into earnings is to lighten up on positions and then get them back after the lemming reaction is over.  Assuming the lemming reaction of course does not crush the chart.  By doing this I miss the glory of the +14% move after earnings, but also protect myself from the -18% "glory".

We have 2 names reporting tonight that have been massive outperformers, one with a massive short position - Netflix (NFLX) - so I could see that stock +/- 10% in about 4 hours.  F5 Networks (FFIV) has been a standout in the networking space, but when 'hot money' is hanging out with you in any stock, you need to be careful.  While I like the new information given at each earnings report, I don't wish to participate in the gambling circus of it all, so we'll assess the fallout after these 2 report.  I've already taken some profits in both names during the past week but am going to take them down to about 0.6% exposure each with the sales today.

Long FFIV, NFLX in fund; no personal position


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