i have a way of finding out which themes are the strongest. whenever there is a market downturn, the stocks that go down the least are the ones who's long term theme is the strongest. i can easily rank them by clicking on the "52 week high change %" column in yahoo finance to sort it.
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theses/catalysts (faves):
- thesis broken: defense (lmt) - rise in populous anti-war movements
- AI (nvda, crm - agentforce)
- nuclear energy (gev, ceg, avoid uranium miner ccj - mining is usually unstable)
- cybersecurity (panw, crwd)
- reshoring (etn, emr, hon)
- infrastructure spending/trump tarrifs (cat, nue)
- diabetes/glp-1 (lly) thesis broken: podd, dxcm- glp-1 makes their products obsolete
- thesis broken: always more fun in the philippines (ephe) - AI agentforce threatening call centers. hedge by buying crm.
- YOLO (You Only Live Once) (ba,rcl,bkng,nclh,fun) - boeing is a duoploy so it will always bounce back
- YOLO (You Only Live Once) (ba,rcl,bkng,nclh,fun) - boeing is a duoploy so it will always bounce back
- non-ownership/gig economy (uber, abnb, tsla - robo taxis)
- rise of MRI demand due to AI (gehc)
- rfk support for marijuana (*smg)
- ukraine/middle-east conflicts (lng,d, avoid natgas producers like chk - gas prices always low)
- humanization of pets (zts, idexx, avoid pet stores and pet foods - no moat)
- oil and coal downtrend (fslr, tsla, thesis broken: alb - no more moat and chile unstable)
- dying movie theaters (nflx)
- cashless society (v, thesis broken: pypl - no more moat)
- ukraine/middle-east conflicts (lng,d, avoid natgas producers like chk - gas prices always low)
- humanization of pets (zts, idexx, avoid pet stores and pet foods - no moat)
- oil and coal downtrend (fslr, tsla, thesis broken: alb - no more moat and chile unstable)
- dying movie theaters (nflx)
- cashless society (v, thesis broken: pypl - no more moat)
- other healthcare mrk,azn (cancer), ew isrg (robotics) stay away from car-t cells, hospitals, and insurance unh cnc - hostage to politics)
google "XXX motley fool" and "XXX seeking alpha" where XXX is the stock ticker symbol. these articles usually give you the high level or long term factors to consider. look for titles that says something like "is XXX a buy?".. ignore the articles that talks more about the numbers or earnings. keep in mind you only care about the long term and you don't care about the short term performance of a stock.
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answer: the current and proposed export terminals will only be able to export 3.5 tcf a year (cheniere will be exporting about 36% of that or 1.27 tcf). so it will lessen it from 90 years to 75 years supply. however, by that time advancements in renewables like solar will probably replace most of our fossil fuels needs. worse case scenario, there is always nuclear energy and we still have 400 years supply of coal. these potential negatives (which most probably will never happen) far outweigh the sure positives such as job creation (https://lngexports.com/#/?section=thebenefits-of-lng-exports) not only from exporting but also production because exporting will help decrease the supply, increase the price, and make it more profitable to drill more wells so it creates more jobs. the effects would also ripple to other industries such as steel. it could also cut our $500 billion trade deficit by 6.5% - https://www.hudson.org/research/14366-can-liquefied-natural-gas-solve-the-trade-deficit
actually, i had this wacky theory that the reason why america is suddenly desperate to harvest it's oil and natgas reserves is because solar energy is threatening fossil fuels so america is panicking to cash in while it still can. however i can't find an article in the internet confirming this so maybe it's not true. i found out the real reason is that it was too expensive to extract because most of our oil/natgas are trapped between very hard to penetrate shale rocks. but in 1997 someone perfected a technique called fracking/horizontal drilling that can produce shale oil at $30/barrel break even point (for reference, conventional oil reserves such as those in saudi arabia produce oil at just $10/barrel). so when oil went up to around $140 in 2008, america unleashed an oil and gas revolution. the recession caused by the mortgage crisis caused oil to momentarily dip to around $50 but it quickly recovered to around $100 in just over a year. however the slowing economy of china caused the price of oil to start declining. saudi arabia could have easily stabilized the price by cutting production but it decided to let prices fall in hopes that it will put the shale companies in america and oil sand companies of canada out of business. this caused the 2015 oil crash. although low oil prices hurt the oil sector of america, saudi arabia's strategy backfired because it forced the US shale companies to be more efficient or find innovative ways to bring down cost. it brought down the average break even point from $50/barrel to $30. low gasoline prices also benefited many other sectors - travel, dining and manufacturing (lower raw cost) which ignited the economic boom in america. the improving economy of america increased demand for oil, and couple this with OPEC agreeing to cuts in oil production, the price of oil started to recover.
the jobs created in america's oil/natgas industry is very important to offset the job loses in other sectors due to automation. that's why the immigration policies of republicans makes more sense to the american voters no matter how racist or cruel they may seem. democrats argue that there was a time when we let anyone in and those immigrants such as their great grandparents made america great. that is true. everyone agrees with that. except during those time there was an industrial revolution and we needed people to work in the factories. now everything is automated so we don't need that much immigrants anymore. so it will be tougher for you, your kids and grand kids to find a job if we just let anyone in.
lng can also be used as an economic weapon against russia who's natgas supplies 50% of europe's electricity needs. if we develop more lng export terminals, this will scare russia and give us more bargaining power in the negotiating table.
3) if exporting natgas increases domestic natgas prices, won't this increase the electric bill of the americans? won't the voters get angry and pressure their lawmakers to ban the exporting of natgas?
answer: the electricity bills for americans are already low enough. besides, further lowering natgas prices would hurt the natgas industry and the economy because the producers, who employ thousands of people, won't be able to make a profit so they cease operations. besides, the natgas infrastructure of america with it's thousands of miles of pipelines is so nimble such that it can easily produce more whenever it needs to stabilize the price. THIS MEANS YOU SHOULD STAY AWAY FROM NATGAS PRODUCERS LIKE CHK even if you are a okc thunder fan (whose homecourt is chesapeake arena)
there used to be a very strong lobby by the manufacturers who use natgas as raw material (e.g. chemical companies and plastic makers) against exporting of oil and natgas. they were afraid exporting natgas might make natgas more expensive. but that was before the discovery of new drilling/fracking techniques that enabled us to produce as much natgas as we want at will. https://www.brookings.edu/research/lift-the-ban-on-u-s-oil-exports/
also, natgas producers themselves are afraid natgas prices will revert back to it's historical highs because the reason why america is switching from coal to natgas is because it's now 16% much cheaper to generate electricity than coal. it was not really for environmental reasons. if natgas prices goes up too high, electric utility companies might switch back to coal so producers end up selling less natgas so they make less money.
even the anti fossil fuel democrats are supporting the exporting of natgas - https://lngexports.com/#/?section=what-they-are-saying
4) cheniere and dominion will have too much competition from other countries and other sources of energy. what if other countries follow trump and say fuck you to the climate accord and revert back to using coal?
answer: cities in china are literally suffocating from smog pollution because of their coal power plants. natgas is 50% cleaner than coal so this will solve their air pollution woes. they can say fuck you to global warming but they can't say fuck you to smog. i don't think japan, south korea or europe will want to have this:
besides, europe's governments are very progressive. also americans can't say fuck you to money. as i said earlier, natgas is now 16% cheaper than coal in generating electricity. also, natgas power plants are much cheaper to build and maintain compared to coal to the point that replacing current coal power plants with natgas power plants saves money, not an expense.
what about clean coal? it's just a myth (google it).
what about competition with nuclear energy? actually, nuclear is ideally cheaper and cleaner than natgas. there has to be a black swan event to convince the world to use natgas instead of nuclear. unfortunately, that black swan event did happen - japan's fukushima nuclear power plant disaster caused by the 2011 earthquake/tsunami. a post by my fb friend marcelino ugarte saying the world's seafood will be contaminated by the fukushima radiation spill scared the bajeezus out of me. good thing i read this - https://oceana.org/blog/worried-about-fukushima-radiation-seafood-turns-out-bananas-are-more-radioactive-fish
what about renewables? wind energy only works in windy places. solar energy still needs government subsidies for it to grow. however, i believe solar energy will eclipse (pardon the pun) natgas somewhere in the future. i don't know when this will happen, that is why i also put 2.5% of my portfolio into solar (fslr), and i only put 5% in lng export and not like 20%.
what about competition from other countries who has vast reserves of natgas? aside from our price advantage, there are many articles in the internet explaining why it's not a threat to my investing thesis. the short explanation is - they can't get their acts together. it's so crazy. america is even exporting to kuwait, jordan and dubai - in a region with the richest natgas reserves. kuwait consumes 42 million cubic feet of natgas a day, yet they can literally see their next door neighbor iraq burning 700 million cubic feet of natgas a day (flaring) because it's a byproduct of oil and they don't know what to do with it. kuwait does not want to buy natgas from iraq because iraq invaded kuwait 28 years ago. even if saddam hussein is gone. it's crazy considering america and japan quickly became economic bffs even if america dropped 2 nuclear bombs in japan.
it even gets crazier - there is no coal in the middle east, right? which is ok because coal sucks compared to oil and natgas and there is abundance of oil and natgas in the middle east. yet, the middle east is now building coal power plants and exporting coal from china. crazy !!!
a vast amount of natgas reserve was recently discovered off the mediteranean coast of israel. so israel's energy needs are solved. what about it's next door neighbor jordan? they can easily pipe the natgas to jordan. but it turns out many jordanians along the border are very pissed palestinians because their homes were displaced by israel. so no pipeline. therefore jordan is now exporting lng from america.
we can extrapolate from the dubai vacation photos of our facebook friends that dubai probably has a huge appetite for natgas. no problem because it's next door neighbor qatar is the #1 exporter of natgas in the world. 11 tcf of natgas is exported annually and qatar exports 30% of that. wow !!! unfortunately qatar owns one of my favorite news network al jazeera. it's my favorite because it's not bias, unlike CNN and fox news. i was very surprised when i started to notice al jazeera is not even biased against the west in favor of muslims. it just reports what it sees. as a news organization, one of their responsibilities is to report corruption whenever and wherever they see it. so they occasionally report about corruption in different places around the world. one of those places just happens to be dubai. this pissed the leaders of dubai. so it joined the economic embargo against qatar so now dubai imports natgas from america. whew !!! but wait. iran, a top natgas producer is also also nearby. there is even already a natgas pipeline that runs from iran to dubai. but the pipeline is empty. why? because iran got pissed the emirates of dubai allowed france to setup a base in dubai (actually UAE but people know about dubai more than UAE). OMG !!! https://www.forbes.com/sites/thebakersinstitute/2018/02/23/mideast-strife-is-cash-positive-for-us-natural-gas-and-chinese-coal/#227785d814f5
what if all of a sudden the middle east gets it's act together? will their cheap natural gas production limit cheniere's market share? maybe. but peace in the middle east would cause a world economic boom that would benefit the other 95% of my portfolio. the economic boom will also increase the demand of natgas to the point that the market will be more than enough for all exporters to share. worse case, cheniere will just double in the next 10 years instead of quadruple.
actually other non chaotic countries such as australia and malaysia are already exporting natgas. and of course qatar can always ship to countries outside of the middle east. 11 trillion cubic feet (tcf) of natgas is currently exported globally (for reference america consumes 28 tcf) - https://www.fool.com/investing/2017/08/23/the-worlds-8-largest-liquefied-natural-gas-exporte.aspx the export capacity of cheniere is just 1.27 tcf. this means it's price advantage offers more room for future growth.
many other countries has vast amounts of natgas shale reserves. example argentina has 802 tcf and china has 1,200 tcf (for reference america has 2,400 tcf). but they don't have the technology to extract it cheaply. unfortunately, obama shared our shale gas technology with china because obama hates america - https://en.wikipedia.org/wiki/Shale_gas_in_China. just kidding :-) even the EU has 560 tcf of shale natgas reserves but their leftist/liberal policies or regulations won't allow it to be developed - https://ec.europa.eu/energy/en/topics/oil-gas-and-coal/shale-gas
nevertheless, other countries will be ramping up their export capacity. even with our technological or price advantage, if we don't increase our natgas export capacity, other countries will be the beneficiaries of the growing demand for natgas. this provides an incentive for the US govt to give license to lng export companies such as cheniere to build more export terminals - https://lngexports.com/#/?section=the-world-lng-market
6) fracking can be disastrous for the environment. the chemicals used to fracture the shale can contaminate the drinking water. fracking has also been blamed for mild earthquakes. https://www.nationalgeographic.org/encyclopedia/natural-gas/ --- since the shale revolution began in 2008, there has been no proven negative impact on the environment. however, this still causes me a lot of concern. that is why i limit my lng export holdings to 5% of my portfolio instead of 20%.
can shipping lng also cause envornmental disasters similar to the disastrous oil spills that has occured in the past? the answer is no - https://lngexports.com/#/?section=lng-exports-and-safety
7) is cheniere (lng) overvalued? -- maybe. only smart people can compute the valuation and answer that question. and i'm just a dummy. but i don't care. now that we know cheniere is a good long term investment, the problem is, everyone else also knows it.. which means cheniere is most likely overvalued. as always, i am late to the party. which is true for all my other core holdings. this is one of my most important investing rule:
ALWAYS BE LATE TO THE PARTY. buy only when most of the money has already been made.
what am i stupid? yes. that's why the title of this article is "stock picking for dummies". why am i buying if i will just lose money? actually, i will only lose money short term. long term, i will make lots of money. that's why i just bought half of my intended position. then i buy some more as it goes down and range trade the ups and downs. if it gets stuck in a trading range, i make money. if it goes down, i will eventually make money when it recovers because i was buying on the way down and selling for a profit on the way up. actually this happened to cheniere stock - in 2015 it crashed from $80 all the way down to $30 but my thesis was still intact so i did not hesitate to keep buying on the way down. the reason why it went down was valuation. as expected i was late to the party (intentionally) and it was already overvalued by the time it became a popular stock. so short term, my upside was limited.
note that fund managers and professionals cannot do what i'm doing because they don't have the luxury to wait. they have clients breathing down their neck pressuring them to perform year in year out that is why they have to sell if they think a stock won't perform short term even if the long term story is still intact. you might say, well, what about dead money? well, 50% of my portfolio is dead money most of the time anyway as i said in my main blog https://ian-crystal.blogspot.com/2015/06/investing-for-dummies.html (50% of my portfolio is in bonds when the market is near it's highs and bonds have been earning almost nothing in the recent years because of very low interest rates). this means even if my portfolio is only 50% vested in stocks, i can still earn money and beat the market if the market gets stuck in a trading range and when the market is in a volatile correction. whats more is that i'm always liquid, so my money is never tied up in case i ever need to use it. that's why during the mortgage crisis, i was able to take advantage and buy 5 properties at dirt cheap prices (which now has tripled). another scenario where i can kick the market's butt is when the market is barely moving but there is a sector rotation going on - i can sell on the way up the sectors that are recovering or back in favor and i can buy on the way down the sectors that are getting out of favor.
cheniere (lng) also got caught in the ETF undertow. oil price crashed in 2015 which of course took down the entire energy sector. unfortunately (fortunately for me), cheniere is part of many energy ETFs. one of the problems at that time with the energy sector was the glut of oil and natgas, causing the prices of these commodities to crash. the glut of natgas supply and the very low price is suppose to be very beneficial to cheniere because it makes money by basically buying natgas and selling it to other countries. but of course it hurt the producers and service providers of the industry because they are selling something that has now dropped in value. many companies even went out of business. however, nowadays, most people don't buy individual stocks anymore for lazy reasons. they just buy the entire sector through ETFs. so when people were selling their ETFs that contained cheniere, of course cheniere also had to be sold so cheniere also had to go down even if it did not deserve to go down. so while cheniere was being mercilessly being dragged down by the ETF current, i was salivating waiting for my metrics to signal that it was done going down and it was time to buy. my favorite signal is when it bucks the market trend for 2 sessions.
i will only sell everything if the long term thesis is broken. i will say it again because it's one of my most important investing rules:
SELL WHEN YOUR LONG TERM CATALYST/THEME/THESIS IS BROKEN
if you really want safer plays for lng exports, you can by dominion (d). it's actually a utility company who is building an lng export terminal. it's safer and more stable so the way you play this is with a bigger core holding and tighter trading ranges. example, buy 1/2 of your position if it's down 5% instead of waiting for it to go down 10% and adding only 1/4 of your position.
one of the joys and fun of stock picking is you get to participate in celebrating world events and achievements. the entire world becomes your virtual playground. if you search "panama canal expansion" in youtube, you will see very spectacular videos of the expansion projects especially the "time lapse" - Official Panama Canal Expansion Timelapse 2011-2016 these videos are even more special for me as a cheniere stock holder because when i first bought cheniere back in 2014 at around $55 a share, one of the negatives was that lng ships are too big. it cannot cross the panama canal. so the expansion project was very special to me. the expansion allowed cheniere's ships to cross the panama canal and cut it's voyage to china by 1/3, benefiting their bottom line. more spectacular videos - First Trial Transit at Panama Canal Expansion Agua Clara Locks, Panama canal expansion: how it works
8) threats from renewables/nuclear/climate change
solar and wind power will not replace natgas. in fact, it will cause natgas to grow. when the wind is not blowing and the sun is not shining (nighttime), natgas power will still be needed. that's because a natgas power plant can quickly be turned on and off while coal and nuclear takes many hours. for nuclear, ramping up and down can also put a strain on the nuclear rods - http://news.mit.edu/2018/flexible-nuclear-operation-can-help-add-more-wind-and-solar-to-the-grid-0425
however for me nuclear should be the best solution to address climate change - Why renewables can’t save the planet. the problem is that it has a bad reputation. but for me now is the time to invest in nuclear power while the world has not woken up to the reality. thorium is the future of nuclear power but unfortunately there is no public company you can invest in for thorium.
11/21/18 fb post:
PETIZATION OF HUMANS
KANA !!! kanaog pa !!! (stocks ako gepa sabot dle asawa sa kano). that's why i keep preaching here in fb to keep lots of dry gun powder for moments like this you can defend your portfolio. i'm surprised my fave on "humanization of pets" bull market, zoetis (zts) is only down 7% from it's highs (even apple is already down 23%). maybe because people won't skip rabbis vaccinations on their pets just because the economy is bad.
stay away from pet foods and pet stores they have no moat - anyone can make a pet food or start a pet store overnight. stocks with no moat are only for smart wall street analysts who are very good at valuating stocks and finding short term discounts. besides stocks are in short supply so managers of big mutual funds have no choice but to put money in pet stores and pet foods even if they are under a constant threat from competition. i even heard food conglomerates like general mills are getting in on this long term trend. i hope they don't accidentally mix dog food on my cheerios :-) i also read about this dude who started making organic all natural pet food in his garage and is now a billionaire. who would have thought someone would care if their pet's food is organic or all natural? actually we've always had that here in the philippines - it's called LAMAW !!!
vet clinics are also a good bet (or is it - bet clinics are also a good vet?) because you can't just start a vet clinic overnight. there is also a world wide shortage of vets. the only problem is my favorite vet clinic stock VCA hospitals (WOOF) got bought out by mars candy last year and you can't buy mars candy stock because it's a private company (even if it's public i still won't buy it because it's not a pure play anymore and you will be hostage to the long term downtrend on unhealthy snacks. snickers has lost it's crown to healthy nutri/energy bars as the new emergency meal people always carry around in case they get hungry and have no time to eat. henry schein (hsic) can be a vet clinic play because it's sells vet clinic management software tools and services, but it's not a pure play because it's also a dental products company. your only option is to buy an actual vet clinic and not the stock. just like this dude who bought a vet clinic and named it banfield pet hospital. then 20 years later, he grew his clinics to 800 locations.
i recommended zts here on fb 4 years ago because it's a pet biotech/medical device company and you can't just develop a pet vaccine or diagnostic device overnight. no one can just copy their products because they are protected by patents. since then zoetis has doubled. my secret? it's easy to spot trends - just observe your facebook friends. my dear batchmate in high school who is the top vet in cebu was posting that she was super busy so i started googling and found out about the pet bull market. holy cow time just flies that felt only yesterday. maybe because i'm always pre-occupied with my PETIZATION OF HUMANS (https://ian-crystal.blogspot.com/2018/08/knowledge-bombs-on-marijuana-and-duckling-care.html). hahaha. c'mon i'm not a bad person i'm just like newt and they are my fantastic beasts (that movie threw me off i really thought jacob and queenie will be the parents of harry). so you help a shitzu wandering the streets but ignore those poor street kids? what the fuck's the matter with you people ??? i'm just messing with you.
dear ian,
at least we don't molest the stray shitzu when we take it home.
sincerely,
(a person who knows what is a psychopath).
3/8/9 fb post:
VI. oil and coal downtrend
oil is now just a trade, not an investment anymore. example, i was posting in facebook that i bought eog when oil was at $30. then i sold it when oil was $50. oil went up to $70 (thus the title stock picking for dummies). that's because the oil industry is being threatened by electric cars . just imagine the glut in oil inventories when even 25% of the cars on the road are electric cars and 10% of the electric grid is supplied by renewables.
the key factor here is climate change. my opinions about climate change are too long to include here so i will write about it separately later. but even fox news reported that 70% of americans now believe man is responsible for the possibly devastating climate change. soon politicians will have no choice but to give subsidies and incentives for society to use less fossil fuels and more renewables and electric cars (EV). i won't be surprised if trump changes position in favor of renewables because he does not really follow an ideology he is all over the map.
however, even without the subsidies, solar and EV are now affordable to and average american.
i pick fslr for solar because it has one of the most efficient panels. for EV batteries i pick lithium producers alb and lthm (formerly part of fmc) - like an arms dealer type of play for the brewing electric car wars. lately alb just got cut in half but i don't care because my long term thesis is still intact. even if it takes 5 years for alb to recover, i can continue to make money on alb range trading at these levels. i'm even happy i didn't end up with too much shares while buying on the way down because i only buy when it bucks the market and alb only bucked the market twice. i also don't worry about dead money because i'm normally 50% cash anyway.
yesterday i started a small position on tesla at $287. will buy some more if it goes down some more. i've been saying forever that tesla is over valued but now, i think it has come down enough. maybe it's still over valued but this is a long term play i'm confident it will be keep growing for many years to come especially if climate change starts to become evident.
i was never planning to include an actual battery producer but 5 years ago in the philippines i had my car battery replaced by this startup company where you just call them and they come to you and replace your car battery. at first i was disappointed the brand was panasonic and not my favorite brand die hard.. but lately it seems like panasonic is more durable than die hard. couple this with the fact that elon musk partnered with panasonic to build the gigafactory for tesla and wall chargers, i decided to include panasonic to my portfolio (pcrfy).
3/10/19 fb post:
thesis broken: in flight wifi (buy vsat, sell gogo)
2/6/20 update: sell vsat because it's down 30% from it's highs of the year while s&p500 is up 20% for the year. vsat's problems don't look temporary and i don't see any catalysts for the future. international flights now have individual entertainment screens filled with movies on all seats which competes with netflix streaming.
remember my most important rule: SELL WHEN YOUR LONG TERM CATALYST/THEME/THESIS IS BROKEN
this happens very very rarely. it happened to me with the in flight wifi play gogo, but it was just a speculative play not a core holding. i owned both vsat and gogo. there was a quarter when gogo was going down while it's competition vsat was going up, i immediately investigated and found out gogo was losing market share because vsat had a much better product.
i immediately sold for a small loss. which is ok because because it was offset with my gains in vsat. it was down 50% from my entry point. but it was just a small lose because it was just a speculative play so i only kept a small position and also i've been range trading around my gogo position and it did go up and a few times.
but wait. didn't i say in my "investing for dummies" article that i love duopolies because customers will never let one go out of business for fear they will be hostage to a monopoly? just like with most rules and virtues in life, they are just general guides and everything still needs to be a case by case basis. this is an extreme case where gogo's technology is much more slower and much more expensive. with the famous altera-xilinx duopoly, the competition was always close. besides, i also realized the airlines won't be hostage to a vsat monopoly. vsat still has competition so it will still be forced to give good service and good price - the passenger on the plane has the option to just sleep or relax and watch a movie which they usually need to do anyway. or pre download the websites or documents so they can work on the plane even without wifi.
dying movie theaters (buy nflx)
home entertainment systems nowadays are so spectacular there is really no reason to go to the movie theatres except maybe to go out on a date. so of course it's not good to own movie theater stocks like amc, regal, and cinemark.
i have the luxury to stay away from movie theater stocks but large hedge fund and mutual fund managers have no choice but to own them because the amount of money they are managing is so huge and there are not enough stocks available in the market so they have to own stocks that have bleak long term prospects. mine is so tiny (my portfolio, not my you know) i can buy and sell anything i want anytime i want at market price while it can take them a while to buy and sell. but the joke is on me because the big boys are very good at determining the shorter term valuation of stocks so they know the right price to buy and sell while i can only bet on very long term themes and thesis. also, they get 1% commission so if they are managing $500 million, they earn $5 million a year.
i bought netflix when it was around $15 in 2010 because 1) everyone in wall street was recommending it 2) i loved their product - i've been a loyal customer since netflix started and they did not have competition. 3) i love stocks that did not go down that much during the mortgage crisis. when the stock got hit because customers where pissed they raised prices, i did not sell because my long term thesis was still intact. however, when competition threats from google and amazon began to surface and movie conglomerates were trying to squeeze them and threatening to not renew their license, netflix crashed from $38 to just $9. i immediately sold for a 40% loss. however, in around 2015 everyone was saying netflix was back in command and licensing problems have been ironed out. but by then nflx already has gone up 1000% from when i last sold it. nevertheless, i still got back in at $93. stupid right? now 3 years later netflix is around $350. this is an example why i still buy even if i'm "late to the party", as long as there is a long term thesis.
netflix is also a good play on chord cutting trend of the millenials (cable tv is also dying)
cashless society (buy v, avoid banks) thesis broken: pypl - too much competition
cash is inconvenient. credit cards, debit cards and peer to peer payments are faster and more convenient. ergo society will only continue towards being cashless.
the best of breed of credit cards is visa (v) - one of my biggest source of income since i retired. every time visa is down because of the market and etf currents, i just load up. what's amazing is visa is not really a financial or even credit card company. it doesn't really own the loans so if customers default on their loans visa does not get hurt. think of it as more of a toll booth operator. every time someone buys something with a visa credit or debit card they get a tiny percentage.
i've been noticing some sort of a conspiracy theory. the good kind. i'm always wondering why there are stocks that are so good but it never really goes up to a price i think it deserves to be. examples are visa and apple a few years back. my theory is that wall street is trying to make these "annointed" stocks go up slowly to allow new investors in their mutual funds and retirement funds to always have decent and stable returns. this is to make the public feel that stocks are safe so more people will invest in their funds.
i avoid banks because it's getting threatened by non bank online lending.
healthcare (buy lly (diabetes) gsk (asthma) mrk (lung cancer), stay away from car-t cells, hospitals, and insurance unh cnc) thesis broken: podd, dxcm- glp-1 makes their products obsolete
the biotech/pharma drug industry is too tough for me. however when the entire industry was being unfairly punished by clinton and trump's high drug cost rhetoric, i bought the etf but i sold when it recovered.
i did buy asthma (gsk) because i understand it's demand because i'm an asthmatic and i know a lot of asthmatics. i know it sounds stupid to buy gsk when advair's patent already expired in 2011. but the reason why i love gsk is because until now no one has come up with a bio similar because no one else can make an inhaler for it that works. it's been 7 years. INCREDIBLE !!! is it really that hard? the moment someone comes up with an inhaler for advair that works, that's when i sell gsk.
i used to like car-t cell cancer therapy companies because the technology amazed me and gave me hope that one day cancer can be cured (google it). but now most of the pure play ones like kite and bluebird got bought out so i don't own any of these. merk (mrk) also came up with a promising treatment for lung cancer.
health insurance companies united health (unh) and centene (cnc) have bee performing incredibly well in the past years but i stay away because it's tied to the political climate. i don't even know what will happen to these companies if america starts to move towards single payer healthcare.
i sold my non-invasive colonoscopy speculative play exas for a handsome profit after finding out that it only detects when you already have cancer. that means people still need to go to the doctor for the regular colon and sanciangko exams.
(complete list of my knowledge bombs - https://ian-crystal.blogspot.com/2018/12/table-of-contents.html)
- programmable chips (xlnx - bought by amd therefore buy amd)
- water shortage (awk)
- cloud (goog, msft, now, crm)
- e-commerce (amzn, ebay, fdx,xpo,unp)
- food (tsn,ctva) thesis broken: lw,k,gis, nsrgy, hsy - no moat and glp-1 will decrease demand
- e-commerce (amzn, ebay, fdx,xpo,unp)
- food (tsn,ctva) thesis broken: lw,k,gis, nsrgy, hsy - no moat and glp-1 will decrease demand
- thesis broken: alcoholic drinks (stz, deo) - glp-1will decreases demand
- 5G (aapl, vz, avgo, swks, glw, mrvl)
- consumer staples (clx, pg, kmb, cl)
(* means speculation only)-------------------------------------------
google "XXX motley fool" and "XXX seeking alpha" where XXX is the stock ticker symbol. these articles usually give you the high level or long term factors to consider. look for titles that says something like "is XXX a buy?".. ignore the articles that talks more about the numbers or earnings. keep in mind you only care about the long term and you don't care about the short term performance of a stock.
-------------------------------------------
consumer staples
3/23/18 fb post:
i was wrong when i wrote in my blog to avoid consumer staples because developing countries (cheap labor) now has the capability to manufacture their own consumer goods. only lately i noticed the products of my faves pg, cl, kmb and clx are winning insane shelf space even in supposedly discount stores like gaisano country mall - head and shoulders, pantene, safeguard, gillete, oral-b, ariel, downy, tide, cascade, mr. clean, swiffer, pampers, tampax, bounty, charmin, clorox, pinesol, glad. clx even makes my favorite ranch dressing for my daily kale regimen - hidden valley. rejoice being the official shampoo of alta vista gives me more reason to rejoice.
they are even matching the prices of the local brands. i'm sure it's because they are also manufacturing locally and they have better technology. so i will violate my "moat" investing rule for now.
what really is getting me excited is that these names have been out of favor in the past year and unfairly beaten down (buy low).
i also like it that these names have decent yields (2-3%) but not too high as to get affected by the rising interest rates (competition with bonds).
but i feel guilty that i invest in these international conglomerates and also play golf with top executives of the local brands (IPI and happee). oh well, it's just business. as my college dorm roommate used to say, "walang personalan".
for consumer staples or grocery brands, just google "top xxx products" where xxx is the name of the company to see if they have the winning products.
also food is something we put in our bodies therefore we tend to prefer a brand that we trust. this is unlike the apparel or fashion industry which is very difficult to game because it has fickle consumers (i even heard crox is making a come back - only smart people can analyze how long this crox comeback trend will last so please stay away).
10/31/18 fb post
marijuana
i just bought some marijuana today (stz, smg) so that duterte will tokhang me. 2% of my IRA and will hold it 'till i retire. then i will let my beautiful caregiver smoke all of it. please don't be arrogant just buy enough to get you high because marijuana has no moat or barrier of entry. you can easily plant it in your balcony. stz (cgc) will compete against the black market. there is also an oversupply risk because so many producers are popping up everywhere. it's really a play on bulk sales to processed cannabis products like beverages. marijuana will disrupt the liquor industry so i'm selling my bud light and johnny walker (DEO). however, it's ok to buy corona and modelo (stz) because they bought a massive stake on cgc - $4 billion which is 50% of cgc and stz is just a $37 billion company so it will be a needle mover. if you want an arms dealer type of investment in marijuana, scott's miracle growth (SMG) supplies hydrophonic products to the marijuana growers. which means even the black market dealers will be buying from SMG. this is a good entry point - smg is down 39%. so many great stocks that are on fire sale right now. that is why i get excited every time the market goes down. all my recommendations will only be long term plays. short term plays are for smart people and i'm just a dummy.
example i don't trade the cycles (software cycle, heavy machinery cycle (cat), etc ...). it's too tough for me. that's only for very smart hedge fund managers. by the time you know companies are upgrading their software, the prices are already too high and money has already been made.
11/6/18 fb post:
5G
buy apple, vz, swks, glw, mrvl,xlnx,nxpi, amt,cci)
a) apple
apple is getting pummeled, down 13% from it's highs because investors were unhappy with the mixed results when it reported earnings 5 days ago. these short term hiccups don't cause me to panic into selling. instead i use it as an opportunity to buy some more as long as my long term thesis or catalyst is still intact (5g). however, smart people like hedge fund managers who's got clients breathing down their neck pressuring them to perform year in year out would need to sell if a stock like apple will do poorly short term. home gamers and pajama traders like me who has a 20 year investment horizon has the luxury to wait as long as we can. i will only sell a core holding if the long term catalyst is broken. example for apple, i will only sell apple if news comes out that the world is cancelling it's 5g plans.
3 years ago i was selling apple because i felt there was no more catalyst or technology has almost reached it's peak and i didn't see any new upcoming feature that could be a game changer. at that time iphone 6s was about to come out and i did not see any real game changing features. maybe the cpu speed but i never had any processor speed issue with the iphone, just the internet speed. i keep a list of potential game changer features of each iphone release (or iphone shopping guide for dumb pragmatic republicans):
- iphone 5c - LTE, bigger screen and higher resolution
- iphone 5s - better photo in the dark/better flash, (cpu faster for certain games), (fingerprint/apple pay)
- iphone 6 - bigger screen, camera: slow mo/better at low light,(m8 coprocessor detect walking, cycling, running), (20 LTE bands (from 13) cebu lte problem still happens)
- iphone 6s - [worse in low light], stronger/more water resistant, much faster, 5mp front camera (from 1.5), (3d touch potential)
- iphone 7 - [wireless headphones], 30 minutes water resistant, loud speaker, 4G much faster, much better camera/7mp front, much faster (but 6s already so fast), (1 hr more battery life), (home button touch sensitive),
- iphone 7 plus - (wider depth of field)
- iphone 8 - [larger/heavier], speakers 25% louder, (much faster), (wireless charging)
- ipone X - (facial recognition/replaced fingerprint)
*** next: 5g support, services
(for smart and cool democrats, just google something like "iphone6 vs iphone 6s". example: https://www.forbes.com/sites/gordonkelly/2016/05/31/iphone-6s-vs-iphone-6-whats-the-difference/#6bd4cec7772a - it contains extensive information but will probably take only 5 mintues for a democrat to read and absorb all the information. (which is why talented (musicians/actors) and smart (silicon valley engineers) democrats don't mind socialistic 50% tax policies because earning a living comes so easy for them). but it could take a republican 4 hours to read and only cause confusion (which is why they hate high taxes because all the money they earn is through blood, sweat and tears because of their lack of talent)
1) however, at around middle of 2016, i started reading about 5g technology and found out it could offer internet speeds of up to 20 times faster than 4g. i immediately bought apple hand over fist at $120. my thesis is that even a cheapo like me would upgrade to an iphone if the internet is 20 times faster. so it would be like 2008 all over again for apple if all iphone owners would eventually upgrade at some point. today apple has almost doubled since then and i've been range trading the ups and downs along the way.
2) i also learned recently apple is transitioning into a services company, meaning even if apple stops selling iphones, it will continue to make lots of money from apple app store, apple care, icloud, apple music, apple pay, etc ...
3) the newest apple watch is the first to offer ECG heart monitoring and could be a blockbuster. however i'm not getting my hopes up on this one because i also read it could lead to so many false alarms to the point that the feature would only endanger the lives of those that truly need emergency help.
b) vz
another good 5g play is telecom giant verizon, for obvious reasons. i also want to point out 5 years ago my wing-man in manila named amit, a singaporean who is a consultant for accenture told me telecom is not a good investment anymore because you can now get free text and call services through internet apps like facebook, skype or viber. i told him that's absurd because it's the telecom companies who are providing the internet connection so if that happens they will just increase the cost for internet connection so they continue to be profitable. telecoms are like regulated utilities, they have to stay profitable. of course or they will go bankrupt and disappear and there will be no more internet. DUH !!! therefore telecoms will never go away which makes it my favorite core holding. the growth may be limited because of their ultra high debt. but i don't care. in fact in the last 5 years vz has not really gone up significantly. it's just range bound so i just range trade it and enjoy the juicy dividends. if you look at the 5 year chart of vz, holy cow so many ups and downs - KACHING !!! KACHING !!! KACHING !!!
c) swks - swks is like an arms dealer to the smartphone wars. instead of betting on who wins the war, just put your money on the arms dealer swks. i don't want to spoon feed you just google these stocks and learn why they would be good 5g plays.
d) glw make fiber optics which will be used a lot in building 5G
LNG export. (chenier (lng), d)
2/10/20 fb post:
i just sold all my core holding cheniere LNG, exporters of liquified natural gas. my thesis that natgas will remain a bridge fuel for mankind's transition to renewables is not really broken, but oversupply has flooded the market and will continue to do so especially now that the middle east countries are starting to get their acts together so the US will now face stiff competition. especially that we have an anti war president (trump) and the leading candidate of the democrats is bernie who is also anti war. however buttigieg is in the pockets of the defense industry so if he wins maybe america will step up it's efforts to sabotage the middle east which hampers their ability to export LNG to europe and china and this will make chenier investable again.
3/23/18 fb post:
i was wrong when i wrote in my blog to avoid consumer staples because developing countries (cheap labor) now has the capability to manufacture their own consumer goods. only lately i noticed the products of my faves pg, cl, kmb and clx are winning insane shelf space even in supposedly discount stores like gaisano country mall - head and shoulders, pantene, safeguard, gillete, oral-b, ariel, downy, tide, cascade, mr. clean, swiffer, pampers, tampax, bounty, charmin, clorox, pinesol, glad. clx even makes my favorite ranch dressing for my daily kale regimen - hidden valley. rejoice being the official shampoo of alta vista gives me more reason to rejoice.
they are even matching the prices of the local brands. i'm sure it's because they are also manufacturing locally and they have better technology. so i will violate my "moat" investing rule for now.
what really is getting me excited is that these names have been out of favor in the past year and unfairly beaten down (buy low).
i also like it that these names have decent yields (2-3%) but not too high as to get affected by the rising interest rates (competition with bonds).
but i feel guilty that i invest in these international conglomerates and also play golf with top executives of the local brands (IPI and happee). oh well, it's just business. as my college dorm roommate used to say, "walang personalan".
for consumer staples or grocery brands, just google "top xxx products" where xxx is the name of the company to see if they have the winning products.
also food is something we put in our bodies therefore we tend to prefer a brand that we trust. this is unlike the apparel or fashion industry which is very difficult to game because it has fickle consumers (i even heard crox is making a come back - only smart people can analyze how long this crox comeback trend will last so please stay away).
10/31/18 fb post
marijuana
i just bought some marijuana today (stz, smg) so that duterte will tokhang me. 2% of my IRA and will hold it 'till i retire. then i will let my beautiful caregiver smoke all of it. please don't be arrogant just buy enough to get you high because marijuana has no moat or barrier of entry. you can easily plant it in your balcony. stz (cgc) will compete against the black market. there is also an oversupply risk because so many producers are popping up everywhere. it's really a play on bulk sales to processed cannabis products like beverages. marijuana will disrupt the liquor industry so i'm selling my bud light and johnny walker (DEO). however, it's ok to buy corona and modelo (stz) because they bought a massive stake on cgc - $4 billion which is 50% of cgc and stz is just a $37 billion company so it will be a needle mover. if you want an arms dealer type of investment in marijuana, scott's miracle growth (SMG) supplies hydrophonic products to the marijuana growers. which means even the black market dealers will be buying from SMG. this is a good entry point - smg is down 39%. so many great stocks that are on fire sale right now. that is why i get excited every time the market goes down. all my recommendations will only be long term plays. short term plays are for smart people and i'm just a dummy.
example i don't trade the cycles (software cycle, heavy machinery cycle (cat), etc ...). it's too tough for me. that's only for very smart hedge fund managers. by the time you know companies are upgrading their software, the prices are already too high and money has already been made.
11/6/18 fb post:
5G
buy apple, vz, swks, glw, mrvl,xlnx,nxpi, amt,cci)
a) apple
apple is getting pummeled, down 13% from it's highs because investors were unhappy with the mixed results when it reported earnings 5 days ago. these short term hiccups don't cause me to panic into selling. instead i use it as an opportunity to buy some more as long as my long term thesis or catalyst is still intact (5g). however, smart people like hedge fund managers who's got clients breathing down their neck pressuring them to perform year in year out would need to sell if a stock like apple will do poorly short term. home gamers and pajama traders like me who has a 20 year investment horizon has the luxury to wait as long as we can. i will only sell a core holding if the long term catalyst is broken. example for apple, i will only sell apple if news comes out that the world is cancelling it's 5g plans.
3 years ago i was selling apple because i felt there was no more catalyst or technology has almost reached it's peak and i didn't see any new upcoming feature that could be a game changer. at that time iphone 6s was about to come out and i did not see any real game changing features. maybe the cpu speed but i never had any processor speed issue with the iphone, just the internet speed. i keep a list of potential game changer features of each iphone release (or iphone shopping guide for dumb pragmatic republicans):
- iphone 5c - LTE, bigger screen and higher resolution
- iphone 5s - better photo in the dark/better flash, (cpu faster for certain games), (fingerprint/apple pay)
- iphone 6 - bigger screen, camera: slow mo/better at low light,(m8 coprocessor detect walking, cycling, running), (20 LTE bands (from 13) cebu lte problem still happens)
- iphone 6s - [worse in low light], stronger/more water resistant, much faster, 5mp front camera (from 1.5), (3d touch potential)
- iphone 7 - [wireless headphones], 30 minutes water resistant, loud speaker, 4G much faster, much better camera/7mp front, much faster (but 6s already so fast), (1 hr more battery life), (home button touch sensitive),
- iphone 7 plus - (wider depth of field)
- iphone 8 - [larger/heavier], speakers 25% louder, (much faster), (wireless charging)
- ipone X - (facial recognition/replaced fingerprint)
*** next: 5g support, services
(for smart and cool democrats, just google something like "iphone6 vs iphone 6s". example: https://www.forbes.com/sites/gordonkelly/2016/05/31/iphone-6s-vs-iphone-6-whats-the-difference/#6bd4cec7772a - it contains extensive information but will probably take only 5 mintues for a democrat to read and absorb all the information. (which is why talented (musicians/actors) and smart (silicon valley engineers) democrats don't mind socialistic 50% tax policies because earning a living comes so easy for them). but it could take a republican 4 hours to read and only cause confusion (which is why they hate high taxes because all the money they earn is through blood, sweat and tears because of their lack of talent)
1) however, at around middle of 2016, i started reading about 5g technology and found out it could offer internet speeds of up to 20 times faster than 4g. i immediately bought apple hand over fist at $120. my thesis is that even a cheapo like me would upgrade to an iphone if the internet is 20 times faster. so it would be like 2008 all over again for apple if all iphone owners would eventually upgrade at some point. today apple has almost doubled since then and i've been range trading the ups and downs along the way.
2) i also learned recently apple is transitioning into a services company, meaning even if apple stops selling iphones, it will continue to make lots of money from apple app store, apple care, icloud, apple music, apple pay, etc ...
3) the newest apple watch is the first to offer ECG heart monitoring and could be a blockbuster. however i'm not getting my hopes up on this one because i also read it could lead to so many false alarms to the point that the feature would only endanger the lives of those that truly need emergency help.
b) vz
another good 5g play is telecom giant verizon, for obvious reasons. i also want to point out 5 years ago my wing-man in manila named amit, a singaporean who is a consultant for accenture told me telecom is not a good investment anymore because you can now get free text and call services through internet apps like facebook, skype or viber. i told him that's absurd because it's the telecom companies who are providing the internet connection so if that happens they will just increase the cost for internet connection so they continue to be profitable. telecoms are like regulated utilities, they have to stay profitable. of course or they will go bankrupt and disappear and there will be no more internet. DUH !!! therefore telecoms will never go away which makes it my favorite core holding. the growth may be limited because of their ultra high debt. but i don't care. in fact in the last 5 years vz has not really gone up significantly. it's just range bound so i just range trade it and enjoy the juicy dividends. if you look at the 5 year chart of vz, holy cow so many ups and downs - KACHING !!! KACHING !!! KACHING !!!
c) swks - swks is like an arms dealer to the smartphone wars. instead of betting on who wins the war, just put your money on the arms dealer swks. i don't want to spoon feed you just google these stocks and learn why they would be good 5g plays.
d) glw make fiber optics which will be used a lot in building 5G
LNG export. (chenier (lng), d)
2/10/20 fb post:
i just sold all my core holding cheniere LNG, exporters of liquified natural gas. my thesis that natgas will remain a bridge fuel for mankind's transition to renewables is not really broken, but oversupply has flooded the market and will continue to do so especially now that the middle east countries are starting to get their acts together so the US will now face stiff competition. especially that we have an anti war president (trump) and the leading candidate of the democrats is bernie who is also anti war. however buttigieg is in the pockets of the defense industry so if he wins maybe america will step up it's efforts to sabotage the middle east which hampers their ability to export LNG to europe and china and this will make chenier investable again.
march 2022 update:
i got back in to lng when russia invaded ukraine. if europe stops buying natgas from russian, this will be very good for lng and d.
-----------------
background: there is a glut of natural gas (natgas) in america. the oversupply is so overwhelming it crashed the price from $16/Mcf to around $3. at one point it was $1.5. producers are even burning them out (flaring) to stabilize the price or else they will go out of business. meanwhile, many other countries like japan, south korea and even china is in desperate need of more natgas. so companies like chenier and dominion decided to export our natgas to other countries (it's called liquified natural gas (lng) because natgas can only be shipped in liquid form).
thesis: lng in america only cost $3/Mcf while it can easily be sold for $12 to other countries. companies involved in the export of lng to other countries (lng,d,glng) will be very profitable for many decades to come.
i'm a masochist so i will try to destroy my own thesis:
1) is the supply sustainable?
-----------------
background: there is a glut of natural gas (natgas) in america. the oversupply is so overwhelming it crashed the price from $16/Mcf to around $3. at one point it was $1.5. producers are even burning them out (flaring) to stabilize the price or else they will go out of business. meanwhile, many other countries like japan, south korea and even china is in desperate need of more natgas. so companies like chenier and dominion decided to export our natgas to other countries (it's called liquified natural gas (lng) because natgas can only be shipped in liquid form).
thesis: lng in america only cost $3/Mcf while it can easily be sold for $12 to other countries. companies involved in the export of lng to other countries (lng,d,glng) will be very profitable for many decades to come.
i'm a masochist so i will try to destroy my own thesis:
1) is the supply sustainable?
answer: america has 2,400 trillion cubic feet (tcf) of recoverable natural gas reserves. america consumes 28 tcf a year (12% of which is actually already being exported to mexico and canada through pipelines). so it has about 90 years worth of recoverable natgas reserves.
2) isn't the reason why america never used it's own oil and natgas reserves in the past was because of energy security and national defense reasons? we even went to war in iraq which killed 5,000 of our soldiers and cost us $3 trillion just to secure our future supply of oil. what if exporting natgas will significantly reduce the years of supply? are you saying the government does not care about the energy security of future americans?
2) isn't the reason why america never used it's own oil and natgas reserves in the past was because of energy security and national defense reasons? we even went to war in iraq which killed 5,000 of our soldiers and cost us $3 trillion just to secure our future supply of oil. what if exporting natgas will significantly reduce the years of supply? are you saying the government does not care about the energy security of future americans?
answer: the current and proposed export terminals will only be able to export 3.5 tcf a year (cheniere will be exporting about 36% of that or 1.27 tcf). so it will lessen it from 90 years to 75 years supply. however, by that time advancements in renewables like solar will probably replace most of our fossil fuels needs. worse case scenario, there is always nuclear energy and we still have 400 years supply of coal. these potential negatives (which most probably will never happen) far outweigh the sure positives such as job creation (https://lngexports.com/#/?section=thebenefits-of-lng-exports) not only from exporting but also production because exporting will help decrease the supply, increase the price, and make it more profitable to drill more wells so it creates more jobs. the effects would also ripple to other industries such as steel. it could also cut our $500 billion trade deficit by 6.5% - https://www.hudson.org/research/14366-can-liquefied-natural-gas-solve-the-trade-deficit
actually, i had this wacky theory that the reason why america is suddenly desperate to harvest it's oil and natgas reserves is because solar energy is threatening fossil fuels so america is panicking to cash in while it still can. however i can't find an article in the internet confirming this so maybe it's not true. i found out the real reason is that it was too expensive to extract because most of our oil/natgas are trapped between very hard to penetrate shale rocks. but in 1997 someone perfected a technique called fracking/horizontal drilling that can produce shale oil at $30/barrel break even point (for reference, conventional oil reserves such as those in saudi arabia produce oil at just $10/barrel). so when oil went up to around $140 in 2008, america unleashed an oil and gas revolution. the recession caused by the mortgage crisis caused oil to momentarily dip to around $50 but it quickly recovered to around $100 in just over a year. however the slowing economy of china caused the price of oil to start declining. saudi arabia could have easily stabilized the price by cutting production but it decided to let prices fall in hopes that it will put the shale companies in america and oil sand companies of canada out of business. this caused the 2015 oil crash. although low oil prices hurt the oil sector of america, saudi arabia's strategy backfired because it forced the US shale companies to be more efficient or find innovative ways to bring down cost. it brought down the average break even point from $50/barrel to $30. low gasoline prices also benefited many other sectors - travel, dining and manufacturing (lower raw cost) which ignited the economic boom in america. the improving economy of america increased demand for oil, and couple this with OPEC agreeing to cuts in oil production, the price of oil started to recover.
the jobs created in america's oil/natgas industry is very important to offset the job loses in other sectors due to automation. that's why the immigration policies of republicans makes more sense to the american voters no matter how racist or cruel they may seem. democrats argue that there was a time when we let anyone in and those immigrants such as their great grandparents made america great. that is true. everyone agrees with that. except during those time there was an industrial revolution and we needed people to work in the factories. now everything is automated so we don't need that much immigrants anymore. so it will be tougher for you, your kids and grand kids to find a job if we just let anyone in.
lng can also be used as an economic weapon against russia who's natgas supplies 50% of europe's electricity needs. if we develop more lng export terminals, this will scare russia and give us more bargaining power in the negotiating table.
3) if exporting natgas increases domestic natgas prices, won't this increase the electric bill of the americans? won't the voters get angry and pressure their lawmakers to ban the exporting of natgas?
answer: the electricity bills for americans are already low enough. besides, further lowering natgas prices would hurt the natgas industry and the economy because the producers, who employ thousands of people, won't be able to make a profit so they cease operations. besides, the natgas infrastructure of america with it's thousands of miles of pipelines is so nimble such that it can easily produce more whenever it needs to stabilize the price. THIS MEANS YOU SHOULD STAY AWAY FROM NATGAS PRODUCERS LIKE CHK even if you are a okc thunder fan (whose homecourt is chesapeake arena)
there used to be a very strong lobby by the manufacturers who use natgas as raw material (e.g. chemical companies and plastic makers) against exporting of oil and natgas. they were afraid exporting natgas might make natgas more expensive. but that was before the discovery of new drilling/fracking techniques that enabled us to produce as much natgas as we want at will. https://www.brookings.edu/research/lift-the-ban-on-u-s-oil-exports/
also, natgas producers themselves are afraid natgas prices will revert back to it's historical highs because the reason why america is switching from coal to natgas is because it's now 16% much cheaper to generate electricity than coal. it was not really for environmental reasons. if natgas prices goes up too high, electric utility companies might switch back to coal so producers end up selling less natgas so they make less money.
even the anti fossil fuel democrats are supporting the exporting of natgas - https://lngexports.com/#/?section=what-they-are-saying
4) cheniere and dominion will have too much competition from other countries and other sources of energy. what if other countries follow trump and say fuck you to the climate accord and revert back to using coal?
answer: cities in china are literally suffocating from smog pollution because of their coal power plants. natgas is 50% cleaner than coal so this will solve their air pollution woes. they can say fuck you to global warming but they can't say fuck you to smog. i don't think japan, south korea or europe will want to have this:
besides, europe's governments are very progressive. also americans can't say fuck you to money. as i said earlier, natgas is now 16% cheaper than coal in generating electricity. also, natgas power plants are much cheaper to build and maintain compared to coal to the point that replacing current coal power plants with natgas power plants saves money, not an expense.
what about clean coal? it's just a myth (google it).
what about competition with nuclear energy? actually, nuclear is ideally cheaper and cleaner than natgas. there has to be a black swan event to convince the world to use natgas instead of nuclear. unfortunately, that black swan event did happen - japan's fukushima nuclear power plant disaster caused by the 2011 earthquake/tsunami. a post by my fb friend marcelino ugarte saying the world's seafood will be contaminated by the fukushima radiation spill scared the bajeezus out of me. good thing i read this - https://oceana.org/blog/worried-about-fukushima-radiation-seafood-turns-out-bananas-are-more-radioactive-fish
what about renewables? wind energy only works in windy places. solar energy still needs government subsidies for it to grow. however, i believe solar energy will eclipse (pardon the pun) natgas somewhere in the future. i don't know when this will happen, that is why i also put 2.5% of my portfolio into solar (fslr), and i only put 5% in lng export and not like 20%.
what about competition from other countries who has vast reserves of natgas? aside from our price advantage, there are many articles in the internet explaining why it's not a threat to my investing thesis. the short explanation is - they can't get their acts together. it's so crazy. america is even exporting to kuwait, jordan and dubai - in a region with the richest natgas reserves. kuwait consumes 42 million cubic feet of natgas a day, yet they can literally see their next door neighbor iraq burning 700 million cubic feet of natgas a day (flaring) because it's a byproduct of oil and they don't know what to do with it. kuwait does not want to buy natgas from iraq because iraq invaded kuwait 28 years ago. even if saddam hussein is gone. it's crazy considering america and japan quickly became economic bffs even if america dropped 2 nuclear bombs in japan.
it even gets crazier - there is no coal in the middle east, right? which is ok because coal sucks compared to oil and natgas and there is abundance of oil and natgas in the middle east. yet, the middle east is now building coal power plants and exporting coal from china. crazy !!!
a vast amount of natgas reserve was recently discovered off the mediteranean coast of israel. so israel's energy needs are solved. what about it's next door neighbor jordan? they can easily pipe the natgas to jordan. but it turns out many jordanians along the border are very pissed palestinians because their homes were displaced by israel. so no pipeline. therefore jordan is now exporting lng from america.
we can extrapolate from the dubai vacation photos of our facebook friends that dubai probably has a huge appetite for natgas. no problem because it's next door neighbor qatar is the #1 exporter of natgas in the world. 11 tcf of natgas is exported annually and qatar exports 30% of that. wow !!! unfortunately qatar owns one of my favorite news network al jazeera. it's my favorite because it's not bias, unlike CNN and fox news. i was very surprised when i started to notice al jazeera is not even biased against the west in favor of muslims. it just reports what it sees. as a news organization, one of their responsibilities is to report corruption whenever and wherever they see it. so they occasionally report about corruption in different places around the world. one of those places just happens to be dubai. this pissed the leaders of dubai. so it joined the economic embargo against qatar so now dubai imports natgas from america. whew !!! but wait. iran, a top natgas producer is also also nearby. there is even already a natgas pipeline that runs from iran to dubai. but the pipeline is empty. why? because iran got pissed the emirates of dubai allowed france to setup a base in dubai (actually UAE but people know about dubai more than UAE). OMG !!! https://www.forbes.com/sites/thebakersinstitute/2018/02/23/mideast-strife-is-cash-positive-for-us-natural-gas-and-chinese-coal/#227785d814f5
imagine half a million people in syria died because of natgas. https://oilprice.com/Energy/Energy-General/The-Natural-Gas-War-Burning-Under-Syria.html all those horrifying pictures of dead syrian children you see in the internet? that's probably mostly because of natgas. no they did not die of natgas poisoning. it started when qatar wanted to build a pipeline to supply natgas to europe. but it will have to go through syria. the problem is russia is an important ally of syria and russia already supplies natgas to europe. iran is also a close ally of syria. iran also wants it's own natgas pipeline to europe. so the only way for qatar to realize it's natgas pipeline dreams to europe is to get rid of the leader of syria, assad. qatar has a weak military but it has lots of cash. during the arab uprising of 2011, qatar saw a window of opportunity so it funded the syrian opposition. assad would have quickly crushed the opposition because it was weak and incompetent. but the financial assistance from qatar gave it more oomph to prolong the fight. so 7 years later, 500,000 people have died in a war that seems to have no end. america was also not interested in intervening because the moderate opposition was too weak, meaning if assad is overthrown, the radical islamists will only fill the void and get control of the chemical weapons. in fact, all the successful arab uprising with the exception of tunisia resulted in more brutal authoritarian regimes. just like what happened in iraq when we overthrew saddam
what if all of a sudden the middle east gets it's act together? will their cheap natural gas production limit cheniere's market share? maybe. but peace in the middle east would cause a world economic boom that would benefit the other 95% of my portfolio. the economic boom will also increase the demand of natgas to the point that the market will be more than enough for all exporters to share. worse case, cheniere will just double in the next 10 years instead of quadruple.
actually other non chaotic countries such as australia and malaysia are already exporting natgas. and of course qatar can always ship to countries outside of the middle east. 11 trillion cubic feet (tcf) of natgas is currently exported globally (for reference america consumes 28 tcf) - https://www.fool.com/investing/2017/08/23/the-worlds-8-largest-liquefied-natural-gas-exporte.aspx the export capacity of cheniere is just 1.27 tcf. this means it's price advantage offers more room for future growth.
many other countries has vast amounts of natgas shale reserves. example argentina has 802 tcf and china has 1,200 tcf (for reference america has 2,400 tcf). but they don't have the technology to extract it cheaply. unfortunately, obama shared our shale gas technology with china because obama hates america - https://en.wikipedia.org/wiki/Shale_gas_in_China. just kidding :-) even the EU has 560 tcf of shale natgas reserves but their leftist/liberal policies or regulations won't allow it to be developed - https://ec.europa.eu/energy/en/topics/oil-gas-and-coal/shale-gas
nevertheless, other countries will be ramping up their export capacity. even with our technological or price advantage, if we don't increase our natgas export capacity, other countries will be the beneficiaries of the growing demand for natgas. this provides an incentive for the US govt to give license to lng export companies such as cheniere to build more export terminals - https://lngexports.com/#/?section=the-world-lng-market
5) what about the tariff war with china? --- if china refuses our natgas because of the trade war, japan and south korea will be more than happy to buy our natgas. currently japan and south korea consumes a total of 6.2 tcf. note that america's current export capacity is only 3.5 tcf (36% of that is cheniere's - 1.27 tcf). nevertheless, investors will still ignorantly and mercilessly take down cheniere stock (lng) whenever there is a trade war scare. this gives you a chance to buy some more at cheaper prices. kaching !!!
can shipping lng also cause envornmental disasters similar to the disastrous oil spills that has occured in the past? the answer is no - https://lngexports.com/#/?section=lng-exports-and-safety
7) is cheniere (lng) overvalued? -- maybe. only smart people can compute the valuation and answer that question. and i'm just a dummy. but i don't care. now that we know cheniere is a good long term investment, the problem is, everyone else also knows it.. which means cheniere is most likely overvalued. as always, i am late to the party. which is true for all my other core holdings. this is one of my most important investing rule:
ALWAYS BE LATE TO THE PARTY. buy only when most of the money has already been made.
what am i stupid? yes. that's why the title of this article is "stock picking for dummies". why am i buying if i will just lose money? actually, i will only lose money short term. long term, i will make lots of money. that's why i just bought half of my intended position. then i buy some more as it goes down and range trade the ups and downs. if it gets stuck in a trading range, i make money. if it goes down, i will eventually make money when it recovers because i was buying on the way down and selling for a profit on the way up. actually this happened to cheniere stock - in 2015 it crashed from $80 all the way down to $30 but my thesis was still intact so i did not hesitate to keep buying on the way down. the reason why it went down was valuation. as expected i was late to the party (intentionally) and it was already overvalued by the time it became a popular stock. so short term, my upside was limited.
note that fund managers and professionals cannot do what i'm doing because they don't have the luxury to wait. they have clients breathing down their neck pressuring them to perform year in year out that is why they have to sell if they think a stock won't perform short term even if the long term story is still intact. you might say, well, what about dead money? well, 50% of my portfolio is dead money most of the time anyway as i said in my main blog https://ian-crystal.blogspot.com/2015/06/investing-for-dummies.html (50% of my portfolio is in bonds when the market is near it's highs and bonds have been earning almost nothing in the recent years because of very low interest rates). this means even if my portfolio is only 50% vested in stocks, i can still earn money and beat the market if the market gets stuck in a trading range and when the market is in a volatile correction. whats more is that i'm always liquid, so my money is never tied up in case i ever need to use it. that's why during the mortgage crisis, i was able to take advantage and buy 5 properties at dirt cheap prices (which now has tripled). another scenario where i can kick the market's butt is when the market is barely moving but there is a sector rotation going on - i can sell on the way up the sectors that are recovering or back in favor and i can buy on the way down the sectors that are getting out of favor.
cheniere (lng) also got caught in the ETF undertow. oil price crashed in 2015 which of course took down the entire energy sector. unfortunately (fortunately for me), cheniere is part of many energy ETFs. one of the problems at that time with the energy sector was the glut of oil and natgas, causing the prices of these commodities to crash. the glut of natgas supply and the very low price is suppose to be very beneficial to cheniere because it makes money by basically buying natgas and selling it to other countries. but of course it hurt the producers and service providers of the industry because they are selling something that has now dropped in value. many companies even went out of business. however, nowadays, most people don't buy individual stocks anymore for lazy reasons. they just buy the entire sector through ETFs. so when people were selling their ETFs that contained cheniere, of course cheniere also had to be sold so cheniere also had to go down even if it did not deserve to go down. so while cheniere was being mercilessly being dragged down by the ETF current, i was salivating waiting for my metrics to signal that it was done going down and it was time to buy. my favorite signal is when it bucks the market trend for 2 sessions.
i will only sell everything if the long term thesis is broken. i will say it again because it's one of my most important investing rules:
SELL WHEN YOUR LONG TERM CATALYST/THEME/THESIS IS BROKEN
if you really want safer plays for lng exports, you can by dominion (d). it's actually a utility company who is building an lng export terminal. it's safer and more stable so the way you play this is with a bigger core holding and tighter trading ranges. example, buy 1/2 of your position if it's down 5% instead of waiting for it to go down 10% and adding only 1/4 of your position.
one of the joys and fun of stock picking is you get to participate in celebrating world events and achievements. the entire world becomes your virtual playground. if you search "panama canal expansion" in youtube, you will see very spectacular videos of the expansion projects especially the "time lapse" - Official Panama Canal Expansion Timelapse 2011-2016 these videos are even more special for me as a cheniere stock holder because when i first bought cheniere back in 2014 at around $55 a share, one of the negatives was that lng ships are too big. it cannot cross the panama canal. so the expansion project was very special to me. the expansion allowed cheniere's ships to cross the panama canal and cut it's voyage to china by 1/3, benefiting their bottom line. more spectacular videos - First Trial Transit at Panama Canal Expansion Agua Clara Locks, Panama canal expansion: how it works
8) threats from renewables/nuclear/climate change
solar and wind power will not replace natgas. in fact, it will cause natgas to grow. when the wind is not blowing and the sun is not shining (nighttime), natgas power will still be needed. that's because a natgas power plant can quickly be turned on and off while coal and nuclear takes many hours. for nuclear, ramping up and down can also put a strain on the nuclear rods - http://news.mit.edu/2018/flexible-nuclear-operation-can-help-add-more-wind-and-solar-to-the-grid-0425
however for me nuclear should be the best solution to address climate change - Why renewables can’t save the planet. the problem is that it has a bad reputation. but for me now is the time to invest in nuclear power while the world has not woken up to the reality. thorium is the future of nuclear power but unfortunately there is no public company you can invest in for thorium.
11/21/18 fb post:
PETIZATION OF HUMANS
KANA !!! kanaog pa !!! (stocks ako gepa sabot dle asawa sa kano). that's why i keep preaching here in fb to keep lots of dry gun powder for moments like this you can defend your portfolio. i'm surprised my fave on "humanization of pets" bull market, zoetis (zts) is only down 7% from it's highs (even apple is already down 23%). maybe because people won't skip rabbis vaccinations on their pets just because the economy is bad.
stay away from pet foods and pet stores they have no moat - anyone can make a pet food or start a pet store overnight. stocks with no moat are only for smart wall street analysts who are very good at valuating stocks and finding short term discounts. besides stocks are in short supply so managers of big mutual funds have no choice but to put money in pet stores and pet foods even if they are under a constant threat from competition. i even heard food conglomerates like general mills are getting in on this long term trend. i hope they don't accidentally mix dog food on my cheerios :-) i also read about this dude who started making organic all natural pet food in his garage and is now a billionaire. who would have thought someone would care if their pet's food is organic or all natural? actually we've always had that here in the philippines - it's called LAMAW !!!
vet clinics are also a good bet (or is it - bet clinics are also a good vet?) because you can't just start a vet clinic overnight. there is also a world wide shortage of vets. the only problem is my favorite vet clinic stock VCA hospitals (WOOF) got bought out by mars candy last year and you can't buy mars candy stock because it's a private company (even if it's public i still won't buy it because it's not a pure play anymore and you will be hostage to the long term downtrend on unhealthy snacks. snickers has lost it's crown to healthy nutri/energy bars as the new emergency meal people always carry around in case they get hungry and have no time to eat. henry schein (hsic) can be a vet clinic play because it's sells vet clinic management software tools and services, but it's not a pure play because it's also a dental products company. your only option is to buy an actual vet clinic and not the stock. just like this dude who bought a vet clinic and named it banfield pet hospital. then 20 years later, he grew his clinics to 800 locations.
i recommended zts here on fb 4 years ago because it's a pet biotech/medical device company and you can't just develop a pet vaccine or diagnostic device overnight. no one can just copy their products because they are protected by patents. since then zoetis has doubled. my secret? it's easy to spot trends - just observe your facebook friends. my dear batchmate in high school who is the top vet in cebu was posting that she was super busy so i started googling and found out about the pet bull market. holy cow time just flies that felt only yesterday. maybe because i'm always pre-occupied with my PETIZATION OF HUMANS (https://ian-crystal.blogspot.com/2018/08/knowledge-bombs-on-marijuana-and-duckling-care.html). hahaha. c'mon i'm not a bad person i'm just like newt and they are my fantastic beasts (that movie threw me off i really thought jacob and queenie will be the parents of harry). so you help a shitzu wandering the streets but ignore those poor street kids? what the fuck's the matter with you people ??? i'm just messing with you.
dear ian,
at least we don't molest the stray shitzu when we take it home.
sincerely,
(a person who knows what is a psychopath).
3/8/9 fb post:
VI. oil and coal downtrend
oil is now just a trade, not an investment anymore. example, i was posting in facebook that i bought eog when oil was at $30. then i sold it when oil was $50. oil went up to $70 (thus the title stock picking for dummies). that's because the oil industry is being threatened by electric cars . just imagine the glut in oil inventories when even 25% of the cars on the road are electric cars and 10% of the electric grid is supplied by renewables.
the key factor here is climate change. my opinions about climate change are too long to include here so i will write about it separately later. but even fox news reported that 70% of americans now believe man is responsible for the possibly devastating climate change. soon politicians will have no choice but to give subsidies and incentives for society to use less fossil fuels and more renewables and electric cars (EV). i won't be surprised if trump changes position in favor of renewables because he does not really follow an ideology he is all over the map.
however, even without the subsidies, solar and EV are now affordable to and average american.
i pick fslr for solar because it has one of the most efficient panels. for EV batteries i pick lithium producers alb and lthm (formerly part of fmc) - like an arms dealer type of play for the brewing electric car wars. lately alb just got cut in half but i don't care because my long term thesis is still intact. even if it takes 5 years for alb to recover, i can continue to make money on alb range trading at these levels. i'm even happy i didn't end up with too much shares while buying on the way down because i only buy when it bucks the market and alb only bucked the market twice. i also don't worry about dead money because i'm normally 50% cash anyway.
yesterday i started a small position on tesla at $287. will buy some more if it goes down some more. i've been saying forever that tesla is over valued but now, i think it has come down enough. maybe it's still over valued but this is a long term play i'm confident it will be keep growing for many years to come especially if climate change starts to become evident.
i was never planning to include an actual battery producer but 5 years ago in the philippines i had my car battery replaced by this startup company where you just call them and they come to you and replace your car battery. at first i was disappointed the brand was panasonic and not my favorite brand die hard.. but lately it seems like panasonic is more durable than die hard. couple this with the fact that elon musk partnered with panasonic to build the gigafactory for tesla and wall chargers, i decided to include panasonic to my portfolio (pcrfy).
3/10/19 fb post:
thesis broken: in flight wifi (buy vsat, sell gogo)
2/6/20 update: sell vsat because it's down 30% from it's highs of the year while s&p500 is up 20% for the year. vsat's problems don't look temporary and i don't see any catalysts for the future. international flights now have individual entertainment screens filled with movies on all seats which competes with netflix streaming.
remember my most important rule: SELL WHEN YOUR LONG TERM CATALYST/THEME/THESIS IS BROKEN
i immediately sold for a small loss. which is ok because because it was offset with my gains in vsat. it was down 50% from my entry point. but it was just a small lose because it was just a speculative play so i only kept a small position and also i've been range trading around my gogo position and it did go up and a few times.
but wait. didn't i say in my "investing for dummies" article that i love duopolies because customers will never let one go out of business for fear they will be hostage to a monopoly? just like with most rules and virtues in life, they are just general guides and everything still needs to be a case by case basis. this is an extreme case where gogo's technology is much more slower and much more expensive. with the famous altera-xilinx duopoly, the competition was always close. besides, i also realized the airlines won't be hostage to a vsat monopoly. vsat still has competition so it will still be forced to give good service and good price - the passenger on the plane has the option to just sleep or relax and watch a movie which they usually need to do anyway. or pre download the websites or documents so they can work on the plane even without wifi.
dying movie theaters (buy nflx)
home entertainment systems nowadays are so spectacular there is really no reason to go to the movie theatres except maybe to go out on a date. so of course it's not good to own movie theater stocks like amc, regal, and cinemark.
i have the luxury to stay away from movie theater stocks but large hedge fund and mutual fund managers have no choice but to own them because the amount of money they are managing is so huge and there are not enough stocks available in the market so they have to own stocks that have bleak long term prospects. mine is so tiny (my portfolio, not my you know) i can buy and sell anything i want anytime i want at market price while it can take them a while to buy and sell. but the joke is on me because the big boys are very good at determining the shorter term valuation of stocks so they know the right price to buy and sell while i can only bet on very long term themes and thesis. also, they get 1% commission so if they are managing $500 million, they earn $5 million a year.
i bought netflix when it was around $15 in 2010 because 1) everyone in wall street was recommending it 2) i loved their product - i've been a loyal customer since netflix started and they did not have competition. 3) i love stocks that did not go down that much during the mortgage crisis. when the stock got hit because customers where pissed they raised prices, i did not sell because my long term thesis was still intact. however, when competition threats from google and amazon began to surface and movie conglomerates were trying to squeeze them and threatening to not renew their license, netflix crashed from $38 to just $9. i immediately sold for a 40% loss. however, in around 2015 everyone was saying netflix was back in command and licensing problems have been ironed out. but by then nflx already has gone up 1000% from when i last sold it. nevertheless, i still got back in at $93. stupid right? now 3 years later netflix is around $350. this is an example why i still buy even if i'm "late to the party", as long as there is a long term thesis.
netflix is also a good play on chord cutting trend of the millenials (cable tv is also dying)
cashless society (buy v, avoid banks) thesis broken: pypl - too much competition
cash is inconvenient. credit cards, debit cards and peer to peer payments are faster and more convenient. ergo society will only continue towards being cashless.
the best of breed of credit cards is visa (v) - one of my biggest source of income since i retired. every time visa is down because of the market and etf currents, i just load up. what's amazing is visa is not really a financial or even credit card company. it doesn't really own the loans so if customers default on their loans visa does not get hurt. think of it as more of a toll booth operator. every time someone buys something with a visa credit or debit card they get a tiny percentage.
i've been noticing some sort of a conspiracy theory. the good kind. i'm always wondering why there are stocks that are so good but it never really goes up to a price i think it deserves to be. examples are visa and apple a few years back. my theory is that wall street is trying to make these "annointed" stocks go up slowly to allow new investors in their mutual funds and retirement funds to always have decent and stable returns. this is to make the public feel that stocks are safe so more people will invest in their funds.
i avoid banks because it's getting threatened by non bank online lending.
healthcare (buy lly (diabetes) gsk (asthma) mrk (lung cancer), stay away from car-t cells, hospitals, and insurance unh cnc) thesis broken: podd, dxcm- glp-1 makes their products obsolete
the biotech/pharma drug industry is too tough for me. however when the entire industry was being unfairly punished by clinton and trump's high drug cost rhetoric, i bought the etf but i sold when it recovered.
i did buy asthma (gsk) because i understand it's demand because i'm an asthmatic and i know a lot of asthmatics. i know it sounds stupid to buy gsk when advair's patent already expired in 2011. but the reason why i love gsk is because until now no one has come up with a bio similar because no one else can make an inhaler for it that works. it's been 7 years. INCREDIBLE !!! is it really that hard? the moment someone comes up with an inhaler for advair that works, that's when i sell gsk.
i used to like car-t cell cancer therapy companies because the technology amazed me and gave me hope that one day cancer can be cured (google it). but now most of the pure play ones like kite and bluebird got bought out so i don't own any of these. merk (mrk) also came up with a promising treatment for lung cancer.
programmable chips (buy xlnx - bought by amd therefore buy amd)
programmable chips can be found in the devices of all kinds of industries - medical devices, fighter jets, cell phones, cars, network routers, etc .... what's the big deal? most major semiconductor companies also have chips everywhere. the difference is that programmable chips only take weeks to program while the traditional chips (asics) can take 6 months. the disadvantage of the programmable is that it's bigger, slower and more expensive. but as time goes by, these differences are getting smaller. why do i know this? i used to work in altera for 15 years but it was bought out by intel after i retired. intel was trying to penetrate the programmable market for years and kept failing so it finally gave up and bought altera for a high premium. that's a sure sign that xilinx has a huge moat (protected from compeition). so now xlnx is the only pureplay. but it's still a duopoly. the great thing with a duopoly aside from less competition is that even if xilinx's technology gets overtaken by intel, the big customers like cisco will continue to buy from xilinx to keep it alive or else they will become hostage to the monopoly with higher prices and poor services.
programmable chips can be found in the devices of all kinds of industries - medical devices, fighter jets, cell phones, cars, network routers, etc .... what's the big deal? most major semiconductor companies also have chips everywhere. the difference is that programmable chips only take weeks to program while the traditional chips (asics) can take 6 months. the disadvantage of the programmable is that it's bigger, slower and more expensive. but as time goes by, these differences are getting smaller. why do i know this? i used to work in altera for 15 years but it was bought out by intel after i retired. intel was trying to penetrate the programmable market for years and kept failing so it finally gave up and bought altera for a high premium. that's a sure sign that xilinx has a huge moat (protected from compeition). so now xlnx is the only pureplay. but it's still a duopoly. the great thing with a duopoly aside from less competition is that even if xilinx's technology gets overtaken by intel, the big customers like cisco will continue to buy from xilinx to keep it alive or else they will become hostage to the monopoly with higher prices and poor services.
always more fun in the philippines (buy ephe)
philippines (ephe) is taking huge market share from india in call centers. this is a huge needle mover. filipinos are very UNIQUELY hardworking, humble, good english speakers. other catalysts are cheap labor and overseas filipino workers sending dollars back home always provides a stability to it’s currency (peso) and economy. however i don’t own ephe because i already have enough exposure with my rental properties in the philippines.
defense (buy lmt) thesis broken: rise in anti-war populous movement
people are getting crazier and the world is getting more dangerous. with internet and social media, it's now hard for imperialistic america to exert it's influence anywhere. so with less economic interest, there would be less need to police the world. this will force other countries to not depend on america to protect them. this will result in a demand for top weapons like the f35 and missile defense systems. this makes lockheed martin (lmt) my top pick. boeing also makes good drones. this should offset the drop in demand in case the democrats take over in 2020. india and saudi alone will be enough to weather the storm if the democrats win. google f35 and you will be very amazed with it's technology.
YOLO (You Only Live Once) (ba,bkng,nclh,fun)
this is the best play for the growing middle class all over the world especially in india and china. i've owned this stock forever. when i got a good paying job i immediately spent my money on travel. when someone transitions into middle class, the first thing they do is travel. my favorite play is boeing (ba). first of all, it's a duopoly (with airbus who is always having problems), the next best thing to a monopoly. second of all, the new titanium technology will make it more profitable for the airlines because it cuts the fuel cost by more than half. incredible !!! third, titanium allows bigger windows so nicer views. fourth, titanium is not corrosive unlike alumnium so it allows a more humid airconditioning instead of the very dry air that really hurts my eyes and nose everytime i travel. fifth, they make the best drones so it's also a defense play.
when i traveled to bohol, i booked my room in booking.com. so it caught my interest and did more research and found out booking.com is very dominant all over the world so i bought it.
i also figure there is no better family trip than a trip to a theme park or a cruise ship vacation. i observe this from the postings of my facebook friends. i chose nclh because it's norwegian and i have this racist bias that norwegians are the best boat makers because of their vikings history (or was that iceland). i was also impressed by the vikings how quickly they can build dragon towns when i watched the movie how to train your dragon. i also feel norwegians are very competent because they can make a social democractic system work. i stay away from disney because of it has a chunk of cable business (disney and espn channels) and it's a dying business of the chord cutting trend of the millenials. so i went with ohio theme park operator cedar fair (fun) because arabelle sent me a post card of it's giant rollercoaster when she vacationed in the states back when we were in high school.
philippines (ephe) is taking huge market share from india in call centers. this is a huge needle mover. filipinos are very UNIQUELY hardworking, humble, good english speakers. other catalysts are cheap labor and overseas filipino workers sending dollars back home always provides a stability to it’s currency (peso) and economy. however i don’t own ephe because i already have enough exposure with my rental properties in the philippines.
people are getting crazier and the world is getting more dangerous. with internet and social media, it's now hard for imperialistic america to exert it's influence anywhere. so with less economic interest, there would be less need to police the world. this will force other countries to not depend on america to protect them. this will result in a demand for top weapons like the f35 and missile defense systems. this makes lockheed martin (lmt) my top pick. boeing also makes good drones. this should offset the drop in demand in case the democrats take over in 2020. india and saudi alone will be enough to weather the storm if the democrats win. google f35 and you will be very amazed with it's technology.
YOLO (You Only Live Once) (ba,bkng,nclh,fun)
this is the best play for the growing middle class all over the world especially in india and china. i've owned this stock forever. when i got a good paying job i immediately spent my money on travel. when someone transitions into middle class, the first thing they do is travel. my favorite play is boeing (ba). first of all, it's a duopoly (with airbus who is always having problems), the next best thing to a monopoly. second of all, the new titanium technology will make it more profitable for the airlines because it cuts the fuel cost by more than half. incredible !!! third, titanium allows bigger windows so nicer views. fourth, titanium is not corrosive unlike alumnium so it allows a more humid airconditioning instead of the very dry air that really hurts my eyes and nose everytime i travel. fifth, they make the best drones so it's also a defense play.
when i traveled to bohol, i booked my room in booking.com. so it caught my interest and did more research and found out booking.com is very dominant all over the world so i bought it.
i also figure there is no better family trip than a trip to a theme park or a cruise ship vacation. i observe this from the postings of my facebook friends. i chose nclh because it's norwegian and i have this racist bias that norwegians are the best boat makers because of their vikings history (or was that iceland). i was also impressed by the vikings how quickly they can build dragon towns when i watched the movie how to train your dragon. i also feel norwegians are very competent because they can make a social democractic system work. i stay away from disney because of it has a chunk of cable business (disney and espn channels) and it's a dying business of the chord cutting trend of the millenials. so i went with ohio theme park operator cedar fair (fun) because arabelle sent me a post card of it's giant rollercoaster when she vacationed in the states back when we were in high school.
water shortage (buy awk)
i've been hearing about the upcoming water shortage. so i did some research and found out awk was the best play. i didn't find a good or safe desalination play - too many players.
e-commerce (buy amzn,fdx,xpo,unp,wmt)
xpo just got cut in half because it's biggest customer amazon is building it's own logistic infrastructure. i did not sell because it didn't feel my long term thesis has been broken. first of all, e-commerece is not going away, so the problem of losing amazon can be overcome in the long run. may take 5 years but by that time, probably already made lots of money range trading at these levels. i don't think the problem will worsen because i don't think it's worth if for smaller companies to build their own logistics network. luckily, it went down quick without bucking the market trend so i did not really buy on the way down and end up with too many shares. so i won't worry too much about dead money, anyway, i'm normally 50% cash anyway. i still feel xpo has a good moat. it's not easy to setup a global logistic network. besides, delivery services are not like a product where a competitor comes up with a better product and there is nothing you can do about it. delivery services cannot be patented so you can always find ways to improve and match the competition
food (tsn, ctva, avoid organics and farm stocks, stay away from unhealthy foods k, gis) thesis broken: lw - glp-1 will lower consumption of fries and potato chips
man will always eat. so the industry will never die. the problem is that there is too much competition. so i just stick to fertilizer and agri chemicals provider ctva. stay away from farmland stocks. they are always dangerous to invest in because there is always a possibility of land reform where the farm land can be sequestered by the government from large conglomerates. also stay away from organics because all food producers and grocery stores can shift to organics whenever they want to so there is no moat.
i like potato seller lw (lamb and weston) because i still yet to find a culture or society or country where the kids are not crazy about french fries. lw dominates the market share. lw broke up from it's parent company conagra. i used to own conagra shares when it was the sponsor of the skins game between tiger, phil, fred couples and mark o meara that me and my dad watched in palm springs. when i got home i googled it and found out it was a good agri company.
although one thing i love about food producers is that the stock always recovers when it goes down. i sold my perennial holdings gis and k because of the worldwide trend towards healthier eating. i'm sure they will soon transition to healthier product lines and when that happens i will get back in.
i've been hearing about the upcoming water shortage. so i did some research and found out awk was the best play. i didn't find a good or safe desalination play - too many players.
e-commerce (buy amzn,fdx,xpo,unp,wmt)
xpo just got cut in half because it's biggest customer amazon is building it's own logistic infrastructure. i did not sell because it didn't feel my long term thesis has been broken. first of all, e-commerece is not going away, so the problem of losing amazon can be overcome in the long run. may take 5 years but by that time, probably already made lots of money range trading at these levels. i don't think the problem will worsen because i don't think it's worth if for smaller companies to build their own logistics network. luckily, it went down quick without bucking the market trend so i did not really buy on the way down and end up with too many shares. so i won't worry too much about dead money, anyway, i'm normally 50% cash anyway. i still feel xpo has a good moat. it's not easy to setup a global logistic network. besides, delivery services are not like a product where a competitor comes up with a better product and there is nothing you can do about it. delivery services cannot be patented so you can always find ways to improve and match the competition
food (tsn, ctva, avoid organics and farm stocks, stay away from unhealthy foods k, gis) thesis broken: lw - glp-1 will lower consumption of fries and potato chips
man will always eat. so the industry will never die. the problem is that there is too much competition. so i just stick to fertilizer and agri chemicals provider ctva. stay away from farmland stocks. they are always dangerous to invest in because there is always a possibility of land reform where the farm land can be sequestered by the government from large conglomerates. also stay away from organics because all food producers and grocery stores can shift to organics whenever they want to so there is no moat.
i like potato seller lw (lamb and weston) because i still yet to find a culture or society or country where the kids are not crazy about french fries. lw dominates the market share. lw broke up from it's parent company conagra. i used to own conagra shares when it was the sponsor of the skins game between tiger, phil, fred couples and mark o meara that me and my dad watched in palm springs. when i got home i googled it and found out it was a good agri company.
although one thing i love about food producers is that the stock always recovers when it goes down. i sold my perennial holdings gis and k because of the worldwide trend towards healthier eating. i'm sure they will soon transition to healthier product lines and when that happens i will get back in.
avoid these stocks/sectors
call centers (fivn,rng,zm,zen) - threatened by agentforce
call centers (fivn,rng,zm,zen) - threatened by agentforce
cloud drives (box,ddog) - no moat
marijuana (cgc) - anyone can plant marijuana
data centers (cone,cor,dlr) - no moat
healthcare:drugs (biib,gild,pfe,jnj,regn) - too tough
selfies; (algn,ulta,elf) - too much competition
healthcare:hmo (unh,cnc,wlp,aet,syk) - political risk
defense (lmt,rtn,noc) - political risk
healthcare:hospitals (hca,vtr) - political risk
in-flight-wifi (vsat) - lack of recurring purchase
tools (sna,itw,swk) - lack of recurring purchase
guns (cab,aobc) - lack of recurring purchase
tech:video-games (ttwo,ea,gme) - need to keep producing hits
entertainment:film-producers (lgf) - need to keep producing hits
food:chains (mcd,dpz,cmg,shak,bwld,jack,dnkn,yum,dri,pnra) - no moat, fickle consumers
retail:dollar-stores (five,dg,dltr) - no moat
hotels (hot,wyn) - no moat
casinos (lvs,wynn,mgm) - no moat
ultra.discretionary (kors,coh,rl,pii,wsm,bc) - fickle consumers, difficult to game
apparel:retail (lowend;rost,tjx) - no moat
apparel (ua,vfc,lulu) - no moat, fickle consumers, difficult to game
apparel:shoes (nke,skx,ua,ads) - no moat, fickle consumers, difficult to game
apparel:blue-collar (ctas,www,hbi) - no moat
apparel:retail:midend (pvh,tgt,m,asna,gps,kss,chs,sks,jwn) - no moat
apparel:retail:teen (anf,expr,aeo,hott,psun) - no moat, fickle consumers
retail:drugs (wag,cvs,esrx) - no moat
food:groceries (swy,wfm) - no moat
autoparts:retail;azo,orly,pby,jci,mga - EVs more reliable and modular
movies-theatres (imax,amc)- industry threatened
finance:banks (bac,jpm,san,wfc,usb,c,gs,key) - industry threatened by fintech
entertainment:cable-satellite (cmcsa,chtr,dish) - industry threatened by streaming
commod:mining (fcx,bhp,nem,ng) - unstable geopolitics
cigarettes (pm,mo) - industry threatened
energy:oil (eog,rds.a,xom,cop,cvx,bp,nbl,xec,cog,gpor,sto,wll,sd,sto,enb,mro) - industry threatened by renewables and nuclear
energy:oil:service (slb,hal,clb,keg,esv,sdrl,nov,wft) - industry threatened by renewables and nuclear
energy:natgas (swn,dvn,chk,cop,upl) - natgas price too low
energy:natgas:spec (clne,gtls,wprt,se) - natgas price too low
energy:mlp-pipelines:energy (kmi,mmp,enb,paa,etp,wes,sdr,eroc) - industry threatened by renewables and nuclear
transports:rails:oiltanks (arii,trn) - industry threatened by renewables and nuclear
transports:shipping:oil (nat) - industry threatened by renewables and nuclear
i sold my non-invasive colonoscopy speculative play exas for a handsome profit after finding out that it only detects when you already have cancer. that means people still need to go to the doctor for the regular colon and sanciangko exams.
list of etfs from major sectors: ephe,lit,fiw,gld,slv,pgf,ibb,xph,tip,xlu,tlt,hyg,jnug,tan,qqq,ixp,xlf,xle,xlk,xli,xlv,xlp,xlb,rth,xhb,iyr,soxx,oih,uso,ung,jjc,moo,fxe,fxi,corn,ctnn,cane,cafe
(complete list of my knowledge bombs - https://ian-crystal.blogspot.com/2018/12/table-of-contents.html)
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