Thursday, May 27, 2010

Nice write-up by 3rd party on RMBS

One of the "flyers" we have mentioned has been in the news recently. Here is a good write-up from a 3rd party:

Legal Delays Hit Rambus

Shares of memory chip maker Rambus (Nasdaq: RMBS) are off -8% today on word that the International Trade Commission (ITC) will delay a decision on whether Nvidia (Nasdaq: NVDA) and others violated Rambus’ patents. Rambus, along with Qualcomm (Nasdaq: QCOM), has made its name as a collector of royalties for the massive base of intellectual property it has developed. Before the delay, shares of Rambus had been near a multi-year high on expectations of an imminent positive resolution to the matter. Yet this is more of a delay then a real setback, as the ITC simply wants all parties to weigh in on how a royalty deal between Samsung and Rambus will affect the rest of the industry.

Rambus has always been a difficult stock to value. Much of its profits come from royalties, and the timing of agreements creates very lumpy revenue and profit results. The company was especially active in securing new agreements in the middle of the last decade, which pushed shares above $40 in 2006. Royalty revenue slumped in more recent years, and shares now trade closer to $25.

Action to Take --> Over the near-term, shares should rebound and push past the $30 mark, perhaps closer to $35. That’s because the company is expected to imminently win a patent case over memory makers Hynix and Micron Semiconductor (NYSE: MU), which could net the company close to $500 million in an upfront license, and then more revenue from ongoing royalties. After that, perhaps by the end of July, the company is still expected to prevail in the case that was just delayed by the ITC. That could net the company a similar windfall.

Wednesday, May 26, 2010

Stock System Update

During the recent stock market volatility, our long-term stock systems have remained long. Our intermediate overbought/oversold have been slightly "long" through the turbulence -- and they are now moving to a medium to strong long position.

Volatility and scary drops have returned for now -- but the computer systems are giving a green light. We moved back down to the area of the "Flash Crash" and there looks like there is solid support in the 1050-1060 area on the S&P.

Stocks in the Long Run

Franklin Templeton and Stocks in the Long Run -- this is a nice look at long-term stock performance including poor ten-year periods like we have seen recently.

Monday, May 17, 2010

Comparing Greece to US: OK, but need to tighten belts

" different, really, is the United States?

The United States will probably not face the same kind of crisis as Greece, for all sorts of reasons. But the basic problem is the same. Both countries have a bigger government than they’re paying for. And politicians, spendthrift as some may be, are not the main source of the problem.

We, the people, are..."


Check out this article for more info.


Monday, May 10, 2010

Using Z-Trader Blog: Difference between Traders & Investors

Several readers and friends have asked about our trading systems and how to best read our Blog -- and use the trading signals. Last week's crazy free-fall was a prime example.

There is a difference between traders and investors. Investors typically look for positive results over a longer-term time horizon. Traders, on the other hand, attempt to add excess returns by trading in and out of positions over the short to intermediate-term.

During last week's sharp declines, traders had to reduce positions and manage risk. On the other hand, long-term investors were looking to add to positions. I act as both an investor and a trader for various portions of my portfolio.

Note that we always blog or Twitter whenever we have a change in our long-term or intermediate-term (overbought/oversold) stock indicators. We also periodically discuss the futures markets.

Wednesday, May 5, 2010

Intermediate Indicators Go Long (Fear)

We just Twitted about our intermediate-term/oversold signals going long this morning. There is a lot of fear in the market right now. Stocks may be volatile, but at least historically, this kind of fear creates short-term and intermediate-term opportunity.

We are stepping back into the market (and increasing our stock allocation) cautiously.