Waiting.

Brexit? Apparently the Brits don't know much about it either. As far us as though, we'll have to wait and see. We're not so Euro-centric in our portfolio, so it probably won't have too much of an impact on our buying.

Infosys is in executive free fall. The founder and the board have been fighting over how the company has been run, but it doesn't seem to be tanking the stock price so who knows? We still have not triggered our auto sell, order (which had to be re-upped).

And EWZ, you are always on our minds:

You want out now?  No... Ok...

This chart shows EWZ's continued descent into the toilet or right where it was in 2009. Unfortunately we bought it when it was in the 70s.

Here you can see the up and down a little more zoomed-in. There is still movement on it, but it is beyond us as to what that might mean. Basically, there's a lot of theory that drives how people analyze movement on stuff. These tools are "more for short term trading looking for hyper volatile instruments," says a friend of ours who knows about these things. There a bit of risk, because it "comes down to timing as opposed to valuation fundamentals" he goes on to say.


More for short term trading looking for hyper volatile instruments. I'm not a big fan because it comes down to timing as opposed to valuation fundamentals

As far as a buy, if we like the idea of SPY, there are a few dividend options for something related. We like stability, and we like dividends. We like stable dividends.

Profit!

Picking and Choosing

Peace and Love, Peace and Love. Ringo might not write you back anymore, but he'll sell you some shoes. 

Last week, a few of us met and talked about a potential investment strategy. One of us chose the consumer cyclical sector, specifically sports footwear. The rationale was that it is consumer cyclical, and it will do well if the economy was doing well. Also, it is historically strong, and it won't collapse, because, hey, people wear shoes.

So now he looked at which companies are there, and which ones have a lot of potential for growth
because they've been suffering or are potentially undervalued. He chose Sketchers, which was sitting around 19 and this week it is at 21--a bit of a bump. That is pretty good growth, but of course this is just one stock in one week. Originally, it was at 23 and had a 20% drop, which has nearly been recovered. It is important to note that, as an investment, it is good that it didn't go up all in one day, because you wouldn't be able to purchase it quickly enough to reap the gains.

This strategy would have worked well  in the short term. We tend to be a bit lazy, or let's long term. So what we might do is to look at something that we think will have some more long term growth potential.

Taking the same strategy, we took a look at the biggest losers based on price on google finance (google sorts this by percentage loss). Here's what we found:

*McKesson (drug retailers)
Synaptics (computer hardware)
World Fuel Services (petrol)
AmerisouceBergen (drug retailers)
Novo Nordisc (pharma)

Looking at this, you can tell the medical sector took a big hit. So if you look at related companies (in that sector), you see this is the case.

Look at this, the three we should look at are McKesson, AmerisourceBergen, and Cardinal Health.

Another company we pulled up is Synaptics.

You can see that it wasn't the sector that took a hit, just Synaptics.

The proposal is, that we're working through a strategy for making a purchase immediately following one of our meetings. This would not necessarily work for stocks to discuss next week. Therefore, once we have the strategy established we can do a quick run-through and identify potential stocks. This would let us dedicate more time in a meeting to choose one of those individual stocks. If for some reason we can't agree with something that week, we can take the same approach next week, based on the previous Friday's performance. This is sort of a day-trader strategy applied to a longer term investment. Of course, we don't know that and we're just guessing. We're essentially looking at what happened yesterday, so that we can make a purchase the next time the market is open.

As an aside, you can look at the weekend as a sort of long evening, in terms of buying and selling stocks.

Since this is a short-term strategy, we can set an automatic sell limit at some threshold, say 10% or some dollar amount. Also, if we're dealing with risky stocks, we can set a sell limit if it falls below some threshold as well. This helps us avoid another EWZ.

Really, we're trying to figure out what we're doing. Once we know that a little better, we can start implementing this with some degree of confidence.

Profit!

Reading the Tea Leaves: Talking Technical Analysis (Guest Speaker!)

Today, we had a special guest speaker.  A friend of the group wanted to join us for a meeting and give us a presentation on the basics of technical analysis.  Additionally, he shared a website with the team:  www.finviz.com.

The basic premise of technical analysis is that the price contains all of the information that you need to make decisions about buying and selling of equities.  This focuses on the psychology of other traders and is more of a short-term tool.  Fundamental analysis is what one should use for long-term holdings and that's the primary buying pattern of the group.  Nonetheless, there may be some useful things to gather on the educational side as well as a tip or two that the group can use.

Support and resistance are the first two terms discussed.  The first term refers to a price point at which there are more buyers than sellers.  Like a mattress spring, sometimes it will hold, but sometimes it'll collapse under weight.  This can be seen as a floor for the price.  When you look at variability over time, this is the dollar amount that the equity seems to never drop below.  Resistance is the ceiling in this analogy and follows the opposite logic.  The two of these form a range that the stock price will have trouble leaving due to the psychological barrier that they create.  Again, in this technical analysis, we are paying attention to the minds of all of the traders (or their algorithms).

Next, we moved into trends.  As per usual, the trends can be divided into short, medium, or long-term.  The support and resistance barriers form what is called a channel and provide a barrier that the trends will, more or less, obey.  An analysis technique is to find common geometrical patterns in these price movements, and use historical outcomes to determine what is most likely the best action based on the trend.  These geometrical patterns have all sorts of fun names.  Head and shoulders, double top, falling wedge, flag pattern, triangles, as well as cup and handles.  Each has their own technique that should be applied, but we didn't dive into that during this session.

Next, we moved onto the FinViz.  "For the visually stimulated, it's a wonderful site".  The opening page is full of images, ticker symbols, and charts.  The above is a visualization of sector size as well as company size within each sector for the S&P 500.  It's quite easy to get lost down the rabbit hole.

Of course, we had to check out EWZ.  Our speaker didn't have any big suggestions based on the performance.  You can see the resistance and support trending up through September.  The psychological floor was destroyed by something around the start of October and you can see the price collapse a bit.  We should probably look into why that happened.

The speaker was a fan of upward triangles.  This was one of the shapes mentioned previously.  The resistance has just recently been breached.  For the short term, it may be a good buy since people finally seem to be willing to pay prices above the purple line.  Interesting stuff!

To conclude, our group probably won't utilize these techniques too often.  It'll be worth spending a little more time with them because one of the basic purposes of the team is for education.  One takeaway is that we might be able to use these techniques to find an entry point into our next buy.

Thanks again to our guest speaker!

Profit!

Cobra Commander would like to make you aware of a lucrative investment opportunity.

Members present: Brian, Bickford, Danak

After a thorough discussion of the finer points of political commentary in Rocky & Bullwinkle vs. G.I. Joe, we got down to talking about finance.

EWZ hit $40 and is basically oversold at this point, which means that the price is artificially low. This is kind of like the opposite of a bubble--would that make it a black hole? Since we bought it around $72, we might as well hold onto it for a while.

We really need to buy something, anything, anything at all. None of our prospective investments are perfect, but we are trying to balance several factors as we understand them. For example, AAXJ has a high expense ratio but has a better risk to return in its category. CHIQ and MAPIX are really diversified, which is comforting.

We are trying to avoid having high expense ratios, having too much of our portfolio in a single sector or company, or having too much in emerging markets. Diversification does mitigate losses but also gains. This is the double-edged sword of conservative investment. Since we are in it for the long haul, we have anticipated this.

The standard investment advice is to invest heavily in the US economy, and we wondered a bit as to why. We were curious if we are too heavily invested in foreign markets. Is it time to start thinking about making a more domestic buy? The US is still probably the most stable economy in the world, which is reassuring. The S&P 500 is on the upswing, which implies that the US economy is not a good "buy" right now. If we want to catch something on the upswing, we might want to find something that is low or wait for a downturn. In the meantime it seems logical to try and find something that is undervalued.

To get back to our three contenders for the next buy, it seems like CHIQ and MAPIX are good, but AAXJ seems to make the most sense. CHIQ is heavy in consumer cyclical and defensive, which would balance out our portfolio. Its emerging markets in Asia (which is exciting), the returns have been good, etc. There's a lot to like, a lot that is even exciting. However, CHIQ could hit a very frightening bump with all those exciting factors. AAXJ seems more responsible, because it is cheap, it is out of Japan (MAPIX is 22% in Japan), it is well-diversified, and it seems to be performing really well. We could take a look at its peer group of stocks to see if there is an even better buy.

We must remember, that a high risk investment scheme seems good in the long run, but you don't want to end up like COBRA.

For next week, Income Inequality.

Profit!

Norway: fit for some kings!

Norway has a king.  We love kings.  Let's buy some NORW!

Well, let's at least research some NORW.  The fund has fluctuated between $12 and $17 since its inception.  The last dividend was $0.42 back in December of 2012.  Since the price was around $12 then, that's not too bad.  The breakdown of NORW has 50% in the energy sector.  This will throw the sector breakdown of our portfolio a bit out of whack.

While revisiting our spreadsheet breakdown of portfolio weighting, we noticed that EWZ greatly shifted its portfolio around and now is much more focused on consumer staples than energy.  Also, we're now including T in our calculations.  Taking price into account, EWZ has also dropped in terms of the percentage of our portfolio.  Since SPY, ENZL, and T are all up, they are pushing their weight around even more.  We included NORW to see its impact.  It looks like we're very heavy in telecom (T and ENZL) and energy.

For the next buy, we're going to look into consumer staples for something with defensive potential.  We'll also need to try to get the portfolio back into balance.

Profit!

Talk to Hal.

Members present: Brian, Bickford, Danak

SPY is currently doing pretty well, and we were wondering if we wanted to see if it is going to go higher or do we want to lock in our profits. If there is some downturn on the horizon, when do we want to get out? Granted, SPY is an index of the S&P 500, which means that as long as the parts of the fund are doing well as a whole, we are good.

SPY is hovering at $151, and historically it hasn't gone much past $160. We purchased it at $119, so it has been mildly profitable. It might be a good idea to set an automatic sell, say at $140, just to limit the amount that we can lose in the case of a crash. Using automatic orders is good for a small, informal group such as ours. We meet once a week, and none of us is at the computer all day looking at the numbers. Using these tools allow us to keep a watchful, robotic eye on our money.

EWZ is steady.
ENZL is humming along, as is ATT.

Now, on to the problem of figuring out where to put our money.

We took a look at a few different funds, and did some reading. A while back, we were thinking about investing in HILO, an emerging markets ETF. It is billed as a low-volatility, emerging market, dividend ETF. Also, we looked at EELV and EEMV. HILO is unfortunately a little more "expensive," because it has a high expense ratio. The fund is performing well, but it drags a little because it has to work that much harder to make up for the higher expense ratio.

Next week we should delve further into these funds, and maybe even make a decision on a buy.

Profit!

Yousef forgets to write the minutes [insert joke here]

We started talking about retirement, and some among us are less inclined to crunch the numbers for fear of realizing they will be absolutely destitute, so we crunched some numbers. Here's the take-away:

A pension plan is a stable option, if you can secure one. However, it hinges on the idea of not leaving that job before retirement. If you do go with a pension plan, you need to take the few minutes to look at the calculations of your benefit. It is not as painful as you think...promise. Also to consider, is what happens should you leave and take on another job.

Stocks:

SPY is still doing well, still above the [rising] DMA.
ATT is doing okay, even if a little down--still getting dividends.
ENZL is still going up.
EWZ is still doing it's crap self.

What to buy next?

Profit!

There's one thing I'm certain of/Return.../I will.../to old.../BRAZIL!

Members present: Brian (& Bunny), Bickford, Yousef

So EWZ dropped quite a bit midweek (see Brian's previous post), and it brings up the fact that we should be aware of what we have. We have been going with ETFs, to add to the diversification, but those funds are composed of many bits. It would be helpful to be aware of what those bits are, so that we can do that important research. 

EWZ: Two major components of this fund, Petrobras and Valle, sucked this one down a bit. 

SPY: Over the last five quarters we have earned about $13 dividends. Also, the share price is up  to about $140--purchased at $119.

AT&T: We have gotten a dividend of about $7!

We spent some time poking around the Scottrade account to take a look at how our portfolio is doing. Regrettably, Scottrade only allows one person at a time to be logged in. While this makes sense for security reasons, it also fails to recognize that people may be doing this, as we are, on the Internets. 

The conclusion we came to is that if we were to cash out our entire portfolio, after fees we would make $4.76, collectively. Hey, this is a positive number. Free learning experience, right? Well, not free, we would make a $1.59 on the deal.* 

*Apparently, through some tax voodoo that we don't care to understand or explain, we might be out $0.80. Thanks a lot, Uncle Sam!

Oh fine, we knew you'd be chomping at the bit for this tax magic, so here it is:

The total gains are $46.76, less $42 for trading fees. This gives us $4.76. We divide these winnings by 3 to get $1.59 a piece. However, we have to look at taxes on the gains. Each gained $15.59, which for taxes gets rounded to $16. This is taxed at a rate of 15% (capital gains), giving a tax bill of $2.40. This means that we are in the hole about $0.81 a piece. 

For next week, 

*Maybe Yousef will do his taxes. 

*Figure out some topics for educational meetings.

Profit!

Eu nao fala Portuguese. Maybe I would be able to do better research.

One of our holdings, EWZ took a big drop the other week. We purchased it for 70ish and then it immediately dropped. It had worked its way up from around a low of $51 to $70 and now it has dropped again to the mid $60s. I wanted to do a little research as to why this might have happened. http://community.nasdaq.com/News/2012-03/tax-dispute-keeps-vale-and-all-of-brazil-too-hot-to-handle.aspx?storyid=126635 According to this article, both Vale and Petrobras are having issues. Vale is having tax disputes that potentially leave it liable for a size able portion of their market cap. Petrobras is having profit issues that I'm too lazy to research. Now, these two companies are the largest holdings in EWZ to the tune of 30%. This is a lesson in knowing what is under the hood when you buy something in the ETF envelope. We've stressed the idea that diversification is important because an unexpected turn of events could do some damage. We'll talk about this at the meeting. It is always said that a big drop is much less likely after another big drop. Who know if these risks have been totally priced in. The results of the tax issues with Vale are likely to have a large impact on this portion of our portfolio. http://www.forbes.com/sites/etfchannel/2012/03/08/ewz-large-outflows-detected-at-etf-3/ This article points out the incredibly large outflow of money from EWZ. Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares MSCI Brazil Index Fund (AMEX: EWZ) where we have detected an approximate $67.2 million dollar outflow — that’s a 0.7% decrease week over week (from 152,950,000 to 151,950,000). That seems like a pretty quick move. It still appears that we're above the 200 DMA, if that is of any consequence. That's all for now. Profit!

KOL Finance Meeting Minutes 01 28 12 Check yo credit, before you wreck yo credit!

Members present:

Brian, Bickford, Danak

Bickford was checking his crtedit score, because he is a tidy financier, and it brought up the point that not all credit scores are created equally. You really want the FICO score, since it is regarded at the standard. You are going to have to pay, and make sure you go to the FTC website and plow through their links, in order to avoid the [not] free credit report sites, and which are legit and not. You are looking for your annual credit report. You are allowed one per year, per company, under federal law. In certain states you are also granted an additional annual credit report. To be clear, though, if you want your credit SCORE, you are going to have pay. 

*Also, if someone pulls your credit score, say, if you are applying for a loan, you are allowed to request the credit report. The company pulling your score is legally required to provide you with a basic report, with the scores for each company. 

ATT has not changed much, which is what we want. We purchased this as an experiment in earning dividends, so there's a success!

EWZ is making more progress on the way back up. It is not quite back to where we bought it, but it is making slow progress. We bought it about $72, and now it is about $66. If we had more shares of this, it would be a tragedy, but we're learning, right? The 50DMA is on the upswing, and the 200DMA is about leveled out. This points to the stock stabilizing, so hopefully Brazil will get its shit together, and start making us some dolla-dolla!

SPY, oh SPY, you are almost pack up to the peak that it has been at when we first bought it. 

We didn't really buy any of these to get huge gains, and really, we were just hoping that we wouldn't lose any money on the deal. So far we have done a pretty good job not losing our heads on this. That brings up the ever-present discussion of the next buy. Since we have played it safe, do we want to go with more growth (read: risk) or more diversification (read: keep shirt and pants)?

And here's a neat blow-by-blow for the recent federal reserve announcement to keep rates low until 2014. Fun reading, to be sure. 

For next week: 

We should take a look at this article from Jim Rodgers, in particular we should take a look at what this means: 

Brazil is wonderful and I am very bullish on commodities. These two are commodity countries, but Brazil is normally not a very well-managed country and their new government is making many mistakes and of course the market there was very high. 

Fun, no? So what went wrong in Brazil?

Also, should I do my own taxes? [Lifehacker]

Profit!