Week July 23 - 27

S&P dropped 4.9% this week. Worst week in 5 years. Wow this is happening sooner and quicker than I thought. The earnings aren't that great but it is not that depressing either. So what justified the selling? The credit market. Banks can't sell Chrysler's 12b loan, they have to sell the bonds at a higher yield (which means lowering the bond's price). This is foreseeable but how does that relate to my stocks? In my portfolio, only FMXL.pk has a high debt/equity ratio. All other companies have a clean balance sheet. So in a downturn, my stocks can probably absorb the shock better than most of the other companies. My stocks are pretty undervalued right now I believe, but I don't have new money to get in the market!

My portfolio dropped from +10% at around 2 weeks ago to -7%. A drop of 17% from top to bottom...wow! One good thing happened is that I didn't panicked this time as opposed to March. I guess I have a bigger stomach now. I am still confident my stocks can outperform the market.

NTRI: Dropped 20% in 2 days because 3q guidance was lower than the target. People completely ignored the strong 2q they posted. Even at the lower range of the 3q which I think is unlikely going to happen because management said that the estimate is convervative and they have a history of sandbagging their guidance, their YOY profit would still rise 22%. With no debt, no way the company's value justifies a 20% drop. NTRI's quarter is actually quite similar to that of AAPL's (strong 2q and relatively weak 3q), but AAPL's stock rose 9%? It doesn't make sense at all. With P/E of under 18 right now, it is now cheaper than ever IMO. When will people start giving credit NTRI deserves?

TDW: Dropped 8% because earnings didn't meet the street. YOY EPS rose 26% which is not impressive but not bad either. Management was pretty stupid as they gave empty optimism to investors prior to earnings release and then couldn't beat the estimate. Something concerns me: there was a class lawsuit brought on by its employee? Talk about employee morale. This is something I miss, I need to check that in future as well. Right not their P/E is 10.75, pretty close to a 5 year low. I think it is a buy right now despite the supply exceeding demand problem some analysts were worrying about. TDW is still the industry leader, they know what they are talking about.

More earnings next week! Stay tuned!