I am so sick of Japan./ Earnings seaon is here!

Dear Japan,

Please stop crashing every time the wind blows. Seriously, I'm sick of trying to figure out which obscure currency shift is causing your daily "THE END IS NIGH!" selling. Thank you for your attention to this matter.

Sincerely,

Mansij Hans, E.I.T.

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Hey everyone,

Thank you for indulging my letter to Japan. Anyway, earnings season is already in full swing, lets re-cap a few companies:

Jones Apparel and Liz Claiborne:

Down after weak earnings reports. You might remember that awhile back I specifically told you not to invest in "specific retailers". I told you so.

Ebay:

Down on poor outlook. Honestly, the word on the street is that ebay is really upsetting their US customers. They fired something like 10% of their employees and are using what would have been their future salaries to buy two businesses in Europe. Because the economy is SOOO much better in Europe. Morons.

Intel

Beat earnings estimates. I can't say I'm that suprised, they are really wiping the floor with AMD.

Alcoa

This was by far the dumbest reason for a stock price to drop. The stock price went down because profits were down 52%. Now, normally that's a good reason for the price of a company to drop. However, was it really that suprising that a company that sells metals had a bad quarter if you can see that all metal prices are plummeting?

On October 16th:

Google - The proble with Google is that people are becoming incredibly bearish on technology stocks. This is part a result of the fact that a lot of hedge funds are just dumping stocks to raise cash. The other reason is because technology is perceived to be the most negatively leveraged to an economic downturn. The basic idea is "Who is going to spend cash on $299 Ipods?"

So, Google is a falling knife. It is going to have somewhere in the range of a 10% drop or jump as soon as the earnings report comes out. If it goes down, I would buy it if you can hold onto it for a long time. If it goes up, I would wait until the wind blows again and the price drops for another random reason and then pick it up if you can hold onto it for a long time.

Prediction: 10% swing, one way or the other.

CapitalOne - I've made no secret of my belief that I think CapitalOne is undervalued. I think that unlike the other banks, they will not lose money and while their profits will go down from last year, their stock price will increase as a direct result of this earnings report.

Prediction: Up to at least 45 unless the market goes down 5 or 6% that day.

AMD - Like I mentioned before, this report is going to be a disaster. They still haven't answered Intel's Core Duo 2.

Prediction - 5% or greater drop. Perhaps a multi-year low.

Gap Inc. They just don't have the "cool" feel to them anymore. Take a hint from Liz Claiborne and Jones Apparel.

Prediction: They've been hammered about 33% in the last MONTH. The earnings report will likely be bad. Considering their P/E ratio is about 9 and a lot of their competitiors have a P/E ratio of 2 or 3, Gap has a good chance of dropping another 10%. Best case scenario is that it remains unchanged. I think this best case is highly unlikely.


That's it for today, let's see how I do. More tommorrow.


-Mansij Hans, E.I.T.
Member, Intigril Capital Management