Iqbal you raise a good question as to why I am long the stock.
First you need to be aware that I separate positions between investments and trades--they are held in separate accounts. I have owned INTC in my investment account for years and my basis is in the single digit. I have never sold the stock through ups and downs-- INTC like other "investment quality" stocks are held until the story changes. The LONG-TERM story of INTC has not changed--when it does I will look to sell it--to try and do otherwise has tax implications and I may not get on board in time for another ride up.
Short-term, I trade stocks both long and short--for anywhere from a few days to a few weeks. The calls that I bought on INTC were for a trade. I bought them before earnings were announced--it was a mistake and my brokerage statement will show the effect of this. I am still holding the calls and I will now sell short the 90 calls when INTC bounces a bit towards the 90 level--the equivalent of a short position. I will then probably close out my long calls at the same time.
I hope that this explains the apparent contradiction between my current position in INTC and what I have been saying about INTC's comments with earnings. Again. the calls were purchased before earnings and my investment position is a long-term hold. Despite what I have said about INTC--there is no doubt that it is a technological leader and is well-managed with a strong balance-sheet. As long as one believes in the future of technology and INTC's premiere position in that arena one must believe that the company has a bright future. Shorter term however, I think the stock is at best range-bound. Also, given that I trade on technicals -- I will not aggressively short INTC while it is in an up-trend and despite today's weakness, IMO the stock is still holding at important support levels. I view the 80 level as key support--there is a gap at the 82 level which I suspect will be filled.
As far as being emotional in trading decisions--I suppose, that I like anyone else falls victim to this on occasion. But for the most part, that is not something that those who know my trading style accuse me of being prone to doing. I do not fall in love with stocks and when I am wrong I cut my losses or otherwise hedge my position and move on.
In trading futures, half my trades are losers--and in trading stocks/options about 30% of my trades are losers. I don't like having a losing trade but I accept it as an occupational hazard of trading and it really does not bother me, for more than a brief moment. The important thing is to make money trading ---and I do so trading both futures as well as stocks/options. The thing that has saved me many times is that I am a very disciplined trader--but I constantly learn from others and my own mistakes.
As far as your statements regarding INTC's revenues and margins, I have said all that needs to be said---and I don't want to repeat myself. Suffice to say, that your interpretations of the company's near-term outlook in the areas of revenue growth and margins seems to differ from what the company said regarding the same.
One of the reasons why I sometimes have disagreements with others on trading is because I look at things at face value--when INTC says that revenue growth will be slight and margins will decline--I take that to mean exactly that. I don't look for convoluted reasons why it will not. Not unlike a couple of weeks ago when you and I disagreed about why the bonds and the S&P futures reversed--you saw it as part of a larger plot that involved rumor-mongering regarding the Nimitz and so on. I saw it as an over-reaction to favorable numbers leading to profit-taking, hitting stops and so on. But if it is any consolation, I have this same disagreement with others re MM manipulation and other shenanigans -- others see this happening all the time, including someone who I trade with closely--I don't. I am not naive enough to believe that it never happens but certainly not anywhere near what some like to believe.
Yesterday, we had this bizarre belief, posted on the ideas thread (I think), that the weakness on INTC in the morning was an attempt to shake out the weak hands and then the MMs' and the "smart money" would make a killing buying the stock cheap and then see it sky-rocket. This sort of paranoia is too complex for me--and quite frankly those who pursue that line of reasoning generally get hurt. I preer to take the view that you outlined elsewhere that today we have seen heavy volume and yet INTC has held relatively well--so there are others who see value as well. A paranoid view would be that this is an attempt to suck in more buyers and then kill the stock--just not my approach. Price action tells a lot about a stock--I do believe that.
Changing the subject--I am looking to add positions to my investment account. I am looking for the type of companies that have a technological edge, good management and reasonable balance-sheets-- and which are not ridiculously over-valued. I am looking for the growth companies of tomorrow that would be buy and hold situations. I have received a few names already which I am researching--do you have any thoughts on other companies that would qualify based on this criteria??
Take care |
