Solar Portfolio Update and Market Update – 10-9-2013

Solar Portfolio’s Update

I initiated our second 2013 solar portfolio (2013 Solar Portfolio (2) ) at the market opening on 26 June, subsequent to the introduction of President Obama’s new energy policy, which I thought was a positive step, although, far from what I would consider a “bold step” for America’s energy future.

 

I selected the three most technically strong stocks (based upon my evaluation system) from our publicly traded stock list and initiated theoretical equal money positions ($10,000.00) in each security – Canadian Solar – CSIQ, Sunpower – SPWR and Sun Edison -SUNE.

 

On 5 July I added two addition stocks that had given subsequent technical buy signals – Jinko Solar (JKS) and Yingli (YGE).

 

Solar Portfolio (1)

 

We closed out our last position in our 2013 Solar Portfolio (1) on 16 April 2013 realizing a gain of 44.94% for the first 14 weeks of 2013.

 

Solar Portfolio (2) Current Status

 

CSIQ – Sold 75% of our position at various stops as indicated.

JKS –   Sold 25% of our position at indicated stop loss point.

SPWR – Sold 50% of our position at indicated stop loss point.

SUNE – Sold 100% of our position at various stops as indicated and took a small loss.

YGE – Sold 50% of position at $3.80

 

Current Stop Loss Points

 

CSIQ – Sell final 25% of position at $14.00

JKS – Sell 50% of original position at $17.50, leaving 25% of original position

SPWR – Sell 25% of original position at $25.00 and remaining 25% at $20.50

YGE – Sell 25% of original position at $6.80 and remaining 25% at $5.25

 

 

 

Current Performance 2013 (2) Portfolio

 

Realized Profits + 17.47%

Unrealized Profits + 80.81% as of the close Wednesday 10-09-2013

 

Market Update

 

At the current time the general market is in a “higher” risk status, based upon my technical indicators. In addition, we have the current chaos created by our “leaderless” Congress going back and forth about absolutely nothing of any real consequence. This shutting down the government “game” has happened many times before – and the vast majority of the time the market got worried initially and in the end just yawned and actually ended UP after the Washington Circus Troupe closed their tents and went home.

 

All of this does NOT mean that the market is going to have a major correction. What is does mean is that caution is warranted because the overall technical market risk is higher and at the same time the Government closing is casting doubt all around making it much more difficult to get a clear picture.  As a result, I have set my stop loss points closer to protect the portfolio’s profits.

 

Remember – you will never be able to catch the very bottom of a stock or the very top, when that happens it is plain and simple – luck. The key thing to always keep foremost in your mind, the number one rule of investing:

 

Cut your losses short and let your profits run

 

We have been in a Bull Market since March 2009, close to 4 ½ years. The average Bull Market is 3.8 years – so this market is growing long in the tooth. But I have not seen any “serious” indications of the end of this market. But when the market is in a higher risk area – the changes can come quickly – so we have to adopt a defensive posture.

 

However, the solar sector is among the strongest of all the market sectors. There is no way to really project the future – but solar is booming everywhere in the world, even in the U.S. – this will be the first year ever that solar has put in more capacity than wind worldwide.  The general press in the U.S. has still not caught on to the current “solar boom” or is “scared” to write about it for fear of offending some financial backers etc.

 

I think this is the first really visible evidence of a much more widespread transition to solar – which, in my opinion, is well over due if one considers all the facts and costs and not the silly gibberish from the anti-solar groups, the coal faction and all the other reality ignorers from the flat earth society. Change is coming, like it or not!

 

Comments on Solar Related Stocks in the News

 

Three stocks that I have received a lot of emails on regarding my opinion are: First Solar (FSLR), Solar City (SCTY) and Tesla Motors (TSLA).

 

My opinion on these stocks (not on the companies), a company is stated below.

 

FSLR and SCTY – Both stocks are NOT a buy at their current levels.

They are both below their 50 day moving averages and their technical values are declining. Both their monthly (longer term measure) momentum as just turned negative which is not a positive sign for the near term action of any stock

In the current higher risk market environment, you do NOT buy technically weak stocks.

Remember – whether you think either or both of these companies are good companies and have promising futures – that opinion is irrelevant as to whether or not they are good stocks to buy at this time. Good companies can be bad stocks – it happens all the time.

 

Tesla Motors (TSLA) – Stock is UP over 300% in somewhat of a parabolic curve ascent – those curves historically end badly.  We missed this stock and it is too late to buy it here.

For the moment the stock is operating in a “gravity free” environment – which is always scary.

In addition, one could also say that, when you look at the TSLA stock chart it currently looks like the left side of a parabolic curve and based upon my memory and historical data parabolic curves usually end up badly.

I do like the company and they are certainly on the cutting edge of electric car innovation and manufacturing techniques.  In situations like this the best thing to do is to put the company on a “watch” – so that you can monitor it and be ready to buy it IF it becomes a buy.

 

Market Psychology

The HARDEST THING for investors to do is know when to sell. That is why you have to set specific, non-emotional prices to exit if things do not go right. You cannot allow your emotions to get involved and take over your thinking.

Remember: markets fool the majority of investors by “Climbing a Wall of Worry” which is exactly what it is doing now. Once losses start and keep getting worse then  investors generally get on the “Slopes of Hope” and hope that their stock comes back – trust me, the “I hope my stock comes back” technique will NOT work, now or ever.

Trust in your system and follow it regardless of what you think “should happen”. Once you try to impose your will on your portfolio you will stop paying attention to what is most important – and what is most important to understand is:

“what is actually happening” NOT what you think should be happening.

If you looked at the portfolios of the most successful investors you would, in general, see the following pattern:

Approximately 80% of trades would be either small losses and/or small gains and approximately 20% would be very significant gains. This is exactly how we dramatically outperformed the markets in 2012, 2011 and 2010 with far lower market risk, since we were out of the market for much of those years when the environment was unfavorable.

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Solar Portfolio Track Record

2013 Solar Portfolio (1) + 44.94% (January thru April 16^th)

2012: Solar Portfolio outperforms markets by 325%

 

Solar Portfolio   + 39.7%

Solar Industry Average   – 13.93%

Major Markets Average   + 12.19%

 

2011: Solar Portfolio outperforms markets by 1,416%

 

Solar Portfolio   + 17.56%

Solar Industry Average   – 70.3%

Major Markets Average   + 1.24%

 

2010: Solar Portfolio outperforms markets by 310%

 

Solar Portfolio   + 42.94%

Solar Industry Average   -14.2%

Major Markets Average   + 13.87%

This performance by simply following the #1 rule of investing:

Cut your losses short and let your profits run

We cut our losses when things did not work out and we let our profitable stocks run as far as we could and minimized any further deterioration by setting reasonable stop loss points to protect our profits.

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Background Analysis Notes

Keep in mind that there are two basic types of equity (stock) analysis. Below are a brief description of each and its primary purpose:

Fundamental Analysis (“what to buy”) – this is the analysis of the fundamental financial condition of a company to identify which stocks you may want to buy when the timing is right. This form of analysis will give you NO indication of the best time to buy a stock or sell a stock.

Technical Analysis (“when to buy”) – this form of analysis will tell you “when” to buy a stock and when to sell the stock. It will do this by showing you (in chart format) the basic interaction of supply and demand and when the two change and shift which will indicate a time to buy or a time to sell.