Investors & Friends:
Here's a summary of our investment actions from the past week.
Option Strategies - Naked Puts
1) Apollo Group Inc (Nasdaq: APOL) - We sold Jan '11 $20.00 puts.
Even if we go double dip recession, Apollo (and other non-traditional education companies) should hold up (perhaps even prosper) as they did last time. Biggest cloud hovering over these companies is potential gov't regulation that can penalize schools whose students graduate with large loans and low-paying jobs. The proposed rule is referred to as the "gainful employment" rule. It questions how well schools prepare their students to get jobs that can cover their educational debt. It was recommended that programs whose graduates have a debt-to-income ratio above 8%, or who don't meet certain other criteria, lose access to Title IV federal financial aid - the main revenue source for the for-profit schools. Some say the rule could force schools to lower their prices, if the gov't aid is eliminated or reduced.
Apollo passes our wide moat stock screen, as well as our more restrictive proprietary wide moat screen.
Our wide moat stock screen is based on a term popularized by Warren Buffett (Wide Economic Moat) that refers to a company's ability to maintain a competitive advantage. We define a wide moat as five ratios that average 10% or higher over the most recent 10-year period. The five ratios are Return on Invested Capital (ROIC), Book Value/Share Growth Rate, EPS Growth Rate, Sales Growth Rate, and Free Cash Flow Growth Rate. Our screen selects companies that have all five ratios at 10% or more for 10 years. (See below, Buffett's Top 10 Investing Secrets, for more on the wide moat.)
Click here for the Investrio Stock Selector Fund Bull and Bear Market Indicators Report for the week ending March 26, 2010.
Click here for the Investrio Stock Selector Fund Watchlist.
Upcoming earnings calendar for our portfolio holdings
3/29 - Apollo Group Inc (Nasdaq: APOL)
Click for upcoming IPOs.
Lead Fund Manager
Investrio
Etcetera
We're in a top 10 mood this week...
1) Ten Reasons Why This Is Not a Bull Market
-- Todd Harrison, Founder and CEO of Minyanville
2) Buffett's Top 10 Investing Secrets
-- The Motley Fool
Sunday, March 28, 2010
Sunday, March 21, 2010
Investors & Friends:
Here's a summary of our investment actions from the past week.
Long Stocks
1) Our shares of Clean Energy Fuels Corp (Nasdaq: CLNE) were assigned last week @ $12.50 for a 6.8% gain.
Return calculation = ($12.50 sale price - $11.70 cost basis) / $11.70 cost basis x 100% = 6.8%.
The date we opened the trade was 10/2/08.
The Investrio Stock Selector Fund Bull and Bear Market Indicators Report for the week ending March 19, 2010, is attached.
The Investrio Stock Selector Fund Watchlist is attached.
Upcoming IPOs
Lead Fund Manager
Investrio
Etcetera
1) NPR interview with Michael Lewis, author of The Big Short: Inside the Doomsday Machine
2) C-SPAN video of Gregory Zuckerman, author of The Greatest Trade Ever
Here's a summary of our investment actions from the past week.
Long Stocks
1) Our shares of Clean Energy Fuels Corp (Nasdaq: CLNE) were assigned last week @ $12.50 for a 6.8% gain.
Return calculation = ($12.50 sale price - $11.70 cost basis) / $11.70 cost basis x 100% = 6.8%.
The date we opened the trade was 10/2/08.
The Investrio Stock Selector Fund Bull and Bear Market Indicators Report for the week ending March 19, 2010, is attached.
The Investrio Stock Selector Fund Watchlist is attached.
Upcoming IPOs
Lead Fund Manager
Investrio
Etcetera
1) NPR interview with Michael Lewis, author of The Big Short: Inside the Doomsday Machine
2) C-SPAN video of Gregory Zuckerman, author of The Greatest Trade Ever
Sunday, March 14, 2010
Investors & Friends:
Here's a summary of our investment actions from the past week.
Option Strategies - Naked Puts
1) Intel Corp (Nasdaq: INTC) - Our Jul puts reached 80+% of their maximum value, so we closed them out and sold Oct $15.00 puts.
The date we opened the trade was 12/16/09.
2) Holly Corp (NYSE: HOC) - Our Jun puts reached 80+% of their maximum value, so we closed them out.
The date we opened the trade was 12/23/09.
Option Strategies - Covered Calls
3) Blackstone Group LP (NYSE: BX) - We sold Jan '12 $22.50 calls.
The Investrio Stock Selector Fund Bull and Bear Market Indicators Report for the week ending March 12, 2010, is attached.
The Investrio Stock Selector Fund Watchlist is attached.
Upcoming IPOs
Lead Fund Manager
Investrio
Etcetera
1) If you want to have sky-is-the-limit success in a capitalist society like ours, then you need to own companies, either privately or through the market, preferably both. Very recent history has shown that the stock market can be a rough game. But if you want to win, then you have to play, and you aren't playing if you're on the bench. Play ball!
2) Some thoughts on shorting... one of our subscribers was lamenting the fact that if they're long stock and the stock goes down, they don't panic. However, if they're short and the stock goes up even a small percentage, they get butterflies in their stomach. They can handle loss from long stock, but even a small loss from short stock makes them panic.
Some replies from other subscribers... There is this whole extra psych dynamic that goes on when you are short. There was this movie I saw that had a line about not being able to sleep when you are short the market (the storyline was about this guy who cut the battery cables on cars when the alarm kept going at night). You tend to constantly question your thesis on why you shorted the stock and you tend to look at it on a daily basis (more than your long positions). What I am trying to do is NOT look at my short often but continue to coldly consider if the thesis still holds true. In my case I am sticking to my guns that ANF will not grow in this economic environment. If more consumer stimulus is issued, then maybe I'll change my mind. Good luck!
One other thought about the dynamic is the "familiarity" you have with that kind of trade. Practice goes a long way towards your confidence. Remember the first time(s) you bought and sold some long positions on your own? If you were like me it was both intimidating and exciting... but over time you become very confident on how to get around when the boat is rocking. We don't have that kind of "sea leg confidence" when it comes to short sales... probably never will.
1. It’s not just you feeling this way…
2. If you’re long and stock goes down, one reason you don’t panic is you write a covered call, or set a stop loss, or buy put insurance. And at end of day you know your max loss is capped, because stock only can go to zero.
3. If you’re short, your max loss is theoretically infinite. That’s a decent reason for emotion side of brain to send danger signals, even though your logic side of brain tries remind you it’s only a theoretical possibility, not likely outcome. Your main tool to protect yourself is stop loss, and it’s what I’ve used last few times to sweat less.
4. Another alternative if you want to bet on stock price decline is buy a put option. You know what your max loss will be if it doesn’t work out.
Here's a summary of our investment actions from the past week.
Option Strategies - Naked Puts
1) Intel Corp (Nasdaq: INTC) - Our Jul puts reached 80+% of their maximum value, so we closed them out and sold Oct $15.00 puts.
The date we opened the trade was 12/16/09.
2) Holly Corp (NYSE: HOC) - Our Jun puts reached 80+% of their maximum value, so we closed them out.
The date we opened the trade was 12/23/09.
Option Strategies - Covered Calls
3) Blackstone Group LP (NYSE: BX) - We sold Jan '12 $22.50 calls.
The Investrio Stock Selector Fund Bull and Bear Market Indicators Report for the week ending March 12, 2010, is attached.
The Investrio Stock Selector Fund Watchlist is attached.
Upcoming IPOs
Lead Fund Manager
Investrio
Etcetera
1) If you want to have sky-is-the-limit success in a capitalist society like ours, then you need to own companies, either privately or through the market, preferably both. Very recent history has shown that the stock market can be a rough game. But if you want to win, then you have to play, and you aren't playing if you're on the bench. Play ball!
2) Some thoughts on shorting... one of our subscribers was lamenting the fact that if they're long stock and the stock goes down, they don't panic. However, if they're short and the stock goes up even a small percentage, they get butterflies in their stomach. They can handle loss from long stock, but even a small loss from short stock makes them panic.
Some replies from other subscribers... There is this whole extra psych dynamic that goes on when you are short. There was this movie I saw that had a line about not being able to sleep when you are short the market (the storyline was about this guy who cut the battery cables on cars when the alarm kept going at night). You tend to constantly question your thesis on why you shorted the stock and you tend to look at it on a daily basis (more than your long positions). What I am trying to do is NOT look at my short often but continue to coldly consider if the thesis still holds true. In my case I am sticking to my guns that ANF will not grow in this economic environment. If more consumer stimulus is issued, then maybe I'll change my mind. Good luck!
One other thought about the dynamic is the "familiarity" you have with that kind of trade. Practice goes a long way towards your confidence. Remember the first time(s) you bought and sold some long positions on your own? If you were like me it was both intimidating and exciting... but over time you become very confident on how to get around when the boat is rocking. We don't have that kind of "sea leg confidence" when it comes to short sales... probably never will.
1. It’s not just you feeling this way…
2. If you’re long and stock goes down, one reason you don’t panic is you write a covered call, or set a stop loss, or buy put insurance. And at end of day you know your max loss is capped, because stock only can go to zero.
3. If you’re short, your max loss is theoretically infinite. That’s a decent reason for emotion side of brain to send danger signals, even though your logic side of brain tries remind you it’s only a theoretical possibility, not likely outcome. Your main tool to protect yourself is stop loss, and it’s what I’ve used last few times to sweat less.
4. Another alternative if you want to bet on stock price decline is buy a put option. You know what your max loss will be if it doesn’t work out.
Sunday, March 7, 2010
Investors & Friends:
Here's a summary of our investment actions from the past week.
Option Strategies - Naked Puts
1) Bristow Group Inc (NYSE: BRS) - Our June puts reached 80+% of their maximum value, so we closed them out.
The date we opened the trade was 11/30/09.
2) Goldcorp Inc (NYSE: GG) - We sold October $20.00 puts.
The Investrio Stock Selector Fund Bull and Bear Market Indicators Report for the week ending February 5, 2010, is attached.
The Investrio Stock Selector Fund Watchlist is attached.
Upcoming earnings calendar for our portfolio holdings
3/8 - American Oriental Bioengineering Inc (NYSE: AOB)
3/10 - Clean Energy Fuels Corp (Nasdaq: CLNE)
3/11 - Goldcorp Inc (NYSE: GG)
Upcoming IPOs
Lead Fund Manager
Investrio
Here's a summary of our investment actions from the past week.
Option Strategies - Naked Puts
1) Bristow Group Inc (NYSE: BRS) - Our June puts reached 80+% of their maximum value, so we closed them out.
The date we opened the trade was 11/30/09.
2) Goldcorp Inc (NYSE: GG) - We sold October $20.00 puts.
The Investrio Stock Selector Fund Bull and Bear Market Indicators Report for the week ending February 5, 2010, is attached.
The Investrio Stock Selector Fund Watchlist is attached.
Upcoming earnings calendar for our portfolio holdings
3/8 - American Oriental Bioengineering Inc (NYSE: AOB)
3/10 - Clean Energy Fuels Corp (Nasdaq: CLNE)
3/11 - Goldcorp Inc (NYSE: GG)
Upcoming IPOs
Lead Fund Manager
Investrio
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