July 3, 2014

Karl's BorB Report Logo Headingwall street bull (1)

THE BULL OR BEAR DAILY REPORT

By: Karl Hormann

 (BTI:  Bull or Bear Trend Indicator Signal)  Gains since Jan/2012: +26.58%

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NOTE: NEW MINI-TURBO PORTFOLIO (SEE BOTTOM OF NEWSLETTER).  RETURNED +70%+ in 2013

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BTI Signal:  BULL    

Our BTI Allocated funds are back to 100% Long as of 5/30 Open.

(Using QQQ & IWM)

July 3rd —  Well the economic news that was released Thursday was just as I expected supporting my hunch that business is slowly improving due to the massive liquidity and Central bank’s intervention. The jobs numbers showed that 288,000 new jobs were added last month and that the unemployment rate fell to 6.1% from 6.3%. Everyone jumped all over this news as a sign that the economy is much stronger and stocks were bid up for the light volume half trading day which sent the Dow over 17,000 for the first time in history. Is this the top or the beginning of a massive bull market?

 

I did some reading on the jobs number and the investor’s business daily pointed out that the drop in unemployment this time from 6.3% to 6.1% was not due to people giving up working but actually from people finding jobs. The fact still remains that the labor rate participation still is stuck at a 36 year low of 62.8% which is not extremely healthy for the country. Also the jobs which were created were led by growth in professional and business services, retail trade, food services, drinking places and health care. The only jobs that look good to me are the professional and business services. The rest of them look like part time, lower wage paying jobs plus the healthcare jobs are a pure expense on the economy, not a contribution. Regardless of the type of jobs that are being created it looks like car sales are rising, people are being lulled into the belief that you must get back into housing and general commercial business is picking up.  It seems the Fed’s unlimited money printing and bank bailouts has buoyed the economy long enough for people to feel confident enough that nothing bad is going to happen and it’s safe to start to take on some more debt and risks. But is the water safe to wade back in?  The US government will soon breach $18 Trillion dollars in debt with no signs of even slowing down the deficit spending.  I don’t even hear congress even addressing the fiscal disaster and we are soon approaching the fall. What could possibly go wrong? Ha! The US government will just keep borrowing, pretend and spend like always. Hmmmm..

 

This market feels like it wants to go a lot higher.  Every time we trade sideways for a little while it just explodes to new highs.  My gut feeling is that this wave of global new liquidity is like a tsunami hitting many different asset classes.  We can obviously see the effects on ultra-high end real estate that has prices topping $50-80 Million dollars easily.  Next we are seeing classic and collectible cars hitting the tens of millions of dollars.  Finally we are seeing the money tsunami starting to hit the stock market with the Dow breaching 17,000 and stock prices in the hundreds of dollars. This is by no means over because central banks are boxed into a corner due government’s fiscal insolvency situations. They have no choice but to keep monetizing debt or face collapsing sovereign debt, panic and currency crisis.  So do you think that is really an option? Of course not.  So we invest.

 

Below is a chart of my favorite long term holding Berkshire Hathaway.  I have recommended this stock over and over for the past year. Today if finally broke out from its two month trading range to the upside and is challenging its previous high of $129.50 it hit on May 2nd. Berkshire is a classic diversified way to play inflation and they will benefit handsomely.  This stock definitely acts independently from the market.  Some days the market is up while Berkshire’s stock is down slightly.  But then there are days where the market is flat while this stock pops higher. Either way Berkshire Hathaway is trouncing the Dow and S&P’s average for the year in a safe manner.  You can hold this stock and sleep well at night knowing they are sitting on a boat load of cash and are just waiting for deals to arise that they can scoop up. I continue to like this holding and see it eventually topping $155-160 by the end of the year or early next year.  I continue to accumulate on any dip as part of a diversified strategy.  Let inflation work for us not hurt us!

 ScreenHunter_472 Jul. 04 15.31

(Berkshire Hathaway Chart)

 

SIGNAL – Our BTI Signal continues to be in full 100% BULL mode as of 5/30. Our BTI System allocated funds are 100% Long. This trade is only for our BTI signal allocated funds. (I allocate 1/3 of my account to trading along with the BTI Signal.) The rest of the portfolio is made up of Long Term Core holdings which we do not sell, like IYM, Berkshire Hathaway (BRK.B), CVY, DVY etc…   We continue to hold all Long Term CORE positions.

 

Right now we are fully invested with our positions doing just fine. Our Turbo Mini-5 portfolio is holding up nicely while also paying us some dividends which can be reinvested if you have your account set up for “Dividend Reinvestment Plan.”  You must call your broker to set that up.

 

Check out my many recommendation at the bottom of my report to get ideas on what you could pick from to diversify your portfolio.

http://www.usdebtclock.org/

*We continue to hold our Long Term Core holdings which should account for about 66-70% of your portfolio.*

 

Note:  My portfolio is made up of 70% Core long term positions with dividend paying ETF’s and stocks, Gold/Silver per my sample portfolio & the other 30% to my BTI Trend signal.

The 30% of my portfolio that is dedicated to the BTI signal I trade 50/50 between QQQ & IWM (Russell 2000 etf) so half of my position has less exposure to Apple and more exposure to smaller cap stocks.  IWM will usually appreciate higher during Bull markets that we expect to be continuing like the one at the moment. Depending on the size of your portfolio you can cut down your holdings to less until the funds grow or you continue to contribute to your savings/investment account.

** Any last minute evening Signal changes will be emailed to you by 7:30am the next morning via auto alert update.

 

GOLD/SILVER— Gold and Silver again did not do much today again, as Silver continues to trade around the $21.00/ounce level. I am still waiting for silver to “Close” above $22.50 for a few days before I am confident of this new break out. We watch and wait.  Short term Silver definitely looks a little overbought and vulnerable to a pull back, but with inflation a certainty I see precious metals much higher in the future.  The longer they hold it back the higher it will pop in the future.

 

Today I received a Twitter message from Jim Rogers the commodity expert saying that Gold is going to go much higher.  He was actually bearish on gold two months ago but has suddenly changed his mind.  I’m telling you, this massive liquidity wave will definitely send many commodities much higher in the near future including precious metals.  That’s why I recommended the Royalty trust basket and the GGN (Gabelli Gold Trust) high dividend payer.  These will all benefit as precious metals march higher.  This sector has been shackled down for too long and once they break out it will be off to the races.  We are already seeing that with the bounce in the Royalty Trust group below.  We still have a long way to go to get to an all-time high price in this sector just like all the other indexes.  Why not Gold/Silver and mining companies?

 

With RISK CAPITAL, on June 6th, 2014 I took the little funds I wanted to gamble with and purchased a mix of 6 Royalty streaming companies.  They are listed below. I put equal money into each stock and in three years from now we’ll see how it plays out.  They say invest in what is most shunned and in my view this sector just reeks of hatred by the investment community.

Royalty Trust Companies:   (Group of 6 currently +13.94% as of 6/30 since we bought them.)

Is this the canary in the coal mine of much higher commodity prices to come? Maybe….

FNV,  GG,  RGLD,  SLW,  TCK,  VALE

 ScreenHunter_471 Jul. 04 15.08

(Royalty Streaming Basket Equity graph)

ScreenHunter_470 Jul. 04 15.08

Good luck and remember, only 100% risk capital for these stocks.  Keep it to a minimum in your portfolio.  These positions I will not follow any money management rules.  I will just buy them and forget about them until 2017.  Then I’ll look back and see how they did. Like a lottery ticket. These are all good profitable companies, but I just want to own these as another sliver of my portfolio exposure to metals.

We continue to hold all our metals (20% maximum of our portfolio) and very very small mining positions if you have any.

Oil ETF complex I like: USO, XLE & IEZ.

 

Shopping list:

(New Bull trend as of last week and CEF crossing back over $15.20)

SLW Deep in the money Call Leaps. (I continue to hold)

SLW  (I continue to hold some shares)

SSRI, ANV, GDX, SIL, EXK, IAG,

Keep the total of any of these trades to under 3-5% of your portfolio value if you do decide to get involved.  See my sample sector allocation section of the web site to see how much you should have total exposure to Gold/Silver and miners.

 

FINAL THOUGHTS— So is the danger of complete collapse over and all the preppers that were hunkering down underground just fools that wasted their time? Maybe those extreme alarmists may have gone overboard, but I don’t think we are completely out of the woods. Governments continue to pile debts higher and higher while interest rates remain near zero. What if inflation were to finally roar back to life, what are central banks going to do?  Suddenly raise rates from 0% to 5%? That would send government borrowing and debts into hyper velocity and onto a sheer vertical rise to outer space due to compounding debts. That would soon lead to complete collapse. Is that really an option? I think the longer this fantasy goes on the worse it is going to be in the future.

 

What is happening now is completely unnatural and I don’t see a very nice way out of it. I have quietly ratcheted down the rhetoric of preparing for a collapse and have kept it all to myself. If the government or currency collapses all I know is that I can protect my family, ride out social unrest in safety and hunker down or get out to the country if need be.  The point is that you have “options”. If you have no stored up freeze dried foods, no emergency cash at home, no precious metals to buffer a currency crisis, no emergency generator in case of a power down situation, no way to filter contaminated water or carry emergency water then simply you have NO OPTIONS. You are at the mercy of the local grocery store, IF they have power and protection of local police departments who really don’t care about you.  Honestly I called the police a few months ago because someone was fighting in the street by my commercial business location and the police showed up 20 minutes later after it was over. That was on a good day, with nothing going on, in the middle of the week. Imagine if looting was going on, power was down or civil unrest was breaking out.  It’s every man for himself.  Just think about that.  Look around the world at all the riots breaking out and protests.  Why is it happening? Is it because jobs are being created abundantly and everything is just fine? Think again.  This is the early warning signs of more difficult times to come.  Continue to take advantage of this “nirvana” economy all the TV media is bragging about and buy what you will need to make your life safer and easier in the future. I personally would not be going into debt to buy expensive cars or other frivolous things. Save, invest and prepare for tomorrow.

 

I hope you all have a great three day weekend and I’ll see you all back here Monday before

Best regards,

Karl

The Bull or Bear Report

(Newsletters put out every evening before 8:30pm daily.  You will receive email notification once posted)

 

MARKET UPDATE:    

Dow:  Up +92.02  (+.54%) 17,068.20 (BULL)

Transports:  Up +62.15 (+.75%) to 8,294.74

NASDAQ:  Up +28.19 (+.63%) to 4,485.93

S&P 500: Up +10.82 (+.55%) to 1,985.44

Gold:  June Gold Up +1.30  (+.10%) to 1,321.90 (as of 6:00 pm EST.)

Silver:  July Silver Up +.093 (+.44%) to 21.230 (as of 6:00 pm EST)

US Dollar Index:  Up +.044 (+.05%) to 80.325

Crude Oil Futures:  August Crude Down -.29 (-.28%) to 103.77/barrel

Advancers beat Decliners (from 8K+ stocks) by: 4,591 adv. to 2,609 decl.

 

Our Recommended Popular Holdings

QQQ  Up +.61 (+.64) to 95.71 as of 4:00 pm

IWM   Up +.70 (+.59%) to  119.80 (Russell 2000 etf)

IYM  Up +.62 (+.70%)  to 88.57 (Good long term Core position. Basic Materials etf)

MOO Up +.22 (+.40%) to 55.54   (Good Agriculture industry holding)

GDX   Up +.04 (+.15%) to 26.52 (Large Gold mining etf)

SIL   Up +.17 (+1.20%) to 14.39  (diversified way to own the Silver miners.)

GLD  Down -.53 (-.42%) to 127.17  (or you can substitute with:  SGOL)

BRK.B:  Berkshire Hathaway’s Class B Shares. [12-18 month target:  $162.00]

July 31st at: $116.21,     Sept. 24th at:  $115.05,     Oct. 9th at:  $111.77   (Book Value: 1.36),      November $114.87,      December 7th at: $116.62,   Feb 5th 2014 at: $108.83,  Mar 5th 2014: $119.02  April 18th $127.18,        May 7th 127.50 ,                June 25th  127.13

**BRK.B IS A GREAT CORE HOLDING FOR LONG TERM AND FOR PEOPLE WITH LIMITED FUNDS THAT CAN ONLY HOLD A FEW POSITIONS.  BUY ON THE DIPS AND HOLD.  Berkshire is a great buy at a Book Value at under 1.1 to 1.2***

Other good diversified Conglomorates like Berkshire but a bit riskier are: LUK, Y, SEB & APLCY

iShares Russell 1000 Value ETF:  IWD  (pays 2% dividend)

       Oct 17:  $89.25,      Nov 21: $92.37,    Dec 28: $93.74  April 4: $96.43

 

Healthcare ETF’s below. (Great for Core position holdings)

XHS at $75.36 on 4/25/13 (Health Care Services etf. I like more.  Good Core holding)

IYH   at $100.00 on 4/25/13 (Health sector such as J&J, Pfizer, Amgen…, Dividend: 1.42%)

 

(CVY highly recommended for diversified safer yield)

CVY  Up +.02 (+.08%) to 26.16  (start of year 24.71)

Div Yield 5.00%,  2014 YTD ETF performance: +5.86% (+ dividend yield)

2012 Return: +7.48% + 5% Dividend= +12.48%  (VERY GOOD)

2013 Return: +11.17 + 5% dividend=  +16.60%  (VERY GOOD)

VYM  (Blue Chip high yielding stocks etf)

DVY   (another great dividend earning etf)

XLE   (Energy Sector ETF.  Good on pull back’s for rising energy exposure. Pays +1.68% div.)

 

Extra Suggestions :

BGCP:  Target  $10.00  (Real Estate broker play) Dividend 8%+  (Stop close below $5.50)

EXG:   Target  $12.00 (Global High Income Fund) Dividend  10.22%  (Buy under $11.00 on dips)  we are up +13.68% since 7/15/13.

HMC  (Honda Motorsport):  Long, Target: $55.25; (Stay out under $32.50)  Pays 2.39% dividend

CHK (Chesapeake Energy): Target: $41.00  (stop: Stay out below $26.00)  Pays 1.24% Dividend)

HUN (Huntsman Corp):   Target:  $35.00  (stop: get out if below $24.10)

NYMT (NY Mortgage):  Buy near $7.58,  Target: $10.00,  **14% Dividend Yield** (I will advise if this is removed from my list)

TGP (Teekay LNG Partners): Buy under $45.00, 6.49% dividend. (I will advise of changes)

NSLP (New Source Energy Partners): Buy under $24.00, 3.51% dividend, (Fair value: $27.00+)

GGN (recommended 6/23/14): Buy under $11.25  (pays 9.9% dividend, monthly pay out!)  Looking for 20 to 40% gain if commodities continue higher.

 

 

Little Riskier Bank/brokerage plays below

KKR:  Target: $34.00,   Dividend: 6.91% (Stop: stay out below $22.05)

BX:  The BlackStone Group,  Target: $51.50 , (Stop: stay out below  $29.50)

 

HIGHER RISK MINERS PICS
Allied Nevada Gold (ANV):

Mesabi Trust (MSB):   Target: $31.40,  pays +2.33% Dividend  (NO POSITION YET)

SLW (Silver Wheaton):

DEEP IN THE MONEY CALL OPTION STRATEGY I AM TRADING from 4/22/13.

SLW might go lower so be very cautious or wait until bullish confirmation.

Buy  Jan 2015 SLW (Silver Wheaton) 15 Strike Calls for around $9.00

You have almost 2 years for Silver to get back over $50.00/oz. At that price your Calls would be worth $35.00.  I think there is a high probability to get at least a 200% to 350% return on this trade.  It is a form of a synthetic Long because we are Deep in the money.  Of course if Silver Wheaten closes below $15.00 two years from now, the call option will go to zero.  So only use pure risk capital on this trade.  And as soon as you get a double sell half of your investment to take your original money out of the trade.  Good luck.

 

 

Abbott Laboratories (ABT):  Target:  $35.04,  Dividend 1% only.  Recommended at $33.79.

Current price: 38.15 on 11/25/13  (Stop: Close below $34.00)

 

MSB, BGCP, TAL (high debt but stable shipping transport business) riskier,

* FDL (First Trust Morningstar Dividend Leaders Index ETF) yields 3.5% from Blue Chip large caps.  Good to buy AFTER major market corrections.  Very conservative income generator.

 

Permanent Portfolio (PRPFX)

2012 Gain: +6.02% (PRPFX is a well diversified holding fund.  Has stocks, bonds, Gold, Silver, etc…)  Great place to conservatively put retirement funds or to park cash Long Term.  The only issue I have with this is the US government Bond Allocation of the fund.

 

IMPORTANT NEWSLETTERS BELOW FOR QUICK REFERENCE 

July 20th 2012: Real Estate Special Discussion Edition

Nov 19th 12012: How to insure your portfolio

Nov 6th 2012: How to make $200K per year

 

*****TURBO MINI PORTFOLIO STRATEGY*****

Check out my new mini portfolio below called TURBO MINI STRATEGY.  It’s a purely mechanical computer generated investment model that picks superb S&P companies that have positive cash flow, positive earnings, accumulating interest and are leaders in the S&P for growth. This is a bit more of an aggressive portfolio, but if you have a large investment account then it could be a great way to supercharge a portion of those funds.  Last year in 2013 it only made about 6 trades and currently holds the 5 stocks listed below.  I will list the changes as they occur in 2014. Of course past performance is no guarantee of future results, but if the Fed will continue to print to infinity or face collapse, you can guarantee these monster growers will continue to accumulate the worlds growing cash supply and cause their stock to rise further.  And if one company fails to perform or falls off of its many growth criteria, that particular holding gets cut and replaced with another up and coming company.  I’m very excited about this new addition to our Bull or Bear Report.  Good luck, stay diversified and invest safely.

I will update these as changes need to be made. I will make a note at top of newsletters to changes to TURBO MINI PORTFOLIO.

TURBO Mini Portfolio G/L for today 7/03/14: +.74%

Portfolio Gains from 1/1/13- 7/03/14:   +78.14%  (live trades)

UNP: Union Pacific, (1.94% Dividend Yield) Long 3/25/14 @ $188.56   +7.10% 

AZO: Autozone,  Long 11/12/13  @ $448.27    +20.34%

AAPL:  Apple, Long 8/12/13  @ $457.03   +44.02%

GWW: Grainger, Long 6/6/14 @ $265.77    -3.72%

BX: Blackstone Group, Long 6/27/14 @ $33.11  +2.02%

 

**BUY Long BX (Blackstone Group) with 20% of your Turbo Mini Portfolio.

(Portfolio Graph I will post each weekend.)

 

 

HISTORICAL TRADES BELOW for 2014

6/27/14: Buy Long BX (Blackstone Group) at (9:31 am open price)

6/27/14: Sell Entire PCP on open (9;30 am) sold @ $251.34

6/6/14: Buy PCP on open (9:30 am) $270.08

6/6/14: Buy GWW on open (9:30 am) $265.45

4/23/14: Covered Short GDP on close (4pm)  26.44

4/16/14: SHORT GDP on open 4/16 (9:30 am) 24.85 Open.

4/16/14: SELL WYNN at open 4/16 (9;30 open) to close position.

*****

4/9/14: COVER OFIX at open 4/10 (9:30 open) to close.

4/7/14:  SHORT OFIX at open  4/7  (9:30 am open) to open

4/7/14: SELL GOOGLE at open 4/7 (9:30am open) to close.

3/25/14: Replaced Priceline with (UNP) Union Pacific at 9:30am open price

3/24/14:  REPLACED NETFLIX with  (WYNN) Wynn Resorts Ltd. at 9:30am open price