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(B)(N) Hot Stocks In The NASDAQ

February 19, 2014
SplattThat's OK - No Need To Apologize

Splatt
That’s OK – No Need To Apologize

Drama. We almost never have to make a “sell” decision or “take profits” absent liquidity; most of our decisions are made for us by the market which brought us there in the first place and now challenges our stop/loss price or long put because of a surprise which, by definition, is unpredictable.

And most analysts and investment advisers or strategists who dominate the “market’s advice” try to predict the unpredictable by using moving averages or folklore but, really, that’s just short of going to the wall. And no apology is necessary if it’s their own money nor is one required if they are duly registered for that activity.

Stocks Analysis With Correct Orientation ...

Stocks Analysis With Correct Orientation … As Marked.

But it was they who brought us there because most CEOs will honestly and candidly say that they don’t know anything about the stock price for their company; they don’t know why it is what it is or what it might be someday, or tomorrow, notwithstanding insiders.

And we have to play in the same market even though our view of investments is different – we want our money to be safe – 100% capital safety – and to obtain a hopeful but not necessarily guaranteed return above the rate of inflation which, if we don’t get it, is just another way of losing our money. In other words, we want a non-negative real return and to get home safely for which the charts don’t help at all.

Last year, nearly 40% of the stocks in the NASDAQ 100+ (the NASDAQ 100 plus about one hundred other interesting things that we follow in that market) were up by more than +50% and thirty companies doubled (+100%) and five quadrupled (Tesla Motors, SolarCity Corporation, Yelp Incorporated, Netflix and Catalyst Pharmaceutical Partners).

These are among the “hot stocks” and there are lots of them in every market and it’s good to catch them early but we need to have the thermal gloves because they are full of surprises, some of which are within their control – such as their products – but also depend on even more flammable market factors such as changes in the interest rates, more or less expected earnings or another stock du jour which is the latest flame or “celebrity” stock. Please see Exhibit 1 below for this year’s “hot stock” fundamentals that are still smoking from last year. But the year is early.

Exhibit 1: Hot Stocks In The NASDAQ 100 – Fundamentals

Hot Stocks In The NASDAQ - Fundamentals - February 2014

Hot Stocks In The NASDAQ – Fundamentals – February 2014

(B)(N) Hot Stocks In The NASDAQ - Risk Price Chart

(B)(N) Hot Stocks In The NASDAQ – Risk Price Chart

If we take out Google and Apple, which account for 50% of the market value and 90% of the earnings for this lot, we are left with the “green fields” and no dividends and an expected market yield of 1% (the inverse of the [P/E] at 100×) but if we put them back, 3.4% and a [P/E] of 29× which sounds more familiar. Please see the Chart on the left.

However, we are far from dismissive because all twenty-six of them but for one, Intuitive Surgical which we’ll look at below (please see Exhibit 4), are currently in the Perpetual Bond™ and that portfolio is already up +29% this year and was up +190% last year. Please see Exhibit 2 and 3 below for more details; our estimate of the downside in the next quarter due to the demonstrated price volatility is minus (12%) absent surprise if the market fails to swoon.

Exhibit 2: (B)(N) Hot Stocks In The NASDAQ – Prices & Portfolio – February 2014

(B)(N) Hot Stocks In The NASDAQ - Prices & Portfolio - February 2014

(B)(N) Hot Stocks In The NASDAQ – Prices & Portfolio – February 2014

Exhibit 3: (B)N() Hot Stocks In The NASDAQ – Portfolio & Cash Flow Summary – February 2014

(B)(N) Hot Stocks In The NASDAQ - Portfolio & Cash Flow Summary - February 2014

(B)(N) Hot Stocks In The NASDAQ – Portfolio & Cash Flow Summary – February 2014

(Please Click on the Chart to make it larger and again if required.)

Exhibit 4: (B)(N) ISRG Intuitive Surgical Incorporated – Risk Price Chart

(B)(N) ISRG Intuitive Surgical Incorporated

(B)(N) ISRG Intuitive Surgical Incorporated

One of the reasons we hardly ever need to think about selling stocks and only about buying them and holding them is that the market usually sells us out on a stop/loss and the price drops because of some rumour or news or anxiety, warranted or not (Bloomberg News, March 26, 2013, Intuitive Surgical Loses Bid to Throw Out Robot Lawsuit).

We only buy it back at a lower price if it’s still trading above the price of risk (Red Line Stock Price (SP) indicated as being above the Black Line Risk Price (SF)).

For more information on “risk management” and additional references to the theory, please see our recent Post, The RiskWerk Company Glossary.

And for more on what risk averse investing has done for us this year, please see our recent Posts on The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in AmericaBig OilShopping in America or Banking in America, to name just a few.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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