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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My Wife’s Buy & Hold Strategy Still Crushing the Professionals

My wife’s buying habits are beating the pants off the market, most mutual fund managers, hedge fund managers, retirement plans, pension funds and short term traders. And all at NO FEE (free here on this personal blog).

In what started as an experiment two years ago (after years of discussing the strategy), a buy-and-hold portfolio of 22 stocks was put together to see how it would perform against the market and professional traders alike. The idea of the portfolio was to buy and sit on the stocks (no active trading – ride the ups and downs of the market with high quality companies that sell goods and services that we use most often within our household).

I put the portfolio together on August 6, 2014, exactly two years ago, titled: My Wife’s Personal Mutual Fund Outperforms the Pros.

As of August 6, 2016, the 22 stocks have performed as follows:

  • Total gain of 36.08% (not including dividends)
  • Total gain above 40% with all dividends re-invested
  • 20 of the 22 stocks are positive
  • A 91% success ratio

Further:

  • 18 of the 22 stocks have a double digit gain, averaging 44% (80% of portfolio)
  • The leading gainer, the 2nd highest priced buy, is up 145%: Amazon $AMZN
  • 2 stocks show a loss: $KORS at 36.27% and $XOM at 5.62%
  • The portfolio is crushing the DOW, S&P 500 and Nasdaq
  • NOTE: Dividends have not been calculated into these stats (2 years of dividends increase the gains).

2016_08-06_Wife-Mutual-Fund-Image

Not bad for buy “quality” and hold.

I completely understand that the market has been in an up-trend for much of the past two years so all I can do is compare against the general market indexes, fund benchmarks and professional results. In all three cases, this buy-and-hold portfolio outperformed them all. And they outperformed each of them without incurring additional fees, additional time wasted for research or any time actively trading in-and-out.

I wrote an update on the 2014 blog post about six months ago (February 21, 2016), showing how the strategy was winning: My Wife’s Personal Mutual Fund Crushes the Markets, AGAIN

The portfolio of 22 stocks:
$AAPL – Apple
$SBUX – Starbucks
$GOOG – Alphabet
$AMZN – Amazon
$FB – Facebook
$COST – Costco
$TGT – Target
$COH – Coach
$KORS – Michael Kors
$CVS – CVS Health Corp
$NFLX – Netflix
$DIS – Walt Disney Co
$JNJ – Johnson & Johnson
$PG – Proctor & Gamble
$V – Visa
$MA – MasterCard
$PEP – Pepsico
$TJX – TJX Companies
$HD – Home Depot
$VZ – Verizon
$XOM – Exxon Mobile
$WFC – Wells Fargo

The older I get, the more I realize that buy and hold (over a period of time), for a retail investor, will outperform most strategies within the market. Retail investors should just buy and hold low cost index funds and not entertain an idea such as the above buy if you must trade in the market, consider buying and holding the stocks of companies that you do the most business with. Know what you invest in.

The next step will be to see how this portfolio of stocks performs during a down-turn or major correction. Of course the stocks will lose value but how will they perform compared to the major indexes and other active investing strategies and professional traders.

I think they’ll do fine.

P.S.: KORS should be replaced with $MSFT (considering we use Microsoft every day – this was an oversight and bias two years ago).

My Wife’s Personal Mutual Fund Crushes the Markets, AGAIN

My wife’s so-called “personal mutual fund” returned 22.72% from August 5, 2014 through to last Friday, February 19, 2016 (approximately 18 months).

As a comparison, the following stock market indices performed as follows:

Dow Jones Industrial Average: -0.23%
S&P 500: -0.13%
NASDAQ Composite: 3.48%

Her buying habits CRUSHED the general markets, by a HUGE margin, just as they had from the day we were married back in 2004.

2016_02-21_Wife-Mutual-Fund-Image02

The personal mutual fund (as outlined in the blog post, My Wife’s Personal Mutual Fund Outperforms the Pros, back on August 6, 2014), highlighted 22 stocks of companies whose products or services she religiously buys or uses on a daily or weekly basis.

Of the 22 stocks, 20 show gains while only two show a loss ($KORS and $XOM). The top five leaders are as follows:

  • Amazon ($AMZN) leads the pack with a 71% gain
  • Home Depot ($HD – actually my store) is second with a 56% gain
  • Starbucks ($SBUX) comes in third with a 53% gain
  • Netflix ($NFLX) is up 47%, a service used by the entire family
  • Facebook ($FB) is up 43%: yes I admit it, we are both addicted (very bullish going forward)

This is simple investing logic (for our family) as we use the products and services of these five companies every day (HD being the lone exception for daily use, but monetarily, it may lead the pack).

Amazingly, 14 of the 22 stocks show a double digit gain:
$AMZN $HD $SBUX $NFLX $FB $V $TJX $COST $TGT $CVS $GOOG $MA $PEP $DIS

The other six positive stocks show a gain between 0.1% and 9.94%:
$VZ $JNJ $PG $COH $AAPL $WFC

For the second time in less than two years, I am convinced that my skills, or lack thereof, are no match for the power of my wife’s product and service buying habits. Hands down, her habits are kicking the market’s a$$ and my a$$ for that matter.

Who needs a financial advisor or one of these “trendy” new robo advisors when I can just copy what she is buying and doing?

As I said back in 2014:

Peter Lynch subscribed to the idea of “know what you own”. I know what my wife owns and can take the lesson that many other wives (and people in general) are buying what she is buying. Consumers = profits and profits typically lead to earnings which leads to a rise in share prices. Sounds like a simple formula.

The formula is WORKING!

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A Recap of Stock Trends for 2015

In the blog post, Stock Trends for 2015, twenty-eight stocks were identified as represented by six trends over the course of the year with the following results:

The lazy man’s portfolio had a total gain of 12.79%

  • 18 stocks ended in positive territory
  • 10 stocks ended in negative territory

NOTE 01: by “lazy man”, I mean that the 28 stocks would have been bought and held all year without any buy and sell rules. Clearly, the exercise was for observational purposes ONLY.

Comparison to US Markets:

  • NASDAQ: +5.94%
  • S&P 500: -0.69%
  • DJIA: -2.29%

Comparison to All World Markets:

  • All Markets (Average): -10.20%
  • Fifteen stocks logged double digit gains.
  • One stock logged a triple digit gain.
  • Six stocks logged double digit losses.
  • The big winner was Amazon.com, $AMZN, with a gain of 132.47%, moving from $290.74 to $675.89
  • The big loser was Barracuda Networks, $CUDA, with a loss of -47.40%, moving from $35.51 to $18.68

2016_01-02_AMZN_wkly

It’s interesting to note that CUDA was actually showing a 22% gain in April 2015, running as high as $46.78 before crashing in the summer and ending the year at $18.68.

Six of the ten leading gainers started with a triple digit share price while the bottom three losers all started below $40 per share. One may argue that this outcome further confirms the observation from William O’Neil:

“What seems too high and risky to the majority generally goes higher and what seems low and cheap generally goes lower.”

Of the six trends, the groups performed as follows:

Digital Wallets (currency) & Mobile Payments, +43.53%

  • The group was up a collective 43.53%
  • Companies in group: $AMZN $GOOG $V $MA $AAPL
  • 5 of the 6 stocks showed a gain
  • 1 of the 6 stocks showed a loss (less than 1%)
  • The leading gainer was AMZN at 132.47%
  • The leading loser was AAPL at -0.69%

Self Driving Cars (Future of driving), +37.35%

  • The group was up a collective 37.35%
  • Companies in group: $NVDA $GOOG $TSLA $MBLY
  • All 4 stocks showed a gain
  • The leading gainer was NVDA at 65.13%
  • The trailing gainer was MBLY at 10.48%

Drones & Unmanned Aircraft, +9.25%

  • The group was up a collective 9.25%
  • Companies in group: $NOC $AVAV $LMT $BA $TXT $LLL
  • 4 of the 6 stocks showed a gain
  • 2 of the 6 stocks showed a loss (both less than 5%)
  • The leading gainer was NOC at 23.14%
  • The leading loser was LLL at -4.90%

Biotech, +5.68%

  • The group was up a collective 5.68%
  • Companies in group: $REGN $ILMN $CELG $JUNO
  • 2 of the 4 stocks showed a gain
  • 2 of the 4 stocks showed a loss
  • The leading gainer was REGN at 32.83%
  • The leading loser was JUNO at -12.31%

Social & Web based brands, -2.43%

  • The group was down a collective -2.43%
  • Companies in group: $FB $LNKD $BABA $TWTR
  • 2 of the 4 stocks showed a gain
  • 2 of the 4 stocks showed a loss
  • The leading gainer was FB at 39.21%
  • The leading loser was TWTR at -37.98%

Cyber Security, -4.86%

  • The group was down a collective -4.86%
  • Companies in group: $PANW $CYBR $CHKP $QLYS $RDWR $CUDA
  • 3 of the 6 stocks showed a gain
  • 3 of the 6 stocks showed a loss
  • The leading gainer was PANW at 40.90%
  • The leading loser was CUDA at -47.40%

NOTE 02: none of the figures above include dividends
NOTE 03: Google (Alphabet) $GOOG is represented in two groups when results are separated by trends

Of the twenty-eight stocks listed in 2015, I will definitely give a look and consider the following heading into 2016: AMZN, FB, GOOG, V, MA, TSLA, BABA, CYBR

Although many of these stocks have been up for one, two or even three plus years, don’t let that discourage you until the trend changes.

“The trend is your friend except at the end when it bends.” – Ed Seykota

2015_12-31 - Watch List- Dec-sm

Stock Trends for 2016 will be issued shortly.

Stock Trends for 2015

I’m always in search of trends that may offer solid investment opportunities (using individual stocks) but at the same time may not be “bleeding edge” technology. The best performing trend trading stocks don’t have to be unknown or highly touted IPO’s but rather they can be established companies. In searching for trends in 2015, the list of stocks I have developed is a combination of small growth, IPOs and established names.

So let’s identify a few trends that should continue to grow in 2015 and then identify a few stocks within each of these groups that could provide some upside. One caveat: the overall health of the market must be positive in order for the majority of these investments to do well.

Six trends come to mind:

  • Cyber Security
  • Biotech
  • Digital Wallets (currency) & Mobile Payments
  • Drones & Unmanned Aircraft
  • Self Driving Cars (Future of driving)
  • Social & Web based brands

Cyber Security
$CYBR, $PANW, $CHKP, $CUDA, $QLYS, $RDWR

One of the obvious trends that should continue in 2015 is cyber security as breaches at major corporations around the world continue. Home Depot, Target, Staples, Michael’s and most recently Chick-Fil-A have all admitted to being “hacked”. And who can forget about the fiasco at Sony (whatever the real story may be). These companies and especially financial institutions must spend more money to protect their servers, clouds, data and integrity. This is precisely why I initiated a position in the cyber security sector in late 2014 and will continue to add to the position (at ideal risk / reward entries), using multiple stocks to diversify within this growing trend. One idea I have considered is building my own cyber security motif which would likely include several of the stocks listed above. Taking that idea further, a motif containing many of stocks listed in today’s overall blog post is a possibility as well.

2015_01-18_CyberSecurity_6mth

Biotech
$ILMN, $JUNO, $CELG, $REGN

The next trend that I like is biotech (a carry-over from 2014) and the big winner over the past several years has been Regeneron Pharmaceuticals. I have had the unique perspective of working with $REGN as they have expanded their headquarters in Tarrytown, NY; consulting for them (Real Estate & Construction) since January 2010 when the stock traded at $25 per share – it’s now trading above $400. Due to this professional relationship, I have mostly avoided talking about the stock on the blog and twitter.

With that said, I still like the broad sector. Illumina was a rock star in 2013 but traded mostly sideways in 2014. I liked the action in 2014 and view it as a long term flat-type base that looks poised to breakout above $200 per share. Sounds expensive, right? So did REGN at $100, $200 and $300 (after running from $25). $ILMN made a breakthrough in DNA sequencing and looks poised to continue that trend as well as expand elsewhere.

Next up is Juno Therapeutics, a biopharmaceutical company that engages in developing cell-based cancer immunotherapies. The company develops cell-based cancer immunotherapies based on its chimeric antigen receptor and T cell receptor technologies to genetically engineer T cells to recognize and kill cancer cells. Young IPO stocks are risky and typically like to build bases within the first year of trading but I am placing $JUNO on the list (use caution with first year IPOs). Cancer is not going away and the fight against it will continue to grow.

Both CELG and REGN can be added to a portfolio as their businesses continue to be cash cows.

2015_01-18_BioTech_6mth

Digital Payments (currency) & Mobile Wallets
$AAPL, $GOOG, $AMZN, $V, $MA

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