SubscribeOne Week Job - Day 3 Update
November 8, 2007
8:00am on Day 3 and Sean was energetic and ready for the what the day would bring. We went to the office with a full schedule ahead of us and planned out the details, looked at the pre-market news and set out to fund a few opportunities. This day we had the added challenge of fitting in an NPR reporter who was coming to interview both of us and to find out more about Sean’s projects well as a podcast interview with Jim Jubak of Microsoft’s MoneyCenteral.
As the NPR interview was closing and we were wrapping up, Sean came across the opportunity of what looked like a potentially profitable trade into Crocs (CROX). Looking at all of the data, he felt that the stock was poised for a bounce, even thought the overall market had been weak that day. The stock was then sitting at $41 and had shown a good deal of support at that price.
As we were still working on a few other items on the daily to-do list, we initially passed it up even though Sean was getting a bit anxious watching the price action. It wasn’t until it moved up towards $41.30 that a confirmations signal was clearly reached. We bought a small position to see how it would play-out.
It turned out to be a short-hold as the market was becoming more volatile throughout the day and the position was not moving at all from its support level. We made the decision to abandon the position for no-loss and no-gain. (FYI: Sean was right in his assessment of the position and if we had held it, we would have ended the day with a $1 per share profit on that trade)
Other than that, we had 5 successful trades for a nice profit and decided that the markets would have to wait as we had two important meetings that required some preparation. Over all, the day was productive and Sean put to work many of the important lessons learned about trading stocks. Tomorrow will be his final day as he is headed north in search of the perfect baked cake.
(Note: All trading and stock transaction were done under the direct supervision of Andrew Horowitz and no client money was used in any of these trading lessons/simulations)
One Week Job - Day 2 Update
November 7, 2007
Sean got an early taste of the dreaded Miami/Interstate 826 traffic today. Stuck for over an hour in bumper-to-bumper traffic he arrived late at the office at 9:45am. Even with this setback, he was ready and willing to roll up his sleeves and get going, so we dug right in. 
We started the day by looking at the many economic and news items that would shape the day and found a few interesting positions that would would look to enter. Overall, we have traded over $1,750,000 in a day-trading style and have total net profits of $5,500. Looking at the trades, we tallied a total of five up and one down. Interestingly, the down was on a small position that was entered into after we chased a news item on an earnings release. Never a good idea.
Mid-day, he seemed ready. So, we both decided that Sean would take the helm with 3,000 long shares of Countrywide (CFC). Initially, he looked to exit at a price that he determined was the upper limit of the trading range. One of the lessons we went through today was the fact that he must leave emotions a the door before he comes in to trade. In his words, ” it is a hard thing to separate the emotions as it is so high powered and so intense. This is a real rush and the second I took over the trading platform for CFC, it was like a jolt of electricity passed through me,” he explained.
In the end, we made about $.12 per share on the trade and the “net” after commission profit was $350 . This was donated to the charity for the One Week Job project. Sean is a quick learner and he has a real knack for finance. We spent a good amount of time on the Level 2 trading platform and the explanation of the various components as we were busy reviewing portfolio positions as well as longer term opportunities.
Tomorrow we are planning on a very big day. NPR interview in the morning, taping The Disciplined Investor
Podcast in the early afternoon, and then off to afternoon meetings and more interviews. Should be a day full of learning and a heap of caffeine. The first thing on our agenda though, will be to make sure that all of our client positions are in good shape and that there is no news that could be a negative influence on those stocks within H&C client portfolios.
As it is getting close to the end of the year, we will begin to look through portfolios to find and “harvest” tax losses to offset gains for clients. This is always the plan starting in early November. Even though loses are something that we attempt to avoid, sometimes it is simply smart to take the loss and move on. This is why the practice of diversification and some form of risk management is one of the key components when managing portfolios.
Our One Week Employee - Introduction
November 6, 2007
We have a new employee - but, he’s only staying one week!
After graduating from college in 2005 with a Business degree, Sean Aiken made a promise to himself that he would not settle for a career that he was not truly passionate about. Not realizing what this type of career would look like, he started, www.OneWeekJob.com in order to gain a better understanding of where his passions lie and inspire others to go after their passions.
Basically, anybody anywhere in the world can offer him a One Week Job. He is doing 52 jobs in 52 weeks with all his wages donated to charity.
Some of his previous One Week Jobs throughout North America have included: Advertising Executive, Dairy Farmer, Yoga Instructor, Florist, Job Recruiter, Veterinarian, Radio DJ…And now, in Week #33 of his journey, he is a Stock Trader/Investment Advisor with Horowitz & Company. This week he will be honing his skills in the areas of economic theory, basic finance and investment management by researching and trading stocks, bonds and mutual funds.
Graduating top of his class with a Business Administration degree, Aiken sees many signs that his generation is putting off the transition into adulthood - taking longer to finish university, get married, move out, start a family and to enter the work force. In a world where there are so many possibilities, the weight of all the possibilities can be overwhelming,” he says.
“Each day, we will be working on a different facet of this job.” said Horowitz, his 33rd employer. “The market’s daily gyrations movement and continual changes in the economy will help to make this a very interesting week,” Horowitz added.
All of the monies Sean receives will be donated to the Make Poverty History campaign and donations are highly appreciated. We will chronicle Sean’s experience daily via blog posts audio and video and have a call-in show later this week. Stay tuned.
The Sharks are feeding on Crocs
November 6, 2007
What am I missing? Wasn’t it was only a few months ago that Crocs was the golden child and was going to be the next Shoe-Google. Back then, I was the “stupid one” who had no idea what he was talking about, as once again I was told over and over that this time was different. It was only a few months ago that I warned about the over-valuation of the stock and that $40 was going to be a price to watch for if the stock did not meet investor’s expectations. Today, I write this trying to find answers, not rubbing salt in an open wound.
For the past 2 years or so, the Crocs bandwagon had many well-heeled fanatics buying shares as they were hopeful of a retirement based on the a fanciful valuation of their rubber-shoe empire. Along with that, it seems that the anti-bacterial component along with slipper-like comfort, had most looking the other way from the horrific fashion statement which the bold colors represented from the over-sized hole-ridden footwear. Add that most analysts had Crox at a BUY (or better) and several well known writers/bloggers were continually defending the company at all times. It is no wonder that most investors were in continual BUY mode.
The problem is this: If only a month ago many investors owned shares with the belief that there will be a steady growth of earnings moving forward; why did the stock take such a tremendous hit after posting, albeit disappointing, yet somewhat reasonable solid results? It seems that once again, emotions are the crux of the Crox.
Look at the fundamentals and it is exceedingly hard to comprehend how the stock is trading below the level it was when the essentially all of the information is similar to what was published in May 2007. Fundamentally, not much has changed except for the fact that growth is not expanding at the rate it had been for the past several quarters. Now, unless there is more that meets the eye with the latest announcement of earnings and projections, there is much more panic than logic involved in this sell-off - But you already know that. It is a well known fact that EPS growth slows once a company moves towards maturity. Look at Dell, Microsoft or even Merck. It is not simply the EPS growth percentage, it is also the ratios that are of importance here.
The truth is that Crocs has been the favorite of the “emotional trader”, those that are playing the home-game. The reason for the past run up being so strong was based on strong emotional ties to a stock because of love of past growth. These are the same investors who are now running for the hills – simply selling at any price because they are apparently holding low-cost-basis positions that they do not want to lose on. There is no logical reason for this massive sell-off. Really…
But what does logic have to do with this stock anyway? One more question: Where are all of the die-hard writers now? You know, the ones that were screaming to buy-buy-buy! Why are they not here now, helping you with the situation when the decisions are much tougher. Frankly, running away and pretending the stock did not get cut in half will not provide comfort or direction. So, here is a life-ring: Hold on for the bounce. It is coming and will be strong.
Just to be clear: We sold/shorted at the peaks, now we are buyers in the valleys. Use logic here and profit should follow.
Horowitz & Company clients may hold LONG and/or SHORT positions in CROX.
R U the Next Peter Lynch? (Contest) Week 3
November 5, 2007
Here are the finalists for Week #3
1) Listen to this week’s finalists…
Pitch # 1
Pitch # 2
Pitch # 3
2) Please VOTE for who you believe has the best pitch. (one vote per person please)
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