JohnCM Investment Corner

[JohnCM]

STOCK INVESTMENT NEWSLETTER
March 6th, 2021 no.105

ZOOM meetings 5:00pm PST Saturdays every 2 weeks
Next meeting March 13th
https://www.meetup.com/stock-market-investing/
https://investorshub.advfn.com/JohnCM-Investment-Corner-37729/
https://investorshub.advfn.com/Cannabis-Investment-Club-33161/

John’s portfolio Friday -0.03% Monday +6.86%
+50.11% (unrealized gains) Portfolio
Investment Rate of Return +67.53%

EMERGENCY
INDUS HOLDINGS INDXF
$1.92(SOLD)
BUY TILT TLLTF
$0.545 (now $0.50)



Trading Secret #4

This technique has taken me 35 years to get right.

Download the smartphone app "Stocks Alert."

Pick a percentage of your total shares in your position that you will use to trade around your core position. 33 percent?

Set the RSI(14) alert to 80.

When 80 is triggered, sell 33 percent.

Buyback at 60 and either pocket the cash difference or buy back more shares than you sold.

INTEREST RATES


Hmmm, how do interest rates affect me? And why do they increase? (Or rather why does the FED increase interest rates?) Is it simply supply and demand? In a way, yes. The primary motivation for the increase in interest rates is to keep inflation from rising. What increases inflation? Demand. What is the result of inflation? Higher price tags for everything you spend your money on. Services, goods, travel, food, housing, fuel, clothing, luxury items, etc.


So, if the FED is keeping an eye on inflation, why do I need to pay attention to interest rates? All depends. Do you have any investments in Real Estate or in the Stock Market? Hopefully, by now, most folks have converted their ARM mortgage into fixed rate. In that case, a higher interest rate on your mortgage is not a worry.


How about the stock market? You would think that a recovering economy would help buoy the markets, right? Yes, to a limit. The market is typically 6 months forward looking. So, your stocks have already priced in where economists expect the U.S. to be on August 1st, 2021. When interest rates increase, so do the number of alternative, safer vehicles to earn interest/dividends/capital gains on your stock market investment. When there are more, safer alternatives, they are fewer buyers of company stock as an investment.


I should add here, as a rule, precious metals should take up a 5% position in your portfolio. Individual miners, ETF (long/inverse/ leveraged 1X 2X 3X), or simple bullion.


Getting back to the stock market. The markets right now are priced to perfection. Any seismic shift will send the DOW lower. A 10 percent decline is still not out of the equation. Seismic shift? World events i.e., saber rattling from a communist country. Nuclear arms concerns. Higher interest rates. A major setback in the fight against COVID-19, to name a few.


When you see a meaningful increase in interested rates, and as I mentioned earlier, the trend is beginning right now, you want to have a defensive game plan in regard to your stock positions. (Not so much mutual funds. You have professionals baby-sitting those for you). There are a number of ways you can prepare for future pressures on the stock market. Look for sector niches that will benefit from the recovering economy. Use ETF funds for this. Set stop limit orders to protect your gains (you do not want to give them all back). Look to inverse ETF (bear) funds. Precious metals. CASH.


Getting back to Real Estate. I hate to say it BUT the party will not last forever. This is not directed to quality Real Estate agents who always flourish because of their elevated marketing skills and their ability to work well with people. Regardless of the economy, there will always be a housing market. The party I am referring to is the one being thrown by homeowners. When we see interest rates rise, the affordability factor for home buyers is reduced. When real estate is costlier to purchase, this puts a damper on prices and activity. But even with an increase in interest rates homeowners have another “dog that will hunt.” Supply. If there is one house available to purchase and 100 buyers, the price will stay elevated regardless of the mortgage interest rate being offered.


Supply. Supply. Supply. From what I can tell, real estate prices have topped out, regardless of supply, interest rates, the economy the presidency, the Mars landing. What will affect supply? More houses being placed on the market, or fewer buyers? From what I can tell we are going to see an increase, not a decrease, in interested home buyers. The only factor putting pressure on this is the "affordability factor." So now we have to look at new home construction.


Who remembers earlier housing booms that went bust? Do you believe that this will never happen again? We have seen a historical cycle of booms and busts over the last 100 years. Where do you think we are at in this current cycle? We are at the top. What do you do when you are holding an investment and the price is at the top? There are 2 ways of thinking. One is greed. “Hey, things are going so well, why would I want to sell if the price is going up and up and up?” This makes sense, until it does not. Two, the folks who know when to "ring the register." What did Warren Buffet say? "Sell when people are buying (market bubbles, froth, exuberance, greed) and buy when people are selling( fear, panic, sense of loss, herd mentality)."


So, what do you do if you need to buy a house at the market top due to a change in jobs, family events, relocation, or the need for a bigger house? #1. Find a quality Real Estate agent. #2. Get pre-qualified from a lending institution. Ask your Realtor who they work closely with. This is important. #3. Realize that you will have to "settle" on filling out your “wish list” checklist. #4. Be ready to pounce on a home you like the way Tom Brady was ready to pounce on the Chiefs during the Super Bowl. Was Tom Brady prepared? Did he have his "head in the game?" Did he have ALL of his "ducks in a row?" #5. Ask your Realtor about utilizing a "Multiple Offer Playbook." This will list up to 25 techniques that will ensure that you are not missing a thing, and that you are giving your absolute best. #6. Know your limits. i.e., what are you prequalified for in terms of price?
#7. Be comforted in knowing that although, historically, you are paying a high price for your new home, you are also buying the neighborhood, the town, the weather (if you like it), the surrounding amenities and finally, you are moving into a home that you love. All of a sudden, some of these important qualities become "priceless."

Tuesday, Feb 23



Airline, cruise stocks surge to start the week.
Investors can't keep up with economic optimism right now.

On Monday, the re-opening trade was on fire with shares of airlines, cruise lines, and banks all rallying. And this while Wall Street strategists continued raising full-year GDP forecasts as others reiterated calls that consensus estimates are still too conservative.

Which continues to show that for all of the optimism about 2021 that was anticipated by investors last year, folks are still playing catchup.

Travel stocks were the stars of the market show on Monday, with positive earnings commentary from Royal Caribbean (RCL) and an industry-wide upgrade of the airlines from Deutsche Bank analyst Michael Linenberg catalyzing the moves.

Royal Caribbean said pricing for its bookings for the second half of this year are trending higher than 2019, adding that 75% of bookings for 2021 are new reservations. Shares of Royal Caribbean gained 9.5%, while peers Carnival Cruise (CCL) and Norwegian Cruise Lines (NCLH) also rallied more than 5.5%.

Meanwhile, Linenberg's call on the airline industry sent American Airlines (AAL) shares up more than 9% while United (UAL), Delta (DAL), Southwest (LUV), and JetBlue (JBLU) all gained more than 3%.
________________________________________





NEWS!!
2 NEW CANNABIS COMPANIES
VERANO - VRNOF
CHOICE CONSOLIDATION (NO TICKER YET)

VERANO HOLDINGS VRNO (CSE) IPO on Canadian exchange Wednesday, February 17th.

"They said" shares would be available to trade on the OTC in about 3 weeks.

Good news, bad news.

Good news.

When the OTC ticker is available, the volatility of the share price will have modulated with 18 trading days under its belt. So, instead of buying at the initial IPO "pop" only to see the price wane after the initial surge, you will be buying at a "non-pumped" price.

Bad news.

You will miss out on 3 weeks of appreciation IF the markets love this company. For all intents and purposes, they will.

Initial est. valuation $32 US. (Came out around $23 - $24 U.S. $27 - $28 CA)


TRADING

A step-by-step explanation is the best way to illustrate the trading process. The example below is tailored for individual investors, although many of the same principles apply to institutional investors.
1. Investor Selects a Broker-Dealer — In order to execute a trade, an investor must have an account at a FINRA-registered broker-dealer.
2. Investor Makes an Investment Decision — Investment decisions should be based on thorough research on the company and security. For securities that trade on the OTCQX, OTCQB and Pink markets, investors can use www.otcmarkets.com to access the information companies have provided, including trade data and company news and financials to help facilitate an investment decision.
3. Investor Defines the Order — Investors define the order they wish the broker-dealer to handle. The two primary order types are Limit Order and Market Order.
o Limit Orders allow investors to specify the exact price they are willing to accept for a buy or sell order. While Limit Orders are designed to offer more price protection for investors, a Limit Order may not be executed if the price of the security does not reach the price stated in the Limit Order.
o Market Orders direct the broker-dealer to immediately execute either a buy or sell order at the current 'market price' — the best bid or offer.
Investors must decide whether price (Limit Order) or timing/immediacy (Market Order) is more important to them.
4. Broker-Dealer handling of the Order — Once a broker-dealer receives an order, it often goes through the following steps as part of the trading process:
o Execute Trade Internally — Broker-dealers will typically first determine if the order can be executed internally. Internal executions occur if they can 'match' (same prices for a buy and sell order) Limit Orders or if they provide liquidity against their own account. If they are trading for their own account, they generally must give investors the best available quoted price or better at that point in time. This rule is known as Best Execution and is among the regulations discussed in Part 3 - Regulation
o Trade Marketable Order Externally — If the broker-dealer cannot, or chooses not to, execute the trade internally they will attempt to execute the trade with another broker-dealer. OTC Link® ATS provides trading and messaging capabilities, which facilitates the process of ascertaining whether the order is marketable. Marketable orders are orders where the price specified can immediately be executed in the market. Market Orders are, by definition, marketable. Limit Orders are marketable if the limit price is less than or equal to the bid price (for sell orders) or greater than or equal to the ask price (for buy orders) (i.e., execution is at a price better than or equal to the limit price). For example, a customer's Limit Order to buy security ABCD for $30 will only be marketable if the offer/ask price is $30 or less. If the offer price is $30.01 or greater, then the limit order is not marketable and will not be executed. If the order is marketable, the broker-dealer may utilize OTC Link® ATS to negotiate a trade.
o Create/Edit Quote on OTC Link ATS — If the order is not marketable, the broker-dealer may be required to adjust its existing quote to reflect a new price or size. Broker-dealers are only required to update their quote if the price of the order is equal or superior to their existing quote (See FINRA Rule 6460 and Part 3 - Regulation). In many cases, a broker-dealer quote size represents an aggregation of a number of customer orders. Trade Non-Marketable Order Externally - Once a broker-dealer has a quote posted on OTC Link® ATS, they may receive a trade message via OTC Link® ATS from another broker-dealer; as the market changes, a broker-dealer with a standing quote may also initiate a trade message electronically. At that point, the broker-dealer may accept, decline or counter (send a different price or size) the offer to trade. The broker-dealers then negotiate trade price/size, one of the main differences between a trading a security off-exchange and trading a listed security. There is no central system that matches/executes orders for off-exchange traded securities — all trades are agreed upon directly between the broker-dealers. OTC Markets Group's trading platform, OTC Link® ATS, facilitates negotiated trading. Broker-dealers are required to be firm at their quote prices up to the sizes displayed. While broker-dealers may communicate by phone, one of the benefits of OTC Link® ATS is the ability for broker-dealers to trade and message electronically, creating a more efficient trading process.

Exchange Traded Fund (ETF) - Investopedia
An exchange traded fund (ETF) is a basket of securities(stocks) that trade on an exchange, just like a stock. ETF share prices fluctuate all day as the ETF is bought and sold; this is different from mutual funds that only trade once a day after the market closes.
'It’s the toughest time in the restaurant industry ... in the last 30 or 40 years': Celebrity chef Marcus Samuelsson

In anticipation of restaurants opening

**Chains, indoor dining
**ETF pleasure, dining out
**Foodservice delivery
**Supplies and small wares
**Restaurant centric companies i.e., Maître D
**Website "Open Table"
**Bar service

The Biden Presidency
It is not too late to take advantage of our new administration. Think “green.” Cannabis and renewable, clean energy. A new emphasis on climate change, environmental protection, etc.
https://www.greenprophet.com/

Stocks for the “Green Gold Rush”
The Industrial Revolution… The 1980s Computer Boom… The Internet of Things…
Throughout history, we have seen fortunes made, with market leaders rising on the back of new economic tailwinds. And it is not too late to get in on the next possible economic gamechanger sweeping the nation.
Take the potential of the Industrial Revolution and remove the soot-covered cities…
Investing in “green” companies could add some green to your bank account. And we are not just talking green tech—there are companies across sectors that are using sustainable, environmentally conscious principles to decrease their carbon footprint and increase their stock value.

Definitive List of Alternative Energy Equities ETFs
This is a list of all US-traded ETFs that are currently included in the Alternative Energy Equities ETFdb.com Category by the ETF Database staff. Each ETF is placed in a single “best fit” ETFdb.com Category.


ICLN
iShares Global Clean Energy ETF

TAN
Invesco Solar ETF

QCLN
First Trust NASDAQ Clean Edge Green Energy Index Fund

ACES
ALPS Clean Energy ETF

PZD
Invesco Cleantech™ ETF

FAN
First Trust ISE Global Wind Energy Index Fund

PBD
Invesco Global Clean Energy ETF

NRG
SPDR S&P Kensho Clean Power ETF

GRID
First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund



CANNABIS STOCKS TOP 10

My criteria;

#1. I like to see at least 100M in annual sales.
#2. I like to see an outstanding share number of less than 300M.
#3. The stock must have momentum. Especially right now.
#4. On the way to EBITDA break-even, if not there yet.
#5. Maybe a turnaround story, or legit, right out of the box.
#6. Typically, will be focused on the U.S., not Canada.
#7. For now, will be marijuana only. No hemp.


1) TILT TLLTF HOLD ADD
2) High Tide HITIF HOLD ADD
3) Columbia Care CCHWF HOLD ADD
4) Harvest Health HRVSF HOLD ADD
5) 4Front FFNTF HOLD


6) CRESCO CRLBF SOLD
7) Verano Holdings VRNOF NEW NO POSITION
8) TerrAscend TRSSF NO POSITION
9) AYR Resources AYRWF SOLD
10) Green Thumb GTBIF SOLD
11) HEXO HEXO SOLD
12) Schwazze SHWZ NO POSITION
13) Jushi JUSHF SOLD
14) Trulieve TCNNF NO POSITION
15) INDUS Holdings INDXF SOLD
16) HOLLISTER HSTRF SOLD
17) GrowGeneration GRWG NO POSITION
18) Curaleaf CURLF SOLD
19) TILRAY TLRY SOLD
20) TPCO Holding Inc GRAMF SOLD


Too late to find quality underpriced Cannabis stocks? But even the worst companies are increasing in value because the entire Cannabis sector is doing well.
Looking at the Cannabis SPACS right now. GRAMF and soon to come, Choice Consolidation.

EBITDA
What Are Earnings Before Interest, Taxes, Depreciation, and Amortization?

EBITDA, or earnings before interest, taxes, depreciation, and amortization, is a measure of a company's overall financial performance and is used as an alternative to net income in some circumstances. EBITDA, however, can be misleading because it strips out the cost of capital investments like property, plant, and equipment.
This metric also excludes expenses associated with debt by adding back interest expense and taxes to earnings. Nonetheless, it is a more precise measure of corporate performance since it is able to show earnings before the influence of accounting and financial deductions.
Simply put, EBITDA is a measure of profitability. While there is no legal requirement for companies to disclose their EBITDA, according to the U.S. generally accepted accounting principles (GAAP), it can be worked out and reported using the information found in a company's financial statements.
The earnings, tax, and interest figures are found on the income statement, while the depreciation and amortization figures are normally found in the notes to operating profit or on the cash flow statement. The usual shortcut to calculate EBITDA is to start with operating profit, also called earnings before interest and tax (EBIT) and then add back depreciation and amortization.


CANNABIS STOCK PICKs OF THE WEEK
High Tide
Indus Holdings
TILT
Hollister
4Front
Harvest Health
(It is getting harder to find undervalued MJ stocks)
Next quarter’s earnings release should boost both HEXO and Harvest Health


Bloomberg


With New Lobbying Clout, Big Pot Has Arrived: Cannabis Weekly

Big Alcohol and Big Tobacco have garnered a formidable reputation in the lobbying arena over the years. Big Pot is now looking for a piece...



Why Cannabis?
I have followed the Cannabis sector for over 7 years. There are now 3 solid reasons to look at the Cannabis sector in regard to your investment portfolio.
Number one - MOMENTUM
States are falling like dominos legalizing marijuana for recreational use. Throw in the Biden win, and this is a trend that cannot be stopped.
Number two - PROFITABILITY
cannabis companies are reporting net profitable quarters. Look what happened to Tesla when they reported their first profitable quarter. Two companies of note, Trulieve and Cresco.
Number three - The ARBITRAGE play (Buy Out)
American companies, wanting to partner with or purchase Cannabis companies, have to stay at arm’s length from Cannabis companies because marijuana is a schedule one substance (the most dangerous), and it is illegal federally.
When the fed loosens its grip and/or marijuana is legalized federally, BIG business will rush in to swoop up already established Cannabis companies at a premium. BIG tobacco, BIG liquor, BIG beverage, BIG pharmaceutical, BIG leisure, retail grocer, health food and nutritional companies.

BIG TOBACCO
BIG LIQUOR
BID RETAIL
BIG NUTRITION
BIG PHARMA
BIG BEVERAGE
BIG POT

MJ tailwinds

#1. State dominos are falling for legalization. Arizona. Florida next?
#2. First time House votes approvingly on legalizing marijuana.
#3. President and vice president-elect Biden and Harris are pro-cannabis.
#4. U.S. MSO's (Multi-state operators) are starting to report net profitable quarters.
#5. MOMO (momentum).
#6. Democrat control of the Senate.


How to Use Index Futures - Investopedia

The rise or fall in index futures outside of normal market hours is often used as an indication of whether the stock market will open higher or lower the next day. When index futures prices deviate too far from fair value, arbitrageurs deploy buy and sell programs in the stock market to profit from the difference.

FUTURES 2/15 Begin at 3:00pm on Sunday for Monday’s open
DOW +/-
NASDAQ +/-
Check on mobile app CNBC!

BEST REFERENCES
1. Smartphone app – “Yahoo Finance”
https://play.google.com/store/apps/details?id=com.yahoo.mobile.client.android.finance&hl=en

2. Investor Business Daily https://www.investors.com/
3.
4. www.otcmarkerts.com
5.
6. https://www.stockscores.com/charts
7.
8. Smartphone app – “Stocks Alert” by Milhomens Apps
https://appgrooves.com/android/cat.obiols.milhomens.BorsaValors/stock-alert-formula/milhomens-apps

9. Investors HUB https://investorshub.advfn.com/
Cannabis Investment Club
https://investorshub.advfn.com/Cannabis-Investment-Club-33161/
JohnCM Investment Corner
https://investorshub.advfn.com/JohnCM-Investment-Corner-37729/

I have known of this following discipline for 30+ years, but rarely used it, UNTIL NOW!

"Trading around a core position"

You own 100 shares of ABC Inc.

You have the smartphone app STOCKS ALERT setup on your phone with your portfolio. All of your stocks are monitored for RSI(14) oversold (30) and overbought (70) levels. As well as (20), (80), (60).

When ABC Inc. flashes the RSI(14) 80 threshold has been reached, I sell 33 shares. When the stock flashes (60), I either, pocket the extra CASH, or buy 33 plus shares.


This Stock Investment Newsletter is free to enjoy.
I also have available my “live” version of the newsletter that includes my “real time” trades (buys and sells), portfolio positions and immediate “stock tips.”
If you wait 7 days to act on one of my recommendations, that is an eternity of time in the investment world. Stocks can move 5%, 10% or more, in a single day, let alone 5 trading days.
To take a peek at my “live” newsletter version, click here
https://johncmueller.com/stock-investment-newsletter/

DISCLAIMER
John Mueller is not a licensed financial, income tax advisor, stockbroker, or licensed real estate agent (almost!). All investment/financial opinions expressed by John Mueller are from personal research and 35 years investing experience and are intended as educational material only. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur. Purchase and sell real estate and stocks at your own risk.