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© 2016 by Clay Baker all rights reserved

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Day 226: Hold Your Ground

August 11, 2017

 Mother's Little Helper portfolio was DOWN today -$19,787.78 (-2.50%).  Overall GAIN YTD: +$187,753.79 (+32.16%).

 

According to CNN Money our benchmark index, the S&P 500 is up +8.91% Year To Date. http://money.cnn.com/data/markets/sandp/

 

 

 

OUCH!  That hurt today.  First up I reported yesterday that NetEase beat expectations on their earnings call.  In fact they missed.  My bad I reported un-audited numbers, when investors got the real scoop they sold NetEase off, the stock was down over $30/share.

 

These are the days that make investors question themselves.  These are the days when nothing makes sense in the markets and we all just wonder if the money isn't safer in something like a bond or a money market account earning 1/2% interest.  North Korea, of all things, North Korea is the boogeyman this time around.  The bears and major hedge fund managers have been screaming that the market is too expensive and there is turmoil everywhere.  Investors are way too complacent.  I've heard it before and this time will be like all the others.  When the dust clears, average investors will lose money and all those hedge fund managers will make more. Why?  Because the one thing that separates the professional investor form the average retail investor is behavior.  Average investors run scared when they are told to, professionals do the telling.  Stay invested.  

 

NVIDIA reported a solid beat on earnings and revenues but investors weren't happy.  Sales increased 56% to $2.23 billion and topped forecasts of $1.96 billion. Earnings of $1.01 per share topped forecasts of 70 cents per share.  Every segment was strong and growing and the forward guidance is stronger.  Nope!  Not good enough.  The stock closed at $164.74 and has dropped to about $154 in after hours trading.  This is over done, I expect to see shares rise back up soon as investors realize they can buy this great company at lower prices.  Is NVIDIA cheap, no, it trades at over 55 times earnings.  You pay up for growth and NVIDIA keeps delivering it.  Investors seem to like Netflix just fine, it trades at 218 times earnings.  Think about that disparity.  Investors are willing to pay up nearly 4 times as much for the movie, as they are for the chips that make the movie possible in the first place.    

 

The most heard response on the street today was, "NVDA is just a company that makes chips for mining cryto-currency like Bitcoin".  "They're done, the boom is over".  STUPID, STUPID, STUPID!  I think NVIDIA may be the most misunderstood company in tech.  Even Jim Cramer on CNBC waxes on and on about the company's strength in gaming and the growth of eSports helping NVIDIA grow.  Great, how long will that last?  As soon as every millennial has grown tired of their high score wall reality will set in and they'll all start to realize..."Oh, I'm traveling to the airport in my autonomous car and flying to the moon in an autonomous space craft because of NVIDIA".  

 

The real strength of NVIDIA is that everything that gets made, NVIDIA touches.  That's not an exaggeration.  If you're an architect designing homes and sky scrappers or an engineer building bridges and major infrastructure, you most likely have an NVIDIA graphics board in your computer.  Do you use SolidWorks to create 3D models and manufacturing drawings of the products your company manufactures (P&G, CAT, Boeing, Honeywell, Deer, Illinois Tool Works, Cisco Systems, and thousands of others); guess what, they use NVIDIA boards in their computers.  Did you just buy a Tesla Model 3, NVIDIA chips are in those.  Autonomous cars and trucks, yep, NVIDIA boards and chips again.  If you can touch it, imagine it or think of any part of the biggest technological changes occurring on planet Earth, NVIDIA plays a major roll.  

 

Kingstone Companies reported today and came in below analysts expectations with earnings of $0.22. The stock is trading down a little over 5% after hours.

 

 

 

PORTFOLIO COMPANIES REPORTING EARNINGS THIS MONTH

 

NVIDIA Corporation is expected to report earnings on 08/10/2017 after market close. The consensus EPS forecast for the quarter is $0.69.

Kingstone Companies, Inc is expected to report earnings on 08/10/2017 after market close. The consensus EPS forecast for the quarter is $0.32.

 

Cisco Systems, Inc. is expected to report earnings on 08/16/2017 after market close. The consensus EPS forecast for the quarter is $0.55. 

 

Applied Materials, Inc. is expected to report earnings on 08/17/2017 after market close. The consensus EPS forecast for the quarter is $0.83.

 

Veeva Systems Inc. is expected to report earnings on 08/24/2017 after market close. The consensus EPS forecast for the quarter is $0.15.

Ulta Beauty, Inc. is expected to report earnings on 08/24/2017 after market close. The consensus EPS forecast for the quarter is $1.78.

 

Analog Devices, Inc. is expected to report earnings on 08/30/2017 before market open. The consensus EPS forecast for the quarter is $1.15. 

 

 

 

 

Stay Invested

Clay Baker

 

 

 

Disclosure: I am personally invested long in these stocks that appear in the MLH portfolio and may purchase or sell share withing the next 72 hours. I am also invested in other stocks that do not appear in the MLH portfolio: BA, BRK.B, CELG, CSCO, CTXS, CVX, DOW, DVAX, FB, IBM, NTES, NVDA, OMER, PFE, PG, RDHL, SCHW, THO, TWX, VEEV, VZ, XLNX, XOM

 

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.