Markets were pretty much flat yesterday. No new vaccine or stimulus talks but nothing to panic about either.
Tesla's earnings seemed like good news, but stripping out tax incentives and non-operating income they actually lost money on making cars. Not that it matters with shares up 3% premarket.
Microsoft shares are down, thankfully, after growth slowed. Can't argue with that.
And Chipotle crushed the quarter but shares are down as well - again, logical after the strong run-up.
Futures are looking green this morning, but we'll see if it holds.
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1) The S&P's earnings yield (inverse of P/E) is lower than it's been over the last 10 years. An astute investor might compare this to the 10-year Treasury yield and say stocks are cheap. I used to be in that camp, but most investors are focused on hitting their nominal return and watching absolute P/E levels. So a nimble investor should consider both the relative and absolute numbers. And the absolute numbers point to over-valued stocks.
2) With the Chevron M&A activity this week, I've been digging in to other oil & gas producers. Part of that research brought this chart - bankruptcies by location. Unsurprisingly, it matches up pretty well with where production takes place. Note that the Marcellus Shale in the northeast hasn't produced as many issues as the "Wild West" of Texas and the Permian Basin.
3) The Swiss banking system has long been known for its stable, secretive nature. The rich hide assets there. Swiss bankers are Greek gods of modern times. But something changed after the Financial Crisis. The Swiss joined the free money party like the rest of the world. They began to print. The size of their monetary base is up over 6x since then! Goodness gracious, no more Swiss bank accounts for me!
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I continued to recycle my utility positions - replacing Sempra with more Spire. I also day-traded IWM puts - netting 6% in an hour or so. It was a small, 0.5% position. But still. My long-held IWM short position continues to plague me - along with the other short positions. The little wins along the way keep me from losing my mind. I'm pretty sure I'm right in my call, but am clearly and obviously very early (if not outright wrong).
Spire is probably my top long idea right now. It's down from the $80s where it traded much of last year and hasn't recovered like many of the utilities. I think there's a very high probability that it reaches $70+ in short order - no matter the market direction. 10-20% upside isn't something to sneeze at in this market.
I'm also investigating First Energy (FE) after the stock fell 30% in 2 days following a lawsuit relating to bribery of Ohio officials and a bankrupt subsidiary. There may not be any impact to FE - and the numbers in the allegation are only in the $60 million range. So FE could be a great, speculative buy down here. I bought a small position in call options - and am investigating whether to take a real position in the equity or a larger options position. I think the first leg up (or further down) will happen quickly, so getting the work done quickly matters.
I've also got KMI back on my buy list after shares are down 3%+ because pipeline volumes were down on the quarter. Duh! One quarter of down volumes isn't enough to scare me away, but we'll see if the price keeps dropping and I can snag a great deal.
Lots to do today!
Tesla's earnings seemed like good news, but stripping out tax incentives and non-operating income they actually lost money on making cars. Not that it matters with shares up 3% premarket.
Microsoft shares are down, thankfully, after growth slowed. Can't argue with that.
And Chipotle crushed the quarter but shares are down as well - again, logical after the strong run-up.
Futures are looking green this morning, but we'll see if it holds.
_______________________________________
1) The S&P's earnings yield (inverse of P/E) is lower than it's been over the last 10 years. An astute investor might compare this to the 10-year Treasury yield and say stocks are cheap. I used to be in that camp, but most investors are focused on hitting their nominal return and watching absolute P/E levels. So a nimble investor should consider both the relative and absolute numbers. And the absolute numbers point to over-valued stocks.
2) With the Chevron M&A activity this week, I've been digging in to other oil & gas producers. Part of that research brought this chart - bankruptcies by location. Unsurprisingly, it matches up pretty well with where production takes place. Note that the Marcellus Shale in the northeast hasn't produced as many issues as the "Wild West" of Texas and the Permian Basin.
3) The Swiss banking system has long been known for its stable, secretive nature. The rich hide assets there. Swiss bankers are Greek gods of modern times. But something changed after the Financial Crisis. The Swiss joined the free money party like the rest of the world. They began to print. The size of their monetary base is up over 6x since then! Goodness gracious, no more Swiss bank accounts for me!
________________________________________________
I continued to recycle my utility positions - replacing Sempra with more Spire. I also day-traded IWM puts - netting 6% in an hour or so. It was a small, 0.5% position. But still. My long-held IWM short position continues to plague me - along with the other short positions. The little wins along the way keep me from losing my mind. I'm pretty sure I'm right in my call, but am clearly and obviously very early (if not outright wrong).
Spire is probably my top long idea right now. It's down from the $80s where it traded much of last year and hasn't recovered like many of the utilities. I think there's a very high probability that it reaches $70+ in short order - no matter the market direction. 10-20% upside isn't something to sneeze at in this market.
I'm also investigating First Energy (FE) after the stock fell 30% in 2 days following a lawsuit relating to bribery of Ohio officials and a bankrupt subsidiary. There may not be any impact to FE - and the numbers in the allegation are only in the $60 million range. So FE could be a great, speculative buy down here. I bought a small position in call options - and am investigating whether to take a real position in the equity or a larger options position. I think the first leg up (or further down) will happen quickly, so getting the work done quickly matters.
I've also got KMI back on my buy list after shares are down 3%+ because pipeline volumes were down on the quarter. Duh! One quarter of down volumes isn't enough to scare me away, but we'll see if the price keeps dropping and I can snag a great deal.
Lots to do today!
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