Ok, I haven’t a clue about this blogging stuff but I coincidently happened to be sick of other people’s stock advice at the same time that my friend Jackie suggested I try this site so I am going to start my own stock newsletter here – away from the usual bs on the money sites. I watch Mad Money and Cramer says: Bulls make money, Bears make money (one would think not at the same time) and Hogs get slaughtered. The last bit of advice is very true, if you make 10% on a trade and don’t think that’s plenty then stocks are not for you (neither is gambling in general). I have a lot of pent up things to say but I’ll get to them eventually but for now I’ll go Strunk & White and stick to the topic (as much as I am able). There are other animals that get slaugtered in the market:
- Cows – who stand around and do nothing
- Chickens – who panic
- Sheep – who follow blindly people like Cramer (much as I love him)
Today’s lesson is: Don’t listen to analysts!
On Monday, Bear Stearns Analyst Dr. Mark Schoenebaum (sounds qualified to analyze biotech hmm?) said that Genzyme was scewed because Medicare will start reimbursing all joint injections made from a substance called hyaluronan at the same rate in 2006.
Oooh – scary! Sounds like he’s right on top of this doesn’t it. The stock, which had been doing great dropped from $75 to $70.66 that day – ouch! If you didn’t know this ahead of time his advice was no help as the stock opened at $72.
Well this doesn’t happen often but it only took 25 hours for this idiot to be proven totally wrong. The next day at 10:30 this article came out http://biz.yahoo.com/prnews/051108/netu037.html?.v=22 completely negating the good Dr.’s fears. Literally 20 minutes after that another analyst at William Blair initiated coverage of the company with a screaming buy!
Getting news like this during the trading day is like a xmas present! The stock was at $71 and promptly shot up to $73.48. I was lucky because I bought a lot of it at $71 (options but that’s a whole nother blog).
Will Genzyme go up further? Yes, it will break out of it’s high of $76 by January unless the whole market collapses.
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I love to trade on news – Just now (6:45 am) Marvel (the comic and movie guys) announced a disaster. Well somebody knew this was coming because they dropped right to their trendline yesterday down 3.27%. Not only did they miss earning, they also lowered guidance so bu-bye to this stock today.
Can you make money on this? I doubt it, people with better access than you and I will kill this puppy pre market but their low for the year is 12 and I would look for that to be challenged. They are actually saying they will earn no more than 1/2 in ’06 of what they have lowered their ’05 estimates to!!!
Since their projected growth rate was 14% and their pe is 17 they were worth, conservatively $17 yesterday. If they make a dramatic recovery and grow at 50% a year after dropping 50% next year they will achieve a 3 year growth (this will not happen) of 3% per year which makes the true value of this stock about $6.
Maybe there was a hint when President Tim Rothwell and CFO Ken West sold 250,000 shares in May when the stock was at 20….
Speaking of analysts, on October 18th Morgan Joseph initiated coverage of this company with a BUY!!! Now, to give him credit, the stock did go from $16.75 to $18.50 so anyone who followed my 10% rule would have been laughing all the way to the bank but analysts are supposed to be giving long-term advice, not daytrading.
So I am initiating my coverage of Marvel with a sell @ $18 and a get the hell out of a short at 16. If you want to be really aggressive I would take 1/2 out at 16, put a stop on the rest at 16.5 and then do the same at each dollar lower. Prior to the 18th they (I use they for the pantheon of people who control the market, either on purpose or by accidental participation) may keep the price at around 15 for option expiration but after that, the floor may be the limit for this one. Another hint of Marvel’s impending doom is the 2,500,000 Jan ’06 put options at $15 and $12.5 currently trading at .70 and .15.
Just yesterday The Motley Fool mentioned Marvel in an article entitled (really) "Find the 20-Baggers of the Next 20 Years." Now if this thing goes back to $6 I may get on board – they have a great library of stuff but the company is trading at 4x book value while time warner is at 1.5x.
Anyway, this has eaten into my homework time a little so I need to get busy. My goal is to come up with a good idea for people every day so I can build some kind of puplic performance profile before I get into selling an on-line newsletter so enjoy this stuff while it’s free.
Disclaimer – I am no professional and will probably be wrong at least 50% of the time so don’t be a sheep!!!
Later,
– Phil
