Friday File — Brands, Hospitals and the Yuan
by Travis Johnson, Stock Gumshoe | August 16, 2015 12:15 pm
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Source URL: https://www.stockgumshoe.com/2015/08/friday-file-brands-hospitals-and-the-yuan/
Change of subject, I received an email from Investor’s Alley saying that 19 major banks to shut down. Do you have any comments about this?
Great article today Travis!
btw, I’ve recently been getting teasers on selling put options and I note Scottrade and others are now allowing this.
Perhaps you could give us your take awa offer some links, pro and con.
The “selling put options for income” pitches have been more quiet of late — we used to see a lot of them, but not so much this year. Maybe that’s because sentiment is so leery of a crash that selling puts is not as appealing, though in that case presumably the prices are finally going to rise and make the risk-taking more worthwhile.
In general, selling cash-backed puts (or selling covered calls, which is a similar risk position) is a high-probability, low-reward strategy — you miss the bull market runs but you generally make a steady return… the problems arise either when you have one big mistake (selling puts on a stock that falls 40% on bad news overnight, for example), and that mistake or bad fortune wipes out a year of small gains. Additionally, we hear a fair number of complaints about the services who recommend options trades, mostly because options are much less liquid than stocks so it’s hard for more than a few subscribers to get the “recommended” price on trades.
Very low premium rite now on selling the puts and extremely HIGH
premium on buying them. Check the ratio…way outa whack.
Tells where the REAL sentiment is rite now.
What’s the best URL for daily checking the index?
Is it not TradeStops.com rather than Tradestops.net?
You’re correct, sorry — switched them up with one of their competitors’ URLs.
A further note about selling put options.
A lot of hype building around a possible implosion in Sept.
I wonder if this has anything to do with an increased spread between puts and calls.
Travis: Your comments on the Yuan and the 2% change is the canary in the coal mine. Every Govt that has tried central planning has lost control at some time. And you are also correct that tying an economy to the price of gold is not too effective either but at least the price and ownership of gold is not unlike the ability of a nation of produce goods for export and the value of its production property be it ag land or non ag land which are the only metrics that should be accepted and used.
‘SHOULD’ is a very BIG word Ken!
Unfortunately the Uber Elite Banksters will bypass it. They have no clue on it’s meaning,
and frankly, don’t care!
In itself I do not see the Yuan adjustment as a big deal, as you say Travis; though it maybe one more ruction point on Xi’s forthcoming US trip. But I think he will fairly say that Asian currencies had tended to be weakening against the USD recently, which is the competitve marketplace.
Certainly China’s economy needs bolstering.
I disagree with your use of the word bubble, particularly in respect of housing. The Chinese housing market has a very significant amount of equity in it. If anything, it had been over-restrained by government action. I sold two properties earlier this year to buy a house in the UK; I did not think the market was heading South, and I will retain an interest in two more all admittedly in Shanghai.
As for the stockmarket, The China A share Fund’s portfolio is on a prospective PE of 13.7x (end July) and is expecting 30.7% earnings growth this year. Having lagged the market rally last year, it has been catching up in 2015. It is mildly geared presently, expecting its portfolio to perform positively.
The market, though, is too heavily dominated by large caps in a few sectors. The government, after allowing margin-trading, like many others failed to recognise the extent of margin-trading engendered outside the brokerage system. That certainly created an over-inflated bubble, which has seen a significant correction. Although the enormous rally had been very rapid, it followed a desultory market over 5 years. The valuation at the outset was definitely low. Whether the government’s direct support and now implicit backing is sustaining a ‘bubble’ is not yet clear.
It had though foolishly recommended investment when the index was rising, which had left it an obligation. So we do not now have a clear, free market, though the small medium caps in the private sector are likely to be more directly company-performance driven.
Apologies for the repetition; separately China is so de-stabilising foreign website access that usage is wretchedly slowed and my first attempt at posting did not appear to have succeeded.
Travis, I’v incurred the same problem as Patrick. There is a very long delay after you click the ‘Post Comment’. Don’t know if anything can be done about that.
I did learn to be patient however after the first couple times failed.
Are you overseas as well, David? We don’t usually have issues with comments not submitting unless the comment is flagged for moderation, though sometimes cached pages will cause it to appear that the comment isn’t published yet.
Nope, just here in the Great NW near Seattle.
The delay isn’t really too long, perhaps 8 sec or so…
Just enough to make u try to click again if u’r new to the system.
Back to ICON for a minute, if we may. Thank you for bringing it to our attention months ago, Travis. I thought it was overpriced, but kept it on the radar and subscribed for email alerts from their website. On this recent drop, I decided to buy. The main reason is their interim CEO, Peter Cuneo, whom you did not mention. He was a board member and I believe the departure of the old management including the founder was actually a decision made by the board. Do a little research on Peter Cuneo. He has had four turnarounds at companies as diverse as Clairol, Black and Decker and Remington Products and Marvel Entertainment. I cannot imagine anyone more qualified to move this share price back up and to the right.
Yes, Cuneo gives some extra confidence — though he’s just an interim and likely doesn’t want the job for long… It should be a very interesting six months for ICON with Peanuts, the CEO search, and the effort to turn around Men’s fashion and fix investor worries about their accounting.