Sell in May … but not yet! This week’s roller coaster ride in the stockmarket is a practice run. When the market started to fall steeply last Tuesday, I was there watching it. But like that day, the falls were so quick and steep, I thought, what to do for the whole day? Something tells me that sell-off was a case of “sell now and ask questions later” and there’s going to be some smart buyers snapping up bargains and they did. That’s giving some perspective in this whole sell off. Of course, like what I teach in the Low-Risk High-Reward Stock Investing workshops, there is a reason big money moves around and that happened this week. Bonds, another asset class was getting sold, so the panic is slipping over to stocks with profits being taken, to go out and dive in another day. Bonds issue receded and the bargain hunting is on! Jobs data was good but wages are still low so it is a good cocktail for interest rates on hold for a few more months.
Now looking at next week, there isn’t a major economic report for Monday and Tuesday and all up to earnings. The expectation is low for most of the companies so it is potentially an easy task to report profits. Which reminds me to say, since the earnings are still rolling in, especially for the retail / consumer-related sectors, which are expected to have benefitted from the lower oil prices and higher dollar’s purchasing power. So if you still have your stocks, weigh your risks and to me it is looking like there is still some upside on the market. ( I would give that selloff a hold for a few more days maybe even after big Dow component Walmart reports on the 19th.
Meantime, let’s enjoy the low-interest rate environment, it is impossible to stay as low as it is.
Here’s the Impossible Dream ….
Billionaire fund managers are starting to come out with the dire predictions that bubbles are going to burst especially for those high flying stocks like biotech and social media (Why Twitter is even valued at the billions at all escapes me!) Anyway, they point to the rate rise that is sure to come this year, maybe as soon as June. I think many are going to be led to the same belief, and I am nearly about to agree, but not yet. Corporate earnings are not as dismal as we were led to expect, and as far as timing goes, we are still working through the earnings, so, me thinks, at least in the next week or so, the bull still got legs, just be careful not to tripped up with those overvalued companies.
So imagine if these undervalued companies (PE below 17) gets even more cheaper!
Here they are from last business day’s close
JPM (JP Morgan) PE is 11.66
XOM (Exxon Mobile) PE is 13.34
WFC (Wells Fargo) PE is 13.48
INTC (Inte ) PE is 14.19
AAPL (Apple) PE is 15.94
If you notice, we have come away from the steep oil price declines, so the feared job losses and investment loss is at least going to help sentiment in that industry. Looking back at the last few months when oil reached hysterical lows, the economy chugged along and it really didn’t help that much so, investment managers keen to pick up bargains will push the prices up once more and there’s a buying opportunity.
This week, the jobs numbers will be reported and it will probably show better numbers with the better weather. Will that mean better stock performance? Likely, it will be choppy. What I’ve observed is that the bad news gets greeted with more buying and good numbers inspire quick selling. No one wants to be left behind with a high-priced stock. In a little while, sell in May is under way.
Now it makes sense! The Fed has been talking up the economy so it could raise rates… eventually. The GDP number last quarter revealed the obvious, the US economy’s growth has been weak weak weak. But of course, to say they will raise rates does not mean they will raise it quickly, they just kind of want to. Just because.
Well I think they shouldn’t really. Consumers who have been signalling confidence for at least the last year have been indicating weakness, and honestly I am surprised they are saving more than shopping! hahaha But, we all learn lessons (from taking too much debt) and it’s as good a time as any. America has changed!
So what’s the deal, oils stocks down, biotech and tech stocks were being sold for profits but — well some are still good. AAPL provided fantastic earnings report but stock is downl… now the PE is around 16, looking like a bargain. So don’t despair, once the investor’s sentiment has improved (there’s a chance with the jobless claims report ) there’s your buying opportunity.
By the way, I post my quick thoughts, tips and insights in my FB pages so if you have not done so, please like our page! https://www.facebook.com/highheeledtraders?ref=hl
Workshop has concluded last weekend and it was a fantastic learning experience. Thank you all for your contributions and keep checking your inbox for emails from our organizers Learning Curve.
Long-term investing is popular, but does it work? When I started to invest, my primary objective is to get out of the “rat race” — waking up, going to work, eating, sleeping and do it all over again. I had a very good job in IT back then, but we have to work long hours, often having to meet deadlines (like, yesterday!) so the stress has affected my health, I couldn’t fall pregnant for 4 years! That clear objective helped to shape my strategy thus I avoided “long-term investing” and instead went for income investing where I make sure I have money coming in monthly, make sure that I grow my capital and skillset steadily, which lets me invest more and increase that income! The best part, with the skillset, you can even get to use “other people’s money” — yes the banks or brokers let you invest with “margin or a loan”. The goal has always been to replace my income from my job and have more time to raise my children and other projects I want for myself.
You see, it all starts with desire. What do you want in your life, most brokers or “stock investing education” neglect this part of investing education because well, they just don’t have to. It’s beyond what makes money for them … AHA!!! (All they have to do is make you buy or sell and they make money either way — they don’t have to bother!). Yes, sadly …. this is why I share about goal-setting, which is the reason why you are investing in the first place. Oh yes, sounds simple ,,, but no! Done haphazardly, it’s not going to get you anywhere. “I want to make a lot of money” is not only vague but after a while, it does not motivate you anymore.
GOAL-SETTING is discussed in my workshop. “Low-Risk High-Reward Investing Workshop” happening on April 25. For many, vague goals are stopping them from making more profits, they can be “psychological barriers” that you may not even be aware of, so join our workshop to get clarity on this!
In goal-setting – we start by doing an inventory.
> Where are you right now — assess your current financial standing : assets, income, debts
> How much capital do you have available, a portion of that for risking eg, 100,000 total capital to be spent but 20,000 only for risking (amount you can afford to lose)
> What are your skills? Are you computer literate, good in math, what industry do you understand or are you interested in? (technology, finance, industrial, mining etc)
> How much time do you have for studying, creating your business plan, timeframe you want to invest, monitoring your investments
> What is your temperament – are you action-oriented, do you like to think and ponder about things, take things slow.
The beauty of investing is that it can be done in a way that suits you. In the book “Market Wizards” all these traders cite different strategie but the singular thing that works is that “they invest as it fits them”
Goal-setting is your compass, your GPS (and soon to be Apple Watch! ) , it basically gives you direction on your trading. Avoiding the wrong path so to speak. Make sure you make the right moves. Without the goal/s you will be led by anything that, suggested frequently enough will make you think that is the norm or only way to do things. Your goal is ultimately what you want in your life that makes you happy and productive. So think long and hard about that. Get into the details ,,, what you can see in your future, taste and smell!
Meantime, here’s my video on my take on Long-term Investing. Enjoy!
That popular stock or even AAPL you bought may have been sagging with the market last week. How are you feeling? I wasn’t happy about it but thank goodness I was busy last weekend with a class reunion and a road trip with my kids, I come into the week with a fresh perspective… looking at my investing at a different angle. One of the keys to investing is to know when you are WRONG about the trade or the investment, meaning the investment is not working out. Yes, one of the pitfalls of investors is to insist upon the market what they think is right. It’s painful to admit you are wrong, but to take the “pain” away, know that the market will do whatever it wants to do, and it’s best to just get out if your maximum allowable loss or “stop” is reached.
On my side, my different perspective on my investing is to do more of the position-trading style (that I’ve been doing for years) instead of purely day trading which I thought I’d do since it’s summer vacation from school. I’ve been much more successful with the short-term (2days to 1 month) timeframe and definitely fits my lifestyle as a mom. So AAPL sagged last week, if I was day-trading I would have to cut the loss on it several times, but with position trading which has a wider stop, it’s more relaxed, I slept while the stock was down and woke up at an advantage.
Volatility is definitely in season, so keep in tune with the market and know how to manage your risks to make a better investment decision. Many point to the Europe distress over Greece however the market has started getting Earnings reports in the US and many read it as positive in the wake of banking stocks reported better earnings. The economic reports so far point to a not-so-hot-not-so-cold “goldilocks” economy. So there’s definitely the interpretation that there won’t be a rush to raise interest rates. Of course we have no control over how other investors would react, and that is why we need to focus on managing our risk. I will be focusing on this topic in the “Low-Risk High-Reward Investing Workshop” that I will be leading on Saturday April 25. Details here.
I will be holding a webinar version of this since many are moms and it is best where they can learn at their own time and comfort of their homes. So do watch out for that.
I will also be a speaker at an invitation-only event organized by the Philippine Stock Exchange in May, so keep posted I may be able to bring some of you as my guest.
Supermodel Gisele Bundchen and me really do have a lot in common . We think along the same lines. She did her last catwalk last night and it was great to read about why.
“I don’t see how to continue (modeling on the catwalk) … and stopping will leave room for other projects I have for myself. Automatically my body tells me if what I do is worth it, and it asked to stop. I respect my body, it’s a privilege to be able to stop,” Bundchen explained in the Folha de Sao Paulo newspaper interview. (Article here) She “has said she wants to spend more time with her family.”
For me, as I’ve been doing more trading in the US markets which is night-time in my side of the world, I was working along the schedule of my children’s schooling. Now that they’re in their summer vacation, I thought it’s time for me to step up and do the “all-nighter” trading that I was envisioning will capture more opportunities, hence more profits. I made it a priority. However, my body had other ideas. Much as I tried to reserve my energy and eat healthily, I just feel that sleepiness catches up with me and I may stay up till 1pm but not successfully making the decisions that need to be done because my mind’s reaction time is just not up to it.
And PLEASE, don’t binge on sugary food, softdrinks and coffee to stay “alert” .., chemically, sugar is glucose, when the glucose level rises in the body too quickly, the pancreas secretes insulin, which then drops the glucose level. This insulin makes the muscles absorb the glucose faster. So excess sugar is absorbed quickly by the muscles, and converted by the liver, leaving no energy source to your brain. Google might not have told you that!
It also meant, I wake up later than my children (and my son is an early riser, fends for himself, eating cereal or bread and plays computer games!) I also get easily cranky. So my soul is suffering, because instead of nurturing them lovingly, there was a lot more “tough love” (LOL). OK so that didn’t go well, and I knew that it was wrong “trading plan” for me, I had to, as Giselle said, respect my body and spend my time with my children, who give me the greatest joy and inspiration. Investing profits were also minimal because I was prone to making mistakes, becoming too stressed out and mentally sluggish. Not happy!
I began to concentrate on the early / opening times for trading which for 2 hours or so provides me enough opportunity and profit anyway to keep on doing this business. The schedule and activities is just a better fit and enables peak performance. As Dr. Van Tharp’s research has proven “trade as it fits you”, so trade with your body and soul in mind.
Let me see you move! Apple iWatch available for pre-ordering online 12:01 Pacific Time is going to potentially make investors nervous. Or happy, depending on how this day or weekend goes. Analysts have already come out with reviews, most of them pointing out the “wearability” is not so good if you have to give a more vigorous shake of your hand to get something done. Others are concerned about the battery life. The other day, a rare downgrade from Buy to Hold was given which dragged down the stock price a bit. However, investors shook that off yesterday, possibly in anticipation of the pre-ordering. Besides, if AAPL or the Watch is so bad, why is it inspiring much competition? At the end of the day, this is a new product that is revolutionizing the industry (maybe even later on, the world). I would probably be In and Out when there is volatility, but you could do no great damage holding this stock. If you haven’t got it and the price is volatile, wait it out and get a confirmation on the trend up before buying. By the way, as far as value goes, the PE is still at a very desirable 16.92. If stock moves lower, it get’s to be a bargain-hunter’s delight so it’s probably not going to stay down for long. Observe how the stock moves down, AAPL moves around 2-3 days trend and back up it goes. That’s been my experience for a lot of my trades, bearish positions are losing if not offer little profit compared to the bullish positions in this stock.
Welcome to a new Earnings season! This week we are low on economic report – just FOMC minutes out on Wed – but heavy on company news with the Earnings season trickling in with Alcoa reporting after the close on the 8th, then some banking stocks follow shortly. Guess what, banks are being reported as big winners this quarter. In layman’s term, the banks it got it so bad already it couldn’t be worse! Dow Jones Newswires reports “The long-term bull case for large U.S. banks is that with the bulk of the major regulatory settlements behind them, the continued growth of the U.S. economy and a brightening picture for net interest margins over the next few years, earnings and valuations may rise big time.”
Also not to forget AAPL will start to take orders by April 10th, and there has been analyst projections that they could sell 1million AAPL Watches by this weekend. That would be news worth watching for.
Which you may or may not believe. As for me, I am keen to believe about the brightening growth and supported by the high level of Consumer Confidence reports, so I would say I would keep with financial stocks like Visa and MasterCard that keep the payments going but don’t fork out money themselves (whoever invented this business is genius!).
On the other hand, AAPL is starting to get orders for AAPL Watch by Apr 10 with 1 million projected for the weekend. Now I’d be watching that!
I know, the last few days have been volatile and opening minutes of April 1 stocks have been falling, for investors this could be the perfect time for bargain-hunting, BUT given the unsteadiness of the market with the rate rise and we are allowed to question is there there any good investment. If there is anything to pick up, might as well those with “sure money” in the form of dividends right? I’ll have some of that. Here’s a great list from Dow Jones Newswires that mainly discuss Tech stocks — they argue that technology sector “has a solid free cash flow margin of 21.3%, along with an average free cash flow yield of 6%, which he said is significantly higher than the average of 3.6%.
We pared the list to 20 tech stocks with market values of more than $500 million and dividend yields of over 1%, with the highest “headroom” for dividend increases, based on their free cash flow over the past 12 months:
Company Ticker Closing price – March 30 Free cash flow per share – last 12 months Free cash flow yield Annual dividend Dividend yield “Headroom”
Predicted a downtrend a couple of days ago and here it is! Yesterday’s fall was just spectacular my bargainista friends must sure be excited. But hold on to your wallets, it is getting cheap, but could be cheaper! Checked Apple’s PE and it’s standing at 16.62 around the same as Microsoft at 16.73. At this stage in the market, with the quarter just about to end even with US GDP being reported tomorrow we have to consider that there’s about 2 weeks days to go before the Earnings pour in, so expect volatility and it looks like we got a lot more trip down the slides. Apple’s PE was around 13 when they reported their Earnings last quarter so my short and sweet tip for today is that there’s going to be bargains galore but it hasn’t hit the floor…. Wait up for the next quarter earnings to roll in (Around Apr for the first major company Alcoa … before you really go shopping for the bargains. For those who want to get the brainwork that leads to my market predictions, join my webinars and workshops, email at firstname.lastname@example.org or keep posted in this blog!