Phil's Newsletter

How to Buy Stocks for a 15-20% Discount

Value Investors: 3 Dirt-Cheap Stocks Trading at a Massive Discount ...Are you down 50% one or more of your stocks?

That's the position a lot of people are finding themselves at the moment and some part of that is, of course, from the overall market drop but a lot of that is from paying too much when they bought the stock in the first place.  At Philstockworld.com, we teach our Members to NEVER pay retail prices for a stock – that's what retail traders do – not professional traders!  

First of all, see our article about Scaling Into Positions from the Strategy Section of Philstockworld.com.  The very short story is that you should never make a full commitment to a position early on.  You should break your portfolio down into Allocation Blocks (see Strategy Section) equal to no more than 10% and preferably 5% of your portfolio so that no one position can break you and THEN you break your allocation blocks into quarters and each position should be started with a 1/4 entry.

Now, not only can no single position damage your portfolio but no single entry should be able to damage it either.  For example, Disney (DIS) seemed like a very safe stock and, even at $140, it wasn't terribly overpriced but then the virus hit and all the movie theaters closed and the theme parks closed and POOF! – half their business disappeared and the stock dropped to $85 before recovering a bit to $94.  Had you bought DIS for $140 in February, you'd be down 33%.  

Had you, however, made a 1/4 allocation to DIS in Feb, let's say buying 100 shares for $14,000 in a $50,000 allocation block, you would have plenty of buying power to buy 100 more at $90 ($9,000) and your average on 200 shares would be would be $115 ($23,000) – not even 1/2 of your $50,000 and down only 18.3% on the larger position.

Don't miss out! How Disney uses FOMO (and other marketing gimmicks ...If DIS dropped another 33% to $62 (and we're assuming you still want to be in the stock, of course), you would have $27,000 on the sidelines in your allocation block and you could buy 200 more shares for just $12,400,
continue reading





Friday Market Workshop – Portfolio Repair Part 4 – Adjusting Our Goals to Reflect Reality

Time to get real.  

We've had 3 Workshops so far on fixing our portfolios this week:

Now we move onto a very important topic that combines what we have learned and that is Adjusting our Goals.  I talked about this on Tuesday (Part 2) in the Boeing example for someone who bought Boeing at $350 and now it's $150 (today it's $123!) and we do not sit there and HOPE (not a valid investing strategy) that BA will go back to $350 because it's no longer realistic!  

As much as you may love a stock – you have to be realistic when there is damage done to it's financial position or outlook and you have to adjust your expectations accordingly – perhaps even considering abandoning the stock altoghether – especially in times like these when there are other fantastic stocks on sale and, even as I say this, I'm thinking that BA is not really a fantastic stock anymore – they simply have too many troubles to be excited about them – even at $123.

So today we'll take a look at our Earnings Portfolio, which started out with $100,000 on October 21st and was originally supposed to be just quick earnings plays but, the way things went, we ended up getting "stuck" in some good bargains (or we thought as the time) and we rolled them into longer-term bets.  So now it's a bit of a hybrid but that makes it interesting.  At the moment, we're at $132,078 so up 32% for the year but, as you'll see – NOT because our picks were any good – but because our HEDGES saved us!  

Notice we have more cash than the portfolio has value – that's because we follow our core Philosphy, which is:  "Be the House – NOT the Gambler", which means we always try to be sellers of premium, not buyers and that gives us a huge advantage in our trades while also dropping a lot of cash into…
continue reading





$5,000 Thursday – Yesterday’s Oil Petroleum Plays Pay Off Fast!

Wheee, that was fun!  

For thos of you lucky enough to subscribe to yesterday morning's PSW Report we had almost all day to get in at our target entry on Oil Futures (/CL) at $20 per barrell and we got a nice ride to $22.50 this morning – for gains of $2,500 per contract on our two long contracts as Oil blasts 10% higher this morning.

Apparently China is buying up oil to fill up their Strategic Petroleum Reserves while it's so cheap and who could have seen that coming?  We could!  That's what happens when things get cheap – people buy them!  That's kind of the whole point to INVESTING – understanding the true VALUE of things and taking avantage of situations where the PRICE does not match the VALUE.  QED!

Still, we don't want to be greedy so we'll set a stop at $22.50 once /CL is over that line and at 0.615 on our Gasoline (/RB) Futures that we picked up as it came back to the 0.55 line into the close – also stupidly cheap and now up close to $3,000 per contract at 0.62.

That was a pick we discussed in our Live Trading Webinar and again in our Live Member Chat Room and playing the Futures is another excellent way you can make quick money to supplement your portfolio during a choppy market. 

8:30 Update:  6.65M Unemployment Claims this week!  That's about as bad as expected but the market still sold off on the news (which is why we set tight stops on our energy trades) and now we can get back in if we cross over those lines again or perhaps lower).  That's double last week's pace and we never like to see accelerating negatives like that.  

That should have us re-testing yesterday's lows in the Futures and now I like Nasdaq (/NQ) 7,400 for a long play with very tight stops below.  Setting tight stops at a good support like means you limit your losses but not your upside.  2,450 on the S&P (/ES) Futures is already blown but we can jump on those when they cross back over…
continue reading





Whipsaw Wednesday – Only Down 700 Points? Not a Big Deal!

Wimps!

The Dow drops 700 points (1,200 off yesterday's high) and everyone is back to Doom and Gloom.  We are in the MIDDLE of a Global Catastrophe that will play out over the next two to three months – it's the expectations of the participants that need adjusting – not the markets...

This is like standing in the rubble of the World Trade Center the afternoon of 9/11 and asking why the markets haven't gone back up yet – it's irrational behavior.

Yes, the Government APPROVED Trillions of Dollars in stimulus on Friday but it hasn't been deployed yet.  That doesn't seem to stop a parade of idiots from going on TV to say "Well, I guess the market is telling us the stimulus wasn't enough."  What morons!  Even worse is the uncritical response they get from the Hosts (who are usually empty suits anyway) and the Producers whispering in their ears.  Welcome to the 21st Century, where your idiotic opinion gets the same weighting as actual facts!  

As our Members know, there's always a song in my head and this morning it's:

"When I'm riding in my car

And a man comes on the radio

He's tellin' me more and more

About some useless information

Supposed to fire my imagination

I can't get no

Satisfaction" – Stones 

Coronavirus In humans: Money-Making Hype From Your FearWhy do we listen to these people?  When have they ever been right?  The same thing happened in 2008 when the people who had the money (the Top 1%) got their bailouts (TARP) and then went about telling the Bottom 99% that the World was going to end and they should dump all their stocks – the same stocks the Top…
continue reading





Tuesday Market Workshop – Portfolio Repair Part 2 – Resetting Your Positions

10 skills to be a successful stock traderWhat is your plan?  

Come on, I'm not messing around here – WHAT is your trading plan?  Surely you have one if you are in charge of trading your portfolio, right?  If you were a General in the Army and you didn't have a plan – your troops would very likely be screwed.   If you were head coach of a football team and you didn't have a plan – your team would likely lose.  If you were the CEO of a company and you didn't have a plan – your company would likely do poorly.

These things are obvious and while you know it's a bad idea to perform surgery without a plan or mount a legal defense without a plan – somehow some of you business owners, doctors, lawyers and other professionals who trade the markets think it's OK to trade without a plan.  It's not – it's a very bad idea!  

On the right are some good trading guidelines but #1, as it should be, is HAVE A TRADING PLAN.  And it doesn't mean "Until it Fails" – it's even more important to have a plan to FIX your positions AFTER the first plan fails.  Very sadly, a lot of people take 3, 4 and 5 too seriously and hold tight and cross their fingers when faced with a major market sell-off but your plan CANNOT BE waiting until the market recovers.  That is not a plan – that is FEAR!

What we need to do, when the market drops, is have a very rational look at our positions – under the new circumstances – and decide if they are still worth keeping in our portfolio and, most importantly, whether or not we have realistic targets for them to recover.  

Let's take Boeing (BA) for example.  If you owned BA at $350 and watched it fall to $300 but then back to $350 so the next time it hit $300 you weren't worried but  then $275 and back to $300 and suddenly $250 but you thought surely it would bounce back from that and then below $200 the same week and now it's too late to do anything about it but cross your
continue reading





Monday Market Workshop – Portfolio Repair Part 1 – Damage Assessment

The virus rages on.

US infections have jumped from 85,996 on Friday, when we had just passed China, to 143,055 as of 6:11 this morning and that's up 66% in two days.  Globally, there are 735,650 infections with 34,686 deaths and 154,673 recoveries so, to date, 18.3% of the outcomes are – DEATH!!!  No, I don't think it's funny – I want to emphasize that so people, HOPEFULLY, will stop risking their lives to go on a beer run or whatever other silly thing you do that you don't have to do – this is serious people and it remains serious.

On the other hand, as I have pointed out before, 7,708 people die every day in America from all sorts of things but mainly cancer or heart conditions so 2,500 dead (so far) in the US is just another manic Monday morning as far as it's effect on the economy.  What matters is how soon we can get things under control as they are currently still clearly OUT of control as our hospitals are being overwhelmed (leading to more deaths) and supplies are running short.

Trump is right, this is like a war but it's a war we are clearly losing despite Trump telling us:

  • Jan 22nd - “We have it totally under control. … It’s going to be just fine
  • Jan 30th – "We think we have it very well under control. We have very little problem in this country at this moment — five. And those people are all recuperating successfully. But we’re working very closely with China and other countries, and we think it’s going to have a very good ending for it. So that I can assure you.” 
  • Feb 24th – "The Coronavirus is very much under control in the USA. … Stock market starting to look very good to me."
  • Feb 26th - “And again, when you have 15 people, and the 15 within a couple of days is going to be down to close to zero, that's a pretty good job we've done."
  • Feb 28th - “It’s going to disappear. One day, it’s like a miracle, it will disappear.”
  • March 2nd - "We had a great meeting today with a lot of the great companies


continue reading





Fallback Friday – US Passes China to Become Most Infected Nation

Why the COVID-19 death rate varies dramatically from country to ...85,996!  

That's how many infections there are in the US as of 6:49 this morning and China has 81,897 so we blew right past them – even though we had 3 more months to prepare than China did and we were certainly not taken by surprise – other than our President, who asked us "Who could have seen this coming?"  

It was way back on January 22nd when we had the first US case of the coronavirus.  I noted it in our Morning Report saying:

One thing that's distracting everybody at the moment is the Chinese virus scare, with 50% more cases today than there were yesterday (now 470) so no, it's not at all under control.   The US case that panicked our markets yesterday was from a guy who was in China recently and it does seem to be contained (so far). 

In drugstores and at airports, and on the online marketplaces increasingly at the heart of Chinese commerce, fear and confusion manifested themselves in shortages or long lines for suddenly scarce products promising protection from the deadly but still largely mysterious respiratory disease.  Surgical masks flew off shelves, travelers canceled plans and rumors flooded social media.   Drug makers are doing well, travel stocks are doing poorly.  

The very next day, we initiated our first virus hedge because that is what you are supposed to do when you come across economic uncertainty and want to protect your portfolios.  What we didn't count on, however, is that two months later, the US would still be totally unprepared for its own viral epidemic or that our President would spend more time in denial than in meetings about controlling the virus.  Rather than lead us through this crisis, Trump made 33 false claims about the virus in the
continue reading





Federally Funded Thursday: “We are Not Going to Run Out of Ammunition” – Powell

Fed's balance sheet rockets above previous high in one week$4.5 TRILLION! 

That's how much more lending power the Fed just opened up.  That's on top of the $4.66Tn they arlready doled out – $1Tn of it in the past month alone…  The Fed spent $4Tn buying the first recovery so what's another $4.5Tn to buy the next one?  That was a trick question as the answer is "A good start! 

Pat Toomey (R) of Pennsylvania told Bloomberg yesterday that ANOTHER $4.5Tn is waiting in the wings.  Who knew we had this much money sitting around?  Certainly not the 700,000 Americans Trump pulled off Food Stamps because he said we couldn't afford $4.2Bn to feed starving children.  Yet if one Octogenarian in the Senate gets a virus – suddenly $4,500Bn is available to ease the pain.

"Burn in Hell" is not something you usually hear in a Financial Newsletter but sometimes it's hard to find nicer ways to express yourself….

We still need the House to confirm the bill but let's keep in mind this is only our FIRST bailout package.  If things drag on, there will cerainly be others and the way our Government is responding, things are certainly going to drag on.  If you wonder what FEMA is doing during this emergency, New York, Hawaii and North Carolina  have issued an urgent request to FEMA for emergency mortuary assistance as deaths mount across the states.

New York City has 17,856 cases of the virus (worst city on Earth) and over 200 people have died in the past week, which has overwhelmed the city's morges and they are currently keeping the dead outside in makeshift tents.  As usual, states turn to FEMA to clean up the mess and soon we'll be hearing all the stories of families screaming about misplaced bodies, etc.  This is, of course, not uprecedented:

What, too soon?

CBS (VIAC) will be putting Stephen Colbert back on the air on Monday, apparently from his house but they plan on doing a full show with interviews (from…
continue reading





Which Way Wednesday – Is $6Tn Not Enough to Boost the Markets?

Image result for money printing animated gif$6,000,000,000,000!  

That's right, Larry Kudlow announced this morning that the US Government's stimulus package "will come to roughly $6 Trillion."  That's in the form of $2Tn of direct CASH!!! to businesses and individuals and $4Tn from the Federal Reserve or, in other words, given to the Banksters.  If they just gave the $6Tn directly to our 300M US Citizens, that would be $20,000 for every man, woman and child or about $70,000 per household.  I think that would do a Hell of a lot more to stimulate the economy than giving it to Goldman Sachs, don't you?

NONETHELESS, $6Tn is about 1/3 of our entire GDP – the entire output of the United States over a 4-month period and, so far, we're in week 2 of the virus shutdown and, so far, there's no evidence that economic activity is down more than 30% – or about $500Bn for the month.  Granted the virus may be around for longer then 4 months but, as I pointed out yesterday – it's not likely to kill more people than cancer (6M) or even Aids (1M) and, horrible though it is – life will, eventually, go on regardless.

Another reason the Futures dropped 600 points this morning (still green though) is our beloved leader is still sticking to his idiocy of ending the quarantine by Easter (April 12th) despite every expert, including his own, saying that it's a terrible idea to set arbitrary dates this early in the process and, of course, China's quarantine lasted 50 days – how are we going to be done in less than 30 days?  

Also this morning, because our President is an idiot, the World Health Organization (WHO) warned the rest of the World that the United States could become the new hub for the viral outbreak as we are THE WORST country on the planet Earth in terms of preparedness, prevention and containment.  Chad looks organized compared to us – CHAD!  

“This cure is worse than the problem,” Trump said. “In my opinion, more people are going to die if we allow this to continue.”


continue reading





PhilStockWorld March Portfolio Review

Image result for one million dollars animated gifWhat a crazy fist quarter it has been!

We cashed out our last set of winning portfolios back in September, as I did not trust the market into Q4 but the market kept going higher so we had too much FOMO (Fear of Missing Out) and we started playing again in October – albeit with much smaller amounts.  Our Long-Term/Short-Term paired portfolios had hit $2.6M after starting at $500,000/100,000 on Jan 2nd, 2016 and it was becomming too difficut to hedge so I said at the time:

Hedging a $1.7M LTP would be very expensive and what if next time we didn't time the turn in the STP and instead blew the turn and lost money there as well as the LTP.  Then we'd be back to $2M and needing to make 30% to get back to $2.6M and what if it's hard to make money next year or what if we have another crash and the market is down 40% – it's just too much to risk vs. putting $2.6M safely on the sidelines and simply looking for new opportunities.

Well, here we are, at the bottom of that 40% sell-off and, as expected, we're having to pull a bit more cash off the sidelines as some of our new portfolios got crushed.  This is going to be an odd review because we made more than one adjustment in the past two weeks on some portfolios and I'll do my best to consolidate all the moves here.  The bottom line is we got a lot more aggressive around March expirations (20th) and yesterday (23rd), as the market hit rock bottom, we went gung-ho bullish in our LTP and Butterfly Portfolios in anticipation of a massive Congressional Bail-Out Package.  

Hopefully, that provides a catalyst to form a floor at the 40% off line and we can consolidate between here and the 20% off (the top) lines, which is where the market should be in the first place – the rest was just fluff – that's why we cashed out in September – at S&P 3,000!  

Short-Term Portfolio Review (STP) (3/19):  $282,168 is up 182% so…
continue reading





 
 
 

Phil's Favorites

Trump Tweeting As Much As Ever Amid Twitter Standoff

 

Trump Tweeting As Much As Ever Amid Twitter Standoff

By , Statista

President Trump has signed an executive order which aims to remove some of the legal protection given to social media companies, though it is expected to face significant legal hurdles. In a nutshell, it sets out to clarify the Communications Decency Act, handing regulators the power to file legal proceedings against social media companies for the way they police content on their platforms. Trump's decision to take action comes two days after Twitter attached a fact check to one of his tweets lambasting mail-in voting. He then threatened to close ...



more from Ilene

ValueWalk

Gold supply chain in recovery mode after pandemic shutdown

By Michelle Jones. Originally published at ValueWalk.

The gold supply chain was largely shut down as the COVID-19 pandemic spread around the world. However, things are starting to open back up, and production is beginning again. The World Gold Council studied the gold supply chain, how it was impacted by the pandemic, and how the disruption of the supply chain has affected investment demand for the yellow metal.

Q1 2020 hedge fund letters, conferences and more

Disruption to the gold supply chain

The World Gold Council said the gold supply chain is entirely global because the metal is mined on evert continent except Antarctica and refined in nume...



more from ValueWalk

Biotech/COVID-19

Antigen tests for COVID-19 are fast and easy - and could solve the coronavirus testing problem despite being somewhat inaccurate

 

Antigen tests for COVID-19 are fast and easy – and could solve the coronavirus testing problem despite being somewhat inaccurate

Antibodies are incredibly good at finding the coronavirus. Antigen tests put them to work. Sergii Iaremenko/Science Photo Library via Getty Images

Courtesy of Eugene Wu, University of Richmond

In late February, I fell ill with a fever and a cough. As a biochemist who teaches a class on viruses, I’d been tracking the outbreak of...



more from Biotech/COVID-19

Zero Hedge

Ted Cruz Accuses Twitter Of Violating Sanctions Against Iran, Demands DoJ Probe

Courtesy of ZeroHedge View original post here.

We've mentioned in nearly every single one of our posts about this week's dustup between the president and Twitter that the Ayato...



more from Tyler

Kimble Charting Solutions

Tech Indicator Suggesting A Historic Top Could Be Forming?

Courtesy of Chris Kimble

Tech stocks have been the clear leader of the stock market recovery rally, this year and since the lows back in 2007!

But within the ranks of leadership, and an important ratio may be sending a caution message to investors.

In today’s chart, we look at the ratio of large-cap tech stocks (the Nasdaq 100 Index) to the broader tech market (the Nasdaq Composite) on a “monthly” basis.

The large-cap concentrated Nasdaq 100 (only 100 stocks) has been the clear leader for several years versus the ...



more from Kimble C.S.

The Technical Traders

M2 Velocity Collapses - Could A Bottom In Capital Velocity Be Setting Up?

Courtesy of Technical Traders

M2 Velocity is the measurement of capital circulating within the economy.  The faster capital circulates within the economy, the more that capital is being deployed within the economy to create output and opportunities for economic growth.  When M2 Velocity contracts, capital is being deployed in investments or assets that prevent that capital from further circulation within the economy – thus preventing further output and opportunity growth features.

The decline in M2 Velocity over the past 10+ years has been dramatic and consistent with the dramatic new zero US Federal Reserve interest rates initiated since just after the 2008 credit crisis market colla...



more from Tech. Traders

Lee's Free Thinking

US Southern States COVID19 Cases - Let's Give Credit Where Due

 

US Southern States COVID19 Cases – Let’s Give Credit Where Due

Courtesy of  

The number of new COVID 19 cases has been falling in the Northeast, but the South is not having the same experience. The number of new cases per day in each Southern state has been rangebound for the past month.

And that’s assuming that the numbers haven’t been manipulated. We know that in Georgia’s case at least, they have been. And there are suspicions about Florida as well, as the State now engages in a smear campaign against the fired employee who built its much praised COVID19 database and dashboar...



more from Lee

Chart School

Is this your local response to COVID 19

Courtesy of Read the Ticker

This is off topic, but a bit of fun!


This is the standard reaction from the control freaks.








This is the song for post lock down!







What should be made mandatory? Vaccines, hell NO! This should be mandatory: Every one taking their tops off in the sun, they do in Africa!

Guess which family gets more Vitamin D and eats less sugary carbs, TV Show



...



more from Chart School

Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



more from Bitcoin

Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



more from Our Members

Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

http://www.insidercow.com/ more from Insider

Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

...

more from Promotions

Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

more from M.T.M.





About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.