Tuesday, June 30, 2020

An Example of Exuberance

This market is crazy.  Here's an example.

Workhorse (WKHS) was $2.63 on June 1, 2020.   Today it hit $20.00 before pulling back.   All on rumors of the USPS closing bids for the next generation mail truck on July 14.   Workhouse is one of three remaining bidders and the only all electric design.

Currently, Workhorse loses money on every vehicle it sells, based on sales to UPS.   There are several larger companies now competing in the same area.    However, Workhorse is riding the same wave as other EV companies, such as Nio and Nikola.

I've been selling into this rally.   My last sale was at $15.15.  Unbelievable.  I've owned shares since 2014 at much lower prices.   I expected to lose my entire investment eventually.  Not complaining and enjoying the ride.  But fully expect the price will come back to reality soon.

Full Disclosure:   We own shares of WKHS.

For more on Ideas You Can Use, check back Tuesdays  for a new segment.

This is not financial nor investment advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Monday, June 29, 2020

Waiting for New Lows

Although I was tempted to buy on Friday, I'm still waiting.... waiting for new lows before buying.  The current market valuations do not make sense to me.    It feels somewhat like 1999 and 2008, where the market defied the economic situation. 

So I'm going to wait to buy, despite the market making me feel very stupid for not buying.   It is painful, watching growth stocks hitting new 52 week and all time highs.  I'm going to wait until stocks test the March lows. 

Hopefully, I will get a chance to buy in a couple months, but it may take as long as waiting until November, after the elections results are decided.

For more on Strategies and Plans, check back Mondays  for a new segment.

This is not financial, nor investment advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Sunday, June 28, 2020

Bizarro Market

"It's different this time." ~ Wall Street justification

Up is down, left is right, and bad is good.    Nothing seems to make sense to me.   My spouse tells me I need to think about the what is coming in the future.   Not what has worked in the past.   Good advice, but I think I will slowly make the transition.  In case, it isn't different this time:-)

For more on  New Beginnings, check back Sunday for a new segment.

This is not financial nor investment  advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Saturday, June 27, 2020

Expect COVID-19 to Return

"I'll be back." ~ Arnold Schwarzenegger in Terminator

Given the rise of COVID-19  cases in Arizona, Texas, Florida, and California, it seems a resurgence of coronavirus in the U.S. is very likely.   

Business Closings

A subsequent closing of businesses  is also likely, but not as extreme as the first one.   The focus will be on businesses that are crowded with customers.

Bars will be first to close or be severely restricted in capacity.   In my area, based on drive by observation, the bars seem as packed as they were before coronavirus.

Restaurants may be more restricted in capacity such that the business may not be sustainable.

Work from home will be a norm where possible, eventually increasing the vacancies in offices.

Cruise lines won't survive.

On the other hand, all retail establishments will be allowed to stay open, not just essential businesses.  Even with reduced occupancy limits, I expect most will be able to operate profitably.

Personal Restrictions

People will be expected to follow guidelines to prevent spread.

Masks will be required instead of being optional.

Stay at home will be optional, primarily for those at high risk.

Schools

Full time in person school will not occur.   Perhaps part time, or worse case, exclusively distance learning.

Extra curricular activities and sports will be canceled.

Vaccine

A vaccine is not likely given there is still no vaccine for HIV, SARS nor Ebola, which have been around for years, even decades.   

Conclusion

The economy is likely to further into recession, given the loss of jobs, the decline of consumer spending and failure of small businesses.   Cash will become king, despite low interest rates.


For more on Reflections and Musings, check back  Saturday for a new segment.

This is not financial, pandemic nor investment advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Friday, June 26, 2020

Reducing Our Investment Risk in Retirement

For me, a big risk factor in retirement is volatility of investments.  I learned this the hard way in 08/09 when our retirement investments were reduced by over 50%.  For the next few years, it wasn't clear that my retirement was sustainable.   Fortunately, the market and my company stock recovered such that most of the losses were eliminated. 

However, there is a big difference in dealing with downside volatility at 49, which is when I retired, and in my 60s.  There is less time to recover and less options for recovery.   If needed, I could have gone back to work in my 50s.    Returning to work is a much less likely option in my 60s, 70s, and 80s.

Being a financial geek, I decided to test a scenario of keeping 2/3 of our retirement funds in cash, at 0% yield,  and calculating if the combination of  future social security payments, current dividend income, current rental income, future RMD withdrawals,  and current cash was sufficient to cover our annual expenses for 20 years, assuming 3% inflation.  The answer was yes. 

Since I was conservative, e.g. no growth in cash funds and 3% inflation, I feel confident that we can keep a significant amount of cash to minimize the negative impact of volatility without jeopardizing our retirement lifestyle.  I plan to work this scenario with our financial advisor to significant reduce our downside risk during the times of significant volatility.

For more on  Reaping the Rewards, check back Fridays for a new segment.

This is not financial, retirement, nor investment advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Wednesday, June 24, 2020

Making My Buy List

The March stock market decline was so fast that I wasn't ready with buy list.  I was expecting the downturn to last a few months and give me time to choose some good buys.    I learned my lesson.  The next time a rapid decline happens, I will have a list of stocks and etfs ready for purchasing.   I will be looking at good dividend paying stocks, specific growth stocks, and index etfs.   I will minimize selections of energy and value stocks.  I will overweight FAANG and other high tech growth stocks.

Full disclosure:  We own AAPL, NFLX, and GOOG in our personal accounts.  We own FB and AMZN through our managed accounts.

For more on The Practice of Personal Finance, check back Wednesdaysfor a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Tuesday, June 23, 2020

Prepping for a Potential Lockdown or Quarantine

COVID-19 seems forgotten, but it's not gone.

Just in case there a is resurgence of COVID-19, we have decided stock up again on various good, while the supplies are good.   Dry and canned goods for the pantry, frozen vegetables for the freezer, and paper goods for the house. 

We will only be stock on foods that we usually eat and paper goods that we usually use.  That way, if there is no resurgence, we will be able to work down the inventory easily.

Hopefully, there will be no resurgence, but we don't want hope to be our only preparation.

For more on Ideas You Can Use, check back Tuesdays  for a new segment.

This is not financial, health or pandemic advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Monday, June 22, 2020

Preparing for the Recession

"It ain't over till it's over." ~ Yogi Berra

The National Bureau of Economic Research has announced a recession began in February 2020.    The stock market didn't get the memo and is reacting as if the recession is over.  With all the economic disruptions from the pandemic lockdown, I think the recession is in the beginning stages and far from over.

I feel like stock market has given me a gift.  With indices near or above early 2020 highs, I can take profits or sell at lower losses than in March, which is what I am doing.

My next step is to review capability of our investment assets to support our current lifestyle during an extended period of negative or very small returns, which I will be doing with our financial advisor this week.

One option is I can being taking Social Security, instead of waiting until 70, which would mitigate some level of stock market losses if needed.

For more on Strategies and Plans, check back Mondays  for a new segment.

This is not financial, investment, retirement nor economic advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Waiting for More Certainty

There are too many canaries in the coal mine for me to have conviction in the market direction and confidence in our investments.  Higher unemployment, corporate earnings decline, small business failing, COVID-19 resurgence, and election results are among some of the lurking canaries/issues.

For now, I continue to be biased towards selling, to reduce equity exposure and mitigate volatility in our retirement investments/savings.

For more on Strategies and Plans, check back Mondays  for a new segment.

This is not financial, investment, nor retirement advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

Saturday, June 20, 2020

Flummoxed

"If you don't know where you're going, you'll end up someplace else." ~ Yogi Berra

I am flummoxed and having a crisis of confidence.

This market has me totally confused.  The fast rebound, some stocks hitting new 52 week highs, penny stocks doubling, tripling and more, and confidence in a V economic recovery do not make sense to me.  I thought many stocks were over priced before COVID-19 lockdowns.

I thought the downturn was going to be  extended and allow more time for stocks to be reasonably priced.      Now after lockdowns, many of the stocks have recovered 50% or more of their losses, with some exceeding previous highs, despite the overall fundamentals (and economy) being worse than before the lockdown.   The DOW and S&P are near their highs, and the Nasdaq has hit a new 52 week high.  I don't get it.

 I tried shorting with  Norwegian Cruise Lines, but bailed out due the volatility, and closed the short with a very small gain.   If I had stayed in a few more days, I would have had a 10% gain. 

Perhaps time to get out of the market.

I think I will continue selling profitable peripheral positions in our trading account, and perhaps even some profitable core positions.   I believe lower prices will be coming, and will try to mitigate the impact by reducing our equity exposure.

For more on  Reflections and Musings, check back Saturdays for a new segment.

This is not financial nor investment advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Saturday, June 13, 2020

Feels Like a Worse Downturn is Coming

The next market downturn will likely be more serious, longer duration and deeper than the recent downturn, which was self induced.  Soon, the market will recognize more businesses than expected will fail, more jobs will not be coming back, pensions will be cut, state and local governments will shrink.  Other negative factors include civil unrest and a COVID-19 resurgence.

This feels a lot like 2008, where the market ignored many issues, until Lehman Brothers failed.   I suspect there will be another Lehman moment later in 2020.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Friday, June 12, 2020

Invoking Rule Number One

"Rule #1: Never lose money.  Rule#2: Never forget Rule #1." ~ Warren Buffet

After a brief review with our financial advisor, I've concluded we have sufficient funds to support our retirement for another 35 years.   The analysis was done with a conservative rate for return of 3% with 2% inflation, for a real return of 1%.  .  This includes  that I will begin taking social security payments at 70.  In addition, we will pay for both our children's college education.

For us, this means protecting our retirement investments against a significant decline, as occurred in 08/09 and in March 2020.   Going forward, our investments will be primarily conservative, to preserve principal, with a large portion in cash a cash equivalents.

We will be working the specifics with our financial advisor over the next few months.

For more on Reaping the Rewards, check back  Fridays for a new segment.

This is not financial, retirement, nor investment advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Wednesday, June 10, 2020

Patiently Waiting for Lower Prices

I felt the stock market was too high before the COVID-19 pandemic.  Now the indices are near or above their all time highs, with earning lower, significant numbers unemployed and many small businesses at risk of failing.   There is too much confidence given the many unknowns.  To me, it seems the downside risks are higher than the upside potential.

I will continue to take profits, raise cash and wait.  I may even short a few stocks, such as cruise lines and airlines, which I believe have advanced far faster than recovery would support.

For more on The Practice of Personal Finance, check back  Wednesdays  for a new segment.

This is not financial nor investing advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Monday, June 08, 2020

Selling Into the Mania

It doesn't get any wilder than this.   Shortest bear market ever.  Greatest 50 day advance ever in the stock market.  Stocks advancing 100, 200 up to 600% in a couple months, weeks and even days.  The Nasdaq has hit an all time high, the S&P is positive for the year, and some stocks are reaching 52 week  and even all time highs. 

Ten weeks ago, it was the death of the bull market due to the pandemic lockdown and economic shutdown.  Now, it's the birth of a new bull market.

I'm selling into the rally.     Today I sold an oil stock, NBR,  that I've owned since April 22, 2020 for a 611% gain.   That's crazy and not sustainable.    So I am selling all our peripheral shares that have at least a 15% gain.  I may even start selling our core positions, if the advance keeps going for a couple more months.

I expect stock will be cheaper, significantly cheaper, in the future.  I will look to buy back then.

For more on Strategies and Plans, check back Mondays  for a new segment.

This is not financial  nor investmet advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Saturday, June 06, 2020

Too Good to Be Sustainable

After an amazing recovery from the March 23, 2020 bottom, the S&P is within 1.7% break even for YTD.   As the media has noted, the S&P has the best ever 50 day rally from the bottom.  Interestingly, after seven other strong 50 day rallies, the market was up 100% of the time 6 and 12 months later, averaging 10.2% and 17.3% respectively.  According to the chart in the article, 6 of the 7 coincided with the end of a bear market.

Yet the data doesn't give me confidence that the rally is sustainable.  There are too many headwinds: small business failing due to lockdown, protest and riot curfews closing down businesses, and the possibility of a significant increase in COVID-19 cases as states reopen.   The downside risk is much higher than the upside potential, in my opinion, despite the data on previous strong 50 day rallies.

Separately, I already thought that many stocks were overbought and very expensive before COVID-19.   I read somewhere that about 10-20  stocks are responsible for 1/3 of the S&P recovery.   Some stocks are even hitting new highs, even though considered expensive by fundamentals before COVID-19.

Nah, not sustainable, despite the data on 7 similar previous rallies.

I  will keep selling into the rally and look for an opportunity to buy back at lower prices.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial nor investment advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

Friday, June 05, 2020

Lucky - Even YTD

With today's rally, our investments are about even YTD, even though the market is still down about 4% 1.14% Our accounts got a small boost since I was buying stocks during the last down turn, during most of the month of March 2020.   Although numerous purchases were made before the bottom,  some are above the buy price.  As a result, we have a net gain for the buys made during the recent decline.

In hindsight, I bought too soon especially for energy stocks.  Next time I will wait for a larger decline, say 20%, before initiating significant purchases.

A second reason is the value of our brokered CDs, which behave like bonds,  have increased in value, since interest rates are falling.

For more on Reaping the Rewards, check back Fridays  for a new segment.

This is not financial nor investment advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC