Amazon beats estimates

So Reuters and the New York Times both have articles for Amazon (AMZN). Amazon posted some nice Q1 numbers late in the day today. Net income is up 9%. AMZN closed at $50.00, and according to the articles, it's already up 11% in after-market trading. Pretty impressive. I'm going to say it'll go up some more as the results hits the rest of the news circuits. This is pretty exciting as the market was actually down today. So Western Digital (WDC) yesterday, and AMZN today. Not all's dark and gloomy.

(Note: I do not own any shares of AMZN. I do own some shares of WDC.)

Missed this headline somehow...

Western Digital (WDC) announced their fiscal Q2 results yesterday. I have no idea why I didn't get the headline yesterday, but it really doesn't matter as I do own WDC. But again, my theory of a bit of a delay in mob market response holds up again. If I had saw the first couple headlines yesterday, I could've called this one a bit better. The headlines have hit the mainstream today, which is reflected in the market price. Again, I don't know why Google reader didn't pick this up. But then again, I was pretty busy at work.

In any case, WDC announced their results with EPS of $0.06/share (net income of 14M). That's adjusted for restructuring charges, so pre-adjustment, EPS was $0.55/share (net income of $123M). Just a quick peek at the market, WDC is up $1.50 (10.42%). Pretty nice. My only lament was that I didn't buy a larger lot; I only have 13 shares. I had purchased WDC with my proceeds of when Budweiser merged with In-Bev. Ever since then, I've told myself to try to aim for trades of 50 shares or more.

Anyway, WDC is my strongest performing holding, and I am slightly kicking myself for not having at least bought 50 shares. But I am also very glad for not selling WDC to get Seagate to try and get another dividend-paying stock. They're having some problems with one of their products. WDC, on the other hand, just announced their 2TB Caviar drive. And I still like their Passport external drives very much. Very sleek. It's even in the Apple store, and anything blessed by the sacred fruit can't be that bad right?

Pfizer to buy Wyeth

Pfizer announced today that they are buying Wyeth for $68B. This values Wyeth shares at $50.19/ea (the deal will involve Pfizer paying $33 and 0.985 Pfizer shares for every Wyeth share). Normally with an acquisition announcement, shares of the company being acquired trades to pretty close to the acquisition price. This deal is a bit more complex, so Wyeth shares will trade to an amount relative to the Pfizer stock amount. It's 9:54AM, and WYE is at $44.75 (up $1.01). PFE is at $16.27. So if you buy WYE now, you will get $33 per share, plus 0.985 of PFE, which at current pricing will equal to $49.03. Seems like a pretty automatic gain right?



The only issue I have with this is that investors will try to correct for this gap. Most of the time, the buying company's stock drops since an acquisition is costly. This drop will then affect the end result of the acquisition since part of the deal is 0.985 shares of PFE. That's a variable that you can't control. So if one takes the time to write out an equation and solve it, you could probably come up with an equation that would tell you how high PFE prices would need to be relative to WYE's price to see if it's worthwhile to buy before the acquisition. But for now, it seems like an automatic gain of close to 10%.

Google leads tech sector

So after a bit of a loss across the market, Google (GOOG) did as I expected and led the tech sector with an increase of $18.20/share. That's a 5.94% gain. So even though Google posted a first-ever decrease in earnings, they still beat the estimates most analysts had for them. And investors and analysts love it when a company does better than expected. Now, GOOG closed at $324.70. That means they opened around $300/share mark. This made it quite difficult to have made any money on this stock. You would've need $30+K to get 100 shares, which would've grossed $1,820. I don't know about you, but I don't have $30K lying around. Boo. But then again, making $1,820 in a day on this gamble would've been pretty sweet huh?

(Note: I do not own any shares of GOOG. Too rich for me.)

Google expected to post earnings

So the news is that Google is going to post a better than expected profit. This headline hit a bit later in the day, and the report won't be out till later tonight. GOOG is already up $3.42 (1.13%) as of close, so I say GOOG should go up a bit more in after-trading and tomorrow when the headlines hit all the news circuits. People just love it when a company posts profits in times like these. Let's see if I'm right.

Mob pyschology theory for stocks holding up

So, I'm beginning to think more and more that my idea of mob pyschology is holding up in terms of stock prices. Late in the day yesterday, Apple announced their earnings - very positive. I thought to myself that the stock has been kinda beaten down over the whole Steve Jobs thing. Then in general the market has been pretty grim, with GM losing the top global crown to Toyota after 77 years on top and Bank of America being pretty shaky now after their "forced" acquisition of Merill Lynch. I made a prediction to myself that Apple would definitely go up in after market trades as well as in trading today.

This morning, I told one of my friends that Apple would go up. I just checked and as of 10:40AM, AAPL is up to $88.10, a gain of 6.36%. It's not much, especially since AAPL moved a bit yesterday from news that they are being investigated about the whole Jobs thing (kinda silly to spend the energy on that, but whatever). But as I've said in a previous post, losing Jobs does not mean they will sell less MacBooks and iPods. It doesn't work that way for a company as innovative as they are.

In any case, I'm gonna keep applying my gut feelings to certain headlines and see if the market responds relatively the same way. By the way, even though AAPL is up, rest of market is down, so that 6.36% should be considered a blessing. Now you might ask why I didn't buy AAPL? Well, I told myself to stop buying little bits of stock and to at least buy 25+ shares (preferably 50+) to make any trade worthwhile for me. Commission really eats away at any gains, so it's silly to run around buying 10 shares here and there (although for AAPL, 10 shares yesterday would've been $800+). So I have an excuse to just lay low and test my gut feelings. I just wonder, sometimes, how things would be different if I had $10 - 25K lying around and I made the gambles (I say gambles, cause that's what they were) on AIG, FRE, PALM, and AAPL when I thought of them. Hmm...

(Note: I do not own any shares of AIG, PALM, or AAPL. I do, however, own some nominal shares of FRE.)

Mob psychology

Just to prove my point again about how the market reacts to news/fear about the stock market. Last night, my cousin sent me a link to a story about Apple's Steve Jobs's leave of absence till June to attend to his health issues, which are more "complex" than he thought. I read the news earlier and didn't think too much of it, but after my cousin sent it to me I thought the stock would definitely react. Sure enough, by closing yesterday, stock was down 2.71%. Today, the news hit the rest of the news outlet and right now AAPL is down 4.59%.

Now I don't know about the rest of you, but I'd like to think Jobs isn't the only reason Apple is as successful as it is today. Sure, he is mostly responsible for the innovation and success Apple has enjoyed of late. However, I'd like to think that Jobs is business-savvy enough to surround himself with other smart people such that there is not a total collapse should Jobs ever leave or move on or even "move on." I mean, if there is no plan in place at all, I'd be very disappointed in Apple as a company.

Let's think logically for a minute. Would Jobs's leave of absence really mean the DRM-less Apple store will suffer? Does this mean the supposed iPhone nano would sell any less? Does it even mean people would buy iPods, iPhones, MacBooks, and all things white and glorious any less? I really doubt it. If anything, this slumping economy would have a bigger effect. Stop panicking and look at the company numbers.

(Note: I do not own any shares of AAPL, much like I don't own an iPod)

Missed the Boat again

Now if you invest in the stock market, you probably know there are two types of investing. One, you pick companies with actual value in them and you buy and hold for the long term. This is usually the smarter move. The other type is pretty much gambling. If you watch the market close enough, you start to see patterns. In fact, a psychology major might do pretty well, since most people in the market are regular people like me and you or just prospectors reacting to buzz and news.

Anyway, Palm was doing their announcement for their "new-ness" they were buzzing about. I knew that this announcement was going to make or break them, so I didn't want to make any moves market-wise. Well, I stayed on top of the announcement and realized that Palm had a pretty good contender for the smartphone category. I figure I was too late to enter so I didn't buy any shares. Palm was up $0.09 after the announcement. A small blip. Well, by the end of the day, Palm was up $1.15. A near 30% gain. I kicked myself a bit, but didn't think too much. I missed the mob buying in and I'll live with it. Well, I just checked again today and Palm is up another $1.62 (35%). Boy, am I pretty annoyed now.

Now Palm is a decent company that made a lot of money on Palm Pilots and then the Treo before the smartphone market exploded. But they made some not so good decision recently and paid for it with loss of market share. So this buy would've been a gamble. But this was a good gamble that I missed. Here are the reasons and lessons that I've learned from this:

1) A floundering decent company buzzing about some new product garners a lot of attention. People either want to see them succeed and comeback or watch the company crash and burn. So a lot of eyes were on this announcement.
2) The new Palm pre is pretty darn cool. It isn't as revolutionary as the iPhone when it came out, but it definitely makes it's presence known among the iPhones, Storms, and G1's out there. They have wireless charging and a pretty slick OS.
3) The market can be slow to respond with tentative news like this. Usually the market goes up on the rumor and down on the actual news (recent bank bailouts and auto bailouts). But this one, people weren't confident Palm could do it. Palm announced the Centro and the Treo Pro to very little fanfare. So when Palm announced the WebOS and the pre (and they were actually pretty good), it was a bit unexpected. Therefore, the market didn't respond till after it sunk in that they might actually comeback as a real contender in the consumer smartphone market.

In any case, I missed the big gain. We'll see how they price the pre to see how Palm will do in the future. Hopefully, Palm realized that they need to keep up with the other competitors and keep the "new-ness" coming and not just update the pre for another five years like they did with the Treo.

Oh, in case you were wondering, if you had 100 shares in the morning yesterday, you would have made $260+ right now. But again, it would have been a gamble. Palm could've just as easily announced a Treo 900 or the market might not have responded so well. So if you're risk-adverse, go buy Coco-Cola. As someone said: "Economy good, people drink Coke. Economy bad, people drink Coke."