Thursday, July 28, 2005

Earnings Pain

Ok today is the midst of earnings season and today was not a good day for me. I unloaded LSI Logic for a loss. Bought 9.89, sold 9.59. Ouch. Then after the bell, SYNA announces a blowout quarter, but guides down the next quarter. I had already sold half of my original position at a solid profit, but it hurts to give back some profits, especially since it closed at 21.02 and will likely open tomorrow in the area of 16.50. At 16.50 it might be too attractive to unload, but what's the opportunity cost? I actually wanted to sell half of my remaining position to further minimize downside risk, but Mr. Murphy intervened with a long day at work, a clock that said 3:57 and was 4 minutes slow, and a computer that needed to be rebooted. These are the things that Law and Order guy won't tell you about in his ads for TD Waterhouse.

I don't know what others think, but this year especially it seems very difficult to survive earnings unscathed. The CFO's are really being squeezed. Talk about a tough job. On the one hand, if you issue conservative guidance in your conference call, your stock gets hammered by the market the next day. Oops! There goes the value of your unexercised options and your kid's braces. On the other hand, if you issue agressive guidance and miss, months later you end up getting served with a class action suit for misleading investors. Your kid will have braces but you might have to look at that great smile from the other side of the visitor's lobby of SingSing one day. Thanks to the rise in class action litigation, I am sure we will see the trend of conservative guidance continue. There might be a shorting strategy to be found here, but that might be a little risky to try (of course when I hear risk I also hear "reward").

Bought 500 GLW at18.83 on a decline today I've been waiting for a return to the 17's to enter but it isn't looking like it will happen. Hope it opens up higher tomorrow. See you then.


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