Thesis
This is the only basket that I trade actively and when I retire I will probably give this up and cash out; all other baskets are long buy and hold. This is also my "incubator" for future core stocks that will be long term positions.My thesis for red/green analysis is that if a stock is very far gone in the negative or red direction ( MAKO ) there isn't much to do , but sell or hold on hoping the company turns around. If a stock is very positive, hopefully I saw that trend and increased my holding and at some point I will profit take ( one of the rules of this basket). So the action is really around the middle, stocks that are slightly positive and negative. Past Ts Red Green reports confirm they change places.
Rules of the basket:
(Last updated April 28, 2013)
- No big bets, lots of small orders which means incurring a 0.5% -1% overhead per transaction for the trading fee
- Check on this account often, this is by far the most dynamic account you manage
- Preference is given to companies that are not debt ridden using Google Finance debt to assets ratio < 20 ( and also being mindful of the debt to equity)
- If you have a high flyer that starts to drop it is OK to profit take and protect principle, you can always buy it back when it drops. If it keeps going up after you sell, oh well, there's too many fish in the sea
- During bull markets, be willing to profit take on companies that appreciate more than 20% and store that money in a safer instrument
- During recessions, corrections and bear markets be willing to open and add to positions
- It is real retirement savings you are spending so research the company even if you have to rely on industry analysts
- Remember the rule of unrealized loss. If you believe it is a soundly run company with good product, even if the market drives it way down, hang on. MAKO was a fairly big bet and it is down 70% or so, but my thesis is we are going to keep needing surgical robots.
- Use limit orders whenever possible, they do not all have to hit
8/2/13 Whole Foods (WFM) 54.58 and Proctor Gamble (PG) 80.96, Medtronic (MBT) 54.94 dropped a bit, added ten shares of each to my position. Opened a position with Apogee (APOG), 45 shares market, 27.03.
8/1/13 Polypore (PP0)
This is still negative for me and is very volatile, but added 15 shares@market, 43.44
7/24/13 ISRG
Robotic surgery is the future so Intuitive, a market leader, should do well. However, they missed earnings and have really dropped. I had this stock before, but did some profit taking with it. Trying to reopen a position with 10 shares on a limit order or 380.00, currently it is trading at 386.89.
8/1/13 395.26
7/23/13 Reds, top performing, descending order
30 90 180 1yr 5yr
MCD - - 4 3 3
FPX 2 2 2 1 2
SSL 1 1 3 2 -
COH 3 3 1 4 1
BRCM - - - 5 4
7/23/13 Greens, lowest performing, descending order
30 90 180 1yr 5yr
CTXS 2 - - - 1
CORR 3 2 1 - -
INTU 1 - - 1 2
TEVA 4 1 2 - -
QCOM - - - 2 3
CORR L@7.50 70 shares last close 7.63
CTXS L@64.00 10 shares last close 66.07
7/21/13 Athena Health Care was up 22% and it dropped 4.00 a share, added ten shares to my position. Opening a small position on an IPO ETF (FPX) 25 shares at market.
6/26/13 Silver (SLV ETF) just dropped 5%. Opening a small position, 30 shares@ market, 50 shares limit at 17.25.
7/21/13 18.88 Missed the boat, sometimes a limit order means not striking paydirt. Oh well. I do have 30 shares that I purchased at market. Beats nothing.
5/17/13 Getting sketchy, market feels overpriced
ENH 15 Limit@48.5
IRBT 20 Limit@33.0
PANW 10@ 53.0
5/1/13 Cummins (CMI) got trashed today, 6% drop. Bought 5 shares at market.
7/23/13 117.67
4/30/13 Not one single limit hit today, the market was definitely trending up. At least when I look at the baskets I see green everywhere and get to congratulate myself on how smart I am (yes, I am kidding, tomorrow it might be mostly red and I will be dumb). Do need to keep a close eye on Liquidity Services (LQDT), I am still up 15%.
7/23/13 28.94 down 22% in 30 days.
4/27/13
1) Lowest greens, best to lowest
30 90 180 1yr 5yr
RAVN - 1 1 2 1
NOV - - - - -
CORR - 3 - - -
VIVO - - - - -
ERIE 1 2 2 1 2
Intuition would say that the NOV and VIVO are not the place to add money to, but the S&P Fair Value for NOV is a 5 and the Schwab rating is a B, where Erie is a 1 C and RAVN is a 1+ D. Limit order to accumulate more NOV.
2) Next best performing flight, best to lowest
ATHN - 2 1 1 1
MCD 1 1 2 4 3
WFM 2 - - 3 2
CHEOY - - - - 4
FDX - - 3 2 -
ATHN looks good and it should, it has a P/E of 188.62. Thesis: this is like a dating service for patients and health care providers. As Obamacare is rolled out they are well positioned. But to win one needs the right stock, but also at the right price. It would only be smart to add to this position on a dip. They are a D1. Pass.
McDonalds is a steady Eddie, but with their debt level, I am not inclined to add to the position right now. They are a C 2, S&P says buy. Pass.
WFM is a D 2, I only have a small position open to look at them. Pass.
CHEOY is a long term play. Thesis: hearing aids is a good business to be in. Pass.
FDX is also in the eCommerce basket (Sk). The worse things are for the USPS, the better UPS and FedEx are likely to do.
3) Best performing reds, best to lowest
30 90 180 1yr 5yr %increase for 1 year
QCOM - - 3 - 4 (4)
BCPC - 1 1 1 1 47
PANW - - - 2 2 1
COH 1 2 4 - 3 (22)
IBKR - 3 2 - - (3.5)
Coach of course got that pop based on their earnings.
I bought Balchem in July 2011 and it tanked, but it is up 47% for the year. Schwab rates it a B, S&P Fair Value is a 2-. Another case of the right stock, but needs to be the right price. This is the result of my work so far today, note VIVO got downgraded to 19.00
4) Genworth (GNW). I started a research workup on this stock for basket Ck (dividends), only to realize the dividend party ended years ago. Then I thought about a small position in Ts. After a couple hours I am conflicted. No action at this time.
5) RKUS Rukus. Thesis: this is a better wireless mousetrap. They are essentially the BOSE of the wireless world AND they are down something like 13% in past 30 days. Opening a position with 40 market and also 30 L@19 and 50 L@18.5.
6) Seattle Genomics (SGEN). Thesis: with an apparently effective anti-cancer drug in the field and more in clinical trials and no debt and lots of cross agreements, they could do very well. They last closed at 37.38. 30 Limit@37.30, 40 Limit@37.00, 40 Limit@36.75.
4/25/13 Not sure why, but we had some drops, so I am doing two market, two limit buying on dips:
4/23/13
1) ATHN. Opened a possible position on Athena Health. My thesis is that as Obamacare continues along, the complexity will push all smaller providers to use cloud type billing. 20 shares Limit@90.
2) COH. Coach has been a disappointment in a number of ways. I am down 16% since I opened the position, luckily it is a very small tracking type position. However, this article suggests a number of people are selling puts ahead of the earnings report. It appears that someone thinks the stock is about to rise. I am not sure that I agree, partly because they are modifying the strategy that got them where they are and partly because a strike of 52.50 is beyond my ability so see happening, but once again, the Wall Street guys have IBM Z series mainframes and I have Google and a Mac. Decision: no action.
3) WFC. Wells Fargo is experimenting with a new style branch according to this article. Looks a lot like an Apple store to me. Let's add 25 shares @Market.
4/20/13
1) Open orders
2) Recent activity
3) Lowest performing greens best to worst
5 30 90 180 1yr 5yr
CTXS - - - 3
MCD - 1 1 2
CMI - - - 1
WFM - 2 - -
FDX - - - 4
Decision: MCD Limit buy 10@94.00 Last close 99.92
4) Next higher performing greens best to worst
5 30 90 180 1yr 5yr
ORCL - - - 3 2 3
ROLL - - - 4 3 4
ULTI - - - - 1 1
MELI - - 1 2 - 2
HURC - - - 1 - -
Decision: Profit take ULTI, close position, but put it in the watch list, I like the fact it does not correlate strongly with the other four. Action: find another equity to replace it. Hold the line on HURC.4/16/13 Market dropped today possibly due to the Boston Marathon bomb. Kathy and I have been praying for the injured and those grieving the loss of a loved one. But we are adding to some positions:
Lowest performing greens:
5 30 90
HURC - - -
NOV - - -
NUAN 2 1 -
WFM 1 - -
IRBT - 2 1
Decision: Add to my NOV position? Dunno, it seems incredibly stupid to me, but it is a small bet ( 15 shares) and it dropped like a rock today and my thesis remains that it is a great company poised to do well and if you buy on dips in an aging bull market you have to accept a few drops.
4/3/13
1) Top performing greens ( excludes TSRYY)
4/27/13 30 90
5 30 90 180 1yr 5yr
Z - 1 1 2 1 2
DIS 2 4 4 4 2 1
OII - 5 3 3 5 3
MDT 3 3 5 5 4 4
BSX 1 2 2 1 3 5
OII dropped 3.76% today 10@Market last close was 63.02
BSX (B 3) and MDT (B 4) have a little more debt that I like to see, going to sleep on that one.
4/27/13 Speaking of medical device companies, Spectranetics (SPNC) is going to sell some stock, it will be interesting to see what impact that has. Not that debt is the only factor, but they have less debt than most of the players in this space.
2) Green Analysis, best to least heat 1
NOV - 2 - - - 2
FDX - - 2 1 2 4
HURC - - 1 2 - -
CHEOY - - - - 1 3
NUAN 1 1 - - - 1
NUAN Limit 30@20.75 last close 21.06
3) Next lower tier (RDWR is a slight red)
BRCM - - - - - 4
MCD - 3 2 1 1 3
IRBT 1 1 1 2 - 5
LQDT - - - - - 1
RDWR - 2 3 3 2 2
RDWR Limit 20@37.20
IRBT Limit 30@24.50
MCD Market 10 last close 99.25
4) Top (best performing) reds
INTU - - 3 1 1 2
RAVN - 1 1 2 2 3
WFM - - - - 4 1
PANW - - 4 - 3 4
TEVA - 2 2 - - -
RAVN Limit 20@31.20
4/1/13 NUAN Deja Vu! I researched this company a year and a half ago, my thesis was that people were going to want it because it is faster than typing. My wife prefers voice search on mobile to using the itty bitty keyboard. And I lost money. And now I am thinking about it again. It has a PE of 37 AND a debt ratio of 36.5. I do not have a basket that I can add this to under the rules of any of my baskets, but I do have three exceptions I can use in Ts, my mutual fund.
Decision: Commit red flag #1 of 2013. Very small open position, 50@Market, last close was 20.18, hopefully this is not my April Fools Joke on myself.
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