BBC – The Podfather

Documentary telling the story of silicon chip inventor Robert Noyce, godfather of today’s digital world. Re-living the heady days of Silicon Valley’s seminal start-ups, the film tells how Noyce also founded Intel, the company responsible for more than 80 per cent of the microprocessors in personal computers.

• Download
• Streaming
• Shockley, Nobel prize winner, inventor of the transistor and the Traitorous Eight

Kleiner’s Laws

Words of wisdom from Eugene Kleiner, one of the original founders of Kleiner Perkins.

• Make sure the dog wants to eat the dog food. No matter how ground-breaking a new technology, how large a potential market, make certain customers actually want it.
• Build one business at a time. Most business plans are overly ambitious. Concentrate on being successful in one endeavor first.
• The time to take the tarts is when they’re being passed.
• The problem with most companies is they don’t know what business they’re in.
• Even turkeys can fly in a high wind. In times of strong economies, even bad companies can look good.
• It’s easier to get a piece of an existing market than to create a new one.
• It’s difficult to see the picture when you’re inside the frame.
• After learning some of the tricks of the trade, some people think they know the trade. This reflected some of Eugene’s own humility; he recognized that many venture capitalists thought they were experts when they had just a bit of knowledge.

ICOP surges

Stock has moved up nicely on Friday on big volume and on no official news.

• ICOP has been in a nice uptrend since they announced a deal with Raytheon.
• My recap of the conference call on the Raytheon deal.
• A few small sales orders were reported recently indicating that the Raytheon deal is beginning to bear fruits.
• Management was recently interviewed at Fox Business news.
• ICOP products at Raytheon’s site.

Buy a few shares on weakness. Float/shares outstanding is small and stock has potential to spike on news related to new sales orders.  Of late, stock has strong support and rebounds from 58 and 61 cents.

Negatives to keep in mind/Caution:

• Stock is speculative.
• ICOP has very little revenue.
• A secondary was filed recently.

A few small sales orders were reported recently indicating that the Raytheon deal is beginning to bear fruits.

LSCC gets upgraded to Buy. Target price 3.5$

Northland Securities Upgrades Lattice Semiconductor (LSCC) to Outperform.

• Details
• More

LSCC gets an upgrade following yesterday’s earnings report.

• Lattice Semiconductor sees Q4 revenue up 6%-10% vs. Q3
• Lattice Semiconductor reports Q3 EPS 0c vs. consensus of (2c)
• Reports Q3 revenue $49.1M vs. consensus of $47.39M

Transcript of earnings call

Buy a few shares as stock is cheap, cash rich and is trading near book value. Management expects next qtr to be profitable.
Caution: Semi stocks that I have been following are getting weak of late (since mid Sept). LSCC is also trending lower.

Hany Nada buys more of GLUU

1)Hany Nada buys more. About 600k shares. Average price close to 1.1$

• Details on this buy

2)Info on Hany Nada

• Forbes
• GGVC

GLUU moved from 1$ up to 1.5$ in late August when Hany Nada filed his big purchase. Stock is cheap and has a small float. Has potential to move up in the near term.

Sunday diversion: Wolves vs Sheep: A nice little game

http://miscmatter.50megs.com/wolf_sheep/wolves.htm

Instead of the usual Bull & Bear tussle,  for a change we have Wolves & Sheep battling it out in a nice little game. For those who have played chess: A Wolf in this game has the same power as the Queen piece of chess.

How can one make profits consistently?

The market is a zero sum game and consequently inherently risky. If one is not careful, one can lose a lot: money, sleep, peace of mind and more. However, by having a system in place and being disciplined and following certain rules you can improve your odds of success. In this post and in the coming days, I will explain a simple system (the SimpleTrader system ) that I use. You can modify this system to suit your trading style & risk profile.

1)Trade stocks that you know well.
I keep a trading watchlist of stocks that I like and know very well and mainly trade those stocks. I avoid companies that have debt. Only stocks with clean balance sheet and strong cash position will go in this trading watchlist. I make it a point to listen to their earnings conference call. This is so important to get a feel for management’s tone, business outlook, how they answer analysts’ questions and more. I tell myself, that I am lucky to be living in this modern era of internet where I can listen to live *free* earnings conference call.

2)Tackling unfamiliar stocks
I avoid the temptation of jumping right into a stock that I am not familiar with. When I hear a stock mentioned on TV, or any other source. I research it first. Then add it to a secondary watchlist. If I really like the stock and like the story then I’ll trade it in small lots and add it to my primary trading watchlist. If the stock has had a runup, I’ll wait patiently for a pullback.

3)Don’t chase a stock especially an unfamiliar one.
I rarely chase a stock. I don’t need to. There will likely be sufficient stocks in my watchlist that may have pulled back. I feel that I will have better odds of making the same amount of money in these stocks from my watchlist than chasing an unfamiliar stock.

4)I avoid biotech stocks. Especially small cap biotech stocks with unproven drugs that are pending FDA approval.
Know what stocks/sectors fit your risk profile. Biotech stocks do not fit my risk profile. I do not have strong genes, stomach and guts like some of the investors who seem to lose 40% overnight in some biotech stocks.

The next few points deal with how to build a SimpleTrader system. The system mainly consists of a primary trading watchlist (stocks that you currently trade) and a secondary watchlist (stocks that you like but are waiting for the right catalyst). How does one populate the 2 watchlists?

5)Knowing what kind of investor/trader you are
I am a value investor and so I actively seek value stocks to populate my watchlists. Stocks can be classified into 2 distinct categories: value & growth. Growth stocks trade at a high P/E aka multiple aka valuation. They soar quickly as they attract aggressive fund managers who are willing to pay a premium valuation for accelerating revenues/earnings. The problem comes when a growth company falters. Any whiff of this and the stocks can get hammered overnight. The mathematics behind this is very simple. Stock Price = Valuation * Earnings Power. Growth stocks get a premium Valuation because of accelerating Earnings Power. If however the company is unable to deliver current year’s earnings then: Earnings Power gets revised down. And because Earnings Power gets revised down the stock no longer gets a Premium Valuation. Basic arithmetic will tell anyone that the product of 2 smaller numbers is a much smaller number. Hence no wonder growth stocks can get hammered overnight. Example: CROX, RACK to name a few. I am uncomfortable with growth stocks so I don’t trade them. I like value stocks because I feel that they will let me sleep in peace. So I populate my watchlist with mainly value stocks. Ask yourself what kind of an investor you are? Value or Growth.

6)Do not buy just any value stock
Value stocks can have limited downside. But where will the upside come from? Of course, better  business execution and catalysts. However, if there are no catalysts then a value stock will become a value trap. Trading in a narrow range, going nowhere for years. Example: SCMR. http://finance.yahoo.com/q/bc?s=SCMR&t=2y It has huge cash reserves on its balance sheet but the stock has been soporific. So, I populate my watchlists with value stocks that have some potential catalysts.

7)To be continued in coming days

2 questions to ask oneself before buying a stock

One of the simplest and *relatively* safe ways to make money in the market is to buy stocks with good valuation & those whose businesses are executing well. You will have good success with this *simple* combo: Value + Sentiment.

To increase the odds of a successful trade, ask these 2 questions, before hitting the Buy/Sell button:

1)How good is the value?

– Ideally buy stocks with a) low P/E and b) of companies with clean balance sheets. Stocks with good valuation will let you sleep in peace as they will *likely* have limited downside. However, one should be wary of value traps and not rely solely on valuation alone. The cautious investor should ask: Am I missing something? Why is the stock so cheap?

2)How is the company’s business doing?

–If business is doing fine *and moreover improving* then the stock will have good investor sentiment and consequently have room for appreciation. Periodically listen to earnings conference calls to get a feel for management’s tone. Analysts’ comments after an earnings call can typically be found at paid sites like briefing.com or theflyonthewall.com. Respect the consensus opinion of analysts.

Value + Sentiment is a match made for success. Sentiment means one or more of: Good business execution, insiders buying in the open market, stock buyback plan, new product release/cycle etc.

Further if you are disciplined and buy in small lots, stocks that have the above features, then your odds of success will improve. If you have researched your stock well and understand it well then when the stock drops on a market correction you will be confident of buying more rather than selling in a panic.

Welcome

This blog’s purpose is to discuss trading ideas. My name is Steven. I am a self learned trader. I started trading in 2002 without knowing what trading is and what it involves. But I was patient, cautious and eager to learn. Luckily the trading gods were kind to me and I managed to survive the beginning trader’s phase without serious catastrophes. I have consistently made profits over the last few years and I believe that many individuals can achieve good results by following some simple ideas. I believe trading should be simple and not too complicated. Hence the blog’s name: SimpleTrader.