JC Penney update

Last quarter, billionaire George Soros acquired 19.9 million shares, representing 3.70% of his holdings. Soros paid an average price of $16.66. As mentioned, the stock is less than half of the price he paid right now. Today it went up about 7% as it reiterated that sales were better. The media has beaten down this stock indicating may run out of money. However, they raised capital through their equity offering so I think they should be fine in regards to cash flow.

Media and misleading information

The media, Wall Street, politicians, strategists, and almost everyone has become conditioned to look for things to worry about. But the concerns continue to be good for newspaper titles, and not relevant for stocks.

For the past year, heading into September, the overall feeling is that people became bearish thinking that there would be a taper driven market crash. It didn't happen. Then, in October, people became worried about the debt default and sold out.  It didn’t happen. The media is always out there to look for news that would catch people's attention so we should take news from the media as a grain of salt.

I am still skeptical of the bull market because of the debt issue but I think this bull market is still going to last until the end of the year. After the end of the year, we will have to revisit and talk about the elephant in the room which is the looming debt ceiling. The United States has a huge debt that I am not sure how we will repay. The politicians are stuck between a rock and a hard place. Anything that they do will be detrimental in some sense. If we continue to increase the debt, we will just cause a situation where our children and their children will have to pay. I believe the government has become too large and is just not efficient anymore. There is too much unnecessary spending. If they stop certain spending, the fear is that it will cause a recession.

Tesla Drops with BofA Indicates stock price target

As mentioned before, Tesla drops big time any time there is someone who thinks the stock is overvalued. The latest is Bank of America Merrill Lynch. An "underperform" rating and a $45 price target on Tesla caused it to drop 4.7% to $163. With 3Q earnings being reported next month, I would exercise caution if you are long TSLA or planning to purchase. They have beat expectations lately but who knows if they can keep this up. They are expected to deliver over 5000 cars during the quarter and 21,000 of them for the year.

Netflix on its way down, Apple on its way up!

In response to my post yesterday in regards to high flyers, Netflix was one of them this year going up over 400% in the past 14 months. They even had a blow out quarterly report on Monday. The stock went almost up to 400 points in after hours trading. However, the CEO Reed Hastings came out with a note warning investors of 'euphoria' yesterday. This sent the stock back down to about 320. In after hours yesterday, it was down another 2%, roughly 315. Then Carl Icahn who had about a 10% holding in Netflix unloaded about half of his stocks. This was probably the biggest catalyst that sent the stock down but it is quite understandable considering he did make over 450% ROI. Readers, please note that he is also heavily invested in Apple and considers the stock undervalued.
 

Trading Apple stock before the earnings

Apple has been battered this year due to Samsung taking away market share in the smartphone business. Last year in September of 2012, it almost hit 700. This is roughly the time of when it announced its new Ipad, Ipad mini and Iphone 5. Since then it dropped below 400 but it has started coming back up. Also note that Carl Icahn who is a great investor still thinks the stock is cheap. I think it would be a good time to lock in some stock in Apple before their 2013 Q4 earnings.

Burnt by high-flyers

For those who have been reading and why I have been so hesitant on investing in Tesla, it is because I have been burnt in the past by high flyers such as Jet Blue, Taser, etc.

High flyers are basically due a bubble that has occurred. A stock market bubble is a type of economic bubble taking place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation. Behavioral finance theory attributes stock market bubbles to cognitive biases that lead to group think and herd behavior. Bubbles occur not only in real-world markets, with their inherent uncertainty and noise, but also in highly predictable experimental markets.

Like I mentioned yesterday, any type of bad news that comes, the stock drops a lot. There are investors who do this for a living and will beat you to the punch in terms of executing sell orders to lock in their profits. Although the upside is high, the downside is very high as well. In my opinion, it's not a safe investment for conservative investors by any means.

Tesla Update

As much as I love the concept of Tesla and electric cars, it just seems really frightening that every time there is slightly any bad news, the stock drops by 5-10%. It is a volatile stock but as mentioned before, it has gone up about 400% year to date.

When there was fire due to a battery issue, the stock price took a dive from 180 to 168.
http://www.teslamotors.com/blog/model-s-fire

When it was downgraded by Lazard on August 4th, it dropped about 5%.
When it was downgraded by Goldman Sachs, it went from 130 to 109.

There really is a bubble out there and investors are riding that wave. However, any time there is a hint of bad news, they lock in their profits and jump out.

Yahoo! up and away due to Marissa Mayer

Since Marissa Mayer has taken over Yahoo! (YHOO), it has more than doubled. However, this is most likely due to the expected valuation of Alibaba which Yahoo! owns about 25% of. For those who have never heard of Alibaba, it is the next biggest stock in my opinion. It is better/more users than ebay and Amazon. Supposedly the portion that has the most expected growth will be the banking portion of this company. To indirectly purchase Alibaba, purchase Yahoo!.

Government Shutdown Ended and what it means for stocks

Now that the government shutdown has ended, stocks should be back on the rise. With the Fed still pumping money into the economy, look for stocks to continue going up.

Reviewing picks

Banks have done extremely well the past year. If purchased in 2010 when it was recommended, most should be close to a 100% gain in the past 3 years. FAS which is a 3x leveraged ETF of bank stocks has done exactly that. The downside of leveraged ETFs is that when the price drops, it goes down by 3x somewhat losing a bit of value each time. If it is always going up, then there is not that much to worry about.

For example, if it is 100 points and the value goes up 33% making the price = 133. However, if it goes down 33%, it would go down by 43.89 making it 89.11.

Casinos took a while too take off. MGM and LVS are all up.

China stocks are all up. However, BIDU finally made a huge run going from 90 to 150.

Tesla - high flying stock.

Telsa (TSLA) has posted gains of over 400% year to date. It's a stock that I've been looking at but I feel I missed the boat on this. Stock prices have skyrocketed with only expectations that it will do well and get into a new market that no one has entered before. They have exceeded expectations in their earnings but who knows how sustainable this stock is. I've been wonder if it will come back to earth any time soon. I'm staying on the sidelines for this. Any one else have any comments?

JC Penney in trouble?

JC Penney (JCP) has seen a long fall due to Bill Ackman ruining the company, alienating their existing customers. Now that he's gone and some investors expecting the company to fail even more, it could be a good time to jump in now that it is below $8. The real estate ownership of JCP is about $15 a stock so that would mean almost a 100% profit!