Archive for June, 2008

Sell LJ International

By: ispeculatornew | Date posted: 06.30.2008 (9:40 pm)

JADE – LJ International (NASDAQ) – (Closing Price – $2.79) 

I recommended LJ International as a speculative pick based on the company finally reporting earnings. However, the company didn’t get a pre-earnings run like I thought and the company reported disappointing results. Therefore, I am going to recommend to sell LJ International.

 Disclaimer: I sold my position in LJ International.

The Market is Brutal

By: ispeculatornew | Date posted: 06.26.2008 (9:07 pm)

The current market is brutal and I think some of the selling is getting overdone. Almost all stocks, except speculative oil stocks, have been sold off indiscriminately. I think the indiscriminant selling provides opportunity for those who are willing to think like contrarians and exercise patience.

I think the sell-off in small caps and tech stocks has been undeserved. Some of my stock recommendations have taken a hit but I think it would by unwise to follow the herd and sell anything regardless of valuation, especially stocks that have improving fundamentals.

I think the market will probably continue to go down some more but I think it would be wise to start to accumulate small caps and tech stocks. I would avoid/short financials and airlines.

On another note oil continues to rise and nothing is being done to counter the excessive speculation taking place. The Fed, which is causing more problems than it is solving, needs to learn moderation and start being proactive instead of being reactive. In the aftermath of the housing bubble, which the Fed helped create, the Fed decided to drastically cut rates without regard to rising commodity prices. This has helped create the current commodity bubble. Now the Fed is just sitting there without a clue. (more…)

Stock Suggestions

By: ispeculatornew | Date posted: 06.25.2008 (6:53 pm)

If you know of any stocks that are undervalued or overvalued feel free to leave a comment mentioning the company and why you think the share price will go up or down.

I would be particularly interested in any company that is quickly growing earnings and has a low valuation (based on PE ratio or book value). I would also be interested in companies that are not profitable yet, but are quickly cutting their losses and headed for profitability in a few quarters.

Speculative picks will also be welcome.

Tips for Shorting Stocks (Continued)

By: ispeculatornew | Date posted: 06.21.2008 (9:43 am)

In my last post I wrote that the most important thing to consider before you decide to short stocks is evaluate how the overall market is behaving. Once you determine the market is conducive to shorting stocks how do you determine what stocks to short?

In general you should look for stocks that are trading at high valuations but that don’t have the financial numbers to justify the lofty valuations. A good example of this is the run Jones Soda (JSDA) had in 2006 and 2007. The stock price of Jones Soda went from around ten dollars to over thirty dollars in about five months but the financial numbers of Jones Soda did not show any significant improvement. It was inevitable that that stock price was going to crash. To make matters worse for Jones Soda the company’s financial numbers started to deteriorate and the company is now trading at under three dollars.

My example of Jones Soda provides another thing to look for: rapidly deteriorating financials. Stocks that have rapidly declining earnings and revenues are good places to look for short opportunities regardless of valuation. At the beginning of 2007 most banks, bond insurers, home builders, etc. were trading at reasonable valuations. However, if you foresaw the havoc that the housing bubble collapse was going to cause you could have made a ton of money shorting these companies. (more…)

Tips for Shorting Stocks

By: ispeculatornew | Date posted: 06.18.2008 (9:20 pm)

A couple of months ago I wrote a couple of posts about what shorting is and how to place a short order. Now I will give you some general tips on how to make profitable short investments/trades.

In my opinion the most important thing to consider before you decide to short stocks is to evaluate how the overall market is behaving. In a very bullish market it would probably be wise to avoid shorting all together. The reason for this is that stocks prices can continue to go up in spite of very high valuations. For example you might have been justified shorting most stocks half way through the bull market of the 1990s. However, you would have lost a lot of money if you did because investors continued to bid up stocks regardless of valuations. In an irrational bull market like the late 90s the safest thing to do is avoid shorting until the market has clearly turned.

On the same token the best time to short stocks is when the market is clearly bearish. In fact shorting stocks may be the only way to make money in a severe bear market (short term at least). Also, speculative stocks that do manage to jump up in price in a bear market tend to correct quicker.

A market that is neither bearish nor bullish, such as the current one, also provides ample opportunities to short stocks.

I will describe what stocks provide good short opportunities in my next post.

LJ International: Speculative Buy Recommendation

By: ispeculatornew | Date posted: 06.15.2008 (9:54 pm)

JADE – LJ International (NASDAQ) – (Closing Price of Friday: 6/15/08 – $3.50)

LJ International is a company I have followed for a few years and I have written about the company a couple of times on my website. I recommended the company as a short recommendation for a 17% gain last year and I also recommended staying away from the company a few months after I gave my cover recommendation.

In retrospect, my last post to avoid the company because of credibility issues was actually a bad call because I knew speculators were going to bid up the stock price in anticipation of the company releasing earnings. After I wrote my last post on LJ International the stock price more than doubled in just a few weeks. However, the company never reported earnings and the stock price has been meandering ever since. (more…)

Speculation in Oil

By: ispeculatornew | Date posted: 06.09.2008 (9:44 pm)

I read a lot of articles about the price of oil and I have read quite a few lately that quoted some moron claiming the steep rise in the price of oil has had nothing to do with speculation. These morons claim that oil is trading solely on supply and demand fundamentals. That is absolutely absurd.

Last Friday oil had its biggest one day gain ever and oil gained more than sixteen dollars (over thirteen percent) in just two days. Was there some major supply disruption? Nope. The catalysts for this rise were a call by a Morgan Stanley analyst for $150 oil by July 4 and a threat made by Israel against Iran. If a pump by a brokerage firm and a threat of a supply disruption don’t scream speculation I don’t know what does.

I find it very disconcerting that Goldman Sachs and Morgan Stanley continue to pump oil futures. I read in an article the other day that both of these companies own large amounts of oil futures through their hedge funds. This makes Goldman Sachs and Morgan Stanley no better than a boiler room operation pumping penny stocks. (more…)

Financials are Still Good Shorts

By: ispeculatornew | Date posted: 06.06.2008 (6:51 pm)

A few months ago on March 19, I wrote that financial companies still presented good shorting opportunities. However, about that same time I wrote that article there was an almost universal pump among the financial media that financial companies had reached a bottom. If you had shorted financials right after my recommendation you might have felt some short term pain as financials briefly rallied. However, most financial companies have sold off considerably since my short recommendation and I think they will continue to go down.

The same bearish catalysts that were present a few months ago are not going away any time soon and some are even getting stronger. The housing market is still far from a bottom, the economy is still on shaky ground, unemployment is rising, and commodities continue to set new record prices. Also, the Fed can no longer cut interest rates due the concern over inflation.

This means that consumers are going to have a hard time paying their bills and foreclosures and loan defaults are going to continue to increase.

I think the pain is going to continue for financials and I don’t see a bottom in the near future. I also think it is only a matter of time before some banks go under.

Here is the price of the stocks I mentioned in my last article and their current price:

                           March 19                  Today’s Closing Price            Return

LEH                       $42.24                          $32.29                              23.56%
NCC                      $9.48                            $4.95                                47.78%
UBS                      $26.65                          $23.91                              10.28%
WM                       $9.83                            $7.53                                23.40%

Disclaimer: I do not have a position in any of the companies mentioned.

Free Stock Picks – June Report

By: ispeculatornew | Date posted: 06.02.2008 (8:02 pm)

AIXG – Aixtron (NASDAQ)
Aixtron reported Q1 results on May 8 and reported flat results. However, the company reaffirmed guidance which means the company should report considerable improvement in future quarters. I would continue to hold your shares.

CAAS – China Automotive Systems (NASDAQ)
The stock price of China Automotive Systems had a big jump after the company released impressive Q1 results but has sold off since. I think the stock price of CAAS has the potential to go much higher so I would be patient and continue to hold.

DTLK – Datalink (NASDAQ)
There has not been any major news released about Datalink. A positive article was written about the company though. I still rate the company a hold. (more…)