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WiMini, WiMax, or wi not? I've been to the promised land, seen the future, the only darned thing is it keeps changing!
In round 1 of Strategy Lab Open, I acquired a significant position in Clearwire (CLWR), because as far as I could see, WiMax kicks WiFi's butt, Craig McCaw and other visionaries have usually maintained sufficient focus and committed resources to persevere, and, well, it is a contest and doesn't involve real money.
Then I watched as the share price was shredded, and failed to buy more after the slaughter, but this was due more to negligence than trepidation. My strong conviction that Clearwire would persevere and prosper remains intact. The difficulty with playing a game as opposed to investing real money is that in the game one is dealing with artificially imposed time restraints.
Fortunately, my negligence resulted in me leaving most of the portfolio intact, and it is therefore evident that CLWR over a broader time perspective made a lot more sense as a (risky) "value" play, and given the assumption of an upcoming merger with Sprint as partially evidenced by the spiking share price.
The potential of this alliance, and the resulting dramatic increase in scale and efficiency of wireless internet access cannot be over-estimated, given proper execution and fulfillment.
The risk is largely assuaged by first, finding an accessible entry point to buy in, and this is aided by cost averaging down with some discipline and set goal posts. Also, it probably will take a few 800 pound gorillas to bring WiMax to profitable fruition. It helps if they are hungry, as is the case here, especially with Sprint fighting for relevance moving forward. That is why I figured they wouldn't let Clearwire slip away, ultimately. That now appears to be the case. And as importantly, this is a very costly technology and could at any time be surprisingly leapfrogged by an even more powerful, cost effective proposition, thereby rapidly souring investor sentiment on the intrinsic value of this merger.
All that considered, I was still willing to take a calculated risk and hold onto a chunk of the stock, similarly as in buying into Sirius Satellite (SIRI) in the mid to low $2 plus range, and time will tell if these were wise moves.
These stocks are to me a bit more speculative than, say, my recent purchase within SLO 2 of Yahoo immediately upon its plunge a few days ago. Already rebounded a lightning quick 8-10% off the lows, its rapid trajectory was alas, fairly predictable. I also see Lenny Dykstra picked it as his "deep in the money" options stock pick of the week on thestreet.com.
Will Sirius and Clearwire provide fun and profit, because, what's a banquet without some alluring appetizers, laden with spicy risk and enticing speculation? Eating too many though, just plain spoils the main feast by filling up on "iffy" calories. So if decisively venturing into such potentially rich yet potentially unsettling fare, modest consumption to overall portfolio percentile distribution prevents the necessity to reach for the antacids, so to speak.
Bon Appetit,
Jeff Kalnitz
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