Netflix – Huge Mea Culpa!

Netflix is why I gave up shorting stocks. I lost my ass and wasted so much time stressing shorting stocks in the past. When you are wrong it is hard to admit because you really need to have an opinion to go short. If you have an opinion, you are doomed :) .

While visiting New York, Lindsay, Adam, Jeff, and the Wallstrip Young Guns were yapping about Netflix. They love it. It works. I immediately told them how wrong I was and needed to rectify my wrongness. So here I go…

Netflix is cool. The guy who started it is way cool. It is ambitious. It is AMERICAN. They have rolled with the punches. They have so much they can now do. They are forever going to be relevant (maybe I am overdoing it)? They are the poster chart, stocks and company for staying away from shorting stocks that you can’t absolutley prove ARE CORRUPT.

In the paired trade contest I set in motion this July, I nailed my long – Apple – up 80 percent from the day I picked it, but I am down almost 30 percent on Netflix. I gloat posted as Netflix completely missed their numbers a few days after the contest started. WRONG. It is straight up 50 percent since that gloat – woops!

I am still crushing the competition in the contest and will likely keep my used iPod.

Half the entrants shorted Google and a really smart man Fred Wilson chose Long Yahoo/Short Time Warner (boring :) ). Note – I pressured him to enter AND he rarely will pick stocks on his site or mine.

In second place is Trader Mike. Nobody else is close. Mike nailed Hansen’s Juice as a short. Mike would be killing me if he had not been such a perma bear (right at the bottom) and chosen COKE as his long. Phew! No idea why people still read him. He is so late 2005 :) .

Back to Netflix. The perfect tuck acquisition in for FEDEX. Can’t wait to see that happen. Makes sense. This absurd prediction is why I also gave up trading on merger rumors.

Disclosure – Long Apple


  1. Michael says:

    How does going long Coke make me a permabear? I only chose them b/c I wanted to do a “true” paired trade — you know, two stocks in the same industry.

    As for NetFlix, I’ve been a member since 1998. You’ll pry my NetFlix sub from my cold, dead hands. The stock could go anywhere but the service can’t be beat.

    Shit, now that I think about it, are you sure I’m not in first place? I want an audit!

  2. Michael says:

    I just ran the numbers. I’m way ahead of you! I calculated based on the open on July 20th, assuming $5,000 in each position. Given that, as of today’s close you would have made $1,295.73 and I’m up $2,349.69. Ha!!!!

    Please delete all that polka musack before you ship the iPod to me.

    Apple is “only” up 47.95% from the day of the contest, not your claimed 80%.

  3. Netflix will be OK.

    Movie downloads won’t be able to get mainstream until the MSO’s upgrade their HFC cable networks to use smaller nodes.

    Their networks work now with just a few downloaders/node, but it doesn’t scale.

    That upgrade is expensive.

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