My Financial Blog

This is my Financial Blog on stocks using Value and Growth Investing methods, particularly Buffettology. These methods typically require the Intelligent Investor to buy and hold the stock for 10 years or more. For those that are Day Trading or are buying and selling stocks within a year's time frame, this method will NOT work for you. Any information is solely for educational purposes, not for trading purposes or advice.

We use Google Spreadsheets to do our analysis because it is capable of delivering the stock price in real-time. The calculations in our analysis changes in real-time as the stock price changes every 20 minutes.
If you click on "Subscribe to posts" below, you will get the RSS feed to this blog.

Buying the Dip in ViacomCBS (VIAC) and Sold Pfizer (PFE)

posted Mar 27, 2021, 12:21 AM by Intelligent Investor   [ updated Mar 29, 2021, 12:09 AM ]

A very big opportunity came today to buy ViacomCBS (VIAC) at a ridiculously low price. Unfortunately we had to sell Pfizer (PFE). Pfizer has been a big disappointment for us. The stock didn't budge too much in spite of making billions in COVID-19 vaccine. We got bored and just swapped Pfizer for ViacomCBS.
We've been accumulating ViacomCBS (VIAC) for the past year and the stock has dropped 40% over the past few days. We took this as an opportunity to buy more as well as get out of our losing trade Pfizer (PFE). The fundamentals of ViacomCBS' business is still intact. During the last quarterly report, the company announced the following:
  • Accelerated Domestic Streaming and Digital Revenue Growth to 72% Year-Over-Year
  • Grew Global Streaming Subscribers to 30 Million
  • Grew Pluto TV Global Monthly Active Users to 43 Million
  • Grew Domestic Streaming Subscribers to 19.2 Million, up 71% Year-Over-Year
  • Grew Pluto TV Domestic Monthly Active Users to 30.1 Million
  • Revenue Rose 3% Year-Over-Year
  • Beat Earnings Estimate $1.04 vs. $1.02 in the 4th quarter

As far as we are concerned, the company's Global Streaming Ambitions are firing on all cylinders. But yet the stock was pummeled downwards, so we took notice. The P/E ratio at today's close is at 12.3 and the dividend yield is now at 2%. Based on the valuation and the company's very positive financial report, it's a no brainer to buy on this dip!

In Benjamin Graham's book, the Intelligent Investor is wiser to form their own ideas of the value of their holdings, based on full reports from the company about its operation and financial position. There has not been any company reports nor news that has said the fundamentals of the company is deteriorating. We believe there will be 2 streaming TV providers that is set to dominated the future of television. One of them is ViacomCBS (VIAC) and the other is Disney (DIS). The company is still on track to dominate the global streaming TV market. They have not made any announcement that says otherwise, like nothing that says their plans have been derailed. Any company announcement over the past few weeks have been very positive.
Any news that have been dominating the headlines over the past few days has NOT come from the financial statements of the company. It's just mere opinion and panic. So yes, please, Mr. Market, since you've quoted us a ludicrously low price for ViacomCBS (VIAC), as an Intelligent Investor, we will be more than happy to take your shares in away from you!

Updated 3/28/2021:
News came out this weekend that the record drop in ViacomCBS (VIAC) share price was due to a hedge fund going bankrupt. Apparently, the sell-off in VIAC this past week was NOT REAL, like I have mentioned above, the company's fundamentals are still intact. Some hedge fund named Archegos Capital screwed up and was forced to sell all of their VIAC holdings as well as other stocks. They flooded the market with 30 Million shares of VIAC. We expect the shares of VIAC to go back up to $100/share, right where it was, just before the sell-off started, maybe by April or May, or maybe even sooner. We smell cash money buying into this dip. The Intelligent Investor wins again!
Disclosure: We own shares in ViacomCBS (VIAC) and we no longer own shares in Pfizer (PFE).

Accumulating ViacomCBS (VIAC)

posted Jan 25, 2021, 5:25 PM by Intelligent Investor

We believe there is a greater opportunity in ViacomCBS (VIAC). We have been accumulating the stock for the past year. Our analysis is a mere common sense. During the course of the COVID-19 pandemic, people are staying at home. The cost of high-speed internet is now universally accessible. There are low-income, student, and senior citizen programs where it is available for as low as $10/month. As people are  on lockdown with  "stay-at-home" orders, there are more people stuck at their homes with nothing to do, looking for entertainment. For less than $10/month, streaming TV, seems to be, what many people are doing to keep themselves entertained while they are on lockdown.

We believe the pandemic may have accelerated Disney's streaming service subscriber rate. They now expect 300-350 million subscribers to their streaming platforms, Disney+ and Hulu, by the year 2024, shattering previous guidance.


ViacomCBS (VIAC) has a deal to offer 14 channels to Hulu. What this means is they have an opportunity to "piggy-back" off Disney's success!


They will also be launching their streaming service Paramount+ on March 4, 2021. When Disney launched their streaming service Disney+, their stock skyrocketed. We also expect the same for ViacomCBS' stock when they launch their streaming service.


From a valuation perspective, the P/E ratio of ViacomCBS (VIAC) currently stands at around 11 as of 1/25/2021. The Market Cap is at around $28 Billion, while the value of their assets (not including debt) is at around $33 Billion. And their annual dividend yield is currently around 2.00%. Mr. Market has been undervaluing ViacomCBS for more than a year! Their stock is cheap!

Disclosure: We own shares in ViacomCBS (VIAC).

Sold AXP, BRK.B, JPM, and WFC

posted Jan 19, 2021, 7:53 PM by Intelligent Investor

We sold all of our shares in American Express (AXP), Berkshire Hathaway Class B (BRK.B), J.P. Morgan (JPM), and Wells Fargo (WFC).

American Express (AXP) - We just do not want to be in the financial sector at this moment. The COVID-19 pandemic is hurting small businesses and many of American Express' costumers are small business owners. We believe over the long run, this company will do well. However, we are not sure if the stock will perform well in this economic environment. If we are not sure about something, we just sell it and take our profits. Even if our profits are small.

Berkshire Hathaway Class B (BRK.B) - Berkshire always does well during recessions. Recessions is where Berkshire acquires ailing companies and becomes bigger. We are probably going to regret selling this stock. However, we see a greater opportunity elsewhere and we need to raise cash.

J.P. Morgan (JPM) - This is the strongest bank in the world. They have a fortress balance sheet and out of all the banks in the U.S.A., this bank will survive the pandemic induced recession. This is a good long-term investment. The stock is significantly up since last year. However, Berkshire Hathaways sold all of their shares in J.P. Morgan and we do not know why. Part of our strategy is to simply follow Warren Buffett. We make an assumption, he sold all his stock in JPM for a good reason.

Wells Fargo (WFC) - This company has ruined their reputation...big time! They also cut their dividends! Berkshire Hathaway has also sold a lot of their holdings in this stock. We are worried. If we are not sure, just dump it.

In summary, we need to raise cash because we see an opportunity elsewhere, we also do not want to be in the financial sector at the moment. We also believe that there is a possibility of some Disruptive Technology going on in the financial sector due to the likes of PayPal, Venmo, Amazon Pay, Apple Pay, Facebook Pay, and Square. These payment services are currently small, however, we see them growing exponentially in the future because they are much more "superior" than a checking account.

Disclosure: We do not own shares in American Express (AXP), Berkshire Hathaway Class B (BRK.B),  J.P. Morgan (JPM), and Wells Fargo (WFC) anymore.

We Have Bottomed, Next Stop Dow Jones 100,000

posted Jun 6, 2020, 7:20 PM by Intelligent Investor   [ updated Jun 8, 2020, 12:32 PM ]

The bottom of this recession was on March 23, 2020, when the Dow Jone hit 18,214. This recession was short-lived, it only lasted about 3 months. Our Gross Domestic Product (GDP) should turn positive again over the next coming months. The stock market looks like will turn into a V-shaped recovery. The economic data that came out this past Friday, June 5, 2020, regarding the unemployment number is confirmation of that prediction. Economists were expecting the unemployment number to increase to 20 million. However, as our country reopened in the midst of a pandemic, 2.5 million jobs were added instead. This is a sharp reversal of the trend.


We have bought back stocks. But we didn't buy expensive stocks. We bought stocks that have good brand name recognition, low P/E ratios of less than 20, mostly stocks with dividends, and most importantly businesses we are familiar with, whose products we use and like. We should have bought stocks way back in March and April, but things were uncertain then, we thought this recession was going to be worst than the Financial Crisis of 2008. The sooner we admit our mistake, the more money we will make in the long run. We believe the bull market is back.


Table 1: List of stocks that we bought.
 CompanyTicker Symbol  P/E ratio as of 6/5/2020 Dividend Yield as of 6/5/2020
 American ExpressAXP 16  1.57%
 Berkshire Hathaway Class BBRK.B  18 None
 CiscoCSCO  17 3.01%
 DisneyDIS 18 1.39% 
 GileadGILD 19  3.54%
 IBMIBM 13  4.94%
 JP Morgan ChaseJPM  13 3.24%
 PfizerPFE 13  4.22%
 Viacom CBSVIAC 3.87% 
 Well FargoWFC  11 6.44%
 
To Dow Jones 100,000 we march.

The Federal Funds Rate is currently at zero. If we use Equity Bond Theory, where we compare the rates of a stock to the rates of treasury bonds, the Dow Jones should go up to 100,000. We believe that based on the current economic environment, the Federal Funds Rates will be at zero for a very, very, very long time.


Disclosure: We own shares of American Express (AXP), Berkshire Hathaway Class B (BRK.B), Cisco (CSCO), Disney (DIS), Viacom CBS (VIAC), Gilead (GILD), International Business Machines (IBM), JP Morgan Chase (JPM), Pfizer (PFE), and Wells Fargo (WFC).

Archive: My Stock Research 2019

posted May 21, 2020, 9:21 PM by Intelligent Investor

Archive: My Stock Holdings 2019

posted May 21, 2020, 9:21 PM by Intelligent Investor

Another Dead Cat Bounce, We Haven't Bottomed Yet, Goldman Predicts S&P 2000

posted Mar 30, 2020, 8:35 PM by Intelligent Investor

The Dow Jones has rallied to 22,327 over the past several days. However, we believe this is another dead cat bounce. We sold all our shares of United Health Group (UNH). The stock just got an upgrade from Deutsche Bank, so the stock has had a massive interim rally. We took this rally as an opportunity to sell our holdings in this company.


The number of coronavirus infection in the United State has now outpaced the rest of the world. This means more people are going to get sick or die. Our healthcare system may tither on the brink of collapse. This creates a lot of risk for us to hold shares in UNH. We are expecting this stock to head lower as the company announces their earnings forecast on April 15, 2020, which is only a couple of weeks away. Even if this stock continues its surge higher, we would expect this surge to be short lived. Reality will set in with UNH's investors; the coronavirus isn't going away anytime soon.


The worst-case estimates for coronavirus deaths is anywhere between 200,000 to 1.7 million. And that is a lot of money to pay out for a health insurance company like United Health Group (UNH). We are expecting their earnings to take a hit and their dividends may not be safe. We expect a dividend cut if so many people die and get infected with coronavirus. We will just buy the stock back when it bottoms out sometime in the future.


According to the St. Louis Fed projections, the unemployment rate may go up to 32%. If the unemployment rate shoots upwards to 32%, people will be withdrawing money from their 401K, IRA, etc., to make ends meet. So, how could this rally be real? We are still a long way from reaching the bottom. Any rally at this point is nothing but a mere dead cat bounce. In other words, it is a false rally.


We are not alone in thinking we haven't hit bottom yet. Goldman and Sachs, Charles Schwab, and other investment banks are also seeing a steeper drop coming in the horizon. Goldman and Sachs is predicting the S&P 500 will drop to 2,000 by the middle of the year. To us, this sounds more like the best-case scenario. We believe it the S&P 500 will go much lower than that.

Coronavirus Is The Black Swan Event That Ended The Bull Market In 2020

posted Mar 5, 2020, 4:48 PM by Intelligent Investor   [ updated Mar 18, 2020, 9:21 AM ]

A Black Swan Event is an unpredictable event that causes catastrophic damage to an economy. A few days ago, we wrote an article describing the coronavirus as a Black Swan Event (see blog post below).


Today, Sequoia Capital, a famous venture capital firm writes a letter to all CEOs of the companies they manage in which the opening sentence says, "Coronavirus is the black swan of 2020".  So far, it seems like we are correct.


As for now, we are just waiting for the bottom. We just have to wait and see how deep this rabbit hole goes.

Beyond Meat (BYND) and Dunkin (DNKN), The End Of A Tale Of 2 Speculative Stocks

posted Mar 4, 2020, 5:19 PM by Intelligent Investor   [ updated Mar 18, 2020, 9:22 AM ]

During a recession speculative stocks get pounded down to the ground. Thus, we sold all of our shares of Beyond Meat (BYND) and Dunkin' Donuts (DNKN). Beyond Meat is in a new growing "meatless food alternative" industry and the company has yet to make any money. Dunkin' Donuts has a lot of growth in California, but we believe this growth will get stammered which will result in their stock price getting hammered. We just had to take a small loss on these 2 investments because we believe a lot of hurt is yet to come.


The Dow Jones Rallies 1294 Points, Sold More Stocks On This Dead Cat Bounce

posted Mar 4, 2020, 2:19 PM by Intelligent Investor   [ updated Mar 16, 2020, 9:56 PM ]

The Dow Jones jumps 1294 points a few days ago, however, we believe that this rally is a "dead cat bounce". We have to wait for the next quarter's earnings season to see how much of our supply chain is disrupted and how much did it affect American corporations. That day, we sold some more International Business Machines (IBM), all of Bank of New York (BK), and our remaining Berkshire Hathaway Class B (BRK.B) shares. There's too many risks at this point to hold so much stocks. We are on the 11th year of our bull market. We are not sure that this bull market will be extended to 12 years. How much higher can we really go? When will it end?


Sold:
International Business Machines (IBM)
Bank of New York (BK)
Berkshire Hathaway Class B (BRK.B)

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