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(B)(N) Rolling Down The Rim To Win

May 16, 2014
Sell in May and Go Away

Sell in May and Go Away

Drama. We’re not “gamblers” in the stock market and we don’t buy lottery tickets and we don’t “roll down the rim to win” on the off-chance that there’s a fortune in our coffee. As investors, we’re utterly boring and all we really want is that our money should be safe and available when we might need it – we want 100% capital safety and 100% liquidity – and we want a hopeful but not necessarily guaranteed return above the rate of inflation which, if we don’t get, is just another way of losing our money.

But to a lot of investors and most by the numbers if not the money, the stock market does look like a casino without the dancers, singers (absent some “Sell in May And Go Away” sing-song) and other distractions, and it qualifies as “entertainment” for those who are gifted in numbers but not so much in music and who might find “opportunity” where others just find a song (The Street, May 16, 2014, This Beaten-Down Stock Is Ready to Rebound).

Moreover, our mentor (ibid., The Street) has found opportunity in the short-squeeze between short-sellers who profit as “bulls” by slight-of-hand and “bears” who are sitting out this dance and waiting for the next round or rondel as it is. But we’d like be popular too and so we looked at three of the recommended “dancers” to see if they’ve really got the legs that we might want for a longer term relationship in the Perpetual Bond™ or whether they’re just too short; please see Exhibit 1 below for the fundamentals.

Exhibit 1: NASDAQ Small-Caps Rolling Down The Rim To Win – Fundamentals – May 2014

NASDAQ Small-Caps Rolling Down The Rim - Fundamentals - May 2014

NASDAQ Small-Caps Rolling Down The Rim – Fundamentals – May 2014

(B)(N) NASDAQ Small-Caps Rolling Down The Rim - Risk Price Chart - May 2014

Figure 1: (B)(N) NASDAQ Small-Caps Rolling Down The Rim – Risk Price Chart – May 2014

The combined market value of these three companies is $2.5 billion but that’s up 350% last year and now off 45% since December; that’s quite a ride but we know how to deal with it; please see our synopsis on HIMX Himax Technologies Incorporated in Exhibit 2 below.

Moreover, we don’t even think about getting on the lift until the stock price shows some signs of life after death; that is, when the stock price is at or above the price of risk; please Figure 1 on the left (Red line above the Black line) and click on the link for more details (and again to make it larger if required) “(B)(N) NASDAQ Small-Caps Rolling Down The Rim – Prices & Portfolio – May 2014“.

And we let the market decide when we should get off by hitting our stop/loss. Based on the fundamentals (please see Exhibit 1 above), there’s not much left for the “bears” who are still buying in at high prices with no idea of what the future might be and tend to confuse “value” and “price”; they’re not related and our work tends to show that “value” doesn’t mean anything but that we can understand “price” as the “price of risk“.

Exhibit 2: (B)(N) HIMX Himax Technologies Incorporated – Risk Price Chart – May 2014

(B)(N) HIMX Himax Technologies Incorporated

(B)(N) HIMX Himax Technologies Incorporated

Himax Technologies Incorporated designs, develops and markets semiconductors that are critical components of flat panel displays. Its main products are display drivers for large-sized TFT-LCD panels.

From the Company: Himax Technologies Incorporated is a fabless semiconductor company, provides display imaging processing technologies to consumer electronics worldwide. The company operates through Driver IC and Non-Driver Products segments. It offers display driver integrated circuits (ICs) and timing controllers used in TVs, laptops, monitors, mobile phones, tablets, digital cameras, car navigation, and other consumer electronics devices. The company also designs and provides controllers for touch sensor displays, liquid crystal on silicon micro-displays used in palm-size projectors and head-mounted displays, light-emitting diode driver ICs, power management ICs, scaler products for monitors and projectors, tailor-made video processing IC solutions, and silicon IPs. In addition, it offers digital camera solutions, including complementary metal oxide semiconductor image sensors and wafer level optics, which are used in various applications, such as mobile phone, tablet, laptop, TV, PC camera, automobile, security, and medical devices. The company markets its products to panel manufacturers, agents or distributors, module manufacturers, and assembly houses; and camera module manufacturers, optical engine manufacturers, and television system manufacturers. Himax Technologies, Inc. was founded in 2001, has 1,600 employees and is headquartered in Tainan, Taiwan.

For more applications of these concepts please see our Posts which rely on the Theory of the Firm developed by the author (Goetze 2006) which calibrates The Process to the units of the balance sheet and demonstrates the price of risk as the solution to a Nash Equilibrium between “risk-seeking” and “risk-averse” investors within the demonstrated societal norms of risk aversion and bargaining practice. And for more on The Process, please see our Posts The Food Chain and The Process End-Of-Process.

And for more information on real “risk management” and additional references to the theory and how to read the charts and tables, please see our Post, The RiskWerk Company Glossary; we’ve also profiled hundreds of companies in these Posts and the Search Box (upper right) might help you to find what you’re looking for.

And for more on what risk averse investing has done for us this year, please see our recent Posts on The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in AmericaBig OilShopping in America or Banking in America, to name just a few.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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