Weekly Update, Nov 19, 2017

The standard updates / shares for the week

    • The whipsaw from Wednesday to Thursday was fun to watch and then Friday just seemed to run out of gas completely
    • What i notice, however, is that even on up or down days, the market is not uniform … rotations are happening, and an open question for me remains what is the new upward cycle in early ’18
    • Notice the q-to-q change in 10yr, but lower w-to-w or m-to-m
    • Anticipated inflation flat
    • S&P forward earnings unchanged even after this last q earnings updates
    • This is one of the graphs that i posted earlier in the week hoping for more discussion from Jeff Miller, but nothing there beyond the earlier post
  • Here is a pretty good summary of a bucket of data https://seekingalpha.com/article/4126172-s-and-p-500-weekly-update-new-highs-loom-still-look-gloom-doom
    • Based on all this data, the summary (my paraphrase) remains:  these valuations cannot self-sustain long term so a decline is immenent, when?  who knows.  Ride the wave and keep your finger on the ‘eject button’.
  • Another weekly summary that carries a bit more risk https://seekingalpha.com/article/4126240-tracking-bear 
    • My bias is fairly aligned w/ Lance here
  • Here is a contrarian view on interest rates … my bias based on the authors that i mostly follow is that long term higher rates are going against structural and demographic changes – upside is limited (higher rates).  This author argues the opposite and his points are all valid; i think the directional bias comes down to how are you looking at rates – cyclical or structural dynamics.  I am in the structural camp.  https://seekingalpha.com/article/4126193-fat-lady-singing-bond-market

What topics am i poking at?

  1.  Healthcare REIT
    • I have a bad position in OHI and am working to replace it and exit with limited capital loss.  I have given up on the company after this quarter’s earnings update – a) there were comments made asserting that HHS Secretary resignation negatively impacted the company’s future; b) OHI is suffering poor performing operators and coupled with Medicaid funding risk long term this just tips the risk basket over
    • I will continue to hold LTC in both taxed and non-taxed accounts … but will not add to positions at current levels
    • HCN is the other option, but growth forecasts on HCN are not that strong so building position <$63-65 would be more interesting (current small position in non-taxed basis is ~$61.)
  2.  Small cap IOT stocks
    1. CY – looking at this a EOY trade but would surely build position with 3% dividend
    2. IOTS – this is an interesting little company that just surfaced into profitability and seems to have a good product portfolio.  I see two positive scenarios:  a) IOTS just keeps executing and makes money, b) somebody swoops down and buys it.

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