tonight's thoughts

I apologize for the lack of posts -- I am in a very busy time at work and that means less time to spend with the family, which means less time to post.

Soc Gen fraud issues contributed to the lows in January so it will take more bad news to get us to those levels again. Not unlikely -- trading patterns sure seem more like 2001 than anything else. Just substitute financials and consumer discretionary for tech and telecom but the charts and returns look the same. I am seeing similar ridiculous numbers like stocks up 50+% in the last few weeks yet still down 50-70% over the last 6-8 months. Remember the old adage -- a 50% decline takes a 100% increase to get back to even.

So 2001 saw aggressive fed cuts and big rallies but overall a lot of declines for tech & telecom, which could mean financials and consumer this time. When you see these failed auctions and other issues hitting fixed income, its hard to argue the bottom has been made in financials. So far the damage has mostly been contained to those areas -- some pullbacks elsewhere especially this year (can you say ouch about Google!) but not too bad overall. Will financial issues spill over into other areas -- i.e. will we see a recession and big slowdown? I am still inclined to believe no recession but it won't feel that way. More likely lethargic will be the adjective used.

The big question about the financials and the economy is one reason why I haven't been in a hurry to buy more Moody's. So far I could have at least made a trade out of it.

I am still looking for additional ideas. I am questioning my current holdings -- a good practice to always do. The key is to question appropriately -- don't lose conviction unnecessarily but rather ask questions about whether the position/story still makes sense given any new info. Google makes one wonder -- great position and great growth but is it already in the stock even at these levels (i.e. post a $200 decline!)? I am betting no but I wonder if I shouldn't reduce my position size on a decent rally.

New ideas I am thinking about -- Network Appliance is a storage technology company that benefits from the switch to networked storage from direct attached. Networked is more efficient. Storage has been growing pretty quick -- email and other apps are great at getting users to require more storage. But most technology companies are constantly faced with new competitors and with falling prices, which makes revenue growth hard. NTAP has been growing over 30% but now its in the teens. They have demonstrated strong margins and profitability but recently margins have dropped several points. So the levels are good but the change is in the wrong direction for both margins and growth. Stock is near a 10% free cash flow yield -- that is pretty darn cheap. I would rather not play one time pops -- I am looking for something that makes sense owning for years to come. Not there yet on NTAP but still doing some thinking.

BLUD -- pulled back on some issues but its still an expensive stock but the growth is there and so is the profitability. They sell blood diagnostics equipment and the consumable supplies known as reagents to go with their equipment. This is mostly a product cycle story -- they produce some innovations in a new product which causes blood banks especially hospitals to buy new more expensive versions of the equipment and then buy more supplies to process tests. The innovation generally revolves around automation -- faster, more samples tested at a time and more tests done per sample are the main improvements. There is also new markets such as the echo, which is designed for lower volume customers who are generally performing the tests manually -- i.e. by hand, which is time consuming and costly. They could ship thousands upon thousands of these units over time which could easily double the size of the company.

still looking into this one. NTAP is cheaper but BLUD could have better growth. I think NTAP has more secular parts to the story in terms of storage but innovative product cycles can be powerful. So far BLUD faces less competition.

I don't have as much exposure to infrastructure spending such as what is driving Flowserve or Terex or others and I wonder if that is something I should add.

that's it for tonight. we shall see.