zaterdag 26 mei 2018

Stock Screener: Day 8: KBC Ancora (KBCA)

If I don't have any ideas anymore what to buy, I use the stock screener.

KBC Ancora, which holds KBC group shares, is valued at a discount when you compare the value of KBC group shares it holds to the value of KBC group itself. I believe earnings growth is accelerating and dividends will go up. KBC group also will buy back 220 million euro in shares towards the end of the year.



What you want to do is filter on 4 attributes: market cap, P/E, dividend yield and percentage change.

1) Market Cap: do not choose small companies as they are mostly fraudulent or don't have sustainable earnings. Don't choose big companies because these are not volatile enough to get fast profits from. I'd filter between 200 million and 4 billion.

2) P/E ratio: choose the companies with the lowest P/E ratio, these companies are dirt cheap while still having earnings. Cheap is below P/E of 5. But do not choose below P/E of 2 because those are mostly companies that are going bankrupt or have bad growth.

3) Dividend yield: always choose companies that have dividends, because these companies have real earnings and can prove they have sustainable earnings to reward investors. The higher the better of course, but don't push it above 7% as those companies probably don't have the money to pay out dividends on a regular basis. I'd go for companies with dividends between 3% and 7%.

4) Volatility: don't choose companies that are so volatile. Maximum year over year change should be between the 20% range.

donderdag 19 april 2018

Stock Screener: Day 7: Sinopec Shanghai Petrochemical Company Limited (SHI)

If I don't have any ideas anymore what to buy, I use the stock screener.



What you want to do is filter on 4 attributes: market cap, P/E, dividend yield and percentage change.

1) Market Cap: do not choose small companies as they are mostly fraudulent or don't have sustainable earnings. Don't choose big companies because these are not volatile enough to get fast profits from. I'd filter between 200 million and 4 billion.

2) P/E ratio: choose the companies with the lowest P/E ratio, these companies are dirt cheap while still having earnings. Cheap is below P/E of 5. But do not choose below P/E of 2 because those are mostly companies that are going bankrupt or have bad growth.

3) Dividend yield: always choose companies that have dividends, because these companies have real earnings and can prove they have sustainable earnings to reward investors. The higher the better of course, but don't push it above 7% as those companies probably don't have the money to pay out dividends on a regular basis. I'd go for companies with dividends between 3% and 7%.

4) Volatility: don't choose companies that are so volatile. Maximum year over year change should be between the 20% range.

maandag 16 april 2018

What happened since September 2017?

The economy has seen a significant transformation since September 29th, 2017, when the debt ceiling was raised and U.S. debt went up by $800 billion (see chart below from Wolfstreet). From that day on, everything changed.

Read the analysis here.


maandag 5 maart 2018

FRBNY gold repatriation continues

After a small hiatus in 2017, the gold repatriation continued in January 2018.

Trump Import Tariffs Are Not The Solution

In a previous article I mentioned that the U.S. deficit was going to spiral out of control and that inflationary pressures will emerge, putting pressure on the U.S. dollar. Well, it just got worse with the news that Trump is going to impose import tariffs on steel (25%) and aluminum (10%). I will make the case that this will only increase U.S. deficits and be detrimental to GDP growth.

When import tariffs are imposed, basic economics tells us that in all cases, the price of the good will increase. Foreigners will sell less of the good to the U.S and domestic production of the good will increase.

Go here to read the analysis.


woensdag 21 februari 2018

maandag 19 februari 2018

Uranium Miners: Wait 2 Years

Uranium seems to be the latest thing in investment land. I can agree with that, but it's much too soon. I would wait 2 years.


donderdag 15 februari 2018

The Central Banker's Bubble

On February 14th, 2018, the consumer price index (CPI) came in higher than expected. It posted 2.1% instead of 1.9%. 10 year bond yields surged to 3% on this news and the U.S. dollar fell. It will be interesting to see how the Federal Reserve will react to this news in March's FOMC meeting. Will it increase interest rates on this higher inflation data, or will it hold rates? I believe the Federal Reserve is not able to raise rates much more and I will tell you why.

Read further here.



woensdag 14 februari 2018

The Holy Grail for Bitcoin Trading

Correlations are very important and in bitcoin, this is essential.

People don't like transaction fees. When transaction fees go to $50/transaction, people will stop using bitcoin. Transactions will go down and the bitcoin price will go down.


So what do you do then? You buy bitcoin when transaction fees are low and you sell bitcoin when transaction fees are high. It's that simple. I would only buy bitcoin when transaction fees are in the $10/transaction. A sane person wouldn't want to pay more than $10/transaction.



zondag 11 februari 2018

Central Bank Solvency

This page is created to monitor the Federal Reserve Bank's solvency.

Very nice article on the Federal Reserve and its interest payments to the banks.

http://www.businessinsider.com/fed-paid-banks-30-billion-on-excess-reserves-for-2017-2018-1?international=true&r=US&IR=T

One wonders what will happen when yields go up and the FRB unwinds its balance sheet in this environment. Will it have enough revenue to pay these interests on excess reserves, especially with higher fed funds rates. Will it have enough money left to remit to the treasury? We already see these remittances to the treasury going down since 2015. More debt will be issued once the treasury is empty again.


Remittances can be found here too:
https://research.stlouisfed.org/datatrends/usfd/page9.php


The Fed started to pay interest on reserve balances at the Fed since 2008, to address conditions in credit markets.

https://www.frbsf.org/education/publications/doctor-econ/2013/march/federal-reserve-interest-balances-reserves/ 

Interbank loans dropped because there was no need to lend money to each other. The Fed gave free money.


Once the Fed becomes insolvent (because interest rates rise), it will have to monetize and create even more money. It won't be able to execute remittances anymore to the treasury. It won't be able to pay interest on excess reserves to the banks. This paper explains it perfectly.

https://minneapolisfed.org/research/wp/wp747.pdf

The capital buffer can be found here and is at $45 billion (2018).
https://www.federalreserve.gov/releases/h41/current/

More info on central bank solvency: https://www.zerohedge.com/article/federal-reserve-insolvent

Excess reserves are shown below.



And by the way, the central bank is on its way to becoming insolvent as unrealized losses are growing.


https://www.federalreserve.gov/releases/h8/current/

You can see here that when bond yields go up, the unrealized losses will go up.


And each time, these losses worsened, the Federal Reserve started another round of QE.


One of my favourite tools to see if the Fed is in deep trouble is the cash balance at the U.S. treasury.
Can also be found here: https://www.federalreserve.gov/releases/h41/current/

http://katchum.blogspot.be/2017/04/us-treasury-cash-balance.html

vrijdag 9 februari 2018

Falling Wedge Formation Spotted in Silver

Let me introduce you to the bullish falling wedge formation, which is presently active in silver.