Thursday, September 18, 2014

Scottish Voters Choose to Join Alibaba

Scottish voters choose to join Alibaba! $BABA


EDINBURGH, Scotland — Scottish voters decided they are better off remaining part of the United Kingdom, a blow against independence that produced a huge sigh of relief in London and averted an uncertain future for the country.

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Monday, September 15, 2014

Growth Stocks Hammered

Not a good day for growth stocks. Check out the IBD50!  Wow!

Everybody Waits For One But ...

$SPY - Everyone says they want a pullback in stocks but as soon as one happens they get scared and don't buy. 

Markets pulling back this morning.  Especially growth stocks.  The rumor is that the selling is out of growth names as everyone wants the new and shiny growth name that IPOs on Friday,  $BABA. 

I'm trying to get some shares but looks like it will be hard to get them at the IPO proce.  That leaves first day trading - uh, ouch.  But since folks have FB and TWTR as a recent reference it seems folks expect a pullback after the IPO.  Which means there probably won't be a pullback. Lol.  Play small on day one to get a toe in the water, and keep some powder dry for later?


Looking at my watch list, the "who's who" of growth stocks getting sold hard. I'm not doing much until Thursday or Friday. 

Wednesday, September 10, 2014

McDonalds Rallies Despite the Negativity

image $MCD – So everyone is hammering McDonalds on the TV as bad news flows in. Yet, the stock rallied today.  Hey, that’s sometimes a good thing when everyone is bearish and the stock rallies anyway.

Yes, there are lots of competitors out there.  Seems like there are gourmet burger places all over the place that sell food that isn’t too much more expensive than a McDonalds meal.  Some fast food and casual diners are seemingly higher quality and more fashionable.  Folks want to at least think they’re eating healthier, and McDonalds is associated with an unhealthy lifestyle.  (Heads up:  2400 calorie burritos won’t do your body any favors, either!)

And what’s next, McBrunch?

Long $MCD

‎Rising Rates?

$TLT, $TBT - Behind the noise of the $AAPL Apple iPhone 6 and the $BABA Alibaba IPO, bonds have been on a bit of a slide the last week.  Rates have ticked up a bit as there could be higher rates in the future.

At least the fear of higher rates for now.

Seems to me whenever the Fed meets and causes some reaction, there is an opposite reaction shortly thereafter as they make comments that seemingly state the opposite of what they may have said the day before.

Stay tuned.

No positions.

Fed Weighs Change to Rate Guidance in Quest for More Flexibility

Jeff Kearns, Christopher Condon and Steve Matthews

Bloomberg - Bloomberg - Wed Sep 10 17:00:00 UTC 2014

Federal Reserve officials are considering whether to alter their guidance on the likely path of inte...

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Tuesday, September 09, 2014

Is Las Vegas Sands Corps' Stock a Buy?

$LVS - The stock has been ugly but there are some revenue catalysts on the horizon. My concern is that weak stocks tend to perform poorly during market corrections.  (Should we ever have a market correction again).  But should the market continue to rally, then investors may start looking back to gaming stocks and Las Vegas Sands has some new property openings coming up.  In addition, even with revenues currently slowing down, those kinds of things tend to rebound eventually.  People like gambling.

It has been a rough end to the summer for shareholders of Las Vegas Sands, who have seen their stock plummet 20% since early August on concerns that Macau's gaming market is taking a turn for the worst. But the falling stock price could create a buying opportunity for investors willing to take the long view with this company.

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‎Apple Unveils New iPhones and Watch‎

$AAPL - The new Apple iPhone and Watch not exactly life changing. Upgrades for most of us down the road, if we are in the Apple ecosystem. The big deal for Apple earnings will be the higher prices of the 6+ and fees from using their smartphone payment system.

(Which will amount to a whole lotta money).

Will it be enough to accelerate growth for the company and/or justify a higher PE multiple?  That's the billion dollar question.

Apple Unveils New iPhones and Watch

Daisuke Wakabayashi

The Wall Street Journal. - The Wall Street Journal. - Tue Sep 9 19:55:37 UTC 2014

In an ambitious blitz of new products, Apple Inc. unveiled a pair of larger-screen iPhones, a sleekl...

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Monday, September 08, 2014

Market Thoughts and the Arizona Cardinals Cheerleaders

$SPY - The road is littered with bad market calls in 2014. I know I’ve made some, expecting the correction that never comes.  After all, it’s a mid-term election year, and we’re guaranteed a correction of gut wrenching proportions sometime during the calendar year, to be followed by a glorious rally.  So far, we’re just getting the glorious rally part of the deal.

Yes, there have been a few teases to the downside.  But after a few days of getting folks riled up and the TV business networks unleashing the bear market forecasts, it’s been rip city, baby.  This is an amazing picture!


Now we are on the verge of a few market catalysts that one would think should alert contrarians.  The first was a Barron’s cover this weekend.  Uh, tempt fate much?

imageTuesday is the new product announcement from everyone’s favorite fruit company, Apple!  $AAPL.  Okay, so the rumors are that we’re getting multiple sized iPhones, and maybe some sort of new wearable.   Folks are calling this the biggest Apple Event since Moses parted the Red Sea with an App from the first gen iPhone.  Is this a potential sell the news event where the heavily index weighted AAPL drags down the index trackers?  Stay tuned.

Finally, there is the Alibaba IPO, $BABA.  You can’t watch five minutes of a financial news channel without someone mentioning the hot IPO and the best ways to play it.  $YHOO – Yahoo stock has put on a nice rally as it will be a benefactor of the IPO feeding frenzy.  I think $BABA can be a huge winner, too.  But then I’ve caught the momo fever, too.

So where am I at right now?  Mostly long.  I still have some high flyers even though I’ve trimmed around the edges (but looking for somewhere to put that, too).  I believe in the pullback that never comes, but grew tired of waiting for it.  I am probably destined to suffer through it when it eventually comes.  (Hopefully, that’s from much higher levels!)

This is the week before options, and if the market is going to pull back this looks like a likely spot.  Although there is no reason to think that any dip won’t be bought up quickly.  There are always the external headline news threats, but those haven’t done much damage so far this year.

Long and strong.


Final thoughts: Nice comeback win from Carson Palmer and the Arizona Cardinals. It’s been a great opening weekend to the NFL. My biggest surprise was the Bears losing at home to the Bills.  I imagine that knocked a lot of folks out of their elimination pools in week 1.

Saturday, September 06, 2014

Update – The IBD Top 50 Stocks Strategy

Here is the latest on the IBD 50 stocks investing strategies vs. $SPY

imageSince I last updated the strategy, the market has been on an amazing run and the popular, high beta stocks have been outperforming.  As the portfolios reallocate each Friday night to the latest IBD updates, all of the portfolios are outperforming the SPY.  For the week, there were 28 stocks up and 22 stocks down for the IBD 50. 

AMBA led the IBD 50 with a return of 7.74% for the week.  The biggest loser for the IBD 50 was FANG, down 8.22%.

The total return since 2/8/2014 is outperforming the SP500. As the market rallies, the portfolios concentrated in fewer high-flying positions are outperforming the portfolios that are more diversified with more positions. 

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 $567.15.

image The IBD monthly strategy has also had an amazing run for the year, after looking a little wobbly after each small pullback.

The portfolios concentrated in fewer holdings are outperforming the market as a whole.  Only the IBD 50 is underperforming the SPY at this time.

image Since September is just getting started, lets take a quick look back on August to see how the strategy performed compared to the SP500.

For the month of August, the IBD 50 has 44 gainers and 6 losers.  Each portfolio smoked the returns of the market.  And the more concentrated the portfolio in fewer stocks, the better the return.

BITA was the top performer for the IBD 50, returning 61.57%.  It was also in each of the portfolios, so the more concentrated holding benefitted each portfolio dramatically.  For example, if you own only 5 stocks and one of them is up 61%, it’s likely you’re looking at your account statement and wearing a watermelon smile.  The weakest stock in the IBD 50 for August was ARRS, losing 10.42%.

Trading costs $109.45

As I have been reading reviews of investing and rebalancing into model portfolios, the trading costs of rebalancing weekly or monthly is often discussed.  Going forward, I will list the “in and out” rebalancing costs for each strategy.  I will assume a $9.95 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. 

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.

The Fox Business Block Gurus Update

Here is an update on how the Fox Business Block gurus are doing year to date compared to the indices (excluding dividends).  This return is based on investing $1000 per weekly stock pick at the closing price Friday night.  (Granted, none of us have a chance to buy that pick until the Monday open, but I wanted to give each guru the closing price on the day they made the pick and not any reaction or bump that occurs at the open on Monday morning).

Larry Glazer has only made one pick, F (Ford).  I may have to set a "minimum picks" eligibility requirement.  But for now, having just one pick "for all the marbles" is a valid investment strategy.  Some folks believe that over diversification leads to mediocre performance, and that the only way to make your fortunes is to concentrate your investments in just a few stocks.  This works great if you pick the right stocks, and underperforms if you pick the wrong stocks!

One other observation is that Ben Stein and Adam Lashinsky "tend to" (but not always) pick diversified index ETFs, large mutual funds, or Berkshire.  It doesn't surprise me to see their results close to the SP500, but underperform due to expenses and fees of their holdings. 

Nothing shocking here.  My suspicion was that the Cashin' In gurus would underperform the other gurus, and that most all of the gurus would underperform the SP500 (SPY). 

Tuesday, September 02, 2014

IRS Wants to Tax Free Lunches!

There's really no such thing as a free lunch! The IRS wants to tax the corporate free food for workers as income!

(Say, do families get taxed for schools providing breakfast and lunch for the kids?)

Anyway, I predict the resurgence of the Brown Bag Lunch.

Silicon Valley Meals Whet IRS Appetite

Mark Maremont

The Wall Street Journal. - The Wall Street Journal. - Tue Sep 2 17:18:29 UTC 2014

There is a grumpy new face in line at Silicon Valley's lavish freebie cafeterias: the Internal Reven...

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