Weekly Update, Dec 10, 2017

Must read articles

  • Lance Roberts – from investing.com https://www.investing.com/analysis/no-risk-of-recession–120817-200271844
    • the labor and consumer sentiment (wages) are important trends
    • this graph is also important 
  • A post this week on BIP https://seekingalpha.com/article/4130775-buy-bip-preferred-units-common-units 
    • my research has BIP on my watch list and i agree with the author and many of the comments that the entry point now is not a value entry
    • i would like to see common unit yield >4.5%
    • i found the preferred interesting, but not sure i want to tackle the complexity that it is going to bring – taxes and floating rate … this also contrasts with my overally perspective that rates are not increasing significantly (floating rate risk then)
  • The discussion of should i pay off my mortgage given the inflated prices of assets?  — i am having same discussion w/ my partner https://seekingalpha.com/article/4130628-buy-bubble-pay-mortgage
  • Snippets from Jeff Miller’s WTA https://seekingalpha.com/article/4130837-weighing-week-ahead-plenty-cross-winds-santa
      • This is important to watch imho … this will be one of the early indicators of real life (rather than Wall Street’s view)
      • 10yr lower than last month
      • Anticipated inflation unchanged month to month
  • i looked at OMI at same time that i reviewed CAH, but i am not convinced that distribution logistics are going to be an easy road in the near future … automation across the supply chain is going to squeeze margins or even remove distributors.  https://seekingalpha.com/article/4130838-owens-and-minor-ex-dividend-stock-watch
  • https://seekingalpha.com/article/4130822-fragile-handle-care … the point i take from this discussion:  there is a virtuous cycle going really strong and it is NOT reducing risk but pushing it further down the line … just like our politicians keep kicking the can down the road rather than solving the problems.  This could end very badly
  • Avondale published this quote …
    • The cloud still only handles 10% of compute workloads — “I would say some of the numbers I’ve seen is that like 10% of the workloads are in the cloud. I would make an argument that that might even be optimistically, we might not even be there yet. And so, I think we still have lots of opportunity to move workloads to the cloud. And so, I think that will take place not over the next year or two years but more like over the next 5 to 10 years” —Microsoft (Enterprise Tech)
    • if even close to accurate it begs key questions:  what % of workloads CAN be run in cloud AND what % of workloads will companies put in cloud … from my work a year or so ago on enterprise cloud implementations, if that 10% doubles in 5 years i will be surprised.  Does not mean, however, that opportunities do not exist in that 10-20% move … MSFT, AMZN, GOOG, the data center properties … and somebody is going to make money off that network traffic that was once flowing within the company’s walls is now going in and out of those walls.

For my personal accounts … i am watching things very closely and have started putting hard stop loss triggers on paper for every position – weighing three key variables:  a) tax consequences, b) downside risk and c) inherent value proposition of the the investment.  I see a scenario where i up my actively managed cash and capital preservation positions from the current 50% to 60%, leaving the remaining investments equally spread across income and capital growth target areas.

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