BlueskyMack

Mastercard

Rating: 1.48 (23 votes) Vote:

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I've blogged this stock because I've been looking at it for sometime. I also thought the chart shows some interesting lines.
The best way to describe it is by going to Yahoo finance, pull up the MA chart in it's flash window. Then place FXI and DIA as comparisons. FXI is an ETF which tracks the top 25 Chinese stocks with a large position in CHL (another great chart to look at).

I've read that the number 1 performing stock over the past 10 years is Hansen soda (HANS). My numbers might be wrong here, but I read somehwere it went up 23,000 %. It has what I call the Peter Lynch effect. The company makes products alot of people use.(Monster energy drink) I don't like hearing about stocks that only a expert in the field would know enough about to make money. People know mastercard, many on a daily basis. Now I don't think MA is going to 23K %, but even a quarter of that gain would be really great.
I'm not a huge fan of Technical Analysis, but it can provide some guidance. The reason I don't get that much into Technical Analysis is that, beyond a certain point, I can't make all the data points line up in a fruitful direction. Technical Analysis might make me avoid something like BBBB(blackboard) with it's recent PE of 1637. (nothing against BBBB, and it's a gainer, but I'm not interested at that PE) And AAPL seems to slow down when it's PE gets around 40(conveniently around earnings) But I like stories, does the stock sound good, does it's story make sense? You can argue with the numbers, they can have multiple interpretations, but the story is something which can be more that the numbers. It's like a baseball player. A pitcher has a certain ERA and the bases are loaded and it's in the 8th inning. Now the numbers will tell you likely outcomes. But listen to the announcers tell the story about when the pitcher was in this same situation and what happened. It would be an interesting book to interview athletes at these moments of decision and see what they were thinking. Were they telling themselves stories about when they were successful also? Sometimes the story can be much more powerful.
So, now to the chart. You'll notice that MA is around 100 at the beginning of 07 (run a YTD chart). Nice big round number, which is important, because in the sea of data and uncertainty which that data can create, big round numbers somehow make sense and can provide cliffs or launching pads (another classic is Apple's correction from 86 last year to 52, near enough to 50, and now to 155). The counter points of DIA and FXI are placed to show the effects of the "correction of 2007". This was a small (I think 4%) but dramatic, because we hadn't seen that type of down day in sometime. Look at MA, it's lowest point is 99.72, important, but never goes much below 100 (it's top range prior to the "correction" was 114.) It then pauses at 110, from May 20 to Apr 25th. The market is generally supportive,moving slightly upward. Then off to the races, around 60% gain in two months. What causes this? I think it was pent up demand. The market wants to make sure all is clear (the pause) before venturing forth. The timing on that portion of the trade is really difficult. Once it takes off, you would have to wait for sometime to get confirmation. And this is what appears to have happened as it pauses at 130 (buying and selling going on here) I can't remember a specific story which drove up the stock. I checked Google to see if they point out a story at that place in the chart. There isn't one. Maybe it was earnings. You'll notice the FXI, a volitile stock in both directions went from -20% to +60%. The important point with MA is that it stayed still in the turbulence of Feb/March, there wasn't a whole lot of selling here, the buying returns in a nuetral market and the move is suddenly upward.
However the money was fast and easy, not alot of support, the next correction in the general market sends it back to 130's (around the point of it's first pause) then it maginifies the megaphone pattern which the DIA had (you'll have to pull up the DIA by itself to see that.)
Good stocks throw curveballs. Now MA has another base forming, but it's base is nowhere near as calm as it's base in early 07. Although it's recent highs haven't been as high, the lows havent gone back to the original point (100). The big swings recently make sense. Imagine going from a +70% to plus 30%. You might just want to take you money and play somewhere else, while others may think they are getting a stock on sale.

I think MA has 2things going for it
1.) Everyone knows it, and alot of people use it. Our society is increasingly accepting the use of credit cards. You can use these cards everywhere. but not everyone does. So there is acceptance and growth possibilities, particularly overeseas.
2.) Visa is coming public. Visa is #1, and Visa will create a halo effect.
For an example of halo effect, see Rimm on the day IPhone debuted, check out LVS, WYNN and MGM.

We are in new territory with this one, it's not like it was in the early part of this year. And it's not at 46 (it's IPO), but it looks good. It's up 200% from it's IPO in 2006
Mastercard is ubiquitous, has a worldwide acceptance and is not yet popular in countries that may one day grow the business. Although the numbers are important, the story is sometimes more important, or at least easier to understand. Continued success!

Strategy

Rating: -2.00 (5 votes) Vote:

BIDU. It's interesting how past history trading can effect the present. I had seen BIDU at 56 years ago and remembered INTERNET and FALLING STOCK. I placed these two together, ignored the potential and did nothing. It's now at 300. So that's something I have to recognize.

Gambling stocks

Rating: -1.00 (4 votes) Vote:

I've learned something interesting. A stock can have an intriguing story, but it's better to pick one with intriguing stories. Look at LVS and WYNN (and to a lesser extent MGM) These have the international angle, LVS is expanding overseas and they are a premier provider of this form of entertainment. LVS is also going to expand elsewhere (I was reading about Kansas City) And the found knows how to make money..

I was reading an analyst talking about WYNN when it was 92 (it then went to 118, went back to 89 and I think is around 150 in about two months.) The analyst talked about how he thought WYNN was overvalued when it was 18. So I would imagine it would be difficult to see that you were wrong at 18, and then the market tell you just how wrong you were. Markets may be logical, but they aren't all the time. And the future can be a powerful thing.

Sept 18th revisited

Rating: -1.50 (4 votes) Vote:

Okay, so my post on the happenings of the 18th was way off. I thought the Fed wouldn't do much and they did. What surprised me is that it was surprising to wall street. I had read an article on the 17th which listed out what the major investment houses were thinking it would be and I remember that most thought it would be a .50 reduction. So, I was off in that. Would have been a nice options day.

apple vs rimm

Rating: -0.86 (14 votes) Vote:

Apple should have started with the price they are currently out of the gate. I think it is very interesting that on the day of the iphone release RIMM went up incredibly. An interesting, non logical but beautiful halo effect. These two aren't really competitors. RIMM is used, I would think, mostly for business. Apple Iphones are used mostly for coolness. APPLE is a volitle stock, both up and down. On a side note, why is the VIX stand for volitility but really only goes up when the market goes down? A volitle stock, by definition goes up and down. This isn't a versus game, this is a form of collaboration. Apple is going to go to Europe in a few monts and then don't forget it will most likely go to China and India eventually. Baring anything systemic in hardware failures, I think Apple should outperform the market over the next 3 years. Rimm, who knows? but people can like both of these.

China

Rating: -2.00 (4 votes) Vote:

I think FXI and GXC are going to have the index effect similar to the dow. I think there might be some interesting effects of playing the large single holdings in these ETFS such as CHL. China Mobile.