Cor Bader – Page 2

Collect a Safe 4% While this Company Retools Itself

May 3, 2017 by Cor Bader

U.S stocks are expensive. The Shiller P/E ratio of the S&P is in extremely high territory.

Many analysts are predicting the market is going to drop or crash this year, and it very well may happen.

The only thing that has kept me from believing of a imminent drop is that we have one the most ignored stock bull market in our history. I don’t have people giving me stock tips, the average retail investor has been largely out of this market (until this year that is).

S&P Volume

If you notice in the above chart, the S&P volume has finally shot up at the start of 2017. Otherwise known as the Trump trade. I think there is a chance that we may be at the start of a mania phase for stocks. Stocks trade on expectations, and the current expectation is that we will see some massive tax cuts.

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If we are at the beginning of a mania phase, then yes we are going to likely see an ugly crash/correction at some point. Here is how to proceed in the market:

Be aware. Make sure you are paying attention. Not just to lines on a chart, but to what with bills getting past, the EU elections, strangers giving “hot” stock tips, and so forth.
Hold/Save more cash.
Obey you stop losses. If you don’t have a sell/exit strategy then do not buy.
Expect volatility.

So on to the stock pick. This pick will likely make people’s stomach turn. Retail in the U.S has been hit hard. I’m sure you have come across many articles regarding store closures and declining revenue.

Target’s ($TGT) stock is down a lot. The stock had a high of over $80 a share just last year and now trades for $55.75, a sell off of over 30%.

I’m going to tackle some of the risks I see first and get them out of the way.

Revenues were down in the 4th quarter of last year, and they may continue to go down.
If we see imports get taxed more heavily or a trade war breaks out, that could really effect Target and other retailers.
I’m not a fan of the shopping online to pick up in a store model which they are continuing to pursue. Isn’t that just shopping twice?
The company is putting back $7 billion into it’s stores over the next 3 years. I don’t view this as a bad thing, as it is likely necessary for future growth. But I figure I would note it hear is it will likely cause their margins to drop during this time.

Now for the positive:

By most metrics the stock is cheap. Forward P/E, Current P/E, Price to Sales ratio is only .45. Price to free cashflow.
The dividend payout ratio is at 48%. I believe the current dividend is safe at this level.
Target is still a great store where people love to shop.
Online segment is growing as well.

Action: Buy Target up to $59

Use a 18% trailing stop or if the stock closes below $52.

3D Printer Stocks Taking Off – Not Too Late for this Trend

April 18, 2017 by Cor Bader

3D printer companies are getting some attention again. Earlier this month the Motley Fool had an article on 3D printing one how more and more companies are turning to the technology while we can likely forget about using them in our homes (at least for now). From the article:

There’s some significant progress on that front, with Stratasys signing deals with both Airbus and Ford. 3D Systems has been used by Mitsubishi and Daimler as well, so these companies are slowly being built into the design process. And these partnerships just scratch the surface of companies expanding 3D printing capabilities.

They go on to explain how 3D printing with metals will be the next phase for growth. And recently they covered again on the shoe industry and it’s use 3D printing.

On the 3D printing end, this partnership propels Carbon way ahead of current leader 3D Systems (NYSE:DDD) in the 3D-printed shoe space. Moreover, Carbon is on track to become the tech supplier behind a momentous 3D printing industry record: Once production hits full scale, the Futurecraft 4D will be the highest-quantity mass-produced 3D-printed product ever!

Today shares of Stratasys shot up over 10% on a upgrade noting a positive outlook for the rest of the year. Stratasys has little debt, and arguably the most experience on commercial 3D printing.

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If we compare the disruptive technology cycle chart below with the price action of 3D printing companies we may now just be past the disillusionment trough.

Stratasys ($SSYS) Monthly

The stock is down about 80% from it’s 2014 level and now starting to trend up. Insider buying has also been trending up since December. If we consider Trump’s America first mantra and the push for manufacturing back home, it stands to reason that 3D printing could end up benefiting. In the future the profits from commercial 3D printing may fuel 3D printing for home personal consumption.

Action to take: Buy Stratasys up to $26 a share. Use a 25% trailing stop or sell if it closes below $16.00

Time To Get Into this Stock Miner Play

April 7, 2017 by Cor Bader

As Trump launched Tomahawk missiles into Syria to the neocon’s delight, gold and silver are continuing to creep up.

First Majestic Silver Corp. ($AG) is trending up past it’s 50 moving average after making a double bottom.

First Majestic Silver Corp.

As you can see $AG is down over 50% from it’s 2016 Aug high.

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The company also has been managing it’s business much better than it’s peers. Noted from the 3rd quarter of 2016 they exceed at keeping their costs down:

All-in sustaining costs: down 27%

As if the dual fuels of rising production and prices were not enough, First Majestic also pushed its all-in sustaining costs down by 27% year over year to just $10.52 per silver ounce. Three factors contributed to this decline: the company’s recently renegotiated smelting and refining agreements, the continued weakness in the Mexican peso, and its record silver production. Those new arrangements alone resulted in a 34% decrease in smelting and refining costs, helping the company to more than offset a 10% increase in electric costs from the national power grid.

https://www.fool.com/investing/2016/11/22/2-remarkable-numbers-first-majestic-silver-corp-in.aspx

Recommendation: BUY (First Majestic Silver Corp. ($AG). Sell if you reach a 25% trailing stop or if the stock closes below it’s March low of $7.23.

This is a good time to play off of uncertainty, while the rest of the market appears expensive.

What the People Can’t Yet See – The Bond Duration Surprise.

January 13, 2017 by Cor Bader

What people haven’t realized yet is that all this political shit is not going to stop. Everyone is too caught up in the moment and chaos. The Clinton side will continue to blame the FBI and Russia for the election and Trump will not stop being a total jack ass. The deep state including the intelligence departments will do what they can to hold onto what they have and keep the war gears grinding.

Confidence is failing. It is no longer a United States. U.S government long term bonds (our debt) has been in a 35 year bull market. This debt cycle is coming to an end as confidence erodes at a faster rate. The two go hand in hand. More on the end of the bond bull market and what it means below.

Within the next 16 years we will likely see at least one state leave the union as capital flows move toward China.

Nobody (including myself) is really understanding the role they are playing in all this.

Trying to find a news source you can consistently trust is next to impossible. If an important item comes out in the news it may take another 20 minutes to scout around to get the complete context, understand how much of it is real and wonder what agenda could be behind the release. Who’s got time for that? It’s a lot easier just to let your emotions flair up.

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Going back to bonds. Retries are told to keep the majority of their savings in bonds. The Social Security fund is required by law to be invested in non-marketable securities issued and guaranteed by the “full faith and credit” of the federal government.

Due to bond duration (a bonds sensitivity to interest rates), the 10-year and 30 year government bonds will take a large hit if interest rates move just 2% higher.

Example: “For instance, if interest rates were to rise by two percent from today’s low levels, a medium investment grade corporate bond (BBB, Baa rated or similar) with a duration of 8.4 (10-year maturity, 3.5 percent coupon) could lose 15 percent of its market value. A similar investment grade bond with a duration of 14.5 (30-year maturity, 4.5 percent coupon) might experience a loss in value of 26 percent1. The higher level of loss for the longer-term bond happens because its duration number is higher, making it react more dramatically to interest rate changes.”

http://www.finra.org/investors/alerts/duration-what-interest-rate-hike-could-do-your-bond-portfolio

The bond losses are going to effect a tremendous amount of people. We are going to soon have a large “Oh shit” moment as Martin Armstrong likes to say.

I’d advise people to do the best they can to check their emotions do NOT align yourself with either Dems or Republicans so you can try and keep a more objective view to see what is unfolding. Easier said than done.

Politicians never admit when they are wrong. They only double down on the bad idea the moved to push. The above is not what I want it to be, but it is the trend. I do not believe there is anything that will stop it.Politicians never admit when they are wrong. The above is not what I want it to be, but it is the trend. I do not believe there is anything that will stop it.

Realistically Ending the Federal Income Tax and Corporate Tax

December 30, 2016 by Cor Bader

Martin Armstrong recently had a blog post regarding ending the Income Tax and replacing it with a system where the Federal government prints what they need with a maximum cap of 20% of GDP. Though I believe he stated 10% to 15% of GDP would be much better (which I agree).

I can’t find Martin’s post right now, but the premise was, why bother with all the back and forth with taxes? It took a bit to wrap my head around the idea, but the more and more I thought about it the more I liked the idea.

So basically the printing of money would be more inflationary and that aspect would replace the income tax. So why is that better?

Here are the Pro’s and Con’s.

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Pro’s:

It would save everyone time and money going through complex tax code each year.
The government could end their NSA spying on it’s own citizens, and it’s war on cash since it is all just a hunt for money under the guise of fighting terrorism.
It would render government smaller as there would be no need for the IRS and the hunt for money.
It would reduce stress likely resulting in much more favorable opinions about government.
Without taxation business would be equalized for competition. Example: GE makes windmills. Another company want’s to compete with GE on making windmills. Thanks to GE’s lobbying efforts they have an effective tax rate of 0% while the new smaller company must pay the full 35% in corporate tax. The smaller company can’t compete with such a drastic disadvantage even though their windmills are more efficient.
Companies would have no tax reason to hold their money overseas, much of which would be brought back to the Unites States.
It would end Federal debt. Governments never have any intention on paying back debt which results in:
- Defaults, loss of confidence and the destruction of a currency.
- Governments try and distract it’s citizens with war when the debt gets out of control. WWII is a great example.
- May prevent large capital flows out of an economy.
It caps spending to the economy and business cycle. So that if GDP is down, government spending would also be down.
No longer a need for Primary Dealers. Wall St primary dealers always hold sway over the government for the government needs these banks to sell their debt. The Wall St. / Government manipulation would be greatly diminished.
Because government spending would be consistent, and the fact that taxation is no longer a mystery, confidence would rise for the nation, which could result in making the currency more valuable globally and the global currency demand may offset the inflationary printing.

Con’s:

The biggest con is that printing money is inflationary. Though if Federal spending was capped to 15% of GDP the effects should be consistent. Currently the Federal government is spending over 20% of GDP.
Is it realistic to be able to hold the government to only 15% of GDP? Would congress keep passing bills that would adjust the amount higher? Definitely a big concern.
There is an entire industry based on taxes and filing taxes. This industry would be greatly reduced an many jobs loss. Though I believe jobs in other industries and small business would more than make up for the loss of jobs. There is also state taxation that will require assistance.
The change over to a new system would likely be difficult, and most likely only to occur after a crash and burn of the current system.
May be difficult for people to mentally adjust and understand the new system.

The bottom line is the inflation would be the substitute for taxing. Basically, what is better… the constant back and forth with taxes and the need to police for tax money? Or just printing a constant that the Feds can spend each year with no more interference? The inflation would be the substitute for taxing.

For those that say there would be massive inflation, well we already have massive taxation. So which is worse? Which is easier for everyone and results in more liberty?

Municipal Bond Fund Oversold?

November 18, 2016 by Cor Bader

The Invesco Value Municipal Income Trust (ticker: IIM) has had a big sell off recently along with treasuries and other bonds.

I think this closed ended fund is now oversold.

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IIM is trading at a discount of 11% to it’s Net Asset Value. That is like paying 89 cents for a 1 dollar bill. Buying the fund will also net you a 5.21% tax free yield. Because this is a muni fund you do not have to pay federal income taxes on the yield. You will be hard pressed to find this type of deal anywhere.

The fund will likely bounce off the $14 level.

Action: buy IIM, sell if the fund closes below $13.90.

Buying the fund allows us to collect a great dividend with limited down side. Please use a 18% trailing stop as well as sell if it drops below $13.90.

Martin Armstrong’s Computer Predicted the Election

November 8, 2016 by Cor Bader

It is really quite astounding. For those that do not follow Martin Armstrong’s blog his computer predicted a Brexit a long time ago. He himself doubted that it would happen, he thought the vote would be too close and would result in favor of Brussels as they would tip it to themselves. However, his computer was correct.

His computer then predicted a Trump win as Trump was the outside candidate and that this type of win was due in the cycle. Again, even while everyone thought Hillary would win, including many dynamic predictive sites like fivethirtyeight.com it now looks like Trump will be the winner.

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I’m now listening to news anchors try and explain the results and confess that they were incorrect. From Armstrong’s blog last week:

I still “believe” that they will rig the election to prevent a Trump victory despite the fact that our computer projects a Trump victory and more importantly, that this is a major clash with people who want their country back. Already, Texas has broken all records for the number of people coming out to vote early. This seems to confirm our computer will be right on that forecast that this should be the biggest turnout for the past 23 elections.

Our computer has NEVER been wrong except one time – the election of 2000. There the Supreme Count handed the election to Bush and would not wait for a recount, which ultimately showed Gore should have won. So a Clinton victory will send us into war and the economy down hard and dirty. That appears to be more likely from the market perspective with the bubble top in bonds. But this will be a rigged outcome and that will send what she calls the “deplorables” into rising civil unrest.

https://www.armstrongeconomics.com/international-news/north_america/2016-u-s-presidential-election/fbi-clears-hillary-for-mishandling-classified-emails-again/

Note in the above quote Armstrong gave his opinion, but states what his computer says. This is a often theme as he often is surprised by what the computer is telling him stating, “that can’t be right”. You can find similar posts through out his blog during the election year.

So what now as the market is dropping fast? His computer predicts a 3 day reaction, at that point it’s watching bullish and bearish reversals related to timing going forward.

If the DNC wanted to win they should have LISTENED to what the people wanted. The DNC establishment and the establishment in general fought against Bernie. Wasserman Shultz was exposed to be actively fighting against Bernie thanks to Wikileaks. Wasserman had to leave the DNC because of the scandal and Hillary hired her the next day.

Who needs fiction? Hat tip to Martin Armstrong. I highly recommend you follow his blog.

Government Using Grocery Club Card Data – Hunt for Money

November 4, 2016 by Cor Bader

I remember back toward the end of high school when grocery store club cards first came out enabling customers to receive discounts in the store without paper coupons. We all joked and laughed how the government would be tracking what we bought.

Well laugh no more!

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It turns out that King County government in Washington State (which covers Seattle) started matching up people buying pet food and those that do now have a pet license and sending the citizens mail stating that they will be fined.

RECENTLY, some King County residents received a letter from the government reminding them they are required by law to register their pets. The letter was sent to a mailing list generated by a marketing company that gets its information from various sources, including grocery-store loyalty cards. Wait! The government is contacting people who buy pet food to say they are suspected pet-license scofflaws? What’s next? A letter from the health department noting purchases of ice cream and potato chips?

www.seattletimes.com/opinion/editorials/pondering-pet-privacy-big-brother-shouldnt-peer-into-your-groceries

And from the original Seattle Times article:

“On the outside, it’s stamped ‘Time sensitive. Open immediately,’ and it’s got a pink return address, which usually means something is overdue in payment,” she said.

The writing was terse, “threatening” even, Twadell said.

Heaven forbid buying pet food for a friend!

Twadell called a number on the notice and asked why she received the letter. Grocery-store club cards are tracked, she was told. Twadell recalled buying a dog toy for a friend’s pet and wondered, was Big Brother scanning her grocery list? Not exactly. “We used direct-mail lists,” said RASKC Manager Gene Mueller. “The same way a pet store or veterinarian would.” Here’s what that means: The county hired a Seattle mailing company named Lacy & Par, which retrieved a list of prospective pet owners from another data firm. The county took that list of possible pet owners, compared it against an internal database of licensed pets, and — voilà! — had a list of Fido lovers who might be stiffing the county. Out went the letters

You can expect federal and local governments to ramp up their continue for the hunt for money.

Chart Highlights Pension Changes to Earn 7.5%

November 2, 2016 by Cor Bader

Bill Bonner had a good chart today in his blog highlighting what pensions needed to earn a 7.5% yield in 1995 compared to today.

In 1995 a pension could put everything in the 30-year treasury and be just fine. By 2015 the 30-year could only make up 12% of the overall pension in order to get the same 7.5% return.

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The above highlights what Martin Armstrong has been stating for the cause of driving down bond yields. The 2008/2009 crisis scared even more people into government bonds causing the melt up.

Pension funds WRONGLY assumed that government debt was safe, and as a result, many pension funds simply bought 30-year bonds in an effort to match maturity dates for pensions. That led to a strong bull market and the break-even was 8%. They kept bidding to try to lock in rates for pension payment in the future and their lack of management skills led to this 35-year bull market. Rather than picking stocks, they just believe government is the best thing since sliced bread. Now, they can no longer survive with rates this low, which is why the Fed keeps saying we must “normalize interest rates” for we will see a massive wholesale collapse in pensions. Yes, the 2007-2009 crisis helped create the final Phase Transition into a major long-term high in bonds (5,000 low in rates), but it obviously is not responsible for the 35-year bull market in bonds (decline in rates).

Now, if we are quickly approaching the end of the bond market bull run this last part from Porter Stanberry on bond duration will leave you even more squeamish.

Bonds with longer maturities generally have higher durations. This means they’re more sensitive to changes in interest rates. For example, according to Wall Street Journal data, one-year U.S. Treasurys have effective duration of 0.959 years. In simple terms, this means that one-year Treasurys will fall about 0.96% in price for every percentage point increase in yield. By comparison, 10-year Treasury notes currently have a duration of 9.184 years (representing a 9.2% decline for every percentage increase in yield) and 30-year Treasurys have a duration of 20.692 years (representing a 20.1% decline for every percentage point increase in yield).

Putting all the above together: GET THE HELL OUT OF GOVERNMENT BONDS.

Best Site for Wikileak emails

October 20, 2016 by Cor Bader

I keep hearing from people that lean to the left that Clinton’s emails are “boring” or that there is nothing interesting in them. We now also even have what are being deemed “wikileaks deniers“.

I’m not sure what is meant exactly by “boring”. If you are trying to search through the emails then yest that is likely boring, hell searching through my own emails can be boring. It’s the little gems that keep adding up and form a consistent narrative that is far from boring.

The following site has the Podesta files organized by topic and links directly to the email. I definitely recommend taking a look at them.

http://www.vaskal.ca/podestafiles

Please do not take this post as “pro Trump”. It is not.