Weekly Update, December 17, 2017

From Jeff Miller’s WTWA

  • The S&P one chart of 5 days

    • Less than 1% variance
    • Friday was all Tax reform driven … but look at the drop at end of Friday (I assume traders did not want to hold positions going into weekend and start of holiday tax selling)
  • Small business confidence is really high; many view this as positive, but i am starting to think about this in a contrarian mode … the more optimism, the closer the capitulation.  This weekend i walked around a couple of ‘hot’ areas of Portland and saw a) empty quality storefronts and b) way too much building of condo and apartment buildings with commercial / retail ground floors.  I keep asking if the pendulum has swung too far again … 
  • Investor confidence is similar – the greater the optimism, the closer to capitulation
  • Brian Gilmartin on S&P earnings forecast … revisions are still increasing  http://fundamentalis.com/?p=7428
  • Weekly scorecard

    • 10 yr no change month to month
    • S&P continues up
    • Most indicators flat
  • http://www.crossingwallstreet.com/archives/2017/12/cws-market-review-december-15-2017.html … not sure why Jeff pointed here as it seems like a steady-as-she-goes view … which is fine, but my cautious approach makes more sense to me

Vanguard has what i thought rational advice https://www.bloomberg.com/news/articles/2017-12-04/vanguard-warns-volatile-2018-makes-firm-most-guarded-in-10-years … lower our return expectations and the trigger finger will relax some? I will be happy with low-end returns by the different asset classes / objectives in ’18.

Another cautionary tale from Heisenberg https://seekingalpha.com/article/4132287-mad-mad-mad-mad-world … I too am leary of Bitcoin as too many people are talking about it and looking to ‘strike it rich’ (watched that movie before) … reading this article in conjunction with the Vanguard piece is a rational connection imho.

Century Link — I respect George’s analysis and posts … but on this one my personal ancedote is another cautionary tale https://seekingalpha.com/article/4131345-retirement-security-buy-hated-telecom-just-popped-10-percent

  • We are tired of poor service and price increase from Comcast for internet connection (no phone or cable is worth those prices)
  • Decided to try Century Link (the only alternative at our address to provide the speeds we need)
  • Signed up
  • Scheduled installation for Dec 1
  • They have canceled and pushed the installation 2x and current schedule is Dec 19
  • I have a modem in my hand that i am not paying for and i am losing faith and confidence that they will be able to deliver … crap ‘new user experience’ and if they want to grow, new users should be like diamonds in rough

This is a bucket full of short-term noisy data, but always interesting https://seekingalpha.com/article/4132349-weekly-indicators-whirlpool-crosscurrents-long-range-forecast-edition

One of the “shovels and picks” stocks to ride a US Weed boom https://seekingalpha.com/article/4132284-scotts-miracle-gro-growing-like-weed

  • I am adding to my watch / analysis list, but i am lost confident in US dominant markets … still too much legal churn to place even a mid-sized bet imho
  • I am dipping toe into Canada focused businesses until Sessions lets the states do what is needed

Lawerence Fuller (no relation) has a fairly detailed piece on labor metrics https://seekingalpha.com/article/4132098-news-good-news … i think this focus on real wage growth in the heart of population will be critical to continued growth … right now it does not look so good and the much promised tax help will not help those folks much

I found much to agre with in this commentary – the key two takeaways – 1) future growth (asset values) will be MUCH slower than we have seen since the ’07 banking fiasco, and 2) emerging markets are the interesting allocation looking forward – that’s too general for action.  I am revisiting this question but my inital thesis is:  index asia and eastern europe but select companies in S. America and India (with S. America the MUCH greater risk).  https://www.gmo.com/docs/default-source/public-commentary/gmo-quarterly-letter.pdf

Personal Commentary

  • Reduced my T holding by 25% as my covered call @$35 was executed
  • Started position in IOTS (not a trading position) below $7.00 … think this is about 1/3 of target position
  • Exited FIT in my daughter’s account … two key factors: 1) learned that their SDK requires their own web-based tool (developers in my experience hate being told what tool set they MUST use) and this will severely limit app availability and user experience and 2) crickets from FIT on Ionic sales with consistent disounts across digital retail … entry was $6.15, exit was $6.95
  • Problem children include OHI and PEGI
    • OHI will most likely be removed from all portfolios even after reducing to less than 25% of original position
    • PEGI is open book and right now is my largest single holding across all portfolios (not including ETF or funds)

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