Most people, most commentators and most books concentrate on finding stocks that will go up. But, when stocks fall out of favor, they usually fall faster than good stocks rise. Hence, if you can get your head around the idea of being The King of the Declining Stocks, you stand to make a boatload of money from someone else’s misery.
This big bust recently is RIMM — Research in Motion. Everyone in the press has jumped on this hapless, mismanaged company, which has been good for my short. By the way, This always happens. The press jumps in with stories like “How low can RIMM go?” Remember the press (especially CNBC) has a lot of time to fill with breathless stories. Disasters are good for circulation. This morning Deutsche Bank issued a “sell” on RIMM, with a target price of $10. Wow!! That’s way below where it closed last night — $15.13.
There are more Declining Stocks. They fit into these categories of haplessness:
+ Accounting irregularities. The classic cockroach stock beginnings.
+ Stupid and continuing bad management decisions (Netflix)
+ IPOs that come out on nothing, no (or limited) earnings, no prospects, skyrocket and then fall to earth. Sadly, it’s hard to short IPOs.
+ Dramatic new emerging strong competition (e.g. the iPhone and Android against RIMM)
+ Huge continuing industry price drops (like solar panels and their impact on FSLR)
+ Excessive parabolic price runups (e.g. gold – see chart here).
+ Just plain bad CEOs. Cramer gives awards occasionally. HP had one. But recently changed.
I need to develop these themes a bit more. I ran out of time this morning. Please work on them for me over the weekend. Add a comment below with your mullings.
Some high dividend yielders. First, my favorite Federal tax-free bond fund. Paying over 4% tax-free.
The leading mortgage REIT. Annaly is hanging in and now paying a 15% yield.
Then one that’s getting nice press and paying a 19% yield.
This is the tobacco monster. Sadly, people still smoke. I see them standing outside Manhattan buildings by the droves. They’re young. They’re old. They’re gorgeous. They’re ugly. But they’re all hooked, and all stupid. MO is yielding 5.63%.
Then there’s FGP now yielding over 10%. The chart is pretty awful, however.
A charming tourist video on Michigan in the winter. You’ll die laughing. Click here.
Young Republicans girls pool party. Totally charming. Clean, too. Click here.
Oh, Steve Jobs where are you? Steve was good at many things. He was particularly brilliant at making presentations, which he spent weeks of thought and preparation on. Yesterday I watched and listened to the worst webcast I’ve ever been on. It was a webcast by Lenovo on the new products they’ll be showing at the Consumer Electronics Show in Las Vegas in January. I can’t tell you the products for two reasons. The first is they’re embargoed. Second, I can’t remember any of them. But I do remember some things from the ghastly webcast — tips you shouldn’t ever do if you’re trying to woe the press :
+ I couldn’t read any of the words on the slides – except for the headlines. Lenovo’s boring PowerPoint slides were about half the size of a typical YouTube and crammed with illegible words. “Full-screen” just enlarged the illegibility.
+ The presenters used the word “experience” more times than Carter had liver pills. It was “the latest operating system experience, “the full tablet experience,” “the dualtime mulimedia experience.” If I hear the word “experience” again, I’ll puke.
+ The presenters droned on endlessly, citing tech jargon that many of us didn’t understand and wasn’t explained for us poor dumb reporters.
+ The presenters kept saying “Next slide please.” One even said, “Next slide please. We’re now on slide 14.” Lenovo executives are so lazy they can’t push a “forward” button on a remote?
+ I stayed on the call to get three questions answered. They ran out of time and my questions languished. Dumb. Dumb. Dumb. am I annoyed? Yes!
None of this reflects badly on Lenovo’s excellent products. I use their laptops every day, including writing this column. They’re obviously doing well. They’re second or third in laptop sales worldwide, according to which of the two Lenovo speakers you believe. Pity they didn’t coordinate their presentations.
Christopher Hitchens is dead at 62. Life-long smoking got him with esophageal cancer. Sad.
He was an intellectual giant. He wrote on an enormous range of contemporary issues, including a favorite book:
Witness to an Uprising: What I Saw in Bahrain. An English instructor living in Manama saw a would-be revolution brutally repressed outside his window, so he tried to document it on video, and that’s when his troubles started. For the full article from the Atlantic Monthly, click here.
Life’s Truths:
Truth 1:
Partners help each other undress before sex.
However after sex, they always dress on their own.
Moral of the story: “In life, no one helps you once you’re screwed.”
Truth 2:
When a lady is pregnant, all her friends touch the stomach and say “congrats”.
But, none of them come and touch the man’s penis and say “Good job”.
Moral of the story: “Hard work is never appreciated”
Harry Newton who played two hours of singles tennis yesterday, then rode four miles on his bike. Harry feels great this morning. The moral seems to be: the more vigorous exercise, the better. I’m scheduling four hours of tennis this weekend, and ten minutes of lecturing one kid on logic. I’ll get more satisfaction out of the tennis.
Stop Press. You got to watch this Wall Street Journal video featuring a taxidermist talking of the six day December bear hunt in New Jersey. Hint: it’s been great for business. Click here.
Harry, I would say 15 stop loss, but not auto, computer systems w.algos will test and run it, they will win. Its got to be alert or manual, not auto. My 10c.
Sorry to hear about Christopher Hitchens passing. I guess now he knows if his best selling beliefs are true or not. Interesting that his name is based on Christ; maybe that's why he took his positions.
I suspect about now Hitchens has a different view.
harry you said keep posting so here comes on nly, you cannot try and fool people by saying that is is paying 15%. you should say the last payout in oct was the lowest in 6 years. (.60 per share) and will be lower in jan. also the lower the price the higher the yield. it's drop 13.3 since july high. with that said there is nothing wrong owning it since it has great management but if you deal with alot of seniors like i do 6% from telecom. is a better fit. the risk of 50 % drop in nly is better then 50/50. the twist is killing it. you want a safe bet paying over 6% look at fwf. steady ship with no waves.