Math is hard

Were we mathing wrong?

Are we looking at our portfolio performance all wrong? We tend to compare our performance against the S&P 500, or more accurately the SPY ETF that tracks the S&P. Really all of our comparisons so far have been going into Google finance and look at the chart of how our portfolio is doing versus how the S&P has done over that period. Basically, are we doing the math correctly?

Here's what has been sticking for us: If every time we made a purchase it was SPY instead of whatever we bought, how would we have done? Better? Since everything is a moving target with investing, different investment products are valued differently depending on the time. Our idea is to try and look at past purchase dates and compare those with how SPY was doing.

But what does this information get us? What conclusions do we draw? If SPY turns out to consistently best our choices, do we just keep buying that and talk about video games every Saturday morning instead? Probably not. It's good to have some baseline to compare it to, to check in and see how we're doing. What we decided is that it is word trying to figure out how to track this. We won't bore you with the details, but we'll keep you posted on how it is going.

Profit

Magic 8-Ball, or we also know there are known unknowns

There are two types of people in this world. The shakers and the spinners. You know, you have the magic 8 ball, and you need some answers. You think on it. Eat, pray, love on it, and ask your question. And either you're an animal who shakes the thing, making those weird inky bubbles appear that never seem to leave. Or--or you're a careful spinner. You rotate the soothsaying globe, and you get an unsatisfying answer, and you like it. What I'm saying is nobody knows anything, and we're a bunch of nobodys.

Here's the nothing we don't know:

• Weirdly EWZ is up. This is significant because we've lost so much money on it. At this point, we might as well stick with it. This is another case of how you can't predict the future. Like never. 

• So we've got all this healthcare craziness, and we're holding a healthcare ETF. This would be where we make wild predictions and big decisions. Instead, we're going to wait and see, as is our way. 

• There's a lot of craziness going on with Infosys, but it doesn't seem to be impacting the stock negatively. In fact, it's up. 

So I guess we're just buying more SPY.

Next week, a portfolio check and maybe a decision on Infosys, etc.

Thanks Magic 8-Ball.

Profit.

We bought this thing, so when do we sell it?

We're talking exit strategy

We bought Infosys at $14.45 and now it is currently at $14.36, so we've only lost about $2.50 on it. Before we say oops, we have to remember that we've only had it for about a week. Hopefully with some more time, this strategy will bear out better results for this. The next question, is to probably set some sort of automated out both on the high and low end. This would allow us to cut our losses, which is a first for us.

Sorry EWZ...that's the prime example of inaction biting us in the butt.

So when do we get out? If it gains 4%, that would cover our trading costs. Is 10% enough? Sure 10% would be great. As far as a loss point, maybe 10%? It's kind of arbitrary, but at this point it seems like we have to recognize that we don't have a really great handle on how this works, so maybe having something automated is best to give us a direction. We can always revise our strategy as things go along. After all, learning is the primary goal here for us.

We were able to set a three month automatic buy/sell trigger, so we can set it and forget it for a while. Scottrade has all sorts of nifty options for doing this:

We purchased this on the hopes that it was a short term panic. If that's the case, the price will bounce back. However, if it is a more long-term adjustment, it will be going down. We'll see.

Profit!

I Choo-Choo Choose You

It's buy time again. 

One of our members recently had some contract work done on his house, and he found that it was interesting how many levels of people were doing the work. His contractor essential subcontracted to a subcontractor to have something done. There were some communication breakdowns, even if everything eventually got sorted. So watch out when you have work done, and don't be afraid to ask questions about who exactly is doing the work on your house.

But onto our task at hand. It's buy time, and we've been toying around with a biggest loser strategy. 

Last time we picked the most recent day the market was open and looked at the biggest losers. Here's the list from Google Finance: 

The idea behind this strategy is to try and catch stocks that suffered a large hit yesterday, without any long term drop before. The thinking is that maybe the loss is the result of some panic or short-term incident. We are thinking we could catch it before it bounces back. 

Discovery is out because there seems to be a lot of different places that have good reasons to downgrade the stock. 

GameStop gives us pause, because they have been in a decline for some time. Apparently the drop might be linked to poor holiday sales reports, which dropped Friday. It appears that more people are purchasing games online. This doesn't bode well for GameStop bouncing back. It looks like this is a combination of people freaking out and also the company declining. That said, they will be selling a new console in the next few months, which should cause a slight bump. We would have to watch it especially closely to get out before the bump busts. 

Wins has seen such explosive growth recently that it doesn't fit our strategy because we're assuming it is done or close to done growing. 

The problem with Generac is that the basic headlines surrounding it caused us more confusion, and we got scared off. It seemed like a whole thing trying to sort out. 

Infosys is the largest in the group, and the earnings per share slightly more than analysts projected, but the revenue was lower than expected. For some reason this caused the stock to drop. 

Based on the stocks we looked at, Infosys and Gamestop are the most interesting. While GameStop took the bigger drop, Infosys is the larger company. In theory this makes Infosys more stable, and maybe explains the smaller drop. Also, GameStop doesn't look good long term. So considering our risk-averse and slightly lazy approach, Infosys makes the most sense. We could probably make a little more with GameStop, but the chances of us sleeping on something and screwing up are high. 

Given the likely volatility of the Trump Presidency, we could hold off until next Friday. However, by this logic we could hold off indefinitely. Basically, we need to make a decision, so we choo-choo-choose you Infosys!

Profit

I'm a loser baby, so why don't you kill me?

We're taking a look at the items that were big losers two weeks ago to see how we might have done if we had picked them up. We looked at five items:

1. McKesson Corporation
2. Synaptics, Incorporated
3. World Fuel Services Corp.
4. AmerisourceBergen Corp.
5. Novo Nordisk A/D

In five out of six cases, the items did recover some amount. It is a small sample, but at least our top picks were up, and if we had gone all the way with all the stocks we picked, we would have been up. Of course, these are all domestic stocks and we just went through a presidential election, so there are probably some things that are skewed.

Here's how they shook out

	Date we pulled the data	How far they were down on that date	How far much they've changed as of now (11/19/16)
McKesson Corporation (MCK)	10/28/16	-22.7	12.80%
Synaptics, Incorporated	10/28/16	-22.4	3.20%
World Fuel Services Corp.	10/28/16	-13.7	8.90%
AmerisourceBergen Corp.	10/28/16	-13	14.60%
Novo Nordisck A/D	10/28/16	-12.9	-9%
Skechers	10/21/16	-20 approx.	17.10%

Going through the same exercise for today, we looked at the major losers for yesterday, Wins Financial Holdings, Gap, AveXis, Supernus Pharmaceuticals, and G-III Apparel Group. We are trying to find stocks that we believe may be seeing a short term loss. These top five have experienced recent gains preceding the losses. This makes it look like this is just some price adjustment going on. This means that the top five losers don't meet the cut for what we're looking for. In other words, we don't think that these stocks are going to jump up in the short term. Or at least, they would require much more investigation than what we're trying to do right now.

It is interesting that the ones that we looked at this week didn't match what we looked at last time. The stocks that we picked as potential buys in the last few weeks, still look good. Maybe this is a good method for us. 

Profit!

MCK update

MCK, one of the stocks we looked at last week, is up slightly. It was at $124.11 last week, but is it on the way down? Is it a temporary drop? Or is it a price adjustment of an overvalued stock? If it's on the downswing, you can catch the recovery. if it is a price adjustment, you can catch it really won't change. If you could figure that out, you'd always win.

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!

Proctor & Gambling

We're talking about PG's selloff of a lot of its brands, and the impact that had on stock price. We bought some shares of PG before the divestiture, and since then the stock barely trended upward (about a 1% return). So, does this mean their selloff was good for profits? They only reduced their sales by about 15%, even though they sold off 95 of 160 brands. This made them a leaner company. This was supposed to make them more profitable.

We bought PG as a proxy for the whole the consumer staples sector, which would bolster the overall stability of our portfolio. We were betting that it would mirror or do better than that sector. Although that didn't really happen (a few of their competitors in the sector outperformed PG), it didn't do much worse. It has been pretty stable. Looking back, we missed some opportunities to make more, but it would be nearly impossible to know that at the time.

As a side note, it didn't hurt that PG pays dividends. Their dividend yield is 3.2% of the stock price, which isn't bad. This means that we get 3.2% on our investment each year.

PG wasn't selected because we thought a selloff would happen, and then it happened, and it didn't really do much for profitability. So ultimately, even though the stock didn't increase like we were anticipating, dividends saved us again. The stock price didn't really go up all that much, the dividend yield didn't change, etc. This is just another case of the market being unpredictable and not necessarily rational.

Treat Yo Self

The word on the street is that the Fed is thinking about raising interest rates, since the jobs numbers have been better. That could mean things will be cooling down a bit. Eventually they will, of course, so then we can invest in candy and cosmetics to rot our teeth and look good for the party at Ground Zero. These investments tend to do well during a down economy. The idea is that you can treat yourself to these comforts, even when the world is falling apart around you.

Also, we're headed for another buy, so we need to consider our next move. It was noted that we have never bought any bonds, and there may be something to be learned from a non-equity buy. Also, we haven't done any commodities. If only we could figure out the McRib cycle. One problem with buying a commodity is that it would mess up our diversity, since our portfolio is so small.

We've always been concerned with diversifying our portfolio, and one of the original purposes of this group was education. Maybe we need to focus on the parts of this that we don't yet understand, rather than continue our march towards the perfectly diversified portfolio. Before our break we did spend some time looking at a single company. We ended up going with Proctor & Gamble (and we purchased AT&T in the past). WIth both PG and T, we purchased them as proxies for other things (sector, dividend). We didn't pick these up as growth engines, but rather for their stability. The next step may be developing skills for selecting something that we do expect to grow. Another idea is to focus on building a good retirement fund, with bonds and treasuries and the like. Either way, we should take some time looking into non-equity (stocks) investments.

ENZL and EWZ basically still cancel each other out.

SPY is still up significantly from where we picked it up, even though in the last few days it has dropped a bit. Every drop makes people think its the end.

VPU, NORW, and PG are basically being stable. Mission accomplished on those.

T is still up more than we expected.

Hey, we noticed this article linked on our sigfig account. It's pretty interesting:

P & G to shed more than half its brands

This adds to our knowledge from reading the annual report. From that, it looked like PG was trying to get more diverse internationally, and now they seem to be trying to get rid of stuff that isn't overwhelmingly profitable.

Profit!

The skating rink will give me five tokens for every A on my Annual Report.

We Say So: Prehistoric Procter & Gamble

We continued taking a look at the PG Annual Report, and stumbled across this article from The Motley Fool about what could be gleaned from such a document. There is a lot of biased and extraneous information for our purposes, but there is information that could benefit us as potential investors. It's worth a read. This sort of research is good experience for choosing investments.

Then we just started talking about how many product lines a glom-co like PG has. It is staggering. Also interesting was the disparity between profit margins of different divisions. 

Table courtesy Fool.com 

 

The grooming division is killing it with a 29% profit margin. I guess you can convince anyone to spend extra on lipstick.

Again, the takeaway here is that we have a litter clearer idea of what we can look for in an annual report to get a feel for where a company might be coming from.

Profit!

I know words have meanings, but I just don't know what I mean anymore...

A.G. Laffley, Chairman of the Board of PG.

When we started this experiment a few years ago, it seemed like a good idea to become a little more financially literate. Looking at our small portfolio, it seems like we are meeting our goal of making a small profit on conservative and diversified investments. Overall, it is trucking along nicely.

A more knowledgable investor friend suggested that we take a good like at a quarterly earnings report for a stock we own. It seems like a good way to start to understand stuff at the next level. A while back we did participate in a proxy vote.

As we looked through some of the financial data for P&G, we were a bit overwhelmed with all the information. It was a bit of a rabbit hole situation. However, it proved interested, if somewhat daunting. Looking at dividend charts, we speculated that an increase in dividend may be to match the increase in stock price and keep the dividend yield consistent.

Another thing we noticed is that the net sales by geographic region indicates that their profits are largely tied to international sales, and the events that guide them. With a big corporation like this, does this play into our view of diversification of our investments?

It's almost like a glomCo. such as this operates as its own portfolio.

Profit!

VDC, VCR, and Gambling on Procter & Gamble

Not THAT VCR.

Today we are looking at the single stocks that make up the biggest holdings in VDC and VCR. With VDC, number one is Procter & Gamble, followed by Philip Morris, Coke, Pepsi, and Wal-Mart. VCR has Disney, Amazon, Home Depot, and Comcast at the tip. On principal a few of these just don't seem like something we are interested in.

We like Procter & Gamble and CVS for VDC and Amazon and Home Depot for VCR.

Let's look at Proctor & Gamble

CVS is currently about 50% above their low for the last year.

Amazon is just too expensive per share, which doesn't fit our buying amounts (we'd only be able to buy 1-2 shares). Additionally, it is has almost doubled in price since May of 2012, which doesn't make growth potential seem likely.

When we're comparing Proctor & Gamble to VDC, we should look not only how they are performing relative to one another, but also at how their respective dividends are paying out.

PG is about 8-9% underperforming.  The yield for PG is 3.1% and VDC is paying out 2.24%.

PG has some qualities that we value in our risk-averse investing strategy. It has a low beta and a decent yield. It might be time to do a little reading on it to get a sense of where it might be headed as a company.

Next we look at Home Depot and CVS.

Profit!

Got my business socks on...

It's business time...thanks, New Zealand!

Apparently most of our profits have come from ENZL, the New Zealand ETF we bought. Thanks, Kiwis! Then there's SPY, which has been doing excellent.

This article is an interesting take on putting together an investment strategy. It might be some good reading.

We are taking a look at TDC, Teradata Corp, a data mining, storage, consulting, etc. company.

• Pros: This company seems to be involved in a lot of different industries, which would make it possibly more resistant to changes in those particular industries. 

• Cons: No dividend. 

• Good/Bad: We are not heavy in technology. 

There is nothing really pulling us toward this particular stock, however it is an interesting thing to invest in. Perhaps we can find a more undervalued or attractive company to invest in that does the same sort of things. 

Next week, we take a look at TD, Toronto Dominion Bank and some of the other Avi stocks.

Profit!

Keiger Index... What Did You Say???

Attendance:  Bickford and Brian

This was a very quick meeting.  A friend of the group asked for the Treynor Measure for our portfolio.  Unable to answer, we took an action item to figure it out.

In the above article, we found a formula to calculate this method of portfolio measurement.

(Portfolio Return – Risk-Free Rate) / Beta

T(Market) = (.227-.008)/1 = .219
T(Portfolio) = (.072-.008)/.65=.0984

The returns/beta were pulled from our SigFig account.  "The Risk-Free Rate" is a 6-month Treasury return.  The article mentions that the treasuries are a good proxy for this return.  The 6-month version was the closest to a year-to-date.  Originally, the 10-Year was used and it yielded a result where the T(Market) was three times higher than our portfolio.  Changing the time-horizon on the treasuries bumped the difference down to a little over two.  The "Risk-Free Rate" has a bit more of an impact than we originally would have thought.

The conclusion that we should draw from the rest of the article is that we aren't necessarily doing as bad as the percent returns might indicate.  Even though, on a percentage basis, we are comparing a 22% return to a 7.2% return, the reduced risk of our portfolio boosts how we are doing.  In real dollars and with the current marked conditions we are under performing the S&P.  If the conditions were different, then that lower risk might do us some good.

Again, the S&P 500 may not be the best benchmark to use against an internationally diversified portfolio.  Until we find something better we will continue to use it.

The US is a growth center in terms of stock values currently.  With the large amount of international stocks that we hold right now we should expect to not be doing as well as the US.

Next Week:  Slowly moving towards a buy.  Maybe a US buy.  Maybe we missed the boat.

Picking your stocks like your picking your nose.

Members present: Brian and Yousef are watching the markets. 

We have been using http://www.freestockvalueranker.com/ to analyze stocks for being under/over valued, and came across this: 

As you can see, Panasonic has a projected growth rate of 1,298.11%. Their calculations aren't flawed, but it is important to consider how reasonable those numbers are. 

We compared CVS and Walgreens (CVS & WAG, respectively). They both had their ups and downs, but CVS would have been the one to get. 

However, if there were a pharmacy ETF, having a mixture of the two would level out the ups and downs, leaving us somewhere in the middle. We have been having trouble coming up with a single stock to purchase, and perhaps the problem is that at the level we are dealing, it is just too difficult to make a decision. It is important to consider the goal, and for us, it is mainly educational. On the other hand, we are also pretty risk-averse. We have chosen some broad investments (SPY, EWZ, and ATT--solely for dividends). As we increase the size of our portfolio, a single company will become less frightening, perhaps. Maybe we aren't ready for the tenth-grade economy class stock picking game.

Admittedly, this is a more dangerous game that we are trying to play. We aren't ready to quit on it, yet. We have some skin in the game and have something to get up every Saturday morning for, but any losses incurred would be fairly minimal.

Over the past three weeks, we have picked some stocks we know, crunched the numbers and looked at charts to evaluate them. We find some undervalued companies, and then it ends there. When we picked funds we went with an idea or a theme. That might be something to try with this. For example, if we think the Affordable Care act will be good for pharmacies, we then need to pick a company that serves as a proxy for the industry, rather than choose the industry as a whole. The key is to find the company that we believe is best positioned to profit.

For next week, we should choose and research such a an industry.

Profit!

Insert a joke about cramming money in a bunny.

Members present: Brian, Bickford, Danak (see also, natural peanut butter)

We continue our stock valuation exercise. Up today:

Proctor & Gamble

A gander at http://www.freestockvalueranker.com/ calculated PG as overvalued, so we took a look at some of the other "personal products" stocks and came upon Energizer Holdings Inc. (ENR), which sells batteries, razors, etc. Brian found an article about institutional investors selling consumer goods stocks that are near their fifty-two week high. The article mentions how some hedge funds sold off 30 million shares of ENR back in September, where the price was $81, and it has gone up to $90 or since then--so it is always a gamble, right? However, the real question is how this applies to a small investment group like ours.

If we go with the valuation from freestockvalueranker, and we see around 9% growth, this could mean ENR is a good investment, even if we only have six or so shares. Then we took a slightly deeper look at some of the recent news articles for Energizer, and things look okay. Bickford mentioned that the dividend for ENR is a new development. This might mean that they are trying to get more investment, which might be a sign of worry. The conclusion for now is that ENR might be something to keep an eye on.

Next week we should check up on the two food companies we mentioned a few weeks ago.

There's also still:

• Cvs/Walgreens
• Boston Beer Company 
• Craft Brewers Alliance

Profit!

I would gladly pay you tuesday for a burrito today.

Members present: Brian, Bickford, Danak...Darkness shrouds them as they approach a new buy. 

Today we are going to look at another company and analyze some companies that sell the same sort of service or good, in order to determine if that stock is under or over valued. Specifically, we are going to take a look at Chipotle Mexican Restaurant. This means that we are going to compare it to other restaurants that are at a similar level, i.e. not schmancy.

Below is a handy infographic from http://www.freestockvalueranker.com/, which despite it's sketchy name, is a handy tool.

From what we see CCSC (Country Style Cooking Restaurant Chain Co., Ltd.) is undervalued, however if you take a look at the 200 DMA, it looks a bit scary: 

In this case, this doesn't seem like a good investment just yet. However, it might be worth keeping an eye on for some growth. Right now it is a bit risky, especially since it is a market we don't know about---namely Chinese fast food, in China.

Then there's something like Cracker Barrel (CBRL), which we understand and see as having a responsible and clear growth model--always along major highways, always filled with tons of people looking for their eggs in a basket and crap on the walls. A look at the 200DMA over five years says that we missed the boat, though:

As you can see, it doesn't look like their is a lot of unforeseen growth potential.

We took a look at Kraft, but it's only been around six months as KRFT. Wawa is privately traded, so no good for us. Then there's Hormel (HRL), which is undervalued

The search continues. However, it must be noted that we are starting to get comfortable with the process of picking stocks and analyzing them for their potential investment value. It should also be noted that we haven't actually purchased one of these yet.


Profit!

Workin' from the bottom up.

Unilever - Dove, Axe, and Ben and Jerry's?!

Unilever falls under a number of different names with different stocks that go under the working name, "Unilever Group"  We'll look at the PLC, since it is the most affordable.

Rank	Ticker1	Company Name	IndustrySector	Current Stock Price1	Projected Stock Price2based on Projected P/E	Projected Stock Price2based on PEG	Projected EPS3	Projected Company PEG3	Projected Industry PEG3	Projected Growth Rate4	Relative PEG Value5	% Under/Overvalued PEG5
1.	STKL	SunOpta, Inc.	Food - Major Diversified	$6.32	$6.44	$27.77	$0.48	0.38	1.67	34.65%	Undervalued	338.60%
2.	HOGS	Zhongpin Inc.	Food - Major Diversified	$12.85	$19.71	$44.71	$1.47	0.48	1.67	18.21%	Undervalued	247.22%
3.	DOLE	Dole Food Company	Food - Major Diversified	$10.18	$13.28	$12.69	$0.99	1.34	1.67	7.67%	Undervalued	24.38%
4.	LANC	Lancaster Colony	Food - Major Diversified	$71.14	$58.33	$67.50	$4.35	1.76	1.67	9.29%	Overvalued	5.60%
5.	HNZ	H.J. Heinz Compan	Food - Major Diversified	$58.46	$50.82	$41.02	$3.79	2.38	1.67	6.48%	Overvalued	42.80%
6.	UL	Unilever PLC Comm	Food - Major Diversified	$38.61	$31.38	$17.62	$2.34	3.66	1.67	4.51%	Overvalued	119.60%

Unilever is very overvalued according to the PEG calculations which is what we learned that we should use for established companies.  Unilever has over-recovered.  Skip it.

SunOpta is a organic food company.  They do generic foods and seem to run the whole process by themselves.  They sell to both manufacturers and restaurants.  Very broad based company.  This might be where your Publix Greenwise comes from.  In a growing economy, we're guessing that this company could do very well, but we're not so sure about a shrinking one.



Here is a quick comparison to SPY.  We've got some more volatility there.  That stock value may have something to do with it.  This got us to a quick macro discussion about organic food in general and maybe we should look for a fund so that we wouldn't be trying to pick a winner.

We started looking for organic food ETFs and found the following:
http://www.dailyfinance.com/2012/06/19/huntingtons-ecological-strategy-active-etf-first-o/

This rather new ETF contains a group of established companies in what we consider an odd mix.

Another interesting article we ran into had the following quote (http://www.topstockanalysts.com/index.php/2012/03/08/5-misunderstood-etfs-explained/):

"Though some investors no doubt buy these funds because of the utility derived from avoiding “bad” companies, there is a case to be made for these methodologies producing above-average returns over the long run. Companies that stay on the right side of the law and act as responsible corporate citizens are more likely to avoid costly lawsuits and build loyal customer bases–two factors that can boost profitability over the long run."

This is a nice thought.  I'm not sure if it will pan out, but it'd be nice.  Another article on the same topic:
http://seekingalpha.com/article/723161-huntington-s-top-stocks-here-s-why-eco-investments-are-smart-investments

With that, we have covered none of the stocks that we said that we would last meeting.

Profit!

Stock Valuation: Part Deux

Members present: Brian (with Justin) and Yousef

Last week we proposed to look at a company and try to examine the financials in order to put some of our recent knowledge about stock valuation to use. We chose Target. With an established company like this it is best to look at the YPEG, or yearly projected growth. We get this by multiplying the stock's projected growth by their current price.

In our quest to understand stock valuation we stumbled across http://www.freestockvalueranker.com, which seems to pull data and do the math automatically. The problem is that we still don't understand the numbers involved yet. 

Here's a screenshot with all those glorious numbers:

We started to crunch some numbers and are beginning to understand the rationale between something being under- or overvalued based on P/E ratio and PEG. They are two different ways of trying to gauge  whether a company is over- or undervalued. The idea is that an undervalued company is expected to some day reach its value, and you are catching them on the upswing. Sort of like being the first person to like an awesome band before they become popular. 

We obviously need to continue working through this before we are prepared to make financial decision based on these valuation methods, but the hope is that we will be able to do that soon. 

On another note, the particular type of sell that we tried to use on our SPY stock saved us from dumping it before it grew a bit. 

No profit now for future profit later.