Blog Posts by Jeff Macke

Since January 1st shares of Dell (DELL) have risen more than 40% driven by founder & CEO Michael Dell's $24.4 billion buyout offer. The $13.65 per share bid was a 25% premium to the price of the shares prior to word of the transaction leaking on January 11th. In order to fund the deal Mr. Dell was using his 14% stake in the company and chipping in his own cash along with funding from Silver Lake Partners and Microsoft (MSFT).

The move was just the latest in a long line of efforts by Dell to prop up its stock price. Among the value creating efforts were $39 billion in buybacks since 2007 and the announcement of the company's first dividend last June. How did those strategies work? Dell's costs basis on the repurchased shares is $19 and the stock had fallen 10% between the dividend announcement and Mr. Dell's bid.

Naturally shareholders reacted to the proposed bailout of their losing positions like whiny, litigious children. Southeastern Asset Management, which owns 8.5% of Dell, almost immediately launched a PR campaign arguing shares were worth just under $24. In the note in which Southeastern laid out its tortured valuation model, the firm said it "intends to retain and avail itself of all options at its disposal to oppose the announced transaction, including, but not limited to a proxy fight, litigation claims and any available."

Lee Munson, chief investment officer of Portfolio LLC and author of Rigged Money, says you have to consider the source. Southeastern's founder Mason Hawkins' Longleaf Partners Fund (LLPFX) has had a one-star Morningstar rating for the last 5 and 10-year periods and overall. Painting with a broad brush, Munson says Southeastern is just an example of a collection of value fund managers who have ended up as "bag holders" for companies such as Dell. Southeastern reportedly accumulated its Dell shares for prices between $19.91 and $41.54.

In a world obsessed with picking winners, the dirty truth is many investors under-perform because they don't know what to do with gains once they have them. The temptation to sell too fast is a problem but even worse is the tendency to stick around too long after a stock's run to the upside has ended. Bad stock pickers can muddle along for years, but the true believers get carried out in a box.

Greg Troccoli, co-founder of ChartLabPro.com has three tips for folks looking to hold on to their profits by keeping a grip on their emotions. In honor of those who have been buying the Dip on what was once the largest company by market cap in the world since it hit all time highs $250 ago, we'll call these tips "How to Avoid Getting Apple'd" (name subject to change given Apple's (AAPL) 10% run over the last three weeks).

1) Keep a trailing stop on your winners

A trailing stop is just what it sounds like: If your stock drops below a certain level you automatically sell, which is to say you "stop" owning it. If you watch your portfolio closely you don't need to enter a physical order, but keeping a firm level in mind at which you'd sell an entire position is a key discipline.

2) Take partial gains

"When I reach a certain level of above 10 or 20%, I will take 50% off the books," says Troccoli. Doing so gives him a little more patience with the balance of his position. He compares it to putting a few chips in your pocket when you get lucky in Vegas; people playing with House money are less likely to panic than those who let a profit turn into a beating.

Despite stocks at record highs and promises from Washington, DC to rebuild a more transparent and trustworthy financial system, there's little evidence of change since the 2008 meltdown. Whether it's suspiciously selective enforcement of insider trading laws or JP Morgan's (JPM) London whale, it's obvious that well-placed individuals and financial institutions continue to operate by a different set of rules than Main Street.

If the government can't or doesn't seem much inclined to take tangible actions, then who will? Enter the CFA Institute of America and the Future of Finance Project being launched today. The CEO John Rogers says his program has the specific goal of "getting people back on track for their long term retirement programs."

The CFA Institute sees the Future of Finance project as one leg of a three-pronged collective approach that will work in conjunction with stronger regulations and enforcement to rebuild confidence. The creation of regulations isn't a problem. We have plenty of rules out there being violated, or bent, as a matter of course. Stronger enforcement of existing laws would be an enormous step forward but remains a question mark. The bottom line is the only defense investors have is their own education. Rogers says that starts with teaching investors what they should expect and demand from their financial advisers.

To that end, the CFA Institute has created a Statement of Investor Rights. Individuals should demand their advisors operate in accordance with these rights or take their money elsewhere.

Did you hear about Google (GOOG) breaking through $800? How about Blackberry's (BBRY) comeback? Are you thinking of buying the dip on Apple (AAPL)?

Just stop. Please. Momentum names are fine but big money is made in assets hiding under the radar. In the attached clip, Greg Troccoli, technician and co-founder of ChartLabPro.com has some stock ideas in a sector that's been long out of favor.

Strategically Troccoli screens markets looking for charts that are climbing the fastest using his rating methodology. He's not interested in calling bottoms or tops, but catching the middle of moves in stocks or sectors. It's a less glamorous but a higher percentage way to trade.

Having used his system to run through the entire S&P500 Troccoli found that his three top picks were all in the business developing or exploration of natural gas. The stocks are AGL Resources (GAS), Exelon (EXC) and Devon (DVN) are slowly starting to get their share of the quiet rally in the commodity.

Depending on who you ask, the stock market is: a) overbought, b) a bubble, c) poised to go much higher, d) on the cusp of a correction, e) anything else you could possibly think of and then some. Whenever a range of opinions is this wide and passions this high, it's a great time to step back and take a look at the charts. Charts don't care how you personally feel or what you hear at the cocktail party. That's one reason pros tend to use them; whether they admit to it or not.

As the co-founder of ChartLabPro.com Greg Troccoli has been using price charts to guide his trading for more than a quarter of a century. In the attached clip he shares his strategy for playing the S&P 500's next move.

Troccoli describes himself as bullish overall but he's keeping a tight leash on his positions. "You could go down to the 200-day moving average line and not change the overall four-year trend and go all the way to 1,440," he says.

Such a move would be not dissimilar to what happened last year when stocks got off to a torrid start in the first quarter only to give the gains back in a tough Q2. A move to 1,440 would leave stocks up less than 2% for 2013.

The beauty of technicals is that Troccoli isn't relying on his gut or the latest news from Cyprus to inform his decision. He's listening to the market rather than making a negative forecast. "I don't really start to turn negative unless we close, not intra-day, but close below 1,535."

One week later it's still hard to find a reason to really, truly, deep down in our heart of hearts care very much about Cyprus and its banking system. The best explanations revolve around the disproportionate size of the banking system to the economy of the country.

Jon Najarian, co-founder of OptionMonster.com, says the Cyprus solution matters because of the precedent it could set. Taking assets from depositors is not a tax. It's an outright confiscation of private assets by government authorities. It's the act of a dictatorship, not a democracy. The EU can withstand different tax rates, government aid, philosophies, and cultures throughout its member nations. What the EU can't be is an incubator of tyranny.

It is that relative size of the banks that convinced the Cypriot President Nicos Anastasiades to propose a taxation of 9.9% on deposits, which would go toward satisfying demands made by the EU.

It was a plan so ill-conceived, so staggeringly asinine, that it was immediately met with outrage and runs on Cypriot banks. The banks in Cyprus remain closed, but the size of the bailout on the table — about $13 billion USD — is small enough to suggest the matter could be decided over a few beers and a game of darts.

The problem is the proposed solution says about the thought process of the EU. "This was a trial balloon floated up by the ECB," Najarian offers in the attached video. The country itself is little more than a "banking center that has no impact on the ECB or the European Union."

Lost in the shuffle of new highs and Bernanke testimony on Wednesday were a one-two punch of earnings misses from FedEx (FDX) and Oracle (ORCL). Both companies rely on corporate spending; a fact that was supposed to be a selling point early this year as corporate America loosened its purse strings and stopped sitting on all that balance sheet cash.

Based off FDX and ORCL, the spending isn't happening. Is it too early to be concerned? Jon "Dr. J" Najarian, co-founder of OptionMonster.com says no. "It's a trade down time," he says in the attached clip. Firms are still cutting corners wherever they can; a practice that seems so last year, but is lingering into first quarter.

The markets are shaking it off thus far, punishing the stocks themselves but leaving the broader market momentum intact. Najarian isn't counting on that resiliency to last unless earnings improve.

Related: FedEx's Monster Earnings Miss Is an Early Warning Sign for Multinationals

FedEx and Oracle are outliers in that their fiscal calenders don't jibe with the seasons. The real reporting period gets going in early April. "Sadly that is right when we get that 'sell in may and go away,'" Najarian notes, alluding to the traditionally weak summer market season when volumes fall off and so do stock prices.

This morning the irresistible force of enthusiasm represented by the all-time highs of the Dow Jones Transportation Average (^DJT) met the immovable reality of global economic weakness when FedEx (FDX) reported a stink-bomb of a quarter. The global shipping juggernaut came in at $1.23 in earnings per share on revenues of $11 billion compared to consensus estimates of $1.38 and $10.85 billion, respectively.

"The third quarter was very challenging due to continued weakness in international air freight markets, pressure on yields due to industry overcapacity and customers selecting less expensive and slower transit services," said company founder & CEO Fred Smith in the press release. Smith went on to say the company will decrease capacity to Asia and ramp up cost reduction efforts.

As might be expected from such a large miss and dour guidance, FDX shares are weak in early trading Wednesday but still up over 10% for the year. Yahoo! Finance senior columnist Mike Santoli and I discussed what the bellwether's results mean for the broader market.

Santoli says the million dollar question is whether FedEx customers migrating to lower margin, slower delivery products is a function of the economic cycle or a seismic shift in their corporate clients. For ages FedEx has been satisfying customers' sense of urgency by getting packages delivered overnight.

The fact that the shipper itself says it's accelerating cost-cutting suggests customers are doing the same, in some cases at the expense of FedEx.