Friday, June 24, 2005

A Nice Market Correction

I don't like trade when the market is in correction. I like to let the dust settle and start scanning for the leaders. Leaders are stocks that hold up well in a market correction. For example, Invitrogen (IVGN) has held up well in this correction and made new highs. Here's a chart of Invitrogen vs. the NASDAQ for the past 5 days. This is what I like to see, the odds of this going higher when the correction is over is pretty good. (Note: I have a position in Invitrogen.)

Posted by Hello

Thursday, June 23, 2005

Nibbled On Some Sepracor

I decided to put some cash back to work today and picked up some Sepracor (SEPR). I've been following Sepracor on and off for several years, it's a local company. Looks like they have finally turned the corner with their potential blockbuster insomnia drug, Lunesta. The safest time to invest in a drug company is after FDA approval with a couple of quarters of sales. I'm not too crazy about their pipeline - looks a bit weak to me, but their earning projections look very good. They should earn about $1.00 in 2006 and $2.40 in 2007. The stock is not cheap, it's trading on 2007 earnings, so if there's any disappointment on Lunesta sales - down it goes...

I still have some cash left... Looking at some more conservative plays in the big pharmas.

Wednesday, June 22, 2005

Retirement Story

At work I had a discussion with my coworker about saving for retirement. He tells me his story about his father, which was a bit depressing. His father is retired and has used up most of his retirement funds. He's maxed out the credit cards and is unable to make the minimum payments. His father is planning on filing for bankruptcy. His only remaining assets are an old car and a house in Florida. This is supposed to be his golden years, but now he has to worry about paying the creditors. You bust your ass working 40+ years and this is what you end up with...

You just have to suck it up and save as much as you can while you're young. Max out your 401(k), IRAs and take advantage of all of bennies that's offered by your company. Especially the employee stock purchase program if you have one. I'm sacrificing a lot right now to ensure that I'll be financially secure when I retire.

Saturday, June 18, 2005

Foreclosures Up?

I just happened to scan the front page of my local newspaper and they had an interesting article on the increase number of forclosure filings as home values soar. Click here.

If you read the last paragraph it says: "A lot of people don't have any money. Their savings account amounts to two hundred bucks, and they're living week to week."

This is scary, you just have to wonder how long this housing boom will last... A lot of people are just way over leveraged. Now with the interest only loans, you're looking at a potential time bomb for some of these people.

Wednesday, June 15, 2005

More Bad Trades

Here's another bad trade... I actually made money, but a bad trade really leaves it mark. Back in December, I got some shares in the Las Vegas Sands (LVS) IPO at $29. I sold it in May for ~ $35, right at the bottom! It's rebounded nicely to $38.50 today. I felt warm and fuzzy when it was $50, but when it dropped to $35 I just panicked. I still made ~20% on this trade, but the fact that I sold at the very bottom really hurts. I'll definitely learn from this trade.

Posted by Hello

Tuesday, June 14, 2005

Got It All Wrong

Back in March, I thought Diamond Offshore Drilling (DO) was close to topping out. Well, it just broke out to a new high. There's a lot of momentum in this stock and it's going to go higher. Unfortunately, I can't bring myself to purchase any shares. I owned this stock a long time ago and couldn't make a penny. It's hard to forget old memories. Anyways, I'll just watch from the sidelines...

Posted by Hello

Thursday, June 09, 2005

My Retirement Portfolio

I was just checking out the Smart Money web site and they had a nice article on the Roth 401k's. Beginning next year, some employers will start offering the Roth 401k plan. Here's the Smart Money link: I hope my employer offers the plan. I'll definitely take advantage of it!

It really is amazing how compounding works, especially if your employer provides a company match. I've been working for the company for 7+ years. I enrolled in the 401k plan on my very first day of employment and elected the maximum contribution of 18%. Yeah it hurts, but after a while you don't even notice it. Seven years later, even with the 2000-2003 bear market encounter, the portfolio has appreciated nicely.

Here's the current break down of my 401k portfolio. The S&P 500 is a small percentage because I just started contributing to the fund.
Posted by Hello

Friday, June 03, 2005

Follow The Leaders

I always like to keep tabs on what the best fund managers are buying or selling. The Money magazine web site had a nice little write on Ken Heebner, manager of the CGM family of funds.

"Heebner, the co-founder of Capital Growth Management, said in a recent interview with Money magazine that in the first quarter he sold all of the home-building stocks in CGM's four mutual funds: CGM Capital Development, CGM Focus, CGM Mutual, and CGM Realty. Heebner had long been a fan of the group."

"I am concerned about speculation at the high-end of the [real estate] market," said Heebner. If home prices were to fall, worries Heebner, real estate activity would slow, including home building.

He's one of the fund mangers I really admire. He doesn't follow the crowd. In 2000 he went short on many of the tech stocks in his CGM Focus fund.

Here's a site I've started to check out: It updates what the leading fund managers are buying and selling.

Thursday, June 02, 2005

Take Some Genentech Off The Table?

It just amazes me that Genentech (ticker: DNA) keeps on rocketing to new highs on a daily basis. I was watching CNBC today and Joe Kernen made an interesting observation. In terms of market cap for domestic biotech and pharma companies, only Pfizer and Johnson & Johnson are larger than Genentech. Who would have thought that Genentech would zoom past Merck, Bristol Myers, Amgen, etc...

I'm really tempted to take some Genentech off the table. I bought the stock around $20 and a little more around $50. I initially purchased the stock based on the potential of Xolair and Raptiva, everyone at that time thought Avastin was a bust. I wish I can say that I used my research skills to find this gem, but it was just dumb luck! The nice thing about my Genentech position is that it's in my Roth IRA, so no taxes if I decide to cash out.

Wednesday, June 01, 2005

Real Estate On Hold (Too Hot)

The real estate prices are just crazy around here. I live in one of the real estate "bubble" regions. The interest rates are very attractive, but I just can't bring myself to pay these prices right now. I actually feel safer putting my money in stocks than in real estate. I'm going to put off buying a place for now. One of the tenants from my parents place moved out, so I'm going to take over the apartment. Lucky for me, it will buy me some more time...

It feels like a real estate top. Everyone is talking about real estate, i.e. The Nightly News, CNBC, etc... They interview people, who quit their day time jobs and just flip properties. People are actually saying that "it's different this time". They give the following excuses: low interest rates, new demographics, limited land supply, etc... It's not different this time and the market will correct. Whenever you hear people say: "It's different this time", it's pretty much over.

Keep an eye on the home builders like Toll Brothers, etc... They will be the leading indicator for home prices. Remember, stocks are a discounting mechanism, they discount info 6 to 9 months into the future. When the home builders finally enter a major correction, watch out... In the mean time, it looks like there's some more upside for the home builders. They are starting to break out into new highs.