Stock Trends for 2018

If you thought my Stock Trends for 2017 list was boring (same old stocks), just wait until you see the creativity of this year’s list. I said this last January 1st:

“Perhaps this list is old and boring (Buffett likes boring) but we’re here to make money, not be sexy.”

So, let’s get into the mind of Buffet, which will explain why I am going to “let it ride” for now…

“There seems to be some perverse human characteristic that likes to make easy things difficult.”

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”

Many of the stocks that I profiled in 2017, were the same old stocks that I profiled in 2016 and 2015. Following the trend has worked well so why should I try to get fancy, chasing a few percentage points here and there while increasing my risk? The 2017 portfolio returned nearly 42% and the basis of the setup didn’t include any sophisticated buy and sell rules. It was a simple buy and hold strategy. I’ll take 42% any year, hands down!

The current market run from the bottom in March 2009 will reach nine full years in 60 days. It has been an amazing run with amazing stats along the way. At some point, the trend will end. Unfortunately, no one knows if that will happen tomorrow, sometime in 2018 or at some point beyond 2018.

Take a look at these amazing S&P 500 stats:

  • The S&P 500 has had nine consecutive positive return years, tying the all-time record from 1991-1999 (we all know what happened in 2000).
  • Every month was positive for the S&P 500 in 2017, setting an all-time record, the first time that has ever happened in the history of the index.
  • In fact, the S&P 500 has been positive for 14 consecutive months, another all-time record.
  • The S&P 500 has been positive 14 of the last 15 years with only 2008 showing a loss.
  • The S&P 500 went 17 out of 18 years from 1982 to 1999, so perhaps there’s still room to run.

On the surface, the S&P 500 stats referenced sound like the end could be near but the famous quote:

“Markets can remain irrational longer than you can remain solvent”

keeps me from trying to guess. The “easy” thing to do is to continue playing until the market tells us otherwise. No one is smarter than the market and it will give signals when it’s over.

So, before I get into this year’s list, I once again suggest that 99% of all investors stick with low cost index funds and skip individual stocks altogether. Individual stocks are funny and carry too much risk for the casual investor.

*NOTE: the overall health of the markets must be positive for many these investments to do well.

Digital Currency & Blockchain:
Digital Currency has been on my list for several years and has worked well. I mentioned “blockchain and bitcoin” both in 2015 and 2017 but decided to ignore them as far as investments. Too bad for me as 2017 was the year of cryptocurrency.

Blockchain started to go mainstream in 2017 and I believe the mania will continue in 2018. The challenge with crypto currencies (coins, alt coins, tokens, etc.) is that 99% of the ones available today will not be here in the future, they are garbage or outright scams. Some may survive and new ones will be created but I suspect the leaders of these decentralized cryptos will start to emerge by the end of 2018. I am far from an expert on cryptos so please search elsewhere for advice on how and where to invest. The hope for crypto (and blockchain) is that the “technology” eventually supersedes the speculation and the intended benefits will be realized. (Disclaimer: as of this blog post, I own Bitcoin, Ethereum and Litecoin).

For a more traditional stock approach, these are the companies that I believe will continue to provide value and further upside through their stock shares:

  • V: 114.02. I continue to ride and hold Visa personally as it remains the world’s largest retail electronic payments network and is one of the most recognized global financial services brands. The stock returned 47% in 2017 and has been in an up-trend, above its 50-day moving average since last January. The stock provided a much better entry in January 2017, from a technical standpoint, but I am including again this year. As I said last year: “as a long-term shareholder, I’m holding, until it proves otherwise.”
  • MA: 151.36. Like Visa, MasterCard was also up over 47% in 2017 and has been riding its 50d ma since August 2016. The stock is currently trading sideways over the past several weeks, forming a base along the 50-d ma. My ideal buys are closer to the 200d ma but I will include Mastercard until it breaks down. Be careful buying any stock when extended.
  • SQ: 34.67. Square, Inc. was the one that got away last year. I went with PayPal (stocked up on $PYPL shares personally and it paid off with an 86% gain, I still own 50% of my original position). Personally, I still like PayPal (the company) but feel that the stock is extended so I am not including this year. I am going to take a chance on Square, a stock that went from $13 per share to as high as $49 per share in 2017. The stock has pulled back over the past five weeks, violating the 50d ma on heavy volume so we have to keep an eye on that (red flag). An ideal area to grab shares would be at or near the 200d ma, as long as it holds support. A violation of the 200d ma would be a big red flag. With all that said, I am going to take a chance on SQ. It carries with it some risk so be careful if you decide to grab shares.

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Stock Trends for 2017 Final Results

The results are in and the chrisperruna.com Stock Trends for 2017 outperformed the general market by a wide margin. The discretionary buy-and-hold (mock) portfolio logged final gains that were 48% larger than the Nasdaq, 66% larger than the DJIA and 115% larger than the S&P 500.

Final 2017 Results:

  • Stock Trends for 2017: +41.85%
  • Nasdaq Composite: +28.24%
  • Dow Jones Industrial Average: +25.08%
  • S&P 500 Large Cap Index: +19.42%

Final Results Fun Facts:

  • 20 of the 21 stocks show a gain for a 95% win ratio
  • 18 of the 21 stocks show a double digit gain or 86% of the stocks
  • 14 of the 21 stocks outperformed the three main US indexes
  • 8 of the 21 stocks gained more than 50% for an average of +69.23%
  • 6 of the top 10 gainers started as triple digit stocks (7 ended that way)
  • The top 10 performers had an average gain of +65.00%
  • The average gain of the positive stocks is +44.39%
  • The average gain of the positive stocks, with double digit gains is +49.16%
  • BABA was the top performing stock, with a gain of +96.37%
  • BABA peaked at $191.75 (52-week high), which gave the stock a +118% gain at the time

As 2017 ends, I maintain a bullish outlook on many of these names, heading into 2018 and beyond.

**Note: Adjusted close price adjusted for both dividends and splits.

Stock Trends for 2017 Portfolio:
$AAPL $AMZN $BABA $BCS $CYBR $FB $GOOGL $HACK $INTC $MA $MBLY $MIME $NFLX $NVDA $PANW $PYPL $TSLA $USO $V $VNTV $XME

The Wife’s Stocks Outperforming 3 Years Later

Back in August 2014, I decided to put a collection of stocks together that represent the products and services of companies used most often by my wife and family. I decided to call it “My Wife’s Mutual Fund”.

Original Post:
August 6, 2014: My Wife’s Personal Mutual Fund Outperforms the Pros

Follow-ups:
February 21, 2016: My Wife’s Personal Mutual Fund Crushes the Markets, AGAIN

August 7, 2016: My Wife’s Buy & Hold Strategy Still Crushing the Professionals

Based on past experience, I noticed that these companies were outperforming the market by a wide margin, especially on an individual basis.

What started as a playful review, became a serious pursuit of stocks that we decided to grab shares in. We don’t own every stock on the list below but we do own and have owned many over the years.

As of November 19, 2017, the 22 stocks have performed as follows (for purposes of the exercise, no trades have been made):

  • Total gain of 66.87% (adjusted for dividends & splits)
  • 19 of the 22 stocks show a gain
  • 17 of the 22 stocks show a double digit gain
  • 11 of the 22 stocks show a gain of at least 50%
  • 6 of the 22 stocks show a gain greater than 100%
  • The leading gainer, also the 2nd highest initial priced stock, is up 264%: Amazon $AMZN
  • 3 stocks show a loss: $CVS, $XOM and $KORS
  • An 86% success ratio

I’m not surprised to see, after years and years of gains (pre-2014), that these stocks continue to outperform the general market indexes. At this point in 2017, I believe that many of these stocks will continue to outperform in the years to come (and I’m making this statement deep into a multi-year up-trend).

I subscribe to a strategy of “keep it simple”. The run from March 2009 has certainly helped but these types of companies should continue to outperform going forward (a few may fall out of favor but the stronger ones will continue to dominate and innovative within their respective categories).

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Stock Trends for 2017 Beating the Market

The Stock Trends for 2017, comprised of 21 handpicked stocks (discretionary style), is beating the major market indices by a healthy margin. The Nasdaq Composite is the closest but still trails by four percentage points. In order to be even, the Nasdaq would have to improve its year-to-date results (12.24%) by 30%.

The Dow Jones and S&P 500 would have to more than double their year-to-date gains in order to match the portfolio gains.

Year-to-Date Results:

  • Stock Trends for 2017: +16.16%
  • Nasdaq Composite: +12.34%
  • S&P 500 Large Cap Index: +6.49%
  • Dow Jones Industrial Average: +5.96%

Note: Dividends not included in calculations.

Fun Facts:

  • 15 of the 21 stocks show a gain
  • 13 of the 21 stocks show a double digit gain
  • 6 of the top 8 gainers are triple digit stocks (5 started that way)
  • The average gain of the positive stocks is +24.77%
  • The average loss of the negative stocks is -5.36%
  • MBLY is the leading stock, with a 62.43% gain, after being bought by INTC (another stock on the list)

I will continue to follow the logic of the opening paragraph from the original post:

The trends that I am watching in 2017 are not much different than what I have been following and investing in over the past two years. As Newton’s first law stated, “An object in motion continues in motion…”. I could search for the “next hot thing” each year but why make investing more difficult than it already is when certain trends, technologies, products, services and companies continuously work.

The plan is to keep riding all winning positions higher, until the market trend changes.

Stock Trends for 2017

The trends that I am watching in 2017 are not much different than what I have been following and investing in over the past two years. As Newton’s first law stated,

“An object in motion continues in motion…”.

I could search for the “next hot thing”each year but why make investing more difficult than it already is when certain trends, technologies, products, services and companies continuously work.

Perhaps this list is old and boring (Buffett likes boring) but we’re here to make money, not be sexy.

Investing in the stock market should not be exciting or a path to get rich quick, rather it’s meant to moderately grow our existing capital over longer periods of time.

As I grow older, I have learned that I can beat most investors by being average. By investing (longer term) in low cost index funds and an assortment of stocks that have proven their worth, my returns have consistently outperformed social media stock pickers, active managers and mutual funds.

In fact, I suggest that 99% of all investors stick with low cost index funds and skip individual stocks altogether.

Ask yourself: why would you risk your capital with an active manager who will likely underperform over time, once the fees and activity eat away at the gains?

The S&P has provided an annualized gain of 14.5% over the past 8 years while the Nasdaq 100 has provided a 20.4% annualized gain. That’s a cumulative gain of 195% and 339% respectively.

I haven’t seen many active managers do better than this over the same period. Once again, why risk the guess work of tops, bottoms, trends, fees, commissions, etc.? If active managers were performing 2x-3x+ the averages, over 10+ year periods, then I would consider their services.

Now, let’s get to the list (which contains much of the products and services I use, as well as several of the stocks I already own):

*NOTE: the overall health of the markets must be positive for many these investments to do well.

Digital Currency:
As I did in 2015 (Stock Trends for 2015), I will skip the details surrounding blockchain and Bitcoin (which is above $1,000 as this post). Cash is still king worldwide, as more than 80% of all transactions globally (and 40% in the United States) are still carried out using cash, particularly transactions involving small amounts of money. So why is this good? Because the growth opportunity of electronic transactions is still substantial. I own several on the list and would recommend any of the seven.

  • PYPL: $39.47. PayPal operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants worldwide. The stock appears to be building a solid base above the up-trending 200d ma. A few more solid earnings reports and I can see the stock making a 50% move in 2017, from $40 to $60, riding that 200d ma higher.
  • AMZN: $749.87. Amazon Payments service competes with PayPal, Apple Pay, and Google Wallet, already owns a sizeable market share and may be its most “underappreciated” business, per RBC Capital. The stock is consolidating near it’s 200d ma and if it holds, could be poised for the next leg higher ($750 to $1,000?).
  • V: 78.02. Visa operates the world’s largest retail electronic payments network and is one of the most recognized global financial services brands. The stock has been mostly sideways over the past 6-12 months and is currently below the 200d ma during a multi-year up-trend. As a long-term shareholder, I’m holding, until it proves otherwise.
  • MA: 103.25. MasterCard operates the world’s second largest retail electronic payments network. Like Visa, I will continue to ride and recommend this stock until it proves otherwise.
  • AAPL: 115.82. Apple trailed its peers and the broader market in 2016 but may launch a comeback in 2017. The stock can be listed in several “trends” but I’ll place it here due to Apple Pay. The stock is back above its 50d and 200d ma’s. It needs a catalyst to make a run, perhaps the iPhone 8, a new technology and/or its electronic pay network? Deep down, I question whether the magic is gone, now that Jobs is long gone. We’ll see, but for now, I am still bullish on the company and stock. Adding shares below $100 has proved profitable over the past two years.
  • GOOGL: 792.45. Alphabet has both Google Wallet and Android Pay (I am an Android guy, without a doubt). The stock is consolidating above the 200d ma and could be setting up for a run towards $1,000. With wallet, pay, advertising, self-driving cars, etc., the stock could be listed under most trends on this post.
  • VNTV: 59.62. Vantiv is an electronic payment processing services to merchants and financial institutions in the United States. I placed the lesser known company/stock on my “13 Stocks for 2013 – 2nd Half” portfolio. I was early, as the stock traded mostly flat for the next 12 months but then it took off and more than doubled since. Like V and MA, it’s in a profitable business with excellent earnings. I can see this stock trading at $100 per share in the future.

Autonomous Driving:
Tesla, Ford, Uber, etc., each of these companies keep touting the revolution of self-driving cars. It’s coming and the technologies keep expanding. Nvidia was highlighted in 2015 and became the leader by going on a 440% tear, from $19.96 to a high of $119 in December 2016. The chips are hot again, therefore I added Intel to this list (another blast from the past).

  • NVDA: 106.74. NVIDIA Corporation, operates as a visual computing company worldwide. The stock is up big over the past 6-12 months and may need some time to digest the gains. I would advise new investors to allow the stock to consolidate on lower volume above a support area, such as the 50d ma.
  • MBLY: 38.12. Mobileye develops computer vision and machine learning, data analysis, and localization and mapping for advanced driver assistance systems and autonomous driving technologies. The stock is down since making my 2015 Trends list and has had a volatile ride with a high above $64 and a low of $23.57. Look for the stock to stabilize and mature a bit in 2017, now that the IPO is in the rear-view mirror. I could see a move from the upper $30’s to above $50 in 2017, however, it must recapture its major moving averages first.
  • INTC: 36.27. Intel designs, manufactures, and sells integrated digital technology platforms worldwide. Like NVDA, Intel is now in the self-driving game with its chips. The stock gained more than 20% from its low point of 2016 and is currently in an up-trend above the rising 200d ma. Chip stocks appear to be all the rage again (is this good or bad, as memories of the dot-com bubble appear in my head).
  • TSLA: 213.69. Tesla Motors Inc. designs, develops, manufactures, and sells electric vehicles and stationary energy storage products. What can I say, I’m a big fan of Elon Musk. I added the stock due to the Musk factor but I am suspect. It’s struggling to recapture and sustain a move above its 200d ma. December was a big month for the stock but since 2015, it has been mostly flat with lots of volatility (similar to MBLY).

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