Full markets analysis and updates on the FB and Apollo trades

Kyle: Well, you know, after junior high school, I decided to get a PhD. Mack: You got a PhD? Kyle: Yeah, man. A pimpin’ hoes degree. — SNL 1998

Good morning and thank you all for understanding my need to take some time off last week to deal with the ramifications, both logistical and emotional, from the fire.  I had a Doctorate of Forest Rehabilitation (who knew that was a title!) walk through my torched property (I learned from him that “scorched” means the land and trees survived while “torched” means it was truly burnt to a crisp). I’ve got my work cut out to protect my top soil from eroding with the monsoon season, but the land will come back beautiful if we do it right. And I had a Doctorate of Psychology walk through my head — with all the post traumatic stress disorder symptoms that evacuating and running from 9/11 and almost losing my house and actually losing much of my land to an inferno prompted me to actually start going to therapy to help me deal with all of this.

Now let’s talk markets, economy and stocks and stuff like that.  First, here are a few articles about some of our stocks that you should take a look at:

Don’t Count Out Facebook’s Business Model Just Yet – Good article about why I’m sticking with my Facebook common and calls that we loaded up on at $26 a share.  The stock’s up nearly 30% since I flagged it for you guys and I’ve got a double or more on some of the calls already. As I’d detailed for you guys repeatedly when I was doing it, I’d been much more aggressive about buying FB at $26 than my usual “steady Betty buying-in-tranches” mode and I’d made FB my third largest position in the first couple days I’d ever bought it. All those huge gains on the FB calls I own (not to mention the 30% gain the common) means this is now as big as my long-held AAPL and GOOG positions already. I might trim down on the nearest-dated FB calls with the lowest-strike prices because those will have the most near-term risk if the stock does pullback. But I don’t expect much of a pullback in FB as every serious tech money manager is likely trying to build up their own FB position now that the stock “has stabilized”.

Apollo Group Gets Graded on the Curve – Straight from the article, which actually tries to give a bullish take on Apollo Group by the conclusion: “In 2010, about a quarter of federal loans and grants went to for-profit colleges that turned out just 5% of college graduates—a disproportionate number of whom defaulted.” Can you say unsustainable business model collapsing before our eyes? I can.

The euro crisis: EU leaders vow to fight contagion in the euro zone – Oh, wait, this article is from February 2010, when the Nasdaq was 30% lower than it is right now. Here’s the link to today’s regurgitated version of that article.

Market Gloom Prevails at Start of ‘a Decisive Week for Europe’ – “Decisive week!” Every week for the last three years has supposedly been the “decisive” week for Europe.

Speaking of markets, let’s remember when they were crashed just a couple weeks ago and I kept reminding you guys that buying the panic and making the hardest trade of getting long and strong while investor fear was high in articles like “Trade Alert: Time to get more aggressive“:

“With stocks down and the mainstream media blaming “no meaningful signal from the EU bureaucrats of meaningful steps that the markets will pretend will be meaningful enough to kick the can down the road a few more months or years”, we’re likely right now in the midst of some great pitches. That is why you want to have done some buying at these levels in preparation for the next time the markets rally and the mainstream media reports that there’s something more “meaningful” coming out of the EUcrat backslapping meetings. I think we’re getting closer to seeing some “meaningful” action to the upside, despite (because of?) what the reporters are reporting about meaningless economic stuff from the other side of the world.”

And I also wrote many other bullish articles such as “Getting close to a meaningful rally? while we were at those lows:

“The markets are set up for another ugly open this morning and it looks like they’ll be opening at 3 month lows.

As you guys know I’ve been waiting to put much money back to work and I plan on putting some more orders in this morning, including getting more aggressive by using some call options in addition to stepping up the aggression in my common stock purchases too.”

The point is that the markets are up big from those lows last month, with many stocks also up big in the time since we were getting so aggressive on the long side. I’m not going to chase many longs right now, even as Sandisk, Apple, Google, FIO and others look quite attractive still. We bought lower and we can let those positions play out for us a little bit now. I’m not looking to sell much yet either though.

I do have another great short idea to add to the portfolio tomorrow and that, along with adding the Pearson short position last week, will help to reduce my overall net long exposure even as I’m not trimming my longs yet.

Back in a bit.