Comments on Fund My Mutual Fund: Bookkeeping: More Apple (AAPL)

I just started trading options this fall. My firs...

2008-01-06T22:57:00.000-05:00

I just started trading options this fall. My first play was going long some MSFT calls prior to earnings. They just killed the quarter and I made a fortune. In retrospect this is probably the worst thing that could have happened to me. My first experience was so successful that I got cocky and arrogant and risk management went out the window during the worst possible time which was November. Needless to say I've given up my winnings and then some.

Options are not for the weak of heart and I would not recommend it to anybody who has sufficient capital who wants to play the market. But I have a small trading capital and need to leverage in order to build the capital to in essence, trade like the way you run this "virtual" fund. Although I consider myself to be more like a swing trader. The good news is that '08 is looking to be an extremely volatile year, which is good for options... if you get the direction right :)

got it - thanks. After "leveraging" in 2000/early...

2008-01-06T22:31:00.000-05:00

got it - thanks. After "leveraging" in 2000/early 2001 into tech name call options and making a lot of dough, and giving it all back, I swore off options. :) Other than some long dated calls or in fact LEAPs I'd probably be best to refrain from them ever again; the battle scars all over my body remain from that sickening period. :) Easily the largest tuition bill I ever paid!

Remember my friend that you can buy or sell an opt...

2008-01-06T22:17:00.000-05:00

Remember my friend that you can buy or sell an option. Buying an option whether it be a call or put is being long it. If I'm bearish on the underlying security of the option I'll buy the puts. I'm long the direction that will increase its value. Its like two negatives make a positive :)

Selling an option is being short it, going with the direction which will decrease its value. So I'll sell calls to what I'm bearish on cause I think they will expire worthless and I can collect the premium or buy it back at a much lower price.

Again if this was a 'hedge fund' I would of been f...

2008-01-06T19:14:00.000-05:00

Again if this was a 'hedge fund' I would of been far more than 19% "short" once we broke 1490 (yet again) and the series of lower highs was once again established. i.e. my personal account was far "shorter". But since this is a long biased fund I am trying to limit my short exposure to 20%ish at the max to keep in line with conventional theory.

I think PPT will keep trying to stop the business cycle and keep buffeting the market upwards. Hence why I doubt anything goes straight down and I expect bounces along the way as we move downward. I observed in both August and November when we hit 1400 and the market was about to go off a precipice lots of future buying (not stocks) - futures much easier to control with less money and that led the market to V shaped recoveries both times. I guess it could be coincidence but...

p.s. how does one "get long via puts"?

You know its funny, UA and CROX were two of the co...

2008-01-05T18:09:00.000-05:00

You know its funny, UA and CROX were two of the companies I was looking to get long via puts. Its always interesting to hear contrary views. But I think our strategies differ as I have a more short term perspective on things.

I have to commend you on how you played the market this week. Loading up on the UltraShorts last week. I really didn't think the S&P would test the 1400 level until the financials reported in two weeks cause these write downs are going to be HUGE! I was going to set up my shorts this coming week. Now most of my short plays have just broken past their technical entry points. I have to wait for the proverbial dead cat bounce to put them on.

I wanted to get your thoughts on the plunge protection team. I think the Fed is on the markets side and will be looking to make a shock and awe move soon and you obviously can't fight the fed.

re: AAPL. I honestly think this Christmas quarter ...

2008-01-05T15:33:00.000-05:00

re: AAPL. I honestly think this Christmas quarter will be a quarter for the ages. AAPL will guide lowball and people might panic. Then in 3 months after AAPL will trounce those numbers. AAPL is turning into the Nike of consumer electronics - people pay them more for the same product based on design, aesthetics and cache. I wrote a long piece on that before. Their retail stores are world class and tourists in NYC come and take pictures of it... iPhone to me is not even an issue. It's all about Macs ... I think their market share in 2 years is going to surprise everyone. And thats the true bread winner. The rest is gravy. I have a laptop now (not an Apple) and I love the mobility of it - I tell you I truly think with their vision they are going to come up with something that will be a smaller version of a lap top that people will find indespensible and basically hold their "life" - something out of the future - but literally the iPhone, iTouch, iPod are just laying the groundwork for the next generation of convergence. Google is the other company that I think is laying the same groundwork but I am worried about Google for ad slowdown in the next year. With that said its not a cheap stock so heck it could correct 15% or something but I'd be telling people to buy some for their grandkids at that point.

Re: slowing consumer. Yes they are slowing but electronics are ...how to say it... the last thing standing. They will cut back on clothes before iPods. Or HDTVs. Or video games. It will take a true depression before someone can tell me electronics sales will fall off a cliff. ANd thats just the US. Think abroad as well.

INTC 15% haircut in 1 week is outrageous. But I don't follow it closely. CSCO is the one I will be watching because it seems to affect Riverbed Ciena and Blue Coat Systems. But thats more of a corporate thing not consumer. I just think its not correct to treat tech as a monolith. i.e. "large cap tech" - there are many pieces. Oracle is performing, MSFT is not bad of late, CSCO is actually doing well but there are fears of US enterprise but CSCO has yet to really get into the foreign markets in a huge way, etc. Lots of tech like semiconductors I never even look at - its a saturated, cyclical market. I have in fact very few tech names and they have (until this week) been at the bottom of the portfolio (1-2% type of positions at best) except for short periods of time with BCSI, CIEN, and RVBD. But all in all I have about 6 tech names - the only other area I would of bought was Nintendo if it was available to me in the fund, and Gamestop or Activision. The rest of "tech" I am not interested in (I went into Garmin for a trade briefly)

re: CROX. The thing is growing 30% for a 15x valuation. I will take the risk. In fact I am looking at Under Armour (UA) as well - look at all the kids and teenagers - Nike is old school for them. If this was growing at 30% (CROX) for 45x valuation into a slowing consumer I'd feel differently. Further, its also an international story. BUT, I don't know the long term timeline for CROX. UA I like a lot more long term.

I only have a handful of these 'terrible charts' like BCSI, RVBD, CROX - they are out of favor but until I see more evidence that the story is over I am not giving up yet. CROX is actually a value play at this point, ironically. But I wasn't buying at $40 since the chart stunk, I was waiting for some wash out sell off, and now I got it so it would behoove me to take advantage of it and yes certainlY CROX could go to $25 but then its trading at 30%+ growth for 10x earnings? Seems a bit ridiculous. I thought $35 would be a bottom... $32 shocked me. Just shows me retail investments are pure death right now :)

Last, I reserve the right to be wrong on all the comments above :) But these are my working theories.

Oh yeah I forgot to mention my 2 cents on CROX. D...

2008-01-05T14:25:00.000-05:00

Oh yeah I forgot to mention my 2 cents on CROX. Don't you want to avoid specialty retail in this kind of an environment? Specially with a stock like this one which was a former momentum play that got run off the track.

Hey TraderMark,I was ready to load up on some APPL...

2008-01-05T14:15:00.000-05:00

Hey TraderMark,

I was ready to load up on some APPL today as well but then I read this article
http://www.thestreet.com/s/apple-supplier-sees-cutbacks/newsanalysis/hardware/10397099.html?puc=_dm

Of course the cutback can be for some other reason. I am in the camp of "the consumer is finally tapped out" so I hesitated pulling the trigger today. Although I have no doubt that APPL killed the 4th quarter. But with growth and momentum stocks it all comes down to the all important G word, Guidance.

Although you do have some extra catalyst that can prop this stock up this January. You have Mac-world on the 14th I think, and earnings.

On a side note. A Goldman analyst reiterated its buy ratings on APPL and MSFT yesterday. I would really love to load up on some MSFT before earnings but the INTC downgrades have made me cautious. I also loaded up on INTC yesterday, this company has absolutely just gotten trounced this week. Anyways I was wondering what your thoughts are on large cap tech given the "economic slowdown" that the street has finally accepted yesterday. I know the theory behind this is companies will cut back on its tech spending but we are in an upgrade cycle.