Sunday, August 3, 2008

Performance Update

It’s time for a quick update from Psychology of the Call.

Loyal readers who have benefited from our analysis for months now will know that we have been steering you through market actions and reactions, sending you in the right direction. The psychological aspects of economic and earnings data, political developments, international affairs, and global currency valuations are so often ignored by other commentators, but we consider them to be an essential component of any attempt to interpret and understand market mechanics. We use fundamental and technical analysis, but add in a heavy dose of human psychology. Often it works well. Here are a few more recent examples.

Genentech (DNA)

During our 10 April analysis of the DNA conference call we wrote: “For investors seeking exposure to biotechnology, Genentech is the cream of the crop. We would wait for the Lupus studies to be announced within days and, since management sounded pessimistic on this front, buy shares on that potentially terrific pull back. Chicago's May 30th ASCO conference looks to be very positive for investors. "We also mentioned DNA as a candidate for Euro-ization and Swiss giant Roche obliged.

Please look at the chart below.

Garmin (GRMN)

We suggested in April that you short GRMN at $56. Then on July 15 we suggested that you buy puts because of what we viewed/predicted as competitive pressures, both micro (internal, company specific) and macro (external, related to economy).

Please look at the chart below.

Other examples include a 125% gain on Google (GOOG) $500 Aug put options and a 400% one day gain (22 July) on Apple (AAPL) August 155 call options, suggested in an e-mail note sent out to our subscribers. “POTC does not believe AAPL's 200 day moving average of $158 will be broken on close Tuesday. We recommend aggressive portfolios take advantage of Tuesday's open, as the negative sentiment has been exacerbated by unrelated companies, specifically American Express (AXP) and Merck (MRK).”

In our recent piece Four NEW Reasons for Optimism, we called a bottom in financials and recommended BAC and JPM as conservative picks. Both have appreciated in price in the few days since.

We will admit to losers. We were very upbeat on Sepracor (SEPR), which has since dropped around 15%, but our confidence is not shaken and we continue to hold stock and call options.

While not making an overt buy recommendation, we did mention recently that AKAM was our favorite of the companies reporting earnings on Wednesday 30th July. AKAM dropped 24% after earnings. They had okay numbers but a horrid conference call filled with excuse after excuse. It would be hard to find a worse management team in terms of communication and conviction.

Those are a few samples of our successes. We hope you've been able to use our insights, based on many years of experience at high levels in the markets, to make some cash. Any and all comments are welcome below.

The Psychology of the Call team


Anonymous said...

Thanks for DNA and GRMN, still hodling SEPR ,)

Anonymous said...

Any new picks?

Anonymous said...

What you all think about Amgen