tonight's thoughts

all in all not a bad post Sunday night -- predicted the sharp drop on Monday and suggested a recovery soon after -- Tuesday of course. Predicted FDS would be sold off and told you to expect a short covering pop -- wow did it ever -- from $50 last Thursday to $44 on Monday to as high as $55 on Tuesday. That's one wild ride.

One thing that seems to have flipped is that 3rd bucket -- at least in terms of the commodity related stocks. They were down hard today. Helene Meisler a darn good chart person says they are going to fall big time based on the chart action (she said that pre-today!) but they might rally again one last time. Cramer argues this is just a profit taking correction and the energy names will be right back -- they haven't found anymore energy in the last week so he argues oil goes to $125. He is almost always right but so is she. hard call. I think they both turn out to be right -- correction is harder and lasts longer than Cramer expects but they do come back in the end just like he expects.

If they rally like Helene suggests -- especially after today's drubbing -- I might trim my MCF -- I think the oil services like CLB are less overowned vs. the nat gas stocks which are ridiculous.

Portfolio has definitely taken a big hit this year -- AB, TSRA, DFR, UEPS, GOOG and CME account for probably 60% of the losses with the rest coming from the Asia funds mostly.

AB -- its a money manager that is a leveraged play on the growth in the market -- they go up more and down more so no surprise the stock is down more than the market. I think EPS around $4 this year seems reasonable and that drives a $60 target in a tough environment -- think 15 times the dividend or around 6.6% yield.

TSRA -- fluke action so far based on a hail mary strategy from their legal opponents. Most of the patents TSRA is suing over expire in 2010 -- if the defendants can delay long enough they will expire and TSRA will have to start all over bringing a suit with a new set of patents that will need to go through discovery again, etc. To me it remains a question of when not if -- in the near term we have the AMKR arbitration which is really a contract dispute and the ITC appeal. Win both and the stock is back in business.

DFR -- no excuse. a financial at a time when I have been saying don't own financials. Should have sold all of it in the high single digits when I had the chance. Took to long to realize the evils of leverage applied to DFR just like the brokers and banks.

UEPS -- SA rand is the only currency in the world practically that keeps falling vs. the dollar. They must have some sorry economics in that country to be worse than ours! Gov hasn't made up its mind on the welfare contracts. That is wash to me -- good news that they will keep earning good money on their present contracts for at least another 6 months but bad in that the issue remains unresolved. To me they have the chance to become a really big company -- patience is key though -- by the summer it will be 2 years owning the stock and so far it doesn't look like I will have much to show for it. My plan had been a triple in 5 years -- still got 3 more to go.

GOOG and CME were way too expensive at the highs in October -- I know I mentioned something to that effect about CME here but I didn't take any action -- should have sold.

Issue isn't really about fundamentals its about technicals --- not talking about weird chart patterns but rather how crowded the stock is -- if everyone owns it already, who is left to buy it? and what happens when someone starts selling? yep -- they go down hard. I mentioned this about GOOG and AAPL a month or so ago but still didn't sell any GOOG figuring down $200 was enough -- then it dropped another $100!

What concerns me is FLIR and ILMN -- how vulnerable are they? fundamentally they are great but everyone already knows this. I feel somewhat better about FLIR -- its valuation is much improved -- investment controversy in that one is over whether its a defense stock (they sell at low to mid teens PEs) or a tech stock (their valuations are open ended). For me its a tech stock because they have an open ended growth potential through the consumer biz.

One key lesson that I usually choose not to pay attention to but should -- keep a balance between 3 areas in the portfolio: the horses (those outperforming right now -- ILMN) the tortoises (those steady eddie's that give you a little bit each year that adds up to a lot over time -- TECH, LH, PEP) and the turnarounds -- (those that you hope will start acting better in the future -- TSRA, MCO).

So as you make a bunch in a turnaround that works or in a horse that gets extended, take some off the table and buy a steady eddie or a new turnaround idea with the profits. That keeps you balanced and it also helps to protect those profits because the horses are more vulnerable to sharp corrections if something doesn't go just right in the future -- i.e. mo mo sellers don't ask questions they just shoot.

hope you are holding up well.....