HI Financial Services Commentary 08-28-2018
What I want to talk about today?
Let me tell you a story on how being a Registered Investment Advisor SUCKS!!!
What is the most important part of being successful in the market => PATIENCE
Being honest with oneself
Exiting trades profitably
Sticking to a proven system
What is the primary goal of Hurley Investments – IS to never let you go through a loss like 2008, 2000, 1987, 1983
There are times that you are paying for insurance when it might not be necessary
There are times “options” are used in the place of stock ownership for “speculative” high profit high risk trade ie……… FB, V, COST, F, Directional Leap Long Calls
There are times when for years you amass huge quantities of shares of stock ie… 1000 F shares moves to 3800
Ie… 1000 shares of NVDA moves to 2800
Ie… BIDU for 1000 shares moves to 2300
Clients have no idea how to invest – too short term thinking and a lack of understanding of the the collar trading process
Cramer’s Rules of Engagement: for investing
Buy best of breed – We do research
High Quality Cos Represent Value
Watch the Bond Market & the dollar
Sudden Exec Resignations=Sell
Explain your Stock Picks
Beware of Promotion
Don’t believe everything you Hear
Never Subsidize Losers with Winners
Bad Fundamentals=Don’t Speculate
What happening this week and why?
Where will our markets end this week?
DJIA – Bullish
SPX – Bullish
COMP – bullish
Where Will the SPX end August 2018?
Tues: BBY, TIF, BJ
Wed: AEO, DKS, EXPR, CRM, GES
Thur: ANF, BURL, DG, DLTR, KIRK, SHLD, AOBC, LULU
Tues: Case Shiller, Consumer Confidence,
Wed: MBA, GDP-2nd Estimate, GDP Deflator, Pending Home Sales
Thur: Initial, Continuing, Personal Spending, Personal Income, PCE Prices
Fri: Chicago PMI, Michigan Sentiment
How am I looking to trade?
IN protective puts or collar trades after earning
www.myhurleyinvestment.com = Blogsite
Trump might get his slowdown in rate hikes, but for the wrong reason
- President Donald Trump’s trade war could slow the economy and thus cause the Federal Reserve to pause in its current rate-hiking cycle.
- Trump has been critical of the central bank’s policy tightening, but having it slow now could be a bad sign.
- Stocksthus far have weathered the trade storm, though there has been some recent weakness.
Published 3:08 PM ET Wed, 15 Aug 2018
Updated 5:44 PM ET Wed, 15 Aug 2018
Among the unintended consequences from President Donald Trump’s trade war is that it could cause the Federal Reserve to slow the pace of its interest rate hikes.
While Trump has spoken out against the central bank’s policytightening and might be pleased if it stops raising interest ratessooner than expected, the move would be for the wrong reason, namely a slowing economy.
That’s among the multiple quandaries that have arisen from the president’s gambit to lower the national trade deficit and change agreements he has blasted as inherently unfair to the U.S.
“If you have a situation where tariffs have a significant enough knock-on effect and real growth is impacted in a sustainable way, it’s a prescription for them to [follow a] shallower path for the funds rate,” said Jacob Oubina, senior U.S. economist at RBC Capital Markets.
As things stand now, the Fed has indicated it plans to hike its benchmark funds rate twice more this year, with the market pricing in moves in September and December. In addition, officials have indicated that three more hikes could be on tap in 2019.
Trump has been critical of the policy tightening, saying he’s worried that higher rates could thwart the substantial economic progress made during his administration.
However, there’s concern among economists that the tariffs could be damaging as well. The administration has hit China with a series of duties that have targeted $50 billion worth of goods so far. China has returned fire as well and has vowed a tit-for-tat battle.
Tariffs on their face are inflationary, and the U.S. dollar has been on a steady climb higher this year and particularly since the trade war has escalated. Trump also has expressed his preference for a weaker greenback.
“If the U.S. dollar is going to keep going up, I think the Fed will have to stop raising rates,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “I also wonder if we’re getting close to two things that might force Trump’s hand a bit to water this down. One is the midterms are coming up and [the trade war is] going to become a bigger and bigger issue for Trump, even from his own party.
“And if the economy starts to slow down, particularly the housing data, and that broadens out, I think that will bring a lot of pressure to bear on this trade war strategy,” he added.
From a market perspective, stocks have been able to weather most of the trade storm, though recent tensions with Turkey have been a contributing factor to some weakness.
There even has been some speculation that because tariffs generally do lead to inflation that they might cause the Fed to hike more aggressively. However, central bank officials have tended to look through cyclical bumps in inflation and gear policy more to the longer-term outlook.
Inflation has struggled to reach the Fed’s 2 percent target since the financial crisis.
“The tariff situation is nothing that’s sustainable, it’s not something that’s long lasting,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “I don’t think the Fed is going to respond to tariffs that may not last.”
Baidu: Google Fears Gift
Aug. 8, 2018
Baidu dips following fears of Google re-entering the Chinese search market.
Google has no history to support the company will take market sharefrom Baidu.
The stock is cheap based on reasonable 2018 EPS estimates approaching $12.
Despite reporting outstanding Q2 results, Baidu (BIDU) slumped on news of Alphabet/Google (GOOGL, GOOG) planning to re-enter the search market in China. The market completely ignored those quarterly results and the attractive value of the stock in fears of a search platform that wasn’t even a major threat when Google left back in 2010. Market fears surrounding Google entering China are another gift to own Baidu at lower levels than my previous investment call.
First and foremost, investors need to understand that Baidu was by far the market share leader back in 2010 when Google left the Chinese market due to censorship issues that strayed from corporate values. At the time, Baidu had 76% of the market (via CNBC). Secondarily, Statista estimates that Baidu has about 74% of the market currently despite increased competition from other Chinese firms and U.S. firms such as Bing from Microsoft (MSFT).
The issue for Google is that Baidu has only gotten better over the last eight years. The problem all along is that Baidu has the local expertise in the Chinese language that Google couldn’t match back then and can’t match being absent from the market for going on a decade now.
BIDU EPS Estimates for Current Fiscal Year data by YCharts
Ford Motor Is A Single-Digit Stock: What Should Investors Do Now?
Aug. 14, 2018
Ford Motor makes a solid value proposition on the drop for investors with a contrarian bent.
Fears over an uncontrolled trade war between the U.S. and China are greatly exaggerated.
Ford Motor’s shares are back in the bargain bin, selling for less than seven times next year’s estimated profits.
Ford Motor is widely oversold.
An investment in F yields 6.3 percent.
Ford Motor‘s (F) have fallen below the $10 price level this week on fears over an escalating trade war between the United States and China and higher expected commodity costs. Though Ford Motor faces some headwinds over the short haul in terms of costs, investors have turned too bearish on U.S. auto companies, in my opinion. Ford Motor makes a promising value proposition below $10 as shares are dirt-cheap and ripe for a rebound. While waiting for the storm to pass, investors get to collect a healthy 6.3 percent dividend.
Disappointing Performance And New 52-Week Low
Ford Motor hasn’t exactly been a winning investment in 2018. Year-to-date, the auto company’s share price slumped 23.4 percent. This week’s sell-off also caused Ford’s share price to fall to a new 52-week low @$9.42.
[Note that according to the Relative Strength Index, Ford Motor is now widely oversold again.]
Why Are Investors Spooked?
One word: Tariffs.
The tariff tit-for-tat between the United States and China already drags on for months but went into another round earlier in August when both countries imposed new tariffs on each other yet again. First, the United States slapped an additional 25 percent tariff on $16 billion worth of Chinese imports. China then immediately reacted, imposing a 25 percent tariff on $16 billion of U.S. goods including fuel, steel products, automobiles and medical equipment.
F data by YCharts
F Dividend data by YCharts
How One CEO Taught His Employees A Lesson In Integrity
Last updated Aug 7, 2018
A successful business man was growing old and knew it was time to choose a successor to take over the business.
Instead of choosing one of his Directors or his children, he decided to do something different. He called all the young executives in his company together.
He said, “It is time for me to step down and choose the next CEO. I have decided to choose one of you..”
The young executives were Shocked, but the boss continued. “I am going to give each one of you a SEED today – one very special SEED… I want you to plant the seed, water it, and come back here one year from today with what you have grown from the seed I have given you. I will then judge the plants that you bring, and the one I choose will be the next CEO.”
One man, named Jim, was there that day and he, like the others, received a seed. He went home and excitedly, told his wife the story. She helped him get a pot, soil and compost and he planted the seed. Everyday, he would water it and watch to see if it had grown. After about three weeks, some of the other executives began to talk about their seeds and the plants that were beginning to grow.
Jim kept checking his seed, but nothing ever grew.
Three weeks, four weeks, five weeks went by, still nothing.
By now, others were talking about their plants, but Jim didn’t have a plant and he felt like a failure.
Six months went by — still nothing in Jim’s pot. He just knew he had killed his seed. Everyone else had trees and tall plants, but he had nothing. Jim didn’t say anything to his colleagues, however.
He just kept watering and fertilizing the soil – He so wanted the seed to grow.
A year Finally went by and all the young executives of the company brought their plants to the CEO for inspection.
Jim told his wife that he wasn’t going to take an empty pot. But she asked him to be honest about what happened. Jim felt sick to his stomach, it was going to be the most embarrassing moment of his life, but he knew his wife was right. He took his empty pot to the board room. When Jim arrived, he was amazed at the variety of plants grown by the other executives. They were beautiful — in all shapes and sizes. Jim put his empty pot on the floor and many of his colleagues laughed, a few felt sorry for him!
When the CEO arrived, he surveyed the room and greeted his young executives.
Jim just tried to hide in the back. “My, what great plants, trees, and flowers you have grown,” said the CEO. “Today one of you will be appointed the next CEO!”
All of a sudden, the CEO spotted Jim at the back of the room with his empty pot. He ordered the Financial Director to bring him to the front. Jim was terrified. He thought, “The CEO knows I’m a failure! Maybe he will have me red!”
When Jim got to the front, the CEO asked him what had happened to his seed – Jim told him the story.
The CEO asked everyone to sit down except Jim. He looked at Jim, and then announced to the young executives, “Behold your next Chief Executive Officer!
His name is Jim!” Jim couldn’t believe it. Jim couldn’t even grow his seed.
“How could he be the new CEO?” the others said.
Then the CEO said, “One year ago today, I gave everyone in this room a seed. I told you to take the seed, plant it, water it, and bring it back to me today. But I gave you all boiled seeds; they were dead – it was not possible for them to grow.
All of you, except Jim, have brought me trees and plants and flowers. When you found that the seed would not grow, you substituted another seed for the one I gave you. Jim was the only one with the courage and honesty to bring me a pot with my seed in it. Therefore, he is the one who will be the new Chief Executive Officer!”
* If you plant honesty, you will reap trust
* If you plant goodness, you will reap friends
* If you plant humility, you will reap greatness
* If you plant perseverance, you will reap contentment
* If you plant consideration, you will reap perspective
* If you plant hard work, you will reap success
* If you plant forgiveness, you will reap reconciliation
* If you plant faith in God, you will reap a harvest
So, be careful what you plant now; it will determine what you will reap later.
“Whatever You Give To Life, Life Gives You Back”