Fadi El-Eter

RIMM (Research in Motion), closed today at around $50.25, which is $.25 above the level I recommended for buying (unfortunately, I can’t buy it myself now). If you take a look at the 3 month chart, you’ll be able to notice that RIMM has now bottomed for the current cycle. I think right now is a great entry point to RIMM. Again, I do recommend to be short on your position: sell the stock within a few days (it should rebound in a couple of days). You should exit your position at around $55, and then re-enter below $50.

Research in motion, as a company providing the blackberry service, still has potential in the short and medium term, but the stock is in a downward trend. RIMM’s RSI is way below 50 (right now it’s at 38.42).

Unfortunately, I’m a watcher right now as my money is still locked in the equities that were hit last week. I hope my stocks will recover this week.

Unless you’re a die hard Howard Sterns fan and you pay money just for a good laugh, you should stay clear from this stock. Take a look at its chart. Every day it’s the same story: I see peaks and valleys, everywhere, the stock goes a up a cent, and then 5 minutes later, it goes down a cent. Of course, there is the occasional 2 cents up and 2 cents down, but that’s really about it. Naturally, the Ask Price is always 1 cent higher than the Bid Price. So let’s say you’re buying 10,000 shares of this worthless stock, and assuming that the stock has an Ask of 1.01 and a Bid of 1.00 (so it’s really trading at 1.00). You buy those 10,000 shares and the stock price goes up by a cent (this stock can be manipulated on very low volume), so it’s now trading at 1.01. You’re happy because you think you’re making money. Now someone sells his 10,000 shares, and now the stock is down by a cent. So if you want to sell it you’ll be selling it for a cent less. Of course, every other day you may be lucky and the stock goes up by another cent, so you can sell your 10,000 shares which you locked for 2 days, and make a $100. Assuming you pay $10/trade, then you’ll be making $80. But then, of course, there is the potential that this stock goes down another penny, and then you’ll end up losing money, so you just have to get out or just wait a bit until the stock goes up to a level where you can sell it again, which might be never.

If there’s a stock out there that is used and abused it’s this stock. Sirius is a service providing satellite radio, and similarly to Netflix, it doesn’t have any real competition. Not that there’s a lot of people would care about competing with them.

If Howard Stern ever decides to stop doing his gigs, expect Sirius to become bankrupt. Sirius has about 3.89 billion shares. I guess it takes a lot of suckers to fund a business model based on Howard Stern.

In this post, I would like to examine what Google is doing in order to foresee what will happen with their stock.

Let’s face it, everything that Google is doing lately is becoming a flop. Here is a list of some failed products:

– Buzz: A twitter alternative that had a lot of buzz in the first few days, but then died completely with a week.
– Wave: A product that nobody really knows what it does, because only a blessed few were able to use it. Everyone reviewed it and nobody understood what this product really is. Wave is no longer supported as of the beginning of the month. In fact, I just visited the Wave website (seems that they finally made the product public when everyone lost interest already), and I didn’t understand what it is.
– Voice: A service that apparently simulates a phone, and gives the owner a phone number. It offers the service for free for US residents. The service is probably still provided but I have yet to hear from someone actually using it.
– The list goes on…

It seems that Google can’t get their act straight anymore, either there is so much bureaucracy in this company that it’s nearly impossible to get something decent and competitive outside the door. They look at Twitter, Facebook, and others, and they try to replicate the service. Google even didn’t buy any stake in Facebook, while Microsoft did, 3 years ago, when FB was valued at $15 billion. Google is now more reactive than proactive. Why did they not buy Twitter (which is extremely delicious for their ads), why didn’t they buy a stake in Facebook when they had the chance. Facebook’s search is powered by “Bing” (probably the most disgusting search engine in the world), and of course Microsoft serves ads on their pages.

Google has just a few products that are successful: Google search, Google ads (which represents 99% of the revenue), and Google maps (which is a free service under scrutiny in many countries due to privacy reasons), and Youtube (which is most likely still losing money).

Let’s take a look at the Google traffic for the past 12 months, which is the basis of all the Google revenue:

The traffic has increased 1.5% year to year. Now let’s examine Facebook traffic (I don’t want to compare Google to Yahoo or Bing, because I think the 2 latter search engines are complete flops):

Traffic has increased over 30% year to year, with traffic gains nearly month. If the trend continues, then Facebook may very well surpass Google as the number 1 visited website in the world, by mid of next year. This is a HUGE milestone, as Google as been #1 for as long as I can remember. This will also shake the investor’s confidence in Google. I do believe that Facebook are waiting for this moment to announce their IPO, which is the best moment, and it will give them the best price for the stock.

Google, of course, doesn’t only rely on its traffic, but on the hundreds of thousands (or maybe millions) of websites serving their ads, which is a big advantage of Facebook. Additionally, Google has the best expertise in serving targeted ads to the end user. Facebook know everything about me, my age, my hobbies, etc… Yet they still serve me the “Farmville”, “Mafia Wars”, and other irrelevant ads (even though I can’t remember how many times I clicked on the button stating that I’m not interested in these ads).

Now let’s talk about the most important thing here: GOOG. GOOG has reached a peak of over $714 back in 2007 ($734 adjusted for inflation in 2009 dollars). So far this year the stock is struggling to keep its head about the $500 level. They even disappointed the analysts a few weeks ago because of all the acquisitions that they made.

GOOG is a great stock, and is a must buy below $470, but as a company, I feel that the world is changing, yet Google is not. The Internet is becoming more human, more “facebooky”, Google is trying to adapt to this change by releasing products that only geeks will like. I think the best thing to do is to stop the unnecessary acquisitions and the development of products/services that are free and/or will not appeal to the broader audience, and focus on enhancing the cash cows, and increasing the network of websites serving their ads.

Networking websites will keep sucking traffic from search engines, this is a fact and nothing can be done to prevent it. Google must take that into consideration and take some strategic decisions to keep the company at the top of the helm.

I have to say one of the most impressive companies in the world at the moment is Facebook. They are probably one of the very few mega-websites that are still growing month-to-month. But there is a problem, and it was bound to happen: Paul Ceglia.

In short: Paul Ceglia, an self-described environmentalist from NY, and someone who has been arrested for defrauding his clients by selling non-existent wood-pellets, claims that he owns 84% of Facebook. Hmmm… How? He claims that he gave $1000 for Zuckerberg back in 2003 as an investment in 50% of a project called “The Face Book”, with an additional 1%/day after January 1, 2004, until the project is finished. Facebook at first did not deny the claim, but then slowly they started seeing the seriousness of the issue, and they started denying it and accusing Paul of being a fraudster, an accusation the NYPD would probably agree with. There are some mixed reports on Facebook assets being frozen until this lawsuit is settled.

Paul even stated that he doesn’t want 84%, he just wants to settle outside the court, which is something that Facebook is refusing. My question to Paul, why don’t you want the 84%? After all, assuming that your claim is right, you gave Zuckerberg a $1000 7 years ago for a company that is worth $30,000,000,000 ($30 billion) now. My question to Facebook, why are you refusing to settle? A few million dollars won’t hurt you, that’s a day’s work. The guy needs the money, and he’ll just go away when he has it. Naturally, there’s a huge media circus surrounding this story.

Whatever it is, I am sure that no Facebook IPO will happen as long as this lawsuit exists (everything would crumble if, God forbids, Ceglia wins the case). In any case, a lawsuit of this size, if not settled, may drag for years, especially if it attracts vultures, who will seek their 15 minutes of fame.

If there’s a 1% chance that what this guy is saying is correct, then Facebook should settle, or else the consequence would be really dire.

One of the most interesting stocks (besides BP and RIG) for me is AAPL. I am noticing that the stock is affected by a scandal every other week, whether it’s the antennagate, or selling confidential data about Apple products. It’s interesting to see how Bloomberg focuses constantly on the bad news on Apple, with stupid stories like these receiving a front page article every day, and sometimes twice a day, through updates. Clearly, the world listens to Bloomberg, and AAPL is often manipulated by their news, not to say that the stock is worth much more than what it is right now, but there is always massive shortage when Apple hits a certain threshold (which is around $265-$270), and suddenly a flood of bad news, and the stock goes down another $20-$30 in a few days.

I wonder what’s the next mountain out of a molehill for Apple, is it that their products cause deafness? Or would it be a security breach on the iphone / ipad? I have to say that the latter is very easy, but not as easy as reviving the antennagate another time (I believe that the antennagate can be revived up to 9 times, just like a cat, after that Bloomberg and others will need to have another big story to short the stock).

I’m not complaining, I’m just highlighting a pattern here and I hope someone, somewhere, will put this information to good benefit. For me AAPL is a great buy at around $240 (even $247 is not bad). I never short stocks.

I’m still bullish on CVBF, and I think the stock will go up, to at least $9. Some people think that the selloff that happened last week is unjustifiable, and people are just overreacting (the same way that they did with GS).

Anyway, the stock had a roller coaster today where it went to as high as $8.47 and as low at $8.06, and it closed at $8.17. There was high volume at 8.47. The volume today was 1.82 million, compared to the average volume of 1.42, which is very bullish. On the other hand, there was a huge very high Put/Call ration, mainly at the 7.50 strike, which is bearish. On the other other hand, CVBF still went up despite all the short interest, which is extremely bullish. Also don’t forget that financials in general are not doing great these days.

Again, I do believe that the market overreacted, and the stock will settle at around 9.

It is becoming ridiculous reading the comments on any article on marketwatch.com. When an investor is optimistic, he gets 10 thumbs down, when an investor is pessimistic and is a true believer of a double dip, he gets 20 thumbs up. Apparently, many investors think that every week should be a good week (for all their stocks), and the DOW and S&P should go up almost every single day… Hmmm! Isn’t investing in stocks all about taking risks that the other guy won’t take?

Every time the DOW goes down 200 points or more, floods of comments are posted, mainly begging investors to run for their lives. And if, God forbids, the DOW gains 200 points, then these people would just say this is just a hype. Wow! This is what I call professional pessimism.

I have to say that I’m ashamed that I fell for this double dip “scam” a few weeks ago, when I had some AAPL shares and the stock was going up, and then Bernanke spoke (thank you), and the market went down about 300 points, and I sold my AAPL shares on very little profit. The market went up those 300 points the very next day, and AAPL went up about $6. I don’t regret it as I’ve learned my lesson, never sell or buy in panic mode.

The market was already largely corrected in 2009, many stocks are half their original price, some, like AIG, are 3% their original price. C is at 10% its original price, etc… Freddie and Fannie are already OTC stocks. Investors already paid the price by losing much of their stock value. The storm in 2009 filtered those who can’t survive, and left those who can (OK, some had government help, but they’re opting out of it…). The feds are now absorbing the extra liquidity in the market by selling their stocks (for example, the Citi stocks), investors don’t like that, but that doesn’t mean, of course, that there’s a double dip. It just means some house cleanup, and if needs be, and there’s a problem in the horizon, the Feds will just resume printing money… The issue has much more to it than that, of course, but you get the point, there’s nothing wrong with the system.

Sure the job market sucks, but it’s much better than last year, and you just can’t turn that around in the blink of an eye…

Be patient, don’t be fooled by these stupid comments and large websites predicting apocalypse. Don’t be a follower in this foolish and illogical trend. Real investors profit from these situations by buying stocks that are undervalued for no reason other than FUD.

I have been following NVDA for over 2 weeks now, when they lowered their sales outlook. NVDA, a major graphics card manufacturer for consoles and PCs, is directly affected by what’s going on in the Video Games Industry (which is not looking good) as well as the PC sales.

Here’s the NVDA graph for the last 50 days (courtesy of Google Finance):

I think this is a very interesting graph, the stock has a clear downward trend (I don’t know for how long this will remain, maybe until NVDA comes with something new, or the demand for PS3s increase again) with peaks nearly every week. From what you can see, it is unwise to buy NVDA at this price ($9.43 in after hours trading), as it is a peak if we want to technically follow this trend. If the trend is supported in the next week, the stock will most likely drop to below $9, which is an excellent entry point. The stock should be exited at $9.30, and rebought again at $8.90 (repeat forever, until the trend is broken, and the bullish sentiment regains). Just don’t get bullish on this stock just by looking at technical indicators, see what’s happening in the PC and the consoles industry.

MOT closed today at 7.62 (in after hours trading), down 4.74% from yesterday, when it went up around 4%. I currently have mixed feelings towards MOT, and I would probably wait for the stock to start going up slightly in order to know where the bottom is. Motorola is a very volatile stock, but it’s very bullish on the long run.

Technically, I think the stock will test the 7.50 level before rebounding to 8. MOT has support located at 7.45 and resistance located 7.70, 7.82, 8.00, and 8.06 (I’ve mentioned all these resistance levels as MOT seems to break them all in just one trading day).

Now after talking about the stock technically, I would like to add my own feelings. Again, in my visit to the electronics retailer this noon, I noticed that they didn’t have a lot of Motorola phones in stock (only a couple). They had a lot of Samsungs, Nokias (the cheap ones), and Blackberries (well, after all, this is Canada). They only had one Sony (I guess it was called Xperia), which costs a lot. Going back to Motorola, and seeing only a couple of phones in there, one has to wonder, are Motorola sales really that strong? Or is the market punishing AAPL for the antennagate? Or maybe mistakenly associating Motorola to the success of Android phone sales that surpassed those of the iphone.

Whatever it is, I don’t feel great about this stock, so I will shy away from it, save for the time when I feel it has gone down too much, too fast. I’ll just buy it then for a nice, short trade.

PS: Since the topic is smartphones, I would still stay away from RIMM until it’s somewhere below $50, then it’s good for only a short trade. I would never go long on this stock: too many unknowns, lots of competition, and no real innovation.

The storm is over, and today marks the end of a very, very bad week, where the DOW and the S&P went down 3.25% and 3.73%, respectively. Since my money was mainly in risky financial equities, my portfolio went down around 10%, but today was thankfully not that bad, and most of my stocks started going up, including BAC and CVBF.

I hope next week will be a good week, and there’s no reason (so far) not to. After all, the market already adjusted to all the bad reports and statements (again, thanks Bernanke) that came this week.

If I’m able to liquidate some of my stocks, I will take a look at AIB, I have none at the moment and this stock is very close to the bottom. Although AIB is losing money, its Book Value Per Share is 12.78, which is 6 times the amounts of the current trading price, and for me this is extremely bullish (AIB can be easily taken over). The stock is down 17% since August 3rd. I would be lucky if I can pick the stock at 2.15 next week. I’ll probably buy only 1,000 shares though.

Another stock that I’m interested in is (again) MLNX, I hope I can pick this stock at around 14.70. I will probably buy only 300 shares of MLNX.

A safer stock for me is BP, which is currently at 38.48 in after hours trading. I bought and sold this stock 2 weeks ago twice in the same hour and made money both times! I love BP, let’s see how much the stock will be next week…

I am also interested in MAS (which is a stock that scared me, until I figured out the pattern) at $10. Let’s see if i can pick it at this price next week… I will buy 500 MAS at this price.