Sorry for the lack of activity...

Hey All…

Sorry for the lack of posting. Finals are coming up and its crunch time. I should be back online in early May with some new posts.

I played the AAPL earnings through GLW, QCOM, and a small Bull Spread in AAPL June Calls. As you can expect I did rather well.

Back to the books!

C

Time to Reflect

When I started the T20YM venture, I had a clear and concise goal; to make money using a disciplined investing strategy centered on Dividend Growth Investing coupled with option trading on momentum stocks.  For the past year, this strategy has been inconsistent. There were months where I would be up 30-40%, and months where I was down 30-40%. As it stands today, I have zero dollars left in my equity account.  I liquidated my positions and all that remains are my family’s long-term investments.

I have decided I am a skilled fundamental stock picker and investor, but a terrible ‘trader’. My long-term holdings were all sold for a profit. However, as a former semi-pro poker player, I have that no limit mentality. When I saw odds in my favor, I placed large bets- sometimes on margins- and when these trades went bad, things got ugly. Well, over the last few months things went really ugly. There’s and old adage ‘the market can remain irrational longer than you can stay solvent’.  Well Mr. Market, you’ve won this battle but not the war.

Moving forward:

I will rebuild my Dividend Growth Portfolio using the ‘Best in Breed’ articles located in the links section. I will start by accumulating small, 50 share positions at a time. I will wait for pull backs in these names as I am in no rush to jump in at the markets current levels.  

My option ‘trading’ will be severely minimized. I will not buy front month options. I will not buy large lots of options that grossly distort my weighting in certain sectors. I will use options to invest in companies that do not pass my dividend screening model. There is no need to hold common shares if you are not being paid to hold them.

So what went wrong? The past few months the market has gone up, but I got hammered. I rode AAPL shares from 362 down to 339. I was heavily leveraged with ‘deep in the money’ April calls looking to play the pre-earnings run up. Obviously, the market has not been kind to AAPL.

            I-Pad 2 delays: False

Steve Jobs to Die in Six Weeks: False

I-Phone 5 Delay: False

Bomb scare called into packaging facility

Steve Jobs to permanently resign as CEO of AAPL: So far, False

Supply Chain constraints due to Japan disaster: no evidence

Thunderbolt outselling I-Phone: False

Middle East Turmoil, Higher Oil Prices: Affected the market over all.

Then the NASDAQ re-balances

Plus many, many, MANY more rumors….

The stock was tanking, even with a HUGE IPad2 and Verizon launch. I stuck with my investment thesis and kept riding the stock down. No matter the fundamentals, you can’t fight the market. I still think AAPL is a fantastic investment, check out this article I wrote for the fundamentals

So that’s it for now, back to basics. I will keep you updated as I add back to my Dividend Growth Portfolio. My holdings in my family portfolio as of right now are as follows:

FYI, my 401K remains unchanged… at least I got that going for me!

All the best,

C

IBM: One of the Best Values on the Market

In Peter Lynch’s seminal work ‘One Up on Wall Street’ he quipped, ‘No money manager ever lost their job investing in IBM’. This was a backhanded compliment by Lynch. Lynch viewed IBM as a safe, but stodgy company. While it was true that IBM was a secure investment, no shareholder was getting rich by allocating capital to this tech juggernaut. IBM was the equivalent of investing in a low yield bond.

But over the last 7 years, IBM’s fundamentals have been progressively improving. These improvements are due in large part to management’s decision to focus on more profitable business segments. Unlike Dell (DELL) and Hewlett Packard (HPQ), IBM correctly identified the commoditization of the computer hardware market and quickly moved into higher profit margin spaces such as software and services. IBM summed this up perfectly at their recent shareholder meeting (click to enlarge):

Here we see a 10% GPM increase as IBM shifts to higher-value spaces.

In addition to adjusting their business focus, IBM has continued its global expansion. As they state in their recent annual report:

A historic economic expansion is underway in the emerging markets of the world—as their populations join the middle class and their economies join the global marketplace. These markets are expected to achieve average GDP growth of 5 percent through 2015, more than double the projected growth rate of the developed world. In the largest of these emerging markets, such as China, India and Brazil, IBM is broadening its well‑established base of skills and capabilities, nearly doubling our number of branch locations. In less developed markets, such as Africa, we are leveraging anchor clients in sectors like communications and banking. Our recent partnership with Bharti Airtel to provide 21^st century wireless telecommunications across 16 countries of Sub‑Saharan Africa is one example. Our Growth Markets Unit accounted for 21 percent of IBM’s geographic revenue in 2010. We are aiming to approach 30 percent by 2015.

Read the rest of the article at Seeking Alpha IBM Growth, Dividends an Investors Dream