3 Hour Investor Newsletter incorporating the Newsletter Portfolio Week Mar-18

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2 Current Portfolio Valuation. (up 16.13% per annum) Portfolio Valuation 2017/Mar/17 is $281,324 According to Lincoln the portfolio is increasing at a rate of 16.13% per annum and this week we were up about 1%. (as reported earlier, value remains understated a little because some stocks have gone ex dividend (so the share price went down) but the income has not yet hit this list. Yes this will of course fix itself over the next month or so. *Yes I ve advised Lincoln of this and have suggested that it might be worth fixing.

3 Comment. We currently have 9 securities and about $24k in cash (about 8.5% cash). Note the below excludes about $2,100 of dividends declared but are not yet due Losers >10% - Losers 5.1%-10% 1 Losers 0%-5% - Gainers 0%-5% 4 Gainers 5.1%-10% 2 Gainers10.1% - 20% - Gainers 20%-30% 1 Gainers 30%-40% - Gainers >40% 1 Portfolio comment. Another strongish week for the portfolio, imagine if the portfolio could drift upwards at about 1% per week. Unlikely some weeks will be good others will be bad. Stocks ended green this week. AGL, CGF, FMG, IHOO, IHVV, RFF. (6 out of 9 stocks green). All stocks are still in hold territory. To me CKF looks the most doubtful as in the most likely stock to be out of the portfolio in the near future and yet who knows it trades on an April 17 PE of 16, it s PEG is under 1.5, it carries a fair value rating by Lincoln and consensus and an expected gross div yield of around 4%...and expected EPS growth of over 12% for April FY17so the fundamentals don t seem stretched. I m hoping the market view of the stock will turn and yet it if doesn t I have no qualms in selling out and buying some other stock with (a) good fundamentals and (b) a rising share price.

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5 Status of US Markets on (thurs for Lincoln charts and Friday for non Lincoln charts. Dow. Closed Green for the week (to thurs and I think for Friday Futures slightly red Note the growth as measured by HAVROAR being about 30% per annum. Amazing S&P 500 was Green for the week to thurs. FUTURES slightly Red (virtually flat) on Saturday Note growth at over 20% on ROAR Nasdaq. Green for Week (Just). Futures slightly red Russell 2000 Green for week, Futures Green (0.4% down) Is this a reversal of the threat to cross down? Worth watching. Vix. closed down Red (which I ll take to be a green signal for our portfolio) Seems amazing that the VIX is staying down so low for so long even as the markets are rising higher and higher

6 Status of Australian Markets XAO All Ordinaries Index. Green and above the line. Positive Gap formed in MMA, ROAR close to 20%. XMD Midcap 50 GREEN and above the line Small positive Gap formed in the MMA. ROAR trending towards 20% XSO Small Ords GREEN and yet below the buy line MMA not open has not been a good place to be since June last year. XVI Volatility Index was very slightly Green (a RED signal for us) Has dropped well below the line still close to being the lowest since this index has become available since about March In summary three main US Markets were seen to be trending green and particularly the Russell 2000 had popped back up. Whilst the futures are ever so slightly bearish. ASX markets were up last week and the volatility index is down. I suspect that we have a reasonably ok signal to open the purse let the moths out and buy something (provided that on Monday the Aussie markets are up and that also the US futures markets tick upwards into Monday afternoon (at time of writing ASX 200 futures are flat (0.00%) I m not sure this is correct as I ve never seen 0.00% before

7 Allow me to add a new index to this newsletter. Let s call the value index. How it works: Filter stocks with the following criteria 1. Financial health = strong or satisfactory 2. Dividend yield >2.5% 3. PE <15 4. Price to NTA per share above zero and under 5 5. Enterprise value above $500m 6. Excludes mining stocks and most financials (as advised by Alan Hull) So what we re looking for is strong stocks that seem cheap. Each week we ll count the number of stocks that fit that criteria. In a high priced market there will be few of these. In a low priced market there ll be more of these so perhaps this will allow us to better understand where the market is. Why do this? In a low price market (down market) we ll be looking to buy dividend stocks.in turning market or increasing market we switch to growth stocks so perhaps this will assist us to understand where we are Search for Value count 0 4/02/2017 4/03/2017 4/04/2017 4/05/2017 No comments this week not enough data yet to make any inferences. What I m hunting for is either a sharp increase or decrease in stocks found by this filter. When there are loads of stocks here buying the best of them might be a good strategy.when there are none perhaps it s an indictor we re at the top of the market?

8 Comments on Star and Borderline Stocks. Stocks in Sell Territory. If I had these stocks I should have sold out. Star Stocks BBN, CCP, COH, HSN, PME RCG RFG, RFG, RHC, RRL, TNE, VTG Borderline Stocks DMP, MTR, Stocks that closed Green for week AND are rising at above or close to 20% per annum (based on ROAR) AND are above the line. In other words worth assessment for possible rating as a buy. Star Stocks NHF, (just below the 20% line), Borderline Stocks Lots of Red and probably no greens (I put NHF in here however it really doesn t qualify) Not a good situation for star stocks. (our star stocks portfolio is declining at a rate of 13.08% per annum since mid November 2016 yuk) Charts worth thinking about. Recent cross upwards stocks FPH, NST, PMV, CAR**, REA, TPM, VOC perhaps some of these might rise strongly from here In what seems to be a strong decline BBN, RCG, RFG, RHC, DMP, MTR, (all closed red except for BBN). Some of these have declined SIGNIFICANTLY it hasn t been a good time to hold highly priced growth stocks

9 Selling Report. Nothing to report Buying Report. Nothing to report

10 Stocks worth assessing as suitable for purchase if conditions are right this week The following stocks are on our potential buy list and closed Green for the week A2M, AGL**, AZJ, CBA, CGF**, CHC, CTD**, DOW, HUO, IHOO**, IHVV**, RFF**, SDF, SVW, TPM, WPL I ve not done a proper scoring of these there are a few that I d look very closely at for buying on Monday if the market is going up and US futures are trending up and as you can see I already have quite a few in my portfolios.

11 Bonus Charts: In this section I ll sometimes list a chart that catches my eye and provide a brief comment. If you want a stock reviewed, perhaps me and I might include it (no promises) Chart Comment ASX 200 Accumulation index. Since January last year the ASX 200 including dividends has been growing strongly (around 20% per annum). If you held an ETF you d be getting close to this rate of return (which is probably hard to beat) XJRAI (Asx 200 resources total return) What a year it s been for big resources companies total return above 30% per annum starting from Jan Personally I missed the change and I learned that I should be scanning more widely. Playing in resource stocks is interesting they are clearly cyclical and one needs to be ready to sell out something that active investing should be good at. XTJ, ASX 200 Telecoms Telecoms have been in decline since about mid Anyone who s held stocks like TLS, VOC, TPM, VTG and others knows that this segment has declined. Another vote for being ready to sell when the market changes

12 Parting comment Oil prices seem to have sharply declined Bond prices whilst declining quite a bit over past several months seem to have blipped upwards last week (see the little green bars at the end) Gold and silver also had a decent blip up last week. What does it all mean? It s really difficult to understand market fundamentals and movements. There s literally soo much information available and so many movements that even teams of PHDs with massive computers and full time focus and huge theories and positions must be pulling their hair out. What chance do little investors have to pick overall fundamentals apart? I personally think that the answer is that we have little chance of really understanding what s going on in such a way as to make money from such understanding. And I personally think that the answer (to not knowing) is to have either a passive portfolio (similar to the Buffett s Widow Portfolio followed elsewhere on this site). For those who don t have sufficient time/energy or interest.

13 The other answer is an Active Portfolio as is used for this Newsletter portfolio (only for those with a little time and faith that they can cope with the emotional stresses that comes with Active Management.which means holding when basic human instinct wants to sell and selling when basic human instinct says hold on) I personally wouldn t recommend following a star stocks portfolio at this time. You can read about that elsewhere on this website. Have a good week Warning. This newsletter is provided for your entertainment only, I m not a financial adviser, I have not taken account of your objectives, financial situation or needs. You should therefore consider the appropriateness of any descriptions of my Newsletter and its newsletter portfolio in light of your objectives, financial situation and needs, before taking any actions. All views and information expressed in this newsletter are not the views of Lincoln and or its directors, agents, representatives and employees. Many of the graphs and screen shots are taken from Lincoln services and are fully credited to them. I m a paid up licensee to Lincoln, otherwise all IP in their system and graphs belongs totally to them. I recommend that you consider signing up to their service it s a great service and I feel great value for money! I do invest and trade in shares, I ll mark the ones that I own with (**) however it s safe for you to imagine that I m either buying or selling just about any stock in the market, particularly and especially if mentioned here.