Any biotech firm that even has a loose association with the treating of tropical diseases or rare communicable diseases will do very well in the coming years.
There is no question that climate change will lead to a large amount of people traveling away from their homes to find a safer environment to live in. This mass migration from tropical areas will bring these once rare diseases into the concentrated populations of cities and significantly increase the demand for drugs to treat these diseases. While it is really a niche market today it is one that is growing in response to this threat, and profitability will come as no surprise once wealthier populations are afflicted.
This is also not to mention the growing mosquito population and their spread globally into more populous regions in such a way that increases the spread of things like malaria, dengue and many other such diseases. Not only will firms who work to create drugs for these diseases see an increase in revenue, but also companies in the realm of genetic engineering, who work on making brands of disease carries which enter the population and slow the growth of the disease vectors.
Climate change will bring on many changes and only time will exactly which companies will succeed and if regulation will limit the profits of the drug companies who work to fight the shifting human geography.
This is a project I am working on that is still in its early stages, eventually I want to make it into an App. Here is a sneak peak at what it does in Excel. The idea is to balace the distribution of funds to enhance diversity, but also to place a higher value on dividend returns. This is a really simple working model that does not include risk yet, more is definitely to come. Feel free to shar this and modify it in anyway. It would be cool if you would cite me if you reuse the work, but I’m no copyright lawyer and have don’t plan on becoming one. With no further rambling, this is version 1 portfolio optimizer.
On the bottom left you can set your budget, the Value adjusts automatically. If you set the budget very high, expect to watch every iteration. You can plug in all of your own stocks of interest as long as they fill the same cells. I hope this all makes sense.
The main story of this week is the Chinese markets. They were down, but the Chinese government stepped in to prevent what could have been much worse. The only part of this that came as a surprise to me, was the fact that it took this long for the stock market to react to something that happened almost a month ago.
In response to COP 21 and recent smog trends China decided to take very strong and deliberate action to fight climate change and unhealthy air conditions. In the process they shut down a large segment of the factories in the country. With that, obviously, there were reductions in the quarterly outputs for those companies. On the First day of trading this year we saw huge downturns and read countless articles seeming to make apocalyptic claims about the Chinese markets. An article I read in the wallstreet journal made the argument that China is only delaying the inevitable by buying up stocks, artificially keeping the market afloat.
But lets not forget what country we are talking about. China is and always has been one of the largest players in the global economy. There is no reason to think that after thousands of years, this will be the year to end the Chinese influence in the world. China is clearly making significant political and financial effort to restructure its economy to meet the challenge of global warming and air quality. While taboo in western countries, the Chinese government choosing to step in and stabilize the public market to prevent a complete collapse while they reinvest in more renewable and green technologies. Perhaps rather than suffer from their own version of the 2008 crash, and suffer for years on end, they are taking a more forward looking approach and balancing an aggressive shift in their environmental policy with a subsequent industrial lag. Ordinarily such losses in one sector might completely scare away investors but knowing that the government is willing to step in to prevent a serious collapse investors will be less fearful, and they may be able to keep the market lubricated enough to transition. I don’t think it will be too long (maybe a year or two) until we start seeing large gains in the Chinese market, or perhaps we will see some moderate growth at the end of this next quarter.
All I know, is that with a market shifting down like this, I am ready to double down and hope for the larger potential gains down the road. With that said, it may be worthwhile to make sure your portfolio lines up well with future environmental policies, otherwise they may see some larger costs down the line. As for the next few months, they might be a great time to buy a few shares, bite the bullet, and take a short term loss that may end up paying off really well. But that is just me I guess, I am a big fan of risky bets and underdogs. Only time will tell if it pays off, but based on long term historical trends, I think the Chinese market will do fine, and the next two years will see incredible growth.
In my portfolio I want to get a certain amount of return. My target goal for returns is 5% annual in dividends, and so to achieve that it is useful to think of my portfolio having two separate parts. The one completely invested in market risk and the other invested in the returns from dividends.
Based on your goals you may want more or less invested based on dividends. If your emphasis is on short term investments to capitalize on gains in stock price then it may not be worth it to look for stocks with dividends. That being said, the best method is likely to have a combination of these types of investments, so that you can have a long term side and a short term side to your portfolio.
By scaling up or down each part of your portfolio you can aim towards a target return for your portfolio as a whole. In my current portfolio I am getting an annual return of $4.02 about 3%. If my goal is to get that number up to 5% then I can buy 4 more shares of CYS or NRZ or a combination of the two. Using charts like this can help pick out what your next buys should be based on your current goals. As it stands I have $92.725 invested completely in share price and $38.49 invested in dividend returns. While some of the value only stocks are ones I think are going to be good for long term growth, I still want to see liquid cash gains over time, to mitigate risk.
I have created a list of stocks here, that provide strong dividends and are performing decently well, meaning they are curretly profitable and only have a mild amount of risk or caught my eye for one reason or another. With that said, perhaps I don’t have enough money to buy every stock of interest or perhaps enough time to pay attention to all of their behavior in the stock market. For one reason or another a choice has to be made, but other than price and Dividends all else is equal.
Here I have creted two examples, in one example all of the stock is ranked simply by percentage. Then I set the quantity of shares to be the inverse order of rank in order to measure approximate scale of purchasing based on value and risk. The other example takes the shame share values and then ranks the stock based on the Div/value in order to scale the cost of each individual stock with the percent in returns, creating more balance between higher returns and higher cost per share.
The second in this case produced a higher percentage return while costing less in total. If these figured are reduced by a factor of ten it shows that with the first method $137 would get a return of $16 but with the second method $115 would be able to get a return of $14.
To really compare these methods we have to compare the ratio of costs to ratio of gains for each method. 137/115 = 1.191 , 16/14 = 1.142. Based on this, the gains are not as significant as the cost of achieving this. Making, at least in this case, the Div/Value method a better option if the attempt is to optimize cost while minimizing risk to the same degree.
With all that said the full list is a great idea list for stocks to think about if you are interested in maintaining a strong dividend return in your portfolio.
They provide a very high dividend and it seems as though that this week has represented a bottoming out of their stock price. Today they were up 4.34% from a low of 10.43 only two days ago they are at 13/share today. It is still a bit uncertain if the fed hike is going to really impact the housing industry this year but so far it seems stock are managing just fine regardless. This stock is one of the next on my list to buy, as it looks like a good long term investment to give a solid return through dividends.
CYS – CYS Investments.
This year they have managed to stay in between 7.00-8.30/share, a relatively narrow range with a solid dividend. I say that it is a great investment, although it may be a bit risky given the potentially unstable market especially for mortgages. They also are not the longest standing company having been around since 2006 (it is good to note that they survived the crash in 2008). I am planning on buying a few, but maybe I lean on the riskier side of investing.
HEB – Hemispherx Biopharmocuticals.
Despite a decrease in losses last quarter their stock value has been steady on the decline untill this week. This may represent a bottoming out of their stock value, which may tick upwards pending positive results at the end of this quarter. If they can manage to get up to their stock value from earlier this year it could mean a 300% gain for any potential investor. In my view it is well worth the risk, or at least just a few dollars.
CIG – Companhia Energetica de Minas Gerais
They have been slightly down this past week, however given their large dividends and the positive outlook of the renewables market it seems to be a great candidate for growth potential. This may be the right time to buy or maybe in a few days if they continue their slight downward trend. All in all, a buy in my book.
Bernie Sanders can get elected, he currently is doing better than Obama was in 2008, so I am just getting that out the way now. That being said, not many people in the market are taking his campaign seriously meaning if he does win, the smart investor has much to gain from prepping their portfolio now.
Solar & Renewable Energy
Bernie Sanders has a very aggressive climate change proposal on the table, and while many may not take it that seriously the international community sure does. COP 21 was not too long ago and climate change is in the air meaning this policy may see some popularity in the coming years and I don’t want to be kicking myself when solar really does make significant gains.
One company SunRun is going through some big expansion right now, and they stand to be the “Apple” of consumer solar panels. While oil and coal were most efficient in centralized factories there are many energy and defense analysts who say that a decentralized solar energy grid would be safer against attacks and more stable during natural disaster. Given the interest of policy makers to ensure safety for the american people it is no wonder they emphasize the installation of solar panels on private homes. Size is an important factor too, the bigger the up front investment the larger the gains, right now is a great time to dive into the market and establish a community base for these companies and it looks like that is exactly what SunRun is doing. Most other solar companies have been focusing on large solar fields which have been more profitable for a long time; soon this may not be the case.
The unlikely beneficiary of a Bernie Sanders victory will be the Real Estate market. While the banks may not be a big fan of Bernie, the fact of the matter is that a $15 minimum wage would give the millennial generation a large pay increase and launch the working poor in to relative affluence. All of those empty homes in america, forget em. People will have the money to afford decent mortgages at a rate close to the return of soldiers from WWII (which caused the baby boom and subsequent economic boom).
Banks will feel the Bern from both ends, being hit with much more policy and tough policing, while simultaneously having a stronger base of customers to take out nice loans. One loss they will also feel is a deterioration of income from overdraft fees more money means less over drafting. All of this considered either specific real estate lenders, or real estate owners should be the target for purchasing stock, try to avoid firms that engage in other consumer banking as they will see dampened gains.
The deregulation of Marijuana is a strong possibility meaning a whole new wave of companies may popup all at once and figuring out which individual one to buy into may be a challenge, make the right choice and you may end up with a pretty penny. That being said, there are plenty of other companies who are already sitting on the infrastructure ready to get pot into every CVS in the US and they are pharma companies. They might not see as large of a gain however because Martin Shkreli has put crosshairs on the entire drug industry. While it may not be all written out yet, if you are looking to buy any pharma stock I would make sure to find ones that fit into strict moral bounds, good luck.
Earlier this week I was watching a stock (SunRun) and I was anticipating a strong rise which, all in all, did happen. However on one day I noticed that the stock rose very rapidly from 11/share to over 12/share at market open. This rise concerned me and so I waited about 20 minutes for the stock to slowly crawl down. I bought a share at 11.72. Over that next hour I watched the stock tumble down to 11.02/share. By the end of the day it was back up to 11.81 but that did little to keep me from shaming myself for having such poor judgement.
This is something that I saw coming, I even thought to myself to wait and be patient, however I could not help myself. very often a stock will open either incredibly high, or incredibly low and then move back towards the price of the day before. In my experience, if a stock is up trending very well, about 1-2 hours after market open is the best time to buy and if the stock opens incredibly low and you manage to be one of the first buyers, you can make some decent money as long as you sell before lunch. That being said, this is all very general and hard to gauge sometimes.
This was a really big week in the stock market, and for the people who knew what they were doing one with significant gains. We all know that oil prices are down right now, but some of you may have missed the Fed increasing their interest rates. To add on to this same theme a budget deal was recently passed that had some very important issues covered in it. Not to mention the completion of COP 21. In short, if you had your money in anything Solar or Renewable then you had your money placed right. This week I was up nearly 5% in a matter of minutes because last Friday I picked up a few key solar Stocks. Including SunRun (8.30/share now over 13.00/share) and Real Good Solar (0.46/share now over 0.70/share).
The trend in solar for the past few years has been cheaper and cheaper, today it serves as a reasonable financial alternative to fossil fuels, not to mention the political climate. Because of this shift, oil prices are incredibly low in order to try and compete with the renewables industry, hence the refocusing on Fracking and new Drilling to try and really increase output. A strong blow to the oil industry was made however (at least within the US) in the repealing of the restrictions on oil exports from the US. You may think that this would be to the advantage of the Oil companies, however the supply in the US being kept artificially high, and the price being kept artificially low, is one of the only things that was keeping oil in the game. An expansion to other foreign markets will mean an increase in the price of oil, meaning that new developments will have more of a financial incentive to choose renewables including solar (which is the big player in renewables right now). Speaking of financial incentive, renewable energies tax breaks were extended meaning a double whammy for the oil industry. In the short term the oil industry may be able to get away with their profits from foreign markets, but the decisions made during COP 21 may suggest that they will not have the same success that they may have expected in the past.
While the fed hike normally creates an overall slowing in the market due to banks increasing their rates for loans, it may not have as large of an effect of the every day consumer as people might think. The impact on business will be moderate, but in an up market they may just be thinning profits rather than making losses. For the every day person, they will see a slight increase in their mortgage, but most people nowadays are sticking to fixed rates meaning only new home buyers will really see a difference. But how many new home buyers are there today? Not many is the answer, millennials have largely been avoiding the home market due to a significant rate of unemployment and underemployment, meaning it will only slightly impact the average consumer. Taking into consideration the increase in foreign investments in US real estate the normal ding in the real estate business you might expect may be subsidized by outside forces, meaning real estate companies may do well despite the interest rate hike.
The perception of the real estate market, that it might take a hit due to the interest rate, may make it a prime market to buy into right now due to it being undervalued. While you may have missed out on the solar explosion this Monday, it is likely not too late to reap the long term gains that will be made in the coming year.
A few months ago a new app by the name of Robinhood came out with the offer of providing completely free trading on the stock market. Another notable feature is the lack of a minimum balance, meaning that even with just a few dollars you can buy a few shares of a company you like. I have always had interest in the stock market and followed trends, I also keep up with the news on a daily basis, so I decided once this app opened that I would give it a try. So far I have managed to out perform the S&P 500 73.67% of the time.
In addition to my own portfolio that I manage with my limited personal funds I also manage some fantasy portfolios that I create with larger budgets. In this blog I will share all of these portfolios, my own research, and person views on where the market is headed and what the future of the stock market will look like.
So now, the real question is, will Robinhood fundamentally change how the stock market works? Many market experts say no, and they realize that zero commission trading is not new. However, they miss out on one important detail, today’s generation of Uber drivers and Indie artists do not have the same infrastructure that the old school jobs used to provide. Less and less people are able to invest through their company’s retirement funds and people are having a much more difficult time mustering up the cash to buy their own homes. Robinhood offers a chance for the Millennials to get into investing without having to risk the kind of money that they do not even have yet. They also have the personal drive and ingenuity to learn the trade themselves. Tomorrow may be the day that the stock market is flooded with millions of people trading 10-20 shares a time of their favorite stocks rather than just a few day traders and hedge fund managers trading hundreds a minute.
If you don’t have Robinhood, this may be a great time to dive in. The app is free and you can put is as much money as you want. My rule is, for every dollar I spend on fast food I put the same amount right into Robinhood, but that is my vice; feel free to choose your own.