Wimax, The Speculation Starts Here

wimax-logoI remember talking about WiMax like 4 years ago, "It is like giant wireless routers setup like cell towers all over the city". I know this sounds crazy, but that is basically what WiMax is. I have no idea what has taken so long for this technology to get rolled out, Intel has apparently been finished developing it for years. Intel even assisted the FCC and FEMA by rolling our WiMax in New Orleans after Hurricane Katrina. The lagging issue aside, it looks like WiMax is finally getting the funding it needs for the big national rollout. On May 6 Intel ($1 bil), Time Warner($550 mil), Comcast ($1 bil) and Google ($500 mil) announced that they will invest more than $3 Billion in ClearWire(CLWR), an up and coming Wimax provider. Sprint announced a couple years ago that they were going to build out a giant WiMax infrastructure to try and corner the market. Now that WiMax is finally getting the press it deserves, I saw we start speculating. But first, lets answer the one question everyone is asking, "Who is Clearwire?".

clearwire-carClearWire was started by a telecommunications industry pioneer by the name of Craig O. McCaw. McCaw outsmarted the giant telco giants back during the babybell days by purchasing up millions of local FCC licenses that the telcos didn't know they would eventually need. He later sold his company to AT&T for $11.5 billion and now he's at it again. This guy sees the potential in WiMax that he once saw in these FCC licenses. He knows the telco industry like the back of his hand and now he has Intel, Google and major cable operators giving him billions of dollars.

While he has convinced the tech heavyweights, he has yet to convince investors. Shares of ClearWire had a monster IPO back in March of '07 and have been sliding ever since. The nice pop CLWR got this week from the big funding announcement got shredded 10% today by a Citi analyst who downgraded the stock from "hold" to "sell". Sounds fishy too me. Lets see, Google, Intel, Time Warner, Comcast and this McCaw guy believe in WiMax so much that they invest billions, some Citi analyst on the other hand hates it. Who do you believe.

If you are like me, you believe the tech heavyweights of the world over the Citi guy. I see ClearWire as a great way to play the future of the internet. Let's go ahead and speculate, you know... the fun stuff:

1) Lets start by saying that WiMax technology is 5, or even 10X faster than anything currently available by AT&T & Verizon as far as wireless connectivity (I have actually heard that this is true).

2) Then let's go ahead and say that part of the reason Apple switched to Intel chips a few years ago had something to do with knowing all about WiMax. Wasn't this about the time that Mr. Jobs started working on his first iPhone?

3) Of course Google is investing $500 million in this company right about the same time they are releasing their new android platform. But Google invests in everything, and didn't they spend twice that for youtube?

4) McCaw has already convinced AT&T to buy one of his companies back in the day. If this gains traction, I could see that happening again.

5) Comcast and Time Warner want in this deal in a big way hu? My home phone, tv, and internet is already provided by Time Warner, why not my cell phone too?

There are only two pure plays if you want to try and invest in WiMax. The first and most obvious is ClearWire. The stock is down big and I think this is a good place to start building a position. The next is a little known penny stock that recently hit the radar, AIRN. Apparently they make the WiMax hardware needed to roll out these big ol networks. Intel, Google, Time Warner & Comcast are all too big for any change in the WiMax area to make any real difference in their stock price. But this doesn't stop us from speculating. Internet EVERYWHERE has been a long time in the making, is it finally here? What else will come along with it? There is surely a ton more room to speculate in the comments =)

Hogs Get Slaughtered

apple logoUnfortunately I think it is time to start scaling back on some of these winning positions. I have not researched any other stocks to put the money in, so I will leave it as cash for the time being. Better to act first, ask questions later. I started this morning by selling my Apple position. Trade record as follows:

Bought AAPL @ $154.24 on 4/10/08
Sold AAPL @ 186.08 on 5/6/08
Gained 20.64%

June 1 is Apple's big iPhone announcement. They will be launching their application platform and rumors are swirling about a new 3G iphone. I have always been a big fan of buy the rumor, sell the news and this is a perfect example. The sell could be a little premature but 20% is a serious gain. Bulls make money, bears make money, hogs get slaughtered.

Microhoo Looks Like A No Go

How could this week be complete without a Microsoft Yahoo post? I haven't posted about this yet but it seems pretty obvious. Microsoft had offered $47.5 billion to buy Yahoo Inc., but scrapped the bid late Saturday after they could not agree on a sale price. Yahoo!'s stock popped pretty big the last couple weeks as investors anticipated the deal would go through.

Unfortunately Yahoo! fought off the bid, Microsoft backed out, and the stock tanked 15% today. The news broke Sunday and bloggers were going cRazy. At one point @Scobleizer noticed that the ENTIRE TechMeme was nothing but Microsoft/Yahoo Articles.

The best coverage by far has been over at TechCrunch. So if you are interested in more details on this event, go here.

My Five Rules For Building A Portfolio

Ever since I decided to "Rock A Full Portfolio" I have been having one my my best months to date. I attribute this to five different decisions I made when I decided to start testing out this trading strategy.
1) If the stock doesn't act as expected, dump it.
2) Hold short as well as long positions simultaneously.
3) Keep some cash on the sidelines just in case an opportunity presents itself.
4) Don't let the daily fluctuations force me to make quick unplanned decisions.
5) Pick stocks which have near term catalysts or look to be at a bottom.

--If the stock doesn't act as expected, dump it--
Each stock I picked I did so because I had expectations for it, usually to go in the direction that I had anticipated. Of the five stocks that I chose two decided to act unexpectedly.

The first, STP, seemed to be in a nice position to take advantage of rising oil costs. It was a solar play that had been lagging behind the other stocks in it's sector. I bought in at $47.62 just before oil started making its treck up to $120 a barrel. It started to trend between $45-48 and wasn't able to break out of the range. With oil hitting all time highs STP should have been breaking out so I decided to sell at a loss at $45.10. It is better to take the small loss and put the money elsewhere than hang in there with a sock that going against your research.

The only other pick that acted unexpectedly is Amazon. I sold short going into earnings because I expected them to guide down for the rest of the year and potentially have just an OK quarter. Both of these predictions did become true, and the stock did go down after earnings. What I hadn't anticipated was the market wide rally that happened just days before due to the amazing Google numbers. Google managed to carry every tech stock up 5-10% which prove to be awesome for my Apple pick, not so good for my short position in AMZN. I have decided to hold onto AMZN because I still feel it will go lower. It has backed off of its recent high and is now trending downward, back to where it was before the Google earnings. I still expect to make money off of this short position.

--Hold short as well as long positions simultaneously--
This rule is one of the primary reasons I have been in the green almost every day since picking this basket of stocks. During these turbulent times the market has seen some nice green days, as well as some ugly red ones. When the market is down, my short positions have kept my portfolio from seeing big losses. During the green days, a lot of the time my short positions have still been down because they are not good stocks. Having both short and long positions has really helped keep the equilibrium in place and I cant imagine ever being only one sided.

--Keep some cash on the sidelines just in case an opportunity presents itself--
You never know when a situation might come up where you need cash to pick up some stock. This happened on 4/28 when I was confident GLW would have a great quarter and I wanted to get in before earnings. They were showing some super bullish signs and It just seemed like a no brainer. If I hadn't had some cash around to buy GLW I would have had to sell another winning position to get some. Selling one winning stock to buy another doesn't change anything, but taking some cash and putting it to work does and I am glad I had the money ready to go.

--Don't let the daily fluctuations force me to make quick unplanned decisions--
This rule has proved itself time and time again. So much that it deserved it's own post back on 4/22. The best example of this has been my Under Armour position which has been on a downward trend for some time now. I have been short since 2/5 now and almost bought back on multiple occasions. Just before their recent earnings UA ran from $32 to $39. That put a serious dent in my position but I was confident they would have a bad quarter and was right. Just after earnings they fell from $39 back to $33. When the daily fluctuations are making you think twice about your position, sit back, pull up a 6 month chart, and remember why you chose this position in the first place.

--Pick stocks which have near term catalysts or look to be at a bottom--
Deciding when to get in on a position is one of the hardest parts of portfolio building. One strategy I have used with great success is getting in on stocks juuuust before a near term catalyst. The reason you do this is because you don't want to get stuck in a position that keeps fluctuating between profitable, and in the red, green, red etc. For example, I decided to buy GLW just before it's earnings announcement and just as the 50 day moving average crossed the 200. I got in at $25.93 the day before earnings and found the stock up a full dollar the very next day. If it had gone down, I would have sold, but since it went up, now I can hang on knowing that it is well above my buy in price. I can even put a stop in at $26 to make sure I don't lose any money on the investment.

Testing different strategies and recording their results was the primary reason I started this blog and this is a perfect example. So far over the last month I have had one of my most profitable months to date (up over 20%) while testing a strategy I had never tried before. I don't think I have ever had more than 4-5 stocks at once. It has been a real learning experience, and I plan on sticking with this strategy for some time.

Browser Issues

I have been having some serious problems with my browsers lately. I have always been a big FireFox fan, but then I switched to the new safari and loved it. When I started having some issues with safari, I downloaded the new FireFox beta and gave that a try. No matter where I go or what I do, browsing just isn't the same anymore.

I honestly don't like the new FireFox yet. And this is not a case of just not giving it a fair chance because I did. First there are barely any compatible extensions which is understandable considering it is in beta still. But what about the default skin!? It is so bubbly. Why does everything need to be beveled and dropshadowed: OVERKILL.

Before it sounds like I just don't like the new FireFox because it is ugly, here is the main reason. It is slow and laggggy. Maybe this isnt the case with the PC version, but I have read articles comparing it to Safari and I must say, not a chance. Now I am not clocking them or setting up super sophisticated software to compare but the user experience is definitely not working.

So since I don't like the new firefox I have been using Safari. For the most part, safari is fast and I love it. I miss the extensions that firefox offers, but after a while without them you forget they ever existed. Am I the only one having serious problems with Safari and cookies!? It seems to have something to do with logging in and user accounts. Sometimes when I have had Facebook open for too long, when I come back and click something it tells me to log back in. So I try to log back in and I get rejected. Then I need to go into Safari Preferences, delete my Facebook cookies and come back again. I log in again and get a different error "Cookies not enabled". Then when I login the third time it lets me back. Whata painnn! In short I have been having similar problems with my Google Account.

I hope these browser guys get things back to normal. I miss the days when I didn't have to worry about the most important program on my computer acting up. Maybe I'll just have to switch back to Internet Explorer =)

AAPL wants to break into $180

AAPL seems like it is dying to break into the 180 range. Yesterday afternoon it made a run for it just before the fed cut IRs and then tanked. Today it hit $179.50 and then retreated until the last 10 minutes of the day when it made a crazy run for it! I posted on twitter "AAPL is making a run for it... can it make it before the close?!..." And then in a surprise twist... AAPL closed at exactly $180!!! haha woohoo

I expect AAPL to gap up in the morning just to prove it belongs in this new trading range.

Do they honestly think Diggers will click that!?

I think they need to work a little harder on their target demographics models.

Dice Stacking Master

It's an old magic trick, but there is no magic involved. I usta be able to stack dice way back in the day. This guy takes it to a whole new level.

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