CMG and Shophouse

I do not hold Chipotle (CMG). I did, made a frightful amount of money on it, not because I am smart, because I was lucky. I like their restaurant concept, especially the bowl without the burrito.

Back to efficient markets, not only do the Wall Street computers know just about everything about everything, but day by day that information is available to people to you and and me. Here is an example, I was looking at CMG on Google Finance and it pointed to this blogpost. I do not know who Mr. Prewitt is, but he clearly put some effort into his analysis. What I learned from his post was the idea of Shophouse. WOW!!! And the cool thing is that next month we will be in DC in the Washington Hilton, so it is a short walk to Dupont Circle. I can't wait to try the restaurant.

Does this mean if we like the Asian version of this we would by the stock? Oh, no, no, no. However, it does mean that after I get to taste that food and I am VERY EXCITED, I will follow CMG a lot closer.

Meanwhile, in Gotham City, CMG is considering menu changes that could drive revenue. One idea is serving breakfast or having drivethroughs.

• Update November 21, 2012 CMG announced a stock buyback closed at 275.40
• Update December 3, CMG closed at 263.50, I am setting a buy around at 210.8
• Update December 10, 2012 I did get to eat at the Shophouse at Dupont Circle. It was OK, not great, mostly a college crowd.
• Update December 17, last closed at 286.74, up 9 dollars for the day, I am sticking with a buy around 210.8 and Mr. Market can school me why I am wrong.

Basket Ts ( Mutual Fund)

Ts is my "mutual fund". It takes more of my time than any other basket. I am not even sure it is a good idea, but a heck of an experiment.

Put in a limit order for 10 shares of Terradata (TDC) @ 63.00. I do not know if it will ever hit, but didn't hurt to try, I have more money on the sidelines than the rule for basket Ts recommends.

Limit order to buy 2 shares of MasterCard (MA) @464.00

Sell Ruger (RGR) Market, If President Obama prevails, this will drop fast though it may recover later, I would rather be spared the ride.

The big news is that I am closing my position in Starbucks (SBUX) and buying a CD with the proceeds at .5% interest for one year from Bank Hapoalim.

Rules for basket Ts

Must be hosted on a low cost online broker, max trade fee is $5.00

Initial positions may not exceed $2,500

Additional buys should usually be about $500 - $1,000, no big bets

When making additional buys, keep the capital gains "birthday" in mind

Try not to exceed 10% of money on the sidelines

Any equity that passes 20% profit is a candidate for closing the position on the birthday and purchasing a CD or bond

Equities in Ts may exist in other baskets

Most of my analysis focus is on the lowest performing 15 winning ( positive ) stocks and the 10 losing ( negative ) stocks

It is allowable to add to positions of positive winning stocks on big dips

No more than 15 market price trades per year, use a limit to buy

Use market orders to sell

Losses may be harvested to manage tax liability

Ignore the efficient market hypothesis?

I am not an expert in investing. This is my trading notebook for myself and close family. You are welcome to any of my research, but do your own research and form your own opinions.

I just read that in article by Value Investing. I am not wise enough to say they are wrong; I surely have my share of mistakes. However, I do know that Wall Street has their share of computers and databases, they may not know everything, but they know a lot.

The article is worth reading, as an investor I need to always challenge my beliefs. And they make some good points, especially with stocks that do not have much analyst following. Here is a seeking alpha write up of best and worst performing stocks of late. If I understand the Value Stock Guide article correctly, there may be a gem somewhere in the worst performing list, find a thinly followed small cap stock; research the company and open a small position. Not sure that I have the smarts to buy a stock just because it is in the worst performing list :).

5/1/13 Found some web site that tracks what Hedge funds are doing. They claim to be beating the S&P by 20% or some such. I guess the idea is to hang onto the hedgefund coattails, ( the smart money), and invest in the stocks they invest in. Strikes me as an odd approach and apparently they want you to buy their research to get a detailed look. I think it would be easier to look at the top holdings of some of the better performing ETFs and Mutual Funds, BUT that doesn't make it a good idea. To make money in the stock market we have to buy the right stock at the right price. I doubt they know how they acquired the stocks, limits, puts, calls, some combination. Anyway, what a glorious week to see so much green on the balance sheet. What I am trying to remind myself, ( learn, Stephen, learn), is NOT to make the classic small investor mistakes.

Working on the Ts Mutual Fund

November 4, 2012

Since I have done some profit taking, I have some cash in my tiny mutual fund. Tonight I moved a small amount of money off the sidelines and added about $500 - $1000 of each of these to my existing positions:


PCAR: this stock has shown strength in 2012. 15 shares, Limit, 44.70

• Update December 17, 2012 44.31

TEVA: largest generic drug producer. 15 shares, Limit, 41.00

• Update December 17, 2012 38.39

FDX: Like Fedex is going anywhere? 10 shares, Limit, 90.00

• Update December 17, 2012 91.02

SUP: Hey, they make great wheels. 39 shares, Limit, 17.20

• Update December 17, 2012 19.04

GS: Cause they are scary smart. 5 shares, Limit, 120.00

• Update December 17, 2012 123.49

These represent five different performance levels in the mutual fund. PACCAR has performed the worst year to date, but seems to show some strength, Goldman Sachs, the best, but they were off a bit on Friday and I have hopes of adding to my position on a dip.

Had a bond from the good ol days called today

Drat! I had a 10k bond at 6% called today. As I mentioned in the recent Risk Appetite blog post, I am overweight on stocks and ETFs so that was not an ideal situation for my portfolio. Even though the stock market has been good to you and I for a long time now, I felt I needed to put that money into a smoother return than stocks, so I added that to the sum we are putting in one of the annuities. Sigh!

Being a small investor with a demanding day job makes it really hard to drive strong returns from the overall market and as you approach retirement age it seems to make sense to quit taking as many chances.

Risk Appetite

There must be a person, or perhaps an office somewhere that writes the main copy of the financial analysis about why the market went up or down on any given day.

I follow the Canadian TSX market about as closely as the US, because they have their debt under control and all those natural resources ( though their economy appears to get jerked around by the US and Euro economies). In an analysis I was reading it said that economic news increased risk appetite so the market went up.

Just a few seconds ago I was reading Google Finance and it said:"Asian shares advanced to their highest in nearly two weeks with risk appetite returning on signs that a trend of global recovery is stabilizing, particularly in the United States and China." Awesome, but just how do they know that the news of the day is actually the force driving the market. Earnings reports, I understand, inflation and the concern that a fairly sizable economy will default on its debt, I understand. Risk appetite, that I have less understanding of.

I get risk appetite at the personal level. As you start approaching retirement you want to smooth out your returns and try to be conservative to ensure that one blazingly bad day in the stock market will not wipe you out. I am in the process right now of trying to set up two single pay annuities that will pay Kathy and I until we die. I realize it is a TERRIBLE investment in terms of returns compared to X, Y and Z. However, we were lucky enough to have made a couple investments in cyber security startups that did well and also lucky enough to have worked for a great company that pays well. So, as part of our portfolio, we can afford to have a couple of low return ( right now about 4% ) income streams. Now, that is all I am going to do right now, because I believe interest rates will go up and I will have the opportunity to work with CDs and Municipal bonds at a more reasonable interest rate. But the majority of my portfolio is in stocks, but that is OK because investors have risk appetite and the market went up today right?

AAPL, AMZN, RGR

Apple and Amazon have been kicked about a little so I added five shares of both as a market buy.

Now, is it time to cash in on Ruger? I have not held the shares for a year, my brother in law tipped me that people were buying guns like crazy in the fear that President Obama would get re-elected and ban assault rifles. It sounded like a conspiracy theory at first, but I went to a gun show and these people truly believe what they are saying. They I looked at the company and it is very well run, they have a low debt load, they are living the manufacturing dream. In fact their stock got hit because the demand is so high, they had to quit accepting orders. When does that happen?

I really hate paying capital gains. I feel I pay too much tax already, why would I consider a self inflicted wound without a really good reason?

My thesis at this point is that if the President wins I am going to take a massive hit in the stock price. However, I need to keep in mind that Wall Street has every little jot and tittle factored into the price and RGR is 94% Institutional Investor owned. Yes, the President has some authority, but there is another party in Congress, called the Republican party and they have typically support the right to arm bears(SIC).

So, it is unlikely gun control, even what many people might consider a sensible ban on assault weapons will be a slam dunk. Good company, there is demand for the product, it is unlikely that government legislation will overly interfere with them. There is risk in the decision, but I am going to hold the equity.