Good post, spy. Very educational and I appreciate the 'tone' you took in that particular post rather than a typical 'short this pig now, sucker - you guys are all idiots' type of approach. It's nice to understand the reasoning, decision making and selection process - as we are all attempting to learn.
As you mention, you are using 70% TA and have a complete system set which guides your decision making. That may fit your needs as well as others. Some investors choose other strategies that may or may not meet their goals and provide a significant amount of appreciation as well based on career, tax implications and time/devotion to a portfolio. That may not fit your needs or others as well. No need to claim one is superior to the other, but the strategy should match the facility of the investor.
I'll have to join you on the EGRP long position. I've been long since 1998 and was adding a few shares this year in the $14/$15 range. How much can one lose with a hundred or a few hundred shares at those prices? I don't know, but the business model and breadth of the company's vision has always been compelling to me. I've tucked them away for several years to go alongside my long position in Charles Schwab that I bought in 1993.
I've not practiced the fine art of choosing appropriate shorting candidates at the correct times. Iomega, Trump, Ancor, Iridium, Globalstar, 4 Kids Entertainment - all have been candidates to consider at various times. I couldn't bring myself to do it on a confident basis.
Ariba is one I have chosen as a long candidate buying my original position in 1999 and adding shares during the blow off at the end of May in the price range of the $50's. Quite a few additional shares of equities I already held were snapped up during those price points and quickly showed doubles, triples, quadruples which certainly ironed out some of the 'experience' of the March to June 1 move. I wasn't predicting that kind of a rebound, but was thinking more in terms of several years appreciation. Was it too far too fast? Obviously, the market cap at the time of $13 Billion as opposed to $40 Billion (Ariba and Siebel's current market cap) seemed to be an attractive entry point for additional shares. What that works out to be over the next few years to a decade is something I'm willing to participate in from the long side.
It is difficult to get a handle on the potential market for the application/service/maintenance vendors in the software/exchange B2B markets. All the visions of how it will dwarf the magnitude of the ERP application software market provided in previous years have certainly attracted a lot of attention to certain portions of the B2B space. No need to dig for hypergrowth as it is happening in earnest for Ariba. I think if Ariba had a group of four serious challengers to their niche, I would be much more concerned about the end game result. However, at this point in time that environment is not the case. That doesn't mean Ariba will be the only winner, but the space does warrant study to be best positioned for the next decade. I've been very selective to invest for the long term only in Ariba, i2, Siebel and Oracle to date. Of those 4, Ariba is the smallest weighting as I prefer the long term to increase my weighting. I did spend a great deal of time studying the CommerceOne business model this summer as well as a few others. I haven't drawn full conclusions to add a couple more yet, but I am considering it.
As you so aptly illustrated, the Wall Street game continues to illustrate the 'wisdom' that creates motion:
you think the downgrade to INTC the other day came out of thin air? sometimes analysts do it on purpose, INTC goes down, the whole index goes down, and their bearish bets are profitable. a few weeks later, they just change their tune, and everything is rosy again. wash, rinse, repeat operation over and over and over. Soros calls it "the alchemy of finance".
I'm not sure Kumar will ever change his tune from the sell-side. That's his bag. His niche. His calling card. He knows when to time it - as you said. The wash, rinse, repeat scenario has been very effective over the years and plenty of money is being made because of it. I call it the 'wave'. Through all the noise of the crowd, the 'wave' will continue and the crowd loves to participate in the wave. Whether one uses TA, the 'alchemy of finance', profit warning period fear touting quarter after quarter or simple common sense - various strategies employed will bring various results. How about a Ned Riley/Ashok Kumar/David Tice/Bill Fleckenstein/Dick McCabe/John Murphy wind up doll on one shelf in your office/den and on the other shelf a Joe Battapaglia/Eric Gustafson/Jeff Applegate/Abby Cohen/John Bollinger wind up doll? Set them both to go off at the appropriate times while Mr. Buffett and Mr. Gilder chit chat and serve coffee (something like a Folger's blend bought in huge bulk to achieve the best value and brewed in some sort of an optical wireless espresso machine using CDMA technology) to you in your office/den.
I appreciate your discussion from the side you have chosen. You may not appreciate the discussion as much from the long side, but we are all trying to increase our capital.
Either way one chooses to do it, best of luck to all longs and shorts.
BB |
