“The market can remain irrational longer than you can remain solvent”
- John Maynard Keynes
The Portfolio Performance
The portfolio is UP +2.41%
Our benchmark, the S&P 500 is up 5.39%
Portfolio Performance The market has been going through a transition over the past several weeks and I suspect this will continue until mid-year. The S&P 500 is beating our portfolio by one of the widest margins in our 5+ year history. The reasons are pretty clear, the portfolio doesn't own enough of the 'value' stocks that the market is buying right now. If I care too much about 'right now' I'd be making big changes in the portfolio, I don't and I'm not.
Investing is not an activity, its a behavior
Nirvana The stock market is entering a state of what I will call Growth & Value Nirvana. So that we're working with the same definitions; A value stock is a security that appears underpriced by fundamental analysis. A growth stock is a security that is anticipated to grow at a rate significantly above the average growth for the market. Historically, value stocks have outperformed growth stocks, as a group, since 1928. Isolate individual names and you'll see a very different outcome. Over this period of time it has been rare to see value and growth working together, meaning investors can own both types of stocks and see portfolio growth. Over the past five years this has been the primary strategy of the Stay Invested portfolio, and to further extract safety with growth, the Stay Invested portfolio has used an allocation strategy that protects the overall portfolio by placing hard limits on how much can be invested in any one security or group of securities.
So let's include interest rates and see where the market should be valued. In the Shiller S&P chart below we see that the long term average, rate adjusted level for the stock market is 25.95, about 26. This chart is actually a little old, today's number isn't 35.39, its 38.44. As an investor I would like to buy stocks when the S&P 500 is below 26 offering up a bargain.
Last week the. bond market saw the US 10-year decline to 13% below its 200-day moving average, which was the widest spread in over two decades. This was a capitulation in that the market should have bought responded to that decline, we should have seen a bounce in a fund like the iShares 20+ Year Treasury Bond (TLT), but we didn't. That indicated that the trend will continue to be to the downside. I think this is indicating that rates are staying low but that we should expect volatility in rates. With rates low growth stocks can outperform. I don't see investors dumping they value stocks anytime soon, so there you have it, nirvana, growth and value working together.
Amarin Today I am buying the rest of the position in Amarin bringing the holding to a full position.
Amarin, the maker of VASCEPA received European approval to market Vascepa in the EU. My personal opinion is that Vascepa has the potential to become the best selling drug of all time. I don't think this will happen through Amarin's efforts alone, they need a big Pharma partner, but for now, this expansion into Europe opens a huge market for Vascepa.
What is VASCEPA? VASCEPA is the first and only FDA-approved medication to lower CV risk in addition to other medications, such as statins, in patients with high triglycerides (≥ 150 mg/dL) and heart disease or diabetes with other CV risk factors. FDA-approved VASCEPA is made up of one active ingredient: icosapent ethyl (IPE), which is an innovative form of EPA. If “EPA” sounds familiar, that’s because it’s an omega-3 fatty acid. IPE is the only active ingredient in VASCEPA and is considered the reason behind the significant cardiovascular benefits VASCEPA can deliver. VASCEPA is an ethyl ester of eicosapentenoic acid (EPA). Most other prescription omega-3 fatty acid compounds contain a combination of (EPA) and docosahexaenoic acid (DHA). GSK's Lovaza, which combines EPA and DHA, increases LDL-cholesterol levels; the research shows that VASCEPA does not increase LDL-cholesterol.
BUY AMRN 2,337 shares @ $6.23
"Markets don't go to zero, Portfolio's do.
Buy quality, be patient...and look twice for motorcycles."
- Clay Baker
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Keep Me Honest 2021
The S&P 500 will achieve year-end earnings of $170-$175 (1-1-2021).
We are likely to have a significant pull-back during the 1st quarter, about 5%-10% (1-1-2021).
Stocking picking will outperform algorithmic trading again as it did in 2020 (1-1-2021).
Rule #1: Don't lose money
Rule #2: See Rule #1
Rule #3: Portfolios go to zero, markets don't, Stay Invested
Rule #4: When good stocks you own drop 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
Rule #8: Tips are for waiters. Do your own homework.
Rule #9: Don't sell a stock because you're bored with it. Do your own homework.
RULE #10: Being early and being late is the same as being wrong...move on.
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:
AMD, AMRN, AMZN, AAPL, ARKK, ARKG, CNRG, ENPH, FB, GNRC, GBTC, GLD, HRTX, HD, IPOD, MSFT, NVDA, PSTH, TWLO, VBIV
I am invested short in these securities mentioned in this post:
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.