My Financial Blog

Subscribe by Email

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.

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?

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

We Panic Sold

posted Feb 28, 2020, 8:47 PM by Intelligent Investor   [ updated Mar 18, 2020, 9:23 AM ]

Today was a really bad day in the market. The Dow Jones opened at negative 1000 points. It seems as if the coronavirus is gaining steam and is about to turn into a pandemic. Infections are accelerating worldwide. The risk of selling today is that the market could be bottoming out soon. We don't know when it will happen of course or how deeps this coronavirus will affect our economy. There is just way too much uncertainty today.

Coronavirus live updates: China manufacturing shows record contraction, Trump calls outbreak a ‘hoax’

Wells Fargo (WFC) is currently trading at a 52-week low, the P/E Ratio is at 10, dividend yield is at 5%. We will probably regret selling this at these levels. But we did it anyway.

Biogen (BIIB) does not have any dividend payout. Stocks without a dividend payout will not do us any good during a recession. Long-term wise, this company has a very bright future, but at this this we have to take our profits.

Berkshire Hathaway Class B (BRK.B) is the largest hedge fund in the world. But it doesn't pay out any dividend. We are pretty much relying on the appreciation of the stock and Warren Buffett's success in stock picking which I think is awesome. However, no dividends mean we need to take profits and sell.

Walmart (WMT) has a large presence in China. The grocery portion of their business is selling out products in China because of food hoarding due to the coronavirus outbreak and quarantine. But what about the retail portion of their business? Toys, clothes, electronics? Will these segments do well in a recession? I don't think so. We sold this stock too.

Facebook (FB) is a company that is not yet diversified. Their source of revenue is mainly ads. Unfortunately, during a recession, the ad market tanks. Companies are not willing to spend so much on advertising due to their reduced marketing budget during tough times. Sell, sell, sell!

International Business Machines (IBM) is a company whose fortunes seem to be turning around. They are the leader in Artificial Intelligence for business. But we decided to take some profits off the table and sold a small portion of our holdings on this one. Sell, sell, sell! Hold, hold, hold!

Wells Fargo (WFC)
Biogen (BIIB)
Berkshire Hathaway Class B (BRK.B)
Walmart (WMT)
Facebook (FB)
International Business Machines (IBM)

I'm Calling Tops, It's Over, The Bull Market Is Over, Here Comes The Bear Market, A Recession Is Coming

posted Feb 25, 2020, 7:44 PM by Intelligent Investor   [ updated Mar 1, 2020, 10:47 AM ]

We weren't sure yesterday that the bull market is over. In the morning today, the Dow Jones was up about 300 points, and I thought we were just having a mild pull back. By lunch time, the Dow Jones had dropped another 900 points. The total drop for 2 days is 1900 points.

The catalyst for the Bear Market or upcoming recession seems to be the corona virus which now has spread all over the world.

At this point, we would have to agree with this guy. This pull-back is different. We wouldn't buy the dip in stocks in this market either. The corona virus outbreak seems to be the Black Swan Event that could bring this market down and could possibly push economies all over the world into a recession. Investing in this market is currently very risky for us.

However, keep in mind, we have been wrong before. The stock market is really hard to predict. This could be just a pull-back, or a correction, or maybe if we have a recession, it could just be a mild one.

1-10 of 50