During March 2016 our portfolio gained 9.59%-in other words if you bought all the items listed in the scoreboard (stock listed @ # of shares), you would have gained 9.59% in 31 days! However our overall gain from day one is 10.2%. If not for Twitter, the overall goes up to 17%. And the gain for March 2016 goes up to 14%. We are still in the bear that started on 8/25/15 (see below). When we get in to the next bull market, I would not be surprised to see an overall gain of 30% to 50% within the next 3 years.
The market has been gradually moving up over the past few weeks. In order to prove that we are not in a bear market, the S&P 500 has to go above 2125-that is another 3% from this point. In other words, we should expect a lot of resistance between this point and 2125 on the S&P500 so the probability is to the downside and not to the upside. If the Dow Jones (DJIA) hit a new high (18,312) with another new high on the Dow Transport, then we know for sure that the bear market is over (Dow Theory). For the past 3 months, the market has been acting in a very predictable manner-according to technical analysis. On 3/1/16, Ralph Acampora, one of the best technicians that I have been following for decades stated that the market hit a short term bottom on 3/1/16 (SP500 at 1978) and he expects the market(S&P500) to rise to 2050 to 2100 within a few weeks. On 3/30/16, the market(S&P500) hit 2070 on 3/30/16-4.7% increase in 30 days! Yes, technical analysis could be that accurate. However since 85% of trading is done by computer generated programs, it is safe to assume that they too follow technical analysis.
Oil (WTI) hit a bottom around $33 in January 2016. Since then it has risen to $38 and most analysts believe that this is just a short covering rally and it is not possible for WTI to go over $40. That too might send the stock market lower. On 3/11/16, the industry reported the lowest level of rigs for the past 150 years. In North Dakota Bakken, rigs dropped from an all-time high of 235 to 33 as of now.
GE-On 3/23/16- It was announced that the digital business is just getting started so the stock has a long way to go. This week GE hit an all-time high since 2008.
Twitter- For the past 3 months I have been wondering if we should sell Twitter as it is bringing down the whole portfolio down but for now, I intend to stick with Twitter. On of its greatest fans, Steve Bahlmer, former CEO of Microsoft tweeted on 3/10/16 that he sold his holdings of Twitter saying, “Twitter taught him not to be an investor”. As Ihave said before, if the share price drops below $10, we should consider buying another 100 shares so as to bring down the average cost to $12.52 (50% reduction)
Chevron and Exxon- On 3/8/16, the CEO of Chevron addressed analysts and stated the following: (1) They are going to cut capital expenditures (2) They will increase dividends (3) They will increase production. On 3/10/16, Paul Sankey of Wolfe Research stated that Chevron is a better buy than Exxon. Exxon has losses in Russia. Chevron will cut capital expenses by 50% from peak so the dividend is safe and sustainable. Chevron need not make any acquisitions to make money in the future but hat is not true for Exxon. Most good assets of other companies are overpriced as they are expecting Exxon to go on a buying spree. No risk to the dividend at Exxon either. Exxon also have problems in the Middle East. Companies close to insolvency have assets (oil fields) that are not that attractive to buyers like Exxon.
Good luck till next week! Fernando