Woo Hoo! What a cool day!
Too bad I missed most of it at meetings but it’s very nice to leave in the morning and come home to a 20% virtual portfolio gain! Let’s see how I did for you though: We know we had a mediocre winner on WFMI, on the whole I am glad I bailed on that one at 7%. My GM put opened at $4.50 which was way over the $3.60 I wanted so no trade there. Even if you paid the $4.50 it still raced to $5.10 which is more than 10% and it closed at $4.50 which is still not a bad price and certainly no loss.
Never chase a buy. I do and I kick myself every time so do as I say not as I lose. If you have a theory and a price and an exit and a stop you are a better trader than 99% of all brokers out there.
There was a ton of put action on GM at really low numbers today so I am sticking with my thesis that it’s got a way to go down but I’m very cranky when I miss a 6% drop so I’m off this stock but I may consider the same trade if we get a dead cat bounce tomorrow but I think this stock is toast. OK, I’ve changed my mind (I don’t edit so you can see how I think which may be scary for you but the advice is free so welcome to my nightmare).
Anyway, I was just reading an article and oops, GM "might" be liable for $12Bn in benefits to Delphi employees and that can get way worse! This stock is death! They have $320Bn in debt already (as of June) and another $110Bn in A/P and theyy balance this out with $210Bn in "investments" (perhaps they should invest in paying off some debt) and $76Bn in "Property Plant and Equipment" (how much would you really pay for a plant that makes cars that no one buys?).
So I am going to put an official 25% discount on GM’s assets and declare this company $100Bn in the red and I think I am being way too kind. They have a market cap of $15Bn (and for that bargain price you can have all this!) and they will lose $10Bn this year. They have 324,000 employees so everyone thinks someone will save these guys but it just can’t be done!!! I know that many Washington insiders read this post so I will give my advice now:
- Train 150,000 GM workers to do construction work in New Orleans.
- Give Toyota a MASSIVE incentive to buy GM (if you can sucker them into it).
- Present GM as a gift to the Chineese next time you are there – run out of the room before they can open the box and give you some excuse not to accept it.
My advice to readers is wait a day or so and make sure crazy people don’t buy this stock then buy silly out of the money puts like January ’07 15s for $3 (do not pay panic prices, wait for it to calm down a bit) or even Dec ’06 20s if they can still be had for under $1.
Check out the 1970’s on this stock, it went from 50 to 15 during the recession and back then they just missed a few quarters. These guys have to make $5bn a year for 20 years just to dig themselves out of their current hole. Oops, they lost $10Bn this year so make that 22 years.
Now where was I? Oh yeah, GM – total disaster! So mortifying I can hardly think of anything else.
I will point out that I called GM’s action today almost to the penny so kudos to me.
I also said that if the market can overcome GM, Cisco and the trade deficit we are officially in an "I don’t care what the facts are, I’m buying stocks" kind of rally so let’s strap in and enjoy this ride.
LNUX – I’m still in it but you shouldn’t be. -.03 and I’m done with them. Perhaps it was a healthy pullback but it bounced off its 200 ma like it saw the ghost of Linus Torvold.
PLAY – Damn I should have made that my pick of the day – I would have looked like such a genius! That $1.65 option I recommended will open tomorrow at about $5 and I’m not selling it!
It was way oversold anyway and now they retracted their secondary offering, upped their EPS by about 10% and got raved about on Cramer – a triple play!!! I wouldn’t chase this thing at this point, I could kick myself for "only" buying 300 contracts (I thought I had 500) but I will certainly take this little bonus.
Kudos to analyst Wedbush Morgan (where do they get these names?) and his amazingly wrong Haloween downgrade. Jeffries too – a big Baaah to them and all the sheep that follow them.
Cisco – I hope it was understood that we are still waiting for the lemming dive and not in just because it went below $17.50.
New rule – if I do not specify a trade to make then I am just rambling!!!
Taser – I wish I had sold those calls at 10am when they were $1, I could have made 50% in one day. Stock ended up flat and I am still happy with my leap but not ready to sell the $7.50 calls as they might hurt me.
Whole Foods still has major issues but also, apparently, a lot of fanatics who are willing to pay 60x earnings for a grocery store. I guess if you are willing to buy organic peanut butter for $12 then buying a stock for all the money it can make in 60 years seems like just another sensible lifestyle choice.
BTW – they had an "unexpected 31% increase in G&A." I ran a company – I would be "expected" to be firing quite a few people for a debaucle like that.
Also, they are splitting the stock, rushing options through for tax reasons, blaming the hurricane for a bad quarter (see earlier post)….
There is a scene in blazing saddles where the mayor and his staff say "We have to protect our phony baloney jobs!" So a big Harrumph to Whole Foods for trying to protect their phony baloney stock price but I really feel that todays bounce was purely a technical off the 50 ma and we will be visiting the 200 ma at $117 real soon!
Unfortunately, it takes a long time for the granola crowd who shop at Whole Paycheck to realize that the stock is a bigger sinkhole than the organic diaper pit in their backyards so I say wait until we cross back under $135 to short this Titanic in the making.
