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A sampling of some of the analysis I've made that has come to pass is or happening now...
Welcome. The content below is free to the public. It might be worth what you are paying for it. Having studied economics and being in finance for over two decades, I have learned that only one thing is certain - that almost nothing is certain. As we endeavor to come up with our best analysis of the world around us, the opportunities and risks, we have to try to overcome a myriad of issues including our own ignorance, biases and emotions. What follows are my attempts to overcome those obstacles. Welcome to my view - publishing Monday and Friday afternoons.
"In relation to the 201 solar tariff decision, the product exclusion process was published today. We will continue to work through this process with the Administration to convey that only SunPower can make a copper-plated, interdigitated back contact solar cells and that with an exclusion, SunPower can further invest in research and development to improve on its market-leading efficiency and performance while demonstrating America's continuing leadership in solar energy innovation. Unfortunately, we are already seeing a negative near-term impact from the ruling as the increased costs due to import tariffs have delayed certain 2018 projects and made other projects uneconomical. We have also put our planned $20 million U.S. employment expansion on hold and are considering other significant cost saving initiatives to lower our overall expense structure and improve our financial performance. Given the early stages of this review, we are not prepared to discuss specific actions at this time but expect to communicate our plans on or before our next earnings call. Our focus has been, and will continue to be, on driving cash flow, strengthening our balance sheet and positioning the company for sustained profitability."
The energy sector has taken it on the chin the past 3 years and again recently. If I am right and oil heads to $80 per barrel in the next 6 to 18 months, then there will be some big winners in the oil patch.
Here are some very quick thoughts on the oil and gas stocks that are in our universe, as well as, some major companies that are well known by investors.
Energy has been a top performer for decades. Over the past few years it has seen a volatile road crashing from highs. Recently oil and gas rallied into late autumn, however, there has been a recent correction. This correction is another, maybe the last, excellent opportunity to buy into the "Last Great Secular Oil Bull Market" in my opinion.
This stock market is moving very fast right now. As I discussed a few days ago in "This Correction Could Have Another Leg Down:"
The surge in volatility might be more than just an isolated event, it could be a harbinger of what might come next.
Well, what is coming next appears to be an actual real live bear market. We can't be certain of course, but if Friday ends with the S&P 500 below $253 on both the daily and weekly chart, well, that's a recipe for a full on search for strong support. As I show in one of the charts below, strong support is quite a bit lower.
In real estate it is "location, location, location." In stocks it's quality, quality, quality. The problem is that in the stock market, basically everybody knows who the quality stocks are. There are certain companies that only go on sale once or twice a decade, usually during correlated market corrections when "everything" falls in price.
So, now that we are hitting 10% on this correction in the stock markets, let's focus on a dozen or so quality stocks to add or round up positions for our portfolios. These are stocks we rarely can get with a discount.
I'll start with a half-dozen dividend growth stocks that actually have growth. One day folks who don't understand that just because a dividend grows doesn't make a company strong, i.e. they borrow to pay the dividend, or look good going forward, i.e. if there's no growth how do they keep growing, or maybe even paying, the dividend.
I'll then move to growth companies, virtually all in tech, that are part of the massive changes that are occuring in the world. There will be a common theme to all of them - they are all profitable or on the verge of being profitable. No speculations. We don't need to.
I will follow up tomorrow morning with some options trades for this group, but to be sure, selling cash-secured puts on any of them, a month or two out just a shade below the money is a great trade. Premiums being paid are very high right now, so there is added built in margin of safety.
I was near Albany, NY when the flash crash of August 24, 2015 hit. I was on my way out to a retreat with friends in the White Mountains of New Hampshire. The stock market was down 5.3% the first few days after the open that day.
Buying stocks quickly that day worked for me as I had put 10 good til cancel limit orders in before I left for vacation the day before because the market had already become jittery. All ten trades hit as over 765 stocks in the Russell 3000 were down more than 10%. I got stocks like Google (GOOG), Lockheed Martin (LMT) and Intel (INTC).
There is certainly a strong argument for keeping open limit orders on our favorite stocks in case of such corrections. However, buying a few ETFs is probably the easiest thing to do on a correlated correction. We can always sell off pieces of the ETFs and replace with stocks when we are ready.
Here are some ETFs I have open good til'cancel limit orders in for, the reasons why and the price levels I've set. Remember, I'm 25% in cash because of the overvaluation of the markets.
Are you getting scared yet? I want you to take a few minutes and meditate on how you feel about investing right now.
The stock market has sold off a couple percent, yes, just a couple, and volatility has risen to almost the normal average. That's right, volatility isn't above average yet.
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