Category Archives: Stocks

by | January 6, 2014 · 2:00 pm

January Effect

The so-called “January Effect” is not what is was anymore. It is not so important as it was and more and more people are using tax-sheltered retirement plans, and that is one of the most important reasons why they tend not to sell at the end of the year for a tax loss.

Earlier, the “January effect” affected small cap stocks much more than the larger one. This trend is declining much because the investors have adjusted for it.

Definition:

A general increase in stock prices during the month of January. This rally is generally attributed to an increase in buying, which follows the drop in price that typically happens in December when investors, seeking to create tax losses to offset capital gains, prompt a sell-off.

Please note that the optimism in the market right now is historic. The charts show us that we are very close to a tipping point, but it could take some time before a major reversal occurs.

Price is always the most important and the most valuable indicator. The price in the indexes must show some reversal pattern on a daily chart, but until then, the uptrend remains intact.

January 2013 was strong, but in the last 15 years it has not been that strong. December has been a very strong month the last 15 years. How will january 2014 be? The first trading day of 2014, all the major indices was trading lower. It is the first time in six years the S&P 500 and Dow ended the first trading session of the year in red territory.

The optimism in the market tends to be very strong in the early stages of a bear market, and the charts tells us the truth. It happens again and again and again. We saw it in 2007. People poured more money into different U.S stock funds in October last year, and that is more money than any time in at least 7 years. Keep in mind that this includes the 2007 stock market top.

News today: ISM Non-Manufacturing PMI & Factory Orders at 10:00am.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | December 27, 2013 · 1:52 pm

Prepare for next year

It was not so hard to earn money in 2013 if you invested in U.S stocks. 9 out of 10 stocks in the S&P 500 was in positive territory. But everything associated with gold gave you losses. Did you sell the gold related investments in 2013 and what are you gonna do with it next year?

The gold is down about 30% in 2013, so owning a stake in a gold mine was not the smart way to make money this year. The worst U.S large Cap stocks was Newmont Mining. The second largest gold producer is down about 50%, and 30% of its corporate office staff is eliminated.

They are not only building cars in China. They are building factories to meet the demand for cars because the sales of automobiles are surging in China. The main partner of Ford Motor is Chongqing Changan Automobile Co. (000625). Changan`s earnings per share is up 400% and are the best International stock!

To be an investor is like being a school student. You have to do your homework every day. I don`t say you have to follow every stock you have in your portfolio with every tick of intraday trading.

What I prefer is to follow the stocks and the stock market for important changes over time. Sometimes it is important to evaluate and update the portfolio, like now, in the year end.

You can save money and take advantage of last minute tax savings in preparation of your portfolio. If you do all the things alone, you may do some work. You have to prepare your portfolio for the next year. I have created a few things to consider:

  1. Tax planning. Take a good look at your portfolio and check your winners and losers. You can offset capital gains with capital losses. If you have lost everything in one stock, you can sell it before the end of the year to offset any pending gains you may have on other stocks. Check the IRS rules and talk with a tax adviser before you take any tax decisions.

  1. Goals. What is your goals for 2014? What have happened so far this year? What do you think will happen next year? What is your plan for next year? Do you want to spend more money in the financial markets? How will your economy be next year? marriage or divorce? Some kids? What about you family situation? Some dramatic changes in 2013, or next year? You get the idea. Create a trading plan for 2014.

  2. The right balance. Do you have all you eggs in one bag? What is your mix today. Do you only go for stocks? Do you have bonds? Currency? Do you have the right mix in your portfolio or do you need some adjustments?

2013 have been a great year in the stock market. Many investors have done it better than the market in 2013. Is this going to continue next year? Try to follow the market and read the news and do as best as you can to understand them. Don`t always listen to everything people say on TV, and think by yourself. Be smart and look for great opportunities and be a winner in the market next year!

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | December 13, 2013 · 2:37 pm

M&A (merger and acquisition)

As I wrote about earlier, you must look for small cap stocks in the Russell 2000 now. It is risky, but high risk means high gain, and you have to spend money you can afford to lose. So why small cap stocks?

You see, America is for sale and that is for the highest bidder. What I am talking about is really good companies out there. The companies that no one is talking about. The cheap one. The innovative one.

There is a lot of money out there waiting for good investments. Many of the great companies are searching for the right small cap stocks. Why? They simply want to thrive by purchasing growth.

Take a look at Google. For example, they expanded and bought Youtube.com. Everyone is afraid of Google. They are a great example of a model for what a media company needs to be in order to be competitive in the future.

Cisco was smart enough to buy companies with great talents instead of developing them themselves. Cisco have done this over 140 times since 1993. They are infusing new ideas and new ways of thinking by doing it like this. It makes them strong and competitive. Google seems to do exactly the same thing and that makes them stay ahead of a rapidly changing competitive landscape on internet.

The really biggest day in e-commerce in history is Cyber Monday. $10 billion was spent from about 70 million online shoppers. That`s an increase of 18%. 30% of the purchases came from a mobile device. 80% of those came from an Iphone or iPad. unbelievable!

And here is the catch: Social sites generated only around 1% of the e-commerce sales on that day. An increase of only 2%. So, E-commerce is the real big thing. It`s business. 17% of the sales came from Email. That`s pretty nice.

Facebook, Twitter, Instagram and Pinterest are popular sites and people still think that social media is a marketing must. The numbers are falling and the money is not in here. Social media is better for branding, networking and community building, but direct sales is better other ways than social media. Will we see any M&A in this sector in 2014? Are those big ones looking for small caps?

This is a tremendous investment opportunity and you as an aggressive investor need to play on it. But how? I expect next year to be a takeover boom! You have probably seen it before and know that nothing jolts a stock higher than an unsolicited takeover offer. The stock prices skyrocket on rumors like that.

Who say no to a single-day return of 50% or more? I have many new and exciting companies on the radar, but I can`t tell you what stocks it is. It is a lot of research behind the work of finding the best stocks, so this is what I get paid for.

But I can tell what sectors you should look for. It is technology and healthcare. I expect a lot of action in those sectors next year. I really look forward to 2014. It`s gonna be a funny year. So, I am still bullish!

News today: PPI m/m at 8.30am.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | December 11, 2013 · 1:33 pm

Window dressing

It`s time to look at your stock portfolio. What is your winning and losing stocks? What are you gonna do with your winning stocks, and what are you gonna do with your losers? Do you have a strategy? The fund managers are focusing on two things: to outperform their competitors and to outperform a given sector benchmark.

Every year in late December, many investors, mutual fund and portfolio managers improves the appearance of theirs portfolio / fund performance to make it look better. Mutual funds usually do this before the presentation to clients or shareholders.

Many fund managers like to window dress. They look at their portfolio and sells the big losing stocks. This is good for tax planners. In addition; they purchase high-flying stocks, simply to improve their portfolio. This theory is questionable, because investors can see the actual performance of the fund at a given point of time.

The losing stocks tend to go up when all the investors are selling them. That`s why it can be lucrative to buy the losing stocks at the end of the year. Some mutual funds like commodity funds invest in other stock sectors like some hot sectors at the time, just to disguising the funds holdings. The clients do not know what really going on and what they are paying for.

In a short period of time, this strategy will make the mutual fund more attractive, but in the long run, it is difficult to hide poor performance. As a private investor you can buy some cheap penny stocks to make it look better. As you know, in average of 41 penny stock will double every trading day on Wall Street.

This is why December is so special, and this is why we traditionally see a so-called January effect. There is two reasons for that:

1. Tax loss selling: In (late) December investors sell stocks in which they have losses in order to lower their taxes on net capital gains, thereby further increasing the downward price pressure of losing stocks. In January the proceeds from these sales will be reinvested, resulting in large January returns.

2. Window dressing: In (late) December portfolio managers sell losing and risky stocks and hold cash and blue-chip stocks instead to make their year-end portfolios appear more conservative. In January the proceeds from these sales will be reinvested, resulting in large January returns.

It doesn`t mean that this is going to happen every year. So far, we have not seen any correction and investors are waiting for the FED meeting next week. If the FED start to taper, we will probably see a big selloff. Wait and see. News today: Crude Oil Inventories at 10:30am, 10 Year Note Auction at 1:01pm Fed Budget Balance at 2:00pm.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | December 10, 2013 · 1:04 pm

Dividend payout ratio (DPR)

Not so many investors talks about this metrics and DPR is considered to be a tedious measurement. It looks like an important measurement, but nobody know why. DPR measures what a company pays out to investors and money makers in the form of dividends.

You can calculate like this:

DPR = Dividends Per Share / EPS

Let`s say Company A have paid out $2 per share in annual dividends and they had $3 in EPS, the DPR is 66%. ($2/$3=66%). Younger companies have lower payouts or no dividends at all, than the older one.

The companies that is older do business in mature industries that is still growing and therefore can pay out higher dividends which is the best use of their profits. But again, you cannot look on this measurement isolated, but in relationship to other tools and in context of the company`s industry.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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