Exhuberence and Temperance

What the heck, all caution has been thrown to the wind. For now, anyway. The Fed cuts the rates by 50 points and the market goes to the moon.

Dow Jones: +335 (2.5%) to 13,739
S&P 500: +43 (2.9%) to 1,519
Nasdaq: +70 (2.7%) to 2,651

Strangely enough, I wasn't pleased. I want to make money. I like making money. I hate losing money. But the rate cuts threw fundamentals and technicals out the window in some ways. It may be a while, maybe a long, long time, before we see bargain prices in the market again. I'm all about getting great stocks on the cheap (most of the time).

So where does discipline fit into this fastbreak, no-huddle offense of a market? I used today's momentum to inch my way into positions for two more A grade stocks that I had been out of: Garmin and Amazon. Inching into the A graders isn't painful for me. The fundamentals, the growth rates ... I've liked them for months. So I got a small position of GRMN at 107 and another of AMZN at 89. No pain, just discomfort from buying shares of stocks well above their moving averages.

Also bought shares of McDonald's for my nephew and myself. Just the monthly addition I do for him, and he's been bullish on McDonald's numbers for a few months, well before the recent global growth numbers. He used to be bullish on Happy Meals, and now he's bullish on chicken snack wraps.

A generous market washes away mistakes: buying AAPL too high (above moving averages) at 135 and 144; buying NTDOY.PK at 62; buying UA at 65. I inched into RIMM last Friday at 87, not on technicals, and that could've turned into a mistake, too.

But a generous market also rewards technically sound entry points with a boost of turbo power: NILE within its 13-day MA last week at 80 (which I failed to get at 75 because of a glitch in my account); NTDOY.PK at 55; CROX at 40.

I like Starbucks, but . . .

A must read: Jeff Macke's analysis of Starbucks.

Haven't been to my favorite afternoon hangout, Starbucks, since my nephew finished summer school. See, the routine was like this:

• Take nephew to summer school by noon.
• Stop in at Starbucks, just a few blocks from the school, to avoid relentlessly bad Honolulu freeway drivers.
• Plug in my adapter, check my favorite message boards and write on this blog.
• Milk my a) vanilla bean frappuccino, b) hot cocoa, or c) hot tea.
• Use the restroom at least a couple times as 3.5 hours passed.
• Debate whether to buy another drink. Did this occasionally, but usually just refilled my cup with water from the dispenser.
• 3:45 p.m., head up the road to pick up my nephew.
• Take him home.
• Take him to practice.

From there, my springtime habit was to stop in at another coffee shop, Coffee Bean and Tea, while he was at practice. Now, however, I head to his house, where I wait for my mother to be dropped off by the HandiVan after another day at the senior day care center. So the afternoon trips to Coffee Bean, where I liked the hot cocoa and free electricity, ended.

For what it's worth, the Starbucks I frequented before my nephew's summer school session ended was quite busy. Not line-out-the-door busy. That would be the nearby Subway during lunch hour. But it was busy enough and well supported by a community that was one of the last in the city to get a Starbucks.

My need to buy Starbucks beverages is not a real need. Spending $4 for a frappuccino isn't a habit I want. Going there, I confess, is only a matter of convenience. Good service, good product, but just convenience. Air conditioning helps during a hot Hawaiian summer day.

That's why, though I do respect Peter Lynch's "Buy what you know" approach, I have never bought a share of SBUX. I'll walk into a location with my Crocs Caymans and Apple PowerBook, and my nephew will come with me from time to time wearing his Under Armor long-sleeved shirt ... but I'm not going to buy a share.

What's the solution to the Co's growth woes? I see two.

1. Go private. Howard Schultz doesn't want to see all his work and sweat go down the drain, which it will if overseas expansion doesn't pan out. Going private will lessen the strain, ease the burden of growth and help the Co refocus on its soul.

2. Sell to Pepsi. PEP would be more than happy to flaunt its wares at all 14,000 Starbucks locations, while expanding its line of beverages.

Unlike McDonald's, which excels in volume and short stays, SBUX's soul caters to long-sitting patrons who savor an aesthetically pleasing experience almost as much as their beverages. Bricks and mortar can be a growth monster, but when the ceiling hits, there's no soul in concrete.