Stocks

Stocks for the Long RunThis is a list of stocks that Fundamental Trends subscribers generally hold for extended periods. On rare occasion we might trade short-term on news or large price swings, however, we are generally on a 3 to 5 year time horizon. People who are looking to trade frequently are genearlly making a mistake. Not only are trying to trade against super computers, hedge funds and investment bankers, they are destined to miss the biggest moves by being "out" when something happens and they wake up to see the news and stock price move too late.

Our core criteria for buying any stock is that we believe it can double in price within five years as a worst case scenario. We believe in building in a "margin of safety" on each purchase.

Most stocks will be released to the public once we are done accumulating a position, generally four to twelve months after initial purchases are made. Often we will use selling cash-secured puts to build a position. Those trades are noted in the Options section. 

Many people will build a 20-30 stock portfolio over a few years and then slowly replace expensive stocks with cheaper stocks. It is a process designed for the patient, thoughtful, forward looking and emotionally controlled. Asset allocation is a seperate issue. Some subscribers buy nothing but stocks, but most blend with an ETF allocation. I recommend blending an ETF portfolio with a stock portfolio. Read the guide you get when you subscribe to learn how to build an asset allocation that is right for you.

Your strongest edge as an investor is the ability to evaluate a company and let the calendar work for you. Not only can you beat the market that way, but you can do other things with your time.

Potash Corp is once again within our buying range. There are two different trades you can make. 

Buy the stock outright at market

OR

Sell a cash-secured put.

The CEO of the company stated that this appears to be the bottom of the cycle. As I've pointed out, the capex pullbacks in potash, much like in oil and gas, is going to fuel a sharp rally at some point. Right now people are selling the downward momentum. That won't last but a month or two from here most likely. Here's a quant analysis chart:

What the chart indicates is that the drop in share price is nearing an extreme point that is ripe for reversal. The 52 week low is $14.64. It's pretty unlikely to get there, however, it might. If it does, it'll probably head to around $12-13. I am comfortable buying a little stock now and if it falls more, a little more later. The potential upside on the fertilizer stocks, POT, MOS, is well over 100% from these price levels the next 2-4 years, and there is very little risk left. That's a good trade-off. 

Recommendation:

Buy shares of Potash at market.

Sell cash-secured puts of Potash: Sept $15 puts at market (about 55ยข now).

It is not a bad idea to do a percent or two of both ideas, however, one or the other is fine depending on your risk tolerance and type of account.

Kirk

 

 

 

I have started a thread for AbbVie in the forum. 

After doing a lot of reading about AbbVie, I have decided to add it to the Very Short List and establish a limit order for making a first buy of the stock.

While I do expect short-term market weakness, I also expect healthcare stocks to do very well coming out of election season once the rhetoric gets dialed down.

I am expecting some retrace soon on the general market weakness, so that is where I'll make my first buy.

You'll see the stock has started a general trend upward with higher lows. Most recently it has started to have narrower and narrower ranges. That's a good sign for a breakout possibly after the next breather. 

I have entered a limit order at $54 per share for AbbVie - ABBV, GTC, for 1% of the PCS and Retirement Income Options portfolios.

Kirk

NOTE: Never Executed

Potash Corp is one of the most important agriculture companies on the planet. This sell-off is overdone. I will take the dividend as I wait for continued droughts to push demand for fertilizer and bad financial circumstances restraining competition. I am buying up to 2-4% of NAV.

Buy shares of Potash Corporation - POT at market tomorrow around $15.50-16.

Kirk Spano

Fundamental Trends

http://FundamentalTrends.com