Breaking Up With JMBA

I have been a JMBA shareholder since day one(ish). Back in March of ’06 Service Acquisition Corp.(SVI), a SPAC company announced that it was going to use the money raised from it’s IPO to buy Jamba Juice. As a Southern California native I have witnessed Jamba Juice go from a small smoothie shop to a full-blown national franchise. The story was compelling, and I felt like I had gotten in on what could potentially be an exciting opportunity. Boy was I wrong.

One of the worst parts about the story is that I had been averaging down as the stock price went down. Eventually my average price per share came in at around $6.50. The problem all along is that I have just been married to this stock and the potential for this company. I was infatuated with the idea of owning a company from the beginning and watching it grow up into a big, well known, national public company. Obviously I liked that idea more than I liked to make money, cause the company has done nothing but taken advantage of our relationship.



The management at JMBA has never once acknowledged the fact that the company has lost over 80% of its value over the last 2 years. They haven’t done as much as to say, “We understand that our shareholders are hurting, and we have a plan to fix it.” So sufficed to say this has been a one sided relationship, they don’t give a shit about their shareholders.

JMBA has never been a large part of my portfolio. I always considered it to be a little gem that I could some day be proud to of been a part of from the beginning. But that small position has gotten a whole lot smaller to the point where it is embarrassing to even see it in my portfolio.

Everything I have ever said about JMBA still holds true. I still believe there to be a lot of potential in their ready-to-drink line and maybe some day they will grow into a profitable company. But we will never see this as long as the people in charge act the way they do. It is sad to see this position go, but in order to be serious about my new trading strategy I can’t have any skeletons in my portfolio.

Related Posts:
Jamba Juice Finally Extends It's Brand, Officially (27 May, 2008)

JMBA- Cutting Back (21 August, 2007)

JMBA- All Time Lows, & Taking Me With It (15 August, 2007)

JMBA- Time To Get Back On Board (26 July, 2007)

Jamba Juice Explodes On Record Earnings, And Then Tanks (12 June, 2007)



My First Few Trades With My New Strategy

Since starting with my new trading strategy things have been going according to plan. I have had some very successful +6% trades and limited the rest to less than -2%. One thing I hadn’t anticipated (but probably should have because it makes sense) was how quickly stocks reach their 6% goal. Both successful trades each took 5 and 6 days to reach their price targets. Knowing your price targets ahead of time makes all the difference in the world. If you see a stock approaching your target, put in a sell order and see if it triggers. One small pop can trigger your order even if the stock opens and closes nowhere near your target. My three most recent trades:

Short CSTR @ 34.65 on 6/24/08
Bought CSTR @ 32.05 on 7/1/08
TOTAL = 8.11% gain

Short MSFT @ 27.90 on 6/24/08
Bought MSFT @ 26.25 on 7/2/08
TOTAL = 6.29% gain

Bought T @ 33.35 on 7/1/08
Sold T @ 32.75 on 7/7/08
TOTAL = 1.8% loss

The AT&T(T) trade didn't fly because the market was getting crushed at the time. It is always best to be long or short according to overall market conditions. After 5 days and no sign of T trading in the direction I had planned, it was time to dump it and move on. If a stocks doesn't move as anticipated, get rid of it and put the money to work elsewhere.

At this rate I should be at my first 6% goal in no time. Then only 11 more times to double my money. The extremely choppy market conditions are making for great trading. Just remember to set stops, and everything will go according to plan.



The 6 Percent Solution

Below is the current strategy I use when investing my money in the stock market. I may make slight changes and adjustments to this strategy as time goes by, but the general concept will always stay the same.

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If you make 6% 12 times you double your money.
If you double your money 8 times it becomes $1.2 million.
[Starting with only $5k]
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Portfolio Rules

  • Always know where my next 6% goal is.

  • Sell all positions every time goal is reached.

  • No more than 4 stocks at a time.


Stock Rules

  • Plan the trade, trade the plan (know exactly where I am going to buy and where I am going to sell before pulling the trigger)

  • Never let a gain turn into a loss. Use stops.

  • Never lose more than 2%.

  • Always sell once up 5-10%.


Stock Picking Rules

  • Avoid stocks with known upcoming catalysts.

  • Pick stocks based on trends and technicals.

  • Look for stocks with potential for 5-10% gains.

  • Never pick stocks under $20.

  • Never pick stocks with average volume under 500,000.


Other Rules

  • Never hold a stock through earnings.


This strategy forces me to acknowledge some very important concepts that I believe make me a better investor.

  1. You will get sidetracked without a solid plan.

  2. Investing is all about discipline. Make a plan and stick to it.

  3. If you want to set your goals high, you need to take lots of baby steps to reach them.



My Pledge To Disciplined Investing

Back when I first began investing I built a strategy that I believed (and still do) could make me the most money, and best fit my investing style. It was a mash-up of the many investing strategies and concepts I had read in books and researched before putting my hard earned money to work in the markets. It was developed with no personal investing experience, but was based on the ideas and concepts of professional, successful, experienced investors. I had $5,000 at the time and my goal was to turn it into $1,000,000. The strategy was built on a set of rules that would help me minimize risk and stay focused on the baby steps towards my end goal. I called the strategy "The 6% Solution".

Fast-forward to today, and not only have I not reached that goal, but I was never able to successfully implement the strategy. The problem lies with what I consider to be the most important and difficult part of investing, discipline. The strategy would have worked as long as I stuck to the plan and focused on my goal. It turns out that was extremely difficult and boring. I found myself chasing the big winners, taking bigger risks and essentially attempting to prove my rules wrong.

I spent the last few years avoiding discipline only to learn that you simply cannot be a successful investor without it. So here is my pledge to being a disciplined investor:

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I will review my investing strategy before every trading day.
I will never break the rules of my strategy under any circumstance.
I will not let the excitement of the market interfere with my strategy.
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Remember, it is not so much the strategy. In fact, you can change and develop the strategy if need be, It is sticking to the strategy that counts. For an example of a strategy, check out the one that I use. The 6% Solution.



The Big Bid For Bud

Anheuser-Busch-LogoEveryone knows, you don't mess with a mans beer, but maybe Belgium never got the memo. InBev, maker of Beck's and Stella Artois brands has just made a $46 Billion bid for Anheuser-Busch. Not only is this a good offer, it is a great offer valuing the stock at $65 a share. Budweiser's struggling stock has been hanging out around the $40-50 level for the last 5 years. From a shareholder standpoint, the company should take the deal. Unfortunately this story gets a lot uglier.

For those who don't know, Anheuser-Busch is a company that is very near and dear to my heart. What can I say... I love drinking a cold Bud. JK. Actually, my dad has worked for Anheuser-Busch since before I was born and beer money has basically funded my entire life. Growing up around "The Bud Guys", I can truly say that this is the most genuine company/group of people who not only represent the American dream, but are respected as a great American company. The thought of losing such a great American icon to the dark side of free/open capital markets puts pit in my stomach.

What we are seeing here represents a scary trend in the American financial system. Our weak dollar and shot economy make American companies a target for takeover by thriving emerging countries. While the bulls-eye has been on America's forehead for many years, it was not until now that our oversees competitors have the ability to pull the trigger.

So who decides whether the deal goes through? The Busch family owns 4%, Buffett owns 5%, the Budweiser distributors own a good chunk of the company, but the boys on Wall Street still own controlling interest in the company. Will it matter to them that losing this company will dent the ego of our already suffering country?

The legal eagles on capital hill are already buzzing trying to figure out ways to make the deal "illegal". On the other hand, Budweiser is batting around it's own ideas on how to avoid the merger. Mexico's Grupo Modelo SAB and Anheuser-Busch have been working together for many years and if they were to merge, the combined company would be too large for InBev to swallow. Unfortunately one rumor floating around the Bud camp is that InBev has the financial backing to raise it's bid as high as $70 Billion which would value BUD at roughly $98 a share! It would be a hard sale convincing the market to deny an offer which is 2X the what the stock price was only a few short months ago.

This is going to be a long battle and I am only hoping we can hang on to this great American icon. The least we can do at this point is sign this petition to save Budweiser and keep Anheuser-Busch an American owned company. I will make sure to keep everyone updated on any news/rumors that come floating my way.
Budweiser-Logo



The GPS & Location Targeting Trend Is Still In It's Infant Stages

If there is one trend that I truly believe in it is GPS and location awareness. This technology is another example of tech developed for the government and military which is finding consumer applications. Not only is GPS extremely helpful, but it will soon change advertising as we know it. The launch of the iPhone 3G with it's new GPS capabilities got me thinking about how this technology is really still in it's infant stages. Last year sent some GPS stocks soaring, but they look to have come back down to attractive levels. There are also a few hidden gems out there still waiting to be discovered by the market.

Garmin (GRMN)
garmin-logoGarmin is one of the biggest names in GPS because they brought those dashboard turn by turn navigation systems to the masses. The HUGE runup we saw at the end of last year was driven by pure speculation that every car in America would get a new navigation system in their Christmas stockings. In an attempt to leverage it's brand and diversify it's product lineup, Garmin will launch the nuvifone in the third quarter of '08.

SiRF Technology Holdings (SIRF)
sirf-logoSiRF develops the chips found in many GPS devices. Unfortunately the company was a victim of the big hit GPS stocks took at the beginning of '08. Last year, many of SiRF's competitors were swallowed up by big chip makers who were looking to integrate GPS into their other technologies. The stock isn't looking too attractive right here, but being the last independent GPS technology company around makes them an interesting play.

Navteq (NVT)
navteq-logoYou must have seen it at the bottom of your Google maps, "Map Data Provided By Navteq". This is the company that keeps the worlds maps up to date and accurate. They basically dominate the market and without them, none of this GPS madness would be possible. Their real time traffic data is a recent example of various products the company can offer in the future to attract customers and investors.

GeoEye (GEOY)
geoeye-logoGeoEye is big brother at it's finest. Soon this year, GeoEye will launch it's new satellite capable of taking the highest resolution images of any commercial satellite ever. GeoEye's images already show up on services like Google Maps and are used by many businesses for detailed data on large areas.

Local.com (LOCM)
local-logoThis is my favorite play because the stock is so cheap and has so much potential. While it is not a pure GPS play I think it will turn into one. Local.com is a search engine strictly targeted towards local searches. For example you type in your zip code, and pizza to find all the local pizza shops, reviews and ratings. While this is nothing new, data like this will be extremely important when everyone in the united states has GPS in their pocket. There will be no more typing in your zip code when the phone knows exactly where you are at any given time. Imagine sitting in a restaurant and the phone pulling up the reviews and ratings because it knows you are inside. I can see local.com getting bought up by a big phone manufacturer, service provider or even a competitor.

If you know of any other good stocks which will benefit from the trend in GPS and location targeting make sure and share in the comments below.



Can Hybrid Technologies Win The X-Prize?

Hybrid Technologies has given us the first look at the vehicle they plan on winning the X-Prize with. This new car will come in two models, one gas/electric and one all electric vehicle. This new electric only racecar will travel between 120-180 miles on one charge, and the gas/electric model should go a minimum of 220 mpg. Some big questions for me still remain, will they will win the automotive X-Prize? How will this help their stock? Red or silver?



Related Articles:
Nissan Plugs In (19 May, 2008)
Investing In Hybrid Technologies (16 May, 2008)



Kinkos Gets Tossed In The Dumpster

Now here is something that makes no sense to me. FedEx purchased Kinkos in 2004 while it was still a thriving business. Today, four years later, they announce they will write off $891 million dollars worth of good will and assets associated with the Kinkos brand and drop the name all together. From what it looks like, that does not even include the cost of replacing their FedEx Kinkos logo everywhere it shows up.

ups logo changeWhen I think of changing logos and brand replacement two companies come to mind. In 2003 UPS announced that they would change their logo to a new more modern design. The estimated cost was $20 million and included changing their logo on thousands of vehicles, more than 250 aircraft, 1,700 facilities, 70,000 drop-off and retail boxes, and more than 1 million uniforms. FedEx has far less places to change the FedEx Kinkos logo but is spending over 40X more money to do so.

FedEx obviously did not plan for this. Why would they let the Kinkos brand thrive sync with the FedEx brand if they just planned on breaking it off and throwing it in the dumpster? The best example of a company succeeding in buying a huge company and then scrapping their brand just happened recently with AT&T and Cingular. One week AT&T bought Cingular, and the very next Monday AT&T had commercials and advertisements all over the United States saying "Cingular has joined AT&T". Just one month after that, AT&T incorporated the "Cingular Orange" into its logos and dropped the name completely. Even though BellSouth and Cingular spent a reported $4 billion dollars promoting the Cingular brand, AT&T crushed it in about two months but not before stealing various elements of the logo.

Kinkos is a big healthy brand. People still think of Kinkos first when they need copies or print jobs. I think the FedEx brand has actually benefitted from being associated with the Kinkos brand. Brandtags.net shows this best. The website displays a logo and then asks you to type in the first word that comes to mind. After entering your tag, it displays the results of everyone's responses in the form of a tag cloud. The larger the word, the more relevant it is to the brand. Maybe FedEx should think twice about dumping Kinkos all together. I'm sure a chain of print shops somewhere would pay good money to buy the Kinkos name. One things for sure, FedEx Office just dosn't have the same ring to it. Kinkos, R.I.P.



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