Ok, GOOG at 460, it is time for reflection. First I must admit: ability of this company to create perception in the market that they have beat every possible estimation and move the share price higher is unmatchable, or here I am wrong – guys from YouTube maybe even better, and it is great for them if they will sell shares of GOOG in due time. But admission to be made: GOOG have broken to the upside on earnings from triangle on weekly bases. I was wrong here and predicted that it will be breaking down. So we must study the facts, check the strategy and move on. When I would be completely wrong: if I have put all my short position on this earnings without any limit of risk, so few rules to stay in this game until the end of education:
Allow at least twice as much time for your thesis to be developed in the market as you can anticipate in the beginning.
It is still very difficult: you have some help: Roll Over your position.
If you Trade then close position as soon as you have profit that you have anticipated in the beginning and take you capital out, let you profit run If thesis still in place.
How to stay in the game: Trade only with money which you could afford to lose: limit your risk by buying PUTs on stocks which you think are overvalued.
So what is my case: I am Investor in big long term trend: now it is commodities, PGM, Silver, Uranium, alternative energy. All my major positions are there: I am using TA to reduce my positions on the tops and to increase them in the bottoms. Here my horizon is years. I am buying value in undeveloped resources – mining companies: it is like option trade on the underlying commodity but without time value to lose. Not Risky? No way, but I had very expensive education and now is doing good job. Am I as good as I am writing now – this is the whole point of this Blog: I can be way better, particularly in Trade. So this is part of my education: I have allocated some capital on ongoing bases and trying to bring my skills to perfection, here where the Google comes: I really like technology and using it everywhere and Google as well and Blogger (maybe because I am PC illiterate). But when we talk about Google Company valuation it is another story.
Probably, according to research and massive comments I am the only reader of this Blog – better for me: Warren Buffet will not compete with my positions. And I do not like that Larry and Sergey after reading it will change their strategy and will buy all Junior mining companies with their shares: they are already wealthy, actually without knowing me are doing the same (only selling shares of GOOGLE, it is very strange that they are not buying it like crazy with guaranteed upside to 600) and my turn to make a lot of money on Irrational Exeburation in WEB BUUBLE 2.0 is still to come. Sorry I can not disclose my Junior mining trades apart from already posted information: their market caps are so small that it takes me months to establish proper positions. But leave me a comment and for the good devoted to thinking guys and girls there is nothing to be jealous about.
So talking about business I will post my take on earnings and why I am not buying calls but rather puts March 07 and further down the road. Why to bother? Another Rule:
Never marry your position, do not bring your trade or even investment to Personal level: if the thesis changed close the Trade and move on.
From personal experience: If you are healthy and have capital, another idea and opportunity will find you, in different case nobody will call.
What I did well this year in trading: Puts on GM, YHOO, INTC, QQQQ, KBH, LEN, TOL, DIA, AAPL all closed with profit. Now new are established PUT QQQQ, SMH, DIA, SNDK, NVDA, RIMM. Warrants on NNO, GG closed with profit. Now calls are established on SSRI, SLW, GG, RGLD. Google PUT closed with profit in May – June and Rolled Over into Jan 07 (bought new positions Long Put with longer term of Expiration). Am I perfect and satisfied, no - I could do better particularly with GOOG, RIMM and expect that more time will be needed until Irrational Exuberance will be apparent to the market and take into account that some Saudi friends can help someone with elections bringing oil down and effectively markets up. Thanks them for it: I had good Juniors Hunting recently. Few more streaming thoughts before Bear GOOGLE Hard Data thesis posted: today I have closed very nice Trade on SNDK: it was down 21% and my PUTs were flying: very perfect education case. I enter small position in the beginning of the year too early and too out of the money (after today drop even there I can break even), but let myself test the water, on recent spike I have established proper position and today thesis was developed by the market, valuation PERCEPTION was changed and stock was beaten HARD so I ended with nice profit. Why SNDK fall? They beat the Street 0.51 vs 0.49 and on revenue 2% above Street est. but they guided lower! And everybody sell them, GOOG keep silence about the outlook and the same guys who punish SNDK with $46 PT are putting on GOOG PT of $595. Look at their fundamentals in the same report: SNDK forward P/E 2006 is 30.1 est. and 2007 is 28.7 GOOG frwd P/E 2006 is 41.8 and 2007 is 30.4. One stock is down 21% and another is up 7.5%. Here comes another very important issue: PERCEPTION and it could cost you all your money you can be THOUSAND times right, but if perception of the MR Market has not agreed with you, you can lose everything and in options TIME which is against you when you are long options is most crucial factor: Google can go into oblivion in 5 years but if you had Oct 2006 400 puts you Capital will not make it. That is why (according to open sources) Warren Buffet is never playing options, he is …”just not clever enough” as he puts it. One thing is to find out right direction another is to figure out the timeframe when that direction will be realised. Am I trying to be clever than him? Nope, just “sharping the saw”. At the moment bad story about SNDK is known, with GOOGLE with WORSE fundamentals perception is that everything is growing fast and upside is unlimited. What is very important with SNDK: there is no pricing power, competition in COMMODITY business (search is UNIQUE and RESTRICTED to Google?), lower sales (I bet due to Consumer hurt by Housing Bubble bursting and cut back of all users of SNDK on Inventory levels due to Not Rosy outlook) will they cut on chips but spend on ADs even more – hardly and we can see it already in Google financials). Before Hard Data just take a look on Rev growth q on q this q3 it was 9.3% not 10% in conference call (are they pushing figures only here?) but in q2 on q1 Rev Growth was … the same 9.3% miracle, or can I smell some cooking oil? Then we can find out that international Rev contributed 44%, where from do you think click fraud originated: China, Malaysia, Russia and other “pure international destinations”. Why do they use Non GAAP figures together with GAAP ones just for confusion, they love Buffet but he never do it. Why is there is always mysterious:
“Stock-Based Compensation – In the third quarter, the total charge related to stock-based compensation was $100 million as compared to $109 million in the second quarter.
For the full year, we expect stock-based compensation charges for grants to employees prior to October 1, 2006 to be $377 million. This does not include expenses to be recognized over the remainder of the year related to employee stock awards that are granted after October 1, 2006 or non-employee stock awards that have been or may be granted. We currently anticipate that dilution related to all equity grants to employees will be approximately 1% to 1.5% per year.”
Why do not expense all related to the q costs of Labour in all categories of compensation? The only reason that you can play with it but at the year end you will have to charge it. But more to come in hard data posting.
Few final disclosures: because if you Think you will always ask Who? What? And Why? I am not so old; my background is in Finance with applications in telecom, transportation, banking, and internet. Mining and PGM lately, strategic controlling in fast developing Holding of companies in different industries in emerging markets was my last managerial application. Now I have a treasure to Think, Act and Enjoy accordingly. I do not believe in Efficient Market - otherwise I can not afford my lifestyle. Why? I am not sure, definitely for myself and my son and maybe few others…If I will stop posting it means that I have figured out more efficient way of keeping myself to the account. English is not my native, sorry. Sufiy…it is very special and I am not Muslim (nothing wrong with it anyway). Always remember there are a lot of PhDs in the world, but not everyone of them is a millionaire. You need something else, I would rather call it Art. (I am not PhD)
http://investor.google.com/releases/2006Q3.html
Allow at least twice as much time for your thesis to be developed in the market as you can anticipate in the beginning.
It is still very difficult: you have some help: Roll Over your position.
If you Trade then close position as soon as you have profit that you have anticipated in the beginning and take you capital out, let you profit run If thesis still in place.
How to stay in the game: Trade only with money which you could afford to lose: limit your risk by buying PUTs on stocks which you think are overvalued.
So what is my case: I am Investor in big long term trend: now it is commodities, PGM, Silver, Uranium, alternative energy. All my major positions are there: I am using TA to reduce my positions on the tops and to increase them in the bottoms. Here my horizon is years. I am buying value in undeveloped resources – mining companies: it is like option trade on the underlying commodity but without time value to lose. Not Risky? No way, but I had very expensive education and now is doing good job. Am I as good as I am writing now – this is the whole point of this Blog: I can be way better, particularly in Trade. So this is part of my education: I have allocated some capital on ongoing bases and trying to bring my skills to perfection, here where the Google comes: I really like technology and using it everywhere and Google as well and Blogger (maybe because I am PC illiterate). But when we talk about Google Company valuation it is another story.
Probably, according to research and massive comments I am the only reader of this Blog – better for me: Warren Buffet will not compete with my positions. And I do not like that Larry and Sergey after reading it will change their strategy and will buy all Junior mining companies with their shares: they are already wealthy, actually without knowing me are doing the same (only selling shares of GOOGLE, it is very strange that they are not buying it like crazy with guaranteed upside to 600) and my turn to make a lot of money on Irrational Exeburation in WEB BUUBLE 2.0 is still to come. Sorry I can not disclose my Junior mining trades apart from already posted information: their market caps are so small that it takes me months to establish proper positions. But leave me a comment and for the good devoted to thinking guys and girls there is nothing to be jealous about.
So talking about business I will post my take on earnings and why I am not buying calls but rather puts March 07 and further down the road. Why to bother? Another Rule:
Never marry your position, do not bring your trade or even investment to Personal level: if the thesis changed close the Trade and move on.
From personal experience: If you are healthy and have capital, another idea and opportunity will find you, in different case nobody will call.
What I did well this year in trading: Puts on GM, YHOO, INTC, QQQQ, KBH, LEN, TOL, DIA, AAPL all closed with profit. Now new are established PUT QQQQ, SMH, DIA, SNDK, NVDA, RIMM. Warrants on NNO, GG closed with profit. Now calls are established on SSRI, SLW, GG, RGLD. Google PUT closed with profit in May – June and Rolled Over into Jan 07 (bought new positions Long Put with longer term of Expiration). Am I perfect and satisfied, no - I could do better particularly with GOOG, RIMM and expect that more time will be needed until Irrational Exuberance will be apparent to the market and take into account that some Saudi friends can help someone with elections bringing oil down and effectively markets up. Thanks them for it: I had good Juniors Hunting recently. Few more streaming thoughts before Bear GOOGLE Hard Data thesis posted: today I have closed very nice Trade on SNDK: it was down 21% and my PUTs were flying: very perfect education case. I enter small position in the beginning of the year too early and too out of the money (after today drop even there I can break even), but let myself test the water, on recent spike I have established proper position and today thesis was developed by the market, valuation PERCEPTION was changed and stock was beaten HARD so I ended with nice profit. Why SNDK fall? They beat the Street 0.51 vs 0.49 and on revenue 2% above Street est. but they guided lower! And everybody sell them, GOOG keep silence about the outlook and the same guys who punish SNDK with $46 PT are putting on GOOG PT of $595. Look at their fundamentals in the same report: SNDK forward P/E 2006 is 30.1 est. and 2007 is 28.7 GOOG frwd P/E 2006 is 41.8 and 2007 is 30.4. One stock is down 21% and another is up 7.5%. Here comes another very important issue: PERCEPTION and it could cost you all your money you can be THOUSAND times right, but if perception of the MR Market has not agreed with you, you can lose everything and in options TIME which is against you when you are long options is most crucial factor: Google can go into oblivion in 5 years but if you had Oct 2006 400 puts you Capital will not make it. That is why (according to open sources) Warren Buffet is never playing options, he is …”just not clever enough” as he puts it. One thing is to find out right direction another is to figure out the timeframe when that direction will be realised. Am I trying to be clever than him? Nope, just “sharping the saw”. At the moment bad story about SNDK is known, with GOOGLE with WORSE fundamentals perception is that everything is growing fast and upside is unlimited. What is very important with SNDK: there is no pricing power, competition in COMMODITY business (search is UNIQUE and RESTRICTED to Google?), lower sales (I bet due to Consumer hurt by Housing Bubble bursting and cut back of all users of SNDK on Inventory levels due to Not Rosy outlook) will they cut on chips but spend on ADs even more – hardly and we can see it already in Google financials). Before Hard Data just take a look on Rev growth q on q this q3 it was 9.3% not 10% in conference call (are they pushing figures only here?) but in q2 on q1 Rev Growth was … the same 9.3% miracle, or can I smell some cooking oil? Then we can find out that international Rev contributed 44%, where from do you think click fraud originated: China, Malaysia, Russia and other “pure international destinations”. Why do they use Non GAAP figures together with GAAP ones just for confusion, they love Buffet but he never do it. Why is there is always mysterious:
“Stock-Based Compensation – In the third quarter, the total charge related to stock-based compensation was $100 million as compared to $109 million in the second quarter.
For the full year, we expect stock-based compensation charges for grants to employees prior to October 1, 2006 to be $377 million. This does not include expenses to be recognized over the remainder of the year related to employee stock awards that are granted after October 1, 2006 or non-employee stock awards that have been or may be granted. We currently anticipate that dilution related to all equity grants to employees will be approximately 1% to 1.5% per year.”
Why do not expense all related to the q costs of Labour in all categories of compensation? The only reason that you can play with it but at the year end you will have to charge it. But more to come in hard data posting.
Few final disclosures: because if you Think you will always ask Who? What? And Why? I am not so old; my background is in Finance with applications in telecom, transportation, banking, and internet. Mining and PGM lately, strategic controlling in fast developing Holding of companies in different industries in emerging markets was my last managerial application. Now I have a treasure to Think, Act and Enjoy accordingly. I do not believe in Efficient Market - otherwise I can not afford my lifestyle. Why? I am not sure, definitely for myself and my son and maybe few others…If I will stop posting it means that I have figured out more efficient way of keeping myself to the account. English is not my native, sorry. Sufiy…it is very special and I am not Muslim (nothing wrong with it anyway). Always remember there are a lot of PhDs in the world, but not everyone of them is a millionaire. You need something else, I would rather call it Art. (I am not PhD)
http://investor.google.com/releases/2006Q3.html
1 comment:
Ram Charam's 2007 book "Know-How" agrees that emerging markets are a smart place to invest.
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