TSX Target 13480
NASDAQ Target 4900
DJIA Target 17000
When the respective target is reached for you market, don't hesitate to buy!
Thursday, August 20, 2015
August 20, 2015 - It is almost the DAY to purchase stocks!
Today is the day if you have any money set aside, to put into the stock market - even if it is an index fund. All the past indicators has been met for maximum pessimism. There are no more optimism on stocks. Headlines are calling for a decline. The only thing missing is the alignment of the technical.
TSX Target 13480
NASDAQ Target 4900
DJIA Target 17000
When the respective target is reached for you market, don't hesitate to buy!
TSX Target 13480
NASDAQ Target 4900
DJIA Target 17000
When the respective target is reached for you market, don't hesitate to buy!
Tuesday, August 18, 2015
August 18, 2015 - What is Warren Buffett Secret Stock Filed to SEC?
“Warren Buffett’s Berkshire Hathaway Inc has eliminated its
stakes in National Oilwell Varco Inc and Phillips 66, and on Friday signaled it
may have another large investment in the works.
The changes were disclosed in a filing with the U.S.
Securities and Exchange Commission detailing Berkshire’s U.S.-listed stock
portfolio as of June 30.
Berkshire said it disclosed some information about its
holdings confidentially to the SEC, which the regulator sometimes permits when
Buffett is building a large new position.
Last week, Berkshire disclosed it had bought $3.09 billion
of equities in the second quarter, without identifying the stocks.” Globe and
Mail
What exactly are the stocks that Buffett has been buying?
Today we attempt to analyze the most likely stocks in the works.
First of all, we need to know what is Buffett's recent stock purchasing method. To do so we compare 4 recently purchased companies filed. (WFC, IBM, SU, PCP)
From this comparison, we found out some very interesting screens that were similar for all four companies. These screens were then put in our searched for all available stocks and can be found in the image below.
The resulting screen gave us a number of selected companies where we will review to determine the likelihood of the company to become the next Buffett legend.
Usually, before Buffett has purchased a stock, other billionaires has already jumped on the company. Using this methodology we screen out the companies other billionaires has purchased on this list, and further more, only those companies billionaires has been buying lately will be kept. The results are as follows.
| Symbol | Owned By Billionaire and Bought recently |
| AFL | Y-S |
| COF | N |
| RY | N |
| BMO | N |
| CNQ | Y-B |
| JPM | Y-B |
| BNS | N |
| TD | N |
| TRI | N |
| BAM | N |
| LVS | Y-S |
| CSX | Y-B |
| BCE | N |
| WFC | Y-B |
| IBM | Y-B |
| BBT | N |
| PNC | N |
| AXP | Y-B |
| AEP | Y-B |
| SU | Y-B |
| NEE | Y-B |
| PCP | Y-B |
The remaining companies are CNQ, JPM, CSX, WFC, IBM, AXP, AEP, SU, NEE, PCP.
Since Buffett is not identifying the stock in his purchase this time, it is highly likely this company has a smaller market cap compared with the rest. Therefore, we takeout those that has a market cap larger than $40B and also those companies that he already owns.
This leaves three candidates:
| Price/Book Ratio | Market Capitalization | Volume 90-Day Average | |
| Canadian Natural Resources Ltd | 1.005865 | 25149100000 | 2860204 |
| American Electric Power Company Inc | 1.6978 | 28624200000 | 2491766 |
| CSX Corp | 2.638926 | 29197300000 | 9017191 |
Given Buffett's history with oil and his recent pullback from investing in the oil sector, it is unlikely oil related companies will be on his list of acquisitions. American Electric Power is also not something that Buffett has mentioned in his investment style and doesn't fit into the moat that he usually heeds. Besides that, the comparison 90-day average volume for companies with this market capitalization usually revolves around 3M. The fact the CSX Corp sticks out as 9M average volume shows the likely factor that someone has been secretly acquiring the stock.
Therefore, the most likely candidate for the next Buffett acquisition is CSX Corp!
Monday, August 17, 2015
August, 17, 2015 - Today's Best Company In The Best Industry
Last week I wrote about the best company from the most pessimistic industry.
Today, lets see what would to most be considered the best company in the most optimistic industry.
First off, let us determine which market exchange is the strongest right now.
Today, lets see what would to most be considered the best company in the most optimistic industry.
First off, let us determine which market exchange is the strongest right now.
Exchange
|
# of stock within 5% of 52-week high
|
Total # of stock
|
% of market within 5% of 52-week high
|
TSX
|
585
|
2241
|
26.1%
|
NYSE
|
1362
|
5073
|
26.8%
|
NASDAQ
|
515
|
3320
|
15.5%
|
By comparing the three major index, it is obvious that the NYSE has the highest percentage of the market within 5% of its 52-week high. Since the NYSE has the highest percentage of its market reaching
new highs, we will look deeper to find a stock here.
| Sectors | # of companies within 5% of 52 week high | Total # of companies | % of sector within 5% of 52-week high |
| Non-Energy Minerals | 7 | 1461 | 0.48% |
| Producer Manufacturing | 27 | 389 | 6.94% |
| Electronic Technology | 13 | 509 | 2.55% |
| Consumer Durables | 20 | 158 | 12.66% |
| Energy Minerals | 8 | 581 | 1.38% |
| Process Industries | 21 | 495 | 4.24% |
| Health Technology | 40 | 814 | 4.91% |
| Consumer Non-Durables | 40 | 214 | 18.69% |
| Industrial Services | 12 | 305 | 3.93% |
| Commercial Services | 26 | 239 | 10.88% |
| Distribution Services | 4 | 90 | 4.44% |
| Technology Services | 27 | 491 | 5.50% |
| Health Services | 10 | 116 | 8.62% |
| Consumer Services | 26 | 387 | 6.72% |
| Retail Trade | 18 | 216 | 8.33% |
| Transportation | 6 | 158 | 3.80% |
| Utilities | 13 | 167 | 7.78% |
| Finance | 118 | 1295 | 9.11% |
| Communications | 9 | 114 | 7.89% |
| Miscellaneous | 7 | 339 | 2.06% |
The strongest sector currently is “Consumer Non-Durables”
with over 18.69% of the companies reaching new highs.
Next we determine which industry in this sector specifically
is the best.
| Consumer Non-Durables Industries | # of companies within 5% of 52 week high | Total # of companies | % of sector within 5% of 52-week high |
| Food: Major Diversified | 5 | 10 | 50.00% |
| Food: Specialty/Candy | 5 | 49 | 10.20% |
| Food: Meat/Fish/Dairy | 3 | 18 | 16.67% |
| Beverages: Non-Alcoholic | 4 | 20 | 20.00% |
| Beverages: Alcoholic | 6 | 28 | 21.43% |
| Tobacco | 3 | 7 | 42.86% |
| Household/Personal Care | 8 | 37 | 21.62% |
| Apparel/Footwear | 5 | 40 | 12.50% |
| Consumer Sundries | 1 | 5 | 20.00% |
It appears that Food: Major Diversified is at the strongest
right now.
After comparing the 5 companies only one survived the stress
test with a target of 5% stable growth.
This company is CPB (Campbell Soup Co)
Friday, August 14, 2015
August 14, 2015 - Buying the Best Company at the Point of Maximum Pessimism
Stocks goes up for one reason and that is expectations has
changed for the better. Human behavior dictates all others. The only use for fundamental
analysis is to see if the company can wither through any extreme downturns in
the market. As long as the company doesn’t go bankrupt, future expectations are
what drives the price of the stock.
Therefore, the strategy for achieving 10% – 20% return is to
purchase the strongest company during the point of maximum pessimism.
To find the industries in the worst conditions we compare
the percentage of each sector to determine which sector has the highest number
of companies within 5% of their 52-week lows. (Data taken on August 13th,
2015)
Next, we dig deeper into the Finance industries to determine
which industry is of the highest pessimism.
The following criteria in the picture below were used to
find companies that could constantly grow in excess of 10% or more. Only one
company made the cut in this pessimistic industry.
This company is Wells Fargo (WFC) – Data taken on August 13th,
2015
A strong company entails the following beyond fundamentals –
meaning, moat, management, margin of safety.
1.
Meaning – Wells Fargo is a provider of banking,
mortgage, investing, credit card, insurance, and consumer and commercial
financial services. An American multinational banking and financial services holding
company which has roots to millions of U.S. citizens. It has meaning to a large
group.
2.
Moat – Wells Fargo strongest advantage are the
systems that Wells Fargo developed to not only retain customers, but to sell
them additional products. This emphasis on cross-selling provides clients a
menu of higher-yielding alternatives, the nation's fourth-largest bank by
assets is able to keep those funds within the confines of its holding company.
It diversifies Wells Fargo's revenue stream away from originating loans. The
net result lowers the bank's overall risk profile and retain clients from
competition.
3.
Management – CEO John Stumpf and the management
team at Wells Fargo speaks the language of an investor. They have continue to
increase dividend payments and authorized share buyback plans while efficiently
using earnings to grow the company at a sustainable way and optimizing current
operations to increase efficiency.
4.
Margin of Safety – Wells Fargo currently trades
at a price to book of 1.78 –less than the P/B ratio cut off of 2 which makes it
a good opportunity to purchase shares.
Wednesday, August 12, 2015
August 12, 2015 G-SHOCK (Gold, Stocks, Housing, Oil, Currencies, Key Rates)
Gold
Beijing’s surprise devaluation of the yuan on Tuesday and its continued actions Wednesday, including intervening to slow the pace of the decline of its currency has reignited the haven appeal of gold in the short run. Gold cyclical strength usually starts from the end of July until the end of December thanks to demand from India holidays and Christmas. Over the medium term again I must reiterate that it is highly likely Gold will continue to make new lows most likely after December.
Stocks
It is almost a great buying opportunity for stocks.
Target for index before rebound
Oil
Yuan Falls to 4-year Low: The People’s Bank of China lowered the yuan’s daily fixing by 1.6% to 6.3306 on Wednesday, after Tuesday’s 1.9% cut. Spot renminbi in China fell to 6.45 per USD, its weakest since August 2011, while in the international markets it touched 6.59 per USD.
USD within 2015 till the end of 2016 should still be the stronger currency. Any lowering of the USD should be taken as an opportunity to add to your position.
Beijing’s surprise devaluation of the yuan on Tuesday and its continued actions Wednesday, including intervening to slow the pace of the decline of its currency has reignited the haven appeal of gold in the short run. Gold cyclical strength usually starts from the end of July until the end of December thanks to demand from India holidays and Christmas. Over the medium term again I must reiterate that it is highly likely Gold will continue to make new lows most likely after December.
Stocks
It is almost a great buying opportunity for stocks.
Target for index before rebound
NASDAQ – 4900 (Suggested companies AAPL, GOOGL)
TSX – 13900 (Suggested companies SU, VRX)
DJIA - 17000 (Suggested companies WFC, AGN, IBM)
Oil
EIA Petroleum Status Report came in as follows lower than expectation and causing oil gains from earlier this week to give:
Prior Actual
Crude oil inventories (weekly change) -4.4 M barrels -1.7 M barrels
Gasoline (weekly change) 0.8 M barrels -1.3 M barrels
Distillates (weekly change) 0.7 M barrels 3.0 M barrels
Devaluation of the yuan continues to put downward pressure on oil and further downside is possible.
Target oil price before rebound - 42.03
Currency
Yuan Falls to 4-year Low: The People’s Bank of China lowered the yuan’s daily fixing by 1.6% to 6.3306 on Wednesday, after Tuesday’s 1.9% cut. Spot renminbi in China fell to 6.45 per USD, its weakest since August 2011, while in the international markets it touched 6.59 per USD.
USD within 2015 till the end of 2016 should still be the stronger currency. Any lowering of the USD should be taken as an opportunity to add to your position.
Tuesday, August 11, 2015
August 11, 2015 - Where To Invest Money Today
There are many ways to play the stock market but I personally favor those that provides me with the highest probability of return at the lowest risk possible. Most of you are probably thinking - "Sounds like bunch of baloney". Well stick with me and let me show you how to actually achieve it.
There are basically two ways to to invest while balancing risk and return. 1) Find the momentum stock and trade with the trend at the right time. 2) Purchase what is hit the hardest at the right time.
To maximize your return you need to learn how to do both and preferably in markets around the world.
Step 1: Determine which investment vehicle has the highest momentum and which has been hit the hardest. You want your money in momentum vehicles until the timing is right to transfer into hardest hit vehicles.
Momentum Vehicles: Housing, USD
Hardest Hit Vehicles: Stocks, Oil, Gold
Step 2: Review the timing for hardest hit vehicles
Stocks: NASDAQ (Not right time), NYSE (Right Time), TSX (Almost Right Time)
Oil: (Almost Right Time)
Gold: (Not Right Time)
Step 3: If the hardest hit vehicle is at a right time determine which specific product type to invest in.
Since the NYSE is at point where the upside potential is higher than then risk we need to determine which stock would benefit most from devaluation of China's currency or the rise in US interest rates. The industries that comes up are financial and pharmaceutical stocks on the NYSE.
Step 4: Find the best product
Right now in the financial and pharmaceutical industry, my suggestions are WFC (Wells Fargo), VRX (Valeant pharmaceutical), and DVA (Davita Healthcare) at the current price
Happy Trading!
August 11, 2015 G-SHOCK (Gold, Stocks, Housing, Oil, Currencies, Key Rates)
Gold
Gold stayed relatively flat today during its strength cycle as China has just devalued its currency which will cause commodities denominated in the US dollar to be more expensive. I wouldn't be buying gold right now as even in the strength cycle it should only last until December but with further downside to reach a bottom within the next year or two.
Stocks
Oil
The surprise in currency devaluation in China caused oil to give up all gains from trading on Monday as the world's number two economy is slowing in growth and the price of oil in the U.S. has just gotten more expensive relative to China's oil.
However, the longer term outlook should show that the supply in oil will drop (most likely will be shown in this weeks or next weeks EIA report coming out tomorrow) as at these oil prices, many oil fracking companies are not profitable. Besides, the implementation for lowering interest rates and devaluing the currency should drive better economic stats in the coming months for China which will raise the price for oil.
Currencies
China Devalues Yuan: People's Bank of China has sharply weaken the renminbi’s “daily fix” to Rmb6.2298 against the dollar on August 11th, compared with a Rmb6.1162 the day before in a response to weakening exports and rising deflation risk.
USD stays strong as it continues to stay as the one economy closest to raising rates among its G20 peers.
Key Rates
US Unemployment Rate Steady at 5.3% in July
Euro Area Unemployment Rate Unchanged at 11.1%
China Moves to Devalue Yuan
China Inflation Rate Up 1.6% in July
BoJ Keeps Monetary Policy Unchanged
German Trade Surplus Hits Record High in June
UK Trade Deficit Widens to £1.6B in June
Canada Unemployment Rate Unchanged in July
Hong Kong Trade Deficit Widens in June
Gold stayed relatively flat today during its strength cycle as China has just devalued its currency which will cause commodities denominated in the US dollar to be more expensive. I wouldn't be buying gold right now as even in the strength cycle it should only last until December but with further downside to reach a bottom within the next year or two.
Stocks
Stocks are generally down today in North America due to concerns of slowing economic activities from China's recent surprise. However, the next four months economic numbers should get better as the start of school should encourage consumer spending giving relief to a slowing economy.
Oil
The surprise in currency devaluation in China caused oil to give up all gains from trading on Monday as the world's number two economy is slowing in growth and the price of oil in the U.S. has just gotten more expensive relative to China's oil.
However, the longer term outlook should show that the supply in oil will drop (most likely will be shown in this weeks or next weeks EIA report coming out tomorrow) as at these oil prices, many oil fracking companies are not profitable. Besides, the implementation for lowering interest rates and devaluing the currency should drive better economic stats in the coming months for China which will raise the price for oil.
Currencies
China Devalues Yuan: People's Bank of China has sharply weaken the renminbi’s “daily fix” to Rmb6.2298 against the dollar on August 11th, compared with a Rmb6.1162 the day before in a response to weakening exports and rising deflation risk.
USD stays strong as it continues to stay as the one economy closest to raising rates among its G20 peers.
Key Rates
US Unemployment Rate Steady at 5.3% in July
Euro Area Unemployment Rate Unchanged at 11.1%
China Moves to Devalue Yuan
China Inflation Rate Up 1.6% in July
BoJ Keeps Monetary Policy Unchanged
German Trade Surplus Hits Record High in June
UK Trade Deficit Widens to £1.6B in June
Canada Unemployment Rate Unchanged in July
Hong Kong Trade Deficit Widens in June
Monday, August 10, 2015
August 10, 2015 G-SHOCK (Gold, Stocks, Housing, Oil, Currencies, Key Rates)
Gold
Gold is up today rebounding since the end of July which is part of the normal sector cycles for this commodity. Normal sector cycle should continue until the end of December but will likely be extremely volatile. After December or near the end of this year Gold should continue its decline due to increases in U.S. interest rates.
It will be likely Gold will continue to decline to a point where it is 50% from it's all time high before another parabolic rise.
Stocks
Stocks are generally on the rise today due to the Fisher's comment. This rumor may also present a fantastic selling opportunity near the beginning of September when stocks rally to its high before the fed meeting.
The Dow Jones industrial average is still below the rate of increase of the US money supply and therefore should still have room to rise before a correction happens meaning it is safe to buy stocks today.
Globally speaking, the Chinese stock market bull is not over yet. The money supply in China currently shows there should still be room for a 2000 points increase in the SSE.
Back home in Canada, the TSX also poises to continue its run up with more than 1000 points difference between the money supply and the Canadian stock market.
And for those of you in Hong Kong, do not worry from the last huge drop as the bull run should not be over yet. Liquidity is still higher than where the stock market is today and therefore in the long run the HKEX should test it's highs again. Take the current prices as an opportunity to purchase shares in companies with good fundamentals.
Housing
US housing should continue to rise as the rate of lending for housing has dramatically decreased while the amount of money available to lend has increased. Buying a house now in the United States should on average be a good investment.
The housing prices for China has fell dramatically since the beginning of 2014 and a bottom seems to have been reached. Purchasing a house in China now should on average be a good investment.
Back home in Canada, the increase in money supply due to decrease in interest rates should allow the average home price to continue upwards in a steady pace.
In Hong Kong, the rate of lending for purchasing houses is higher than the rate of increase of the money supply. It is highly probable that the average home prices will start to decline. Besides, an increase in interest rate to the USD will cause the pegged HKD to increase in value further pressuring the housing market. It is not recommended to purchase a home in Hong Kong right now.
Oil
According to legendary investor Jim Rogers, normally when prices falls there is a dead cat bounce and then a retest of the lows. Then oil will go its merry way and surprise the market by going back up and staying up.
Today, Brent Crude recovers from 6-month low may mark the completion of the lows. Brent crude has touched $48.20 early Monday, the lowest level since January 30th, as Chinese trade data released over the weekend showed that demand for oil and other commodities may weaken. Yet as of 13:09 ET, the brent recovered 3.5% to $50.3.
Currencies
USD fell today due to Fisher's comment suggesting there may not be a rate hike during the September meeting surprising the market. This represents a possible buying opportunity for the USD for the next half a year to a year as rate hikes will come this year.
Globally speaking, the USD is still currently a favorite in currency relative to many of the G20 nations due to the near term expected interest rate rise while many other countries are still devaluing their currency. However, in the long run, you must be wary that the USD is no safe haven and should be ready to move cash out when the opportunity arises.
Key Rates
Gold is up today rebounding since the end of July which is part of the normal sector cycles for this commodity. Normal sector cycle should continue until the end of December but will likely be extremely volatile. After December or near the end of this year Gold should continue its decline due to increases in U.S. interest rates.
It will be likely Gold will continue to decline to a point where it is 50% from it's all time high before another parabolic rise.
Stocks
Stocks are generally on the rise today due to the Fisher's comment. This rumor may also present a fantastic selling opportunity near the beginning of September when stocks rally to its high before the fed meeting.
The Dow Jones industrial average is still below the rate of increase of the US money supply and therefore should still have room to rise before a correction happens meaning it is safe to buy stocks today.
Globally speaking, the Chinese stock market bull is not over yet. The money supply in China currently shows there should still be room for a 2000 points increase in the SSE.
And for those of you in Hong Kong, do not worry from the last huge drop as the bull run should not be over yet. Liquidity is still higher than where the stock market is today and therefore in the long run the HKEX should test it's highs again. Take the current prices as an opportunity to purchase shares in companies with good fundamentals.
US housing should continue to rise as the rate of lending for housing has dramatically decreased while the amount of money available to lend has increased. Buying a house now in the United States should on average be a good investment.
The housing prices for China has fell dramatically since the beginning of 2014 and a bottom seems to have been reached. Purchasing a house in China now should on average be a good investment.
Back home in Canada, the increase in money supply due to decrease in interest rates should allow the average home price to continue upwards in a steady pace.
In Hong Kong, the rate of lending for purchasing houses is higher than the rate of increase of the money supply. It is highly probable that the average home prices will start to decline. Besides, an increase in interest rate to the USD will cause the pegged HKD to increase in value further pressuring the housing market. It is not recommended to purchase a home in Hong Kong right now.
Oil
According to legendary investor Jim Rogers, normally when prices falls there is a dead cat bounce and then a retest of the lows. Then oil will go its merry way and surprise the market by going back up and staying up.
Today, Brent Crude recovers from 6-month low may mark the completion of the lows. Brent crude has touched $48.20 early Monday, the lowest level since January 30th, as Chinese trade data released over the weekend showed that demand for oil and other commodities may weaken. Yet as of 13:09 ET, the brent recovered 3.5% to $50.3.
Currencies
USD fell today due to Fisher's comment suggesting there may not be a rate hike during the September meeting surprising the market. This represents a possible buying opportunity for the USD for the next half a year to a year as rate hikes will come this year.
Globally speaking, the USD is still currently a favorite in currency relative to many of the G20 nations due to the near term expected interest rate rise while many other countries are still devaluing their currency. However, in the long run, you must be wary that the USD is no safe haven and should be ready to move cash out when the opportunity arises.
Key Rates
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