The Disciplined Investor

MarketMash

Every once and a while, I read something really interesting. I usually clip it and re-read it a few days or weeks later to take it in from a different reference point. A couple of weeks ago, I clipped a great commentary by Steven Sears and recently re-read it again.

I got to tell you, the second time around I found myself just as aggravated. Just to be clear, I agree with what he wrote. It is the situation he discussed that perturbs me.

It is beyond comprehension how publicly traded companies are allowed to say what they want, no matter how thick the *&%$# it is.

Remember the “Lehman Letter?” Then there were the recent Merrill misrepresentations. Of course, let’s not forget about the Herbalife omissions. Then there are the “Friends of Angelo” and of course Read more »

Screens

As discussed in Chapter 2 of The Disciplined Investor, stock screens can be used effectively to help search for stocks that can help to provide downside protection while positioning a portfolio for the upturn if /when markets stabilize. The fact is that the key in this environment is to look for large cap stocks paying dividends with:

1. Low Debt
2. PEG Ratio below 1
3. Stable outlook
4. High Rating Read more »

Strategy Lab

QuantaFundaTechna is the short name I found best to describe the process we use to uncover the stocks that will eventually qualify for portfolios. Just as is described, the first step is to find stocks that meet certain requirements based on several screening, or quantitative criteria. For the core portfolio, initial candidates will be selected from an active screen filtered for size, sector, earnings growth, rating, corporate structure and price momentum.

Several key fundamental overlays are then added to further refine the list. Read more »

Gameplan

Didn’t it used to be easier? I mean it seems that there are obstacles everywhere these days. From currency and commodities to consumers and credit…when will it end?

Maybe it won’t and this will be the environment we will have to adjust to. So, perhaps now is the time to turn those obstacles into opportunities.

With that in mind, we are adding to the portfolio a position that goes contrary to popular opinion that oil prices will provide unlimited profits to companies within the Oil & Gas sector. One of the best ways to do this is to take a shotgun approach rather than trying to pinpoint a particular stock. This way, the sector is covered and if the thesis holds, that will give the best exposure. Since the portfolio has $100,000 to invest, the purchase of DUG, an “Ultra” ETF from Proshares, essentially provides a 200% inverse exposure that tracks the Dow Jones U.S. Oil & Gas Index.

In essence, for every dollar invested, two dollars are working. If the index moves higher by 5%, this will move lower by 10%. If the index falls 5%, this will rise by 10%.

Positions: (DUG) (UUP) (ADBE) (ANSS) (ESI) ( SDS)

Read the Full Journal Entry - HERE.

Media

So, minding my own business, I am interviewed for my thoughts on the Enron Loophole and Oil. I did some research on the publication and found that they are a group that says they are a “publication of the Communist Party, USA.” Hmmm. Good thing it is not the 50’s.

Below is the summary of what they are trying to achieve and an excerpt from the article.

You know… I wonder why the reporter never told me about his publication. Just goes to show you that a name is not always fully descriptive.

“Political Affairs is an online magazine of ideology, politics, and culture. Our mission is to go beyond simply giving an account of events to providing analysis and investigating what is new and changing in our world – from a working-class point of view.
Read more »