The 3's Report
The 3's Report
From timely to timeless, the 3 most important points we can make about stocks, bonds, ETFs, markets and investing...updated weekly
Welcome to October! I wouldn’t say we at Sungarden have a “new attitude,” but we do have a new and improved look. And focus. And a ton of good news coming for our subscribers. All as the month continues.
For now, here’s a snapshot of our updated home page, which Dana has revamped to include the best takes from our several live sessions during September. You can click on the MEDIA & LEARNING tab on the site and watch the ones that catch your eye.
We’ve also added many of my podcast appearances from the past year or so, at Seeking Alpha, Money Life Show and others.
And at the top of that tab on the site, you’ll find our 4 part educational video series, designed to be a “Sungarden 101” learning tool for those who are new to our way of investing, or for those who’d like a tune up.
3’s Report LIVE: a new weekly session for all!
We tried it last week and it worked well. So we’re going to try doing it every week. Every Tuesday at 4:30 PM Eastern Time, join us as Rob Isbitts walks subscribers through the weekly 3’s Report he just published. This is a fast-paced, weekly review of markets, perspective, charts of interest and Sungarden news.
Click HERE to join us.
ALL SUBSCRIBERS (full and ETF-only subscription levels): the weekly technical scores for ETFs have been updated in the shared research deck.
SIRG SUBSCRIBERS ONLY: we expect to add the stock technical ratings and a full YARP™ dashboard later this week. It covers our 40-stock portfolio plus another 35 stocks on our watchlist, but not currently in the portfolio. Stay tuned!
ROAR Score weekly update
Remains at 30 this week, where it has been since 7/30/24. That’s 10 weeks in a row at the same figure, a new record for ROAR.
The capitalist in me would love to position more aggressively, but the risk manager in me won’t let that other guy do it. That’s Sungarden’s investment process in a nutshell!
The YARP portfolio is up nearly 7% since ROAR dropped to 30 from 40 back in July, ahead of even the S&P 500 (which it does not compete with - YARP is a moderate risk portfolio). Yet another example of how “alpha” comes in many shapes and sizes: dividend stocks, ETFs, options, etc.
3 Quick Thoughts on markets
The U.S. election would normally be the market driver this close to 11/5. But international conflict, AI-driven hopes, inflation (did we beat it or not?) and jobs (Labor report this Friday) are all competing with it for investors’ attention.
Meanwhile, beneath the surface of the headline indexes, there’s so much going on. That includes some iconic blue chip stocks starting to hint at some major comebacks.
Among the better-looking charts I see: several Dow Industrials components and a hint of a revival in Utilities after a pause. But the latter are acting like growth stocks, so be careful. They are not growth stocks!
3 ETF (or index) charts I’m watching
THE COW SAYS WHAT?
CNBC regular and Ritholtz Wealth CEO Josh Brown recently said this was the silliest ticker symbol for an ETF he’d heard of. I think it’s cute and memorable. I guess that’s what makes a market! More importantly, this ETF that allocates to agriculture stocks is trending nicely, yields 3% and its 50-stock portfolio sells for 0.8% sales. It is one of several “starter” positions I added to CORE ETF last month.
I’M NO CRYPTO-BRO
This is a bitcoin-linked ETF that pre-dated the debut of a dozen spot bitcoin ETFs this past January. I am not a crypto fan, generally speaking. But I’m happy to exploit the tug of war between its fans and detractors. In other words, BITO and its mirror image BITI are good trading vehicles. Right now, BITO shows a persistent pattern of “lower lows and lower highs” a.k.a. it keeps going lower. Until it breaks that pattern, the opportunity is on the short side. But lately, there’s no strong trend, just the usual jumpiness we’ve come to expect from this alleged “store of value.”
UP, UP AND AWAY?
This “travel tech” ETF is certainly under the radar at $65 million in assets under management, now in its 5th year of life. It surged post-pandemic for reasons we can all understand. But it is down more than 10% annualized the past 3 years. And these stocks collectively are expected to grow. Key word is “expected.” Chart shows a breakout from that malaise. And the 30+ companies that drive this fund include household names like AirBNB, Booking Holdings, Uber, Lyft and Expedia. Will be interesting to see if this one “gets legs” and flies. There’s plenty of room on the chart.
3 stock charts I’m watching
A CLASSIC EXAMPLE OF HOW I USE YARP™ STOCK ANALYSIS
Amgen checks all the boxes to be part of my 75-stock watchlist (to track it for potential use at some point)…but most of the boxes that would prompt me to include it in my 40-stock portfolio (where I actually own it), a subset of those 75 names, are unchecked. So I don’t own it. And here are a pair of pictures that summarize why this market leader, highly profitable stock is on the outside looking in for me right now.
First, when I started to construct the YARP stock portfolio, AMGN had already run up too high. So instead, I “watch-listed” it for future consideration. The stock keeps nudging higher, though trailing a lot of the names I bought instead. But that chart indicates to me that there’s a risk it has peaked for now, as it is scraping the upper end of that trend channel I drew (the 2 parallel lines). And the PPO (lower part of chart) is confirming that momentum has rolled over (see far right side of chart).
And when I look at AMGN through a snapshot YARP view, it confirms my concerns about owning it now. This is a chart of the stock’s dividend yield the past 7 years. That’s where the YARP ratio calculation starts. The lower the current yield is within that history, the more overvalued the stock is, YARP-wise. AMGN’s 2.78% yield is toward the bottom of that 7-year range. With perfect hindsight, when it was coming off its peak yield of 3.75%, and drifted down to around 3.50% in August of 2023, that was the time to look more closely at owning it. All of the things I typically look for were there. But I didn’t crank up the YARP portfolio until 9 months later.
Where was AMGN in August of last year: around $245 a share. It is up 30%+ in price in the 14 months since, and I would have had a 3.50% “yield on cost” coming in to boot. So about 36% in 14 months. SPY is up 29% and RSP (average S&P 500 stock) is up 20% over that time.
THAT is how YARP logic works, at a very high level. And what I do every day in my portfolio: look for reward, measure the risk in a consistent fashion, and allocate assets accordingly.
REITs? IT DEPENDS.
Some REIT sub-sectors have run too hot. That might mean they fall back to earth, or that they simply take a pause. I’ve reduced my exposure to the sector, but am prepared to reduce more stocks down from 3% to 1% if the hint of a decline becomes more serious. This is one of several REITs I’ve owned in varying position size for a while.
DEFENSE IS OFFENSE (for portfolios)
Why are defense/aerospace stocks rallying today and recently? Read the news. I own 2 of them including LMT, which is up 30% since I purchased it as part of the initial YARP 40 stock portfolio on the last day of April. But the human in me wishes this were not happening, since it means the world has too many geopolitical hot spots. Separating the real world from the dollars is one of the ever-present challenges of investing.
Sungarden Founder Rob Isbitts to speak at Money Show Orlando next month
I am part of the Money Show’s educational provider group (i.e. not paid for as a sponsor), and after a few online sessions earlier this year, my first live session will be at the huge Money Show Trader’s Expo in Orlando next month. My focus: DIVIDEND INVESTING. Our subscribers know well that my views on dividend investing in modern markets are quite a departure from the “same old” and I’m grateful to the Money Show crew for inviting me to be part of this long-running event.
Registration for the 3-day conference is HERE and if you will be there, let us know. Dana and I will be there most of the day Friday and all day Saturday, the day I speak. We’ve love to meet any folks from the Sungarden community there and say hi!
