2002-12-23
Thoughts on the Stock Market
This is a historical document written in 2001. My current holdings include Audible, AMD, Apple, and Qualcom. Intertrust did get a large settlement with Microsoft and I sold my shares. My nano/biotech plays, NGEN and CALP, have been up and down - mostly down - and I now believe in sticking in the domains I know best: computer and consumer electronics. We've had a good run since late 2001; given my self-employment and lack of time in following companies, I've been increasing cash relative to my stock holdings.
Just after finishing my perpetual degree pursuit, I became serious about investing and learning about the stock market. For the first year, I was obsessed with Wall Street, trying to micro-manage my portfolio and making far too many trades. I saw eye-opening events like the Bre-X scandal, the Asian contagion, and the incredibly poor and manipulative work of some "expert" analysts. The dot-com mania obviously overinflated many stocks, but shorting companies like K-tel, uBid, and CMGI was difficult for timing reasons.
I frequently look for over-reactions to news or unfair/incorrect assessments of high-tech companies. I invest only in high-tech companies that I understand and really like the idea of finding companies with intellectual property that are trading at a discount to cash with relatively slow burn rates. Besides this bottom fishing strategy, I study developing trends in the tech sector and target companies that will benefit from the trend. "The Big Tech Score" by Mike Kwatinetz provides an interesting blueprint for personally managing a small porfolio of stocks.
Advanced Micro Devices (AMD) is releasing their "Hammer" line of 64-bit processors with 32-bit x86 compatibility. If AMD can establish a strong corporate interest, for the first time in their history, they will make great gains versus Intel.
Nanogen (NGEN) makes chips that can electronically manipulate DNA, proteins, etc. Their devices are highly sensitive but perhaps not as applicable to mass market as Affymatrix (AFFX) gene chips. Caliper (CALP) specializes in microfluidic technology and trades at a sizable discount to cash; this is a case where the investing public values their operations and IP at a sizable negative amount. A private company, US Genomics, is developing a real-time system for sequencing an individual's genome.
Audiocodes (AUDC) is an Israeli Voice-over-IP chip/equipment maker. It's stock price has been decimated, and as of October 2001, it trades at a sizable discount to cash relative to its burn rate. Audiocodes is trying to move into 2.5/3G wireless markets. They have been a leader in VoIP.
Intertrust (ITRU) has been periodically trading below cash value. They have a broad patent portfolio in digital rights management, central to the digital delivery of content. Their current strategy is to remake themselves as a licensor of their intellectual property. If they can win their suit against Microsoft or establish their IP as necessary for digital content delivery, Intertrust is dramatically undervalued. All of the companies above are speculative plays. The safer bets are covered through index and large cap funds.
Silicon Investor (SI) was my earliest discussion forum of choice. Most high-tech stocks have active threads and if not, you can always start a new thread. SI has very nice price charting features, access to old news, links to SEC filings and pertinent web sites, and some general market-related threads.
The Motley Fool web site may not be as functional as its AOL area, but it still provides some good information, particularly on stocks in the Fool's portfolio. Beginners will find a wealth of "Foolish" advice on the stock market.
I like to be aware of the short interest, both as an indicator of negative sentiment as well as the likelihood of possible short squeezes. Short interest on NYSE stocks can be found at BigCharts which is also an excellent resource for momentum information and broad market graphs. Short interest for NASDAQ stocks can be found at ViWes.
Insider trading can be monitored through a number of sites. InsiderTrader offers both a subscription service and free insider summaries. CDA Investnet Insider Watch also provides some free information.
CMPnet provides a couple of web sites covering technology. General tech news can be found at TechWeb. EE Times is a great source of news and developments in the semiconductor chip industry. Tom's Hardware Guide,Extreme Tech, and AnandTech are excellent sites for reviewing computer technology developments. The Register and The Inquirer are great daily news sites for computer-related technology. ZDnet's Interactive Investor is another good resource for computer industry news.
Just after finishing my perpetual degree pursuit, I became serious about investing and learning about the stock market. For the first year, I was obsessed with Wall Street, trying to micro-manage my portfolio and making far too many trades. I saw eye-opening events like the Bre-X scandal, the Asian contagion, and the incredibly poor and manipulative work of some "expert" analysts. The dot-com mania obviously overinflated many stocks, but shorting companies like K-tel, uBid, and CMGI was difficult for timing reasons.
I frequently look for over-reactions to news or unfair/incorrect assessments of high-tech companies. I invest only in high-tech companies that I understand and really like the idea of finding companies with intellectual property that are trading at a discount to cash with relatively slow burn rates. Besides this bottom fishing strategy, I study developing trends in the tech sector and target companies that will benefit from the trend. "The Big Tech Score" by Mike Kwatinetz provides an interesting blueprint for personally managing a small porfolio of stocks.
Technology Developments to Watch
- Genomics, Proteomics and Nanotechnology. Molecular Medicine is here. Personal genome reading will be a key to molecular medicine. (Does US Genomics have a system that works?) Systems that operate in the mesoscale will revolutionize bioengineering in both diagnostics and therapeutics.
- Neuroprotheses and other biomedical engineering developments. Within a decade, we will probably see functional bionic eyes and limbs directly interfaced to the brain.
- Wireless internet and content companies that can leverage it. Refinement of current 802.11b wireless coverage and the creation of low-cost ultrawideband networks might dramatically lower the cost of broadband in the last mile.
- Digital Video (e.g. DVD and DTV), storage systems for digital video, and computer graphics. New digital video viewing paradigms like those championed by TiVo and Replay are reshaping the ways we watch TV and the financial support mechanisms for public TV. Increasing realism in computer graphics is leading to real-time cinematic experience.
Companies of Interest
I'm an investor and enthusiastic consumer of Audible.com (ADBL), an internet provider of downloadable spoken audio content. It's a speculative play, but hopefully they will survive until the market grows sufficiently for positive cash flow. You can check out my web site dedicated to Audible analysis at ADBL.org.Advanced Micro Devices (AMD) is releasing their "Hammer" line of 64-bit processors with 32-bit x86 compatibility. If AMD can establish a strong corporate interest, for the first time in their history, they will make great gains versus Intel.
Nanogen (NGEN) makes chips that can electronically manipulate DNA, proteins, etc. Their devices are highly sensitive but perhaps not as applicable to mass market as Affymatrix (AFFX) gene chips. Caliper (CALP) specializes in microfluidic technology and trades at a sizable discount to cash; this is a case where the investing public values their operations and IP at a sizable negative amount. A private company, US Genomics, is developing a real-time system for sequencing an individual's genome.
Audiocodes (AUDC) is an Israeli Voice-over-IP chip/equipment maker. It's stock price has been decimated, and as of October 2001, it trades at a sizable discount to cash relative to its burn rate. Audiocodes is trying to move into 2.5/3G wireless markets. They have been a leader in VoIP.
Intertrust (ITRU) has been periodically trading below cash value. They have a broad patent portfolio in digital rights management, central to the digital delivery of content. Their current strategy is to remake themselves as a licensor of their intellectual property. If they can win their suit against Microsoft or establish their IP as necessary for digital content delivery, Intertrust is dramatically undervalued. All of the companies above are speculative plays. The safer bets are covered through index and large cap funds.
Stock Research
Yahoo! provides a good portfolio tracking system that integrates stock prices, charts, news, and basis prices. They allow you to maintain the information on their server so you can track your stocks while travelling as long as you can surf the web. They also provide a table of analyst recommendations so you can see how the analyst community views a stock (e.g. "Strong Buy" vs "Hold").Silicon Investor (SI) was my earliest discussion forum of choice. Most high-tech stocks have active threads and if not, you can always start a new thread. SI has very nice price charting features, access to old news, links to SEC filings and pertinent web sites, and some general market-related threads.
The Motley Fool web site may not be as functional as its AOL area, but it still provides some good information, particularly on stocks in the Fool's portfolio. Beginners will find a wealth of "Foolish" advice on the stock market.
I like to be aware of the short interest, both as an indicator of negative sentiment as well as the likelihood of possible short squeezes. Short interest on NYSE stocks can be found at BigCharts which is also an excellent resource for momentum information and broad market graphs. Short interest for NASDAQ stocks can be found at ViWes.
Insider trading can be monitored through a number of sites. InsiderTrader offers both a subscription service and free insider summaries. CDA Investnet Insider Watch also provides some free information.
CMPnet provides a couple of web sites covering technology. General tech news can be found at TechWeb. EE Times is a great source of news and developments in the semiconductor chip industry. Tom's Hardware Guide,Extreme Tech, and AnandTech are excellent sites for reviewing computer technology developments. The Register and The Inquirer are great daily news sites for computer-related technology. ZDnet's Interactive Investor is another good resource for computer industry news.
