The most important piece of the jigsaw of a rising economy is not bullshit like "buy less from China", or "the government caused this and now we're becoming socialists".
Idiots think this. (Sorry if you are one). But, it’s time to get REAL, as we watch stock market take away any profits, give them back, and resolutions being “stuck and lobbied”
A large part of the jigsaw is that consumers owe $14 trillion. This is all Obama's fault, like everything else. He and those Democrats (not a single Republican) are not focusing on JOBS that will allow people to spend.
Here's the facts:
1. There is $14 TRILLION in household debt, and $10.5 TRILLION of that mortgage related, thanks to Bubbles Greenspan.
2. Americans have now decided being upside down that is okay to PHUCK your bank. We predict more and more will just walk away from their mortgages as their homes lose more value.
Reduced spending may occur with this, as will rising delinquencies on credit cards and mortgage accounts.
3. A Floydian Fact of real merit: There is an astonishing decline in bank deposits, clear evidence we as a public are starting to burn through the cash.
4. Stephanie Pomboy, Market Maven, says there is almost a zero chance of our ratio of debt returning to 65%, what it was before Bubbles Greenspan came to head the FEDS, and we all believed him GOD, because the money was free. She analyzes that to decline our debt by 6.3 trillion, or increase income by 9 trillion would bring us to this 65% reasonable and healthy rate, would take up to 10 years to occur, and has a ZERO chance of occurring because 40% of our households now spend every dollar they make just to keep their heads above water.
Last week we updated our portfolio on the website and made a number of recommendations for sales of positions. We are continuing to do so, and to do our mid-year “MRI” of our holdings. It’s been an exceptional year and a half for Blue Chip Options.
We’ll begin in the Monday commentary with our analysis of our holdings, and continue through the week, so that all of our holdings are covered by weekend.
Please Make Note: People invest for different reasons, and at different times in their lives. Planners call this allocation. Traders call it sector changing. Money magazines explain to the average Joe investor that it is good to have holdings in a variety of positions, and of course, never to have all your money in your company stock, as they are likely going to phuck you.
We pick both stocks that we buy and hold (and buy more on downturns) that ALL pay dividends. These are our CORE positions.
Our SPECULATIVE positions we may hold days to months, and with some over a year. We consider these potential break out positions, or trade them as options.
We will utilize our discussions about holdings in the order they list in our portfolio on the website.
Also make note that on our website we have a direct link to our up to date point and figure charting for all positions, and also positions we “watch”.
Chevron (CVX)
We bought this well and continue to hold. Nice dividend and the oil industry will rebound. Chevron has much risk inherent in lawsuits, and is aggressive in their exploratory methodology.
Hold, and use a 25% trailing stop loss
EXXON Mobil (XOM)
This is our largest single CORE position right now. We believe XOM is undervalued to the market, is being aggressively shorted, and will surprise everyone. It’s simply CHEAP under $60.00, we’re already up 17%, it pays a dividend, and Floyd believes it’s a potential $90.00 stock.
If trading options, trade ATM or ITM long -range calls. If buying the stock, use our traditional 25% trailing stop loss.
Health Management Services (HMSY)
We also read this speculative trade right, up over 44%. As healthcare changes (you know, we become communists) we will first have to figure out how we have created a “clusterphuck” of paperwork in the medical industry that RAISES cost. HMSY is an organizer company, managing and improving systems.
It’s well run, and has more upside.
We’d take 1/3 profit at 55% area. 25% trailing stop loss. Hold the position; do not buy at this time.
ITC Holdings (ITC)
Is an incredible concept -http://www.itctransco.com/
We bought and are up only 20%, because the stock is not yet known, and their concept of modernization of grid just beginning to be understood. It’s speculative, but a great move.
McDonalds (MCD)
1. Horrible food, builds obesity
2. Ugly buildings
3. Hideous customer service
4. Terrible dangerous little toys for children
5. The best system of “average” in the world. The food tastes like the same crap anywhere in the world, except for the French fries which they put drugs in
6. Execution business A+ BAR NONE.
We’re up 30%, it pays a dividend, and we’ll buy McD on any downturns. It’s a great “bad company”
Analy Capital Management REIT (NLY)
At one time last year we had a 120% return on this position and many took their first 1/3 of profits. The position is now up over 85%
Keep a 25% trailing stop loss, and HOLD
YUM Brands, Inc (YUM)
Pizza Hut, KFC, Taco Bell, etc.
And here’s McDonalds again, with a few changes:
1. Horrible food, builds obesity
2. Ugly buildings
3. Hideous customer service
4. Terrible dangerous little toys for children
5. The best system of “average” in the world. The food tastes like the same crap anywhere in the world, and it appears Asians are fried Chicken addicts
6. Execution business A+ BAR NONE.
We list this having just sold it for between 47 and 68% profits, plus dividends, but will be entering it again soon.
Wal-Mart (WMT)
Sadly this is another stock I love to hate. It’s a large box at the end of
a town that destroys local businesses, imports everything from China, and sells volume.
This company is the great logistics distribution company in the world. It has more money than we can imagine and executes.
A steady dividend, we hold this in our CORE account as a steady investment , using our standard 25% trailing stop loss.
Entry with WMT is fine anytime, and continue to buy.
Berkshire Hathaway B Shares (BRKB)
We know the story. The greatest investor in the world. We’ve shown returns of 50% in the old days, but did not add to the position during the downturn.
Many of our traders are sitting on hefty profits, having held the position with us over 5 years.
For the first time in BRKB charting history I am noticing a struggle at selling, and a more noticeable potential resistance area.
BRKB may be ripe for a drop. If you are profit oriented short term within your CORE account, we suggest selling 1/3 to 2/3 of your holdings if your returns are greater than 30%, as most of our traders are.
Templeton Emerging Market Fund (EMF)
We have owned this fund forever, and will hold it as long as Mark Mobius, the famed international trader, runs it. As a student of Sir John Templeton Mobius has allowed us returns as high as 200%, and currently over 150%.
We use a strict 25% trailing stop loss on EMF as emerging markets are volatile and unsteady. When many trading services recommend a variety of stocks and “plays” on China we sit back by the pool and let Mr. Mobius do our work.
Always a good buy on any dip. We list in our spreadsheet no trailing stop, for those that are risk oriented and simply accumulate on volatility.
Bristol Myers (BMY)
Blue Chip owns two pharmaceuticals and we’re in for the long term.
Hold, and use a 25% trailing stop.
BMY is sound, and has break out potential
NetFlix (NFLX)
Daughter Jenn who is learning the business and writes much of our final work recommended this on a simple “Dad, they have it together. None of the other ones do”. She’s been right. It’s up 60% and we’ve made money several times on calls.
We just recommended to sell a 1/3 of this position to lock in some profits.
JM Smuckers (SJM)
A kick ass “family company” that makes great profits and advertises perfectly.
We recommend this position be held if already accumulated, or purchased if not owned. Accumulate as a CORE position that has a dividend.
SJM actually looks like it has a healthy upside potential.
Caterpillar (CAT)
CAT is like a drama in the volatility that occurred during our ownership.
We’ve continued to add on dips and stand now with a 93% average gain.
Accumulate this position on any dips to a Point and Figure support line.
If you have great profits, take 1/3.
This is a long term CORE position charged for the” building of economies”
Each day this week we’ll outline in detail the rest of our portfolio.
Again, go online and see our charts on these holdings.
Be Well and Do Good
Floyd at Blue Chip Options
