The Proficient Investor

In what could be a very bold move for the DVD delivery service, Netflix has decided to offer some of their titles for viewing or downloading over the internet.

This should help the company compete against the likes of Apple and Movielink who already offer the download service. It should also be good for the stock…I haven’t run the numbers yet, but it could be a good opportunity here if the position is right.

Read More Here.

Update: Hope Capital Ltd. (WSE:HCL) began trading publicly today. Opening at $L1 and trading as high as $L8 at one point, it was a successful IPO. Five other companies within Second Life are now up for IPO and several of them are also being offered at pre-IPO prices of $L1 per share. This is a great way to not only support business in Second Life but also to make some money while you are at it.

This hasn’t made headlines nationwide yet, but seeing as Second Life is maturing and now that the viewer code is public domain, I think this story has merit.

I for one hold stock (in Second Life) in the World Stock Exchange. The idea is to create an in-game exchange where users can invest in virtual businesses that exist only in Second Life.

It’s a bold move and one that I am sure is going to be quite successful.

Read more about it here.

Apple Inc, sure is starting the year off with a bang. First they wow the crowd at MacWorld with their brand spankin new iPhone and not a day later are being sued by Cisco Systems for infringing on a name they have trademarked.

Read The full story at TheStreet.com

At the time of posting, Mr. Wilcox had no position in AAPL but was long TheStreet.com (TSCM).

With MacWorld underway today and CEO Steve Jobs unveiling the much anticipated iPhone and a change in name to Apple Inc. , should investors buy Apple now? I don’t think so. Up just about 7 points today after the news broke, I think you will see Apple is still going to fall flat for quite some time.

I think Apple is overweight here and overvalued based on their earnings. Let me explain. At 19 percent growth and already trading at 42 times earnings, the stock is just too expensive and has too high a multiple at this level. After all, this isn’t Google.

Couple this with the fact the iPhone isn’t available until June in the US and September in UK and the hefty price tag of $599 for the 7GB model…there’s not much here for investors to bank on. No other products have been announced and the only other “killer app” they have going is the Apple TV which wirelessly transmits shows you have recorded to or from your Mac to your TV.

I think maybe you have an upside of $95, possibly $100 but a bigger downside as we enter 2007 and get underway in a weak market. Don’t forget that Jobs is also still under investigation for options backdating which never makes investors happy. Should Jobs be found to have cooperated in the practice, we are likely to see a major pullback of the stock. On a pullback to $80 or $75 I think you have a buy, but again with limited upside for the year.

On the other hand, Dell Computer (DELL) which unveiled new hardware at CES in Las Vegas this week has 17% growth, trades at only 22 times earnings and could fetch $40 in 6 to 18 months if their growth and revenue continue. I always like the beat up stock of a good company, especially when all the analysts either hate the stock or have no opinion in the matter.

At the time of this publication, Mr. Wilcox held no positions in stocks mentioned.

I think in times like this, it’s easy to panic when you see red all over your portfolio. The thing you have to remember is your stocks aren’t always going to go up. Sometimes they go down, sometimes they go down big. So what do you do when that happens?

There are usually a couple factors that you need to consider when you see the prices of your stocks drop like a rock. First, consider how long a run the stock has had in the positive direction. If it’s been a week, two weeks or more, then chances are you are seeing some profit taking assuming no other catalyst is out there causing the weakness. Second, Wall Street doesn’t like to see stocks go up endlessly because it doesn’t let anyone in at a comfortable level. New investors easily panic when they buy equity and it doesn’t immediately go up. This is just a matter of experience.

Remember, we don’t pick stocks on a whim. For every position you buy, you absolutely MUST have a good reason for. Just because some analyst says a stock is good doesn’t mean you should buy it. In fact, most of the time if a lot of analysts are touting a stock, the move has already been made and you are too late to the party. However, let’s say you do have a stock you like and you have plenty of reasons to like it, but the darn thing is just getting hammered. Do you get out? Jump ship because you are down 25%? I don’t think so. Nobody ever made money selling when the price dropped. If you do your “homework” as Jim Cramer calls it and run the numbers, and if the financials and fundamentals of the company are unchanged but the stock is down, then you buy more! You don’t bail on a bad stock if the fundamentals are good. This just means Wall Street is having a sale.

Think about it. When your favorite department store says the price of some item is down 25% do you walk away from that store saying “oh they must be having trouble…they slashed their prices.” Of course not. It’s more likely that you are going to shop there because of the sale. That’s the idea. Pull the price down so more people can get in.

That’s what I am seeing this week. We had a good 4th quarter in 2006 and the market is now correcting itself. I like some tech here, definitely RMKRand AANI and in the big names I like MSFT, LLL (talk about a bargain) and even DELL.

At the time of publication, Mr. Wilcox was long RMKR and AANI and had no positions in MSFT, LLL or DELL.