Investment "Logic"

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. The purpose of this discussion and review is to analyze the trades I made in 2015 - what went bad, what went well, and what's still undecided.  Hopefully we'll be able to glean some lessons from the experiences I've had and use those to become better in 2016 - so let's dig in.  Below are all of the trades I made this year.  I'm going to try to break things down stock by stock, not trade by trade, but I'll do my best to keep all of this straight. Trades Made in 2015 I'll start with the easiest topic to discuss, which was my "win" with NPS Parmaceuticals (NPSP).  As I went into the year, I was up significantly o...

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. 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 ...

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. Ensco PLC announced their fourth quarter and fiscal year 2014 results on Thursday.  The Fourth quarter actually beat analyst estimates of $1.38 by coming in at $1.68 on in-line revenues of $1.16B.  Under normal circumstances or even just considering the difficulties the company faced, these might not be considered all that bad for results.  However, the saying goes it's not how things went in the past, it's what's going to happen in the future and, frankly, the future certainly isn't in need of shades right now.   Now I'll be up front, it's not like it's a surprise that the industry is doing poorly.  Commodity prices were cut in...

As the last week was generally uneventful, outside of the continued macro stories about oil prices and the Greek debt vs. the Euro situation, let's just move straight into next week.  We have an extremely busy week in front of us next week as 3 of my holdings report.  Starting on Tuesday, Home Depot will announce their fourth quarter and fiscal year 2015 results.  Expectations are set at $0.89 earnings with $18.69B in earnings.  While the results will be important, I think the biggest keys will be in regards to what they're seeing now and into their 2016 guidance with the low interest rate market combined with more confident consumers.  I expect we'll hear glowing remarks, but be prepared for a poor stock reaction if the numbers or guidance aren't impressive, as it's run a lot over the last quarter.  On Thursday, Ensco reports their fourth quarter and fiscal year 2014 results.  Expectations are $1.36 in earnings on ...