Investment "Logic"

If you love wild roller coasters, this week's market was right up your alley.  After opening up on Monday with the Dow down over 1000 points (no, that's not a typo) the market worked it's way back to about even through wild swings both up and down.  Talk about taking lumps and learning lessons!  My broker wasn't functioning the best, plus I wasn't ready for something like this.  As such, I saw opportunities, like Pepsi down around $82, Home Depot, down 20%, Isis registering under $43, Citigroup under $47, and both Honeywell and Cedar Fair at rather juicy prices.  Not a single trade executed, though.  I panicked.  We were down that much, we could go down more.  I should wait for some confirmation that the down side is at least slowing.  It slowed - right back to going up, and then back down, but never to those prices again, before charging ahead again.  The one thing I did do, was finally pull in that cash infusion I had always talked...

Well, it would appear that the correction everyone has been waiting for has finally begun.  The breadth of the market's winners is slimmer than the most economy airplane seat, sentiment, as indicated by CNN's Fear and Greed Index  is so fearful, people might be making bunkers and locking themselves away in hopes of being spared from the apocalypse.  I have to be completely honest here, despite the fact that this correction is very real, I can't help but feel like the reaction is so overdone it's a fright.  Only time will be able to tell me if I'm being smart and rational/factual, or if I'm just stone cold stupid.  Either way, I can't help but feel like the reaction is similar to that of 2008, however, the situation we're in is nothing like it, and therefore doesn't warrant the reaction. Let's start looking at all the facts in front of us, starting with what is driving this selloff.  While the swiftest, and most painful downward moves happen...

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 Tuesday, Home Depot delivered yet another set of solid quarterly results.  Second quarter earnings slightly exceeded expectations of $1.73 on sales of $24.8B.  Same store sales results also beat expectations, coming in at 4.2%.  While the 4.2% is lower than the over 7% result we saw last quarter, the compares were much more complex as well.  Additionally, earnings guidance for the year was increased rather significantly to a range of $5.31 to $5.36.  This is a 13% - 14% increase from last year's results.  Sales were also bumped up to a growth rate of 5.2% - 6% from 2014.  This revision is a combination of both perform...

Another week goes by with the market swinging relatively wildly on news or lack of news related to geopolitical impacts.  While Greece has agreed to terms for bailout version 3, which includes tax hikes and deep spending cuts, China now becomes the focal point as they devalued their currency 3 times this week.  The devaluation is concerning to many emerging market investors because it makes people wonder what does that say about the growth of the Chinese economy.  We already knew it was slowing to 5% or so, but this could be an indication of something much bigger.  Should the economy only be growing at 2%-3% or less, it's no better than the US economy, and frankly, the US is much  safer to invest in at that point.  As such, all companies known for doing strong business in that area are getting hit hard.  Additionally with WTI oil falling below it's previous lows in the $43 range, this accelerates the fears/worries about our own economy going into a...

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 Tuesday, Isis Pharmaceuticals announced second quarter results of $0.29 in earnings on $120.4M in revenues.  The quarter was basically in line with analyst expectations, while cash guidance appeared to be better than expected.  The big announcement (or discussion point at least) was the latest partnering between Isis and Astra Zeneca to collaborate in a number of cardiovascular therapies, many of which are focused around the kidney areas.  This deal does have the potential to be huge for the company, as there are opportunities for up to $4B in milestone payments over the course of a number of years, but I also believe that sounds bigger ...

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. Yesterday, Cedar Fair announced their second quarter's financial results.  They reported earnings of $1.02 off of an reveue base of $377.4M.  Revenues topped expectations slightly while earnings missed expectations slightly as well, mainly due to higher than expected costs.  It's important to note that these mid-year estimations are difficult to calculate with accuracy as the theme park business has only around 135 days of peak revenue generation, which is spread mostly between the second and third quarters.  The swings in expenses and revenues can fluctuate depending upon needs and weather as a minor example of impacts.  On a yea...

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. Yesterday, On Semiconductor announced their second quarter earning results.  They were mixed, as they  met earnings expectations of $0.22, but missed on revenues by delivering results of $880.5M, which was over $10M below estimates.  Most of the estimate miss was related to macroeconomic concerns with Europe and Japan as well as a supply chain issue with one of their customers.  They also saw a slowdown in orders in the last half of June as well, which is a little concerning, given all of the China fears and impacts from their crashing stock market.  There's no doubt that this was a quarter that had budding concerns which only sup...

Next week is going to be extremely busy for earnings calls.  While I will try my best to get through things, this isn't my full time job, so I may not be able to make it through all of the calls and provide analysis and/or won't be able to deliver next weeks portfolio summary. Starting on Monday, On Semi announces their second quarter results.  Considering how dramatically this stock has been pounded, this release and conference call can be huge for the stock.  Anything remotely positive has the potential to send things soaring, however, if earnings miss or, more importantly, guidance indicates a slow down and supply concern and the stock will be quickly looking at a $10 price.  Analysts are expecting $0.22 earnings on $897.4 in revenues. On Tuesday, there are two earnings releases for my portfolio in the morning.  The first is from Cedar Fair, whose stock has been hit lately, likely more in relation to being a MLP more so than for fears or concerns. ...