Common Cents Investment GroupMonday January 27th
Market Cycles & Investment Ratings
AgendaMacro Update – WeiyiMarket UpdatesMarket Cycles – MaxInvestment Ratings – Lindsey
Market Update
http://www.cnbc.com/id/101365510
http://www.cnbc.com/id/101361746
Market Cycles
Max Layman
Disclaimer: past performance does not indicate future success
Market TrendMovement in a certain direction
over time◦Secular – Long time frames◦Primary – Medium time frames◦Secondary – Short time frames
Identified with technical analysis of charts
Secular TrendLasts 5-25 yearsConsists of a series of primary
trends◦Example: Secular Bull Market
Larger primary bull markets Smaller primary bear markets
Primary TrendLasts 1 year or moreBroad support from entire marketTime frame typically talked about
in media (i.e. CNBC)◦2013 was a bull market
+30%
SPY
Secondary TrendLasts few weeks to few months“Market correction”
◦Markets down 4% in last week
Secondary Trend Cycle
http://www.investopedia.com/articles/technical/04/050504.asp
Sector RotationMoney moving from one industry to
another
http://blogs.stockcharts.com/.a/6a0105370026df970c01538decb605970b-pi
Full Recession
Bad time to be unemployedInterest rates fallingProfitable Industries
◦Cyclicals & Transports (near the beginning)
◦Technology
◦Industrials (near the end)http://www.investopedia.com/articles/trading/05/020305.asp
Early RecoveryRising ExpectationsInterest rates bottomed outProfitable industries
◦Industrials (near beginning)
◦Basic Materials
◦Energy (near end)
http://www.investopedia.com/articles/trading/05/020305.asp
Late RecoveryExpectations declineInterest rates rise rapidlyProfitable industries
◦Energy (near beginning)
◦Staples
◦Services (near the end)
http://www.investopedia.com/articles/trading/05/020305.asp
Early Recession
Bad for overall economy, low expectations
Interest rates peakedProfitable industries
◦Services (near the beginning)
◦Utilities
◦Cyclicals & Transports (near the end)http://www.investopedia.com/articles/trading/05/020305.asp
Kandi Technologies [KNDI]Electric Vehicle (EV) technologyRenting cars
◦Cheaper than a taxi◦Return to garages◦Similar to Car2Go
Car vending machine
http://www.youtube.com/watch?v=fiEJPbxL2hI
Kandi Technologies
Investment Ratings
Lindsey Kathmann
Warnings of Investment RatingsQuantity is no guarantee of quality!Analysts opinion is not the end all be
all.2 Warnings:
◦Analysts' ratings do not have clear, standardized meanings.
◦Potential conflicts of interest that you, as an investor, should be aware of in assessing the usefulness to you.
Understanding the LanguageDifferent terms mean different things to different analysts
http://www.marketwatch.com/tools/guide.asp
Understanding Analyst Loyalty
•Some analysts can be unaffiliated but most are affiliated with financial institutions
•Mutual Fund/Hedge Fund • Provide financial advice for intuitional clients whose
investment decisions are usually much different than ordinary investors.
• If the fund has a large holding in a particular stock, they do not want a “Sell” rating, so an analysts may put a “Hold” rating on it. This can cause inflation.
•Analyst Compensation• Compensation can pressure analysts to report
positive research
•Ownership Interest in the Company• Analysts may hold stock in the company and do not
want to see the rating go down.
Key Tips Never rely on a rating alone.
◦ Look at the entire report-not just the one word. The report will include risk factors you can use to help you make a decision.
Analysts differ in quality.◦ Not every analyst is the best. You can look up different analysts
records online.
Is it right for YOU? ◦ Your individual financial need is what matters most. Make sure
you view each rating in terms of your unique financial situation.
Bank of America
(BAC)
Bought:$10.56Sold: $13.87Gain: ~31% over 2 yrs.
SODA STREAM Stock Analysis
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