3 Hour Investor Newsletterincorporating the “Newsletter Portfolio”

Year 2. Week 18-Part 2

  • Note this is part 2 of Week 18’s report
  • Apologies for truncated report

Status of US and Aus Markets.

Green / RED
USA DJA / 1
USA S&P500 / 1
USA Nasdaq / 1
USA Russell 2000 / 1
USA VIX (inverted (means Green is shown as RED) / 1
USA DJA Futures / 1
USA S&P 500 Futures / 1
USA NASDAQ Futures / 1
USA Russell 2000 Futures / 1
Aus XJOAI / 1
AUS XMD / 1
AUS XSOAI / 1
AUS XVI (Vix) (inverted) / 1

Overall market signals look mostly GREEN to me.

ASX Indices with ROAR above 20%

New section for this report. Here are the ASX indices which closed the week with ROAR(6 months rather than annual) above 20%. (purpose of this section….if an index is going up…perhaps consider looking at its component stocks to check for anything worth buying). (if it closed green for the week I’ll mention it)

Indices going up at or > 20% ROAR (6 mths) / Indices that are positive and over 10% over 6 months ROAR.
XEC emerging companies
XEJ ASX 200 energy
XMJ ASX 200 Materials
XSOAI Small Ords total return
XGD ASX 300 GOLD
XJR ASX 200 Resources
XMM ASX 300 Metals Mining.

Looking at the above table the following might be reasonable conclusion. “ if you’re not in small companies and mining companies…you’re not where the growth is in our market!”. Does any of your portfolio fit with that conclusion? If not what are you going to do about it or do you have a good reason to stay as you are?

VALUE index update

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)

  • 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 itindicates we’re at the top of the market?

Stocks worth assessing as suitable for purchase if conditions are right this week

We’re fully invested at the moment…so we won’t be buying unless one of our stocks is sold.

Strategy 1 securities / Strategy 2 Stocks
A2M* / ABP*
AGI / BPT*
ALU* / CDA*
APX* / CSR*
AWC* / CTX
BKL / HFA*
CGC* / KMD*
CIM* / NHC
GDI / RCG
IAA* / RIO
IEM* / VLW*
IFL
IZZ
MIN*
MLD
MTR
NHC
ORA
RFF*
SDA
TWE*
WHC*

Note this week I’ve completely updated the list and personally would be prepared to buy any of the stocks or ETFs on the above list provided that the markets were trending up on the day of buying. As you can see I do already personally own many of the stocks on the list above.

Strategy one = stocks with (a) acceptable fundamentals plus (b) are rising at over 20% (or close) on a 6 month ROAR basis or are ETFs with a growing price trend

Strategy two = stocks with high return on assets and low PE and acceptable market support.

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
/ BKL
  • Strong Stock
  • ROA 19%+
  • EPSG June 18+28% forecast
  • PEG 0.95 forecast
  • Average daily trade $5.2m
  • Div Yield above 4% (forecast)
Is Blackmores back? Maybe worth a look
/ IEM*
  • 5, 3 and 1 yr return: 9%, 9% and 20%.
  • Div yield about1%
  • Daily Turnover about $1m
As you can see this ETF has given a steady return over the past 5 years and provides a way to diversify your portfolio away from Australia and is currently trending up. What’s not to like?
/ SDA Speedcast Australia
  • 3 and 1 year returns are 33% and 23%
  • PE is 18 prospective and PEG is 0.35
I’ve not come across this company before and yet I like what I see, perhaps worth a look for your portfolio

Parting comment

Each of these charts show some interesting moves in the past week.

USA’s small companies index is roaring up over the past few weeks

Australia’s small ordinaries index has also popped up in recent weeks after about a year in the doldrums

Maybe the market is seeing value at the smaller end of the market.

Bond prices are taking a bit of a dive (implying higher interest rates)…the money seems to be going into small stocks

What does it all mean? Here are the things that I remind myself of

  • We are at least one day closer to a big correction
  • I have to be in the market to make a return…If I’m out of the market my return is fixed in Australian dollars are below 2% which is not a happy place to be.
  • If I’m in the market I must be ready to sell
  • Things change, views change, markets shift…often not that quickly…but fast enough that I have to be nimble with my views and respond accordingly. If I sit still I’ll lose money.
  • What are you watching for in regards to your portfolios?
  • 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 usually 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.