3 hour investor newsletter incorporating the “newsletter portfolio week … · 2017. 4. 28. · 3...

3 Hour Investor Newsletter incorporating the “Newsletter Portfolio” Week 49- 2017-Apr-28


Current Portfolio Valuation.

Portfolio Valuation 2017/April/22 is $284,067 According to Lincoln the portfolio is increasing at a

rate of 16.8% per annum. Note however this next important bit. The 16.8% return has been

achieved with a couple of components. The securities in the portfolio have returned 28.99% per

annum since inception, whilst the cash in the portfolio has returned nil (I’m assuming no interest is

earned on cash to be conservative). So think about that for a moment. The portfolio currently has

about $42,000 in cash (or about 15% cash). That cash is nice an safe in our theoretical bank…but it’s

existence is lowering the portfolio return. Another way to think about it is that we’ve lowered the

risk in the portfolio and still made a decent return.


Whilst we’re a bit under the ASXOAI over the period I think we did it with lower overall exposure

to the market (because we had a fair bit in cash most of the time). I’m not a quant…so don’t take

my assertion of lower risk for granted…it may be that being fully invested in a widely spread ETF is

lower risk than having 80% of funds invested in say 9 stocks.

Comment. We currently have 9 securities and about $42k in cash

Losers >10% -

Losers 5.1%-10% -

Losers 0%-5% 1

Gainers 0%-5% 3

Gainers 5.1%-10% 2

Gainers10.1% - 20% 2

Gainers 20%-30% -

Gainers 30%-40% -

Gainers >40% 1

Portfolio comment.

6 out of 9 stocks closed green for the week.

All stocks are still in hold territory.

We gained over 1% for the week…(any time we do that it’s a winner)

3 Hour Investor Newsletter incorporating the “Newsletter Portfolio” Week 49- 2017-Apr-28 Status of US Markets on 2017-04-26 (thurs for Lincoln charts and Friday for non Lincoln charts.

Dow. Closed Green for the week (down 0.19% on Friday) Futures RED (Saturday) Looks firmly above the line.

S&P 500 was Green week to thurs. (note down .19% on Friday) FUTURES Red on Saturday Above the line

Nasdaq. Green for Week to thurs Friday was down 0.02% Futures barely RED. Short term moving average still above longer term moving average

Russell 2000 Green for week to thurs, Was down 1.18% friday Futures Sharply Red Short term moving average has crossed down below longer term moving average…(a negative sign)

Vix…. Continues to close down sharply over past couple of weeks (which I’ll take to be a Green signal for our portfolio) Note the positive kick up and then back down over recent weeks…(war worries perhaps?)

3 Hour Investor Newsletter incorporating the “Newsletter Portfolio” Week 49- 2017-Apr-28 Status of Australian Markets

XAO All Ordinaries Index. Green and still above the line. Positive Gap formed in MMA, ROAR close to 20%.

XMD Midcap 50 Green and above the line Positive Gap formed in the MMA. ROAR trending Close to 20%

XSO Small Ords Green… Just Below the buy line MMA not open…at least the short term black lines have appeared above the longer term blue lines ROAR marginally ABOVE Zero…

XVI Volatility Index was RED (a Green signal for us) HAVROAR trend is well below Zero

In summary the main US Markets were Green to Thursday but slightly red on Friday and futures

were also very slightly RED (on Saturday). As a counter…the VIX is very sharply down

ASX markets were GREEN…and volatility index is down

If the market is up on Monday AND US futures look ok on Monday afternoon I’ll be buying for the

newsletter portfolio


Allow me to add a new index to this newsletter.

Let’s call the value index. How it works: Filter stocks with the following criteria

1. Financial health = strong or satisfactory

2. Dividend yield >2.5%

3. PE <15

4. Price to NTA per share above zero and under 5

5. Enterprise value above $500m

6. Excludes mining stocks and most financials (as advised by Alan Hull)

So what we’re looking for is strong stocks that seem cheap. Each week we’ll count the number of

stocks that fit that criteria. In a high priced market…there will be few of these. In a low priced

market…there’ll be more of these…so perhaps this will allow us to better understand where the

market is. Why do this? In a low price market…(down market)…we’ll be looking to buy dividend

stocks….in turning market or increasing market…we switch to growth stocks…so perhaps this will

assist us to understand where we are.

Still no comments this week…To me this indicator has remained flat and needs more time and data

to provide any meaningful insights

We search for (a) sharp increase or (b) decrease in stocks found by this filter.

If there are many stocks here then “buying value stocks might be a good strategy”….

If there are few perhaps it indicates we’re at the top of the market?

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4/02/2017 4/03/2017 4/04/2017 4/05/2017

Search for Value count


Comments on Star and Borderline Stocks.

Stocks in Sell Territory. If I had these stocks I should have sold out.

Stocks that closed Green for week AND are rising at above or close to 20% per annum (based on ROAR) AND are ‘above the line’. In other words worth assessment for possible rating as a buy.

Star Stocks APX, BAP, BBN, HSN, PMV, RCG RFG, SAR, TPM

Star Stocks ALL**, AMA** (a bit under 20%), COH, CTD, FPH, IRI, NHF, NCK, PEA,

Borderline Stocks CKF,

Borderline Stocks CAR**, CSL, WEB, ,

10 Red 12 Greens

Charts worth thinking about.

Check out CSL. It’s grown from a week low of about $95 in December 2016 to current

132.55. ROAR is about 60%. PE is a little high at about 33.2 historic and about 32

prospective. 5 year return incl divs is 32% per annum. Nice work if you can get it.

CAR** is trading on a prospective PE of 23.72 and returns grossed up nearly 5% and over 5

years has returned approx 19.5% per annum inc dividends.

ALL** is a standout, returning an astonishing 47.75% per annum over 5 years incl divs and a

one year return of over 100% including dividends.

We are hunting to add stocks like this to the newsletter portfolio. We’ll try to pick them and

then quickly discard those that don’t perform and we’ll keep those that do.


Selling Report. Nothing to report

Buying Report. Nada to report

I have to report that I almost bought on Monday (when I saw a growing market and USA futures

ramping up). If I had bought I would have bought IEU and NDQ and used all the cash in the bank.

If I’d done that our weekly results would have looked sensational.


Stocks worth assessing as suitable for

purchase if conditions are right this week

The following stocks are on our potential buy list and closed Green for the week

A2M**, ALL**, ANZ**, AZJ, CBA, CGC**, CGF**, CPU**, CTD**, IAA**, IEM, IEU**, IOZ**, NAB**,

NDQ**, NHF**, QOZ, SDF, VTS, WBC, WPL

Stocks on the list that closed Red were

CHC**, NCK, RFF**,

As you can see I hold a lot of the above stocks in my personal portfolios…so I had a good week also.

21 out of 24 stocks closed up for the week. That probably won’t happen all too often. Does it mean

we’re close to the top. Who knows?


Bonus Charts:

In this section I’ll sometimes list a chart that catches my eye and provide a brief comment.

If you want a stock reviewed, perhaps email me and I might include it (no promises)

Chart Comment

IEU**. European ETF

5 year return inc div 13.44%

Gross Dividend Yield 2.53%

ROAR is above 20%

Average daily turnover over $900,000

Personally I like using ETFs in the newsletter portfolio. If I find a broad market ETF currently gaining at over 20% it will be a strong candidate for out portfolio. I personally see these as lower risk than individual stocks as it’s hard to imagine them going to zero…although there does remain a counterparty risk

NDQ**. Nasdaq 100 ETF

1 year return inc divs 30%+

Div yield is under 1% This is an easy way to get exposure to the high growth tech companies you’ve all heard of. Are we in a bubble? Maybe. Will the newsletter lose in a bubble burst. Maybe, however we check for sell signals daily and would hope to get out sooner rather than later and certainly would not hold out in a freefall situation.

RHC. Ramsay

5 year return inc divs 31.4%pa

Trailing PE 31.68

Gross div yield 2.61% RHC seems to have crossed up into buy territory. Is it set to “return to growth?” Maybe. Personally I held RHC for many years from about $11 to about $65 so I liked this stock in the past. However with such a high PE I’d be wanting to wait until a clearer set of signals before buying in again. What about you?


Parting comment

Take a close look at the above charts and what do you see. They are all weekly charts showing the

period from mid 2011 to current. There’s been a terrific rise in stocks over a 5 year period and at the

same time the Vix has tended to drop over time. Does this mean we are in bubble territory? The

NASDAQ in particular seems to show a sharp incline…particularly with a nice little blip upwards on

the right hand side. Is it really different this time…or are we in for a sharp correction?

What does it all mean?

Personally I think it means we should risk out capital to the market and expose it to growth.

This bubble might inflate for another week and another 5%. It might inflate for another year

and another 45%. Or it might burst and drop 5% in a day.

So we need to have our hand on the “eject” button and pull out if we’re sure that the trend

has changed.

Unfortunately this means we won’t sell out at the top…and so we’ll share some of the pain

from any drop in the market.

However if we do “eject” we’ll preserve most of our capital to do something else with…to

fight another day.

Have a good week


Warning. This newsletter is provided for your entertainment only, I’m not a financial adviser, I have not taken account of your objectives, financial situation or needs. You should therefore consider the appropriateness of any descriptions of my Newsletter and its newsletter portfolio in light of your objectives, financial situation and needs, before taking any actions.

All views and information expressed in this newsletter are not the views of Lincoln and or its directors, agents, representatives and employees.

Many of the graphs and screen shots are taken from Lincoln services and are fully credited to them. I’m a paid up licensee to Lincoln, otherwise all IP in their system and graphs belongs totally to them. I recommend that you consider signing up to their service…it’s a great service and I feel great value for money!

I do invest and trade in shares, I’ll mark the ones that I own with (**)…however it’s safe for you to imagine that I’m either buying or selling just about any stock in the market, particularly and especially if mentioned here.

3 hour investor newsletter incorporating the “newsletter portfolio week … · 2017. 4. 28. · 3...

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