Surfing Wall Street to Retire: Signs of Banking Stress in China

Tuesday, January 28, 2014

Signs of Banking Stress in China

The results of years of centralized planning (they will come if we build it) and political influence on banks to keep suppling the funny money. The real questions is whether this will create a contagion or not? I am not thinking it will but the questions will create some stories for the bears at minimum. This really seems more like a 2008 variety oops than a 1997 oops. Let me know your thoughts. Below is how I would categorize stocks I own....


VB	107.55	+0.65	+0.61%	Not likely to have a problem as mostly domestic and small
SPY	178.57	+0.56	+0.31%	Some problems with US exporters
EEM	38.26	+0.17	+0.45%	Big problems coming just how big
SPHIX	9.38	-0.02	-0.21%


HIINX	67.55	-0.46	-0.68%	Some problems
DIS	72.60	+0.35	+0.48%	Minor Problems
USB	40.47	+0.43	+1.07%	Some Problems related to contagion risk
BK	32.14	+0.10	+0.30%	Some Problems related to contagion risk
KFN	12.36	+0.23	+1.90%	Minor problems
GE	25.41	+0.34	+1.35%	Some
CAT	91.81	+0.52	+0.57%	Some, but could be muted by US demand
AA	11.83	+0.18	+1.59%	Some, global demand might shrink
NUE	49.27	+0.85	+1.76%	Some, global demand might shrink
PHM	19.33	+0.62	+3.31%	Little
LEN	38.70	+1.83	+4.96%	Little
F	15.71	0.00	0.00%	Some
BA	136.95	-0.41	-0.30%	Little - some
DD	59.77	-0.47	-0.78%	Some
GSFVF	1.69	+0.06	+3.93%	Little
ADES	50.70	+0.56	+1.12%	Little
BP	47.35	+0.10	+0.21%	Some
WLL	57.96	+0.89	+1.56%	Little
ETP	53.69	+0.42	+0.79%	Little
CSX	26.48	+0.34	+1.28%	Little
UPS	95.26	+0.10	+0.10%	Some, drop in demand in Emerging markets
DAL	31.07	+0.48	+1.57%	Some,
NAT	11.22	+0.19	+1.72%	Some, lower demand possible
PM	80.85	+0.07	+0.09%	Little - Some, this is a recession stock
PEP	81.91	-0.15	-0.18%	Little - Some, this is a recession stock
KO	38.82	+0.09	+0.23%	Little - Some, this is a recession stock
ADSK	50.83	+0.24	+0.48%	Some, High flyers tend to bounce back
AAPL	508.73	-41.77	-7.59%	Some,
GLD	120.76	-0.20	-0.17%	Good Buy perhaps if currencies behave
MPEGX	44.30	-0.48	-1.07%
MOAT	28.23	+0.06	+0.22%	Little

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Long Term Market Equity - MacroThemes

1. How will the 46'-64' born baby boomers effect cash flows into and out of the market. Given the Dot Bomb and Housing Bubbles which help to define horrible stock market decade, more than likely there will be a movement towards perceived quality like bonds and out of riskier assets like stocks. Therefore, lower P/Es should be expected in the coming years for Stock Market investors. The Baby Boomers will be retiring at age 67 in 2013-2031. Hospital stocks and pharma stock should do well during the retirement.
2. The Information Age will become more and more pronounced by those defining what the information age is becoming. Stock exemplifying these would be IBM, MSFT, AAPL, GOOG, FB, and CRM. Salesforce.com and cloud computing seem to be where things will be headed in the next couple of years. Then likely there will be another correction in directions.
3. Emerging Markets - Additionally, all this free information available over the internet will allow emerging markets to compete without so much of an educational deficits. Look to EEM and emerging market stocks to continue to accelerate progress and prosperity. The China Age - China becomes worlds largest economy in 2032 -City Weekly January 6 2011. This theme has weakened significantly with the Chinese focus towards services and technology.
4. The Energy Age? Not defined yet, but the need will be originating from a peak in fossil fuel production coupled by increased demand originating from the largest part of the Globe. The 3rd World continues to industrialize at an accelerated pace. Small start-ups in Algae, Wind, Gas, and Fracking will be in demand as oil prices keep rising.
5. Resource Scarcity - Human activity will continue to pressure resources especially food, oil, and gold.
6. US Debtor Nation Status - Interest on the national debt should be pushing $1Trillion per year in 2020. City Weekly January 6 2011
7. Obesity kills more Americans than smoking City Weekly January 6 2011. Healthy and honest food options will become more and more in demand as the younger generations expand purchasing power.
8. Nature Deficit Disorder - Kids start getting disconnected from the natural environment at an accelerated rate. City Weekly January 6 2011
9. Emerging Markets - Rise in Food Costs driven by desire for higher protein diets. - DE, POT, ASCO re: Cramer 4-18-11
10. Emerging Markets - Power Management - Electicity will continue to follow the movement - ETN, HON, EMR
11. US - Healthy Food - Industrial Farming, Factory Farms, Hormons, Pesticides, Fertilizers, Chilpotle, Hanes Celestial Seasons, Whole Foods re: Cramer 4-18-11
12. Gold - Inflation Hedge and Especially GLD, SLV, GG, NG, BRK re: Cramer 4-18-11
13. Homeland Security - Even though defense is being cut around the world by developing nations, terrorism is a force that will stick around just like Middle East Terrorism Groups - NICE, Fortnet, American Science and Engineering re: Cramer 4-18-11 Trump should also expand insecurity through isolationism and uncertainty of campaign promises.
14. Currency Going Electronic - Consider credit card companies as a value growth proposition. DFS, MA, V, and AXP will all benefit from this trend.
15. Paperless Office - Though this was a theme in the 90s I believe the paperless office is happening now at an accelerated rate. Companies that can benefit might be ADBE which holds the keys to PDF productions. Other software and cloud plays will also benefit. There is a lack of a pure play paperless office company.

Demographic Influences of Investing

Baby Boomers Born 1946-1964 or Ages 64-46 (2010)
*Boomers might be focus on stable income investment like bonds and high yield large cap stocks.
*Catch ups will likely focus on international stocks

Baby Busters Born 1965-1977 or Ages 45-33 (2010)
*Focused even more so on 401k's and stock investment
*Not a large enough group to have great market inflow influence
*Possible Baby Boomer Inheritors

Echo Boomers Born 1978-1994 or Ages 32-16 (2010)
*AKA Millenials
*Too young to be buying homes, mostly a renter generations
*Probably more concerned with college debt and the like

Signs that a stock is a sell:

1. Accounting Irregularies are discovered - Extreme Concern.

2. The competition is starting to take market share away.

3. Caution! - when all the analysts say your stock is an "Aggressive Buy" be very careful and ready to sell.

4. PEG Ratio > 1.0

5. Short Ratio > .40 Indicator of Bearish Sentiment, but beware of a shorts squeeze.

6. P/B Price to Book = Stock Price/Total Assets-Intangible Assets and Liabilities > 1.0 = Overvalued Indicator

8. Technicals: Head and Should profile is bearish just as inverted Head and Shoulder Profile is bullish.

9. Remember Buy Low and Sell High!!!!!! You never have a profit until it is logged.

Let me know if you have others good rules to sell?

Signs That A stock May Be A BUY:

1. You believe the stock has long term earnings growth.

2. You believe the stock has a moat (Warren Buffett term). This is a form of monopoly or sustainable market control. Examples of a modern monopoly or duopoly (KO, PEP, HD, LOWS, CAT, DE, etc).

Insider Buying Tipoffs:

3.The stock is on the 52 week high list and there is significant and real insider buying.

4. The stock is heavily shorted and has significant and real insider buying.

5. The PEG Ratio is between 0-1. This is a tipoff the stock may be undervalued when considering price in relation to growth.

Let me know your favorite indicators to buy??

Tuesday, January 28, 2014

Signs of Banking Stress in China

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