In January of 2007, Steve Jobs announced the iPhone. As we now know, the iPhone wasn’t simply another cell phone. Many now associate its introduction with the dawn of the mobile computing era. Apple really threw down the gauntlet last week as it became the number one PC maker.
Apple reported record quarterly sales of 15.4 million iPads and 5.2 million Macs, giving the company over 20 million sales of dedicated personal computing devices (distinct from its sales of more than 37 million phones). Gartner reported HP’s worldwide sales for the fourth quarter to be 14.7 million, while Lenovo and Dell sold 12.9 and 11.6 million units, respectively. – Apple Insider
A few months after the iPhone’s announcement in 2007 – I saw a TV commercial that convinced me that there were dollars to be made investing in this area. The commercial stated that “From Africa to Asia the next billion cell phone users will be here by 2010.” That sounded like opportunity and I began investing in mobile related stocks.
As many people did at the time, I initially invested in the handset manufacturers like Apple, Research in Motion and Nokia. This started out as a great strategy until everything cratered in 2008.
Before the recession, the Stock Market believed that the market was large enough for many winners. Afterwards it became more discriminating. Apple and Research in Motion continued to outperform the market, while Nokia struggled. The market also shifted to component makers like ARM Holdings. The component makers would win regardless of which handset manufacturer won. The same was true for infrastructure plays like F5 Networks. Once again, networks had to be upgraded to handle the new demand regardless of which phone people bought.
By 2010, the Market began having its doubts about Research in Motion while its love affair with component makers grew stronger.
The Market hit another rough spot in April 2011 that took the steam out of component plays as well as just about everything else.
Since I follow the industry very closely, I have been able to maneuver fairly well as money shifted from one sector to another. That being said, my shifts haven’t always been timely. For instance, last year I was way ahead of the curve thinking that Near Field Communications (NFC) was going to take off. I bet money in NXP Semiconductors that didn’t pan out. RIM was another example. While I turned bearish fairly early, making money on the short side was a battle with constant never ending buy out rumors.
Although I am constantly reading all of the pertinent blogs and reports – staying on top of the shifts is a challenge. Matter of fact, my research often puts me far ahead of the curve – like NXP proved. Since my primary objective is NOT to become a subject matter expert, but to make money off the trend – it’s time to tweak my stock selection strategy. Thus, instead of doing deep research trying to identify the potential winners, I will let Wall Street select the winners for me. So, what does that mean?
If Wall Street believes in a stock – it bids its price up. At some point, the stock will hit its 52 week high and continue making new highs as long as it has Wall Street’s favor. My new goal is to buy the stock as it hits its 52 week high and ride it as long as possible – trailing it up with a stop. There are some nuances around the set-up that I will save for another discussion. Some trades might last 2-3 days, while others will last weeks or months. This is basically a momentum strategy that traders have been using for years. My only twist is that I have a focused database of about 150 stocks related to mobile computing that I will use as my universe.
This strategy should keep me in sync with the hottest stocks as they are moving while rotating out of them when they inevitably correct. Let’s see how it works. I will keep you a updated as time progresses.
Disclosure: Long Apple.