Weekly Update, April 8, 2018

After a short vacation and a small bout with a gastro bug, i have the focus to post.  Just a reminder.  I write this blog to help me understand, plan and make investment decisions.  This is NOT any semblance of recommendation or advice.  Just my way of holding myself accountable for sound, data-based investment planning and execution … using the best Plans and Clues I have!

Weekly Reads

  • Doug Short put together a good look at Treasury yields – worth the read for additional historical context.  https://seekingalpha.com/article/4161348-treasury-yields-long-term-perspective
  • Lance Roberts posted on debt and inflation … i am WAY more anxious about debt than inflation.  There is a narrative that can be built that depcits debt as the method being used to prevent disinflation.  Sooner or later unless there’s a major jubilee, the debt must be paid.  https://seekingalpha.com/article/4160453-ballooning-debt-really-inflationary
  • A short’s perspective on Canada Weed https://seekingalpha.com/article/4161019-aurora-canopy-time-sober-90-percent-downside
    • This guy may be fueling his own position – short, so a bit overly negative perhaps
    • The one big retort I have on the author’s position is using the average production cost from areas (WA, OR, CA, CO) where growers can actually grow outside.  It’s rational for me to see how outdoor farming will be lower cost as well as higher capacity
    • I do agree, however, that these companies are NOT investments yet.
  • Brian Gilmartin posted on S&P earnings yield and where that indicator sits going into Q1 earnings season.  I totally share Brian’s opinion / anxiety in one of the comments.  I will paste both the question and Brian’s answer as it’s spot-on.  https://seekingalpha.com/article/4161628-s-and-p-500-earnings-yield-remains-elevated-good-thing
    • Q:  Looks like we are approaching earnings season with market weakness… could be good for the market
    • A:  Market weakness but earnings season optimism. Dont like to see all the bullishness headed into earnings season
    • I have read several posts / articles that sugggest earnings will create the floor in market over the next few weeks … i think misses will be severly punished, and there may be collateral damage with competitors and / or suppliers to those punished.
  • Jeff Miller WTWA  https://seekingalpha.com/article/4161614-weighing-week-ahead-trump-trade-reached-tipping-point
    • A perfect quote from Jeff on this graph; as i was surprised when i reviewed as i was expecting Friday’s close below Monday’s.  Quote:  “The loss this week was only 1.4%, but the dramatic daily moves made it seem like more. The trading range was 4.8% including 3% in a single day.”  -> it felt much worse than it was … 
    • Interesting that both Rail and Trucking are up —
    • Weekly Indicators  – Earnings Yield over 6, 10yr down from last month, technical health declining … Here’s  Jeff’s summary:  “I have increased the 9-month recession probability to the 18% range. I am monitoring, but not yet especially worried. The long-term technical health is 1.5, but I rounded it up to reflect the change.”
    • Jeff, like many of us, is keeping eye on Trade War consequences, and has a great summary:  Quote:  “What is the worst case from a trade war? Estimates suggest it would lower world GDP growth from about 3.5% to 2.5% in China and the US – a reasonable level, but not the fuel for a big rally in stocks.  Since none of the US or China proposals will take effect for two months, there is plenty of time to negotiate and modify positions. On the US side there is evidence that this is already happening with close allies.  But there is a reason for additional worry – the loss of business confidence.” My bold on where i agree strongly.
  • One data point a trend does not make … but i also negatively react to analysts who parse out a report to point out how things are not what they seem.  https://seekingalpha.com/article/4161585-suspiciously-pessimistic-march-jobs-report
  • This is a great post and i walked away w/ 2 key points https://seekingalpha.com/article/4161625-trade-wars-just-beginning-war-fight-indefinitely-shrinking-pie
    • Helps explain some of the motivation behind the huge China infrastructure investments into Africa / India – that’s where consumption growth will be in long term
    • Fits as well into the debt-driven consumption that many of us are concerned about … where is the next debt wall, and what will be the fall out
  • From the folks at Fast Graphs, the first in a series of posts of potential value investments https://seekingalpha.com/article/4161426-dividend-growth-stocks-remain-expensive-50-part-1-5
    • As always from Chuck’s posts, the methods and tool usage are more important than the specific content
  • REIT master, Brad Thomas, posted on VTR https://seekingalpha.com/article/4161244-ventas-inc-grand-slam
    • The comment section is equally valuable
    • I share Brad’s interest in VTR and am looking to add to position
  • A short post on Friday’s job reports … this points out that the March numbers while below expectations are maybe not as important as the downward adjustments to January and February http://www.crossingwallstreet.com/

Plans and recent actions

  • Sold off portion of PEGI in taxable account to preserve capital – sold for nominal gain after x-Div.  This bring PEGI position into more rational size and increases the cash position – target reinvestment is VTR with a target around $49.50
  • Sold my full CRON position in my speculation trading account for loss of ~10% which was my stop target.  (see above Weed pointer).  I will continue to look for trades in the large 4 TMWJF, ACBFF, AHPQF, and CRON, but the winds need to shift to more positive sentiment after the bears make some money.  These are NOT investments yet, IMHO.
  • Bought several SPY June puts, and sold 1 for decent profit – holding the remaining puts for the next big swing
  • My investment discards at today’s valuations:  CY, SQ, and HBAN … both CY and SQ have solid business plans and fit within my narratives, but valuations (Risk / Reward) are just too high
  • My investment ‘watch’ for rational entry point within today’s ranges are:  PFE, ZBH, and VTR.
  • My speculation trades are focused on:  ETSY, IOTS, CRON, ACBFF and APHQF … no positions today

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