Another day, another rally. It's a bubble-blowing bull market until it's not. And I've had a historic kind of week in my portfolio with Google (GOOGL), Facebook (FB) and Amazon (AMZN) hitting all-time highs and shorts like Valeant (VRX) and Pandora (P) taking big hits. Then again, I've been doing this whole trading and investing thing for many years. There have been times like this when I've felt really smart. And that's usually just about the time that everything reverses on you. So I made some trades today in the name of discipline. (Google and Facebook are part of TheStreet's Action Alerts PLUS portfolio. Amazon is part of the Growth Seeker portfolio.)
Here's a rundown of some of the most important headlines from this week and my commentary on each.
Bill Ackman purchases 2 million shares of Valeant: I respect Ackman's stock picking and it does give me pause to short more VRX vs. just riding out what I have left after having covered some around $100 today. I think VRX has pricing problems and will have trouble meeting estimates in coming years, but what a ride we've already had. I've covered most of my VRX position but haven't closed it out entirely quite yet.
McDonald's (MCD) Stock Sizzles, Earnings Strong: I think the general trend continues to be a healthier-conscious consumer and also that MCD's margins are maxed out. But I'm glad I covered a short MCD position I had a few months ago because the market loved this quarterly report. I think the cheaper fast-food stocks could be in for a world of hurt over the next five or 10 years, but every time I've tried to short one of them, including Sonic (SONC) and MCD, I've gotten burned and am sidelined on the sector for now. I do own a Healthy Food Revolution long pick, though.
Star Wars: The Force Awakens Will Shatter Box Office: Disney's (DIS) a great company and Star Wars will be huge. But ESPN and the other broadcast channels Disney owns are about to lose value. It's about to get even worse for satellite companies and the traditional broadcast television business model.
Here's Why Wynn Resorts (WYNN) Stock Is Tumbling Today: Wynn is paying a 2.7% dividend, trades at 18x next year's earnings estimates, which I assume include the Macau opening and$2 billion cash vs $7 billion debt. Not a screaming buy, and I don't like to invest in a non-productive industry like gambling, so no thanks.
Alphabet, Google on Upwardly Mobile Track: Great pun in the headline there and this is probably the single biggest reason Google's popping today: "Online video provides another powerful growth driver for the company, with YouTube leading the way. Within the next two years, we believe video ads could be a $17 billion per year revenue opportunity in the U.S. alone, as brands allocate portions of TV ad budgets toward highly targeted video ads." Can we call Google a mobile-first company now? So many things are working at Google and Android hasn't even started to contribute yet.
Pandora Shares Plunge More Than 30% as Losses Widen: Our months-long patience in our Pandora short has paid off again as the stock fell after a disappointing earnings report and a disappointing outlook issued by the company (this is the second time we've ridden a short-sell in this stock to profit in the last few years).
Donald Trump Tells Super-PACs Supporting His Candidacy to Return All Money to Donors: I don't vote for Republicans or Democrats, but gotta admit this is smart and a good stand to make whether you can self-fund your campaign or not.
Western Digital (WDC), SanDisk (SNDK) to Merge: I have trimmed but haven't sold all my SNDK yet, but am likely to exit it entirely in the next few days. Big win after all these years, though they and I both missed selling at the top!
IBM (IBM): No Plans to Change Despite Declining Sales: Here's a large part of why IBM can't stabilize (from earnings statement): "... in the Enterprise application space we are seeing a shift away from traditional large ERP implementation projects to smaller initiatives that are built around cloud, mobility, security and analytics. We're continuing to grow in these high-value services, but we're still being impacted by larger contracts that are reaching their maturity. Our decline in consulting and system integration reflects this shift in market demand."
