Investment "Logic"

The market wasn't lacking in volatility as we saw both the biotechs and semis take a sudden, dramatic hit.  The biotech market you could sense was getting hot, however the semis caught me by at least a little surprise.  News from memory chip maker SanDisk pre-announcing to the down side for earnings started things, but what I believe to be the big impact was an analyst downgrade of Taiwan Semiconductor due, in large part, to inventories growing out of control for their top-5 customers.  By the end of the week, biotechs appear to already be putting a bottom into their pullback, which feels shallow.  Semis are still unstable, however news that Intel is in talks with Altera may put in a floor if it turns into something serious.  At the same time, we're about to enter April and tech tends to swoon in the April-May time frame and don't generally recover until the end of summer.  There's a lot going on here and a lot to pay attention to for those holding sto...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. As the stock has pulled back rather strongly in the last week, I felt it important to note new details that should be brought into consideration for the stock's future performance.  First Item I'll note is really nothing of real importance to the stock performance itself, but to its tracking.  On April 6, On Semiconductor will change its ticker symbol from ONNN to ON.  Please note this as I will reflect those changes at that time also, both in my writings and my blogging labels. The next thing to acknowledge is a primary driver to the recent pullback.  An analyst downgraded another chip maker in the industry (Taiwan Semiconductor, ti...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Today I sold my entire position of Ensco PLC at $21.75, taking a significant loss on the stock.  While oil does seem to be bouncing off of its bottom, I don't feel confident I'll get prices above $22 for the stock any time soon, so I decided to cut my ties so I have money ready for new purchases.  I don't see oil prices going much higher than the low 50s in the next 6 - 12 months, the company has a lot of glut in rigs that are active and more coming online.  It will take awhile for everything to play out before this company is investable again.  With only a 2.5% yield, I'm not seeing any benefit in sticking through things unt...

This last week started weak, but ended strong as the primary driver was two-fold.  First, we had the FOMC's announcement on Wednesday.  Contrary to my belief, they did remove the ever-focused word "patient," however, they also indicated that rates wouldn't be raised anytime soon.  By stating this, the markets started to relax on all of the fears of "negative impacts of rate increases."  I quoted that because I'm not buying it.  Everybody says they want the rate increases idealistically and yet they're saying everyone will lose money because of it?  It would be the first rate hike and would have minimal impact - not even allowing the 10-year treasury yield climb enough to be a choice over most high-yielding stocks, given the demand for those treasuries.  While the cost of borrowing money would go higher, by no means would it stop businesses from using it if business is picking up as many other overall indicators show. The second major factor, a...

Another week passes and with the continued talks about the strength of the US dollar and fears of interest rate increases happening sooner, rather than later appear to be putting added pressures on the market.  These pressures are starting to feel corrective in nature - meaning the market is in a state where it becomes more likely to pull back while people work to understand how much currency translation will hurt earnings and what happens to the economy when interest rates do begin to rise.  People are pricing in worse than expected earnings results when we step into the next season of calls about 3 weeks from now and frankly, I can't help but feel it becomes the perfect opportunity for companies to low ball guidance only to set things up for easier expectations beats in the future.  While I say this, it's also unwise to dismiss the action taking place, either.  If things are getting corrective, portfolios will be hit.  It becomes wise to have cash and/or ...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Today I purchased small positions in both Pepsico and Citigroup.  Shares of Citigroup were purchased at a price of $51.55 while Pepsico shares were purchased at $94.89.  Clearly both stocks ended the day lower on those prices as the market fell pretty hard on interest rate hike and strong US dollar fears.   Pepsi's stock price has fallen hard after being over $100 earlier this year.  A large part of this is certainly due to the strength of the dollar and impacts I called out that could still impact earnings in regards to the exchange rate of both Russia and Venezuela.  I knew I might be a little early on the move, which is why I...

With earnings season virtually over, it appears we've entered into an information void.  Outside of the occasional Fed or ECB story, we are lacking any true information that people can leverage to decipher how the next quarter is going to look.  With this lack of information, I can't help but notice increased volatility, focus on mostly irrelevant data reports, and more discussions around what kind of decisions people think major entities will be making 3 months from now or more.  While the links aren't obvious, it's hard for me to not think the lack of hard information and the increased volatility aren't linked.  Let me help put a little of this in perspective.  The biggest hub-bub right now is the results from the jobs reports and everyone arguing about when the Fed is going to raise rates.  Honestly, does this really matter to anyone that isn't trying to trade on short timelines?  If the Fed raised rates from near 0% to 0.5% this month, or 3 or...

Last week was extremely busy for my portfolio.  Three companies reported their fourth quarter results and results were rather mixed, as you'll see in my stock analysis reports for each.  In short, retail - especially home improvement is very strong.  Oil is extremely risky going forward - especially offshore drillers where there is a lack of demand and a supply glut that will take some significant time to work itself through. Biotech continues to get attention, but also remains volatile.  I feel I'm in a strong position should the market pause or correct itself, with a cash holding of 25% that I'm looking to put to work, much less that ever impending cash infusion I talk about doing.   With earnings season now done for my portfolio, there should be a period here where things calm down some.  That said, there are some things going on this week worth noting.  Isis pharma will be at a healthcare conference on Wednesday.  With the number of dru...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. On Friday, Isis Pharmaceuticals announced their fourth quarter and fiscal year results for 2014.  The quarter was not only a beat, but an absolute crushing based on earnings and revenue for the fourth quarter.  Earnings came in at $0.25 on $84.9M in revenues.  While compared to the estimates these numbers are enough to boggle the mind, it's important that a very large majority of these results come from the sale of some shared of one of the subsidiaries which Isis is a partial owner of.  This sale was also a factor to the company having $150M more in cash on hand than they estimated going into 2014.  It is important to u...