Over the weekend, tragedy struck, and as tragedy usually does, it puts in perspective just how helpless we truly are. No matter how much we try to control things, we can only take step to produce the most favorable outcome. After that, its god's will.
This got me thinking about a 'timeless' portfolio. A portfolio that would last, outperform and one that would not require multiple trading. Just minimal homework to ensure the companies continue to produce smartly and efficiently. Its a tight concentration of stocks that have high dividends and are inexpensive enough to outperform due to their management culture and product positioning to benefit for the long long-term.
The stocks include:
1. KMP - high yielder. Will benefit from the increased energy usage.
2. NAT - high yielder. Will benefit from continued globalization, and improve global economic prospeects.
3. BKE - a hidden high yielder. The company has a normal 2.7% annual dividend, but since (the fantastic) management team owns so much of the company they have consistently dished out a 'special' dividend year-after-year. With this special dividend, BKE has consistently yielded about 8% a year.
4. IBM - Its yield is a joke, at 1.7%, but IBM has positioned themselves beautifully with a multi-product assault for the mid-to-long term. We already got a glimpse of their product benefit in the Jan. report.
5. F - Its a whole new culture at Ford. Mulally has been doing a tremendous job streamlining the business. Ford is also seeing huge benefits from Toyota's pain, and the fact that it is the lone US survivor. It is still in the transition phase, but with the trajectory continuing to be very positive, and as these benefits from the streamlining fade, Ford will be a solid great US company that will increase their dividend. (But that will happen in a few years, after its stock has passed 20.)
There are plenty of other companies that I really really like as long-term holdings, that will do very well. But the above names are simple, straight forward, yield very nicely and not held hostage to cyclical trends. They will benefit from continued economic recovery, economic growth, (company specific/product) secular growth and have a minimal negative downside. Their culture of management has consistently performed, continue to perform and allow an investor to truly 'buy and hold'.
If I could produce a 401k with just the above 5 names I would. If I was ever in a position to not be able to trade for an extended period of time, all my cash would be in these 5 names.
(But remember, i'm an anonymous blogger, and should not be taken seriously.)
Monday, February 22, 2010
Friday, February 19, 2010
Market Thought... protect
I make no secret that I feel valuations are really compelling with respect to a bunch of names. (ie GOOG, AAPL, IBM, GS... etc.) But the rise the market saw this week, becoming as overbought as it stands at the moment, in relation to the decline in the Vix, has me concerned. Especially since I still see the SP500 in an atmosphere of negativity.
The Vix declined to the horizontal blue line to which it may bounce off of. And if the Vix bounces, the SP500 should decline.
Fundamentally, there is nothing stopping the market to continue to rise. I truly believe this, hence did not sell my GOOG, AAPL and IBM.
Technically, the hurdles for the SP500 are present. This is why I added to my protection.
The Vix declined to the horizontal blue line to which it may bounce off of. And if the Vix bounces, the SP500 should decline.
Fundamentally, there is nothing stopping the market to continue to rise. I truly believe this, hence did not sell my GOOG, AAPL and IBM.
Technically, the hurdles for the SP500 are present. This is why I added to my protection.
Thursday, February 18, 2010
Market Thought... surprise!
The Fed raises rates on the discount window. This is not really a surprise. We knew it was coming, and its gonna be coming through the year, and next year. We all know rates are too low, we all saw Australia increase the rates, and China doing what they can on multiple fronts.
All this is good news. It means things are working. The after hours does not reflect that because many were surprised that the Fed specifically didn't tell them they would raise a now irrelevant rate.
The SP500, as expected, rose to the SMAs, and with this rate hike, it is a good excuse to sell off.
The economy is getting better. I know this because pretty much every company I follow told us its gotten better in all the conference calls.
I see the continued efforts to facilitate job creation, which make it difficult for me not to like this market.
On the China front, anyone thinking China's issues will hurt the global economy in the short to mid term is mistaken. China is providing stimulus in a very smart way. They still continue to pump the money in, but are taking it out a different way. IMO, in such a way that they are facilitating a consumer orientated economy.
There will always be negatives, and potential instabilities, but we must put these negatives in perspective. To me, the only real uncertainty is the potential instability created by a deconstruction of the Euro. The EU community has a ton of problems they must address to save that currency. But because I am not an expert in currency trading, I do not know the ripple effect the destruction of the Euro will have. Hence my uncertainty. But if it survives, I know the out come.
(ps. I am still waiting to go heavy AAPL, IBM and GOOG)
All this is good news. It means things are working. The after hours does not reflect that because many were surprised that the Fed specifically didn't tell them they would raise a now irrelevant rate.
The SP500, as expected, rose to the SMAs, and with this rate hike, it is a good excuse to sell off.
The economy is getting better. I know this because pretty much every company I follow told us its gotten better in all the conference calls.
I see the continued efforts to facilitate job creation, which make it difficult for me not to like this market.
On the China front, anyone thinking China's issues will hurt the global economy in the short to mid term is mistaken. China is providing stimulus in a very smart way. They still continue to pump the money in, but are taking it out a different way. IMO, in such a way that they are facilitating a consumer orientated economy.
There will always be negatives, and potential instabilities, but we must put these negatives in perspective. To me, the only real uncertainty is the potential instability created by a deconstruction of the Euro. The EU community has a ton of problems they must address to save that currency. But because I am not an expert in currency trading, I do not know the ripple effect the destruction of the Euro will have. Hence my uncertainty. But if it survives, I know the out come.
(ps. I am still waiting to go heavy AAPL, IBM and GOOG)
Trade - GOOG
There appears to be a trade setting up for GOOG.
Looks to be hovering on the 20SMA as resistance. IMO, it looks to want to break it. If it does, it will move to the high 550s or 560s.
Looks to be hovering on the 20SMA as resistance. IMO, it looks to want to break it. If it does, it will move to the high 550s or 560s.If it does not, it will move to test the 520 level.
How I will play it... I have a position now. If it breaks upward, will close out the position in the high 550s. (And will look to buy back after market mid-term bottom is observed, ie SP500 reaches its 200SMA.)
If it breaks down, will double down at 520s, and double down again if it breaks the 520 level at 500. (I do not expect the 520 level to be broken downward.)
Tuesday, February 16, 2010
Market Thought... ho-hum
I hate it when the markets are closed. The work day goes by so slowly. (I am so addicted to the markets, I think I have a problem :)
What a nice day. A day like today makes me question my market hedge. Look how the SP500 just took out the 14SMA.
But with this move, it is no longer oversold, and approaching overbought within an aura of negativity.
The market may move up to the 62 SMA (and other SMAs), but I do not know if there is enough umpf to power through.
My current thesis is to be range bound until we get better clarity regarding job creation. I just do not see the SP500 breaking 1150 unless that happens.
Stocks like AAPL, GOOG, GS and IBM will (imo) outperform the market based on individual performance and very inexpensive valuations. At the moment, I am waiting for the SP500 to test the 200 SMA, and then go heavy into the above names. The overall assessment I gather from the current market dynamic suggests it will happen within the mid-term. I do not think the SP500 will break it, and think it will be an awesome entry point.
What a nice day. A day like today makes me question my market hedge. Look how the SP500 just took out the 14SMA.
But with this move, it is no longer oversold, and approaching overbought within an aura of negativity.
The market may move up to the 62 SMA (and other SMAs), but I do not know if there is enough umpf to power through.
My current thesis is to be range bound until we get better clarity regarding job creation. I just do not see the SP500 breaking 1150 unless that happens.
Stocks like AAPL, GOOG, GS and IBM will (imo) outperform the market based on individual performance and very inexpensive valuations. At the moment, I am waiting for the SP500 to test the 200 SMA, and then go heavy into the above names. The overall assessment I gather from the current market dynamic suggests it will happen within the mid-term. I do not think the SP500 will break it, and think it will be an awesome entry point.
Thursday, February 11, 2010
Market Thought... free Tibet! :)
No. I did not become a hippie, but there is a point to the title. I was going to cover some of they market Puts I took on, to protect against AAPL, but then I saw this article.
Obama to Meet Dalai Lama Feb. 18
This has obvious implications for anyone following China. Especially when the Chinese gave a specific warning over this very issue. (article)
I am not one that accepts such a warning as acceptable political diplomacy. And Obama meeting with him effectively gives China the finger. (rightfully so, who the fuck are they telling the most powerful man on earth what to do)
Anyway, its no surprise China has been getting more and more aggressive with their diplomatic tactics. Add this to the list of things China will be pissed about, but they have to be realistic towards its expectations and warnings. If Chinese diplomats were stupid enough to make this warning, and start acting more and more aggressive, they are stupid enough to do something very stupid.
IMO, there potential stupidity may merit market protection. Hence, I did not remove the protection.
Also, my trigger to remove protection was not achieved yet. (Despite that, AAPL's chart looks so juicy now. Look how the negative trend was broken. It smells like a change in direction :)
Obama to Meet Dalai Lama Feb. 18
This has obvious implications for anyone following China. Especially when the Chinese gave a specific warning over this very issue. (article)
I am not one that accepts such a warning as acceptable political diplomacy. And Obama meeting with him effectively gives China the finger. (rightfully so, who the fuck are they telling the most powerful man on earth what to do)
Anyway, its no surprise China has been getting more and more aggressive with their diplomatic tactics. Add this to the list of things China will be pissed about, but they have to be realistic towards its expectations and warnings. If Chinese diplomats were stupid enough to make this warning, and start acting more and more aggressive, they are stupid enough to do something very stupid.
IMO, there potential stupidity may merit market protection. Hence, I did not remove the protection.
Also, my trigger to remove protection was not achieved yet. (Despite that, AAPL's chart looks so juicy now. Look how the negative trend was broken. It smells like a change in direction :)
Wednesday, February 10, 2010
Apple's new estimates
With the proper accounting in place, AAPL now has a trailing PE of 19. The fastest growing PC, mobile computer maker, and a company growing EPS north of 25% a year is trading with a multiple less than 2o.
All I can do is smile.
I already own the name, and will enter more. I think now is an interesting point for an initial entry. (assuming anyone is interested)
The market looks to want (or need) to capitulate before a real push upward is seen. Apple will no doubt be hostage to that capitulation. But in the mean time, while waiting for this capitulation to take place, there appears to be strength within AAPL, GOOG and GS to which I do not see them breaking there recent lows. AAPL may not break 192, GOOG may not break 520 and GS may not break 148.
If you want to be hedged, buy AAPL with Puts against the market. As the market capitulation takes place, close out the puts and keep AAPL.
All I can do is smile.
I already own the name, and will enter more. I think now is an interesting point for an initial entry. (assuming anyone is interested)
The market looks to want (or need) to capitulate before a real push upward is seen. Apple will no doubt be hostage to that capitulation. But in the mean time, while waiting for this capitulation to take place, there appears to be strength within AAPL, GOOG and GS to which I do not see them breaking there recent lows. AAPL may not break 192, GOOG may not break 520 and GS may not break 148.
If you want to be hedged, buy AAPL with Puts against the market. As the market capitulation takes place, close out the puts and keep AAPL.
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