Buying TD Ameritrade
“What we learn from history is that people don't learn from history. When investors get either too fearful or too greedy, they sometimes hide behind the notion that "This time it's different."
Usually they regret it.
- Warren Buffett
The Portfolio
Our blog portfolio continues to perform well and volatility in the portfolio remains low vs the overall market. Year-To-Date the portfolio is up +17.84%. Our benchmark index, the S&P 500 is up 15.78% YTD.
If you're an investor looking for diversification and growth, and you'd like to know more about the way I build a portfolio; please feel free to email me. clay@claybaker.com
Recent Buys
Our recent buys; Edwards Life Sciences and Fox Factory Holdings have been a tale of two stocks, one growing and one declining without any news. Our shares of Edwards Lifesciences have increased 2.25% while Fox Factory continues to decline without any real, identifiable rational. In fact everything FOXF is doing is building for the future. The company is scaling back its California operations (cutting costs), moving and growing operations in Georgia, acquiring a new brand, reducing exposure to foreign markets and simultaneously growing US revenues. Fox Factory is benefiting from trends in demographics, namely millennial's buying high-end bikes and upgrading to Fox products, plus an aging population that's buying ATV's. I didn't expect to see FOXF decline from $86.91 to $62 since late July, but to break below $62 is a big surprise. I'll be adding more today at these lower prices, but saving some cash in case FOXF drops to its low of $54.21.
Buying Today
Two companies I've always liked got attractive today; TD Ameritrade and Fox Factory Holdings.
By the time you read this I will have made the following buys for our portfolio.
AMTD bought 100 shares @ $33.00
FOXF bought 50 shares @ $60.00
AMTD
Yesterday Charles Schwab announced that they were eliminating commissions on stocks and ETFs, ushering in free trading. TD Ameritrade (AMTD) followed suit within hours. This has been coming for a long time. Investors should keep in mind the old saying, "When customers get something for free, they're not the customer, they're the product". Charles Schwab owns a bank and generates only 8% of revenue from commissions. TD Ameritrade generates 28% of revenue from commissions, and also owns a bank, TD Bank N.A. Banks make money by paying depositors a low interest rate on deposits and lending at a much higher rate; we should see AMTD expand this part of their business. Frankly I would downgrade AMTD as well given that they are setting themselves up for a big loss of revenue in the race to zero. However, the online brokerage industry is also prime for disruption and consolidation. With zero commissions, what's the competitive advantage? I think scale is the advantage. Therefore I foresee AMTD being the next company to acquire a competitor, possibly E*Trade (ETFC), for their technology, customer base and assets.
FOXF
Fox Factory Holdings has been beating analysts estimates for 7 straight quarters. But analysts don't care about what you've done, "what have you done for me tomorrow"? In the last earnings call FOXF beat estimates again, and while the CEO and division Presidents delivered lots a great news, the CFO seemed to have a more down beat spin. In my personal opinion his deliver could have been couched with greater optimism as the issues and guidance are clearly related to an excellent acquisition. Acquiring a company requires a great deal of work to integrate the operations, realign supply chains, meld the two business cultures together, in short, it takes time and its hard. The CFO is now leaving the company to pursue other opportunities....hmmmmm.
Fox Factory has continued to decline at an almost alarming rate. Since July FOXF has declined over 28%; yeah, I'm stunned too. Granted the CFO departed and did some heavy selling of stock on the way out the door. Not a good sign. FOXF is also tied to the automotive industry and it's a manufacturing company. However note that it's foreign manufacturing is in Taiwan, not China. Furthermore, many of its products are either mostly manufactured in the US or final assembly takes place in the US. Given the growth in earnings, revenues and an ongoing expansion of the companies Georgia manufacturing facilities, I think FOXF is oversold; but investor sentiment is still negative. There is every possibility that the stock can decline further, I see the bottom roughly around $54.25. If FOXF falls to that level and the company remains fundamentally sound, I will be a buyer again at lower levels.
Traders buy strength and sell weakness. Investors buy weakness and sell on strength. We're investors, we like to buy good companies when they're on sale.
SUCCESS!
https://www.gentlemansride.com/rider/ClayBaker163790
The Distinguished Gentlemen's Ride in support of men's health. was a great success. I exceeded my fund raising goal by 57.4%. The new Ukiah, CA ride had an excellent turnout with 25 bikes.
You can still donate at the link above.
The DGR Ride is a program of the Movember Foundation. Movember seeks to make a global contribution to men living happier, healthier, longer lives. It is the driving force behind their campaigns, funding strategy, and vision for the future.
The state of men's health is in a crisis. By 2030 Movember aims to:
Reduce the number of men dying prematurely by 25%
Reduce the rate of male suicides by 25%
Halve the number of deaths from prostate cancer
Halve the number of men dying from testicular cancer
Halve the number of men experiencing serious mental and physical side effects from treatment for prostate cancer or testicular cancer
You can learn more at Charity Navigator: Movember Foundation
"Markets don't go to zero, Portfolio's do.
Buy quality, be patient...and look twice for motorcyclists"
- Clay Baker
Stay Invested,
Clay
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Keep Me Honest
S&P 500 declines to 2,350 or more (1-3-2019)
Healthcare and Biotech sectors outperform (1-3-2019)
S&P reaches 3,000 by year end (1-11-2019)
CSCO reaches $60/share (1-18-2019)
VEEV reaches $145/share (2-14-2019) (achieved $145.23 on 5-10-2019)
CVS reaches $91.50 (2-27-2019)
Bull market takes another leg up (4-7-2019)
The Fed will lower rates 1-2 times (5-13-2019)
Clay's Rules
Rule #1: Don't lose money
Rule #3: Portfolios go to zero, markets don't, Stay Invested
Rule #4: When a good stock you own drops 10% below your cost basis, add shares
Rule #5: Bull markets aren't sustained without the Transports
Rule #6: When Forward P/E is lower than TTM P/E, expect earnings to increase
Rule #7: When an investment bank sells below book value, buy it
Disclosure: I am personally invested long in some or all of these stocks or funds that appear in the Stay Invested portfolio and may purchase or sell shares within the next 72 hours. I am also invested in other stocks and funds that do not appear in the Stay Invested portfolio but may be mentioned or related to this article. It is not my intention to advise or encourage the purchase or sale of any security. I am invested long in these securities mentioned in this post:
CVS, CSCO, VEEV, STZ, AMZN, NVDA, BCRX, GS, BDSI, VEEV, VTI, GLD, HD, AWR, XLNX, MRVL, NBRV
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.
