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Money As Debt Video Series

Trying to explain the current problems facing the financial system is very complicated. If you know someone who is trying to figure it out, send them these videos. This is the only way I have ever been able to understand it. Click HERE to watch the videos.



Oh Nokia!

I consider myself pretty knowledgeable when it comes to emerging trends in tech. One of my favorite stories right now revolves around the smartphone market and the battle for mobile operating system dominance. The companies in this space are extremely experienced and know how to capitalize on an amazing opportunity when it presents itself. Within the last few years we have seen new companies entering the mobile space. Apple(AAPL), Google(GOOG), RIM(RIMM) and Microsoft(MSFT) are all looking to bite a chunk out of the new exploding mobile market. Even Garmin(GRMN) wants in with it’s new nuvifone. While these giant companies have already pushed out once dominant Palm(PALM) and Motorola(MOT) one company still dominates the mobile world, Nokia.

I recently dug through AdMob’s smartphone statistics for August and was amazed to see the dominant position Nokia has in the global smartphone market. It is obvious that instead of trying to compete for US customers like it’s competition, Nokia has had a much more global focus and captured an unbelievable amount of market share. AdMob’s statistics relate to internet traffic, but provide an amazing insight into the smartphone market. You can download the entire report here, but below are some of the mind-blowing statistics I discovered:

- Nokia had 62.4% share of worldwide smartphone traffic in August 08 and the next closest is RIM with 10.8%.
- Nokia manufactures 13 of the top 20 smartphones worldwide.
- Nokia has 33.7% market share in total phones including regular, and smartphones. The next closest is Motorola with 13.7%
- Nokia dominates in small emerging markets like the Philippines (86%) and South Africa (87%).

While spending this week at the TechCrunch50 conference in San Francisco, there was one quote that stood out from the rest. Navin Chadda from the Mayfield Fund said, "We like to invest in companies that have an unfair advantage in customer acquisition". While he was referring to investing in private startups, I feel like the same holds true with public companies. Nokia has been busy snatching up global market share while RIM, Palm, Microsoft and Apple have been fighting for the US’s attention. Nokia’s commanding lead in global market share puts them in the unfair advantage Navin Chadda was referring too.

While it still dominates, NOK has recently hit a near two year low. The problem is that companies like Apple and RIM are selling their phones at break-even prices for the shear purpose of snatching market share from Nokia, who announced that they would not snoop to their level. The markets do not take this increased competition lightly, but this also presents an amazing opportunity to invest. This aggressive approach from its competitors cannot last long and is purely a marketing scheme that will end. Reports from Gartner Inc. saying that the slowing economy is effecting smartphone sales and downgrades from clueless investment banks have beaten Nokia’s stock price down to a two year low on the eve of a global smartphone growth explosion. Smartphones present opportunities for multiple business opportunities including GPS, music and mobile applications. Nokia’s new Symbian operating system is on par with the iPhone and Android, and will be able to compete with the best of them.

Nokia’s current stock price looks extremely undervalued at these levels. Compared to it’s new competition, I might even consider it a steal. Picking up some shares of NOK under $24 might be one the best opportunities available in the tech market today.

Disclosure: I definitely own some NOK



FMCN May Have Found It's Bottom

I have been a fan of FMCN for some time. About a year back I posted that this was a great way to get some China exposure and play the Olympics at the same time. Problem was, I think I was about a year late. The market had already been pricing that in for some time, and the stock has been performing pretty poorly ever since.

An earthquake in China shook the stock and then the weak market dragged it down even farther. The short interest in FMCN has gone up dramatically during this time as trend followers hopped on board and the market took a turn for the worse. Their are currently 23.5 million shares short and an average volume of 4 million. At this rate it would take shorts a full 6 days to cover and it only takes a few positive press releases to make that happen.

Today Focus Media announced a $100 million buy back. They are going to use 1/4 of their $400 million in cash to fund it. Tan Zhi, chief executive officer of Focus Media, commented, ''Our Board's approval of the share repurchase program reflects our commitment to increase shareholder value and our confidence that the current ADS price level does not reflect our potential value.''

On that note it seems that FMCN may have found it's bottom. The potential for a short squeeze, the $100 million buyback & the olympics may be the trifecta this stock needs to turn this trend around. It is nice to see a company looking out for it's shareholders when times get tough. The future is very bright for this company, and this looks like a good time to hop on board.

Disclosure: I am a current shareholder of FMCN.



The Run On The Banks Begins

As I drove down Ventura blvd today to my dentist appointment I passed a long line that went down the street and around the corner. I couldnt quite get a glimpse of what people were waiting for but it must have been important. I figured there must be an AT&T store there that just got a new shipment of iPhone 3Gs.

indymac-bank-line


While I was in the waiting room I read the news about the run on the banks and how the federal government had to move in to save IndyMac. On my way back I drove by again and the line got longer. There were police and news vans everywhere. I wish I had taken a picture, but no picking up your phone while driving in LA!

great-depression-bank-line


It reminded me of history class back in 8th grade. Learning about the great depression and the run on the banks in 1933. This is only the begenning folks. Things can go from bad to worse real quick come soon. Lets hope for the best.



Breaking Up With JMBA

I have been a JMBA shareholder since day one(ish). Back in March of ’06 Service Acquisition Corp.(SVI), a SPAC company announced that it was going to use the money raised from it’s IPO to buy Jamba Juice. As a Southern California native I have witnessed Jamba Juice go from a small smoothie shop to a full-blown national franchise. The story was compelling, and I felt like I had gotten in on what could potentially be an exciting opportunity. Boy was I wrong.

One of the worst parts about the story is that I had been averaging down as the stock price went down. Eventually my average price per share came in at around $6.50. The problem all along is that I have just been married to this stock and the potential for this company. I was infatuated with the idea of owning a company from the beginning and watching it grow up into a big, well known, national public company. Obviously I liked that idea more than I liked to make money, cause the company has done nothing but taken advantage of our relationship.



The management at JMBA has never once acknowledged the fact that the company has lost over 80% of its value over the last 2 years. They haven’t done as much as to say, “We understand that our shareholders are hurting, and we have a plan to fix it.” So sufficed to say this has been a one sided relationship, they don’t give a shit about their shareholders.

JMBA has never been a large part of my portfolio. I always considered it to be a little gem that I could some day be proud to of been a part of from the beginning. But that small position has gotten a whole lot smaller to the point where it is embarrassing to even see it in my portfolio.

Everything I have ever said about JMBA still holds true. I still believe there to be a lot of potential in their ready-to-drink line and maybe some day they will grow into a profitable company. But we will never see this as long as the people in charge act the way they do. It is sad to see this position go, but in order to be serious about my new trading strategy I can’t have any skeletons in my portfolio.

Related Posts:
Jamba Juice Finally Extends It's Brand, Officially (27 May, 2008)

JMBA- Cutting Back (21 August, 2007)

JMBA- All Time Lows, & Taking Me With It (15 August, 2007)

JMBA- Time To Get Back On Board (26 July, 2007)

Jamba Juice Explodes On Record Earnings, And Then Tanks (12 June, 2007)



My First Few Trades With My New Strategy

Since starting with my new trading strategy things have been going according to plan. I have had some very successful +6% trades and limited the rest to less than -2%. One thing I hadn’t anticipated (but probably should have because it makes sense) was how quickly stocks reach their 6% goal. Both successful trades each took 5 and 6 days to reach their price targets. Knowing your price targets ahead of time makes all the difference in the world. If you see a stock approaching your target, put in a sell order and see if it triggers. One small pop can trigger your order even if the stock opens and closes nowhere near your target. My three most recent trades:

Short CSTR @ 34.65 on 6/24/08
Bought CSTR @ 32.05 on 7/1/08
TOTAL = 8.11% gain

Short MSFT @ 27.90 on 6/24/08
Bought MSFT @ 26.25 on 7/2/08
TOTAL = 6.29% gain

Bought T @ 33.35 on 7/1/08
Sold T @ 32.75 on 7/7/08
TOTAL = 1.8% loss

The AT&T(T) trade didn't fly because the market was getting crushed at the time. It is always best to be long or short according to overall market conditions. After 5 days and no sign of T trading in the direction I had planned, it was time to dump it and move on. If a stocks doesn't move as anticipated, get rid of it and put the money to work elsewhere.

At this rate I should be at my first 6% goal in no time. Then only 11 more times to double my money. The extremely choppy market conditions are making for great trading. Just remember to set stops, and everything will go according to plan.



The 6 Percent Solution

Below is the current strategy I use when investing my money in the stock market. I may make slight changes and adjustments to this strategy as time goes by, but the general concept will always stay the same.

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If you make 6% 12 times you double your money.
If you double your money 8 times it becomes $1.2 million.
[Starting with only $5k]
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Portfolio Rules

  • Always know where my next 6% goal is.

  • Sell all positions every time goal is reached.

  • No more than 4 stocks at a time.


Stock Rules

  • Plan the trade, trade the plan (know exactly where I am going to buy and where I am going to sell before pulling the trigger)

  • Never let a gain turn into a loss. Use stops.

  • Never lose more than 2%.

  • Always sell once up 5-10%.


Stock Picking Rules

  • Avoid stocks with known upcoming catalysts.

  • Pick stocks based on trends and technicals.

  • Look for stocks with potential for 5-10% gains.

  • Never pick stocks under $20.

  • Never pick stocks with average volume under 500,000.


Other Rules

  • Never hold a stock through earnings.


This strategy forces me to acknowledge some very important concepts that I believe make me a better investor.

  1. You will get sidetracked without a solid plan.

  2. Investing is all about discipline. Make a plan and stick to it.

  3. If you want to set your goals high, you need to take lots of baby steps to reach them.



My Pledge To Disciplined Investing

Back when I first began investing I built a strategy that I believed (and still do) could make me the most money, and best fit my investing style. It was a mash-up of the many investing strategies and concepts I had read in books and researched before putting my hard earned money to work in the markets. It was developed with no personal investing experience, but was based on the ideas and concepts of professional, successful, experienced investors. I had $5,000 at the time and my goal was to turn it into $1,000,000. The strategy was built on a set of rules that would help me minimize risk and stay focused on the baby steps towards my end goal. I called the strategy "The 6% Solution".

Fast-forward to today, and not only have I not reached that goal, but I was never able to successfully implement the strategy. The problem lies with what I consider to be the most important and difficult part of investing, discipline. The strategy would have worked as long as I stuck to the plan and focused on my goal. It turns out that was extremely difficult and boring. I found myself chasing the big winners, taking bigger risks and essentially attempting to prove my rules wrong.

I spent the last few years avoiding discipline only to learn that you simply cannot be a successful investor without it. So here is my pledge to being a disciplined investor:

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I will review my investing strategy before every trading day.
I will never break the rules of my strategy under any circumstance.
I will not let the excitement of the market interfere with my strategy.
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Remember, it is not so much the strategy. In fact, you can change and develop the strategy if need be, It is sticking to the strategy that counts. For an example of a strategy, check out the one that I use. The 6% Solution.



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