Life, one trade at a time

Good Apple

2011-01-18T21:43:00.004-06:00

Occasionally, you hit the nail on the head. Today was one of those days.

On Monday, I wrote that I thought Apple (AAPL) would open the day down a few percentage points and then would recover some losses before closing bell. I went on to say that Apple would report a monster quarter after the regular session, and that the stock would increase in after-hours trading.

Today, the stock opened down as much as 6.5 percent, before rebounding to close down 2.25 percent. Then, the tech leader reported a stellar quarter, raking in $26.74 billion in sales, good for $6.43/share. Analysts predicted $24.433 billion in sales and $5.40/share. The stock jumped 1.25 percent in after-hours trading.

A lot of questions remain about CEO Steve Jobs, but Apple had a good day today.

The Big Apple

2011-01-17T22:21:00.004-06:00

This morning, my friend and former roommate, John Sutter, helped break the biggest business story of the day for CNN, reporting that Apple Inc. CEO Steve Jobs is taking a medical leave from the tech giant. Because American markets were closed Monday in honor of MLK, investors are waiting until Tuesday to see how the announcement affects Apple (AAPL) stock.

My gut is that the stock will dip at least a few percentage points at the beginning of the day, fall later in the day and then make a slight rally. I've never owned Apple stock but tomorrow could present a good buying opportunity. Here's why:

- Following the closing bell on Tuesday, Apple reports its last quarter results. Apple is a chronic outperformer when it comes to earnings. The company has reported a surprise positive report just about every quarter since at least 2008. Despite a hefty prediction by analysts that the company will earn $5.39/share, don't be shocked if Apple crushes that.

- Investors know this. As closing bell approaches, they will buy into the stock, especially if it has struggled all day.

- Apple rules. iPod, iPhone, iPad, iTunes - who doesn't own at least one Apple product? In a short period of time, Verizon will start selling the iPhone, and before year end, we'll most likely see new models of the iPhone and iPad.

- Competition. Who's going to catch them?

- Its workforce. The fear about Jobs' leave is that he is the creative juice behind the company. While true, it's hard to believe not one of the company's 40,000 employees hasn't played a major role in product development.

- The timing. It's not hard to imagine that the company timed the Jobs announcement against unveiling a monster quarter. What a great way to let investors know the company is stronger than ever.

- Steve Jobs. Everyone prays Jobs makes a healthy recovery. Meanwhile, he will remain CEO.

If Apple stock tumbles Tuesday, there may never be a better time in the near future to get into it.

CDP Enterprises: The Start

2011-01-16T20:34:00.010-06:00

Last month marked the two-year anniversary of my first trade on the stock market. Since purchasing 24 shares of Altria Group (MO) for $15 each on Dec. 26, 2008, my research methods, understanding how news affects the markets and patiences in waiting for a stock to make a move have grown by leaps and bounds. Back then I couldn't tell you the difference between a safe yield and a shaky one, or that beta was more than a type of fish or that a $10 stock could actually be more expensive than a $100 stock.

Looking back, I really didn't know what I was doing, and should not have been purchasing stock.

I was fortunate that most stocks I purchased in that period went up, and the ones that went down, moved only a few percentage points. During that winter of 08-09, I got into Ford (F) at $1.88 a share, just weeks before the automotive company made one of the greatest comebacks in Wall Street history. I purchased Jaguar Mining (JAG) just as gold started its historic climb. And Altria's price was bolstered by institutional investors looking for strong yielding stocks to anchor their portfolios in the middle of the Great Recession.

I got lucky. But most importantly, I learned from my mistakes, my successes and from other's advice.

This is the blog that will capture the next chapters of my investing life.

So how did it all start? For years, my brother, Paul, and my dad had watched "Mad Money with Jim Cramer" on CNBC and I'd occasionally be in the room when it was on. From spitting out stock names to yelling "sell, sell, sell" or "buy, buy, buy," I loved the entertainment value of Cramer but found the topic of stocks boring. Deep down inside, I probably also felt like the topic was something I could never understand. But over time, I realized that it was something I could pick up and maybe even make some cash.

As Christmas 2008 approached, my parents asked what I wanted for Christmas. I told them, "stock in Ford." Confusing "buy low" with buying a sinking ship, I figured stock in a company as old as Ford couldn't possibly hit zero. So while at home on vacation on Dec. 23, my parents and I went to the local Scottrade office in Dearborn, Mich. to deposit my Christmas gift. Luckily for me, it takes a day before deposited money is posted in an account. So instead of purchasing Ford on Christmas Eve (the market closed at noon that day), I spent Christmas using the limited knowledge I had to land on Altria, a company that makes Marlboros. Yes, my first company made cigarettes. (Don't judge me, my research was so bad then that I also thought they still made Kraft cheese, and who doesn't like cheese?).

The name "CDP Enterprises" plays off two names. First, my full name. Second, C=Chad, D=my dad, Donald, P=my brother, Paul.

2011 is off to a great start. Just last week, I got lucky on two stocks. Marathon Oil (MRO), announced it was spinning off one-third of its business. That stock was up almost 11 percent at one point on Thursday. And on Friday, Sanmina Sci Corp. (SANM) climbed an eye-popping 13.2 percent in one day - the greatest one-day gain in CDP history. Remembering that pigs gets slaughtered, I sold half my stake in SANM, a 30 percent gain since I purchased it in late December 2010.

So this is the beginning of the CDP Enterprises blog. In it, I promise to share the ups and downs, as well as the funny and frustrating moments of trading.

Current holdings: FNFG, MRO, SANM, BRD and DAL.