- S&P earnings and the promises of the future http://fundamentalis.com/?p=7092 … another quarter of optimism and rose colored glasses, or an accurate picture of continued slow, steady earnings growth into EOY 2017? The back-half ’16 comparisons will add pressure and any execution miss will be severely punished, e.g., CAH this past week (another analysis https://seekingalpha.com/article/4094884-cardinal-health-damaged-dividend-growth-story)
- Jeff Miller’s Weekly Scorecard
- I am still laser focused on the 10yr rate … north of 2.30% things start getting interesting, and above 2.5% will create all kinds of opportunities.
- Another good overall summary of the data https://seekingalpha.com/article/4095250-s-and-p-500-weekly-update-equity-market-perspective
- Good small snippet of individual investor sentiment – what they say is less valuable than what they do – from Jeff MIller’s Weekly Update
- If you are “scared witless” (TM euphemism OldProf) by the doom and gloom stories, you are not alone. Jason Zweig reports that in the past month individual investors pulled $17 billion from stock funds and invested $29 billion in bond funds.”
- Chuck’s videos are a great way to learn more about FAST graphs. Several of these stocks are in my portfolio or watch list https://seekingalpha.com/article/4042738-12-dividend-growth-stocks-meet-magic-formula-dividend-growth-investors
I read this … and i think a bit too much fear building, but cannot be simply ignored. https://seekingalpha.com/article/4092664-hot-potatoes-dutch-tulips
I have been leaning toward more and more cash based on my own analysis and convictions, and articles like this make it hard to remain balanced and objective. Rational logic anchored in consistent and reliable data is needed, not more emotion (fear or greed).
- https://seekingalpha.com/article/4092372-s-and-p-500-weekly-update-positive-earnings-bonanza-produces-new-market-highs I love articles with this much data and summarizations. The authors are not necessarily pushing in any one direction, but calling your attention to data, patterns and probabilities. They leave it up to us investors to use their data collection and analysis. My reactions and actions are aligned here. I rotated out of very high priced companies in the Radar Positions 2 and 3 where growth was limited and the current income replaceble with lower priced companies with better prospects, e.g., Telecom and Retail were my most recent purchases.
- Here’s a look at back-tested models. I am not sure i have that confidence in models of prediction based on historical data – explains why i am much more comfortable investing in companies’ equity or bonds and not trading their stocks or futures. https://www.cantabcapital.com/we-think/trend-is-not-your-only-friend
- Seeking Alpha writers covered a few of my ‘watching closely’ list
- MSFT – (this is one of the best summaries of ‘why Linked In’ and goes to a deeper strategy) https://seekingalpha.com/article/4092398-microsoft-dynamics-enterprise-software .
- CSCO – for dividend investors and others – (i will be adding more if price gets into ‘value’ space; that guardrail i have not yet established – on the ‘to-do’ list – https://seekingalpha.com/article/4092272-cisco-dividend-stock-analysis
- JNJ – i do not share the author’s enthusiasm at this entry point, but would add to my position at right entry (current cost basis is $89 and it’s 4.86% of taxable portfolio) – https://seekingalpha.com/article/4092490-johnson-and-johnson-recent-dip-creates-opportunity-dividend-growth-investors
- Brian is the person i listen to around earnings …. his commentary on forward looking earnings conference calls is priceless – http://fundamentalis.com/?p=7076
- Here is another good S&P review and read together with Brian is good – https://seekingalpha.com/article/4092471-breaking-bull-market
I am fairly comfortable with my current holdings. I have >15% cash in taxable, and plenty of dry powder in nontaxble accounts as well. I will continue to look for opportunitistic profit taking in the Radar Position 2 companies, and writing covered calls for some others. Over the next few weeks, i think the 10yr Treasury is the key indicator and it will be watched carefully … i read somewhere this weekend that 2.4% on 10yr is a critical point. that is about the point where i am willing to take positions in the 7-10yr durations – investment grade muni and corp (not sure about treasuries).
For new positions or building existing ones, the favorites remain (pending logical entry points): STAG, QTS, MSFT, SWKS, CSCO and APPL. Of all these, MSFT is probably my favorite. Shorts being considered though too early on all 3 right now: THO, NFLX and NVDA.
Here is an interesting article from SA this morning … now the content itself is a bit hazy and incomplete, but there is a very good data insight that cannot be emphasized enough … maybe it could be called the importance of ‘mathmatical context’. In our increasing use of headlines, tweets, and other ‘snackable’ information, context and understanding are secondary. For investors, that surface understanding can cost us …
“Just as logically, there should be some “proportionality” to yield curve tightening. While today’s yield curve would require only an 85 basis increase in 3-month Treasuries to “flatten” the yield curve shown in Chart 1, an 85 basis point increase in today’s interest rate world would represent a near doubling of the cost of short term finance. The same increase prior to the 1991, 2000 and 2007-2009 recessions would have produced only a 10-20% rise in short rates. The relative “proportionality” in today’s near zero interest rate environment therefore, argues for much less of an increase in short rates and ergo – a much steeper and therefore “less flat” curve to signal the beginning of a possible economic reversal.”
Closed FPI position (last remnents of a speculative REIT purchase) – first time was on earnings and discussion, and this last time was on inconsistencies from the CEO on up-coming lease renegotiations. This is just a bad picture forming and i do not have the stomach or patience to wait and watch dishonest / obscurely speaking CEO. I swallowed a 9.5% loss in non-taxed account for this mistake. Key learning from this mistake … do better research on the CEO, the company promises (and how they’re kept), as well as stronger competitor analysis.
NWL position was reduced by 30% in taxable account. My cost is <$12/share, but i am just running out of confidence in consumer, as well as taking an opportunity to reduce my investments in oil-based plastics. This was simple housecleaning, no message to risk / reward for the company other than the macro consumer fatigue that i see looming on the intermediate horizon.
TJX position was reduced as well by 30% in taxable account. The position sold cost was >$77, and i just did not see the patience path to profit and i had gains to offset … take the loss and focus on the lower priced positions that actually have profit potential in near/intermediate term. TJX is completely out-of-favor, and i have paid the price for underestimating the negative sentiment. Key learning from this mistake, exaggerate the risk discount in price targets … i was 10% off.
- I posted a couple of SA articles on FPI and my decision to sell and walk away – https://www.plansandclues.org/2017/07/22/fpi-inflection-point/
- Hoya Capital’s regular REIT update is a great read for more than REIT info – https://seekingalpha.com/article/4089397-real-estate-weekly-strong-start-earnings-season-another-week-record-highs
- I love these variable snapshot dashboards
- I love these variable snapshot dashboards
- I have been watching SWKS for months now, and have yet pulled trigger. This is a case of a) i am not sure i understand their product line sufficiently and b) the over-representation of AAPL as customer.
- My bias has titled this week. Previously i waffled back and forth between the fear / greed balance, but now i am in the fearful camp, cleaning up the portfolios to limit downside risk and building cash. This means a) more taxes paid for cap gains in taxable account and b) some short-term income and further cap gains will be left on the table. The opportunity cost is worth the risk mitigation, imho.
- Here are a few articles that hit me this week
I still have a very small position in FPI … waiting for the dead-cat bounce to make next decision, and the time is nigh. Two recent articles in SA help a bit, but for me i am not patient enough to wait this one out. I will take my money and go play somewhere else.
- a conservative middle of road review by Brad Thomas https://seekingalpha.com/article/4089413-fruitful-harvest-farmland-partners
- a bit more negative from Beyond Saving https://seekingalpha.com/article/4089589-farmland-partners-exit-opportunity
Probably the icing on the cake for my decision is the distrust of CEO now established with his inconsistent narrative on lease renewals, as well as the renewals scheduled over next 24 months. Risk for surprises is just too high.
here is a pretty good graphic from Bespoke – https://www.bespokepremium.com/think-big-blog/fang-trading-range-screen – the number of OB stocks suggests time for the short side of the market for those wanting a bit of a trade?
- love point they are trimming portfolio and reinvesting proceeds for future rather than giving it all ack to shreholders
- analyst focus is pharma
- there were good points made about jnj credo and a bit of tranparency on drug pricing
more finacials this weekend
Not sure i agree with the investment conclusion, but its rational and holds together based on the data analysis.
- there is an old saying, ‘don’t fight the tape’ …(i am not this optimistic, but the sentiment and momentum seems to be carrying for the short term at least) https://seekingalpha.com/article/4087864-s-and-p-500-weekly-update-relentless-bull-market-choice-react-headlines-react-price-action
- This lesson was taught to me by an older gentlement in 1987 https://seekingalpha.com/article/4087827-care-market-overvalued-depends … Chuck is efficient and concise with his advise, and i have never forgotten what i was told, but always need a reminder.
- A fairly generic update on emerging markets from Templeton – https://seekingalpha.com/article/4087782-emerging-markets-second-quarter-2017-recap-streak-continues – the technology sector (IT) is a common theme. Makes me want to start accumulating Baidu and Tencent (as well as look for other not-so-famous names … I was learning earlier toward India and E. Europe, but now i wonder if China deserves more attention)
- Blackrock on Canada interest rates – https://seekingalpha.com/article/4087846-midyear-outlook-rising-canadian-interest-rates-impact-investors – this sparked my investments in BMO and RY. Some of my best investments over the last few years.
- Jeff Miller’s Weekly Indicators (and full post)
- Another one of those ‘not sure i agree, but a compelling argument’ … https://seekingalpha.com/article/4087891-headlines-got-wrong-fridays-data-dump
Personal Portfolio Commentary
- sold all of my WTR >$33.00 (sell target within Radar Position
- added an incremental slice to T (intend to add more if price continues to drop >of 5.75% yield
- cannot speculate on probability either way)
- T becomes one of largest taxable holding
- targets this coming week
- CTWS liquidation
- NWN liquidation
- Select REIT out-of-money (OTM) call sales
I took a ‘buy along the way’ dollar cost averaging approach to increasing my portfolio position of Radar 1 stock T. Add on price was $36.20, and overall position in taxable account (the only account w/ T holding separately – not in ETF or Fund) to 5.87% making it one of my top holdings w/ only BMO the same size. The new addition lowers my cost basis to $36.89; an unfortunate negative position. I am prepared to take an equal size (or larger) addition but only after Q2 earnings and the TWX event is resolved.
i have been watching EMB for some time, and just could never pull the trigger. In part due to things like this article https://seekingalpha.com/article/4087450-dangerous-emerging-markets-dollar-debt, and the other part is the thinly traded ETF and all the concerns with a potential vicious cycle in such ETFs. (as The Heisenberg as repeatedly pointed out https://seekingalpha.com/author/the-heisenberg/articles#regular_articles). One idea that i will take a closer look at is individual countries with lower risk, e.g., Chile, Poland and Malaysia.
The FED and labor. Another one of those articles that are definitely worth reading regardless if you agree or not – https://seekingalpha.com/article/4087457-yellen-employment-policy-errors. A couple of obvious things to note: a) data headlines are dangerous if you do not understand the real data and who takes the time to do that? b) there’s usually more than 1 way to tell the story with the same data, and c) things are not as they seem – population growth and employment growth twin data trends – looking at employment without population growth is like looking at the kitchen output without noticing how much is getting eaten.
As my weekly update pointed out, i identified 3 companies in my radar #2 space that just did not hold sufficient potential growth rates or income streams. They are on the selling block. Today, WTR crossed $33.00 / sh, and i sold my remaining small position at > $33. More cash in the taxable account where better opportunities are surfacing.