Relative Strength

Monday was a Memorial day (holiday=market closed); I decided not to go anywhere (one of the worst traffic day in a year next to Thanks-giving holiday) but met with all family members and went to an authentic Chinese restaurant. Wooo, it was great! Although I don't have good appetite due to my chemo therapy, I was able to eat good portions ( I love roast duck).

Tuesday, I went mountain hiking again. Let me remind you once more: the fresh oxygen created by the various trees during the early morning time is known to kill cancer cells in your body. Did you also know that the sweat your body releases during workout is different than the sweat you get simply because of heat (eg: sauna)? Try your best to fit exercise time in your weekly schedules.
No money is worth your health. Trust me.
In the afternoon, my wife Sunny (Bra Designer) & I went to a concert by Yellowman (king of reggae). If you have never heard of Yellowman - go check it out yourself. If you like reggae music (especially the dancehall style) you will love Yellowman. It was fantastic!

Today, I decided to visit one of my best friend Dr. Kolodny at his new job (he is now a Vice-Chairman for a large hospital in Brooklyn, NY). My visit confirmed that this was indeed a nice cushy position. Big corner office, nice furniture, private secretary and a high six figure pay package! I am really glad to see my close friends prosper in life. He worked hard and he deserves nice life style. If you need a good, trust worthy psychiatrist - call me.
Lastly, but most importantly for me, I had my second check-up (CT-Scan) for my cancer. My oncologist (cancer doctor) checks me with full body scans every 2-3 months to see if chemo therapy is doing the damage to cancer cells in my body. I will know the results next week.
As far as I am concerned, these cancer cells are renting a space in my body for a time being.
Believe me - I will be sending an eviction notice soon.
I will not play a nice landlord with these tennants.

Back to business: In choosing stocks, one of the most important criteria is RS: relative strength (how good it performed compared to others in the past).
Past performance is no guarantee of future results, but I can not find a better gauge myself. Let me ask you: if you were to bet on boxing match (I love boxing) where fighter A has a record of (21 win-18 loss) and fighter B has (31-2): who would you bet on?

Please note 2006 performance of our stocks vs. NASDAQ:

RICK: +75.8%
IDWD: +405.3% (yes, 405.3%)
UTK: +16.8%
AUTO: +100.0% (cooorect, a double)
NASDAQ: -1.2%

Although it carries more risk, sometimes you have to pick a stock because you believe it is a winner but temporarily hurt for various reasons. But you have to know what the reasons are and understand that it can be corrected.

Our stocks in this catagory & 2006 performance:

BTYH: -26.6% (special dividend has been delayed a few times)
MATK: -7.0% (possibility of a big, new player in DHA market)
EXPE: -40.8% (unexpected lower earnings)
PRZ: -59.9% (accounting issues, financials need to be summited)
NASDAQ: -1.2% (this is our bench mark)

Obviously, I believe that above concerns can be corrected. And of course we did not buy all these on 01/01/2006. You can get our actual buy price from my prior notes. Also, refer to my 5/11 note for my target prices for each. All target prices are still intact. The two new buys (EXPEZ-this was up 9.5% today & PRZ) have target prices as follows: EXPEZ $9 & PRZ $2.6

P.S: I hope some of you bought OIH as per my previous notes. Both oil and gold is looking better now than a few weeks ago. We wil definately buy a gold/silver stock soon. Stay tuned...

The Free Market

I hope that you had a great Memorial holiday weekend.
The regulars of this blog know that I keep talking about the Free Market. I am a firm believer in the free-market process & its evolution. Whenever I hear someone bashing the big corporation, I wonder if they truly mean what they say. Many view the big corporation as the big bad wolf that only has self-interest and is bad for the economy and its people. I ask you, do you really believe that? Those who do, I feel sorry for them. It must be tough to live in a society in which you believe that the government is bad and its main engine (big companies) are out to get them too. It is no different than thinking that your own parents are bad. How sad ...

Let me be clear. I am the first to admit that we are not perfect. Our government contains some bad apples, some corporations are run by crooks and even some judicial judges are corrupt! But if you step back and look at the total, we look damn good over all! In fact, we are so good that most people in this world want to live in this country even with a major risk coming here.
The main point is that free-market works.
And it works very very well indeed.

Case in point: During the Katrina disaster, the main agency that is responsible for the relief effort (FEMA) could not handle the pressure. The FEMA (not a result of free- market) did not have the system to handle such a disaster. Guess who stepped up to handle the crisis in a timely manner without being asked. Big public corporations. The Walmart, GE, Lowes, FedEx, Coca-Cola and many other companies (direct result of free-market) came in to help. Just to give you an idea, Walmart carries more goods to all fifty states and its townships without delay every single day. As soon as Walmart decided to help, waters and other necessary goods arrived within 24 hours, sharp. This is just one example of free-market at work. A problem that took many weeks and months to solve, the free-market system took a few days. Done.

Free market also means that it will go up and down. We have been enjoying the ups for a while and we are now in the down cycle. We will have mini ups within the down cycle as well. So why not totally abandon the market during the downs? Because no one knows when it will go up sharply.
I am willing to bet that as soon as you sell, the market will jump up.
This has happened too many times for me.
I am sticking my guns for now.
In fact I am still buying.

As longs as I buy it at a price where one year from now it will look cheap, I buy. Who cares if it goes down 30% from your buy point? Great. Buy some more. When your home price go down 30%, do you sell? Seriously, if my condominium price were to go down 30% from where I bought it, I will borrow money and buy a second unit. You should too.

Buy or hold stocks in our portfolio.
Do not sell unless you need the money.
By the way, if you needed your money this soon, you should not have bought it in the first place. With every buys in our portfolio, you need to have a minimum of 1-2 year commitment.
Let your seeds have time to grow and give you beautiful flowers and juicy fruits. know this: Some of our seeds will not mature - I guarantee it.
Some will just whither and die.
That's a proof that free-market is well and alive.
Only the strong survive - no mercy here.

One needs to learn to enjoy loosing as much as gaining. Good night.

EXPEZ & PRZ

We just went through 2 weeks of hell.
During this two weeks, NASDAQ lost all of its 2006 gains and now we are in the red. But, just like the nature, after a storm there is a sun shine. And I saw the sun come up yesterday.

If you look carefully, this down turn has created many bargains among stocks. Some stocks were killed with no mercy (we want to pick these up). Capitalism (free market) is vicious. It is very efficient to praise winners and kill the loosers. The problem is that sometimes (actually many times) the market over reacts (over adjusting) and this creates opportunities. As I have told you last few days, let's go shopping!

I have bought two securities today (notice I did not say stocks).
They are EXPEZ and PRZ - and this is why:

EXPEZ: is a warrant that entitles you to buy Expedia (EXPE) stock for $11.56/sh until Feb 4th 2009. Expedia is now at $14 and EXPEZ is at $4.5. If Expedia goes to $21 (+50%) then the warrant EXPEZ will probably trade at $10 (+120%). So, is Expedia a bargain now? I think so. Will the stock EXPE go up to $21 from current $14 within a year? Yes and Yes. Can EXPE go down further before it goes up? Yes, it is very possible. So, basically you are telling me that if the stock goes up 50% then my warrant will go up 120%? Coorrrrect!

PRZ: PainCare Holdings, Inc., through its subsidiaries, provides pain relief solutions in North America. In addition, the company owns and operates nine ambulatory surgery centers. PainCare Holdings was founded in 1984 and is based in Orlando, Florida. Now, this is a bargain as well. However, PRZ still has to produce 2005 year-end financial and the 1st quarter 2006 numbers too. This is the reason why the stock is down so much. The unknown. What will the numbers say? Are they hiding anything? Obviously, this is not for the conservative guys. I just think that it has a good risk/reward ratio at this point. By the way, the CEO recently said that they are expecting about $85 million in revenue and about $0.21 per share in earnings. Since I paid $1.44/sh, I am paying this growing company at less than 7 times 2006 earnings and less than 1 times revenue. Pretty good value I'd say. If it goes lower (assuming no fraud), I will add more. This is another double in 12 months. You watch.

The reason I did not go into more details in Expedia (EXPE) is that you all know about the company. I also assume that you all know how to look it up in Yahoo.Finance.com to confirm what I have said. I think the above two items are good values.

Please realize: the better the value of a stock, the worse the stock looks and feels. If it looked good and promising, it would not be selling at the price you are looking at. Just remember that.

P.S: June is an important month for us. There will be many news regarding our stocks. RICK will probably announce good monthly numbers / BTYH will have some news regarding the spinoff of its ambulance division / IDWD will be delivering the special dividend to us / PRZ will come up with the necessary financials / MATK will announce a new business deal ( I hope).

Ant Philosophy

When was the last time you saw ants reach an obstacle and give up with their heads down and head back to the ant hole to relax? Never. If they are headed somewhere and you try to stop them, they will look for another way. They will climb over, they'll climb under, they'll go around - regardless of the effort involved.
Imagine what you could accomplish if you never quit and always did all that you could do?

I trust that you already know - I will never give up my personal fight with my cancer. It is simply a new obstacle for me to climb over, climb under and to go around. You - too, should never give up your dreams and do whatever necessary to get to your destination. But remember this, the true joy is in the journey and not the destination itself!

We are in the midst of market volatility. If you refer to my note dated (4/2) I told you that easy money was already made. Remember that we have beaten NASDAQ's 1st quarter performance of +6% (this is quite impressive in itself) by gaining almost 21% ! (this is almost unreal). If you remember, I have also said that 2nd & 3rd quarter does not look too enticing. The 4th quarter of 2006 is where the main action will be.

From this point forward we have to really work hard to squeez extra drops of performance. For me, today was a great day. As per my yesterday's note, I did not buy into RMBS yesterday because it did not touch $27.6 mark (a.k.a. trigger point) and instead I bought RSAS at $14.89/sh. Today I got out of RSAS at $15.49 for a one day gain of 4%. And guess what, I bought RMBS today at $27.27 (it did cross $27.6 mark today: RMBS went up almost 10% at one point). The general market won't excite us tomorrow but some of our holdings will.

RICK closed today at $7.00/sh. It was as high as $7.15. In addition to my long term holdings of RICK, I also bought for my trading account 5K shares at $6.2 last Thrusday (refer to my blog) when it went down for no reason (after an excellent earnings report no less). Today I sold it for $7.12/sh (+15% in 4 days, you do the math). RICK will head higher.

I fully understand that most of you are too busy to folow the market but I want you to kow that certain trades are within your reach. We have a portfolio full of exciting companies. And, boy do they move! And if you take the time to study this a little everyday, you will slowly get the feel for the market. Expect in advance that it does take time though. What doesn't.

I just hope that some of you can utilize this site to improve your understanding of the free market. It is exciting and it is fair. Most importantly it can be very profitable. This is one hobby that pays you as you get better. Where else can you expect daily advise like this? Take it and make it yours.

Like an ant, I will never stop trying.
I will climb over, climb under and go around until I find my food. And you all know my favorite dish - crispy U.S. green dallars. It has all the vitamins and minerals my family needs.
Time for my beauty sleep. Good nite guys and gals...

Don't sell stocks on Monday.

I have briefly mentioned about the book titled
"Don't sell stocks on Monday" in my previous blogs.
Now you know why.
Statistically speaking, Monday is by far the worst day in a week. There is no scientific explanation about this phenomenon but it is probably because most investors are pulling their hair out during the weekend thinking about the potential disaster on up coming Monday and thus place a sell order. This obviously makes stocks to go down, confirming that his/her gut feeling were right.
The truth is: markets usually come back up the next day.
More hairs are pulled in coming days (ouch!).
Let me just say, I see too many people with thinning hairs...

Allow me to show you the damage (in a day):

ICE -15%
ZOLT -11%
TRID -13%
RMBS -7.5%
AKAM -8%

Some of these are great buys.
The shopping season is indeed in full bloom.
Certain stocks are a no brainer buys, they are:

MVK at $43 (we sold this at $57.77)
BJS at $31 (we sold this at $$39.50)
OIH at $140 (we sold this at $165.11)

Lastly, MATK will release 2nd quarter numbers on June 6th. This one better be good or my love will quickly disapate (I think it will be good). If the news is good, expect the stock to jump quickly toward $30. Cross your fingers (the management have been extra quite lately).
Oh, on the same day (6.6.06) a new movie is being released (The Omen!). I loved the original , first Omen - it was scary - just so you know, not many movies scare me.
Even the market doesn't scare me for god's sake.

P.S: For my trading acount, I did not buy RMBS as per my last note - it did not cross $27.6 mark. RMBS is looking better than ever for a short, quick trade! Instead, I bought RSAS today at $14.89/sh. This one looks promising for a quick jump. Look and learn if you have the time.

PPS: Our BTYH went up 16% today on top of almost 19% last Friday! This is now my third largest holding. What's more amazing is that the market was horrible today - great sign. Good things to come...

Sick of investing?

Are you sick of investing?
The market goes up & down for no appearent reason.
In fact, there seems to be no "reason" behind investing in the market. Why go through such an emotional rollercoaster when you can get about 5% in the 10 year Tresury bonds with no risk? By the way, now that we have 5% T-Bond rate, many will do just that. But I won't.

It's obvious that most people are sick watching the stock prices go down everyday. I get many phone calls and e-mails (please use the comment section in my blog) asking what's going on.
The truth? I dunno.

But I do know this. When people react this way, it is the perfect time to put your wager. While some of you were complaining and selling, I was buying. Guesswhat happened Friday:

RICK +8.4% $6.58
MATK +8.4% $23.79
BTYH +18.68% $1.08

This is one (1) day gains I mind you. You could have made up most of your paper losses with gains you see above in one day (had you bought in). I will admit to one thing you already know. The stocks in our portfolios tend to be more volatile (because they are small & new). But this was done on purpose. I do not like SP500 type stocks right now (potential gains are limited). And our stocks do not move in same cycles as the SP500. By spreading your dollars into several stocks (at least 10 hopefully) you can limit big disasters. I do not want to hear from a guy or gal who owns only 2 of our holdings and is upset because one went down sharply (you basically asked for it).

Bottom line: The stock market may go down further from here or it may have reached a bottom already. No body knows. What I do know is that some stocks look very good at these prices.
All stocks mentioned above will look like a crazy bargain 2 years from now.
Just do it.

P.S: May 18th (Thursday) was the record date for IDWD special dividend. The payout date is June 15th. I hope some of you got into this one. They are going to spin off HLS (Home Land Security) division which sells Biometric security deivces and the 2006 revenue for this division could top 100 million dollars. And they are also going to spin off (through IPO) 995ad.com division as well (this also could top 100 million). As I told you before, IDWD is our highest risk/reward situation...
No guts no glory ...

PPS: Tomorrow for my trading account I will be long RMBS if it stays above $27.6/sh.

How to Value a stock

We received a one - two punch this week.
We've been hit but we are not knocked out just yet. Most of our holdings do not have high correlation with the general market (by design). If you read my past notes you kow that I was not very hot on 2nd & 3rd quarter of this year. The last six (6) trading days erased all of this years gains. Nasdaq is now in the red (negative). This was brutal and no one saw it coming. In fact, just last week Wall Street cheered ALL TIME high for the Dow30 index (new record).

The one punch was MATK. During May it went from $30 to $22 as of today. This is a bit too much. People are very nervous on this stock. Someone else is trying to move into the DHA market (MATK has enjoyed monopoly in this area so far). But please know that MATK has numerous patents in this. Customers has to pay royalty (3%) to MATK even if they don't buy DHA from Martek. As of today, I still believe that Martek's DHA is far superior to the fish oil DHA. Thus I bought more yesterday. If & when I change my views (if this goes below $20), I will let you know pronto.

The second punch was BTYH. Now, this one moved for no reason. I even called the company's investors relation guy (named AL); he said someone sold in the last hour and there was no one to pick it up. This happens to low volume stock like BTYH (avg daily volume of about 30K). Since I like the company's strategy and there seems to be no negative issues with the company, I have decided to buy more and lower my average cost. Just remember that this stock went from $0.60 to $$2.48 in two months (Nov - Jan 06). Let's see what happens.

I thought this was a good time to talk about how to value a company & it's stock. Let me begin by asking you a question. "If you have two identical houses built: one in New York and one in New Mexico, do they sell at the same price?". Of course not. The home value is relative to its neighborhood. That's why you need to know what prices homes go for in the area you wish to buy before you buy. Every thing is relative.

The MBA's use NPV (net present value) of all future cash flow model to calculate the value of a stock using risk free discount rate in the process. This is a bit too complicated for most people so I am not going to bore you with formulas (hated doing home works in this class). There are far more simple way to value a stock. Let me give you three:

Price to Sales Ratio (PSR): Generally stocks sell for 1-2 times its annual sales amount. Of course if a company is growing fast, it is going to fetch higher multiples. Example: IBM (PSR = 1.4) GE (PSR = 2.4) Coca-Cola (PSR = 4.5) Google (PSR of 16). Under 1 times annual sales is a great value.

Price to Earnings Ratio (PE): Always use next 12 months worth of earnings (net profit that is). Generally stocks sell for 15-20 times its net earnings. Example: IBM (PE = 13) GE (PE = 15) Coca-Cola (PE = 18) Google (PE = 30). Under 15 times earnings represent value. Obviously you need to estimate or the company gives you it's projections for next 12 months.

Price to Cash Flow (PC): I mean net operating cash flow for the last 12 months. Generally stocks sell for 6-10 times cash flow. Example: IBM (PC = 8) GE (PC = 10) Coca-Cola (PC = 17) Google (PC = 40). You get the picture. If a stock sells for under 6 times cash flow it is considered value (assuming the business is profitable and growing).

Now that you have some basis to work with, let me tell you why I have bought the stocks we have in our portfolios:

RICK: PSR=1.1 / PE=12 / PC=11
BTYH: PSR=0.45 / PE=4.5 / PC=3.5

Eric Langan (CEO of RICK) owns 26% of the RICK stock.
Eric's salary is $344K/year & owns 1.2 million shares.
Larry Lunan (CEO of BTYH) owns 36% of the BTYH stock.
Larry's salary is $72K/year & owns over 8 million shares.

Knowing this, what do you think? Do you think they are interested in making the stock go higher in the long run? I certainly think so. Remember, these are relatively new companies. There will be some growing pains. But I can tell you this. They are growing and they are profitable. Now you tell me what you want to do. Buy? or Sell? Hmmmm ....

One more time: Same business, the stock goes for 30% off sale. What do you do?
Hmmmm ... !

What moves stocks?

I don't know about you but I am exhausted...
The market just tanked today because we had core CPI number released. (CPI: consumer price index = a gauge for future inflation). Guess what the number looked like. Market expected 0.2% but we got 0.3%. Now, does this sound like a huge problem to you? Let's just say the Wall Street is looking for excuses to sell. Everyone is gun shy right now. Basically it's like this:

#1: "If you are selling, then I am selling too!"
#2: "Since my stock price went down for no reason, I am selling"
#3: "I placed a tight stop loss order and it got excuted automatically"
#4: "Forget it, I am nervous, I am selling"

Please understand that the market goes up & down precisely because people react with emotions rather than facts. When a stock goes up, it goes up too much. When it goes down, it goes down too much also. If you can not stomach this volatility, then just get out. I fully understand that some people can not deal with this kinds of pressure.

Here's a million dollar question: "What moves stocks in the long run?".
Before I tell you the answer, let me remind you where it is coming from. I have studied extensively in the field of Economics (as you know my major was Economics) then I went ahead to complete an M.B.A. in Finance (with emphasis in Investments). Upon graduation, for the last ten (10) years I worked in three major Insurance & Investment companies. Most importantly, I have over 20 years of first hand experience in buying & selling Stocks/ Options/ Warrants/ and Mutual funds.

Now that you know where I am coming from, here is the answer: "EARNINGS". You may say that this is too simple but please know that many people forget this everyday. If you pick any company with some history, go back and look at the graph of its earnings and the stock price. Bingo! Almost perfect correlation with some lag time. No other measure matters. It is earnings, earnings and earnings. In real estate, it is location, location and location.

Example: RICK just released very positive earnings two days ago. Yesterday, the CEO raised his estimate of future earnings. Basically RICK made more money last quarter ( try 10 times more money than same time last year) and it is going to continue making higher earnings. In the mean time, the stock went down from $7.x to $6.x. So what do you do? This is not a complicated question. As you know, I just bought more at $6.11/share.

Same is true for MATK. There are some negative news like some might try to replace MATK's DHA with fish oil DHA. Trust me, there's no way fish oil DHA is as effective as MATK's DHA which is from microalgae. It also smells and has shorter shelf life compared to MATK's. This stock also went from about $32 to $24 eventhough the earnings were good. Can you guess what I did today? Coooorrrrrrect! I bought more of MATK at $23.88/share. This may be able to go lower but this is a good price. I know a good price when I see one. (I had to sell IGLD to purchse MATK - I will buyback IGLD later).

If you have some $ left try to diversify by buying any of the stocks in our portfolio. You can actually pay less than I did on some of them. And do not forget OIH: it is now a good price (remember I sold it a few days ago at $165.11 and it is now at $149/share).
The sale is on right now.
If you are shopping, this is a fun time ...

Sensitive market & people

I expected a bounce today as per my last note.
The market as a whole did not quite bounce (although RICK went up almost 9%). Yesterday I have told you that I bought quite a bit more of RICK for my trading account (for a quick trade). Well, it is going great. I might get out in a day or two for a quick profit. You probably remember that the last time RICK went down I bought more too (this is how RICK got to be my largest holding). Back then, the reason was that people thought RICK was involved with the Mafia! Oh, come on. Stock went down and I grabbed at the cheap price. We probably won't see that price again. The lesson is this: if you are in the buying mode, you want the price to go down. Unless the fundamentals have changed, stick to your guns. Don't be nervous at every turns in the market. That's how the market gets rid of weak investors.

Back to the bounce story: I may have been a few days too early but a bounce is near. What killed the party was Home Depot (HD). This giant went down over 5% and it pulled all indexes down with it. We also found out that Mr. Warren Buffett sold many million shares of HD during the first quarter! The smart guy is coveniently out of HD already (I told you he's good). So, let me tell you what he bought during the first quarter. General Electric (GE), (UPS) and Conoco Phillips (COP). So what can we tell from his activity? Mr. Buffett is betting that our economy will be strong (thus GE & UPS) and he thinks oil is great investment (thus COP). It feels good to have Mr. Buffett agree with you.

Regarding oil investments we prefer OIH and MVK to COP. You all know I took good profit from OIH & MVK. As soon as I sell some of our holdings (for a profit of course) I will be buying OIH and MVK again. But wait for a pull back. I will let you know when.

You should also know that I added more of AUTO today at $0.90/share. I first told you about this when I was in Ohmaha at $1.19 then I bought more at $1.00 and today at $0.90/sh. I think I am done with buying unless I get a chance to get a big discount for some reason (you know I like discounts). Also in my trading account I still have SLAB (my cost was $41.11). If the market should bounce (it will) this will jump I think.

Finally, I am thinking of shorting more of Gold stocks (shorting gold was very profitable for me) in the near term. In the long run, I like gold & gold mining stocks. Gold has a good chance to see $1,000/oz in the future. But it has to rest first before the jump.
Tomorrow look for HP (HPQ) to jump in price. It had a fantastic earnings....

Review of our holdings

As per my note yesterday, it's time to review our status.
One must keep score regularly - count your beans frequently.
Let me just get right to the point and explain later:

Stock Avg.Cost Price as of 5/15 Gain/Loss % Target

RICK $ 4.80 $ 6.08 +26.66 % $10.10
BTYH $ 1.46 $ 1.33 - 8.90 % $ 3.60
IDWD $ 0.89 $ 1.15 +29.21 % $ 2.75
MATK $28.70 $26.41 - 7.98 % $42.00
IGLD $ 6.55 $ 6.15 - 6.10 % $ 9.00
UTK $14.35 $16.30 +13.59 % $24.00
AUTO $ 1.09 $ 0.98 -10.09 % $ 2.56

The last time we measured our performance was at the end of the first quarter (see my note dated 3/31). For those who are closely following my blog, I would like to further explain my goals. Most importantly, my goal is to beat the market. When I say market, I mean both big (SP500) and smaller (Nasdaq composite) markets. I think it is wise to remind you what these markets represent:

Nasdaq stock market (this is where we fish) - The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two (2) separate markets, namely the Nasdaq National Market (Nasdaq composite), which trades more established, active securities (about 3,000 companies) and the Nasdaq Small Cap Market that trades smaller, emerging growth companies (about 2,000 companies).

S&P 500 Index - A group of 500 large, widely held common stocks that measures the general performance of the market (the value of these 500 companies represent about 87% of all stock market value). Understand that there are over 10,000 publicly traded companies, which means these 5% of elite companies control 87% of all money being traded.

In the "free market" system, there are no difference between people and companies. I am sure you agree that the top 5% of people in the U.S. control 90% of all the money being traded.
Believe me, you want to be in the top 5% - period.
Membership in this club has its previleges.

When I try to gauge myself, I will use both SP500 Index and the Nasdaq Composite Index - eventhough we mostly hunt in the Nasdaq world. Why Nasdaq? Because these are faster growing, smaller, newer companies. I fully understand that there are more risks in these companies. But how can you beat the market by owning GE? GE is the market. They are not going to bankrupt anytime soon but they are not going to double in size anytime soon either. I am looking for market beating, turbo performance in my stocks.

The base of our performance gauge is January 1st, 2006.
Here is our performance thus far:

Index NAV as of 1/1 NAV as of 5/15 Performance %

SP500 1,248.29 1,294.50 + 3.70 %
Nasdaq 2,205.32 2,238.52 + 1.50 %
AceTrader 1,315.32 1,652.47 +25.63 %

And yes, we have won our third inning as well (3-0). Fourth inning starts tomorrow and ends on 6/30/06. Am I satisfied with the results so far? Yes and no. Because this game can change very quickly. Our stocks can move 10% in a day (sometimes in an hour) up or down. That's why we have to diversify. I need to diversify more. I need at least 12 different stocks. As you can see I only have 7. Basically I am betting big on the ones I have. The list above is ranked by the size of my holdings - my largest bet is RICK and the smallest is AUTO.

If you have noticed, I went as far to give you my target estimate for each stocks. When I get a chance, I will explain where I got those numbers. Now that you have this, do not call me and ask "should I buy xxx at this price?" One more advise: always sell 33%-50% of your holdings if it should double to lock in your gains. Don't be too greedy. And of course I will tell you when I sell.

RICK just announced a blow-out earnings report today as I predicted. However, the stock went down. Please do not worry. Some investors always sell on the good news - suckers. Do you see my target for RICK this year? With this information, you do what you need to do. I just bought more today for my trading account. Let's see.

BTYH released good earnings as well today. This will move up as well. See my target on this too. I added more of this two days ago. Let's see again.

You know that I shorted KRY in my trading account. Shorted on 4/25 at $5.91/sh. Can you guess where it is today? Try $4.08/sh (already made 44.85% on this). Sold half today at $4.05 to cash in the gain. I think it will go down further. I have an order to cover at $3.29/sh (if this happens it is a 80% profit!). Gold is finally taking a rest as I explained in previous pages. As I've said before, this type of resting can give you a big profit!

Tomorrow, the market will be up. It is a bounce. It will rain too.
The market looks sick (caught a cold?). If this continues, I will get a little nervous.
I am too tired. Good night ...

How do we Learn?

Yesterday I went mountain climbing again (every Saturdays and every other Tuesdays). You are welcome to join me if you find the time (by the way, we all have time - its a matter of what's impotant to you). A fellow climber told me that we went up to 1,480 meters (that's close to 5,000 feet high). We did it in about 2 hours and change. Just take my word for it - you need to try this soon. Did you know that clean, oxygen rich morning air in the mountain kills cancer cells in your body? You do now. Cancer cells dislike fresh oxygen it seems.

Oh, how did the guy know we were up 5,000 feet high? He had this cool watch that tells how high we were (Altimeter). That got me thinking. You know what? I needed (wanted) one of those. I made a call. A call to THE watch guy (Greg). He immediately sent me an e-mail with instructions on how to get the watch I want and with a good discount. The watch is called Tissot T-Touch with Titanium case and Tactile Sapphire glass (whatever that means). Now, this is a cool watch. It has a touch screen that activates to tell you: Altimeter (how high), Barometer, Thermometer, Compass, Alarm and god knows what else.
I just bought one (black, to match my Mercedes S320v).

On to business: Some of you are nervous. If you are not, you should be. The market turned sour few days ago after Mr. Bernanke (Fed. Chair) raised rates 1/4 percent and told us that it might not be finished yet with the rate increases. Do you know how many interest rate increases we've had? Even I lost count after more than a dozen (that's 12). Everything went down.

I am now expecting a bounce. It went down too quick. For long term investors this is meaningless. The market will recover anyway. But for short term traders this is a big chance. You can make a decent profit if you are in the right stock at this time ( as per my previous notes, I am long SLAB for my trading account). Most of you are (and should be) long term investors. Therefore I do not go into details regarding my trading account. But I do tell you what I do. I try to elaborate more on long term holdings. By the way, on my last blog I told you that I have increased my holdings on BTYH, IDWD and AUTO. What I forgot to tell you was that I got the money from selling my OIH holding (bought at $142 and sold at $165 for 19% gain in 1.5 months).

Yo should know that I am still bullish on Oil. I just had to take some profit to feed my next hitters. I will be back into both OIH and MVK (Bought $54.2 Sold $57.7 for 6.5% gain in 1 week) soon. Speaking of the hitters, tomorrow RICK will announce its first quarter results (I am expecting record numbers) before the market open. The stock has moved up nicely over the last few weeks in anticipation. The truth is that too many people still do not know about this comapny. That's good news for us. This stock will move up more unless some disaster happens that we are not aware of (this management seems very clear about its affairs). I know many of you own this one - cross your fingers.

How do we learn?
Most people are taught to think that we learn by our mistakes.
Not true.
We learn not from our failures but from our success - and the failures of others.
It has to do with our ability as human beings to relate better to people in their failures than in their successes, and to learn more in the process. Perhaps that's why gossip is such a unifying force. (from: AdvantEdge magazine). When was the last time you gossiped about someone's success?
I would wish that you learn from my mistakes from these pages.
I will try hard to make a few.

Tomorrow, I will revisit all my holdings.
Tomorrow ends our third inning in this game. If you do not know what I am talking about please read my blog dated 4/25 titled "top of 3rd inning". Happy mother's day and let's go RICK!

Trend is your friend

Everything went down today.
Tomorrow does not look too great either.
Many investors are using interest rate increase (up another o.25%) as an excuse to sell. Good for us. There will be many stocks on sale soon. Yesterday I gave you a big picture. Basically there are only two (2) possible outcome:

1. Yesterday marked high for the year - stocks will fall and won't come back to the current level anytime soon.
2. This will prove to be a quick rest for stocks before continuing its upward trend.

As of now, I am leaning toward outcome #2. What will change my mind? If the market (SP500) goes below its 200day moving average. That means SP500 has to go down another 4% from here to below 1,250 (it is currently at 1,306). Yes, this is possible but I don't think so.

Let's remember one thing. We are not fortune tellers. We do not have a crystal ball that tells us the future. We do not know what will happen tomorrow. (Two days before I was diagnosed with Colon cancer last October, I was vacationing in Cheju Island in Korea, happy as a dog, feeling great - not knowing what was waiting for me). Believe me when I say we do not know what the future holds for us.

Then what are we? We are trend followers. There is a trend in the market. A very clear trend if you care to study them. We are currently in an uptrend ( I don't think anyone will argue with me on this) until this trend ends, I am bullish. Thus, I am bullish now.
When I turn bearish you will hear it from me on these pages.

Today, I just bought more of BTYH at $1.34 - this will move up no matter what the market does in the future. My target on this is over $2.50/share, so do what you have to do. Earnings will come out very soon and it will be a record I am sure.

I also added more of IDWD and AUTO. Although IDWD is a speculative play, I am willing to place a wager on this one. If the management is not lying to us, we will be rewarded very handsomely on this. If you are too shy to get into this, then just sit back and watch. I will tell you how the story ends in this blog. Read prior notes on these stocks if you are interested.

Get ready, the sale is going on now!

The Big Picture ...

O.K. It's time to paint you a big picture.
It is very easy to get lost in the forest when you keep looking at the trees next to you. Too many investors are lost in the forest of various news, emotions and personal issues. That's why they worry about the very stock they bought. Simply put, people quickly forget why they bought it in the first place. So please try to remember why you place your hard earned money at risk by buying stocks. It is not too much to ask that you keep a small notes for your self. Now let me help you get the story stright.

The U.S. Economy: Think of the U.S. government as if it is your household. You have income and expenses just like the government. You also have debt and some debt are good debts like a mortgage on your house or money borrowed to increase your business. Of course some debts are bad debts, like you buy drugs on your credit cards - you get the picture. Basically, the United States is performing very well. We are the richest in the world. Our business is booming, more people are working, we are more productive than ever, inflation is low, money is easy to borrow and we have a stable government. There are only two potential problem I see : the interest rate is climbing (would you risk your money and invest in companies if you can safely get 7% from the bank with no risk?) and U.S. dollar is falling (if the value of our money compared to other nations is falling, do you think others will keep lending us the money?). As you know, if you have low credit rating, banks stop lending you cash or they will charge you a heavy interest to compensate for the risk. But overall, we are in a great shape.

The stock market: All parts of the stock market is in an excellent shape. The large/medium/small stocks are all performing. In fact, the Dow30 will hit all time high soon (11,700 level). Even countries like China, India, Russia, Brazil are all doing well. Did you know that even Iraq's economy is booming? Korea, Turkey, Austria too are doing a superb job of growing the economy. So what do I see? We will hit new highs in our stock market soon. Which means your money better be in the stocks rather than other low interest bearing instruments. Of course this party won't last forever, but until then we need to ride it. I will tell you when the party is over. We will change our strategy then.

Gold and Oil: Long term, both gold and oil will go up. It is a simple math. We only have so much gold and oil (by the way, with our advanced technology, we still can not make gold or oil, intersting huh?) and there are more people who want it and now more people can afford it. Having said that, it went up too quickly too soon I think. So in the short term I think both gold and oil will have to take a rest. There are money to be made in this situation.

Regular readers know that I have a short (betting that price will fall) position in KRY (gold producer). I first shorted it on 4/11 at $5.3 (gold was $590) then I shorted more on 4/25 at $5.92 (gold went up to $621). I covered 1/3 position in KRY on 5/3 at $4.5 (gold was at $664) making myself a respectable 24% profit. I still have 2/3 position with me currently.

But, do you see what I see? If you look at the above trade carefully, you will notice that the gold price went from $590/oz on 4/11 to $664/oz on 5/3. However I was able to generate a profit selling short! As of today the gold is at over $700/oz. KRY is going for $4.89/sh. I think KRY is going to low $4's. That means over 33% gain for my trade in about a month. So, as you can see, some investors are not betting that gold will keep going up stright up without a rest. I have an automatic order to cover 1/3 of KRY at $4.29 and other 1/3 at $4.11/share. We shall see.

If you still do not own IDWD (read my past notes on IDWD) you just might want to before May 18th. That's the record date for which IDWD shareholders are going to receive a special dividend. On top of that the company will probably have an IPO of 995ad.com business that they own. Please try to visit 995ad.com and see for your self. It is supposely valued at over $100 million dollars. If everything goes right, this will be a homerun. However, remember that this stock is the most risky one I own. It is a small company with limited proven history and it is very volatile. If you can afford to risk some I think this fits the bill. High risk - high return.

Lastly, Silicon Lab (SLAB) looks interesting. I will trade this tomorrow. This is a short term quick trade. I think I can make a quick 10%-20% on this one. Look at it if you can.
Happy trading...

AutoInfo Inc.

Glad to be back in NYC.
Usually I receive my Chemo therapy on Mondays but due to my trip to Ohmaha, I had to move it to today. As most of you know, I get my Chemo Injection from Monday - Wednesday bi-weekly. Believe me, it is not the most comfortable situation to sleep with a needle stuck in your body for three days. But I am used to it by now. I am O.K.

This morning, as I was driving to the hospital, I felt a surge of happiness. During my trip to Ohmaha for the Berkshire Hathaway (BRK-A) annual shareholder meeting, I was in a same room with the World's richest man and a second richest man. (Bill Gates and Warren Buffett are friends - which makes sense - they play bridge together - and Bill buys Berkshire stock every week it seems - he owns over 5,000 shares so far - 5,000 x $90,000.00 = $450,000,000.00). Oh, let's just say about half a billion dollars worth. And he keeps on buying like a clock work ... hmmm ...

Driving to the hospital by myself (quite rare that a guy in my situation takes himself to the hospital) in my beautiful Mercedes S class (black on black I mind you) blasting my Bose speakers with Alpine CD system; thinking about the trip I just had and remembering how beautiful my son Ace is - I almost cried in my car by myself.
I consider myself a very lucky guy.

Not too many guys in my age group (39) can just fly away to the shareholders meeting (not too many guys even own shares, period.), able to spend almost all day with his 2 year old son (this is heaven guys), goes out to eat whatever he fancy, has a beautiful loving wife who pulls in six figures, owns a condo right in front of the seashores and I can go on and on. If only I can beat this Colon Cancer business (and this is a major business), I am in heaven - and I will beat it (statistically about 90% die in 5 years, just so you know what business I am talking about) - for my son Ace.

Back to real business: I will share my experience from Ohmaha trip from time to time. But more importantly let me introduce AutoInfo Inc. (AUTO.OB). From my last note I told you that I just bought this small outfit.

AutoInfo, Inc., through its wholly owned subsidiary, Sunteck Transport Co., Inc., provides transportation capacity and related transportation services to shippers in the United States and Canada. Basically they are the brokers in transportation business so they do not own any equipments (trucks or ships). They basically conduct business through computers, phones and faxes. Sounds boring right? However, this small outfit knows what they are doing. Revenue and profits are growing like mushrooms (you know I love mushrooms). Yet it is priced at about half times sales ($70 Million) and less than 10x 2006 earings! And ROE (return on equty) is over57% ! WOW !

You introduce me a company with 50%+ ROE while selling for less than half times annual sales - I am in. And I was in Friday. I want to buy more if it falls a tad from here. But this is not happenning yet. The price has not gone below $1.19 since my purchase. If this continues, I might just buy more at $1.2x. What do I expect in terms of returns? My target for AUTO.OB is about $2.40/share. This is about 1X 2006 sales and 15x 2006 earnings. Reasonable; unless there is a disaster we haven't thought of. Transport business may sound boring but it is growing and it is profitable. I suggest you pick up a unit or at least half your usual unit.

And please do not call me when this goes to $1.5x (up 40%) and ask me if it is still a good buy. Because I don't know. I am risking my own money just like you because it makes sense to me. My estimates are just that - an estimate. Remember no one makes money without putting it on the table. So far you have seen my judgement calls from previous notes. There are many winners in rather short period of time - there will be losers I am sure in the future. But overall, our winners will more than offset our losers - or at least that's the plan :-)

P.S: If any one of you who do not know how to check a stock symbol from Yahoo.Finance, please ask me. I am assuming that you all know how to do a basic research on a company when I give you the symbols. But it just hit me that I have been doing this for over 20 years. Some of you might be new to this - just ask. It is very simple. Good nite.

AutoInfo Inc. (AUTO.OB)

Hi everyone, I am in a library in Ohmaha, Nebreska.
This is going to be quick. (there is a time limit).
I just purchased AutoInfo Inc. ( AUTO.OB ) at $1.19 and have an order to buy more at $1.1/sh. I will write about this company when I come back to New York next Monday. In the mean time I am simply disclosing what I just bought this morning. This company has MOJO.

Weather here is beautiful.
I am still excited. Berkshire (BRK.A) will release earnings tomorrow. It will be excellent! And I will be right here next to Mr. Warren Buffett when he talks!

UTK just announced a record earnings. The stock went up to a high of $18 this morning. I told you about this a few days ago at $14.25/sh. Re-visit my UTK write up.

I am always very busy ....

Warren Buffett-Annual Meeting

I am very excited right now.
Tomorrow morning, I am on a plane to Ohmaha, Nebraska.
I have never been to the state of Nebraska. I bet most of you have not either. I mean what's in Ohmaha except some trees and mountains? But I will tell you who, is in Ohmaha - Mr. Warren Bueffett. If you do not know his name, you should just chock yourself. Mr. Bueffett is THE best living money manager we have today.

His company, Berkshire Hathaway (BRK.A) is worth about $140 billion dollars. Mr. Buffett is the second richest man in the world behind Mr. Bill Gates of Microsoft. By the way, Bill Gates is on the board of Berkshire Hathaway. Warren built his fortunes by buying businesses (stocks). His company now owns many names you already know. GEICO (insurance), Dairy Queen (fast food), Fruit of the Loom (clothing), Kirby (vaccume machines), NetJets (airplane time share), Shaw Industry (carpets), World Book and many more.

So why am I going to Nebraska? I am attending the annual shareholders meeting for Berkshire Hathaway. It is going to be big. I think they are expecting about 30,000 people to attend. Let me tell you this way, I could not find a hotel to stay anywhere near the city. It is all booked up. In fact, the hotel clerk told me that the whole city was booked 6 months ago. I now know what I have to do next year.

I will come back with lots of wisdom I am sure.
This means that I will not be able to update this blog for the next few days. I am leaving tomorrow (Thursday) and I will be back on Monday. Don't worry, you will be O.K.

The stock market is somewhat boring the last few days. Most companies are releasing excellent earnings report but the market refuse to move up on the news. Oil prices, Iran, damage caused by Microsoft all effects the market right now. When all is said and done we will move higher once more. I am just worried about this summer. Maybe I will just go away for a while.

Oh, remember the gold stock I shorted? I shorted KRY at $5.91 - today I covered portion of the holding at $4.5/sh. This was an excellent move since no one wanted to short the gold stock few days ago. Mr. Jim Cramer of Street.com loves KRY. Many people bought the stock based on his advise. I decided to go against the crowd. So far, I am winning. I think KRY will go even lower! Watch this for your amusement sake while I am gone.

Please don't do anything crazy while I am away. Be patient. Be cool.
I will be back soon enough. Peace...

Art of Selling

Making money by investing in stocks of public companies is very easy task. As long as you have some money and time, it is almost impossible not to make a profit over the long term. Simply look at any one of the indexes ( Dow/SP500/NASDAQ/Small Cap Index/ etc.) over a period of say 30 years? Are any one of them down? I think not. In fact, all are up big time. This is also the reason why I advocate an "Automatic index portfolio" (see my note dated 4/25) for those who do not wish to be an active investor. The portfolio I suggested in my note will outperform almost 80% of all mutual funds while taking less risk as well as less cost.
This is the only instance where you do less and make more.

My custom made portfolio a.k.a. "Portfolio for the 21st century" takes on a bit more risk than the above but will outperform the "Automatic Portfolio". Most of us in the thirties can afford to take on more risk so I think 21st century idea is a good one (for most of you).

Finally if you wish to be an active, self-directed, control-freak type who thinks he/she can out smart the system then keep reading.
By the way, I am this type.
This is the real reason for this blog. Keep a dated record for future evaluation.
You guys are receiving my various ideas for free (mostly friends & families). I hope you can profit from them. If not, don't blame me. I am not perfect either. But understand this, I probably have more to loose than most of you if my ideas are not profitable. If I keep missing the boat, then maybe I should simply follow my own advise - back to "Automatic Portfolio".

There is one more reason why I trade. I enjoy the thrill.
It keeps me up at night with excitement. I love the ride.
So, for me, it is more than just money. This is my life.
Allow me to share it with you.
As you know by now, I am brutally honest. I tell you my mistakes. I also dangle my victories in your face. I hope my blog is not only interesting but entertaining as well. I sometimes add some life advise. I have managed many many people in my last career and I got to learn a thing or two that might help you. Finally, if you do not appreciate this blog then, get lost. Don't come back. It is afterall a free country. I am a firm believer in non-censorship. I want people to express whatever they feel as long as I don't have to listen to it. Simply change the channel.

Investing in stocks require two main motions: Buying & Selling.
Now, which is more important? Answer: Definately selling. (I am not going to get into shorts because it might confuse some of you).
There are two ways to sell: Mechanically & Artfully (is this a real word?).
Mechanical Sell: Telling the computer to sell at pre-determined price. If the price falls, stop loss limit order (range 8%-20%) will kick in to conserve my capital. If price doubles, I advise you to take between 33%-50% off the table to lock in the gain.
Artfull Sell: Because some stocks behave in such a way that if you place a mechanical sell order you will simply get kicked out of the game too soon - thus you simply let your gut lead the way (usually this is not a smart idea unless you know what you are doing).
There is no right or wrong way to trade. You just have to find your way. You are going to need a lot of practice. If you follow closely and ask questions (this is why we have comment section below the notes) then you can learn from my practices.

Bottom line: Selling is the most important task in investing.
Let the winners run (give it some room) and cut the losers short.
This is easier said than done.

P.S: My last two buys are acting nicely. Both EBAY and MVK are up so far. Go! Go!

IDS Worldwide Inc.

Last Friday Microsoft (MSFT) dropped a bomb in the Wall Street by announcing that its profit will be less than previously expected estimates. They blamed Google (GOOG) saying that it will have to spend more money to effectively combat with Google. (Oh really?). Basically, Google is kicking everybody's ass. And I like it! More competition is always good for the whole.

Obviously this made the whole stock market nervous. Microsoft is so big that when it goes down (down over $3 per share) it takes the whole market with it! Let me put it to you this way: Bill Gates alone owns over a billion shares of MSFT. This means that last Friday, Bill kissed goodbye to about $3,000,000,000.00 (that's billion) U.S. dollars. Bad week for him I say. This teaches us one thing. Never put all your eggs in one basket. Go back and read my notes on units. We all need to build about 12 units for safety and performance (minimize unsystematic risk). Don't worry, the market will recover in a few days...

One of our holding (the most risky) IDS Worldwide (IDWD) just announced that it will delay record date for the special dividend to May 5th. For details go back and re-read my note dated 4/17. The company will spin off its Home Land Security (HLS) division and we will receive this special dividend. In addition, it will spin off its 995ad.com (please visit this site) division through an IPO (Initial Public Offering). Shareholders of IDS will receive 1 share of 995ad.com stock for every 3 shares of IDS stock we own. By the way, the initial price of the IPO will be $5 per share!

If you are smart and do the math, IDWD is trading at a significant discount. Why? Because investors are still wary about the management. Can they actually spin off HLS division? Can they actually complete the planned IPO? Are they even telling us the truth? etc. etc...

When large corporations like Enron, MCI and Tyco lie to us, how can we trust small company like IDS? The answer is we will never know. That's why we do not put all our eggs in one basket remember? And that's why this stock is selling at $1 instead of $2 or even $3 per share. Do I like the risk/reward ratio? Yes.

I bought some more today at $1.03/sh. Now, I have a good amount of chips riding on this. My average cost was $0.70 but due to today's buy it went up to $0.84/sh. I also have a limit order to buy more if this goes down to $0.85 in the next few days. I kind of wish that it does. Remember, that this is a risky bet. I know it and now you know it (I just told you).

Having said that, when was the last time you made decent money without the risk?

RICK (my largest holding) just hit a new all time high at $7.15 per share. Wow!
The earnings will come out on May 15th. I can almost guarantee you that it will have a record earnings. The stock will pop. During the last month, it passed $5 and $6 mark. Today it passed $7 mark. Would you believe me if I told you that during May this will pass $8 mark? I have wrote about RICK so many times that if you do not own this - shame on you. If you are simply a spectator then watch and root for us. This is really exciting. I even gave you the address of its NYC location so that you can visit and sample the fun (4-star steak house with gorgeous girls).

I am just too sexy for my shirt.

P.S: I will be climbing a mountain tomorrow morning. I will be back by 2pm.