It Takes Energy to Make Energy!

Revisiting why we're interested in these ETFs, we looked at Energy as the worst performing sector within SPY.  From a long-term perspective, we believe that alternative energy has a great deal of upward potential and so could be a sound buy-and-hold investment.  We're interested in sustainability at a personal level, so why not spend a little time investing in something you believe in.

To narrow down our 3 potential picks for "alternative energy" ETFs, we put together this table below.

ETF Name	Expense ratio	Top Sector	International Holdings	Yield	Sustainability	Notes
TAN	0.7	Technology (72%) Utilities (24%) Real Estate (3%)	61%	1.82	Low	Middle of the road for Growth vs Value. Massive bid/ask spread (42%).
PBW	0.7	Technology (51%) Industrials (20%) Utilities (13%)	19%	1.33	Low	Mostly domestic.
ICLN	0.48	Utilities (52%) Technology (26%) Industrials (21%)	73%	2.48	Medium	Lowest expense ratio. Highest yield. Highest sustainability. Most diverse sectors.

This approach makes the choice surprisingly easy.  While we believe that the low sustainability scores for TAN and PBW come from the manufacture of solar panels, and the terrible things that go into that process, the long term for solar energy production is a sustainable path.  ICLN's utilities mean that it is investing in companies that use the solar panels and wind turbines and do not necessarily manage the production of this hardware.

The other factors listed in the notes really make ICLN stand out when it comes to our style of investing.  We'll spend a little more time next week making sure that this is the direction that we actually want to go and maybe get around to actually making a buy.

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

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!