tonights thoughts

2 Comments in one night!! wow!!! thanks so much for taking the time to share your thoughts -- especially Dr John for sharing that painful story about Elan.

To been there -- good advice about selling and re-evaluating. Sell discipline is my weakness. It is also true that I am not an expert in patent laws, which one could easily suggest means I have no business owning a company that makes its living from patents. I could say the same thing about several of the stocks that I own. I have written before that having a deep understanding of what you own and why is key to great results because it keeps you out of stocks that are overvalued (e.g. living off of reputation) and keeps you in stocks that have dropped more than they should have.

I try to read as much as I can about the companies and industries I invest in to help determine their value better but I can't know everything that's for sure. Its a tough call about how to balance investing in only what you really know well and having enough diversification as to not taking too much risk. the answer is to concentrate your stocks in areas that you know really well while using funds to diversify with the rest of the money.

I try to do that = probably 40% of my money is in funds.

TSRA tried again to issue a press release explaining their position and it helped pop the stock higher but investors also got to see the briefs filed in the ITC appeal including the one by the ITC staff -- that to me was the reason for the pop today. The ITC staff made a great argument for overturning the stay -- because if they stay actions every time when the PTO is involved they shouldn't bother to exist -- they will have no power anymore because every defendant will just get a stay and the PTO or the federal courts will be the real decider of patent cases because the ITC will have neutered itself. A compelling argument -- every organization wants to have a reason to exist and to have as much influence as possible. will it work? who knows. If it does, I would expect to see the stock reach the low $20's.

I got lucky so far on my additional TSRA shares. To me its still a reasonable decision to have added when I did -- there has been more perception change in terms of the patents than real change. Am I rationalizing the decision -- probably.

DFR -- its all about leverage and forced selling. Brokers have limited capital at this point thanks to their mark to market or subprime losses. That means they don't have the liquidity for all the markets anymore -- they must be selective. All the issues from SIVs to Asset backed CP to auction rate securities to the RMBS repo market (both agency and non-agency) are about 1 thing -- brokers/banks not having the capital to offer liquidity to customers. Various fixed income players are leveraged to the eye balls and they are getting some margin calls -- this not only includes mortgage REITs like DFR but also hedge funds and other types of funds (see carlyzle. As they are forced to liquidate, that puts pressure on bond prices, which makes more people insolvent which means more forced selling. a snowball effect.

when do we find enough low leveraged or no leveraged buyers to soak up all the securities and relieve the pressure? beats me but this will likely ebb and flow -- nothing goes straight down without some kind of rally.

To me it seems like the management company is worth more like $3-5 per share -- yet the stock is near $2 per share. I wonder if the REIT portfolio goes under, wouldn't DCM still be around unless they end up pledging that asset as collateral to try to prevent bankruptcy.

Other reading -- well some cautious folks on the MCF yahoo board have got me thinking -- perhaps I should at least diversify my nat gas bet. MCF has done extremely well but is highly concentrated on one big piece of gas in the Gulf of Mexico. There are other companies that also seem to recognize that value is created at the drill bit -- XTO, RRC, CHK, SWN, EOG are some that I am looking into. we'll see where that goes.

thanks again to my two commenters -- I didn't do that well responding but its thought provoking stuff.