October 28, 2017

 

Items in italics are direct quotes from the articles below

https://www.marketwatch.com/story/sell-these-5-scary-stocks-now-2017-10-27
This year has been a treat for investors, and it could end up even sweeter. The S&P 500 SPX, +0.31%  has tacked on 14% so far — and that’s before year-end rebalancing and hopes of a “Santa Claus rally” that could push the index even higher. Even if stocks do little from now on, it could be the best annual gain for the index since 2013. Still, that doesn’t mean you can just pick stocks out of a hat and hope for the best. This earnings season has created plenty of losers along with the winners, and there are a number of high-profile companies right now that have downright spooky outlooks. So which high-profile names have more tricks than treats in store for shareholders right now? Here are five particularly scary stocks I’m avoiding: Tesla, General Electric, Snap, J.C. Penney, and Valeant. The author’s opinion is valid, and it’s good to listen to different points of view to make a more educated decision. Even if you don’t agree with the opinion, listen and ask yourself, what does this person see that I’m not seeing? Take in the information, and make your own decision. Tesla isn’t a company that trades based on its profitability, but rather on sentiment and expectations. But it’s hard to see what the catalyst is to push sentiment, while there remain some very real downside risks. Case in point: Even as the car recently announced a deal to build cars in Shanghai, a move that should objectively be good for investors, the stock closed lower on the day. You may see Tesla as a good buy. Ask yourself am I investing for capital gains? If so for how long?  In the case of GE, I spoke with a friend of mine who was in the brokerage business for many years, and his opinion is that if you have enough liquidity and a long time horizon, buy GE. This blog is for education purposes only, so I suggest you do the research and make your own informed decision. Even if you have faith that things will work out in the long term and that GE will turn things around, the dividend is very much at risk. Beyond paying out more in dividends than earnings (under GAAP accounting, not its adjusted numbers), GE is sitting on a staggering $31 billion shortfall in its pension liabilities and will have to pay the piper eventually. All that adds up to a very real case against this stock. Don’t be foolish enough to think the deep declines of 2017 can’t continue for GE in 2018, too. Make time every day to gain new information in an asset class you enjoy, and find ways to execute your investment strategy.

https://www.marketwatch.com/story/kyle-bass-says-once-the-stock-market-starts-to-crack-this-will-be-the-first-sign-2017-10-18

The stock market may never go down again. Maybe not such a far-fetched notion, when you consider the Dow industrials yesterday nailed its 50th record close of the year and paid a visit to the 23,000 milestone, which it looks set to revisit and maybe stick to today. To be sure, being in the trenches of this market since the election has been a bit crazy-making, even if it has made investors some money. And naturally, there is discomfort out there over the speed of gains, such as how the DJIA has overcome a pile of worries to gain 4,700-plus points in just under a year. Given that, taking a step back and a look around is never a bad idea. That brings us to our call of the day from Kyle Bass of Hayman Capital Management, who has a timely warning on an “air pocket” that’s coming as we near the 30th anniversary of Black Monday. “If you look at the all of the different constituencies of the market today, it resembles the portfolio insurance debacle of 1987 on steroids,” he says an interview with Real Vision TV released to YouTube today, but recorded a few weeks ago. The key metric to watch for is when a 4% or 5% decline in equities becomes a 10% or 15% decline. What’s adding concern to this situation is the massive switch from active to passive investing. That means risk is “in the hands of people who don’t know how to take risk,” the hedge fund manager says. The message overall was clearly to cut back on a bit of risk, look at cash, and peel back a bit on where there have been some good runs. In this type of scenario, what is your experience with paper assets? Do you know how to short? Do you know how to use options? How can you profit from a market that falls? Do you have enough in liquid reserves or are you completely in one asset class? If you find yourself getting tunnel vision. Ask yourself what is your legacy and how does this impact eternity?

A few blogs ago I had mentioned adding a self-improvement and technical analysis section. Due to my growing interest in the cryptocurrency industry, I’ve added a cryptocurrency section also.

This week, I’ve included Why is this THE MOST MOTIVATIONAL TALK EVER?? See for yourself from the Video Advice YouTube channel.

“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.”

Proverbs 28:26 MSG

 

 

 

 

 

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August 19, 2017

Items in italics are direct quotes from the articles below

https://www.inc.com/benjamin-p-hardy/how-to-learn-in-2-days-what-normally-takes-6-month.html

Research has found that having clarity about your goals is essential to having motivation to achieve those goals. If you’re not clear on what you’re doing, it’s hard to be motivated. Which is why seemingly easy tasks, like sending a fax, could end up taking months. There’s a lack of clarity on how to do it, so you don’t – until either you have to or it’s too late. Can you relate? Unfortunately, having a lack of clarity is why so many people settle for less than their dreams. Said Robert Brault, author of Round Up the Usual Subjects, “We are kept from our goal not by obstacles but by a clear path to a lesser goal.” You want clarity so bad that you’re willing to settle for lesser goals, simply because the path to getting your true goal is less obvious. The Mormon church has seen success in training young missionaries in speaking foreign languages efficiently. The MTC uses context-based learning.

The system is simple:

 

    Learn a concept

    Practice and use that concept in a real-world scenario

    Get coaching and feedback

    Repeat

    Get coaching and feedback

“If you want lasting change, you’ve got to give up this idea of ‘trying something.’ You’ve got to decide you’re going to commit-to-mastery. Most people dabble. They say, ‘I’d like to change my body,’ or ‘I’d like to make my relationship better.’ These people don’t have enough detail to follow-through.” – Tony Robbins. There are four important steps to applying context based learning: get a teacher, repetition until your learning becomes unconscious, set specific goals with a hard time line, and tracking and accountability. If you want to accelerate your ability to learn then take the time to read this article and apply its process. The author outlines step 2 with four important sub-steps:

  1. Repeated learning of a small set of information. If you’re playing basketball, for instance, that might mean shooting the same shot over and over. The key here is to go beyond the initial point of mastery.
  2. Make your training progressively more difficult. You want to make the task harder and harder until it’s too hard. Then you bring the difficulty back down slightly, in order to stay near the upper limit of your current ability.
  3. Add time constraints. For example, some math teachers ask students to work on difficult problems with increasingly shortened timelines. Adding the component of time challenges you in two ways. First, it forces you to work quickly, and second, it saps a portion of your working memory by forcing it to remain conscious of the ticking clock.
  4. Practice with increasing memory load – that is, trying to do a mental task with other things on your mind. Put simply, it’s purposefully adding distractions to your training regimen.

Essentially, you want your understanding of something to be fluid and flexible. You want to be able to apply your learning in different contexts and for different purposes. Thus, you learn your skill in-and-out. I’ve quoted heavily from this article because we live in the Information Age. We have access to too much information, and it takes wisdom to discern the valuable information from the garbage. As humans, we need to start unlocking the next portion of our mental capabilities. It may require proper diet and exercise. Ultimately it requires commitment. Personally, I blog to absorb new pieces of information and at the same time teach myself new habits not just for strengthening my mind, but for reaching more people. What is your lens that you’re using to live your life. Can you make a difference?

http://www.investopedia.com/articles/active-trading/102815/how-identify-mispriced-stocks.asp

Investors hoping to maximize their gains try to identify stocks that are mispriced, creating long opportunities for underpriced companies and short opportunities for overpriced shares. Not everyone believes a stock can be mispriced, particularly those who are proponents of the efficient markets hypothesis. Efficient markets theory assumes that market prices reflect all available information regarding a stock and this information is uniform. Such observers also contend that asset bubbles are driven by rapidly changing information and expectations rather than irrational or overly speculative behavior. Many investors believe markets are mostly efficient and some stocks are mispriced at various times. In some cases, the entire market can be pushed beyond reason in a bull or bear run, challenging investors to recognize the peaks and troughs in an economic cycle. Information on a company might be overlooked by the market. Small-cap stocks are especially prone to irregular information because there are fewer investors, analysts and media sources following these stories. In other cases, market participants may miscalculate the magnitude of news and temporarily distort a stock’s price. Relative and intrinsic valuation both focus on a company’s financial data and fundamentals. Technical analysis helps investors to identify mispriced stocks to identify future price movements by the behavior of participants in the market. In a relative valuation, the P/E ratio is used to take the earnings of a company to help determine the underlying value of a company. The price-to-book (P/B) ratio is used to show how much a company’s valuation is generated by its book value. P/B is important in the analysis of financial firms, and it is also useful for identifying the level of speculation present in a stock’s valuation. Relative valuation is useful for evaluating companies within the same industry. Intrinsic value doesn’t rely on future performance. Intrinsic value is calculated using financial data and may incorporate some assumptions about future returns. Discounted cash flow (DCF) is one of the most popular intrinsic valuation methods. DCF assumes a business is worth the cash it can produce, and that future cash must be discounted to present value to reflect the cost of capital. Another way to calculate intrinsic value is through residual income valuation. Technical analysis involves looking at the price charts and trading volume to identify mispriced stocks. It’s looking at current information and determine if supply and demand issues exist and taking advantage on those price discrepancies. One approach requires in depth analysis, and the other can be done through a daily surface level inspection. What is your strategy? What is your exit strategy? Why are you doing what you’re doing?

If you are interested in creating a budget, then contact me for a financial checkup in the contact me section. Also, learn more about the self-lending principle in the mustard seed section.

This week, I’ve included The Secret to Self-Motivation | One of the Best Speeches Ever from the Video Advice YouTube channel.

“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.”

Proverbs 28:26 MSG