Saturday, October 13, 2007

Google GOOG, WEB 2.0 Bubble, Gold and meditation on emothions and when to quit. CS.

One reader has put very important observation and question:
"Anonymous said...
You have been wrong on GOOG for the past 500 points. When are you going to give it up? Should it fall, taking a victory lap at this point should not be warranted."
This is my response which will go right into Common Sense Secrets of Trade - CS.
It is very important! For me first of all, then for those who are following. It is like in the plane with oxygen mask, same routine.
You should never Marry your stock, or even worse: start to Hate one. This is the ticket in the first class to poor house. (First class is because it is very expensive).
There are great businesses and not so and there are stocks and their prices: representing valuations of those businesses by Investment Crowd. Judgement of the crowd is hardly ever right: we never have all information, it is distorted by "official" figures (if you really think that there is no INFLATION - save your time), Bubble Media and specially blessed people like Mad Guy.
My business is to find those that are having very low valuation and those that are having very high one. Then you can build your case and invest accordingly: accumulate for your Core positions (90%) undervalued assets with IHPV (Insainly High Potential Value) which are in multi year bull market (Gold, Silver and Commodities) and maybe trade with LIMITED possible loss (puts) those that are at the peak of their performance (Google, as you know, I have allocated to this kind of stock).
Why should I give up? It is not a competition, it is my observation and opinion. I am putting some money in this particular play: only what I can afford to lose, read CS if you really care. I have made some money on my puts and lost some, more on this particular trade.
But my personal record does not affecting Google valuation in any way. The main factor is that we are now in late stage of a Bubble: the higher it goes the harder will it fall. Now the stock is in parabolic rise without any fundamental reason. It is madness and insanity of investment crowd that brought stock to that level. Company is "great" (remember Enron - it was also great until CEO quit in August and Enron busted in November. So far we had "only" CFO "Retired" rather suddenly) - valuation of that company is crazy and unsustainable, guys (Larry and Sergey) must be praying that it will stop rising so fast: nothing in the world could stop fear when confidence is lost. It will bring company down with its stock. Fear is more powerful feeling than even greed.
Regarding my personal record I am making very good money in my core positions, did very good with puts in August on Tec, Home builders, QQQQ, DIA and SPY and closer to make money on WEB Bubble 2.0 as never. Sold out puts and bought calls on NEM, RGLD and SLW - all was posted here. Calls on NEM, SLW and RGLD are above plus 100% mark and I took some profit already. I was able to accumulate, when there was "blood on the streets" in Junior mining sector in August and I was blessed to reach my goal for this year now and standing at all time high. The goal was very high and I thought that I can not make it, but with the help of this exercise I made it. This is the reason why I am taking your question so seriously. I will do my homework in order to defend my achievement for this year at least and preserve my capital.
The main point is not to lose money. If you made some in Google, great - take profit and find new Real Bull Market within Trade of this Decade, read CS, Gold and Silver on this blog. Mission of this blog is to help you to think and do not chase last 20% of the Bubble, but to go to there where 80% percent left. If you are not convinced - fine, do not invest in juniors, gold and silver, but just do not lose your money, leave them for your kids it will be your best investment.
Like I have put before: always ask - Why?
I am the one of the greediest person in the world: I need you and your money to drive the Great Bull market of the decade. You are reading it now, you will come back in one year. You will start to think, ask questions and listen. Than you will make your own decision, but it will be yours not of the Mad Guy. If we will be able to get out when only 20% will be left - you will send me Xmas card.
Three most important things in investing:
My Bearish Case on Google:
``It's scary if that ever started to go wrong.'' Bloomberg
"As Its Stock Tops $600, Google Faces Growing Risks" The New York Times

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