What's next for PALM? A few "PRE"monitions.....
June 06, 2009
– Comments (9) |
RELATED TICKERS: PALM.DL
What I'm Learning from PALM. Reading my PALMs.....
I'm learning a lot the last year or so. Last fall I watched some good companies tank down further than the companies I had labeled as "BAD" companies. It happened again in March. I'm learning that looking at fundamentals, balance sheets, P/E, and other statistics doesn't always work in forecasting stock price movement. Mr. Market is not rational, he doesn't have to be, and he's calling the shots. Even when he's wrong he's right.
About once a week I look at some of my most point losing calls here on caps. I focus on the down thumbs and look at the trends wondering which might come back into positive points. IF I see one that I'm unlikely to get back in months, if ever, then I close them for the loss and make space for other calls. I rarely close an upthumb call if the company still has a pulse.
I know some CAPs vets would rarely, for any reason, close a losing pick. Accuracy points are the deciding factor at the top of the heap, but I just can't see wasting space on my list. When I first started closing picks, I did close some too soon. The market swings caught me off guard and I didn't realize the value of the accuracy points. Overall room on my pick list for better calls should help me in the long run.
One company I wrestle with each week is Palm. I'm in better shape than some, point wise on Palm. I still think it was over valued when I picked it, but Mr. Market has kicked it up 3X my start price. I watched it creep above -300 points on my sheet last week. Each week I consider closing it, but darn it, I know its a dog!
I have to ask myself if I'm being vindictive, have developed a hate relationship because it bruised me. I believe "we" do tend to do that at times. I've seen some very stubborn investors who won't let go. IN this case I had no money on it, just pride, and each look at it's fundamentals tell me it's history, so I keep it open. Negative Net tangibles, Negative net book, no earnings, high debvt, a one trick pony.
Well, the PRE finally launched this weekend. Not much hype that I could find from PALM or Sprint. Both don't have much advertising money, but both have a lot riding on the PRE. The Yahoo message board is lit up with whether it will be a success or not. Six people in line at a store opening, ten here, no one there....sold out!
Based on my analysis, the stock price started back down Friday after hitting a new 52 week high. I "think" that some investors were riding this for the announcement pop and are getting out. I believe this will heighten on Monday and Tuesday. The speculators will drift out, what will that leave? I expect to see sub-$11 by Friday, but then the longs hold and the ones who thought they "missed" get in.
The company is picking up returnable cans from the side of the road to stay in business. The debt load alone requires PALM to sell at least 1/3rd as many PRE's as APPLE sold it's iPhone just to pay the interest on the debt load. Palm hired away a slew of engineers from competitors to get the PRE features out, more overhead. Finally Apple is already talking hype about it's release and RIMM will probably start hyping theirs next as well.
The cell phone business is saturated, even if the economy was better. I don't see Palm getting the volume they need. Rumor has it that Microsoft wants in the business. I'm not sure if Palm's debt load is worth the entry price.
I'm still calling this one DOWN. I have some PUTS, so real money invested now, so I hope this isn't just a hate relationship I've developed.
Mr. Market is NEVER wrong, but it's time for Mr. Market to take a vacation or find the next big thing to hype. I doubt I will get my PALM pick back into the green, but by golly, I'm betting I can get a few of my points back so that when I do close it, it's only a moderate eye sore on my "WORST" pick list and will ever be my reminder that Mr. Market is in charge. Fundamentals, TA, gut calls, etc, don't mean a thing if Mr. Market's got that name.
Good luck, gotta go, is that my daughter's phone ringing again? How did she get her address book and favorites onto that PRE already.......?? :)
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