Sunday, January 12, 2014

The naive believe everything . . . but a wise man looks well into a matter.

Back in August I wrote a blog with the above title which is based on a paraphrase of a Proverbs 14 verse. I thought it was a good time to reuse this title, as a note to self, that I don’t need to get into a hurry…there is plenty of time to do the right thing.

My goal has been to study the list posted last week and begin a review of each stock.

I may still take some small positions but before taking a full position I should look well into the matter.

The goal is not to do financial study nor a technical analysis but rather to see it is seems logical that this is a good investment for a moderate length of time.

Cramer’s list of stock to own:

 Cramer’s list of companies that he considered to be well managed:

My thoughts on the first three companies:


Doing a little internet study you can see that many think Google is overpriced with a high PE of around 31. This does not bother me, as I am not sure how a company such as this should be correctly valued. I do like that it is profitable; it is aggressive and looks well into to future for its markets. In addition to providing the favored search engine that dominates online searches, it owns You Tube. It has also created the Android open source mobile software, web browser Google Chrome, Google Wallet for payments, Google TV and the wonderful Google Maps and the list goes on and on.

What can you say other than it’s a very clever company that is currently in the internet leadership role. We have seen the stock rise over the past 5 years from around $300 to over $1100 and during the past year alone its' up over 55%.

However its unknown what the future will bring. Today’s internet darling has a lot of competition. They are very, very good, but it’s the undiscovered new leader that will someday develop something that we all must have that could replace Google.  A second negative is it does not have a role in China. For now the pros out weigh the cons in my mind and I want to own this powerhouse but with no dividend I will be careful to avoid a long-term slump or even worse.

General Electric:

I began buying this fine stock back in October 2008. It did not originally fit my requirements as a dividend payer as it had cut its dividend, but the company appeared to be on a good path and the hunch has paid off over time. I actually sold some in 2013 due to the need for portfolio rebalancing. The best could yet be ahead, if I did not already own it I would buy some here.

Johnson Controls:

Johnson Controls has long been associated with building efficiency, something that is very desirable. They also are involvement in automotive which should see additional growth.

The building efficiency segment designs, produces, markets, and installs integrated heating, ventilating, and air conditioning systems, as well as building management systems, controls, and security and mechanical equipment.  

The Automotive Experience segment designs and manufactures seating systems, instrument panels, electronic convenience features, floor consoles and door systems.

They produce automotive lead acid batteries, as well as lithium-ion battery technologies for hybrid and electric vehicles.

I really like the building efficiency portion, but the only thing I see in the automotive section that I find of interest is the battery technologies for hybrid and electric vehicles. The US automotive industry just has such a bad reputation for poorly treating their suppliers. I know this may have changed and I know Johnson controls has been a survivor and doing this for a very long time, but I done think this stock will ever merit a full position for me.

What did I see in my weekend review?

The 10-yr Treasury yield is 2.86 %

IBD (Investor Business Daily) is: Confirmed Uptrend

Copernicus Systems: Long

Moneys Flows:  all positive, but continuing to trend downward


HAIN +8.69%

CLF -7.75% way too early going into this one


QQQ +9.93% 

EWG +.44%

IBB +5.41%

IWM +.07%

What will I do?

I added ETF’s IWM, EWG, and IBB since my last post.  All of these have been held before and they are off to a good start.

I also added CLF thinking it was time for this industry to shine, but it’s off to bad start. Clearly I did not look well into the matter. I vacillate between doubling down or just taking the loss…likely I will take a loss, as this is not a stock that I intend to hold as an investment. But let’s see what it does this week.

I hope to continue my study of the Cramer suggestions, will perhaps take some initial positions.

I hope you have a great week.

No comments:

Post a Comment