Yeah say it ain't so. My love affair with semiconductor stocks continues. In using my technical analysis screen, the next stock I am looking to recommend is Exar Corp (NASDAQ: EXAR). This is another integrate circuit semiconductor stock very similar to my Radisys selection. Stay tuned for a detailed analysis but for now:
~ Resistance: Near 52 week low levels
~ Bullish on sector: Technology
~ Catalyst: Technical support at recommended price points
I would add this to my Urbanomics Tracker, provided by socialpicks.com, however they appear to still be having technical difficulties.
Recommended Price Points: Accumulate shares in the range of $5.59-5.71. Look for pullbacks to build in a margin of safety.
Wednesday, September 29, 2010
Friday, September 24, 2010
3RD Quarter 2010 - Asset Allocation Reminder
A simple tip I can give any reader is to sign up for reminders that alert you to evaluate your investment portfolio each quarter. A while back I set up this option and I just received my 401K email reminder for this quarter. This was timely because it was soon followed by a question from a friend asking me to assist with their 401k portfolio evaluation.
So as I do every quarter, I will give you a quick update on the state of the markets. I haven't often been rendered with little to say but that's how I feel about this market right now. The data that the market is signaling is very mixed and one could say perplexing. If you don't believe me just follow the stock analysts on TV, the administration's economic team, or Ben Bernanke and the Federal Reserve. For each one of these groups, there is sharp disagreement on whether we are headed for a second dip into a recession or showing signs of growth after one of the worst recessions in history. Its gotten so heavily debated the primary topic in all these circles is whether there should be Quantitative Easing (QE) Pt.2 or a second stimulus effort. I won't go into grave detail but QE as it is nicknamed means that the Federal Reserve will take actions that "PUMP" more money into the economy. The likely predicted outcome may be interest rates dropping further which in turn is supposed to jump start demand for refinancing and loans for other activities (but many banks aren't lending). The Federal Reserve takes an action like this if they believe that the US economy is headed back into a recession or simply just growing too slowly to heal properly. This is why you see the administration attempting to pass "stimulus" type bills to help the economy, such as the most recent 'Small Business Tax Credit Bill' that was passed recently.
In short here is my opinion on the state of the markets and how you should arrange your portfolio accordingly.
State of the Markets
1) The Federal Reserve has been revising their growth outlook of the economy and signs are confirming growth, BUT SLUGGISH GROWTH
2) Right now I truly believe we are facing some disinflation or decline in prices. Think, how many people are holding off on purchasing something or getting a loan because they continually believe prices are going to fall. This is deflation and can be a drag to the economy...
3) The likelihood is that the Fed will implement QE Pt2 later this year because of the slow growth and this could lead to a further decline in rates. However, we should be aware that the the long-term outcome of pumping all this money has to be inflation down the line...which lead to the US Dollars value declining.
4) There is growth in the economy, however because it's such a bad situation not many people on main street will notice. Look, the stock market has been climbing higher and September was the best month on record since 1939, (yup since the Great Depression).
How to Arrange Your Investments & 401K Portfolios
1) If the Fed is forecasting slowing growth, we need to get "PAID" until things get better:
2) Deflation can be a drag and inflation eats at your money. To protect against this:
3) QE Pt2 would continue to push rates down and makes bonds look like they have weak rates of returns:
4) The economy growing so slow means that nobody is unhappy, so that leads to my last tip:
So as I do every quarter, I will give you a quick update on the state of the markets. I haven't often been rendered with little to say but that's how I feel about this market right now. The data that the market is signaling is very mixed and one could say perplexing. If you don't believe me just follow the stock analysts on TV, the administration's economic team, or Ben Bernanke and the Federal Reserve. For each one of these groups, there is sharp disagreement on whether we are headed for a second dip into a recession or showing signs of growth after one of the worst recessions in history. Its gotten so heavily debated the primary topic in all these circles is whether there should be Quantitative Easing (QE) Pt.2 or a second stimulus effort. I won't go into grave detail but QE as it is nicknamed means that the Federal Reserve will take actions that "PUMP" more money into the economy. The likely predicted outcome may be interest rates dropping further which in turn is supposed to jump start demand for refinancing and loans for other activities (but many banks aren't lending). The Federal Reserve takes an action like this if they believe that the US economy is headed back into a recession or simply just growing too slowly to heal properly. This is why you see the administration attempting to pass "stimulus" type bills to help the economy, such as the most recent 'Small Business Tax Credit Bill' that was passed recently.
In short here is my opinion on the state of the markets and how you should arrange your portfolio accordingly.
State of the Markets
1) The Federal Reserve has been revising their growth outlook of the economy and signs are confirming growth, BUT SLUGGISH GROWTH
2) Right now I truly believe we are facing some disinflation or decline in prices. Think, how many people are holding off on purchasing something or getting a loan because they continually believe prices are going to fall. This is deflation and can be a drag to the economy...
3) The likelihood is that the Fed will implement QE Pt2 later this year because of the slow growth and this could lead to a further decline in rates. However, we should be aware that the the long-term outcome of pumping all this money has to be inflation down the line...which lead to the US Dollars value declining.
4) There is growth in the economy, however because it's such a bad situation not many people on main street will notice. Look, the stock market has been climbing higher and September was the best month on record since 1939, (yup since the Great Depression).
How to Arrange Your Investments & 401K Portfolios
1) If the Fed is forecasting slowing growth, we need to get "PAID" until things get better:
- Ensure you have a Dividend Yield Fund selected
2) Deflation can be a drag and inflation eats at your money. To protect against this:
- Select Treasury Inflation Protected Securities aka TIPS (if available to you)
- Select a Commodity Fund to participate in Gold, Oil, Gas, etc
3) QE Pt2 would continue to push rates down and makes bonds look like they have weak rates of returns:
- Re-Balance bond gains made and starting putting them into stock funds (buy on pullbacks)...with a priority to dividend and technology stocks
4) The economy growing so slow means that nobody is unhappy, so that leads to my last tip:
- Re-balance bond gains into international stocks and emerging markets.
Potential Allocation Breakout
60% Stocks - Dividend Fund, Large Cap/Growth Fund, International Fund (Equally)
40% Bonds - Short Term Bonds, Treasury Inflation Protection Securities (Equally)
A look back in time...
I've been following the ups and downs of the markets the last few months and what's interesting about my analysis is I don't really feel like much has changed. It has to be the most perplexing thing in the world for me now in my over 10 years of personal investing. It's perplexing because things are changing (slightly) and for the market we've seen its slow ascent higher. But I still think the market sucks. There is a lot of downside risk and I STILL like Commodities, Technology, Wireless.
I am clearing through my papers and I was looking of the habits of investing for success. The purpose of this blog was to capture the main theme of that write up and that was to keep a diary, a virtual diary in my example. The things to try and remember to do are:
~ Review your holdings (probably not daily)
~ Remember you portfolio includes all your accounts: Stocks, 401K, and IRA accounts do matter and they make up your complete portfolio
~ Pick how you want to measure your success: Success can vary from investor to investor so what defines whether you're up...a percentage, a target goal, etc
~ Start keeping track
I hope these tools go a long way into to helping you build your own portfolio. For me I do these things and really don't review my portfolio very frequently. I care about how they are trading but I don't get to concerned on their moves up or down. A great example was when we bought Burlington Northern Santa Fe. If you go back to when this stock was first recommended you will see why I thought it was important and at what prices I thought it was attractive. By taking notes, I still remember I liked this stock in the mid 70s because I believed that one of the positive things to take away from where the economy was at the time was the importance in commodities and the shift in emerging markets needing those commodities. I kept up with things but often didn't watch its swings. Its hard to wait but the odd thing was when Burlington finally got bought out at over $100 a share it was my friend that called me and alerted me of what had happened...I didn't know right away.
Here are a few examples of stocks that we've recommended over time and waited and watched them pay off as the fundamentals developed:
Supertel (SPPR) - I originally bought this in 2005 when it was known at Humphrey Hospitality. In researching my blog this was sold roughly 3 years later for around a 60% increase.
Cytyc (CYTC)- One of my all time favorite stocks, they were one of the first stocks I recommended and one of the first that I owned to get bought out. Bought at $17 and held until they got bought out in the $40s I believe.
Ambassadors International (AMIE) - This one was a stock that didn't move much for a long time I bought in 2004 for $13. I wrote an article 3 years later finally selling after I recall it hitting a peak of $32 and coming back down and settling in the mid 20s.
OIL - My call to buy oil stocks back in 2005 in my inaugural post was fitting. Who would have known the ride this commodity was going to be on going forward. Oil Post
Clayton Williams (CWEI) - Based on my call in oil, this was the a stock bought at $42 and this went all the up into the $100s. This took years to develop but what a ride.
Collectors Universe (CLCT) - Here is the final and prime reason to not let go of a good thing. CLCT is not the best stock I've owned over time, but it was the most stressful one to own. I have owned this stock since 2007. CLCT POST The story behind this stock and why I still own is because of fundamentals. This stock was paying a healthy dividend $.20c a quarter back then and helped me build up my war chest. When the decline of 2008 hit this stock plummeted to $4 when management cut the dividend. The only thing that stopped me from taking a huge loss was reading the financial report that was put out by the company. The newly appointed CEO (because the company booted the last one) outlined that the company could afford to still issue a dividend however it is prudent to hold the cash during tough times. So I waited and waited through the darkest period in the market and true to his word they brought the dividend back when the stock was around $6 a share. So I was essentially buying the stock each quarter with the dividends and lowering the cost of what I had bought the stock in. So today even with the stock standing at mid $13s a share we are seeing a 25% increase.
This is why its important to take notes.
Now it is even more important to remember your blunders and boy have I had a few in my past. The easiest one I can remember is:
Zhone Technologies - I rode this stock from $1.10 to the $1.40s. Then the fundamentals fell and I waited to long. This cost me a bunch as I never sold until this stock hit .70c! Ouch, they didn't get approval to sell in a region in Europe which they thought they had locked down. So this taught me be careful with penny stocks and they are volatile and their business can swing based on contracts.
Not Shorting Housing - This would have made me a legend if I knew about shorting back in the day. This post proves why you should write down your thoughts...my first call on housing and I didn't nothing about it: Housing
Rite Aid (RAD): Just a horrible pick and I'm glad to notice that I wrote about getting out of this position and putting my capital to better use. Ha to bad that cash went to Zhone Tech. LOL
NOT Buying Apple (AAPL) - I wrote a piece on this based on a reader question, and never followed my own advice.
BUYING ETFs - I will write here. Do not buy ETFs as an investment. I would only use these purely as hedges in your portfolio. They are difficult securities to own due to their calculations and just because oil is going up doesn't mean the ETF is going to do up also. Also, anything super levered (Banks x3) is just not smart!!! Repeat do not buy unless you are hedging your portfolio!!!
I am clearing through my papers and I was looking of the habits of investing for success. The purpose of this blog was to capture the main theme of that write up and that was to keep a diary, a virtual diary in my example. The things to try and remember to do are:
~ Review your holdings (probably not daily)
~ Remember you portfolio includes all your accounts: Stocks, 401K, and IRA accounts do matter and they make up your complete portfolio
~ Pick how you want to measure your success: Success can vary from investor to investor so what defines whether you're up...a percentage, a target goal, etc
~ Start keeping track
I hope these tools go a long way into to helping you build your own portfolio. For me I do these things and really don't review my portfolio very frequently. I care about how they are trading but I don't get to concerned on their moves up or down. A great example was when we bought Burlington Northern Santa Fe. If you go back to when this stock was first recommended you will see why I thought it was important and at what prices I thought it was attractive. By taking notes, I still remember I liked this stock in the mid 70s because I believed that one of the positive things to take away from where the economy was at the time was the importance in commodities and the shift in emerging markets needing those commodities. I kept up with things but often didn't watch its swings. Its hard to wait but the odd thing was when Burlington finally got bought out at over $100 a share it was my friend that called me and alerted me of what had happened...I didn't know right away.
Here are a few examples of stocks that we've recommended over time and waited and watched them pay off as the fundamentals developed:
Supertel (SPPR) - I originally bought this in 2005 when it was known at Humphrey Hospitality. In researching my blog this was sold roughly 3 years later for around a 60% increase.
Cytyc (CYTC)- One of my all time favorite stocks, they were one of the first stocks I recommended and one of the first that I owned to get bought out. Bought at $17 and held until they got bought out in the $40s I believe.
Ambassadors International (AMIE) - This one was a stock that didn't move much for a long time I bought in 2004 for $13. I wrote an article 3 years later finally selling after I recall it hitting a peak of $32 and coming back down and settling in the mid 20s.
OIL - My call to buy oil stocks back in 2005 in my inaugural post was fitting. Who would have known the ride this commodity was going to be on going forward. Oil Post
Clayton Williams (CWEI) - Based on my call in oil, this was the a stock bought at $42 and this went all the up into the $100s. This took years to develop but what a ride.
Collectors Universe (CLCT) - Here is the final and prime reason to not let go of a good thing. CLCT is not the best stock I've owned over time, but it was the most stressful one to own. I have owned this stock since 2007. CLCT POST The story behind this stock and why I still own is because of fundamentals. This stock was paying a healthy dividend $.20c a quarter back then and helped me build up my war chest. When the decline of 2008 hit this stock plummeted to $4 when management cut the dividend. The only thing that stopped me from taking a huge loss was reading the financial report that was put out by the company. The newly appointed CEO (because the company booted the last one) outlined that the company could afford to still issue a dividend however it is prudent to hold the cash during tough times. So I waited and waited through the darkest period in the market and true to his word they brought the dividend back when the stock was around $6 a share. So I was essentially buying the stock each quarter with the dividends and lowering the cost of what I had bought the stock in. So today even with the stock standing at mid $13s a share we are seeing a 25% increase.
This is why its important to take notes.
Now it is even more important to remember your blunders and boy have I had a few in my past. The easiest one I can remember is:
Zhone Technologies - I rode this stock from $1.10 to the $1.40s. Then the fundamentals fell and I waited to long. This cost me a bunch as I never sold until this stock hit .70c! Ouch, they didn't get approval to sell in a region in Europe which they thought they had locked down. So this taught me be careful with penny stocks and they are volatile and their business can swing based on contracts.
Not Shorting Housing - This would have made me a legend if I knew about shorting back in the day. This post proves why you should write down your thoughts...my first call on housing and I didn't nothing about it: Housing
Rite Aid (RAD): Just a horrible pick and I'm glad to notice that I wrote about getting out of this position and putting my capital to better use. Ha to bad that cash went to Zhone Tech. LOL
NOT Buying Apple (AAPL) - I wrote a piece on this based on a reader question, and never followed my own advice.
BUYING ETFs - I will write here. Do not buy ETFs as an investment. I would only use these purely as hedges in your portfolio. They are difficult securities to own due to their calculations and just because oil is going up doesn't mean the ETF is going to do up also. Also, anything super levered (Banks x3) is just not smart!!! Repeat do not buy unless you are hedging your portfolio!!!
London Report - Mind the Gap
I was out of the country for a few weeks and had the opportunity to spend it in London, United Kingdom. I still suffer from currency conversion shock as my dollar doesn't get me a lot of British Pounds (GBP). Here is an example of what $100 dollars gets you in GBP --> 62GBP. Yeah my average meal was probably in between 25-40GBP so let's just say London ain't cheap. However, this is a must visit location for soooooo many reasons. This is a very socially, historically, and economically sensitive country and I learned a lot while I was across the pond. Here are my few examples of each:
Socially - I ran into a number of instances where I saw the social consciousness of the people on display. In a restaurant, the group next to me had excess food they could not finish, and decided to give it to a homeless person sleeping on the street. I also really enjoyed buying groceries in the UK as the food had more information on its label, tended to be made from freshly grown products, and locally provided.
Historically - I loved the fact that the major museums were on display for free. It was a deeply enriching experience as I visited the British National Museum and saw the contributions and evolution of man from the Egyption, Assyrian, and Greek cultures. I also visited Tate Modern and saw many beautiful works of art including a number of Warhol paintings.
Economically - I was reminded of the need for government to play a strong role to incent people both negatively and positively to do things for the good of all. The infrastructure for public transportation is excellent and they incent people to use them as there are cameras situated throughout the city that capture all plates to charge people for a congestion tax. By moving people to a well maintained public transportation system I found that I got more exercise each day as I walked to and from the train station and to the office once we reached our destination. There is also a push to have people bike to their destinations and bikes can be rented and returned as certain locations and appears to be another strong policy. I also learned of a ticket policy used in Finland (I believe) that implements the fine based on your income. So if you are caught speeding, a person making more money will be fined at a higher value than someone making less. The story I was told mentioned that the CEO of Nokia (who is very rich) was once fined $50,000 for a ticket.
I used these points of my trip as an example of things that we can possibly learn from and see which ones make sense here in America. We already have toll roads but there are new policies being used around the world that we can experiment with. There is a debate in the thoughts of how we take care of our people, roads, schools, and health will continue to be discussed as we come up with new and thoughtful ways of doing those things.
Socially - I ran into a number of instances where I saw the social consciousness of the people on display. In a restaurant, the group next to me had excess food they could not finish, and decided to give it to a homeless person sleeping on the street. I also really enjoyed buying groceries in the UK as the food had more information on its label, tended to be made from freshly grown products, and locally provided.
Historically - I loved the fact that the major museums were on display for free. It was a deeply enriching experience as I visited the British National Museum and saw the contributions and evolution of man from the Egyption, Assyrian, and Greek cultures. I also visited Tate Modern and saw many beautiful works of art including a number of Warhol paintings.
Economically - I was reminded of the need for government to play a strong role to incent people both negatively and positively to do things for the good of all. The infrastructure for public transportation is excellent and they incent people to use them as there are cameras situated throughout the city that capture all plates to charge people for a congestion tax. By moving people to a well maintained public transportation system I found that I got more exercise each day as I walked to and from the train station and to the office once we reached our destination. There is also a push to have people bike to their destinations and bikes can be rented and returned as certain locations and appears to be another strong policy. I also learned of a ticket policy used in Finland (I believe) that implements the fine based on your income. So if you are caught speeding, a person making more money will be fined at a higher value than someone making less. The story I was told mentioned that the CEO of Nokia (who is very rich) was once fined $50,000 for a ticket.
I used these points of my trip as an example of things that we can possibly learn from and see which ones make sense here in America. We already have toll roads but there are new policies being used around the world that we can experiment with. There is a debate in the thoughts of how we take care of our people, roads, schools, and health will continue to be discussed as we come up with new and thoughtful ways of doing those things.
Tuesday, September 07, 2010
I've got to have my VOXX...
I am writing this post as a quick update for a couple of reasons. One, I am headed out of the country for a bit, and two my Urbanomics Tracker site, socialpicks is down more often that I would care for.
So I am posting information here that documents when I would have picked up the shares. I received an alert for the following stock:
AUDIOVOX CORP (NASDAQ: VOXX) - Price Point 6.64
I should have some more information for you in the future. But this isn't much of a surprise as technology and natural resources have been a few of my favorites. They are industries that continue to grow or show the ability to pay us as we wait for better economic times.
So I am posting information here that documents when I would have picked up the shares. I received an alert for the following stock:
AUDIOVOX CORP (NASDAQ: VOXX) - Price Point 6.64
I should have some more information for you in the future. But this isn't much of a surprise as technology and natural resources have been a few of my favorites. They are industries that continue to grow or show the ability to pay us as we wait for better economic times.
Wednesday, August 25, 2010
Which Bad Word is it...
It was interesting how a few months ago; the talk of the town was inflation. The massive amounts of dollars being pumped into the economy was a lifesaver but many experts also predicted this would lead to inflation down the road. A short description of inflation is the rise in a basket of staple consumer goods due to the fact that it takes more dollars to buy those goods. It kinda makes sense, there is more money out there, therefore; more dollars will be needed in the future. Experts have also tacked on the fact that it the Federal Reserve has dropped interest rates to the point of "It can’t go any lower". The funny thing is that both of these points are exactly right and inflation and interest rates have not risen. WHY??
Because of the other nasty word that’s been surfacing…DEFLATION. This is the decline in value of goods, because there is not enough money circulating throughout the economy. This may be more accurate at this point because of:
- DEMAND – there is less demand for consumer goods, costs drop to keep people buying
- VELOCITY – Banks are not lending and this means money is not changing hands…the velocity is not circulating the money
- SAVINGS – Consumers are saving more money…the savings rate is 6.4% and rising. We are also demanding more and more deals (i.e., LOWER PRICES) see the heighten interest in sites like Groupon, Slickdeals, coupon sites, etc
- HIRING – Companies are turning a profit, but hiring has not returned. Productivity is high, temp workers are common…but all out hiring has not been seen.
This is my list of stocks that I've wanted to purchase. Some at the recommendation of key analysts or experts and others because I like the technicals observed:
POTASH - a little late on this one now that it has run up on takeover talks.
HPQ - 40.20
RRR - 6.76
IRM - 21.68
BAC - 13
RF - 6.67
CMCSK 15.90
Wednesday, August 04, 2010
The Assessment...
Its time for me to chime in and give you my assessment. We are more than half way through 2010 and its been an interesting ride. I can thank Lebron James for keeping me glued to the television a little bit more than usual. And I will admit that I didn't think it could financially get done...going to Miami that is and forming the Big 3 with Wade and Bosh. This move all of a sudden places Miami in playoff contention right?? Well we'll see because Orlando is still a good team and those Celtics keep signing veteran players. Shaq is the latest addition to Boston and now is Boston officially the Big 4?? I guess the questions keep coming, is Brett Favre staying or going. Wow this story sounds familiar, and it still seems like he doesn't know. So I don't have an assessment on these sport questions but I do have an assessment on the market.
Since the economic downturn, I have been more interested in market events and I been forming themes that may lead to investing decisions. This is traditionally against what I do, but its more fun that just looking at quantitative indicators. So here is my assessment:
~ Jobs, Jobs, Jobs: There is a lot of confusing information out there but it appears that the job situation is trending in a positive direction. It is very slow and we are not even close to turning a corner but the number are off of the all-time lows. This is the most critical part to the recovery and I am still not sold that we are turning a corner. There is a very odd trend that is forming and its: Companies are making and holding onto their cash, and Consumers are strapped for cash
~ Shock Value: I think that people are still jittery because its been hard to catch a break. In general, we all want to hear and see good news but we just haven't been able to get it. I think the wars, the oil spill, politicians fighting, immigration, etc have all been important issues but serve as distractions from getting people stabilized.
~ Trading Ranges: Lastly, I believe that because our politicians can't rally around effort after effort that will spur job growth, people will still feel uneasy. So oddly enough I think it makes sense to trade defensively and hold onto only core holdings. I think it makes sense to look at the ranges that stocks are currently trading in and take advantage of buying in on sharp dips and selling or even shorting stocks trading at the top of their range. I think most stocks will not be aggressively raising their guidance because I frankly don't believe the demand is there. This will keep most stocks trading in a range that could allow us to make some cash and we wait for our core holdings to outperform the rest.
Since the economic downturn, I have been more interested in market events and I been forming themes that may lead to investing decisions. This is traditionally against what I do, but its more fun that just looking at quantitative indicators. So here is my assessment:
~ Jobs, Jobs, Jobs: There is a lot of confusing information out there but it appears that the job situation is trending in a positive direction. It is very slow and we are not even close to turning a corner but the number are off of the all-time lows. This is the most critical part to the recovery and I am still not sold that we are turning a corner. There is a very odd trend that is forming and its: Companies are making and holding onto their cash, and Consumers are strapped for cash
~ Shock Value: I think that people are still jittery because its been hard to catch a break. In general, we all want to hear and see good news but we just haven't been able to get it. I think the wars, the oil spill, politicians fighting, immigration, etc have all been important issues but serve as distractions from getting people stabilized.
~ Trading Ranges: Lastly, I believe that because our politicians can't rally around effort after effort that will spur job growth, people will still feel uneasy. So oddly enough I think it makes sense to trade defensively and hold onto only core holdings. I think it makes sense to look at the ranges that stocks are currently trading in and take advantage of buying in on sharp dips and selling or even shorting stocks trading at the top of their range. I think most stocks will not be aggressively raising their guidance because I frankly don't believe the demand is there. This will keep most stocks trading in a range that could allow us to make some cash and we wait for our core holdings to outperform the rest.
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