Patience is finally paying off

After months of painfully holding onto my stocks, I am starting to feel good about my portfolio again.

I made a good call on DKS sporting goods, but I didn't make any money off of it because I only own 10 shares. I wish the stock would stay down so that I can have an opportunity to buy a significant amount in the future. I still think it is a good value, and should be trading at least in the 30s when you factor in the growth opportunities for the future.

It really doesn't matter though because because I made more with my money in LDK. It looks like solar is getting hot, and LDK is becoming one of the leaders in the sector. I still think LDK is significantly undervalued and am not planning on selling until 2009 when it starts producing its polysilicon. This stock should be trading at least in the 100s. At its current pace of growth, it is should earn $5-10 a share in 2009.

I just think that Wall Street is very risk adverse right now, and won't touch anything doing with China. The American solar companies are trading with PE multiples of 100 while their Chinese bretheren are around 20. It just doesnt' quite add up, but I am taking advantage of this discrepency.

Oh, and NVDA is still significantly lower when I bought it, but it is starting to gain momentum. I think it has found a bottom.

GM and FNM could be good buys if done right

Everyone is afraid of GM and FNM and no one wants to touch them because both companies have the risk of going under. They can still provide opportunities if you know how to manage the risk.

With these stocks, there is a possibility of that these stocks will go to zero, but if they succeed, you will be greatly rewarded. The risk can be managed with proper diversification.

I am not a big fan of diversification, but when you have securities that can go to zero, it is essential to protect yourself. Don't risk capital that you aren't afraid of losing.

I think that these stocks are good buys because there expected value is probably higher than its current price. A simplified way of calculating of the expected value is :

(% chance of losing all)*(0) + (% chance of succeeding)*(price if it succeeds)

If the expected value is significantly lower than its current price, given you a large margin of safety, then these could be good buys. Just make sure you manage the risk properly by making them just a small holding in your portfolio. These should be treated more like options than actual stocks.

I am confident in NVIDIA

NVIDIA's stock has been hammered recently by competition and a write down, but after listening to the conference call today, I was reminded why I loved the stock so much in the first place.

Jen-Hsun basically addressed every single problem head on that they were experienced, which is exactly what I want to hear from a CEO. I hate hearing BS, and just want a CEO who shares the same concerns as I do.

NVDA's strategic position in the market is being challenged from competition from AMD, but that will probably change in a year. These two companies have been trading the lead back and forth for years, and they continue to grow.

I can go into details, but my final decision is really based on intuition. I know NVDA is a great company that is not going anywhere. At this current price, there is really no downside risks and the potential for a multi-bagger in the coming years.

Now is the time to back up the truck. I am even considering buying some margin.

LDK blew earnings away

They killed it posting $1.29 vs a .42 estimate. Sure only .82 cents were operational profits, but it still up about 100%.

LDK is still priced really cheap for what it has to offer. Assuming LDK's profits remain constant, they are trading at 12.2 times earnings at its after hours price of $40 (40/(.82*4)). With the amount of growth in the company, it should be trading around 100.

If it hasn't already, this stock should be taking off soon.

The long term is a painful route in these markets

LDK, which is my biggest holding has definitely been volatile and I have had some huge swings in my portfolio. My performance record looks ugly, but I am confident in this stock in the end.

Unlike some other undervalued stocks, LDK's plans for growth is clear and straightforward. If LDK builds its polysilicon plant on time, it should double its margins while it rapidly expands its wafer business. There is growth in revenue and from margins which should be very potent combination.

There are some risks in execution of this plan, but LDK's execution has been flawless so far and there is such a large margin of safety in its price, that it shouldn't be an issue except in the most extreme circumstances. Even if LDK's polyplan is delayed a year, there is still lots of upside in the stock.

The main reason I bought this stock is because the polyplant is not priced into the stock by the market. When you see something in the stock that the market doesn't, it might take a while for it to catch on, but when it does, LDK should take off. Not to mention, half the float is shorted in the market, so there will be a huge squeeze in the process.

Now the hard part is waiting until these events to priced into the stock. I might have to wait for the earnings in 2009 to prove my point which is a long way away. The good news is that I can enjoy a lower tax rate when I finally do realize my gains.

LDK can easily go to 100+, and I really don't see any better opportunities for my money out there. In the meantime, I get to experience pain and suffering from the market.