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Stock picks based on current political environment

davidallen

davidallen

MegaPoke is insane
Gold Member
Aug 15, 2006
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I was long financial services, got out 60 days ago as the shine faded on immediate tax cuts. Did OK, 15 PCT gain from election day to early Feb.

Taking half my gains on TMUS as looks like merger talks are stalling. (Disclaimer - customer I have NO inside info).

Energy is a quagmire IMO.

Tech is where I live with significant exposure to any downside, very bullish on sector but can't justify chasing it.

What say you?
 
I've made a tidy 20% buying Nvidia when it pulled back after its earnings a month ago. Been following CNBC and its feels like a handful of techs are propping up the entire market. I'm a bit fearful of the sustainability of this market, but the market data is clear, there aren't many outflows from the big name tech stocks. Outside of tech where I'm making gains, my account has pretty much flattened out, although I have a significant portion of my portfolio in good dividend companies (T, AZN, UPS) so even flat makes me 3-5%. But I have to say, I've done very well since the election.
 
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davidallen said:
I was long financial services, got out 60 days ago as the shine faded on immediate tax cuts. Did OK, 15 PCT gain from election day to early Feb.

Taking half my gains on TMUS as looks like merger talks are stalling. (Disclaimer - customer I have NO inside info).

Energy is a quagmire IMO.

Tech is where I live with significant exposure to any downside, very bullish on sector but can't justify chasing it.

What say you?
Click to expand...

if there's a company you want to destroy, just give me a hot tip and let me buy their stock.
 
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Long: E&Ps with increasing production and free cash flow.
Short: E&Ps with stagnate production and negative free cash flow.
 
aix_xpert said:
I've made a tidy 20% buying Nvidia when it pulled back after its earnings a month ago. Been following CNBC and its feels like a handful of techs are propping up the entire market. I'm a bit fearful of the sustainability of this market, but the market data is clear, there aren't many outflows from the big name tech stocks. Outside of tech where I'm making gains, my account has pretty much flattened out, although I have a significant portion of my portfolio in good dividend companies (T, AZN, UPS) so even flat makes me 3-5%. But I have to say, I've done very well since the election.
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Nicely done on Nvidia. That's probably one to hold onto.
 
No single answer here, but I value the context that VIX (volatility index, sometimes called the "fear index") provides. Between 1990 and 2008, the average VIX was around $19. It's around $10.50 lately. It's a 30 day rolling average, so it jumps and bumbs often. But lately it is essentially an historic low.

For me, the context from it overall is there's unlikely to be much movement in the current market, but week to week- the situations change.

TL;DR My guiding principle is higher VIX means shorter term holding onto a stock. Lower VIX, longer time horizon, more likely to be industry-wide holding.
 
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Also, Fed Reserve is widely expected to increase rates at their June meeting. Good opportunity to look at what sectors/individual stocks are likely to go up or down based on the FED rate changes, and Carpe Diem.
 
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shortbus said:
Nicely done on Nvidia. That's probably one to hold onto.
Click to expand...

Thanks. I bought it at 108. Wish I had gotten some more when it dropped below $100, but it was already 10% of my portfolio and with the beating AMD had started taking, I was a bit concerned that I might have been late to the chip-maker party. Currently, I'm considering buying some more dividend staples, as I fear the market will peter out at some point this year, and when it turns it may turn quick. I'd rather be out early than late. And with interest rates still very low, any downturn could lead to a influx back to the 'safety' of the big-cap div plays, which could give them a value boost on-top of the div. Most of these stocks have taken a bit of a hit lately as people have sold out of the 'safe' play to get into the Trump market, so there is some value out there if you can pick wisely. I'm personally a big fan of AT&T (5% div) and OGE (3.5%) as they pay like clockwork every quarter and have done so for decades. And when you can buy them discounted, the div becomes a steal. I bought half my AT&T 2 years ago when it was at $26/share. Its gone way up, and the current dividend on that investment equates to almost 8%.

Only other advice I'd give is to avoid any brick-and-mortar retailers, unless you can see a way in which it can avoid competing directly with Amazon or internet direct sales. A few stores such as TJX (TJ Maxx) can be successful, and stores that can provide exclusivity (such as Tiffany's) or personalized service can work. But large, generic retailers are basically only good for short plays at this point.
 
07pilt said:
Not even good for that. No one will lend any shares for less than 50%.
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You can always buy puts (or sell calls). Although the premium on these are pretty high, especially on the brand names that are known to be flailing (Macy's, JCP, Sears).
 
aix_xpert said:
You can always buy puts (or sell calls). Although the premium on these are pretty high, especially on the brand names that are known to be flailing (Macy's, JCP, Sears).
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Selling calls is probably the move, but I don't think that now is the best time to be short volatility.
 
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Agree with bearish-ness on retailers.

According to Fed data, household debt is at a new record, surpassing previous record of 2008, before the crash.

Consumer spending makes up 2/3 of US economy, and eventually you have to pay the piper.
 
osuengineer said:
Agree with bearish-ness on retailers.

According to Fed data, household debt is at a new record, surpassing previous record of 2008, before the crash.

Consumer spending makes up 2/3 of US economy, and eventually you have to pay the piper.
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And what's worse is that an even larger percentage (vs. 2008) of that debt is Student loan based and thus not readily discharge-able. At least in 2008, you could file bankruptcy and in a year or two be able to spend money and get credit again. When this market turns, it may turn south for an extended period because the household debt can't just go away. The flipside though is that the wealthy (those who buy the derivative products of the student loans) and the banks are less likely to take the type of losses you saw in '08.

Side note, this thread is 100x more enjoyable than any of the Trump threads. :)
 
aix_xpert said:
And what's worse is that an even larger percentage (vs. 2008) of that debt is Student loan based and thus not readily discharge-able. At least in 2008, you could file bankruptcy and in a year or two be able to spend money and get credit again. When this market turns, it may turn south for an extended period because the household debt can't just go away. The flipside though is that the wealthy (those who buy the derivative products of the student loans) and the banks are less likely to take the type of losses you saw in '08.

Side note, this thread is 100x more enjoyable than any of the Trump threads. :)
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Also auto loans, in an over supplied auto market.
 
07pilt said:
Also auto loans, in an over supplied auto market.
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Thats a good point. I'd avoid auto manufacturers in this market. If the market turns south, car makers will be hit hard due to the availability of used cars and the rapid inflation of new car prices. (Average new car cost $32K last year).
 
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