Below are the valuation targets for Berkshire Hathaway (BRK-A) for the next 10 years. Continue reading
- Japan
- Market Indicator
- Price Momentum Indicators
- Richard Russell
- Silver
- Speed Resistance Lines
- U.S. Dividend Watch List
Diversification: DJIA vs. S&P 500
The long-standing view is that being diversified is better for the purpose of limiting losses. the data from the most recent decline from the peak in the market confirms, for now, that diversification doesn’t matter.
| DJIA | S&P 500 | |
| 1 day | -0.94% | -1.10% |
| 2 days | -4.06% | -4.35% |
| 3 days | -4.27% | -4.49% |
| 4 days | -4.12% | -4.52% |
| 5 days | -4.77% | -5.05% |
| 6 days | -5.48% | -5.83% |
As of October 11, 2018, and going backwards to October 3, 2018, the Dow Jones Industrial Average (DJIA) and S&P 500 have declined. However, the extent of the decline defies the norms of diversification and concentration in investments.
In all scenarios, the Dow Jones Industrial Average declined less than the S&P 500. As an example, from the October 3, peak to the present, the DJIA declined –5.19% while in the same covered period, the S&P 500 declined –5.56%.
Conventional wisdom says that concentrated portfolios should rise more and fall more than diversified portfolio. In theory, both the DJIA and S&P 500 are comprised with the same high quality stocks. Therefore, the comparisons is supposed to be like-for-like.
This brings us back to the October 9, 2007 to March 9, 2009 period, when the Dow and S&P 500 peaked and troughed, respectively. Strangely, the more concentrated Dow Jones Industrial Average, counter to the conventional wisdom, declined less than the S&P 500. The 3% difference seems to be small, however, the theory of diversification and its failure, suggests that the amount is huge.
Posted in diversification, DJIA, S&P 500
Chart of the Day: Federal Home Loan Mortgage Corporation
According to Yahoo!Finance, Federal Home Loan Corporation (FMCC), “…operates in the secondary mortgage market in the United States. The company purchases residential mortgage loans originated by lenders, as well as invests in mortgage loans and mortgage-related securities. It operates in three segments: Single-family Guarantee, Multifamily, and Capital Markets.”
Many claim that the financial crisis of 2008 was unforeseeable. Others claim they knew about it but weren’t specific about where the carnage would occur. Robert Rodriguez was clear and specific about the company formerly known as Freddie Mac. FMCC is down –97.82% since the comments made by Rodriguez.
Posted in Chart of the Day, FMCC, FRE, Freddie Mac
Sears Holdings: The Confidence Unwind
On September 28, 2018, we said that “Delisting and Bankruptcy Await.” On October 10, 2018, it was reported in Bloomberg News that there is talk of Sears filing bankruptcy as early as October 13, 2018.
If we look at the price of Sears on September 28 2018, almost anyone could make the claim that Sears was facing delisting and bankruptcy. After all, by that time, SHLD was trading below a dollar and had fallen –86% in the last year. So it was no feat of epic proportions to claim that SHLD was on its deathbed.
However, when Sears was trading above $30, we said the following:
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"Sears Holdings (SHLD) on the other hand has been worth avoiding as the stock has declined as much as –42% and is currently down –18%. SHLD has rebounded to some extent but continues to be too hot to handle in our opinion.”
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"The worst performing stock was Sears Holdings (SHLD). Sears has essentially traded with descending peaks since 2007 with price support at around $30. A break below $30 could result in significant loss for any remaining shareholders. Private equity firms must be circling Sears at the prospect of a decline below the long-term support."
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Even at what is now a towering price of $30, Sears (SHLD) was a dumpster fire in the making.
Lam Research 10-Year Targets
Below are the valuation targets for Lam Research (LRCX) for the next 10 years. Continue reading
Maxim Integrated Products 10-Year Targets
Below are the valuation targets for Maxim Integrated Products (MXIM) for the next 10 years. Continue reading
Chart of the Day: Roadrunner Transportation
Yahoo!Finance indicates that Roadrunner Transportation, “…provides asset-right transportation and asset-light logistics services. The company operates through three segments: Truckload Logistics (TL), Less-than-Truckload (LTL), and Ascent Global Logistics.”
Posted in Chart of the Day, RRTS
KLA-Tencor 10-Year Targets
Below are the valuation targets for KLA-Tencor (KLAC) for the next 10 years. Continue reading
Ebix Inc.: Downside Targets
Ebix Inc. (EBIX) is described as a, “…software and e-commerce solutions to insurance, finance, and healthcare industries. It offers software development, customization, and consulting services to various entities in the insurance industry, including carriers, brokers, exchanges, and standard making bodies.”
The recent decision of Ebix to change their accountant is explained for the recent drop in the stock price. Although, to our mind, the stock price peaked in February 2018 which set the declining trend in motion. Below are the downside targets for EBIX.
At the current rate, EBIX appears destined for the $41.98 downside target. The relative nature of the increase in the stock price from around the $10.00 level to $86.90 makes the $28.97 price a distinct possibility.
Posted in downside, EBIX, Speed Resistance Lines, SRL
Western Digital 10-Year Targets
Below are the valuation targets for Western Digital (WDC) for the next 10 years. Continue reading
Chart of the Day: SAExploration Holdings
Yahoo!Finance describes SAExploration Holdings (SAEX) as, “…an oilfield services company, provides seismic data acquisition and logistical support services in Alaska, Canada, South America, West Africa, and Southeast Asia. Its seismic data acquisition services include program design, planning and permitting, camp service, survey, drilling, recording, reclamation, and in-field data processing.”
Posted in Chart of the Day, SAEX
Analog Devices 10-Year Targets
Below are the valuation targets for Analog Devices (ADI) for the next 10 years. Continue reading
Nasdaq 100 Watch List: October 2018
Below are the Nasdaq 100 Watch List stocks for October 2018. Continue reading
Interest Rates and the Dow
The secular trend for interest rates is clearly up after declining since April 1981.
There are “experts” on the topic of interest rates and the stock market claiming that the Federal Reserve policy of “artificially low” interest rates is the reason the stock market is up since the low of 2009 and as a supplemental proof of their lack of knowledge, the “experts” include the Dow increase from the 2001-2003 lows as the devil’s handiwork. These same “experts” also claim that the stock market will crash if rates start to go up.
Yes, stocks can go down as a function of rising rates. However, this needs to be put in context of the overall market. As we start to emerge from a secular declining trend, from 1981 to 2008, to a secular rising trend, from 2008 to 2035, the only comparisons of the current rising trend can only be done to the last secular rising trend from 1942 to 1981.
The “experts” claim this time is nothing like the postwar economy that led to the rate peak in 1981. We’ll have to wait and see, for now the following data stands in opposition of the “experts.” Continue reading
Chart of the Day: Spectrum Global Solutions
Yahoo!Finance describes Spectrum Global Solutions (SGSI) as a company that, “…provides services and infrastructure solutions to the telecommunications industry, utility entities, and enterprises sectors in Canada, the United States, and Puerto Rico. Its engineering, design, construction, installation, and maintenance services support the build-out, maintenance, upgrade, and operation of fiber optic, Ethernet, copper, wireless, wireline, utility, and enterprise networks.”
Posted in Chart of the Day, SGSI