Thursday, January 22, 2009

Microsoft - Headed for $5 ?

Much of the attention today was focused on the Microsoft, ticker MSFT, earnings miss. Given that I thought it might be fruitful to have a look at the chart. The chart (above) is a 20 yr monthly view. This should suffice in giving us the proper perspective in making an assessment. In fairnes I would caution the MSFT bulls, "it ain't pretty" and may want to skip clicking on the chart above as it may cause severe nausea.

Many will find the my Microsoft price target outlandish but then again, many thought the same of my call on Deutsche Bank AG - headed for $44? as well when it was trading at $94. For the record, Deutsche Bank closed at $23.33/share today so yes I was wrong on DB but only in how conservative.

What also should catch your eye was the fact that Microsoft is cutting 5000 jobs and further has decided to withdraw revenue and earnings forecasts for the rest of the year.

I was listening to the details surrounding the Merrill Lynch/Bank America saga. In particular the paying of bonus' to Merrill executives 3 days before the B of A closed. CNBC, in particular Charlie Gasparino detailed John Thain's travails regarding the redesign of his office and all its attendant goodies. He also reported that the NY attorney general Andrew Cuomo is starting an investigation into the sordid matter.

This all got me to thinking of the sheer greed involved by these characters. I want to state that when you risk WHAT IS YOURS, you fully deserve the most unimaginable windfall REWARDS ALONG with the risk of abject ruin. This is what made our country great, it is what has made it the economic juggernaut it once was. The sheer greed of these vipers got me to thinking of one quote in particular from one of my favourite movies ever 'Scarface'.

In the movie, Al Pacino played the young drug hoodlum Tony Montana was having a conversation about their competition in the drug trade with his new drug boss Frank Lopez played by Robert Loggia in which Lopez said the following " never underestimate the other guys greed." Quite appropriate given our current circumstances, don't you think?

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $148.18
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit of Mantech ticker MANT @ $56.80 stop @ $60.14

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