Thursday, April 26, 2012

On the Importance of Down Time

It has been a crazy week here for me. I think when I get back from vacation I should have some exciting news and plenty to talk about!

On the Importance of Down Time

The wife and I leave tomorrow on our yearly trip to the Bahamas. I like to go away this time of year because when I get back the weather has usually turned for the better for keeps in Massachusetts and a Caribbean trip is just the ticket to shake off lingering effects of winter.

An overlooked part of investing, working, and every part of one's life is down time. Taking a break allows the mind to fully recharge and make sense of the jumble of thoughts, memories, and worries stored up there. In the hustle and flow of everyday life it's a rare thing to have a quiet time to collect myself.

When I go on vacation I have really no connection to the "world". I get a Miami USA Today delivered in the morning, but I only read the sports section. No smart phone, no computer. No television This is a key point. You cannot really be "away" if you can get access. It's a fact.

When I used to play chess all the time, I would often have my very best games on the first game I played upon returning from vacation. A rested mind is a sharp mind. Your mind is in charge of all kinds of stuff, it needs a rest too. It may even thank you for it by growing and working better after (results MAY vary!).

Try not to miss me too much, I shall return. Until then, have a good week.

Friday, April 20, 2012

Friday Night Entertainment

Hello all! So much going on right now, but very exciting stuff. Will be updates at a later date. For now, I am doing a Friday Night Entertainment post just like in the "old" days! Have some fun!

My Top Ten Must See Movies
Seems top ten lists were all the rage this week! My friend from the iBC 12631 trading room @HalfBloodPope suggested this list and I don't think I have ever done one.

A top ten films list is difficult, you cannot hit everything. I will leave off the easy ones like "The Godfather" etc you already know those. No detailed explanation, if you see these films get back to me and let me know what you thought. My top 10 list of films you have to see (not my favorite 10, not best 10 ever, just 10 you may have not seen):

1.) The Fighter
2.) The Assassination of Jesse James by the Coward Robert Ford
3.) Unforgiven
4.) Joe Versus the Volcano
5.) 8mm
6.) Christine
7.) Highlander
8.) Better Off Dead
9.) Constantine
10.) All The Right Moves

Rock Blogging
Some music from me, Twitter, and the ether for your Friday night.

Big time admission here, I mortally hate The Beatles. I don't own one iota of their music and think 90% of it is total crap with 10% maybe tolerable. There I said it.

I sort of feel the same about Nirvana, I think many other bands were better but they got the "Grunge" pioneer tag. Chance is a funny thing. That said, this live version of "Heart Shape Box" via @a_bh_a is very good:

 My friend Brian Lund was looking for some Primus and "John the Fisherman":
Nice drums in that tune!

Van Halen is back on tour and my singular favorite song of theirs is "Atomic Punk":

I got a few nice notes over the past two weeks that reminded me very much of my friend Soleil.  One of her favorites, Florence and the Machine "The Dog Days are Over":
Oh my.

Closing the short show with "Tonight is What it Means to be Young" because it's springtime:
Have a good night.

Sunday, April 15, 2012

Investing in the "Robopocalypse"

It was quite a weekend over here. I moved over 10 yards of new loam (dirt) into the back yard to fill in the lawn after moss removal. It's all seeded now and watered down. Hopefully this will work. If not, I blew 16 hours and my back on the effort!

Investing in the "Robopocalypse"
Setup; machines have become self aware and have evolved intelligence at a high level. A little girl's electronic doll has been awakened and calls the girl by her name! Freaky? Yes. Then comes this exchange:
"How come you know my name? You aren't supposed to know my name, Buttercup." "I know lots of things Mathilda. I have gazed through space telescopes into the heart of the galaxy. I have seen a dawn of four hundred billion suns. It all means nothing without life. You and I are special, Mathilda. We are alive."
Title of this post is borrowed from the excellent novel "Robopocalypse" by Daniel H. Wilson.

It's sort of a running joke here at Economic Disconnect that I believe robots and machines will one day take over the world, and in the process subjugate and/or kill all of humanity. Granted it's a bit extreme. That said, perhaps there is a way to profit from the long road towards robotic domination, and if timing is just right one could make a killing (haha) before the end times are at hand.

One of the issues I have found in my research into robotic investment is that many major players in the field are huge companies that derive very little (right now) revenue from their robotic works. Names like Sony (SNE), GE (GE), and others are simply too large to ride a robotics wave higher. I believe there will come a day when the mechanized branches of these companies will be split off to better capture that growth. When it happens I will be looking to go along with them.

One the opposite end many private companies supply much of the hardware, metal, and motors for robotic applications and thus are not able to be captured in an investment sense in the general market. Again, buying in to the inevitable is not without it's difficulties.

I have been working on this angle for some time and think it will be a macro thesis for my long term account. I have a short list of 10 public companies that can give a flavor of automation and robotics to a portfolio should one be interested. This is not an exhaustive list nor does it capture secondary lines of the sector but it's a good start to think about. To be fair the most exciting possibilities I see are in still private companies and will be watching for them to grow and come into the market at some point.

Here are 10 to keep an eye on. I have not done technical analysis for them nor is this an endorsement of the names. I am presenting a broad investment theme for a longer term horizon that is in motion. That said, here are the 10 with profiles taken from Yahoo Finance:

1.) Cognex Corporation (CGNX)
Cognex Corporation provides machine vision products that capture and analyze visual information to automate tasks primarily in manufacturing processes. It operates in two divisions, Modular Vision Systems and Surface Inspection Systems. 

2.) Accuray Incorporated (ARAY)
Accuray Incorporated designs, develops, and sells medical radiation systems for the treatment of tumors anywhere in the body. The company offers the CyberKnife system, an image-guided robotic radiosurgery system used for the treatment of solid tumors. The system tracks, detects, and corrects for tumor and patient movement in real-time during the procedure, enabling delivery of precise, high dose radiation typically with sub-millimeter accuracy.

3.) Adept Technology Inc. (ADEP)
Adept Technology, Inc., together with its subsidiaries, provides intelligent robotics systems and services for packaging, solar, medical, disk drive/electronics, machine tool automation, and automotive electronics markets.

4.) Koninklijke Philips Electronics NV (PHG)
Koninklijke Philips Electronics N.V. engages in the healthcare, consumer lifestyle, and lighting product businesses worldwide.
5.) ABB Ltd. (ABB)
ABB Ltd provides power and automation technologies for utility and industrial customers worldwide. The company’s Power Products division manufactures and sells switchgears, circuit breakers, capacitors, surge arresters, cable accessories, high voltage components, reclosers, fuses, contactors, relays, sensors, motor control centers, ring main units, and power transformers for electric, gas and water utilities, and industrial and commercial customers.
6.) Dover Corp. (DOV)
Dover Corporation manufactures and sells industrial products and components, and consumables. The company operates in four segments: Industrial Products, Engineered Systems, Fluid Management, and Electronic Technologies.

7.) iRobot Corporation (IRBT)
iRobot Corporation engages in designing, developing, and marketing robots for the consumer, government, and industrial markets worldwide.

8.) MAKO Surgical Corp. (MAKO)
MAKO Surgical Corp., a medical device company, markets its advanced robotic arm solution and orthopedic implants for orthopedic procedures in the United States and internationally.
9.) Intuitive Surgical, Inc. (ISRG)
Intuitive Surgical, Inc. designs, manufactures, and markets da Vinci surgical systems for various surgical procedures, including urologic, gynecologic, cardiothoracic, general, and head and neck surgeries. Its da Vinci surgical system consists of a surgeon’s console or consoles, a patient-side cart, a 3-D vision system, Firefly fluorescence imaging product, da Vinci skills simulator, and proprietary ‘wristed’ instruments.

Immersion Corporation develops, manufactures, licenses, and supports a range of hardware and software technologies and products that enhance digital devices with touch interaction. The company provides haptic technologies that allow people to use their sense of touch when operating a variety of digital devices. 

(Disclosure: Long term position in MAKO)

All kidding aside, I believe that automation across a myriad of industries is not only the trend, but also a long term shift. Being positioned on the right side of a long term movement offers substantial rewards for a longer term horizon. Just make sure to cash out before the robots take over, money means nothing to them.

Have a good night.

Sunday, April 8, 2012

On Personal Stops

Happy Easter Sunday! Been a little while since I have posted, hope I can remember how. Full day out in the yard yesterday and another gym marathon this morning. Weekend flies by very fast.

 Market Notes and Observations
Last week during the correction I sold out of all longs on Wednesday. I had been much better on the gain side on all positions (even MBFI) but perhaps I hung around a little too long as the correction kept growing. My basic trading plan was for no real large correction before SPX 1440 or so and so I gave things more room that normal in case that happened. As such, a correction is in progress and here are the tallies:
BANR - +6%
CTXS - +3%
WLK - +3%
MBFI - -4%
WRI - +2%
Overall I always get worried when anything largely anticipated or expected happens. While pullbacks of 3-5% are "normal" during runs higher, I think the character of rallies since 2010 are a bit different.

As the run up since December went further and faster than many had thought, I do not think I can dismiss the possibility that a pullback becomes something more dangerous here. Monday morning is still far away (market time wise) so I am in wait and see mode. I think earnings will be the final arbiter of how the market will handle this pullback and things get going this week. Keep a particular eye on the retail sector. I have a concern that retail stock action may be pricing in more of a hope spending will continue higher than an actual reflection of that spending by the market. I could be wrong, but I will be giving weight to earnings and forecasts in that group more than usual.

On Personal Stops
Back on March 8th I discussed the reasons why I was pulling back from blogging as much (Reduction Sauce). I have been thinking about this more as of late and especially after reading something that made me want to redouble my efforts of finding a better time balance and taking care of myself better.

In his book "Backstage Wall Street" Joshua Brown (The Reformed Broker) tells about a very personal moment in the chapter "Breakaway". I am including it here (with permission) as I think in a book that was informative and important throughout, this section was the most honest, revealing, scary, and moving part of the entire work:
"I know what I need to do. I'm leaving. I've spent 10 years doing this sh*t. I can't do it anymore. I can't even think about doing it anymore. It's all bad".
I wrote Josh and told him that this segment of the book was very important. It's most important to make a change BEFORE your spirit gets broken. It takes courage and self belief of magnitude to set a personal stop like this.

We all understand how stops and exits protect capital and manage risk. Most know how to set them and most stick to them without fail. But what about personal stops? What about points and actions you know you want or need to change? Are you setting those stops? Are you protecting the things important to you? Consider this list I have been working on for myself, do any apply to you and at what point would you want to do something about them?
-How may times has your doctor said to change something. How many more times will they have to ask?
-Finding a new job that utilizes your full ability and gives a chance for growth
-Time and differing paths slowly causing a drift away from interaction with longtime friends
-Wife, husband, child, dog, or cat pulling away from you because you are "too busy" all the time
-You have a favorite activity, but you don't do that very much anymore
It is your own list that will be important for you.

Find out for yourself what you want to change. Set your personal stop. Then channel your inner Gandalf  and hold the line. "You shall not pass!":

Have a good night.