Showing posts with label investing. Show all posts
Showing posts with label investing. Show all posts
Sunday, June 11, 2017
Find Automated Great Stock Trading Ideas using StockDomo.com (and track the performance of different buy strategies)
Want to find great stock trading ideas using automated methods?
StockDomo.com provides great automated stock trading ideas based on many Buy Signal Strategies including stocks with above average volume exceeding the 52 week high.
The performance of the different strategies will be tracked as well.
Saturday, September 5, 2015
Is September 2015 the start of a great Stock Market Crash? End of 7 year cycle, and September is worst month
After a seven year strong stock bull market in the U.S.A. since 2009 with hardly any stock corrections, is September 2015 the beginnings of a great Stock Market Crash?
2015 is also likely the end of a surprisingly regular 7 year cycle.
- 1973: Oil Shock/Stocks Crash
- 1980: US Recession
- 1987: Stock Market Crash
- 1994: Bond Market Crash
- 2001: 9-11 / Stocks Crash
- 2008: Subprime / Stocks Crash
- 2015 EM / Stock Crash???
Do you notice the seven year pattern?
The fact that the economy goes in cycles in not surprising, so any stock market cycle such as this won't be that surprising.
The Great Unwind and False Prosperity?
Regarding this most recent cycle, the case can be made that as a way to recover from the 2008 Stock Market Crash, the Fed started lowering rates to virtually zero and started printing money like crazy with many Quantitative Easing programs (QE). Yet for around 7 years, the Fed didn't raise rates, and only recently stopped the QE programs.
For seven years, "Follow the Fed" was profitable, and going long in housing and stocks was profitable, as the Fed's policies boosted those asset classes. However, recently, the Fed stopped the Quantitative Easing programs and may be on the verge of raising rates.
But what happens when the Fed starts to unwind its positions? Will we start to see the effects of The Great Unwind?
Over the last seven years, the Fed induced asset boosting policies create a form of an artificial prosperity that will eventually be undone. All the imbalances that have been accumulated will finally end, and in order to correct, a Stock Market Crash, or a even a multi-year time correction (sideways for many years) might be needed.
The risks are high for some sort of event or a multi-year time frame where imbalances will be corrected. Future stock market annual returns for many years are likely going to be below long term averages.
Housing Market Bubble?
Over the last seven years, we have gone from housing recovery to a potential housing bubble. The median income to buy a home in the Bay Area, Northern California is $142,448.33.
Public and Private Debt and too much spending:
Both government and consumer debt is increasing. Government Debt as a ratio of GDP is now 80% (and the total debt is around $18 Trillion). Private debt (including consumer debt and education loans) is approximating 260% of GDP.
.
China:
China is also experiencing a stock market crash.
Also, China is holding a large amount of U.S. treasuries. There might be evidence that China is already dumping some of these?
Oil:
Oil and commodities have been crashing, and some people have said that commodities and oil are leading indicators of an economy and the stock market.
CNBC's Ron Insana says:
"We already have evidence that the commodity crash has ominous portents for the rest of the world:
* Japan’s recession is deeper than previously thought.
* China’s demand for basic materials, amid a glut of uneconomic construction projects, appears to be plummeting.
* Russia’s ruble has collapsed and the country is on the brink, if not already in, a recession.
* India’s economic recovery is beginning to look shaky.
* Europe’s growth rate and inflation rate, for the next two years, were just revised downward by the European Central Bank, suggesting that Europe’s economic crisis is far from over. In fact, at least one former European leader with whom I recently spoke, believes the crisis in Europe may just be in its early stages.
* Brazil and other emerging market nations are struggling with a variety of issues, from recessions at home, to the rising value of the dollar, which is complicating how emerging markets conduct economic policies at home, given how closely their currencies are tied to the greenback."
“We were close enough in 2008 (if the bank bailout hadn't worked),” he said. “and what's coming is on 20 times that scale”.
Does this former adviser know something we don't?
Time to sell stocks?
Risk is definitely high now. Seriously consider your asset allocation and your goals. Consider taking some profits, and sell some equities if possible. Build up cash reserves. Use any potential rallies to sell.
The future down cycle will eventually end, and there will be great investing opportunities at that time.
Tuesday, October 16, 2012
Does Taxing the Rich Help Increase U.S. Revenue as a Percent of GDP? (Historic Range: 1934 to 2011)
Does increasing the top marginal tax rate on the rich help the U.S. Revenue Problem?
In the chart above, the lower green line is the U.S. Revenue as a Percentage of GDP from 1934 to 2011. From 1944 to 2011, the Average U.S. Federal Revenue as a Percentage of GDP was a steady 17.8% with the highest being 20.9% of GDP in 1944, during World War 2. From 1944 to 2011, the U.S. Revenue as a Percentage of GDP remained in a relatively constant narrow band, despite the large range of tax rates during this time. (Different Tax Rate Graph from VisualizingEconomics.com and PolicyGrinder.com)
The upper red line is the top marginal tax rate. Despite the large changes in the top marginal tax rate (from 92% in the 1950s to 28% in the 1980s), the U.S. Revenue as a Percentage of Gross Domestic Product remained relatively constant.
From 1950 to 1963, the Top Marginal Tax Rate averaged between 91 and 92%. The U.S. Revenue as a Percentage of Revenue during this time was 17.4%.
From 1988 to 1989, the Top Marginal Tax Rate was 28%. The Revenue as a Percentage of Revenue during this time was 18.3% (even higher than the 1950 to 1963 time period).
This observation of a steady U.S. Revenue as a Percentage of GDP is often called Hauser's Law.
Chart created by this techfarm.blogspot.com site, and data from the Tax Policy Center.
In the chart above, the lower green line is the U.S. Revenue as a Percentage of GDP from 1934 to 2011. From 1944 to 2011, the Average U.S. Federal Revenue as a Percentage of GDP was a steady 17.8% with the highest being 20.9% of GDP in 1944, during World War 2. From 1944 to 2011, the U.S. Revenue as a Percentage of GDP remained in a relatively constant narrow band, despite the large range of tax rates during this time. (Different Tax Rate Graph from VisualizingEconomics.com and PolicyGrinder.com)
The upper red line is the top marginal tax rate. Despite the large changes in the top marginal tax rate (from 92% in the 1950s to 28% in the 1980s), the U.S. Revenue as a Percentage of Gross Domestic Product remained relatively constant.
From 1950 to 1963, the Top Marginal Tax Rate averaged between 91 and 92%. The U.S. Revenue as a Percentage of Revenue during this time was 17.4%.
From 1988 to 1989, the Top Marginal Tax Rate was 28%. The Revenue as a Percentage of Revenue during this time was 18.3% (even higher than the 1950 to 1963 time period).
This observation of a steady U.S. Revenue as a Percentage of GDP is often called Hauser's Law.
Chart created by this techfarm.blogspot.com site, and data from the Tax Policy Center.
Sunday, August 2, 2009
The Rise of Social Gaming
The Rise of Social Gaming
Social Gaming is the fastest growing game market.
Social games are "built to be enjoyed and shared with friends through existing social networks and platforms like the iPhone." They are often free to play, and they heighten the sense of camaraderie and competition with other players.
Full Article on "Social Networking is next big thing for gaming"
One of the most popular games is "FarmVille" made by private company "Zynga".
Social Gaming may usher in new business models by attracting many players with a free price and then monitizing a fraction of them.
Social Gaming is the fastest growing game market.
Social games are "built to be enjoyed and shared with friends through existing social networks and platforms like the iPhone." They are often free to play, and they heighten the sense of camaraderie and competition with other players.
Full Article on "Social Networking is next big thing for gaming"
One of the most popular games is "FarmVille" made by private company "Zynga".
Social Gaming may usher in new business models by attracting many players with a free price and then monitizing a fraction of them.
Monday, April 7, 2008
Historic S&P 500 PE Ratio, Dividend Yield and Total Return 1960 to 2007
| Year | PE Ratio | Dividend Yield | S&P 500 Return | Total Return |
|---|---|---|---|---|
| 1960 | 18.73 | 3.41% | -3% | 0.41% |
| 1961 | 21.23 | 2.85% | 23.13% | 25.98% |
| 1962 | 17.21 | 3.40% | -11.81% | -8.41% |
| 1963 | 18.15 | 3.13% | 18.89% | 22.02% |
| 1964 | 17.79 | 3.05% | 12.97% | 16.02% |
| 1965 | 17.45 | 3.06% | 9.06% | 12.12% |
| 1966 | 14.84 | 3.59% | -13.09% | -9.50% |
| 1967 | 17.67 | 3.09% | 20.09% | 23.18% |
| 1968 | 18.15 | 2.93% | 7.66% | 10.59% |
| 1969 | 15.08 | 3.52% | -11.36% | -7.84% |
| 1970 | 16.72 | 3.46% | 0.10% | 3.56% |
| 1971 | 18.32 | 3.10% | 10.79% | 13.89% |
| 1972 | 19.12 | 2.70% | 15.63% | 18.33% |
| 1973 | 12.25 | 3.70% | -17.37% | -13.67% |
| 1974 | 7.33 | 5.43% | -29.72% | -24.29% |
| 1975 | 11.70 | 4.14% | 31.55% | 35.69% |
| 1976 | 11.03 | 3.93% | 19.15% | 23.08% |
| 1977 | 8.75 | 5.11% | -11.50% | -6.39% |
| 1978 | 8.26 | 5.39% | 1.06% | 6.45% |
| 1979 | 7.42 | 5.53% | 12.31% | 17.84% |
| 1980 | 9.06 | 4.74% | 25.77% | 30.51% |
| 1981 | 8.07 | 5.57% | -9.73% | -4.16% |
| 1982 | 10.17 | 4.93% | 14.76% | 19.69% |
| 1983 | 12.41 | 4.32% | 17.27% | 21.59% |
| 1984 | 9.93 | 4.68% | 1.40% | 6.08% |
| 1985 | 13.48 | 3.88% | 26.33% | 30.21% |
| 1986 | 16.78 | 3.38% | 14.62% | 18.00% |
| 1987 | 15.41 | 3.71% | 2.03% | 5.74% |
| 1988 | 12.20 | 3.68% | 12.40% | 16.08% |
| 1989 | 14.71 | 3.32% | 27.25% | 30.57% |
| 1990 | 15.20 | 3.74% | -6.56% | -2.82% |
| 1991 | 21.83 | 3.11% | 26.31% | 29.42% |
| 1992 | 24.04 | 2.90% | 4.46% | 7.36% |
| 1993 | 23.53 | 2.72% | 7.06% | 9.78% |
| 1994 | 16.98 | 2.91% | -1.54% | 1.37% |
| 1995 | 17.42 | 2.30% | 34.11% | 36.41% |
| 1996 | 20.70 | 2.01% | 20.26% | 22.27% |
| 1997 | 24.51 | 1.60% | 31.01% | 32.61% |
| 1998 | 32.15 | 1.32% | 26.67% | 27.99% |
| 1999 | 32.57 | 1.14% | 19.53% | 20.67% |
| 2000 | 25.38 | 1.23% | -10.14% | -8.91% |
| 2001 | 25.97 | 1.37% | -13.04% | -11.67% |
| 2002 | 18.62 | 1.83% | -23.37% | -21.54% |
| 2003 | 20.53 | 1.61% | 26.38% | 27.99% |
| 2004 | 18.08 | 1.60% | 8.99% | 10.59% |
| 2005 | 18.28 | 1.79% | 3.00% | 4.79% |
| 2006 | 17.30 | 1.77% | 13.62% | 15.39% |
| 2007 | 16.78 | 1.89% | 3.53% | 5.42% |
Total Return equals the S&P 500 Return plus the Dividend Yield that year.
Table above uses some raw data from Aswath Damodaran at Stern Business School. Aswath got the data from Bloomberg and Standard And Poors.
Wednesday, March 19, 2008
Historical Best Day of Month To Invest or Dollar Cost Average in the S&P 500 from 1950 to 2007
Many people have adopted a Dollar Cost Averaging Strategy of regularly investing in a mutual fund, such as an S&P 500 Index Fund. Often, brokers could give the user an option when they automatically invest the money. Investors could choose which day of the month they can dollar cost average.
Will an investors choice of day to invest on a regular basis affect overall return?
In the Chart Above, we have averaged the S&P 500 Closing Average from 1950 to August 2007 given a particular day of month.
We notice that the 19th of the month has the lowest S&P 500 average, suggesting that the 19th of the month during this 1950 to 2007 period is the best day of the month to dollar cost average. The 4th and 11th are the next runners up.
The worst days to invest are the 22nd, followed by the 7th, 8th, 31st, and 20th.
More Data
Day of Month and S&P Average Close:
Data Ordered by Average S&P 500 Close
Day of Month S&P Close:
Previous Look at Return by Day of the Month
Kiplinger Article on best Day of Month to Invest
The Average Method
The Averaging Method above is only an approximation. We do realize that S&P 500 index values that have a high value overshadows the days when the S&P 500 had much lower values.
Will an investors choice of day to invest on a regular basis affect overall return?
In the Chart Above, we have averaged the S&P 500 Closing Average from 1950 to August 2007 given a particular day of month.
We notice that the 19th of the month has the lowest S&P 500 average, suggesting that the 19th of the month during this 1950 to 2007 period is the best day of the month to dollar cost average. The 4th and 11th are the next runners up.
The worst days to invest are the 22nd, followed by the 7th, 8th, 31st, and 20th.
More Data
Day of Month and S&P Average Close:
- 1 =427.79
- 2 =423.92
- 3 =425.97
- 4 =417.92
- 5 =425.40
- 6 =423.93
- 7 =429.16
- 8 =428.80
- 9 =425.51
- 10 =421.28
- 11 =418.35
- 12 =425.22
- 13 =423.64
- 14 =422.36
- 15 =421.07
- 16 =425.35
- 17 =420.41
- 18 =419.70
- 19 =416.94
- 20 =428.42
- 21 =422.16
- 22 =433.34
- 23 =425.31
- 24 =425.00
- 25 =419.48
- 26 =424.77
- 27 =425.30
- 28 =423.34
- 29 =418.86
- 30 =427.28
- 31 =428.42
Data Ordered by Average S&P 500 Close
Day of Month S&P Close:
- 19 =416.94
- 4 =417.92
- 11 =418.35
- 29 =418.86
- 25 =419.48
- 18 =419.70
- 17 =420.41
- 15 =421.07
- 10 =421.28
- 21 =422.16
- 14 =422.36
- 28 =423.34
- 13 =423.64
- 2 =423.92
- 6 =423.93
- 26 =424.77
- 24 =425.00
- 12 =425.22
- 27 =425.30
- 23 =425.31
- 16 =425.35
- 5 =425.40
- 9 =425.51
- 3 =425.97
- 30 =427.28
- 1 =427.79
- 20 =428.42
- 31 =428.42
- 8 =428.80
- 7 =429.16
- 22 =433.34
Previous Look at Return by Day of the Month
Kiplinger Article on best Day of Month to Invest
The Average Method
The Averaging Method above is only an approximation. We do realize that S&P 500 index values that have a high value overshadows the days when the S&P 500 had much lower values.
Thursday, January 10, 2008
Profit by Controlling Your Stock Market Losses
When managing your stock portfolio, do you get upset by positions which go badly against you? What can you do and how should you look at losses in your portfolio.
Jim Cramer's View
Jim Cramer, in his Book, "Real Money: Sane Investing in an Insane World" presents his Seventh Commandment of Trading: Control your Losses.
"Losses do you in. They always do you in. Controlling losses is the most important thing you can do. I don't really care how you do it. If it is to put on stops in trading, then so be it. If it is to decide that you are never going to let a position run a point against you, then fine. But you must heed the seventh of my 10 Commandments of Trading:
Control losses; winners take care of themselves."
- Jim Cramer
While Jim Cramer was talking about trading, the same concept applies to longer term investing.
Peter Lynch View
Peter Lynch, in his book "One Up on Wall Street" (page 75, paperback edition):
"People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game. If they've done the proper homework on H&R Block and bought the stock, and suddently the government simplifies the tax code (an unlikely prospect, granted) and Block's business deteriorates, they accept the bad break and start looking for the next stock. They realize the stock market is not pure science, and not like chess, where superior position always win. If seven out of ten of my stocks perform as expected, then I'm delighted. If six out of ten stocks perform as expected, then I'm thankful. Six out of ten is all it takes to produce an enviable record on Wall Street." - Peter Lynch
Imagine that, all you need is six out of ten stocks to do well. That means even great investors such as Peter Lynch do make mistakes.
William O'Neil's View
Growth stock investor William O'Neil, founder of Investors Business Daily, often has sell rules such as sell when a stock goes down 7-8% below the proper buy point, or sell at a certain percentage down. He too has a discipline, to make sure his losses do not grow and ruin the portfolio. He also does not "marry" or become "attached" to a stock, a common mistake some investors make.
Investor's Business Daily mentions that "being a successful investor is just as much about limiting losses as it is about riding a winning stock. Downturns are part of life in the market, and you must act decisively to shield yourself form excessive losses. If your stock selection doesn't work out and you're faced with a loss, don't let your pride stop you from admitting you've made a mistake and activing quickly. Cut your losses early and move on. You must make rational decisions, instead of trying to rationalize your way out of a costly mistake."
Wall Street Saying: Cut your Losses Short and Let Your Winners Run
All the comments above reflect a common Wall Street Saying regarding Cutting your Losses short and Let your winners run. This is what every investor should do, but it often turns out that some investors do the opposite. They take profits quickly, and allow losses to start growing.
So don't forget to Control your Stock Losses!
Jim Cramer's View
Jim Cramer, in his Book, "Real Money: Sane Investing in an Insane World" presents his Seventh Commandment of Trading: Control your Losses.
"Losses do you in. They always do you in. Controlling losses is the most important thing you can do. I don't really care how you do it. If it is to put on stops in trading, then so be it. If it is to decide that you are never going to let a position run a point against you, then fine. But you must heed the seventh of my 10 Commandments of Trading:
Control losses; winners take care of themselves."
- Jim Cramer
While Jim Cramer was talking about trading, the same concept applies to longer term investing.
Peter Lynch View
Peter Lynch, in his book "One Up on Wall Street" (page 75, paperback edition):
"People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game. If they've done the proper homework on H&R Block and bought the stock, and suddently the government simplifies the tax code (an unlikely prospect, granted) and Block's business deteriorates, they accept the bad break and start looking for the next stock. They realize the stock market is not pure science, and not like chess, where superior position always win. If seven out of ten of my stocks perform as expected, then I'm delighted. If six out of ten stocks perform as expected, then I'm thankful. Six out of ten is all it takes to produce an enviable record on Wall Street." - Peter Lynch
Imagine that, all you need is six out of ten stocks to do well. That means even great investors such as Peter Lynch do make mistakes.
William O'Neil's View
Growth stock investor William O'Neil, founder of Investors Business Daily, often has sell rules such as sell when a stock goes down 7-8% below the proper buy point, or sell at a certain percentage down. He too has a discipline, to make sure his losses do not grow and ruin the portfolio. He also does not "marry" or become "attached" to a stock, a common mistake some investors make.
Investor's Business Daily mentions that "being a successful investor is just as much about limiting losses as it is about riding a winning stock. Downturns are part of life in the market, and you must act decisively to shield yourself form excessive losses. If your stock selection doesn't work out and you're faced with a loss, don't let your pride stop you from admitting you've made a mistake and activing quickly. Cut your losses early and move on. You must make rational decisions, instead of trying to rationalize your way out of a costly mistake."
Wall Street Saying: Cut your Losses Short and Let Your Winners Run
All the comments above reflect a common Wall Street Saying regarding Cutting your Losses short and Let your winners run. This is what every investor should do, but it often turns out that some investors do the opposite. They take profits quickly, and allow losses to start growing.
So don't forget to Control your Stock Losses!
Wednesday, July 18, 2007
The Warren Buffett Challenge (and Index Funds)
Warren Buffett, in the 2007 Annual Berkshire Hathaway Conference, has some interesting comments.
Warren Buffett even offered a challenge:
His point? For "a know-nothing investor, a low-cost index fund will beat professionally managed money." But you might ask why didn't Mr. Buffett take his own advice on index funds? Warren Buffett said that he thought could beat the S&P by a couple of percentage points, "just not a whole lot better."
Other gems selectively taken directly from a Leslie McFadden Article from BankRate.com:
1. Read and think before you invest. When a 17-year-old who was attending his 10th consecutive Berkshire annual meeting asked how to become a better investor, Buffett offered some simple but golden advice. Read everything on investing you can get your hands on and fill up your mind with various competing thoughts. After doing that, it's time to get started, as investing on paper and dealing with real money is like "reading a romance novel and doing something else."
He added that when you think about buying shares in a company, think about why you might buy the whole business. If you couldn't write an essay about it, then you shouldn't buy any shares.
2. Risk is tied to the type of business and ignorance of the investor. One investor from Los Angeles asked about using volatility as a measurement of an investment's risk. "Volatility does not determine the risk of investing," Buffett said, adding that risk comes with certain kinds of businesses and not knowing what you're doing. A better approach would be to understand the economics of the business you're investing in, he said.
3. What can be done about shorting stocks? "I have no problem with shorts," says Buffett. He added that he didn't think shorting stocks poses any threat to the world. He would be fine with it if someone wanted to short Berkshire stock.
4. Better to invest in businesses tough for competitors to enter. Asked about his interest in investing in Taiwanese high-tech companies, Buffett remarked that "change is wonderful, but not necessarily for investments." In terms of predicting how a business will perform, he said it's much easier to look at consumer behavior and businesses that have big barriers to entry, citing Gillette as an example of a company with a 70 percent market share for men's razors.
5. Value investing -- what else is there? One person asked about whether Buffett's value investing strategy would apply in South Korea. Buffett said investing is all about value. "What other kind of investing is there?" he asked. "Are we going to have nonvalue investing? Are we going to have tipster investing … dream investing? I've never understood what the alternative is."
Warren Buffett even offered a challenge:
Name at least ten hedge funds that will beat a low-cost index funds.
His point? For "a know-nothing investor, a low-cost index fund will beat professionally managed money." But you might ask why didn't Mr. Buffett take his own advice on index funds? Warren Buffett said that he thought could beat the S&P by a couple of percentage points, "just not a whole lot better."
Other gems selectively taken directly from a Leslie McFadden Article from BankRate.com:
1. Read and think before you invest. When a 17-year-old who was attending his 10th consecutive Berkshire annual meeting asked how to become a better investor, Buffett offered some simple but golden advice. Read everything on investing you can get your hands on and fill up your mind with various competing thoughts. After doing that, it's time to get started, as investing on paper and dealing with real money is like "reading a romance novel and doing something else."
He added that when you think about buying shares in a company, think about why you might buy the whole business. If you couldn't write an essay about it, then you shouldn't buy any shares.
2. Risk is tied to the type of business and ignorance of the investor. One investor from Los Angeles asked about using volatility as a measurement of an investment's risk. "Volatility does not determine the risk of investing," Buffett said, adding that risk comes with certain kinds of businesses and not knowing what you're doing. A better approach would be to understand the economics of the business you're investing in, he said.
3. What can be done about shorting stocks? "I have no problem with shorts," says Buffett. He added that he didn't think shorting stocks poses any threat to the world. He would be fine with it if someone wanted to short Berkshire stock.
4. Better to invest in businesses tough for competitors to enter. Asked about his interest in investing in Taiwanese high-tech companies, Buffett remarked that "change is wonderful, but not necessarily for investments." In terms of predicting how a business will perform, he said it's much easier to look at consumer behavior and businesses that have big barriers to entry, citing Gillette as an example of a company with a 70 percent market share for men's razors.
5. Value investing -- what else is there? One person asked about whether Buffett's value investing strategy would apply in South Korea. Buffett said investing is all about value. "What other kind of investing is there?" he asked. "Are we going to have nonvalue investing? Are we going to have tipster investing … dream investing? I've never understood what the alternative is."
Saturday, July 14, 2007
The Sectors in Bull Market Mode
We are in a bull market right now, with the S&P at all time highs, and the Dow near all time highs. So what sectors are working now? What are the long term trends worth investing in? (In this article, trends mean 3 years or longer.)
1. Agriculture:
In 2002, there was an influential US Farm Bill, "The Farm Security and Rural Investment Act of 2002." Prior to this, according to a Forbes Article, " few stocks had big moves prior to the enactment of the 2002 farm bill. Consider AGCO (AG), which sells combines and other farm equipment. Over the course of the year prior to the May 2002 signing of the farm bill, AGCO's shares climbed 150%, vs. a 14% decline for the S&P 500. Archer Daniels Midland (ADM) and Deere & Co. (DE), though not as frothy, also rose nicely in that time period." The push towards Ethanol is also another reason for the bull market in agriculture.
Jim Cramer prefers Deere (DE), who makes the agriculture farm equipment, Monsanto (MON), a biotech company that makes the seeds, and Chemical and Mining Co. of Chile (SQM), a fertilizer play in the agricultural sector.
Forbes likes companies such as Archer Daniels Midlands (ADM), AGCO (AG), and CNH Global (CNH), among many companies in the list they provide as beneficiaries of the farm bill.
2. Machinery
Similar to the farm bill, the $287 Billion US Transportation-spending law in 2005 has been good to machinery stocks. Beneficiaries include companies such as Caterpillar (CAT), and Terex (TEX). As a bonus, companies like Caterpillar (makes of construction equipment), have international exposure as well.
3. Infrastructure
In this area, Jim Cramer likes Foster Wheeler (FWLT) and McDermott (MDR). Foster Wheeler, "provides engineering and construction services to the oil and gas, oil refining, chemical/petrochemical, pharmaceutical, environmental, power generation, and power plant operation and maintenance sectors worldwide. It operates through two groups, Global Engineering and Construction Group (Global E&C Group), and Global Power Group." McDermott (MDR) "operates in three segments: Offshore Oil and Gas Construction, Government Operations, and Power Generation Systems."
Fluor (FLR), is another company in this area. Again, this sector also benefits from global growth.
4. Aerospace and Defense
All those old civilian and military planes need to be replaced. We are in the middle of long aerospace cycle. The main play is Boeing (BA), who benefits from the cycle and also from Airbus' troubles. Other companies in this area include BE Aerospace (BEAV), which manufactures and markets cabin interior products for commercial aircraft and business jets, Northrop Grumman (NOC), an aerospace and defense company, Embraer (ERJ), maker of jet and turboprop aircrafts for civil and defense aviation markets, and Transdigm Group (TDG), a 2 Billion Market Capitalized Company that "engages in the design, production, and supply of engineered aircraft components for use in commercial and military aircraft worldwide." Indirectly, companies such as Allegheny Technology (ATI), creator of specialty metals, benefits from this cycle, as newer planes need lighter materials to save fuel.
5. Oil, Gas, and Energy
Oil, Gas and Energy are in bull market mode because demand is high, and supply is low. The US and Emerging Markets need these to continue their fast growth. And supply is limited, so aside from oil, oil services company which do offshore drilling, supply services to oil companies, companies which search for oil, companies that make and manage offshore rigs are benefitting greatly.
Companies include integrated oil companies such as Exxon Mobil (XOM) and Conoco Philips (COP), oil services companies such as Halliburton (HAL), and Schlumberger (SLB), refiners such as Valero (VLO), offshore drillers such as Global Santa Fe (GSF) and Ensco (ESV), transport vessels for offshore oil services such as Tidewater (TDW), and oil services and rig companies such as National Oilwell Varco (NOV) and Transocean (RIG).
6. Minerals
Gold, Copper, Silver, and other materials are in bull market mode. Once again, this is low supply, high demand. The US, as well as emerging and other international markets are growing! They have an insatiable appetite for these materials. Companies include Freeport-McMoran (FCX), a gold and copper company, and Jim Cramer suggests Lundin Mining (LMC) as well, as the runner up.
7. Telecom especially Emerging Market (Wireless) Telecom
Wireless use, and advanced telecom services such as mobile internet, are growing around the world. Products such as the Apple (AAPL) Iphone, and Research in Motion's (RIMM) Blackberry help drive demand, and countries around the world are increasingly using these services. In the US and in Europe and in Japan, wireless penetration is reaching levels from 70-100%. However in Emerging Markets such as Mexico, and Latin America, wireless penetration is at much lower levels, and is expected to hit 60% penetration in the region only in 2010. That means that there is great opportunity and growth in this area. As an example, Mexican (and South American) telecom play, America Movil (AMX), still has a forward PE of only 15.51, and a 5 yr estimated growth rate of 31.6%, for a PE to Growth ratio of around 0.5, very cheap!
While AT&T (T) is a play on North America Telecom, the greater growth (at a reasonable price) is in emerging markets. Companies include America Movil (AMX), for Mexico and South America, NII Holdings (NIHD) for Latin America, Vimpel Communications (VIP) for Russia, China Mobile (CHL) for China, and Vodaphone (VOD) for Europe, Middle East, Asia and Africa.
8. Mobile Convergence/Wireless Integrated Devices/Handsets
Mobile convergence, where different technologies such as voice, data, and video come together in a single handset, is continuing to grow at a rapid pace. Leaders include Apple (AAPL) with their new handset, Research in Motion's (RIMM) popular Blackberry product, and other companies like Nokia (NOK). As new services emerge, the infrastructure to provide fast, high quality video on these mobile devices will play an important role.
9. Location Based Services
Location based services currently depend on GPS, the Global Positioning System. The companies which use these technlogies are doing well in the market, and will continue to do well, as anything that moves, from cars, with automatic navigation devices, to military weapons, to people holding mobile converged devices such as advanced cellphones will have GPS. Garmin (GRMN) is a company which provides Location Based Product devices. Navteq (NVT) is a company which provides the digital maps, and its competitor is a private company called Tele-Atlas. Sirf Technlogies (SIRF) makes GPS chips. Though it has struggled in the recent past, there are signs that the stock is stabilizing. Competitor includes Broadcom, who bought out their competitor Global Locate. Trimble Navigation (TRMB) is another company providing GPS systems. They even bought the company AtRoad, which tracks fleets of vehicles. Software maker MapInfo (formerly MAPS), was recently bought out by Pitney Bowes (PBI). Indirectly, telecoms will benefit, advanced handset makers will benefit, and companies such as Google (GOOG), may be prime candidates in creating location based service applications such as local GPS search supported by location based advertising. There is great growth in this industry!
10. Computer and Video gaming
Computer and Video gaming are in the middle of a strong cycle, as three major gaming consoles are out from Sony (SNE), Microsoft (MSFT), and Nintendo (NTDOY.pk). Sony also has the portable gaming device Sony PSP, and Nintendo has the portable gaming device Nintendo DS. Demographics also support growth as Generation Y is the 2nd largest group (after the Baby Boomers), and many people in Generation Y like to play games. There are many plays in this sector from Retailers (Gamestop (GME)), console makers (Nintendo (NTDOY.pk)), game makers (Electronic Arts (ERTS), Activision (ATVI)), graphic chip makers (NVidia (NVDA)), and gaming accessories (Logitech (LOGI)). More on this sector and analysis by the numbers here.
11. Online Gaming in Emerging Markets such as China
There is great growth in online gaming, especially in China. There is a growing middle class, and increasing broadband penetration (internet cafes included). In China and Korea, online gaming has become a very popular pasttime. Two good online gaming plays in China include Shanda Interactive (SNDA), and The9 Limited (NCTY) who has the right to bring World of Warcraft to China. Shanda Interactive has a free model where people can play the games for free, but pay real money for items in the game. Article on the Growing Online Gaming Market in Emerging Markets here.
12. Internet, Search, and Internet Video
The internet, the backbone of the major Information Revolution, remains strong. People need to find relevant information from all the data, and companies like Yahoo (YHOO) and Google (GOOG) help do this. Google (GOOG), the groups bellwether company, even purchased YouTube, a popular internet video company. Baidu (BIDU) and Rediff (REDF) service both the Chinese and India markets. Brick and Mortar Retailing continues to be challenged by internet retailing spearheaded by Amazon.com (AMZN) and EBay (EBAY). Infrastructure companies, such as Akamai (AKAM), help make delivery of information better and faster.
13. International Emerging Markets
Emerging markets such as Taiwan, Korea, South Africa, China, Mexico, Brazil, India and China are in bull market mode. This trend will last more than a few years, and this would appear to be part of a much longer trend. Since many companies benefit, an investor could invest in a broad based Emerging Market Exchange Traded Fund such as ishares EEM, and Vanguard's VWO.
Other Sectors to Watch
Besides the sectors which are working well right now, there are other sectors worth watching. Some may start their run right now, while others may take more time to make their gains.
1. Optical Networking and Networking
More data is being placed on the internet, especially internet video. High Definition (which requires more bandwidth) will become more of a standard. Advanced services such as Internet TV (IPTV), and video demand will require much greater bandwidth. Eventually, the system will not be able to handle the demand for greater bandwidth. Next generation applications will require much greater bandwidth. Right now, even AT&T's top DSL Broadband package supports 6 Megabits per second (mbps). In Korea, broadband penetration is around 70%, and their internet speeds go up to 50 mbps, over 8 times faster than AT&T's top speed. The US is behind some countries such as Korea!
Optical Networking is a way to get much better download speeds. The best way to play this is througn Corning Glassware (GLW), who have the added benefit of servicing LCD and flat panel displays (another growth area). Ciena (CIEN) is an optical networking play. Speculative plays include $6 stock Level 3 Communications (LVLT) and $4 stock Finisar (FNSR).
I believe we are the verge of a breakout in the Optical area.
2. Obesity
Obesity is a long term problem. Two possible ways to play this trend are through Weight Watchers (WTW) and NutriSystem (NTRI). NutriSystem looks like the good growth play right now.
3. Specialty clothing
Certain companies just have a special story and product. A good example is Crocs (CROX), maker of a very popular type of footwear. Other companies include UnderArmour (UA) and Gildan Activewear (GIL).
4. Long-Term Care Facilities
Parents of Baby Boomers and eventually the Baby Boomers may need to use Long Term Care Facilities such as Manor Care (HCR), Brookdale Senior Living (BKD), and Sunrise Senior Living (SRZ). We need to watch this group for better action.
5. Healthcare Information System
Eventually, healthcare needs to have integrated software systems. The companies which provide these solutions include Cerner (CERN), Allscripts (MDRX), and Quality Systems (QSII). While this is a growth area, we may have to study the companies carefully to determine the better play.
6. Specialty and Niche Product Companies
Companies which provide a specialty or niche product have a competitive advantage. Examples might be #2 Energy Drink Maker Hansen Natural (HANS), and robotic surgery company Intuitive Surgical (ISRG).
7. Gambling Companies
There is great growth in the gambling and gambling equipment industry. Macau, in Asia, is being transformed into the Las Vegas of the East, and many companies can benefit. If internet gambling (which has taken a hit based on some laws restricting them in the US) comes back, this group will grow even more. Some companies in the gambling and gaming area include Las Vegas Sands (LVS), and MGM Mirage (MGM). Gaming equipment companies include International Gaming Technlogy (IGT), Scientific Games (SGMS), and ShuffleMaster (SHFL).
8. Leisure and Entertainment
Baby Boomers are in their peak spending years which may finally peak in 2010, until Generation Y comes of age. Also, Generation Y, as represented by Generation Y reporter of TheStreet.com Cliff Mason, appears to be more willing to spend money on leisure and entertainment. During these periods, leisure and entertainment companies should benefit.
Companies in this sector include gambling companies and gambling equipment companies (as mentioned above), hotels and resorts such as Starwood Hotels and resorts (HOT), Cruise Ship Companies such as Carnival Corp (CCL), and companies such as Vail Resorts (VAIL) and food and restaurant companies such as Darden (DRI). Powershares ETF "PEJ" covers this area, and the companies in the ETF are listed here.
9. Water
Some people say that water, and clean water, may be the next oil. An ETF which covers this area is powershares PHO, which holds companies such as Mueller Water Products (MWA) and Tetra Tech (TTEK).
10. Environmental Cleanup and Waste Management
Some companies have to cleanup our mess and all or waste including industrial waste, and radioactive waste. According to a Motley Fool article, the trends driving growth in this sector include growth in consumer spending on disposable items in growing populations. Also, there is a rise in industrial waste services as more companies utilize hazardous products in production facilities. There is a greater concern for the environment, so these companies will benefit. Companies in this area include Waste Management (WMI), Clean Harbor (CLHB), and American Ecology (ECOL).
11. Stock Exchanges
Stock Exchanges are in bull market mode. There is great consolidation in this area, and people speculate there may be only a few worldwide stock exchanges. Companies include the InterContinental Exchange (ICE), Nasdaq (NDAQ), New York Stock Exchange-Euronext (NYX), CME Group (CME), and Nymex (NMX).
12. Future Gen Y Plays: Housing, Automobiles, Weddings, Babies
Yes, housing is down right now, but we have to look many years into the future. Generation Y is a very large group, second only to the Baby Boomers. They will eventually (many years from now) be buying their first homes. They will also make other large purchases such as automobiles, and many will be getting married, and having babies. This sector trend will be good for companies in these areas, but we may have to wait many years to play these trends.
Credits
Through my research and experience, I found these bull markets. Jim Cramer mentions six wild bull markets, and those six are incorporated above (with my comments), and a long time ago, Jim Cramer also suggested looking into areas such as HealthCare Information Systems.
1. Agriculture:
In 2002, there was an influential US Farm Bill, "The Farm Security and Rural Investment Act of 2002." Prior to this, according to a Forbes Article, " few stocks had big moves prior to the enactment of the 2002 farm bill. Consider AGCO (AG), which sells combines and other farm equipment. Over the course of the year prior to the May 2002 signing of the farm bill, AGCO's shares climbed 150%, vs. a 14% decline for the S&P 500. Archer Daniels Midland (ADM) and Deere & Co. (DE), though not as frothy, also rose nicely in that time period." The push towards Ethanol is also another reason for the bull market in agriculture.
Jim Cramer prefers Deere (DE), who makes the agriculture farm equipment, Monsanto (MON), a biotech company that makes the seeds, and Chemical and Mining Co. of Chile (SQM), a fertilizer play in the agricultural sector.
Forbes likes companies such as Archer Daniels Midlands (ADM), AGCO (AG), and CNH Global (CNH), among many companies in the list they provide as beneficiaries of the farm bill.
2. Machinery
Similar to the farm bill, the $287 Billion US Transportation-spending law in 2005 has been good to machinery stocks. Beneficiaries include companies such as Caterpillar (CAT), and Terex (TEX). As a bonus, companies like Caterpillar (makes of construction equipment), have international exposure as well.
3. Infrastructure
In this area, Jim Cramer likes Foster Wheeler (FWLT) and McDermott (MDR). Foster Wheeler, "provides engineering and construction services to the oil and gas, oil refining, chemical/petrochemical, pharmaceutical, environmental, power generation, and power plant operation and maintenance sectors worldwide. It operates through two groups, Global Engineering and Construction Group (Global E&C Group), and Global Power Group." McDermott (MDR) "operates in three segments: Offshore Oil and Gas Construction, Government Operations, and Power Generation Systems."
Fluor (FLR), is another company in this area. Again, this sector also benefits from global growth.
4. Aerospace and Defense
All those old civilian and military planes need to be replaced. We are in the middle of long aerospace cycle. The main play is Boeing (BA), who benefits from the cycle and also from Airbus' troubles. Other companies in this area include BE Aerospace (BEAV), which manufactures and markets cabin interior products for commercial aircraft and business jets, Northrop Grumman (NOC), an aerospace and defense company, Embraer (ERJ), maker of jet and turboprop aircrafts for civil and defense aviation markets, and Transdigm Group (TDG), a 2 Billion Market Capitalized Company that "engages in the design, production, and supply of engineered aircraft components for use in commercial and military aircraft worldwide." Indirectly, companies such as Allegheny Technology (ATI), creator of specialty metals, benefits from this cycle, as newer planes need lighter materials to save fuel.
5. Oil, Gas, and Energy
Oil, Gas and Energy are in bull market mode because demand is high, and supply is low. The US and Emerging Markets need these to continue their fast growth. And supply is limited, so aside from oil, oil services company which do offshore drilling, supply services to oil companies, companies which search for oil, companies that make and manage offshore rigs are benefitting greatly.
Companies include integrated oil companies such as Exxon Mobil (XOM) and Conoco Philips (COP), oil services companies such as Halliburton (HAL), and Schlumberger (SLB), refiners such as Valero (VLO), offshore drillers such as Global Santa Fe (GSF) and Ensco (ESV), transport vessels for offshore oil services such as Tidewater (TDW), and oil services and rig companies such as National Oilwell Varco (NOV) and Transocean (RIG).
6. Minerals
Gold, Copper, Silver, and other materials are in bull market mode. Once again, this is low supply, high demand. The US, as well as emerging and other international markets are growing! They have an insatiable appetite for these materials. Companies include Freeport-McMoran (FCX), a gold and copper company, and Jim Cramer suggests Lundin Mining (LMC) as well, as the runner up.
7. Telecom especially Emerging Market (Wireless) Telecom
Wireless use, and advanced telecom services such as mobile internet, are growing around the world. Products such as the Apple (AAPL) Iphone, and Research in Motion's (RIMM) Blackberry help drive demand, and countries around the world are increasingly using these services. In the US and in Europe and in Japan, wireless penetration is reaching levels from 70-100%. However in Emerging Markets such as Mexico, and Latin America, wireless penetration is at much lower levels, and is expected to hit 60% penetration in the region only in 2010. That means that there is great opportunity and growth in this area. As an example, Mexican (and South American) telecom play, America Movil (AMX), still has a forward PE of only 15.51, and a 5 yr estimated growth rate of 31.6%, for a PE to Growth ratio of around 0.5, very cheap!
While AT&T (T) is a play on North America Telecom, the greater growth (at a reasonable price) is in emerging markets. Companies include America Movil (AMX), for Mexico and South America, NII Holdings (NIHD) for Latin America, Vimpel Communications (VIP) for Russia, China Mobile (CHL) for China, and Vodaphone (VOD) for Europe, Middle East, Asia and Africa.
8. Mobile Convergence/Wireless Integrated Devices/Handsets
Mobile convergence, where different technologies such as voice, data, and video come together in a single handset, is continuing to grow at a rapid pace. Leaders include Apple (AAPL) with their new handset, Research in Motion's (RIMM) popular Blackberry product, and other companies like Nokia (NOK). As new services emerge, the infrastructure to provide fast, high quality video on these mobile devices will play an important role.
9. Location Based Services
Location based services currently depend on GPS, the Global Positioning System. The companies which use these technlogies are doing well in the market, and will continue to do well, as anything that moves, from cars, with automatic navigation devices, to military weapons, to people holding mobile converged devices such as advanced cellphones will have GPS. Garmin (GRMN) is a company which provides Location Based Product devices. Navteq (NVT) is a company which provides the digital maps, and its competitor is a private company called Tele-Atlas. Sirf Technlogies (SIRF) makes GPS chips. Though it has struggled in the recent past, there are signs that the stock is stabilizing. Competitor includes Broadcom, who bought out their competitor Global Locate. Trimble Navigation (TRMB) is another company providing GPS systems. They even bought the company AtRoad, which tracks fleets of vehicles. Software maker MapInfo (formerly MAPS), was recently bought out by Pitney Bowes (PBI). Indirectly, telecoms will benefit, advanced handset makers will benefit, and companies such as Google (GOOG), may be prime candidates in creating location based service applications such as local GPS search supported by location based advertising. There is great growth in this industry!
10. Computer and Video gaming
Computer and Video gaming are in the middle of a strong cycle, as three major gaming consoles are out from Sony (SNE), Microsoft (MSFT), and Nintendo (NTDOY.pk). Sony also has the portable gaming device Sony PSP, and Nintendo has the portable gaming device Nintendo DS. Demographics also support growth as Generation Y is the 2nd largest group (after the Baby Boomers), and many people in Generation Y like to play games. There are many plays in this sector from Retailers (Gamestop (GME)), console makers (Nintendo (NTDOY.pk)), game makers (Electronic Arts (ERTS), Activision (ATVI)), graphic chip makers (NVidia (NVDA)), and gaming accessories (Logitech (LOGI)). More on this sector and analysis by the numbers here.
11. Online Gaming in Emerging Markets such as China
There is great growth in online gaming, especially in China. There is a growing middle class, and increasing broadband penetration (internet cafes included). In China and Korea, online gaming has become a very popular pasttime. Two good online gaming plays in China include Shanda Interactive (SNDA), and The9 Limited (NCTY) who has the right to bring World of Warcraft to China. Shanda Interactive has a free model where people can play the games for free, but pay real money for items in the game. Article on the Growing Online Gaming Market in Emerging Markets here.
12. Internet, Search, and Internet Video
The internet, the backbone of the major Information Revolution, remains strong. People need to find relevant information from all the data, and companies like Yahoo (YHOO) and Google (GOOG) help do this. Google (GOOG), the groups bellwether company, even purchased YouTube, a popular internet video company. Baidu (BIDU) and Rediff (REDF) service both the Chinese and India markets. Brick and Mortar Retailing continues to be challenged by internet retailing spearheaded by Amazon.com (AMZN) and EBay (EBAY). Infrastructure companies, such as Akamai (AKAM), help make delivery of information better and faster.
13. International Emerging Markets
Emerging markets such as Taiwan, Korea, South Africa, China, Mexico, Brazil, India and China are in bull market mode. This trend will last more than a few years, and this would appear to be part of a much longer trend. Since many companies benefit, an investor could invest in a broad based Emerging Market Exchange Traded Fund such as ishares EEM, and Vanguard's VWO.
Other Sectors to Watch
Besides the sectors which are working well right now, there are other sectors worth watching. Some may start their run right now, while others may take more time to make their gains.
1. Optical Networking and Networking
More data is being placed on the internet, especially internet video. High Definition (which requires more bandwidth) will become more of a standard. Advanced services such as Internet TV (IPTV), and video demand will require much greater bandwidth. Eventually, the system will not be able to handle the demand for greater bandwidth. Next generation applications will require much greater bandwidth. Right now, even AT&T's top DSL Broadband package supports 6 Megabits per second (mbps). In Korea, broadband penetration is around 70%, and their internet speeds go up to 50 mbps, over 8 times faster than AT&T's top speed. The US is behind some countries such as Korea!
Optical Networking is a way to get much better download speeds. The best way to play this is througn Corning Glassware (GLW), who have the added benefit of servicing LCD and flat panel displays (another growth area). Ciena (CIEN) is an optical networking play. Speculative plays include $6 stock Level 3 Communications (LVLT) and $4 stock Finisar (FNSR).
I believe we are the verge of a breakout in the Optical area.
2. Obesity
Obesity is a long term problem. Two possible ways to play this trend are through Weight Watchers (WTW) and NutriSystem (NTRI). NutriSystem looks like the good growth play right now.
3. Specialty clothing
Certain companies just have a special story and product. A good example is Crocs (CROX), maker of a very popular type of footwear. Other companies include UnderArmour (UA) and Gildan Activewear (GIL).
4. Long-Term Care Facilities
Parents of Baby Boomers and eventually the Baby Boomers may need to use Long Term Care Facilities such as Manor Care (HCR), Brookdale Senior Living (BKD), and Sunrise Senior Living (SRZ). We need to watch this group for better action.
5. Healthcare Information System
Eventually, healthcare needs to have integrated software systems. The companies which provide these solutions include Cerner (CERN), Allscripts (MDRX), and Quality Systems (QSII). While this is a growth area, we may have to study the companies carefully to determine the better play.
6. Specialty and Niche Product Companies
Companies which provide a specialty or niche product have a competitive advantage. Examples might be #2 Energy Drink Maker Hansen Natural (HANS), and robotic surgery company Intuitive Surgical (ISRG).
7. Gambling Companies
There is great growth in the gambling and gambling equipment industry. Macau, in Asia, is being transformed into the Las Vegas of the East, and many companies can benefit. If internet gambling (which has taken a hit based on some laws restricting them in the US) comes back, this group will grow even more. Some companies in the gambling and gaming area include Las Vegas Sands (LVS), and MGM Mirage (MGM). Gaming equipment companies include International Gaming Technlogy (IGT), Scientific Games (SGMS), and ShuffleMaster (SHFL).
8. Leisure and Entertainment
Baby Boomers are in their peak spending years which may finally peak in 2010, until Generation Y comes of age. Also, Generation Y, as represented by Generation Y reporter of TheStreet.com Cliff Mason, appears to be more willing to spend money on leisure and entertainment. During these periods, leisure and entertainment companies should benefit.
Companies in this sector include gambling companies and gambling equipment companies (as mentioned above), hotels and resorts such as Starwood Hotels and resorts (HOT), Cruise Ship Companies such as Carnival Corp (CCL), and companies such as Vail Resorts (VAIL) and food and restaurant companies such as Darden (DRI). Powershares ETF "PEJ" covers this area, and the companies in the ETF are listed here.
9. Water
Some people say that water, and clean water, may be the next oil. An ETF which covers this area is powershares PHO, which holds companies such as Mueller Water Products (MWA) and Tetra Tech (TTEK).
10. Environmental Cleanup and Waste Management
Some companies have to cleanup our mess and all or waste including industrial waste, and radioactive waste. According to a Motley Fool article, the trends driving growth in this sector include growth in consumer spending on disposable items in growing populations. Also, there is a rise in industrial waste services as more companies utilize hazardous products in production facilities. There is a greater concern for the environment, so these companies will benefit. Companies in this area include Waste Management (WMI), Clean Harbor (CLHB), and American Ecology (ECOL).
11. Stock Exchanges
Stock Exchanges are in bull market mode. There is great consolidation in this area, and people speculate there may be only a few worldwide stock exchanges. Companies include the InterContinental Exchange (ICE), Nasdaq (NDAQ), New York Stock Exchange-Euronext (NYX), CME Group (CME), and Nymex (NMX).
12. Future Gen Y Plays: Housing, Automobiles, Weddings, Babies
Yes, housing is down right now, but we have to look many years into the future. Generation Y is a very large group, second only to the Baby Boomers. They will eventually (many years from now) be buying their first homes. They will also make other large purchases such as automobiles, and many will be getting married, and having babies. This sector trend will be good for companies in these areas, but we may have to wait many years to play these trends.
Credits
Through my research and experience, I found these bull markets. Jim Cramer mentions six wild bull markets, and those six are incorporated above (with my comments), and a long time ago, Jim Cramer also suggested looking into areas such as HealthCare Information Systems.
Wednesday, July 11, 2007
Growth in Online Computer Gaming: China, India, Korea, and Japan
China Gaming
The China Gaming market is a very big market. The Chinese middle class is growing and showing their increasing purchasing power. According to play.tm, and according to research from American Market research firm, DFC Intelligence, "analysts predict strong growth for online games in China. Following the trend of South Korea, online gaming is already one of China's favourite pastimes, but it is expected to be worth a great deal more by 2010: 1.7 billion USD we're told. That's up from a 2005 value of about 560 million USD. " "The game market in China is all about online play and charging by usage. There is even a growing market for the items used in games like weapons and characters," states Alexis Madrigal, one of the experts behind the new report."
The three main players in this market are Shanda Interactive (SNDA), The9 Limited (NCTY), and NetEase (NTES). Shanda Interactive and The9 Limited seem the most investable, having MyPEGs of 0.56 and 0.71 (very cheap). The9 Limited has the right to bring Blizzard's World of Warcraft to China. Shanda Interactive also has a good business model. According to a China online gaming survey conducted by Piper Jaffray, "55 percent of respondents said they prefer Shanda's business model, in which users can play games for free and are charged to purchase virtual items within the games. Shanda also tied with competitor The9 Ltd. as the company in its market that offers the best games."
(Analysis of Computer and Video Game Sector here.)
India
Now, what about the India online gaming market? According to a report by San Francisco based analyst and consulting firm Pearl Research (and reported by Gamasutra.com), " online games market in India will exceed $200 million in 2010, as part of a new “Online Games Market in India” report."
According to the report, the "rapid adoption of the Internet with 39 million current users; increasing broadband penetration; growth in Internet cafes with more than 100,000 outlets; and a sizable middle-class with rising disposable income. Most importantly, game operators are promoting and educating consumers about online games including MMOGs."
Local and International publishers are investing in the Indian online games market, as this is one of the few viable publishing models, where "software piracy rates exceed 85%".
However, the $200 Million Indian market by 2010 pales in comparison to China's estimated online gaming market of 1.7 Billion.
Allison Luong, Managing Director of Pearl Ressearch says that "India in 2006 is often compared to China in 2001, when China’s games market started to develop and an online games culture started to form. Within a decade, India has the potential to emerge as one of the top online markets in Asia, along with China, Korea and Taiwan."
India is slow to adopt Online Gaming
However, according to an article by John Ribeiro of IDG News Service (and reported by NetworkWorld.com), the Internet and mobile Association of India and research firm IMRB International (both in Mumbai, India), says the slow uptake in online gaming is partially caused by the "negative perceptions among parents and education institutions." Sohil Kunwar of IMRB says that "Online gaming is considered to be alien and disruptive, and to have an adverse impact on education."
In addition, Sohhil Kunwar says that India has too few broadband connections to homes. There are only 2.21 million broadband subscribers (February 2007), in a country of more than a Billion People.
Opportunity in Indian Mobile Games
In the same report, the big opportunity in India might be mobile games. According to TRAI, "India had 162.5 million mobile subscriber at the end of February. Currently, Indian mobile users can download games from Web sites but are unable to play online."
Korea online gaming
Online gaming in Korea is also very popular. Gravity (GRVY) and Webzen are two popular Korean online gaming companies. Gravity is a small cap publicly traded company (US exchanges) that provides online Games in Korea, but the fundamentals don't look very good. According to an MSNBC article, in Korea, 17 million people play games regularly in a country of 48 million. Close to 70 percent of South Korean households have broadband. And the transfer data speeds in Korea can be up to 50 megabits per second (Mbps). Compare this to AT&T Yahoo! Elite package (DSL) which has download speeds up to 6.0 Mbps. All these, plus the fact that the young people of the country have grown up with the technology help make online gaming in Korea big business.
What about Online gaming in Japan?
Japan, home of Nintendo, and Sony, are more console driven than China and Korea. So, online gaming in Japan is not as popular as it is in Korea and China.
The China Gaming market is a very big market. The Chinese middle class is growing and showing their increasing purchasing power. According to play.tm, and according to research from American Market research firm, DFC Intelligence, "analysts predict strong growth for online games in China. Following the trend of South Korea, online gaming is already one of China's favourite pastimes, but it is expected to be worth a great deal more by 2010: 1.7 billion USD we're told. That's up from a 2005 value of about 560 million USD. " "The game market in China is all about online play and charging by usage. There is even a growing market for the items used in games like weapons and characters," states Alexis Madrigal, one of the experts behind the new report."
The three main players in this market are Shanda Interactive (SNDA), The9 Limited (NCTY), and NetEase (NTES). Shanda Interactive and The9 Limited seem the most investable, having MyPEGs of 0.56 and 0.71 (very cheap). The9 Limited has the right to bring Blizzard's World of Warcraft to China. Shanda Interactive also has a good business model. According to a China online gaming survey conducted by Piper Jaffray, "55 percent of respondents said they prefer Shanda's business model, in which users can play games for free and are charged to purchase virtual items within the games. Shanda also tied with competitor The9 Ltd. as the company in its market that offers the best games."
(Analysis of Computer and Video Game Sector here.)
India
Now, what about the India online gaming market? According to a report by San Francisco based analyst and consulting firm Pearl Research (and reported by Gamasutra.com), " online games market in India will exceed $200 million in 2010, as part of a new “Online Games Market in India” report."
According to the report, the "rapid adoption of the Internet with 39 million current users; increasing broadband penetration; growth in Internet cafes with more than 100,000 outlets; and a sizable middle-class with rising disposable income. Most importantly, game operators are promoting and educating consumers about online games including MMOGs."
Local and International publishers are investing in the Indian online games market, as this is one of the few viable publishing models, where "software piracy rates exceed 85%".
However, the $200 Million Indian market by 2010 pales in comparison to China's estimated online gaming market of 1.7 Billion.
Allison Luong, Managing Director of Pearl Ressearch says that "India in 2006 is often compared to China in 2001, when China’s games market started to develop and an online games culture started to form. Within a decade, India has the potential to emerge as one of the top online markets in Asia, along with China, Korea and Taiwan."
India is slow to adopt Online Gaming
However, according to an article by John Ribeiro of IDG News Service (and reported by NetworkWorld.com), the Internet and mobile Association of India and research firm IMRB International (both in Mumbai, India), says the slow uptake in online gaming is partially caused by the "negative perceptions among parents and education institutions." Sohil Kunwar of IMRB says that "Online gaming is considered to be alien and disruptive, and to have an adverse impact on education."
In addition, Sohhil Kunwar says that India has too few broadband connections to homes. There are only 2.21 million broadband subscribers (February 2007), in a country of more than a Billion People.
Opportunity in Indian Mobile Games
In the same report, the big opportunity in India might be mobile games. According to TRAI, "India had 162.5 million mobile subscriber at the end of February. Currently, Indian mobile users can download games from Web sites but are unable to play online."
Korea online gaming
Online gaming in Korea is also very popular. Gravity (GRVY) and Webzen are two popular Korean online gaming companies. Gravity is a small cap publicly traded company (US exchanges) that provides online Games in Korea, but the fundamentals don't look very good. According to an MSNBC article, in Korea, 17 million people play games regularly in a country of 48 million. Close to 70 percent of South Korean households have broadband. And the transfer data speeds in Korea can be up to 50 megabits per second (Mbps). Compare this to AT&T Yahoo! Elite package (DSL) which has download speeds up to 6.0 Mbps. All these, plus the fact that the young people of the country have grown up with the technology help make online gaming in Korea big business.
What about Online gaming in Japan?
Japan, home of Nintendo, and Sony, are more console driven than China and Korea. So, online gaming in Japan is not as popular as it is in Korea and China.
Friday, July 6, 2007
How to invest $100 per month
Question:
Answer:
Good job saving $100 (or more) per month that you can save or invest.
1. What you can do is open a brokerage account such as:
They offer many kinds of accounts, and you buy and sell stocks, and mutual funds. The minimum to open each account is $1000.
2. Then, choose a mutual fund with a minimum you can afford. Look through your brokerage mutual fund list, and only choose mutual funds that have no-load or no transaction fee. You can then visit Morningstar.com and look for 4 or 5 star mutual funds.
In order to have a diversified portfolio, you can have three mutual funds:
1. Diversified International Mutual Fund
2. Large Capitalization USA Mutual Fund
3. Small Capitalization USA Mutual Fund
If you don't have that much money to start with, you can start with one mutual fund. And as you have more money to invest, you can start investing in another mutual fund, and so forth until you have three mutual funds.
3. Setup automatic investing using your Brokerage account. You can automatically invest at regular intervals (for example, once a month), and the system will automatically invest for you whether the market goes up or down.
Over the years, with the growth of the stock market (on average, gains around 10% per year over many years. Yes, some years, you could lose 10% and other years, gain 20%), you'll be amazed how much money you can accumulate!
What if you don't have $1000 saved?
I was researching mutual fund companies to see if they allowed a very low minimum to start an account (such as $50). I wasn't satisfied with the results.
So what I recommend is open a high yield money market or savings account which, at this time, should get you at least 5%. Then when you have $1000, you can open the brokerage account and invest at regular intervals in mutual funds as described above. You can also open a Complete Savings Account at E*Trade (getting 5.05% at this time). Then, when you are ready to open a Brokerage account at E*Trade, you can link both accounts (your complete savings account and your brokerage account) to the same E*Trade login/account.
If you are interested in getting started in investing (mutual funds, ETFs, or individual stocks), you can try this link here.
Hello. I have $100 that I can save or invest every month.
How can I invest this?
Answer:
Good job saving $100 (or more) per month that you can save or invest.
1. What you can do is open a brokerage account such as:
They offer many kinds of accounts, and you buy and sell stocks, and mutual funds. The minimum to open each account is $1000.
2. Then, choose a mutual fund with a minimum you can afford. Look through your brokerage mutual fund list, and only choose mutual funds that have no-load or no transaction fee. You can then visit Morningstar.com and look for 4 or 5 star mutual funds.
In order to have a diversified portfolio, you can have three mutual funds:
1. Diversified International Mutual Fund
2. Large Capitalization USA Mutual Fund
3. Small Capitalization USA Mutual Fund
If you don't have that much money to start with, you can start with one mutual fund. And as you have more money to invest, you can start investing in another mutual fund, and so forth until you have three mutual funds.
3. Setup automatic investing using your Brokerage account. You can automatically invest at regular intervals (for example, once a month), and the system will automatically invest for you whether the market goes up or down.
Over the years, with the growth of the stock market (on average, gains around 10% per year over many years. Yes, some years, you could lose 10% and other years, gain 20%), you'll be amazed how much money you can accumulate!
What if you don't have $1000 saved?
I was researching mutual fund companies to see if they allowed a very low minimum to start an account (such as $50). I wasn't satisfied with the results.
So what I recommend is open a high yield money market or savings account which, at this time, should get you at least 5%. Then when you have $1000, you can open the brokerage account and invest at regular intervals in mutual funds as described above. You can also open a Complete Savings Account at E*Trade (getting 5.05% at this time). Then, when you are ready to open a Brokerage account at E*Trade, you can link both accounts (your complete savings account and your brokerage account) to the same E*Trade login/account.
If you are interested in getting started in investing (mutual funds, ETFs, or individual stocks), you can try this link here.
"How do I start investing?"
Question:
Answer:
Congratulations on wanting to get involved in the stock market and investing!
All investors need to start somewhere, and books are a good way. I would recommend starting with "Investing for Dummies" by Eric Tyson and "Personal Finance for Dummies" by Eric Tyson.
Once you learn the basics of investing and the stock market, you can continue reading more books including the recommended books in this link.
In addition, you can start watching former Hedge Fund Manager Jim Cramer, on his CNBC show "Mad Money." While his antics may seem crazy to some, he has a lot of substance and has a good message. He had a very impressive record as a hedge fund manager. He even has a loyal following among Generation Y.
Continue to read magazines and newspapers such as "The Wall Street Journal", "Money", "Smart Money", and even "Barron's" or "Investors Business Daily".
Once you are ready, you can start choosing a brokerage account. Two popular ones are:
They offer many kinds of accounts, and you buy and sell stocks, and mutual funds. The minimum to open each account is $1000.
Mutual Fund Route
If you choose to go the mutual fund route, look through your brokerage mutual fund list, and only choose mutual funds that have no-load or no transaction fee. You can then visit Morningstar.com and look for 4 or 5 star mutual funds.
In order to have a diversified portfolio, you can have three mutual funds:
1. Diversified International Mutual Fund
2. Large Capitalization USA Mutual Fund
3. Small Capitalization USA Mutual Fund
If you don't have that much money to start with, you can start with one mutual fund. And as you have more money to invest, you can start investing in another mutual fund, and so forth until you have three mutual funds.
You can also choose index mutual funds. The advantage is that the fees that you pay (called the expense ratio. You don't really notice it, but it is taken out automatically from the price of the mutual fund. Morningstar.com shows you the expense ratio) is much lower than an actively managed mutual fund. Also, advocates of Indexing such as Vanguard founder John Bogle say that Index funds outperform a great percentage of actively managed mutual funds so why not invest in Index funds with a lower expense ratio?
Exchange Traded Fund (ETF)
Exchange Traded Funds, or ETFs are essentially mutual funds, most of which are indexed rather than actively managed, that trade in the stock market just like stocks. For example, the DIA ETF represents the 30 stocks in the Dow Jones Industrial Average. You pay commissions to buy and sell, just like a regular stock. You can buy them from many brokerages out there.
One of the largest ETF companies out there is Barclays iShares.
Investing in Stocks and ETFs
If you wish to invest in stocks and ETFs, congratulations. You are saying that you have the time, and the inclination to study stocks. I would recommend reading lots of recommended books I mentioned, and continue learning about the market.
Also, continue to live life. Sometimes, the best investment ideas you have are in areas you already know. Maybe you see that Chipotle Mexican Grill (CMG) is always full, or that everyone seems to be shopping at Gamestop (GME).
Good luck to you, and I hope you enjoy the journey, and make lots of money in the process.
Info on Getting Started investing a sum of money.
Hi. I'm new to the market and I'm interested in investing.
How do I start?
Answer:
Congratulations on wanting to get involved in the stock market and investing!
All investors need to start somewhere, and books are a good way. I would recommend starting with "Investing for Dummies" by Eric Tyson and "Personal Finance for Dummies" by Eric Tyson.
Once you learn the basics of investing and the stock market, you can continue reading more books including the recommended books in this link.
In addition, you can start watching former Hedge Fund Manager Jim Cramer, on his CNBC show "Mad Money." While his antics may seem crazy to some, he has a lot of substance and has a good message. He had a very impressive record as a hedge fund manager. He even has a loyal following among Generation Y.
Continue to read magazines and newspapers such as "The Wall Street Journal", "Money", "Smart Money", and even "Barron's" or "Investors Business Daily".
Once you are ready, you can start choosing a brokerage account. Two popular ones are:
They offer many kinds of accounts, and you buy and sell stocks, and mutual funds. The minimum to open each account is $1000.
Mutual Fund Route
If you choose to go the mutual fund route, look through your brokerage mutual fund list, and only choose mutual funds that have no-load or no transaction fee. You can then visit Morningstar.com and look for 4 or 5 star mutual funds.
In order to have a diversified portfolio, you can have three mutual funds:
1. Diversified International Mutual Fund
2. Large Capitalization USA Mutual Fund
3. Small Capitalization USA Mutual Fund
If you don't have that much money to start with, you can start with one mutual fund. And as you have more money to invest, you can start investing in another mutual fund, and so forth until you have three mutual funds.
You can also choose index mutual funds. The advantage is that the fees that you pay (called the expense ratio. You don't really notice it, but it is taken out automatically from the price of the mutual fund. Morningstar.com shows you the expense ratio) is much lower than an actively managed mutual fund. Also, advocates of Indexing such as Vanguard founder John Bogle say that Index funds outperform a great percentage of actively managed mutual funds so why not invest in Index funds with a lower expense ratio?
Exchange Traded Fund (ETF)
Exchange Traded Funds, or ETFs are essentially mutual funds, most of which are indexed rather than actively managed, that trade in the stock market just like stocks. For example, the DIA ETF represents the 30 stocks in the Dow Jones Industrial Average. You pay commissions to buy and sell, just like a regular stock. You can buy them from many brokerages out there.
One of the largest ETF companies out there is Barclays iShares.
Investing in Stocks and ETFs
If you wish to invest in stocks and ETFs, congratulations. You are saying that you have the time, and the inclination to study stocks. I would recommend reading lots of recommended books I mentioned, and continue learning about the market.
Also, continue to live life. Sometimes, the best investment ideas you have are in areas you already know. Maybe you see that Chipotle Mexican Grill (CMG) is always full, or that everyone seems to be shopping at Gamestop (GME).
Good luck to you, and I hope you enjoy the journey, and make lots of money in the process.
Info on Getting Started investing a sum of money.
Simple Diversified and Fully Invested Stock Portfolio Strategy
Many investors (especially new ones), may have a difficult time deciding when to sell a stock. These investors may also try to time the market or time sector rotation, but often end up buying and selling stocks at the wrong times, all while making their broker rich through all the commissions they pay them.
Is there an easier way for a (new) investor?
Here's a possible strategy to make things easier:
By staying fully invested, and fully diversified, with the strategy mentioned above, the individual investor can outperform the market, with low turnover and risk.
Is there an easier way for a (new) investor?
Here's a possible strategy to make things easier:
- Always stay fully invested whether the market goes up or down. On average, stocks go up more than they go down, and average around 10% per year over a long time period. Even legendary investor Peter Lynch (in his book, "One up on Wall Street") says to stay fully invested.
- Stay diversified by choosing one stock per sector. There are around ten sectors, so that means you will be holding a portfolio of ten stocks.
- If you choose well, you should be choosing a stock that should outperform its sector.
- When do you sell a stock? It's easy. If there is a better stock in the same sector, sell the stock that you are holding and buy the better stock.
By staying fully invested, and fully diversified, with the strategy mentioned above, the individual investor can outperform the market, with low turnover and risk.
Thursday, June 21, 2007
Investing Book Recommendations
There are so many investing books out there, so how does someone new to the market start investing?
Books are a good way to learn. If you want a broad overview, you should start with the infamous Dummies series, and get Investing For Dummies, 4th Edition
(Eric Tyson). Investors have to start somewhere, and the Investing For Dummies is a good start. (Alternatively, you can also buy and read "Personal Finance For Dummies" by Eric Tyson).
Okay, if you now know the basics, and know about 401ks/IRAs, stocks, ETFs, mutual funds, and have a general idea about the market, what should you read next?
Right now, there are many investing styles ranging from Growth to Value to everything in between. Some of these styles are very different from each other, and each philosophy may have very different rules. So where do we start?
I believe to get a good overview of the different styles, you should read these four books and decide for yourself what kind of investor you can become:
To start out, I would recommend reading both Jim Cramer's "Real Money: Sane Investing in an Insane World" and Peter Lynch's "One Up On WallStreet", Millenium edition.
Jim Cramer's book is a more contemporary look at investing, and goes into detail about the basics of stock investing, rules, cycles, stock sectors, creating a discretionary portfolio, spotting bottoms, and spotting tops, just to give a small sample.
Peter Lynch is the Legendary investor who managed Fidelity's Magellan to outstanding performance. Invest in what you know. He groups stocks into six categories such as "Slow Growers", "Stalwarts", "The Fast Growers", "The Cyclicals", "Turnarounds", and "Asset Plays". He helps investors in the process of choosing great stocks, and even multibaggers (make many times your original investment). Even if the book was written in 1989, this book is still a timeless classic. The Millenium edition has an interesting introduction by Peter Lynch himself in 2000, during the height of the dot-com bubble.
To get two very different takes on investing, you should read both William O'Neil's book (founder of Investors Business Daily , and a die hard growth investor who likes strong earnings growth and great charts), and Warren Buffett's book (Value Investor extraordinaire who made people rich through Berkshire Hathaway (BRK.B)). You'll see how two legendary investors look at investing in two different ways. But both succeed!
There are other recommendations to the right as well, but you may want to first try the books above first.
Books are a good way to learn. If you want a broad overview, you should start with the infamous Dummies series, and get Investing For Dummies, 4th Edition
(Eric Tyson). Investors have to start somewhere, and the Investing For Dummies is a good start. (Alternatively, you can also buy and read "Personal Finance For Dummies" by Eric Tyson).Okay, if you now know the basics, and know about 401ks/IRAs, stocks, ETFs, mutual funds, and have a general idea about the market, what should you read next?
Right now, there are many investing styles ranging from Growth to Value to everything in between. Some of these styles are very different from each other, and each philosophy may have very different rules. So where do we start?
I believe to get a good overview of the different styles, you should read these four books and decide for yourself what kind of investor you can become:
- GROWTH: How To Make Money In Stocks: A Winning System in Good Times or Bad, 3rd Edition
(William O'Neil)
- ?: Jim Cramer's Real Money: Sane Investing in an Insane World
(Jim Cramer)
- ?: One Up On Wall Street : How To Use What You Already Know To Make Money In The Market
(Peter Lynch)
- VALUE: The Essays of Warren Buffett : Lessons for Corporate America
(Warren Buffett)
To start out, I would recommend reading both Jim Cramer's "Real Money: Sane Investing in an Insane World" and Peter Lynch's "One Up On WallStreet", Millenium edition.
Jim Cramer's book is a more contemporary look at investing, and goes into detail about the basics of stock investing, rules, cycles, stock sectors, creating a discretionary portfolio, spotting bottoms, and spotting tops, just to give a small sample.
Peter Lynch is the Legendary investor who managed Fidelity's Magellan to outstanding performance. Invest in what you know. He groups stocks into six categories such as "Slow Growers", "Stalwarts", "The Fast Growers", "The Cyclicals", "Turnarounds", and "Asset Plays". He helps investors in the process of choosing great stocks, and even multibaggers (make many times your original investment). Even if the book was written in 1989, this book is still a timeless classic. The Millenium edition has an interesting introduction by Peter Lynch himself in 2000, during the height of the dot-com bubble.
To get two very different takes on investing, you should read both William O'Neil's book (founder of Investors Business Daily , and a die hard growth investor who likes strong earnings growth and great charts), and Warren Buffett's book (Value Investor extraordinaire who made people rich through Berkshire Hathaway (BRK.B)). You'll see how two legendary investors look at investing in two different ways. But both succeed!
There are other recommendations to the right as well, but you may want to first try the books above first.
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