As the market continues a hugely volatile ride, stick to your stops and move part of your portfolio back to cash.
Stocks are long term investments, but managing volatile markets is tough.
You can do nothing and hope for a pull back – but what if this was 2008 where the market dropped more than 50%?
2CentView strategy is build low cost positions by taking profits (Look at $NFLX today) so you do not have to capitulate core positions for some time – but do sell new trading positions when they hit the stop.
Wait for the market to stabilize and look at it as an opportunity to either get in the same trading position lower down or another positions which can offer better risk/rewards.
2CentView stops hit in $AKS and $GM and opened trading in position in $GOOG (FV=590) ahead of results.
4 things all working together have really hit the market – EBOLA scare, potential recession in Germany with Russia situation not improving, war with ISIL in IRAQ And Syria and China growth concerns.
However, lower oil prices should be good – it may imply deflation which is good for Bonds – but also means consumers have more to spend spurring growth – it is almost like a tax cut!
So when EBOLA is under control and Germany decides to focus less on balancing its budget but add stimulus the market will start to turn again – not sure when this will be – but will be within the next few months.
Tweet 2Centview if you need a FV for any stock you like.
American Airlines AAL trading at only 7.5x 2014 and 6.5x 2015 earnings – this could go 8x 2015 earnings i.e around 52.
FV=52, Stick with AAL, take profit target = 50 if you got in above 30, 45 if around 24. Keep a core position.
Should see a recovery in revenue following weak Q1 affected by weather. Guidance to earn 5.6$ per share or more this year is key.
GM – focus will be on the charges for the recalls and the compensation fund. Sales numbers expected to be good based on monthly auto sales data. Stock held up well given the long list of recalls, implying support from Institutional holders and belief Mary Barra will steer the company through this.
FV=45, Px = 37.43 – Hold – 3.3% Dividend Yield. Take profit target – $43
Both report on Thursday.
$GM reported some great sales numbers and as mentioned in last tweet, they are producing high quality cars and satiating a growing US Economy with pent up demand for new cars, SUVs and trucks.
FV=$45 in GM, Carry = 3.5%. Still a chance to get involved below $36.
There is still the risk of the current investigation could try and hit $GM with a large fine, but the American public seems to have shrugged of the Total Recall and have continued to buy GM Cars…See you at the party Richter!!!!
At 35, only implies 8% Growth over 5 Years, versus 15% predicted consensus growth.
Strategy: Buy Below 36, Take profit target 43 or 42 if you got in below 34.5 Stop 31.
Comparable $F – FV=20 , Carry=2.85% – Ford’s sales numbers not as good as GM.
Keep going Mary!
As $GM continues to recall vehicles, should you hold on to the stock?
– there is still the US DOJ hanging over GM and the potential fine it could slap on could be big – Toyota was $1bn – but the problems were at the old GM not new, so legally the fine could be contested. Best is for the DOJ to fine GM $500mm and be done!
– the recalls could be hurting the brand
-the company has $28bn in CASH
-sales have not been affected so far and the cars produced today are of high quality
-China has big potential for GM – like Russians they love American Cars
-the stock is holding the $34 level – so this could be a floor – for now..
-The recalls are more cautionary to ensure the slate is wiped clean
Buffett still has 30mm shares and recently came non CNBC saying what a great job Barra is doing.
FV=45 for GM, Dividend yield = 3.5%. Hold (or buy at 34 if you you like GM)- target – $44, Stop $29 for 2:1 risk reward, 3.5% carry, 7x 2015 P/E!
Comparable: Ford FV=16.5 vs 15.75px, carry= 3%, 2015 P/E = 8x
2CentView has core position in $GM opened at 34.
General Motors CEO Mary Barra facing a toughest test steering GM through the the crisis brought on by an inept previous management which brought the company to bankruptcy and was responsible for 13 deaths.
From a legal perspective, any liabilities for the tragic injuries and deaths are the ‘Old GM’ – the new GM is protected from these liabilities.
However, the reputation of GM is at risk – but history has shown, consumers forget quickly and it is important that Barra say the right things without talking about compensation for the victims.
It is possible compensation will be paid, but nothing on the scale that would hurt GM significantly – a fine imposed by the US Government is also possible – they hit $JPM with a fine for the housing crash, which was mainly due to Washington Mutual and BearStearns – 2 acquisitions forced on to $JPM!
$GM trades on a low 2015 p/e of 7 times and yields 3.5%. 6-12 Months the recalls and the court cases will be in the past and GM will be trading at $45.
Buy GM here at 35 for 30% upside and 3.5% dividend Yield.
More upside on $F following $GM’s run up in the last quarter. US Government has now sold all its stake in $GM for a loss of $10bn, not a bad price to pay for saving countless jobs!
$F held back by uncertainty over CEO Alan Mullaly – a top CEO who really knows about running large scale engineering firms. Not sure he is the right man for Microsoft – they need the Marissa Meyer type. If you are light on Auto’s in your portfolio $F could be a good bet for 2014 – Mullaly has done a great steering Ford through the credit crisis – the next CEO’s should just reap the rewards from this hard work and a bouyant US Economy!
Look for break above $17.50 in $F then hit the trigger – TP $23 stop 14.75 for 2:1 Risk Reward if you like $F