September Has Arrived

The pundits foretold that September would be the decisive month. Summer lacked direction and commitment, and that it showed in the low trading volume. After the Labor Day Weekend, the professional traders would take over from the Junior traders and give the market direction. Either up or down, the month of September would set the tone for the remainder of the year. It's almost mid September and the pundits prediction is yet to materialize.

Now we are told to wait until the November midterm elections and, after this decisive event, the market will take off after a purported Republican win at the polls. I wonder what we will be told in November. Wait untill January when Q1 stats and December sales show the strength of the economy?

There does seem to be a lot of waiting in investing. Unfortunately, one needs to invest and then wait as opposed to wait and then invest. There is no reward for investing after the news is published. The real money is made by reading the tea leaves and placing a bet on a positive or negative outcome. Is investing then tantamount to gambling? Well, in a way, except that in gambling the house always wins, and in investing one may win too. In both cases, a choice is made and then the outcome appears.

For example, today I bought 1K shares of NOK because it had a appointed a new CEO. The embattled CEO will be replaced because he is costing NOK market share in the lucrative smart phone market. NOK is yet to develop a product to compete with all the shiny music and movie players posing as cell phones. I do not know if replacing the CEO will have an impact on the future of NOK. Currently in the U.S., NOK is an aging brand without much appeal to the young generation. Any device NOK introduces is likely to be expensive, and with $200 iPhones available in the market, NOK will have to develop a true killer product, which is very unlikely.

So why did I buy? Well, the new CEO is going to clean house and change the strategic direction of the company. Maybe the Android operating system will be adopted and NOK Symbian's experiment will be terminated. Building out Symbian and asking software houses to develop applications for it is a pipe dream. The market will not support more than two operating systems. NOK passed up the opportunity of buying PALM and, with it, eliminated the opportunity of relaunching its own operating system.

Maybe the new CEO will steer NOK into a new path, or maybe NOK will become the next MOT or PALM. The former being a market leader turned lagger, and the later a killer innovator turned prey.

In either case, I made my decision on two factors:
1) NOK stock price of $10/share is at value levels and its downside is $8/share
2) NOK has the potential of turning itself around and possibly regaining its post crash high of $20/share.

With a profit/loss ratio of 10/2 NOK should be a winner. So now I sit back and wait for the November elections and, thereafter, the pundit's prediction of what to wait for next.