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Dow Theory: The Formation of a Line
Dividend Capture Strategy Analysis
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Debunked – Death Cross
Work Smart, Not Hard
Charles H. Dow, Father of Value Investing
It's All About the Dividends
Dow Theory: Buying in Scales
How to Avoid Losses
When Dividends are Canceled
Cyclical and Secular Markets
Inflation Proof Myth
What is Fair Value?
Issues with P-E Ratios
Beware of Gold Dividends
Gold Standard Myth
Lagging Gold Stocks?
No Sophisticated Investors
Dollar down, Gold up?
Problems with Market Share
Aim for Annualized Returns
Anatomy of Bear Market Trade
Don’t Use Stop Orders
How to Value Earnings
Low Yields, Big Gains
Set Limits, Gain More
Ex-Dividend Dates -
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Historical Data
1290-1950: Price Index
1670-2012: Inflation Rate
1790-1947: Wholesale Price Cycle
1795-1973: Real Estate Cycle
1800-1965: U.S. Yields
1834-1928: U.S. Stock Index
1835-2019: Booms and Busts
1846-1895: Gold/Silver Value
1853-2019: Recession/Depression Index
1860-1907: Most Active Stock Average
1870-2033: Real Estate Cycles
1871-2020: Market Dividend Yield
1875-1940: St. Louis Rents
1876-1934: Credit-New Dwellings
1896-1925: Inflation-Stocks
1897-2019: Sentiment Index
1900-1903: Dow Theory
1900-1923: Cigars and Cigarettes
1900-2019: Silver/Dow Ratio
1901-2019: YoY DJIA
1903-1907: Dow Theory
1906-1932: Barron's Averages
1907-1910: Dow Theory
1910-1913: Dow Theory
1910-1936: U.S. Real Estate
1910-2016: Union Pacific Corp.
1914-2012: Fed/GDP Ratio
1919-1934: Barron's Industrial Production
1920-1940: Homestake Mining
1921-1939: US Realty
1922-1930: Discount Rate
1924-2001: Gold/Silver Stocks
1927-1937: Borden Co.
1927-1937: National Dairy Products
1927-1937: Union Carbide
1928-1943: Discount Rate
1929-1937: Monsanto Co.
1937-1969: Intelligent Investor
1939-1965: Utility Stocks v. Interest Rates
1941-1967: Texas Pacific Land
1947-1970: Inventory-Sales Ratio
1948-2019: Profits v. DJIA
1949-1970: Dow 600? SRL
1958-1976: Gold Expert
1963-1977: Farmland Values
1971-2018: Nasdaq v. Gold
1971-1974: REIT Crash
1972-1979: REIT Index Crash
1986-2018: Hang Seng Index Cycles
1986-2019: Crude Oil Cycles
1999-2017: Cell Phone Market Share
2008: Transaction History
2010-2021: Bitcoin Cycles -
Interesting Read
Inside a Moneymaking Machine Like No Other
The Fuzzy, Insane Math That's Creating So Many Billion-Dollar Tech Companies
Berkshire Hathaway Shareholder Letters
Forex Investors May Face $1 Billion Loss as Trade Site Vanishes
Why the oil price is falling
How a $600 Million Hedge Fund Disappeared
Hedge Fund Manager Who Remembers 1998 Rout Says Prepare for Pain
Swiss National Bank Starts Negative
Tice: Crash is Coming...Although
More on Edson Gould (PDF)
Schiller's CAPE ratio is wrong
Double-Digit Inflation in the 1970s (PDF)
401k Crisis
Quick Link Archive
Monthly Archives: October 2014
U.S. Dividend Watch List: October 24, 2014
Top Five Watch List Performance Review
In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from October 11, 2013 and have checked the performance one year later. The top five companies on that list can be seen in the table below.
Symbol | Name | 2013 Price | 2014 Price | % change |
IBM | IBM | 176.85 | 162.08 | -8.4% |
XOM | Exxon Mobil Corp. | 87.97 | 94.49 | 7.4% |
SCG | SCANA Corporation | 47.62 | 53.33 | 12.0% |
CAT | Caterpillar | 84.77 | 99.44 | 17.3% |
VMI | Valmont Industries, Inc. | 138.02 | 132.06 | -4.3% |
Average | 4.8% | |||
DJI | Dow Jones Industrial | 15,570.28 | 16,805.41 | 7.9% |
SPX | S&P 500 | 1,759.77 | 1,964.58 | 11.6% |
Watch List Review
IBM (IBM) was at the top of our list last year but shares fell 8.4% since we published our watch list. One October 18, 2013 we said the following about IBM shares.
According to our valuation model, the stock is priced just below fair value of $180. Our model indicates that the stock should be undervalue at or around $150. We’d look for more weakness to come.
IBM shares are trading a $160 which is slightly above but given that the company lifted the EPS guidance, we wouldn't be surprised if our fair value estimate should be reduced.
We highlighted Exxon Mobile (XOM) and alerted our readers that we took position in the stock prior to the ex-dividend date. We booked a gain of 14% from the transactions while the market gained 5%. The stock however has given some ground in recent weeks due to weakness in the oil price. If the stock retraced back toward the 52-week low, you can be certain that we will look to accumulate shares again.
U.S. Dividend Watch List: October 24,2014
After what appeared to be a minor correction in a short period of time, the market roared back and regained some ground. The S&P 500 rose 4% for the week. Based on that information, we would assumed that less companies will show up on our list and that was the case. The total number of companies that fit our criteria rose dropped to 101. Such figure is still a large number thus we will highlight 24 companies that are trading within 6% of the 52-week low. Continue reading
Quick Take: Carbo Ceramics
Review
On August 6, 2012, we purchased Carbo Ceramics with the following rationale:
“Carbo Ceramics (CRR) has been mentioned by us on several occasions. CRR first appeared on our February 10, 2012 U.S. Dividend Watch List (found here) and was trading at $85.94. An Altimeter was run on CRR which indicated that the stock would be undervalued at $62.40 (found here). However, as CRR has experienced a dividend increase of 12.5% since our May 28, 2012 Altimeter, the stock is now considered undervalued at $70. While we do expect approximately 20% downside risk from the current price, we are comfortable with adding to our position when such a decline takes place.”
As it appeared that Carbo was undervalued between $62.40 and $70, we used 5% of our portfolio to purchase the stock. After August 6, 2012, Carbo Ceramics fell as low as $63.03 and increased as much as $156.
Update
Below are the updated numbers for Carbo Ceramics after the decline from the most recent peak of $156. We will cover both aspects of CRR based on Gould’s Altimeter and Speed Resistance Lines. First, the qualitative review based on the Altimeter.
Gold Stock Indicator: October 17, 2014
In the last week gold managed to eek out a gain while gold stocks declined nearly –3%.
Dow Theory: October 17, 2014
NOTE: In our Dow Theory posting of May 18, 2014, we revealed an issue with Dow Theory that has gone unaddressed since S.A. Nelson’s book, The ABC of Stock Speculation, coined the term “Dow’s Theory.” We believe the acknowledgment of this issue adds clarity to the writings of Charles H. Dow and may produce new insights that have not previously been explored.
Netflix: Downside Targets
Review
On December 3, 2010, we ran the numbers for Netflix,based on the work of Edson Gould’s Speed Resistance Lines, to determine what the downside risk might be for the stock. The projected downside targets are illustrated below:
Not long afterwards, Netflix stock price soared from $185.45 to $300. However, the goal of our site is to determine downside risk and the rise in the stock price of was of little interest. Our view is that if we missed an investment opportunity then we will consider investing only if the stock declines to any of the anticipated downside targets.
Naturally, there was considerable opportunity that we missed on the way from $185 to $300. However, our rule is to seek values and from our experience all quality companies become undervalued at some point. Finally and for numerous reasons, Netflix declined from the peak of $300 to as low as $53.80. Naturally, we were able to pick up shares of Netflix at $62, a price we felt was reasonable at the time. Our critical review of the downside targets allows us to accept our purchases for the long-term in case we happen to be wrong about the short-term upside prospects.
October 15, 2014: Netflix Downside Targets
Commodity Index: Are We There Yet?
On October 29, 2013, we said the following:
“…if we are in a commodity bull market, as we’ve made reference to in our January 1, 2009 article, then there is a good chance that a bounce at the long-term technical support line would mark the end of the cyclical bear move in commodities.”
On October 15, 2014, the Bloomberg Commodity Index (sold to Bloomberg in July 2013 from S&P Dow Jones) declined as low as 116.96. As seen in the chart below, this sits at the exact long-term support level.
Gold Stock Indicator: October 10, 2014
Gold was up +2.22% and gold stocks were down as much as –4% and up +4% this past week. Gold stocks, as represented by the Philadelphia Gold and Silver Stock Index (XAU) finally settled at a loss of –1.98%.
U.S. Dividend Watch List: October 10, 2014
Top Five Watch List Performance Review
In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from October 11, 2013 and have checked the performance one year later. The top five companies on that list can be seen in the table below.
Symbol | Name | 2013 Price | 2014 Price | % change |
XOM | Exxon Mobil Corp. | 86.95 | 91.60 | 5.3% |
SCG | SCANA Corporation | 46.14 | 49.41 | 7.1% |
MAC | Macerich | 56.25 | 66.04 | 17.4% |
PM | Philip Morris International | 85.03 | 84.28 | -0.9% |
IBM | IBM | 186.16 | 185.93 | -0.1% |
Average | 5.8% | |||
DJI | Dow Jones Industrial | 15,237.11 | 16,544.10 | 8.6% |
SPX | S&P 500 | 1,703.20 | 1,906.13 | 11.9% |
Philip Morris (PM) was the worst performer with a loss of -0.9%. Last year, analysts' estimated that PM profits would rise by +10%. The actual result didn't pan out and the net income was virtually flat while shares remained at 16x earnings. A change in the expectation of profits was the likely cause for sub-par performance.
On the opposite end of the performance spectrum was Macerich (MAC) which gained +17.4%. When our watch list was published, the company was expected to grow their bottom line by +4%. Currently, analysts are expecting the profits to rise by only +1.4%. Even if the profits weren't expected to grow, shares can still outperform the market. Even more interesting is the fact that Macerich is an independent real estate investment trust or REIT. The key attribute for the increase in price can be point to multiple expansion for the stock.
We highlighted the low valuation of C.H. Robinson (CHRW) and price rose by +9.7% while earnings were expected to rise by +12%.
U.S. Dividend Watch List: September 26,2014
It was a volatile week for the market as the S&P 500 shed -3% and the volatility index (VIX) rose +46%. The Russell 2000 has broken a critical support level and is trading at the 52-week low. The Dow Jones Industrial Average has erased all the gains for 2014. The large number of companies on our watch list is an indicator of market weakness. With that said, we are starting to see good values as prices continue to fall. Our watch list expanded to 163 companies but we will display 37 companies that are of strongest interest to us.
Quick Take: GoPro Downside Targets
We’re fascinated with the news surrounding GoPro (GPRO). The stock went public on June 26, 2014 at $24 per share and has since increase in price to $89.93 as of October 8, 2014. As public offerings go, the rise in price is considered a success. As recently as October 7, 2014, Barclays raised their price target for GPRO from $45 to $60, in spite of the fact that the stock is already trading well above the new target price. It seems that Barclays doesn’t want to appear over anxious to recommend the stock even though they are not confirming their expectation for the stock to decline.
Posted in Edson Gould, GPRO, speed resistance line, SRL
Bitcoin: Speculators Unite…
…Investors need not apply.
On October 5, 2014, the price of Bitcoins dropped as low as $286.56. Reporting on it the next day, MarketWatch.com suggested that the reason for the decline was due to “…the sudden volatility to a large sell order for 26,000 bitcoin that was placed on the Bitstamp exchange, according to a story on CoinDesk.”
The explanations are always very interesting and may be the essential contributing factor that caused the decline. However, when it comes to the projecting of downside targets, Edson Gould’s Speed Resistance Lines (SRL) have provided the clearest estimates of downside risk. What follows is the chronicle of our analysis that preceded, well in advance, the price movement of bitcoin along with updated targets.
Posted in Bitcoin
Gold Stock Indicator: October 3, 2014
Another blowout week with the price of gold (as represented by GLD) declining –2.81% while gold stocks declined as much as –6.61%.