Market is going like a roallercoaster & only up

Anybody wondering the same as me . The markets are hitting new highs every week and some of the stocks the PE/PS expansion seems to be almost beyond expectations. I do understand that the tax reforms are one of the reasons but any other reasons . I am starting to hedge my positions because some of the stocks seem to have untenable PE/PS and unless they show crazy growth next few quarters.

For e.g. I am hedging some of the stocks like OLED - we have no idea on the Xphone factor yet , ANET - June there will be a judgement hearing so on and so forth and also picked some IWM puts …

any thoughts?

Rajesh

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Market is going like a roallercoaster & only up

The market is but not all stocks are. Saul’s board concentrates on current fast growers which are rocketing as are the fast growers on my wish list. One quarter, 11 out of 42 stocks and ETFs on my wish list made new all time highs yesterday and at least one made a new 52 week high (NVO).

ALGN, BOTZ, EXPO, FDN, IRTC, ISRG, MA, NEOG, ROBO, TREE, XSD

But a large number of stocks are hitting bottom as well, check out these 89 duds!


ALXN   Alexion Pharmaceuticals, Inc.
ANZBY  Australia and New Zealand Banking Group Limited
APA    Apache Corporation
APC    Anadarko Petroleum Corporation
ARLP   Alliance Resource Partners, L.P.
ARNC   Arconic Inc.
BBBY   Bed Bath & Beyond Inc.
BKE    The Buckle, Inc.
BPL    Buckeye Partners, L.P.
CAJ    Canon Inc.
CBI    Chicago Bridge & Iron Company N.V.
CHK    Chesapeake Energy Corporation
CIG    Companhia Energética de Minas Gerais - CEMIG
CJREF  Corus Entertainment Inc.
CLB    Core Laboratories N.V.
CLH    Clean Harbors, Inc.
CTL    CenturyTel, Inc.
DBD    Diebold, Incorporated
DO     Diamond Offshore Drilling, Inc.
DRQ    Dril-Quip, Inc.
DVN    Devon Energy Corporation
EEP    Enbridge Energy Partners, L.P.
EGN    Energen Corporation
ENB    Enbridge Inc.
ENDP   Endo Pharmaceuticals Holdings Inc.
EQT    Equitable Resources, Inc.
ESRX   Express Scripts, Inc.
ESV    ENSCO International Incorporated
ETN    Eaton Corporation
ETP    Energy Transfer Partners, L.P.
FCX    Freeport-McMoRan Copper & Gold Inc.
FLS    Flowserve Corporation
FTAI   Fortress Transportation and Infrastructure Investors LLC
FTI    FMC Technologies, Inc.
GE     General Electric Company
GEL    Genesis Energy, L.P.
GG     Goldcorp Inc.
GILD   Gilead Sciences, Inc.
GOGL   Golden Ocean Group Limited
GPOR   Gulfport Energy Corporation
GRA    W. R. Grace & Co.
GWR    Genesee & Wyoming Inc.
HES    Hess Corporation
HMC    Honda Motor Co., Ltd.
IMO    Imperial Oil Limited
INT    World Fuel Services Corporation
KOF    Coca-Cola FEMSA, S.A. de C.V.
LUK    Leucadia National Corporation
MRO    Marathon Oil Corporation
MUR    Murphy Oil Corporation
NABZY  National Australia Bank Limited
NBL    Noble Energy, Inc.
NBR    Nabors Industries Ltd.
NE     Noble Corporation
NEU    NewMarket Corporation
NOV    National Oilwell Varco, Inc.
OII    Oceaneering International, Inc.
OIS    Oil States International, Inc.
OMI    Owens & Minor, Inc.
OPK   
OXY    Occidental Petroleum Corporation
PAA    Plains All American Pipeline, L.P.
PBI    Pitney Bowes Inc.
PG     The Procter & Gamble Company
PHI    Philippine Long Distance Telephone Company
PRGO   Perrigo Company
PSO    Pearson plc
RDC    Rowan Companies, Inc.
RIG    Transocean Inc.
RL     Polo Ralph Lauren Corporation
RRC    Range Resources Corporation
SKT    Tanger Factory Outlet Centers, Inc.
SLB    Schlumberger Limited
SM     St. Mary Land & Exploration Company
SPN    Superior Energy Services, Inc.
SRCL   Stericycle, Inc.
SSL    Sasol Limited
SSLTY  Santos Limited (ADR)
SSYS   Stratasys, Inc.
SWN    Southwestern Energy Company
TEF    Telefónica, S.A.
TEVA   Teva Pharmaceutical Industries Limited
TGI    Triumph Group, Inc.
UGP    Ultrapar Participa??es S.A.
UNT    Unit Corporation
VRX    Valeant Pharmaceuticals International
WFT    Weatherford International Ltd.
XOM    Exxon Mobil Corporation
YZCAY  Yanzhou Coal Mining Company Limited

These stocks are from the default BMW Method buy side screen. Most seem to be in energy but several were on my fast growth wish list a year ago (BKE, CLB, GRA, GWR, SRCL).

http://bmwmethod.com/screens/screens.php?side=buy

What might be happening with the indexes is that fast growing stocks of huge companies like Apple and the Internet darlings have a commanding effect while the shrinking ones, being smaller, have less. It might also be that index funds and ETFs that are distorting the market since the faster a stock grows the more of it the index fund has to buy. Indexes like the S&P 500 drop duds in favor market leaders and when they do indexers have to follow suit amplifying the effect.

With so many new index funds and ETFs I wonder if the indexes are comparable to ten or twenty years ago. While “this time it’s different” are dangerous words, markets do evolve.

For e.g. I am hedging some of the stocks like OLED - we have no idea on the Xphone factor yet , ANET - June there will be a judgement hearing so on and so forth and also picked some IWM puts …

I find timing to be a very difficult gambit except when there are very well known patterns on a chart which is not very often. I often consider hedging but I prefer to stay the course in the belief that my stocks are solid companies that will survive the next crisis. High tech, for example, is the fastest growing sector of the market but technologies are often short lived and darlings can easily crash. I generally avoid individual high tech stocks in favor of high tech ETFs. In healthcare, the second fastest growing sector, I avoid equally finicky biotech but have several individual stocks that are low volatility. I find this kind of structural “hedging” preferable to buying or selling hedges.

Denny Schlesinger

19 Likes

Think about the index fund effect, if and when it goes into reverse it will do so with the kick of a mule. Why? When things are going north everyone is adding leverage. When things start going south stop-loss orders kick in accelerating the decline, then margin calls force sales, covenants are broken forcing more sales. It’s the kind of chain reaction that was so evident in 2007-08. One mitigating factor is that mark-to-market accounting is no longer in effect having been discontinued in 2009, just before the market hit bottom.

Denny Schlesinger

5 Likes

This constant up business is at once exciting and a little unsettling.

Take me for instance. Made my first stock purchase in November of 2014. Have built to my targeted ‘full’ portfolio of fifteen to twenty positions since then. So I’ve been studying and investing at the Fool and Saul’s board for exactly three years. I’m doing this on nights and weekends and on lunch breaks, which is to say I’m not doing this full time, my full time job at the moment is making television for MTV (which should disqualify me even further in the financial world HAHA).

As of yesterday morning (11/22) I’m up 52% YTD.

Which is amazing.

But I am FAR from an expert, and feel like I almost have no business being up this much.

Just FTR…here’s what my port looks like as of 11/1/17. I start with a 5% position. I’ve added a little to the top few along the way as they’ve grown by selling out of the worst performers, but most of this is organic growth.

ANET 16.78%
SHOP 14.12%
LGIH 12.31%
ATVI 9.70%
TLND 6.28%
PAYC 5.92%
UBNT 5.72%
SPLK 5.38%
FB 3.38%
SBUX 2.92%
SBNY 2.85%
CASY 2.60%
SKX 2.55%
SWKS 2.55%
BOFI 2.41%
CYBR 2.14%
TWLO 2.14%

This year I’ve sold out of AMBA,INFN, CRTO, KITE, WFM, CSTE, HDP

8 Likes

It can be quite the ride for sure. Feeling pretty on top of the world myself as my portfolio has “set me free”, as you know. I realize it could all come crashing down but I also have the entire Fool community this time to get me through the next down turn. And you are far far far ahead of those who feared to tread in the investing world or got scared out. Stay strong.

Peace,
Dana

4 Likes

Enjoy the good times, endure the bad, and know there is life up the next climb.

Know when to sell based on bubbles or technology disruptions or market TAMs shortening or otherwise fundamentals changing so current valuation no longer reflects future value, limit your margin (mine is currently 1.5% I use it only for flexibility while
I have cash in transit) limit your naked option bets, and look at historical charts of truly dominating companies even through and beyond the housing crash. Studying disruptions like with AOL and MSFT and many others is so informative and understanding how superior business returns are created. Also instinctively learn how the press and analysts work.

Finally don’t live and breath the market. Treat it as your retirement fund and you are not going to retire for a long time. Then be pleasantly surprised some day when you can retire early and comfortably.

Presently I am debating investing more in my house, whereas you can probably guess where I have put all my money the last 2 years.

If I pay off my mortgage it is the equivalent of a tax free 10% dividend for 20 years plus appreciation given my current payment, mortgage amount, and term left on mortgage.

But that is simply a shorter term diversification as the market will always be my prime focus. But now looks like a good time to divert resources, at least somewhat.

Taxes play into this, as if I sell large tax consequences (it also disciplines one) but so does study of history combined with application of intelligence as to longer term goals.

Most people talk patience and long term perspective but few practice in the end. With all the incredible trades I have made over the years, long term investing in the best dominant, singular, growth companies, knowing the rules of sale, beats them all and is tax free compounded returns.

Reduces stress as well and frees your mind to focus on other things like Vikings v Lions tomorrow.

Tinker

5 Likes

One other thing, if possible, follow the 80 20 Rule. Live on 80% of your income save the other 20%. This is so hard for younger people these days with huge student loan burdens. My loans are still more than $100k but that included 5 years of grad school and my chronic laziness. Fortunately I have been successful so not a big deal (did not look that way at first).

But if you can do it, it is the surest path to wealth and probably greater happiness as you will be more grounded as a person.

On the other hand, sometimes you have to go for it as an entrepreneur and make your dreams happen! But I have found my Ford Edge (yes top of the line, I am not a Scrooge) makes me just as happy as the Tesla S I looked at and even took my son out of school to test drive (no his mother was not completely pleased but great bonding experience). Put it all into perspective and act for now but know the future is coming and have patience and PERSEVERE!!! You are here for the long haul people.

Happy Thanksgiving all!

Tinker

5 Likes

If I pay off my mortgage it is the equivalent of a tax free 10% dividend for 20 years plus appreciation given my current payment, mortgage amount, and term left on mortgage.

What interest rate are you paying? I’m at 3.375%, and it’s tax deductible (don’t know if this is going to change). Seems like the last thing I’d do is pay that mortgage down - I earn far more than that after taxes with my investments.

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In re arguments about whether to pay off a mortgage or invest the money, there has been a recent long thread on the topic in the Retirement Investing board. This thread covers quite a few issues and points of view … illustrating that investing decisions are often quite personal and one size does not fit all.

http://discussion.fool.com/mortgage-i-hate-to-ask-32895776.aspx?..

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