Market Thoughts

It seems that the market has wanted to go down for awhile now, and only the periodic "more stimulus" press releases from central banks have created big rallies.  Look at how narrow stock leadership has been on the bounces.  While it's true that a rally is a rally is a rally, it's a bit unsettling to see "buying and holding" an index feels a lot like running in place these days. 

That being said, I am still long and diversified. I do have some cash and it is tempting to buy the dip. As usual.  

• I thought $FB earnings were great.   I still think the Facebook will be one of those "I wish I would have bought it 10 years ago" kind of stocks. 
• I also liked $LVS earnings. Las Vegas Sands also increased its dividend from $.50 to $.65.  That's a 30% increase! Try to get those returns on a Macau slot machine. 
• Anyone else feeling a little suspicious about $BABA? Alibaba earnings numbers also bringing down $JD today. 
• $AAPL is taking over the world. I wish I would have bought a ton of Apple prior to earnings.  Didn't we all know that everyone seems to have an iPhone 6 or 6 plus and that would translate to monster earnings?

I'm sitting here at $SBUX.  Starbucks is packed.  As usual. 

STOCKMAGEDDON

$SPY - maybe instead of fearing the 3' of snow that didn't happen, investors should have been more worried about the gap down today.  

Blame it on:

Currency exchange rates due to strong dollar

Cheap oil

Europe/Greece/Russia/ISIS

Weak earnings (due to combo of above things)

Weak Econ data (dittos)

Measles at Disneyland

Pick your favorite worry!  Multiple choices are allowed!

I still have a little cash and haven't even traded with it. This year looks a lot like last year so far. There is always something to worry about.  I think the worry and concern is actually bullish at this point.  There isn't rampant bullishness.  Most stocks haven't been leading anyway. The market is a floppin and a choppin. 

I am just being patient and not in panic mode.  I'm also not trying to flip every dip. I will probably buy some of the leading stocks at some point. You know the names that have been first to bounce back on dips...

‎Greeks!

I'm not sure what the Greek election results will mean for the US market in the long term, but in the short term folks seem worried that a "radical left" emerged victorious.  I suppose this means more big government kinds of solutions, which don't work.  Also, when Greece "ran out of other people's money," they ran up large debts that they probably want forgiven.

Hey, not paying for it is one way of paying for it.  If it's forgiven anyway.

***

Greek radical left wins election, threatening market turmoil

Associated Press - Associated Press - Mon Jan 26 03:30:00 UTC 2015

ATHENS, Greece — A triumphant Alexis Tsipras told Greeks that his radical left Syriza party's win in...

http://a.msn.com/r/2/AA8yKxv?a=0&m=en-us

Sent from Surface Pro

Up to the 50dma

The major market indices rallied up and kissed the 50dma today, as the European Central Bank did as expected and announced they were going to print and print and print.  The goal being to keep interest rates low, pump up asset prices, try to avoid deflation, or just be seen as trendy and cool.  After all, everyone is doing it these days!

Stocks have faded the open yet again and then faded the fade.  I suppose some money could be made flipping that around, but I know if I tried it I would just get whipsawed. It works until either it doesn't or as soon as I try it!   I'd rather look at intermediate and longer term ideas. 

I'm still long the market.  I have been hesitant to play high beta names so far in 2015. Seems like the only things working are biotechs and airplanes.  I'm worried that when the party ends for the market, the biotech sector will take the biggest hit because that's where the momentum and  high beta stocks have been.  You know, up a ton, no earnings, and folks speculating on drugs in trial phases.  But I hope it ends well. Some of the new drug studies could yield some great new treatments and cures.  

Thursday already!

***

Kobe Bryant hurt his right shoulder last night against the Pelicans, and came back in and shot left handed?  Crazy. 

ADM - Archer Daniels Midland

$ADM - I mentioned that I was interested in this one on Twitter. No position yet. Analysts seem to be downgrading this one left and right. The 52-week high is $53.91  

The stock is below the 50dma and recently fell below its 200dma. Yields around 2%.  Current PE is just over 16, which is a little higher than its 10 year avg. 

I think this one is falling with a stronger dollar and general weakness in commodities.  Lower energy prices should help ADM. The big question is if there will be potential weaker demand for ethanol if the US economy is slowing. (I don't believe that to be the case).  ADM also has a history of increasing dividends and share buybacks.  

Earnings scheduled for February 3rd. 

No position as of this blog entry. 

The Rumbling and Tumbling Stock Market

• $SPY - Wasn't it just last January and February that we were worried about stocks?  What about October and the Ebola panic?  Or mid-December?  Yet, by the end of the year the market was up double digits.  "Buy the dip" worked.  
• Here we are with folks shouting gloom and doom from the roof tops.  The market again seemingly under pressure from the front page news headlines of the day. 
• I continue to believe that it makes the most sense to be long stocks.  Invest and reallocate on a regular basis. Buy the dips. 
• Amazing comeback win by Seattle Seahawks over the Green Bay Packers.  One of the ones you'll be telling your grandkids about!
• President Obama to give State of the Union speech tonight and call for more taxes and more government spending.  The government already wants more of your money. Nothing new. 
• Maybe a bubble in biotech stocks but that's also where the momentum has been.  Nobody wants to be the last person in the pool in those. But it is awesome when it's moving up!
• Housing bubble and collapse ... Again? Here comes the government again trying to help low income folks buy houses with low or no money down and easy qualifying loans.  Hey, what happens to those loans when the home buyers miss a bunch of payments?  We do know the answer, right?

Stock Thoughts

• Wow. Market volatility! Are we all conditioned to think that whatever the market throws at us in the first hour or so, will be completely reversed by the close? Buy dips, sell rips, and laugh all the way to the bank?
• Lots of worry out there.  Lots.  Europe. Swiss Francs.  Poor US economic data.  Bond bubbles. Biotech stock bubbles. Central banks trying to out stimulate each other.  ISIS. Oil crashing.  Energy jobs imploding. Racial conflict and organized protests. Measles at Disneyland.  
• It's amazing any of us even bother to get out of bed in the morning!
• Well, take a look at the charts from last Jan-Feb. Go ahead.  I'll wait. 
• I am still mostly long but do have some cash.  I'm actually feeling a little greedy and was looking at some call options today.   
• Be greedy when others are fearful.  Be fearful when others are greedy.  And stay away from people with measles.  

Does Microsoft Still Matter

$MSFT - Does Microsoft still matter? Here is a preview of Windows 10 and "what's next?" 

We live in a world where the Internet is the destination and the hardware and software is just the means of transportation.  It doesn't matter what kind of device you own anymore.  It doesn't matter which operating system or apps you prefer.  

It's all about being online. 

Some other thoughts...

• The XBOX still matters. But it's just hardware to play games that for the most part can also be played on a PS4.  The gaming social network differs. 
• By the way, the XBOX 1 price drop to $349 has it in first place the last two months in the console wars.  
• Documents are still created by Office for the most part.  But have you tried Google Docs lately?  Office still the standard.  
• Windows and powerful PCs still dominate in the IT development world.  
• Cloud storage matters. Microsoft has its flavor of that with big competition from others. 

I think Microsoft still matters but that they will continue to need to grow and diversify their business. 

Quick Stock Thoughts

$SPY - stocks continue to chop and chop.  Neither the Bulls or Bears can get any trend going yet.  They say to buy the dip, but that's only working if you also sell the rip and reposition for the next brief scare. 

• Low oil prices 
• Fed rate hike
• Euro recession
• Russia
• Muslim terrorists 
• Memories of last January?
• Squirrel!

Otherwise you are running in a treadmill and not making progress.  

Churning near a top?

Anyway, still long. I had a few buy signals last night but I'm already long with very little cash.  Today's fap up didn't give me a chance to put an order in and I'm not chasing.  

There will always be another dip. Someday. Maybe tomorrow!

Jeb Bush?

Jeb Bush for President? 

There are many on the far right and the far left who go crazy at the thought of a moderate Republican Presidential candidate being the front runner for the GOP 

But for all the talk of Tea Party this and Neocon that, most of America finds their political values somewhere near center.  

We have a long ways to go before November 2016. The nation will have its fair share of Huckabee and Warren populism.  But in the end the centrist candidates may be the ones who face off in prime time. 

Coke Adds Life, but Cuts Jobs

$KO - Coke adds life, but cuts jobs!  

Seems that we are seeing a bit of this around corporate America.  Maybe it's natural to wait until after the holidays to let folks go, but companies are continuing to cut costs and streamline operations. 

Coke and other soda makers are facing challenges from other kinds of beverages. 

The Fed Speaks, Futures Soar!

Stock futures soared after hours when the Fed decided to speak.

Low interest rates for-evah!

What a great day in the market.  The Dow had dropped 500 and got some back today.   http://www.zerohedge.com/news/2015-01-07/feds-evans-catastrophe-comment-sparks-us-japan-stock-surge-china-purge

European Deflation

European interest rates are near zero, and their central bank meets later in the month to announce more stimulus with the goal of keeping rates low.  Aren't rates already low?  Their economies aren't growing. The same thing can be said of Japan. 

The U.S. has stopped stimulating and economic growth is a little higher than Europe and Japan. But our interest rates are also very low.  

Does any of this seem normal to you? Should we be worried?

Stock Thoughts

The SP500 and Dow broke through the 50dma yesterday and are struggling again today.  After a positive opening, the market is again pulling back.  Hasn't the market been down four days in a row? Is that supposed to happen?

• Some cite profit taking and rebalancing. 
• Some worry that half the market wasn't working, and now the few stocks that were are correcting which means even worse things for stocks that are mired down. (I'm looking at you and your ilk, $LVS).
• Some say that falling oil prices are bad for the US economy because many of the latest job creation has been in the oil patch. 
• World. Economic. Slowdown.  

Whatever the reason, I look at the economy and believe that despite the reason du jour for stock market moves, interest rates are low and falling oil prices help consumers and companies who use energy.  

Buy the dip!

I still have some cash and have a shopping list. I have not soured on stocks and believe that the market will have a good 2015.    

First Casualty of Low Energy Prices

$X - While falling prices are good for consumers and overall economic growth, industries that are involved in the business of energy production are slowing down.  US Steel is letting some folks go in Ohio.  

More companies are likely to follow suit in the days ahead as oil prices continue to drop. 

2015 Market Thoughts and Predictions

• I think the $SPY will see another double-digit year in 2015. Not a lot of bullishness out there yet.  I heard on the radio (so you know it must be true) that the people with money in stocks has dropped from 52% to 40%. 
• The casino stocks in Macau interest me. Yes the revenue in Macau casinos has declined. Isn't that priced in?  Nobody likes these names. $LVS for example. 
• Energy stocks and ETFs interest me.  But not until after this upcoming earnings season.  There is bad earnings news in the rear view mirror, and lowered guidance coming.  Let that happen and then see what things look like.  
• Hmm, that may also apply to those gaming stocks!
• Jim Harbaugh turns the Michigan Wolverines football program around. Quickly. 
• If there is a bubble, it is in biotechs.  How many IPOs have there been of companies with no sales?  Just stuff in some phase of trials. Be careful.  I think this could take down the good names, too - but I would stick with the good names that have sales and earnings. Like $CELG and $GILD just to name two (don't own em).
• I was at an outlet mall over the holidays. $UA and $NKE stores were packed.  Decreasing fuel prices mean more money to spend on other things. Same for $BWLD. PACKED!
• The Fox Business Block gurus didn't have a 2015 forecast show.  No predictions!
• Star Wars and Avengers 2 and who knows what else.  When I was in So Cal over the holidays Disney had to turn people away it was so crowded. And how much of your cable bill goes to ESPN?  Long $DIS. 
• I'm typing this in at $SBUX.  Very crowded here. 
• The minimum wage hikes caused the price of my pizza, movie and popcorn to increase this weekend.  More of that in all that we buy. The CPI shows the inflation.  Large employers like the govt that base annual raises on the CPI bump wages for their workers.  The Fed notices the CPI bump and raises rates.  People who pay interest on home, car, credit card and student loans pay more.  And the govt debt gets financed at higher rates.  The minimum wage hikes actually hurt those it is intended to help the most. [steps down off political soap box]
• Kobe Bryant retires.
• And finally, people will discover that placing a plate of pecans in the microwave for about three minutes makes for a very tasty treat.  The fad sweeps the nation, leading to a national shortage in pecans.  Get 'em while you can!

Fox Business Block Gurus Update – 2014 Final Part 2!

Here how the Fox Business Block gurus performed individually (excluding dividends). 

This return is based on investing $1000 per weekly stock pick at the closing price Friday night. 

The stock picks started 12/28/2013 through the 12/27/2014 picks. In addition to total return, I tracked the percentage of winning picks.  Here is how they did, from best performer (Gary Kaltbaum) to the bottom of the list (Jonathan Hoenig).

2014 Fox Gurus Predictions Review

More Fox Business Block gurus:  Here were the 2014 stock market predictions:

Here are the returns from 1/1/2014 to 12/31/2014:

• Dow: 16,557 to 17,823 (7.5%, or 10% including dividends)
• SP500: 1,848 to 2,059 (11.4%, or 13.7% including dividends)
• Nasdaq: 4,177 to 4,736 (13.4%,  or 14% including dividends)
• Oil was down 45% for the year.

On to the Fox Business Network gurus!  These are 2014 predictions from the December 28th, 2013 shows. I included closing prices from Friday 12/27/2013 as the starting price.  My comments follow each guru pick! 

Bulls and Bears

Gary B. Smith:  AET 40% gain, no matter what happens with Obamacare!  Dow 16,500.

My comment:  Gary’s forecast on the Dow was for a flat year, so that was a miss!  Aetna stock went from $67.75 to $88.83 from 12/27/13 to 12/31/14.  That’s a 31% winner.  We’ll take it, Gary.

Jonas Max Ferris: DZZ 2x short gold, up 50% in 2014.  Dow 15,500.

My comment: Jonas predicted a bad year for the market, and that didn’t happen!  His high-beta gold short DZZ went from $7.57 on 12/27/13 to $7.56 at year’s end.  That’s a little less than his 50% forecast.

John Layfield:  SDRL and  a 25% profit in 2014, not counting dividend.  Dow 18,103.

My comment: The ever-optimistic John was very close with the Dow return.  The last couple of 2014 market days took the Dow back under 18,000.  But it was a bad year for oil stocks.  SDRL $38.58 to $11.94 from 12/27/13 to 12/31/2014.  That’s a big decline of 69%.

Cavuto on Business

Adam Lashinsky:  VWNFX (Vanguard Windsor II fund) full of undervalued large companies.  $36.58 on 12/27/13.  I’m not sure about their distribution dates. The funded closed at $36.77 on 12/31.

My comment:  The big Vanguard fund close the year at $37.31.  I’m uncertain of their distributions, but it looks to have underperformed the SP500.

Gary Kaltbaum:  TIF closed at $90.87 on 12/27/13.  The markets are up and the rich are spending.  The stock ended the year at $92.78.

My comment:  TIF closed the year at $106.86, or a 17.6% return from the 12/27/13 pick.

Forbes on Fox

Elizabeth MacDonald:  XAR, the ETF that tracks the S&P Aerospace and defense.  It closed at $99.05 on 12/27/2013 and the year at $99.02.

My comment:  XAR close 2014 at $109.25, or 10.3% gain from 12/27/13.

John Tamny:  BBRY closed 12/27/2013 at $7.30, as “they’ve outsourced their manufacturing and that bodes well for next year.”  Closed 12/31 at $7.44.

My comment:  Blackberry closed the year at $10.98 for a gain of 50.4% from the 12/27/13 show.  Big win!  The stock was volatile all year long.

Cashin' In

Jonathan Hoenig: Interest rates are going to go up in 2014, so buy JGBS to bet against bonds.  The ticker was at $19.23 on 12/27/13 and finished the year at $19.37.

My comment:  JGBS closed the year at $18.20.  Everyone seemed to predict soaring interest rates in 2014.  Didn’t happen!

Wayne Rogers: IBB – Biotech!  This is a diversified ETF across the biotech sector.  The ETF was at $225.92 on 12/27/13 and closed the year at $227.06.

My comment:  Big year for Biotech!  IBB closed out 2014 at $303.35, for a 34.3% gain.

Fox Business Block Gurus Update – 2014 Final!

Here how the Fox Business Block gurus performed compared to the indices (excluding dividends).  This return is based on investing $1000 per weekly stock pick at the closing price Friday night.  The stock picks started 12/28/2013 through the 12/27/2014 picks, versus dollar cost averaging into the index ETFs during the same time period.

We have a winner!  Gary Kaltbaum not only came out on top of the list, but he beat the index trackers!  That is quite an accomplishment!

Gary K. is not a weekly participant. He made 14 stock picks for 2014.  Gary B Smith actually put his picks on the line 51 times in 2014, and had a nice year.  It doesn't surprise me to see Gary B. Smith and Gary Kaltbaum near the top of the list.  I've often thought that those two seem to be the most consistent. 

Near the bottom of the list is John Layfield, who tended to pick stocks from the oil patch.  Those kinds of stocks had a rough year.  Jonathan Hoenig tends to pick the kinds of investments that seem short-term focused rather than long-term focus, such as currency plays and inverse ETFs.  Good luck buying and holding those kinds of things. 

Ben Stein and Adam Lashinsky tend to pick stocks, ETFs, or funds that track a market index or are at least widely diversified.  And they’re in the middle of the pack.

Charles Payne "tends to" pick volatile stocks.  As the market trends strongly in one direction or another, his picks have a little extra beta to the upside or downside.  One of his picks in April, $GTAT, went bankrupt.  That’s a -100% return for this study.

That also points out that these stock picks are made without any future guidance.  Once you buy, there is no advice to sell or buy more.  The shows do have an occasional “follow up” show that goes over the best and worst picks for each guru, and what they’d do with that one or two picks going forward.

I will have another post shortly looking at each guru individually and how they did over the year.

How did the shows do compared to each other?

Congratulations to Forbes on Fox for coming out on top!  My suspicion was that the Cashin' In gurus would underperform the other gurus – but, in the red?  And this was a good year, fellas!  I think what did surprise me was how collectively, the picks dramatically underperformed the SP500 (SPY).  I thought such a large number of picks would closely track the index. 

One final comment is regarding Cashin’ In.  The show quit televising the weekly stock picks and instead directed viewers to the Fox website to find the weekly stock picks.  I miss Jonathan and Wayne going over their stock thoughts.  The picks and commentary on the website are lacking compared to the televised perspective.  This TV segment was replaced by even more Eric Bolling commentary.  I like Eric, but Cashin’ In used to be more about stocks and the market, and I miss those days. 

On to 2015!  Good luck to all of the Fox gurus!

Jan 2nd - Still Holiday Mode

I still have cash I raised Tuesday. I feel as if I'm in holiday mode and don't want to buy buy buy.  Have noticed that some names on my watch list are showing oversold and nearing support.   

I have watched some financial news TV and gurus picks and pans for 2015.  Obviously given a large number of stocks some will do well and others won't. 

More later!

IBD Top 50 Stocks Strategy – 2014 Final!

Here is the IBD 50 stocks investing strategies vs. $SPY. We have a winner!  The SP500 beat all of the IBD 50 stock investing strategies.  I long suspected that chasing the hot stocks could lead to underperformance over time.  This analysis is from 2/8/2014 through  12/31/2014, and is too small of a sample size to base a long term decision on.  But it is interesting.  I will continue to monitor for 2015.

2014 is over, and the SP500 beat the IBD 50 investing strategies.   For the week, there were 9 stocks up and 41 stocks down for the IBD 50.

AFSI led the IBD 50, up 3.59% for the week.  The biggest loser for the IBD 50 was AMBA, down 9.33%.

The IBD 50 portfolios total return since 2/8/2014 underperformed the SP500.  None of the strategies are beat the simple SP500.

The portfolio is sold at the closing price Friday night, and rebalanced into the make-up of the IBD top 50.  Dividends are excluded from total returns.

Trading costs $1,960.15.

The IBD monthly strategy also underperformed  the SP500.

The more diversified portfolios were closer to the return of the SP500.

The IBD 50 has 17 gainers and 33 losers in December.

CMPR is the top performer for the IBD 50, returning 11.55%.  The weakest stock in the IBD 50 is ATHM, losing 15.87%.

Trading costs $189.05

I will assume a $9.95 trading cost to sell last week’s or last month’s portfolio, and $9.95 to buy the new weekly or monthly portfolio.  (Imagine the costs of doing this with individual stocks, compared to using Motif.  Note that Motif limits the size of portfolios to 30 stocks).

The Top 25 holdings are listed at at Motif Investing.  (A check as of 3/31/2014 shows that the ability to view all holdings is limited to Motif members and IBD subscribers).

None of the above strategies are a recommendation to buy or sell stocks.  These are model portfolios constructed for entertainment only.

This is the IBD portfolio performance since 2/8/2014.  Each portfolio begins with $10,000 and then invests an equal amount in the top 5, 10, 25 and 50 IBD stocks at the closing prices on Friday for the weekly model, and at the closing prices on the last trading day of the month for the monthly model.  Since IBD changes the make up of their top stocks daily, this will only rebalance on Fridays or end of month.  It is assumed that trading costs are $9.95 to “buy” a model portfolio, and $9.95 to “sell” a model portfolio.  Thus, each weekly or monthly rebalance out of the previous portfolio and into the new portfolio costs $19.90.  Daily changes in the IBD 50 or stock rankings are not considered.  Changes in IBD’s overall market views are not considered.  Stop loss orders or other market timing strategies are not considered.  The value for SPY is based on buying 2/8/2014.

Based on a blog entry from Paladin Money.  See Investors Business Daily for more information on the IBD 50.  See Motif Investing for their IBD Top 25 portfolio, and the ability to construct your own portfolio of stocks.

Happy New Year!

Happy New Year! I wish you health and prosperity in 2015.  Thank you for following the blog and my rants on Twitter.  

Coming up over the next couple of days:

• A wrap on the 2014 performance of the IBD 50 investing strategies. 
• How did the Fox Business Block gurus fair in 2014?
• A 2014 review
• And 2015 predictions!

But for now, there are bowl games to watch!

Digital Tax Increases in Europe

It's no secret that governments want more of your money. The thirst for tax dollars and larger government spending are facts of societal evolution.  With more and more commerce being driven over the Internet, it should be obvious that the digital frontier is extremely tempting for our elected leaders. 

What does this mean for you? Less money to spend on the things you want to spend money on.  Increases in taxes lead to slower economic growth.  Is that a good idea in Europe at a time when the region is in an economic slump and also facing hindered trade with Russia?