Bought Ford & Silvergate

As we approach autumn, many pundits are speculating about a stock market correction in September or October, citing the season as overly volatile.  I’m not concerned.  Statistics can be manipulated to support any argument.  The way I interpret the data, Sep-Oct is not more prone to downturns, but when they occur, the drawdowns are more drastic.

From a contrarian perspective, the more people that anticipate a market downturn, the less likely the odds that one will actually occur. 

As such, I’m continuing to hold my positions and today I added the following two stocks to my portfolio:

  • Ford (F)
  • Silvergate (SI)

Also, the acquisition of Proofpoint by Thoma Bravo was finalized on 8/31/2021, so PFPT is no longer being held in the portfolio.

Invest with caution and enjoy the harvest season.

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S&P 500 personality hasn’t changed

The S&P 500 personality during the COVID Recovery remains the same:

  1.   Media promotes a scary scenario (Riots, Inflation, Variants, etc)
  2.   Fearful investors sell
  3.   S&P 500 drops to 50 day-moving-average
  4.   Smart Money buys the dip
  5.   S&P 500 rises to record high

This exact scenario played out in full last week, from Monday’s dip to the 50dma to Friday’s record close. 

I can’t predict the exact bottoms and tops…so I just hold core positions and add to them during a pullback.  My core positions are concentrated in smaller companies that are favored by the ReOpening, thus they are risker than the general market and more subject to frightening headlines.  So far the risk has been profitable and I think the big payoff remains with the ReOpening trade.

I find the Oil sector particularly attractive right now.

Last week SolarWinds (SWI) completed its spinoff of N-able (NABL); I’m holding both positions in my portfolio.

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Summertime volatility but AUTOMATION is the Long Term Trend

Today was a bad ending to a bad week.  But don’t despair…

The acquisition of Luminex (LMNX) by DiaSorin was completed 7/15/2021, so LMNX has been removed from my core holdings.  I’ve used those proceeds along with any new money to continue reinvesting in my existing positions. 

Short term the market is choppy, especially for the more volatile Small Cap stocks and the ReOpening Trade.  I’m not concerned. 

Shortages, COVID Variants, FED Policy Flip-flopping…these are all noise & static…that depress the Stock Market, but for the patient and disciplined, it creates a buying opportunity.

The pandemic has hastened the advancement of trends that were already occurring…namely AUTOMATION.  Productivity is enhanced by automation, and productivity is the key factor that drives Long Term profitability. 

Raytheon (RTX) is an example from the COVID90 portfolio.  RTX is down almost 7% from its June high.  The stock price is currently below its exponential short term and 50dma.    Am I worried?  No.  Do I plan to sell?  No.  RTX has excellent long term potential.  The noise & static that are currently dampening the price are short term volatility.  The stock price will eventually find support, I don’t know where, maybe at the 100dma, or perhaps the 200dma.  Rather than panic and sell, I’ll patiently wait, and use the dip as an opportunity to add to my holdings.

Here’s an excerpt from a recent Wall Street Journal article:

“Raytheon Technologies Corp. RTX, the biggest U.S. aerospace supplier by sales, laid off 21,000 employees and contractors in 2020 amid a drastic decline in air travel. Raytheon said in January that efforts to modernize its factories and back-office operations would boost profit margins and reduce the need to bring back all those jobs. The company said that most if not all of the 4,500 contract workers who were let go in 2020 wouldn’t be called back.”

The layoffs are bad news for the furloughed employees, but it’s GREAT news for the future stock price.  RTX will likely have fantastic earnings…in the future. 

The Wall Street Journal article also stated:

“As with past economic shocks, the pandemic-induced recession was a catalyst for employers to invest in automation and implement other changes designed to curb hiring. In industries ranging from hotels to aerospace to restaurants, businesses have reviewed their operations and discovered ways to save on labor costs for the long term.”

That Wall Street Journal article named five companies that are in the COVID90 portfolio, and it could have referenced nearly every company stock that I own.  I believe they’re all poised to make higher profits because of automation, digitization, and technological advancements. 

So I’m not fretting any summertime stock market volatility.  I’m banking on future profits.

FYI- if you haven’t read my book, The Robots are Coming: A Human’s Survival Guide to Profiting in the Age of Automation, maybe it’s time you should.

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ReOpening Trade has better UPSIDE potential

I hope you’ve been buying the dips.  Despite the negative Media narratives about inflation, FED policy & COVID Variants…this week the S&P 500, DOW & NASDAQ all closed at record highs.

I continue to believe that the ReOpening Trade stocks (like the COVID90 portfolio & other cyclical sectors) still offer the best potential.  While the S&P 500 may have a 5% upside through the end of the year, the ReOpening Trade could move up 10-15%, or more.

The ReOpening stocks peaked in mid-March (see chart).  They’ve been consolidating for over three months.  Their 50dma has flattened, and I believe this resilience will be rewarded with a breakout to a new record high.

…but that’s just my opinion.

If you’d like to meet in person:

  • Oklahoma City area Wealthsteading Meetup:  
    • July 27,  6:00pm
    • Edmond Railyard, 23 W 1st St, Edmond, OK 73003

Let me know if you’re planning to attend so that I can notify you with specifics and any changes. Also, please let me know if you’d like to schedule a private meeting while I’m in the OKC area.

If you find these ALERTs informative, please share them with a likeminded friend AND reference this post on your website or social media channels.


FED policy shift PANIC…buying opportunity?

Hopefully you’re enjoying the start of the summer and not paying attention to the latest Media drama that’s spinning a false narrative about a hawkish shift in the Federal Reserve’s interest rate policy.

This week’s scheduled FED FOMC meeting was touted as a lynchpin event for managing inflationary pressures.  Legendary commodity trader Paul Tudor Jones said, “I think this FED meeting could be the most important meeting of Jay Powell’s career and certainly the most important FED meeting of the past four or five years.” 

Nothing material actually happened, but that didn’t stop the Media from reporting a “hawkish shift” in policy.

On June 10, 2020, in response to some initial lifting of COVID19 lockdowns, the FED said they would hold rates at near zero, and stated, “We’re not thinking about raising rates, we’re not even thinking about thinking about raising rates”.  Their policy was to remain flexible and supportive of a full economic recovery.  It was suggested that rates won’t rise until some point in the distant future, perhaps not until 2024…IF NEED BE.

Now that the economy is reopening and moving towards a recovery, the FED has REITERATED that they’re NOT yet ready to raise rates until sometime in the distant future, perhaps not until late 2023, certainly not until at least sometime in 2022. 

For political reasons, I think it’s highly unlikely that the FED would raise rates prior to the November 2022 midterm elections.

The FED summed up their FOMC meeting by saying, “You can think about this meeting that we had as the ‘talking about talking about tapering,’ if you like.”

The Bond Market doesn’t appear worried, because the 10 Year Treasury yield has dropped to 1.46%; however, the Stock Market is in full panic mode, with VIX volatility spiking above 20.

I see this as a buying opportunity, and yet again a confirmation of the 2021 schizophrenic personality of the S&P 500.   Nearly every month this year has seen a selloff of the S&P 500 down to its 50dma, followed by a rally to a new record high.  I think it’s likely this pattern will continue.

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