Transcript from 02/01/05 eConference.
Dave Hunter:
Hello, everyone, and welcome to tonight's e-conference. Our guest tonight is
Gene Michaels.
Gene Michaels:
Thank you, Dave. Welcome everyone.
Dave Hunter:
Gene heads up the Wall Street Secrets Plus Portfolio Management Team. To Gene
and his team, information is king. The more information they can dig up on a
company, the better. Gene's topic tonight is 5 Ways to Protect your Portfolio
in a Rocky Market.
Gene Michaels:
I would like to also introduce Ryan Greene, my fellow team member, who will also
be here with me tonight.
Ryan Greene:
Thanks, Gene.
Dave Hunter:
Gene, any opening comments?
Gene Michaels:
Just wanted to thank everyone for stopping in; lets start with a couple
questions.
Back in Plaid:
Hi, Gene, thanks for being here. I saw that the first month for the Sector
Leaders Portfolio closed nicely. Any thoughts on the current open portfolios?
Gene Michaels:
Hi. Yes, our initial month did close with a 12.6% return. Current January portfolio
will finish up the 19th; all positions look good and we don’t see
any upcoming events that would worry us. Palm scared us for a bit but has
rebounded nicely. Too early to make predictions on Feb portfolio, but both
holdings up. GOOG reported today… stock is currently up about 18 bucks…9% from
close.
SamL:
12.6% return on the Sector Leaders? Is that over a year?
Gene Michaels:
No, that was over about 45 days.
SamL:
Wow!
Gene Michaels:
Yeah, we were happy with that portfolio.
SamL:
How high do you think Google can really go?
Gene Michaels:
So far the sky seems the limit. Watch out for the end of the lock-out period.
180 million shares approximately will be available for sale then.
Don:
What do you mean "lock out?"
Gene Michaels:
After the initial public offering there are SEC regulations regarding the amount
of stock company employees are able to trade.
Annie in Florida:
How do you select the weekly stocks to watch?
Gene Michaels:
Good question...Every Monday our analysts look for stocks that should undergo
material price movements during the upcoming week. The write-ups are made from
an unbiased stance.
beaver:
When is the end of the lock out period?
Gene Michaels:
Look for the lock out period to end Feb. 15th.
Will:
What are the results from the "Momentum" portfolio?
Gene Michaels:
This is a new portfolio for us, Will... The portfolio will go through its first
expiration this month, and then we will have some results to report.
Guest:
You seem to have moved your emphasis more towards options plays. Why?
Gene Michaels:
We are in a low volatility market which opens the doors for more low cost
options going long as well as hedging potential.
Will:
Thanks.
Bob:
Would you recommend selling Google after the lock out period expires because of
share dilution?
Gene Michaels:
If you were going to play the drop, you would be better off exiting before the
lock out ends. We are expecting shares of the stock to drop about 5 percent.
Ryan Greene:
That is from a study that was done over a 10-year period on lockups.
SamL:
Why will GOOG drop this time? It hasn't before.
Gene Michaels:
It actually did take a dip following the last lock out expiration. It just is
a fast rebounder. Also, this time there will be much more stock coming
available.
Bob:
Thanks. That's good to know.
ramchuck:
Who decides the direction of the market; is it puts and calls or blue chips
stocks?
Gene Michaels:
Blue Chips.
Guest:
Are you going to track open stock recommendations now that you have switched
over to options?
Ryan Greene:
The volume on the blue chips far exceeds that of the volume of the options.
Gene Michaels:
Guest, the buy recommendations we made all came with exit strategies. Unless
advised otherwise, we will be sticking with those.
Bob:
What's your opinion of buying gold stocks? Is this the time?
Gene Michaels:
A lot will depend on tomorrow's Fed announcement.
SamL:
Why would the Fed matter? It will be 1/4 point. Everyone knows.
Gene Michaels:
I think a lot of people are going to be paying attention to the Fed's market
sentiment. Ryan....lets make sure not to forget our free book give away
tonite!
Bob:
Interest rates will likely rise again, which will probably boost the dollar.
Gene Michaels:
One would hope that would be the case. But you may find it interesting to see
how last year the dollar lost ground while rates were rising.
Don:
Are puts and calls significant at all the market direction?
Ryan Greene:
Well, option buyers have a tendency to be wrong. Sometimes options are good
contrain indicator and can also let you know when a lot of people are betting
on a stock. But volume alone does not decide market direction. Market
direction can depend how much money is flowing into wall street.
Gene Michaels:
Lets talk about 5 mistakes investors are likely to make. First would be poor
diversification. This leads to a good question from Bob.
Bob:
What conclusion can you come to when the dollar and gold are both rising at the
same time?
Gene Michaels:
It means that the market isn't sure which way to head. It's always best to have
your investments spread out to catch the maximum gains possible. Another
mistake is to get too emotional with your holdings. You can tie this back to
the run up in Google lately.... if you had exit strategies, stick to them, they
are important.
bobm:
Do you pick stocks more with technical or fundamental indicators?
Gene Michaels:
We like to use both.
beaver:
By diversication, do you mean asset allocation?
Gene Michaels:
Exactly. You never want to get caught with all your eggs in one basket.
Guest:
What is the impact of commissions on a typical option spread transaction? For
example, a bull-put spread on 10 contracts with a projected 5% return?
Ryan Greene:
Commissions can vary a lot depending on your broker. You just have to check the
rates and do the math. That is one reason why many of our portfolios suggest 10
contract purchases...we do have brokers on the site that will autotrade the portfolios,
too.
SamL:
What the next stock that will shoot up like GOOG. It more than doubled in less
than 6 months.
Gene Michaels:
If anyone can answer that they win the free book tonite!
Bob:
Please share some your indicators for stock picking. Thanks.
Gene Michaels:
We like to start narrowing our stock universe using fundamentals. We try to
make sure anything we put our money into is actually making money itself! We
then use technical screens to thin out our universe.
wilsot:
What direction do you see the market heading in for the first half of 2005?
Gene Michaels:
We have an overall bullish sentiment for the year. But we are expecting some
bumps in the road as the Fed is likely to slowly raise rates.
ramchuck:
Are the feds trying to control inflation or raise the value of the dollar?
Ryan Greene:
I think the fed is primarily concerned about controlling inflation and growth
here at home. Greenspan has issued some concerns about the growing trade imbalance
but first we need Americans home economy growing.
Sid:
Do you go by trends or sectoral analysis and then filter down to stocks?
Technically how do you scan?
Gene Michaels:
We do both, but mainly try to spot favorable trends to capitalize on. Technically,
we check out both short- and long-term technical trends
Phil:
What does it mean to "have your investments spread out to catch the
maximum gains possible"?
Gene Michaels:
Good question... It's always best to try to spread out your money. The more
allocated your portfolio becomes, the less risk that it will posses. The
chances of a handful going bad against you is a lot less than just one or two
stocks. I think it's safe to assume we have all had a stock go bad....imagine
if that stock had been your whole portfolio!!!
ramchuck:
What is your opinion on the black gold (oil)?
Gene Michaels:
I think we have a long road ahead of us before we can be certain about the
future of oil. A lot depends on the Iraqi situation and also on the ability of
the dollar to rebound.
Guest:
How do you assess the market present 30/60/90 days and then select an stock or
option strategy?
Ryan Greene: (Feb 1, 2005 8:34:11 PM)
We look at the market and try to decide do we see more upward potential or
downward potential over the next 60 days (since most of our option positions
run 60 days) and then we hedge out positions. By doing spread trades we can
select a trade where we can be somewhat wrong and still make money. We will
build a cushion of 7-25% in positions where they can go against us and we still
make money. This is great, especially in markets that end up being flat.
Ryan Greene:
Another thing about the oil is that the price is high because the dollar is
weak. If the dollar were 30% stronger, $50 oil would only cost 35.
Don:
Do you consider institutional ownership in the technical trend category or
what?
Gene Michaels:
I think that would be more fundamental.
Bob:
Is there a particular sector that you will avoid investing in right now?
Gene Michaels:
I would avoid airlines.
Ryan Greene:
Yeah, they are not doing well. If a few went out of business the rest might
have a shot at raising prices and making money but with oil high and high labor
costs, it is tough on most of the airlines. a few of them are doing ok like
JBLU
Gene Michaels:
So many good questions tonite....we have to make sure to give away this
book!!!!
Ryan Greene:
Well, lets see here…
Dave Hunter:
Yes, don't forget that!
Gene Michaels:
Got a new copy of The Automatic Millionaire by David Bach.
Don:
Do the institutions ever get hurt or is it that their actions hurt other
stockholders when they start selling a stock holding?
Gene Michaels:
When stocks go wrong, everyone gets hurt. Institutions can certainly start a
sell off, or a buying frenzy, with their actions....But keep in mind, they too
will have to ride the wave up or take the slide down with that stock.
bobm:
How long would you typically wait, or what would you want to see on a chart, before
buying a stock that gets hammered hard on a "small" missed earnings
or revenue? I'm thinking of CREE.
beaver:
How about using ETFs to minimize risk; a basket of stocks in a given sector is
less volatile that a single stock.
Phil:
What is your asset allocation model?
Ryan Greene:
Well that is a good question. We have no specified model. We try to make sure
not more 25% of holding in any one sector. We like to hedge our positions. That
is why we have been moving towards the option credit spreads in our portfolios.
jim:
What do you look for in your technical analysis?
Gene Michaels:
We try to find stocks with strong trends.
Bubba:
Who is going to win the Super Bowl Sunday?
Ryan Greene:
We are not sure but we do not believe it will predict the direction of the
market.
Gene Michaels:
Patriots ::)
Bob:
If I own 1000 shares of a stock, how can I hedge against it?
Ryan Greene:
You can sell an option on it. A covered call can you some downside protection.
You get to keep the premium. If you are really concerned, you can buy a put
but we like to sell options rather than buy them. We make more money that way
because many of the options expire worthless.
wilsot:
How do you use moving averages in deciding when to buy and when to sell?
Gene Michaels:
I like to watch short- and long-term moving average movements in relation to
one another. Any time the short-term line breaks through the long term chart,
I start to think about looking to buy.
Bob:
Go Patriots!
Ryan Greene:
Thanks, Bob; I'm cheering for them too.
beaver:
What are your favorite moving average period for short and long term?
Gene Michaels:
I like 30 / 150. Let's address one of the other topics... What is the quickest
way for an investor to lose all his money in a single day? I think we touched
on this one earlier. The only risk, other than a complete economic fallout,
would be to have all your assets in one place, and have that company go
south....not likely to happen....not for our readers at least.
Sid:
By putting all eggs in one basket.
Gene Michaels:
Exactly. I think Sid is trying to win that free book!
Will:
Are those 30/150 minutes/hours/days/weeks?
Gene Michaels:
Days.
Sid:
How do assess the range outside to put in the spread either on the call side
and or put side? Is it based on true range or using probability calculator?
Ryan Greene:
We like to get as far out of the money as we can and still pick up good
premium. We have some minimums % based on the portfolio. We also like to pay
attention to volatility (the beta) of the stocks.
wilsot:
And by not using stops.
Gene Michaels:
That is a great point, I had to share that one. We love using stops. It's too
fast of a world to not have something covering you.
Don:
Buying one company like Enron and not holding anything else.
Gene Michaels:
I'm glad I'm not the one to have to bring up Enron. Dave, do we have a winner
for this book yet?
Dave Hunter:
Not yet....at the end!
Ryan Greene:
What is a relatively safe no-brainer investment that could yield 10% a year?
Well, people think investing is easy and there isn't a no-brainer investment. You
need to do your research to get the results. If you don't use good research
tools and hard work, you get what you pay fo.r
Don:
What's the market going to do tomorrow?
Gene Michaels:
That's a question for your 8 ball.
Ryan Greene:
Depends on the fed.
Gene Michaels:
But I think that the strong Google earnings will cause a nice bump.
Ryan Greene:
And the wording they use.
Gene Michaels:
Assuming the 25 basis points we are expecting is the official announcement, and
no surprises, it should be a good day.
edb:
Investing is easy. It's making money in your investments that is hard.
Gene Michaels:
That hard part is finding your sources and doing your reading.
Sid:
Today's momentum will continue tomorrow before some news hits the wire.
Gene Michaels:
That is our feeling as well. Ok, Dave. I hear it's time to give away this book.
Dave Hunter:
Ok, let me put all of the names in a hat. And the winner tonight is..... Will!
Gene Michaels:
Congrats Will...
Don:
Oh heck!!
Gene Michaels:
Next time, Don.
dickr:
Yes, congratulations to Will.
Will:
Thank you.
Bob:
Thanks everyone!
bellock:
How about one for each of us?
Gene Michaels:
If I could, I would. We will have another one for our next e-conference. Any
other questions tonite? Do you have any final comments Ryan?
bellock:
What is the direction of the market for the rest of the year?
Gene Michaels:
We are looking for an up year.
edb:
Thanks.
Gene Michaels:
You're welcome.
bellock:
What do you think of the market for the rest of the year now that January is
over and it didn't do well?
Gene Michaels:
Once again, we are positive on the market.
Ryan Greene:
You know, Gene, we told them that we would give them one stock that should be
in every portfolio. We have a couple we like. QQQQ, DVY and SPY. Yes, we like
the spiders and trackin indexes. Everyone should have that safe part of their
portfolio that should not be very exciting and these have lower fees than a
general mutual fund. The DVY pays dividends, too.
Phil:
What is your investment track record with the type of investing you have been
talking about?
Gene Michaels:
You can check out portfolio stats page for all the portfolio returns.
Ryan Greene:
I got to get the commercial in here... You know if you haven't signed up for
the $1 you can get a look at all of our portfolios. It's only a buck and if you
aren't happy we will even give you your buck back!
bellock:
So what is the one stock?
Ryan Greene:
dvy.
Ryan Greene:
Or QQQQ if you like.
Gene Michaels:
Well I would like to thank you all for your questions tonite.... but the time
has come to wrap it up and start planning for tomorrow.
Dave Hunter:
Folks, we're sorry we couldn't get to all the questions tonight. There will be
a transcript of tonight's event on the site in a few days. Thank you again for
joining us.
Guest:
You do some spreads on the indexes?
Ryan Greene:
No, we typically don't spread the indexes, but we think it is a safe investment
for that nonspeculative part of your portfolio.
Gene Michaels:
Once again, congratulations to Will..... I know you will enjoy your book!
Dave Hunter:
This room is now unmoderated. Feel free to chat amongst yourselves.
Gene Michaels:
We plan to host another conference shortly....stay tuned....and safe investing!
Ryan Greene:
Thanks everyone
Will:
Thank you
Dave Hunter:
good night!
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