A few quick things first though which I wanted to highlight. The first is the very, very easy way to follow this blog (or any blog). Just go to www.feedmyinbox.com, type in the site of the blog and your e-mail and voila! You get notified when posts go up. It’s not real-time (will only update once a day per RSS feed to avoid spamming your inbox on the more hyperactive blogs/news feeds), but it’s very handy. And before some wise guy tries to sign me up for some random site, there is a confirmation e-mail that gets sent out

Also, I’d very much encourage people to ask questions. The tougher the better really, since if we don’t get people picking at our ideas they don’t get fully developed. It’s always nice to get a fresh perspective because without it we can get caught in our own circular feedback loop. You think gold will rally? Sure, make a convincing argument. Think the semiconductor market is going to stagnate in 2010? I’d love to know what supports that view.

So, on to the updates. Because I’m planning on re-entering the VXX sometime around Christmas at a full 15% allocation, in reality I have a little over 7% cash not 22%. So if you’re wondering why that number is still high, there’s your reason. The main goal for me is to use that 7% to hedge as much as possible against some of my positions. So in that light, I’m looking at Nvidia.

Why Nvidia? A few reasons. Now before I go into it, I have not looked in-depth at its financials yet so if you have a concern on that end please bring it to my attention. It would help hugely since this next week isn’t exactly happy hour for pouring through 10-Ks. The real aim here though is to hedge against Intel. Now, I truly regret not buying both AMD and NVDA as hedges for Intel much earlier, but in hindsight there’s always opportunities avoided. At first my reasoning (for liking NVDA as a hedge) was that if Larrabee was panned Nvidia would benefit significantly since Intel gaining a foothold in the GPU market would have been devastating. I never imagined that Intel would actually scrap the project though, and that provided both AMD (which owns ATI) and Nvidia’s stock a jolt upwards.

The main problem as of now is what valuation to attach to it. There have been murmurings that one of the main reasons Intel scrapped its Larrabee project was to prepare for buying Nvidia (because of anti-trust concerns of Intel owning both brands vs. ATI). I don’t want to make a decision based entirely on nebulous takeover rumors, especially since its stock has surged 20% in the last month alone. But I’m not sure I can ignore it either. No matter how it’s diced if the deal goes through Intel’s stock will likely take a hit, either because they’ll have to raise equity and/or general opinion of large deals that “seem” to have synergy etched on its face is usually negative for the acquirer. Because the rumors are sketchy, if they fall through there shouldn’t be much, if any, impact on their shares.

That’s the first reason. The second reason is because the semiconductor market can be fairly rocky moving forward, with analyst projections of next year all over the map. One could argue that by buying Nvidia I’m actually increasing my exposure to that risk, but on the other hand they’re not entirely similar business models and have a different client base. I’m not convinced the reason which causes one to falter would necessarily impact the other in the same way. I’ll probably make a decision closer to the end of the month than now. If it does go in I’m dubious about putting a full 7% allocation in though.

Good luck with finals everyone!

VXX – I sold out of the position Monday night after the rally in imp. volatility (Dubai). Mostly because it seems to be the way of the market to let things settle until the end of the year. And as predicted, Dubai was not nearly as big a scare to put a permanent dent or concern in the market. Turns out to have been a decent exit time since the VXX has sloped downwards the past few days. As I’ve said, I’ll very likely be re-entering this position late December. If this sounds like a trade more than a value pick, keep in mind that the VXX isn’t an actual company, or ETF of commodities/sectors. I’m using it as a pure hedge, so this is the one exception to the rule of trying to get into traders’ heads.

DSX – Increased the position slightly to max it out at 15%, wasn’t able to do so before due to lack of cash but now the portfolio seems to be in the opposite extreme.

ELON – I like this company, I really do. But the uncertainty with so many municipalities running into budget crises has shaken it (at least, that’s the best explanation I can deduce). And that doesn’t seem to be shaping up anytime soon. The smart grid stimulus package notwithstanding I’m very concerned about how the stock seems to be more a trader’s hot potato than anything related to the company. Note just today how the stock dropped $1.02, only to rise $1.02 after hours. So, I took the opportunity tonight to cut the headache and leave it out. Unfortunately, it seems I entered the trade for 11/03 instead of 12/03 so the sell shows up a month back :-/. I’m not sure if I’m going to consider this company again. Given the even higher expected volatility after the year end, probably not. It’s valuation is slippery because it’s basically a growth company currently operating with losses. Would I pick it up again at 9-10 to hold for 5 years? Certainly. But this is the type of company I don’t think will fit particularly well for the Initiative.

TIF – Relating back to the last post where I discussed the new outlook, this is the first buy on it. I feel like I may have written too much emphasis on the commodities/USD on the outlook, because the way I look at it is it’s the icing I’m looking for to find strong companies, if that makes sense. Tiffany’s is a company that I personally like quite a bit (as a stock, not merchandise). It has in some ways the best possible jewelry niche. Think of it this way – Tiffany’s is a brand that a lot of people can and will splurge on, especially as a gift. From that perspective, it’s a luxury brand with broad appeal. On the other hand, it’s not exactly cheap, and for that reason it scales very well in that it’s rare a piece from them won’t be “good enough”. For the company itself, the valuation is definitely not cheap but it’s not expensive either at 20x forward P/E. Bought into it a few days ago, and now with more cash I’m maxing out the position.