Why fly to tech...

Because, I'm like a bird I wanna fly away. That was my best version of Nelly Furtado and it was darn good. I can't go pop so time to get back to the basics. You wonder why previously I said their has been flight. You usually here the statement: "There has been a flight to quality". And all of a sudden the industry that we all have been running away from since 2001 is now the one that we are flying back too now that the financial bubble begins to rear its ugly head.

As usual I try to do the one thing most stock pickers don't do. All the websites and TV shows recommend picks but they don't do one thing that would have been helpful for me when I first got started and that was to recommend great entry prices. There have been a few simple concepts that have made a huge difference in how my returns affect my portfolio. Over the years, I have come to realize that entry price, transaction fees, dollar cost averaging, dividends, and earnings releases/market news have been important in understanding the stocks I pick and how much I buy and how long I hold. I would like to say that I am on the cutting edge by actually recommending an entry price but there is probably someone else out there making a bold leap and doing the same. But even some of my favorites, Jim Cramer, Fast Money crew, and Jim Jubak recommend picks but not exactly the entry price. Jubak probably comes the closest by disclosing he will purchase the stock three days (I think its still three) after he has noted that he will be buying the stock. So here goes my take on good ole' technology:

Adaptec (ADPT) $3.40 – Every portfolio needs a little risk and here is mine. This beaten down warrior blasted through its 52wk low. I see momentum action here that will create a floor and push this stock higher. If this stock every dips back to my recommendation price Superman that stock. I got in at $3.54 and since then this stock has gone up $3.82. It has come back a little and due to the markets negative outlook. I would accumulate at $3.50s if it dips and ride the short term wave to a nice quick gain. Save a little in the tank as this will be a great long term play.
Risk – Medium - High
Time Horizon – Short Term

Advent Software (ADVS) $39.25 – Another area not hit by the credit woes is technology. This company reported earnings in August and sales of their software geared towards investment companies and non-profit organizations grew at a decent clip. With the adding of new customers and management’s willingness repurchase the firms shares when they are trading at a discount, this company will continue to be rewarded for growth and look for an exit point of $45 to $47. My quick update is this stock is volatile and a little patience will be rewarded if this stock gets down back to my recommendation price.
Risk – Moderate
Time Horizon – Moderate Term


Zhone Technologies (ZHNE) $1.10 – Many well known investors note they would probably be small cap traders if they could start all over again in today’s world. And I don’t disagree with them. Small cap gives you the opportunity to accumulate a large number of shares just as a private equity firm would accumulate a large number shares for their investment portfolio of today’s medium and large cap stocks. The practice is to load up on a good thing (most funds hold a majority shares in the top 10 companies) and ride the great returns. But the problem with small cap stocks is risk… or should I say the perceived risk that in one quick swoop your $1 stock can become worthless. The way I recommend playing small cap stocks is find your entry point and give yourself some margin of safety to buy the stock. For example, I have indicated a target price for ZHNE of $1.10, but this is the margin of safety price after I noticed momentum at the $1.15-1.17 range over a month ago. On Aug 16, the death day of the market I got my margin of safety price of $1.10 and rode ZHNE for a few days and sold at $1.20. Well more momentum action is occurring at $1.20. I would say this consistent action should reduce our margin of safety and I would re-recommend ZHNE here at a range of around $1.15 to 1.17.
Risk – High
Time Horizon – Short Term

Ohh and I almost forgot my favorite tech stock of the moment, Radisys.
RSYS - This stock has tested the limits of the faint of heart. Many people watched this stock dip below the 52 wk low and thats when a technique that we discussed above came in handy. Dollar cost averaging allowed us to continue to buy this stock as it fell. The price here would be around the mid 10.80s. The "Superman that stock" price would be where I got lucky and repurchased the stock at 10.50s. If this stock drops to 10.50 I repeat...bring out the 18 Wheeler and jump all aboard. Notice the recent news of RSYS acquiring technology platforms from Intel has fueled a nice rally today. It could have been picked up today at around $11 but the nice upside move is just what the doctor ordered. It was reported the new acquisition will be completed in a little over a month and add around $50 million to the bottom line. Music to the ears of us buyers here at this point in the stock. Look for the completion of the acquisition and if as earnings begin to be revised upwards by analysts covering the stock...get ready for takeoff.

I'm Out....PEACE