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So the plan for the next few months is to eliminate debt, save, and invest. You may say, good plan but what do I invest in?
Well I have some exciting news! I believe I have run across an amazing opportunity that could last for as long as a few years. Here it is: Panera (PNRA) and Jones Soda (JSDA). Jones Soda is a derivative play of Panera. What is a derivative play? It means that Jones Soda is to Panera like butter is to bread. The more business Panera sees, and the more Panera expands its business, the more business Jones Soda will see. Panara’s expansion is going to benefit Jones Soda (JSDA). Panera is one of the leading restaurants known for its healthy selections, and as America switches from burgers to all natural, Panera is going to reign King.
You should get long on Jones Soda (JSDA) and Panera (PNRA). Jones Soda trades at $1.88, a very very very affordable stock capable of being ridiculously profitable. JSDA was up 60% a few days ago. I bought 100 shares, and said why not. Today JSDA is up 80%. Tomorrow I am selling out on Citigroup (C) and placing 50% of my portfolio into this derivative play.
5,000 shares of JSDA. If JSDA goes to $5 in the next two years, you will have made $15,000. The best chance you have of hitting the jack pot, right here at MoneyJog.com.
Also, the cherry on top of all of it… is that Jones Soda (JSDA)… now has distribution with WALMART.  All aboard!! WE’RE GOING TO THE MOON!
Avoid Volatility by all means possible. I am usually a big fan of rapid and dramatic volatility, as it leaves opportunities for large pops in a variety of stocks. This can be fantastic for making quick gains on names that have over reacted to recent market conditions (primarily heavy volatility), but it is also the riskiest of plays you can make with your portfolio. In my recent post “My Game Plan” I discussed briefly the strategy I plan to implement to work around the recent volatile conditions. Again, the plan is to AVOID being eaten alive in volatile conditions such as these.
The action I took to prevent volatility-related losses in my portfolio was to sell 50% of my portfolio and convert it to cash. I used these funds-turned-cash to cover the majority of my outstanding debt. With a large reduction in debt I have essentially done what most US corporations have been doing for the last few quarters, cleaning up balance sheets through methods of cost cutting and alleviating debts leaving them in a stronger financial position. That is phase one of the current game plan.
The second part of my plan is to take advantage of my clean accounts by immediately implementing an aggressive savings plan. Because I used half of my portfolio to clean up my accounts, my portfolio obviously became much smaller in size. With a reduced portfolio I am left with much less buying power in the market. Because of this reduction in purchasing power I will not trade any of my positions for some time. I am holding my positions LONG TERM through the current and likely future volatile conditions. I will let my holdings sit, and I plan to expand the positions using recent increased pessimism in the markets (AKA lower sentiment) and heavy volatility to enter positions at their LOWS. As I accumulate cash through the rapid saving plan, and with markets likely to remain volatile for some time it should be possible to build large, strong, balanced positions in near any name for expected future performance.
Now that’s the current plan. My outlook on markets is skeptical. I feel like there is a lack of trust with our markets, and I feel as though a total sense of greed has taken over our trading markets. I personally don’t see the need to get my portfolio caught up in volatile markets caused by greed seekers and uncertainty, it just seems right to watch it play out.
If you are a consistent follower of MoneyJog.com then you know I have a strong emphasis on timing things right. When we trade stocks we MUST BE timely in our actions. The timeliness in my plan revolves around my view that markets will remain unstable for at least a month or two. I am bullish on mid July to late August. We saw a lot of companies come out with fantastic earnings last quarter. Citigroup beat analysts’ expectations by fifteen cents!! Thats equivalent to Neil Armstrong landing on the moon for this financial name, ticker symbol (C). Trading around $4 right now, I would buy it on down days. I have faith in the name moving higher. Another play I would make, if affordable, would be to accumulate gold related equities. You can do this trading the GLD.
The One Sentence Summary:
- Use recent gains to reduce debts, start a rapid savings plan to accumulate cash, or help expand your holdings for what I believe will be a rather bullish July and August.
How should you ideally position and manage your holdings?
- I recommend picking 3-5 companies you like a lot, that you could be comfortable holding for up to 6 months. Don’t trade in and out of your positions excessively, you can rack up trading fee expenses and may also fall victim to the volatility monster. When picking your 3-5 companies you should choose names you feel will be healthy and active 4-6 weeks into the future. Companies should be in decent financial condition carrying low debt ratios, with high beta’s over 1.6. Companies like these, in my opinion, work well. After picking 3-5 companies that you expect to be strong and healthy in the mid-future, we build and expand our positions to strengthen them. Do this by expanding your 3-5 holdings on the market’s weakness. Use strong volatility to enter positions at LOW levels and when stocks rise, do nothing. Wait until stocks get hit lower to purchase anything! Let the pessimistic market work for YOU, and design your portfolio to take advantage of stocks being knocked up and down the board.
I have come to a conclusion on how to avoid recent market pessimism and volatility, and at the same time cover my personal finances.
It is simple to avoid pessimistic markets and strong volatility by not being invested. This is the move that I decided was best for future market conditions. I view the markets with a very conservative perspective at this point. The emphasis on NOT losing money, greatly outweighs the risk involved with MAKING money. You should never watch your portfolio bleed losses.
I sold off my portfolio recently, nearly half of it I converted to cash. I believe that the market is at a stall. I expect markets to move sideways or lower in the future.
I am not a pessimist on the market. I am big on timing it all right. NOW is NOT the time to be digging your heels in for any big plays. If you have the resources to do so, perhaps the swift drops are perfect opportunities. But if you are like me, and have less than 10K invested, it should not be worth losing any money or gains. Your money is precious, don’t lose it because the rest of the world is in chaos. Sit out, pay off your debt with any gains you have had recently and set up a savings plan to start adding funds to your portfolio after you have cleared any amount of debt.
A clean balance sheet leaves only positive futures.
OK so I have not been posting frequently. I am glad to say that there is a good amount of activity on MoneyJog.com, even without new posts. This is good to see, as it means we have some consistent followers, thank you! But at the same time sorry for not posting frequently recently.
The Dow has been holding above the 11,000 level. A good sign. We are working our way through earnings season. It seems to me that some companies are showing positive signs for the market as a whole. This includes some restaurant names, such as YUM brands, Buffalo Wild Wings (BWLD), Mc Donalds (MCD) and a fantastic outlook on Chipotle Mexican Grill (CMG). We are even seeing the infamous First Solar (FSLR) move higher, perhaps a buy on a possible $20 spread to the 150 range.
FSLR on a 5 day chart, seems rather volatile. However, if you look at the chart FSLR gaps down (gap down means to open considerably lower than the previous days close) throughout most of the week. After every gap down, it consistently rebounds which implies buyers are most certainly buying on the stocks weakness and holding it consistent. It looks from a technical point-of-view that FSLR is developing a floor at and or around the lower 130 range. Take a look, I am not a sold buyer in this one yet. But I could put some faith in this name infamous for its sudden volatility.
Also I would like to address the recent stall within Citigroup (C). At $4.80 a share, this name has too much long term growth potential to ignore. It seems to have a rather strong wave of resistance (the stock is being sold off) around 5 and a nickle. Considering the recent and RAPID upside Citigroup (C) has seen over the last month, it is easy to write this stall in the equity as most likely profit taking. Buyers are definitely making entry points in Citigroup (C) as people who have seen possible 60-70% returns, take profits off the table (MoneyJog.com can report 47% gains out of an estimated 60-70% possible returns under perfect trading). I have very much considered selling off my entire position on some of the recent up days. However the only thing that keeps me from making that sell and taking my profits is the fact that I see this name going considerably higher in the course of a year. Sometimes stocks are tricky to time. In fear of missing the next big swing up, I am rather happy to just hold my moderate position at 3.90, almost a dollar lower than its current levels.
I was reading some online articles the last few days (unfortunately I didn’t think to save the links to post here later). One article discussed how portfolios comprised primarily of lower priced stocks (often also considered riskier stocks) consistently out-performed portfolios of widely held names. The premise behind this was that even though a lower priced stock may be deemed more “risky”, the percentage gains they go through can very much turn the tides on trying to beat market returns. I thought this article was very interesting, as it made me think of my Citigroup (C) position/holdings, and the large returns from such a “risky” name.
Today I also enjoyed 4 espressos from Borders, and browsed through some business books. I ended up purchasing a book called Trend Following, learn to make millions in up or down markets by Michael W. Covel. The book seems to offer sound advice on following markets moving higher or lower. Perhaps you could find a copy and get a bit more knowledge of investing/trading! It cost me $24, and will end up (likely) giving advice worth (I estimate) another $800 in returns, as it discusses ways to imply better leverage.
Untill I read a little bit, or something in my eyes deemed “interesting” happens in the markets, that’s all I have for now. Please remember to browse through our new pages for investment ideas.
P.S. I have recently started working with programming in Microsoft Visual Basics, rather old but I understand it much more. I am working on creating a “quick analysis” program for picking stocks that are expected to yield on average, higher returns. I plan to test and ”tweak” the program for the next several months (likely all summer), to see if the programs projections hold at all consistent or, to any degree reflect future performance of tested equities.
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