Category: Trading School

I am beginning to understand how the Maytag repair man felt as he waited days for a maintenance call.  My position on Research in Motion (RIMM) is a lonely one.  Having the audacity to believe that RIMM’s best days are behind them is laughable to most.

Research in Motion is the leader in U.S. smartphone market share in many reports.  It has a fanatical user base.  The phone is often referred to as the Crackberry, due to its addictive nature. Its QWERTY keyboard is revered by an influential segment of mobile phone users.  That being said,  my qualm isn’t with RIMM’s history;  as an investor, my interest is its future.

The computing industry is in the midst of changing from a PC centric world to a mobile centric one.  The Morgan Stanley Internet Report makes this abundantly clear.  History has proven that many successful companies in one era often miss the transition.   I moved to Massachusetts in ’87 during the height of the mini-computer rage.  Digital Equipment Corporation (DEC) and Wang were both major players.  However, as computing shifted from mini to personal computers both missed the boat.  Ken Olson, founder of DEC, said, “there was no reason for any individual to have a computer in his home.”  Oops.

As far as I am concerned, RIMM is missing  the transition to mobile computing.  The company has built an excellent phone that does business productivity very well.  However, in the mobile computing era a device must do much more.  To be fair, until Apple came on the scene with the iPhone –  who knew that users wanted their phones to have a GPS and an accelerometer built-in.  Apple completely changed the game.  The end user became the customer not the carrier.

Therein lies RIMM’s problem.  Listen to their quarterly conference call and you will see that is primarily carrier centric. The carrier as the customer is in their DNA.   That has manifested in their two feeble attempts at an iPhone killer and their browser and OS are still out dated.  How many chances will RIMM have to get it right?

I could go on and on, but I am an investor – so let’s conclude with some stock talk.  I made a bet with a buddy at the beginning of the year that RIMM would not close above $82.50 this year without a buyout.  In other words, I believed that RIMM’s upside was at most 22%.  A rather bold bet – I admit.  Fortunately, it wasn’t a very large bet.

In my RIMM Rant Part II, I highlighted RIMM’s very enticing “bullish” chart.  On clue, once it punched through $72 the buyers arrived in numbers.  It appears to have hit some headwinds at $75.

The company reports earnings on March 31.  At this point, it’s too late to pre-announce disappointing numbers.  So, most likely the earnings will be at least in-line with expectations.  Wall Street’s focus will be on its future guidance.  If RIMM’s guidance doesn’t forcast significant progress in the consumer market – the stock will be taking to the woodshed.

Currently I have no position in RIMM.  I would love to be short, but my pockets are not deep enough to short RIMM right now.  The company is subject to random analyst upgrades and buyout rumors daily.  However, if they disappoint on the 31st – I may reconsider.  A better way to play RIMM’s demise may be to buy the companies that will benefit from their  loss of market share.  Those benefactors will most likely be Apple, Google and Nokia.

Note: Maybe the Maytag repairman is finding a few friends. I just stumbled across this report,”Crowd Science survey: 40% of BlackBerry users would move to iPhone.”

More support for the repairman:

Is RIM losing its competitive edge?

StockTwits is a cool community were some great individual traders hang out.  I have talked about it many times on these pages.  Their TV programming is really expanding and one of their newer shows is “Talk Your Book.” Each week members of the community send in videos on their best stock ideas.  I have participated several times.  Check out my latest discussion on Helca Mining & Cree.  Both are putting some serious coin in my pocket.  My spill is about 4:30 in.

When watching the financial news channels, you better believe that the guest are talking their books. Dr. Doom is not only saying he believes the next move is down – his portfolio is positioned that way. The portfolio manager talking about increased iPhone sales and the upcoming release of the iPad is long Apple. The networks often have their guest disclose their positions. Mostly to cover their butts, but also to signal to the viewer that the guests are vested in their calls.

Talking your book is not limited to TV. It’s everywhere. If you own a stock – you are going to talk about. It is what we do. It is fun, of course, until someone loses an eye or a few thousand bucks.

Online message boards have taken talking your book to new and often dark levels. With literally tens of thousands of people, often new investors, reading these boards each day – it is fertile ground for shenanigans. Paid pumpers and bashers roam the boards with no policing intentionally providing misinformation for their own benefit. When I first started investing, I got caught up in a scheme. Before I knew it, I was out of a few thousand bucks.

One of the primary problems with message boards is that there is little or no association between a person’s real name and their online identity. Games are minimized when your reputation is on the line. Social networks like Facebook and Twitter are the best attempt yet at addressing this problem and are playing a major roll in legitimizing online financial communities.

StockTwits is one of the first financial communities to benefit from the Facebook/Twitter era. I have been hanging out there for almost a year. Each and every day there are thousands of people online talking their book. Yes, there are some bozos playing games. However, as you spend time on the site – you learn who are the trusted sources.

StockTwits continues to add layers to legitimize its contributors. It has paid premium services. Obviously, if a service does not perform it won’t be around long. They have added bloggers on various topics from personal finance to macro economics and now there is StockTwits TV.

Shows run daily on StockTwits TV and vary from market updates to a sit down with a shrink. Yes, they have their very own Dr. Phil. One of their newer shows is called “Talk Your Book” where community members send in videos of their picks. It differs from traditional TV in that these picks are very recent. Most were acted on in the last few days. So, you are getting fresh stuff – that can be acted on if their case is convincing enough.

I have submitted 3 videos. My first pick was a bust. I rattled off all the catalyst that would take the sugar ETF, SGG, higher. I was stopped out the very next day for a loss. Fortunately, my next two picks have fared much better. In the video below, I give an update of my second pick Helca Mining and discuss an exciting play in Impax Laboratories. Fast forward to around 4:00 to see me “Talk My Book.”