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Scott Wachsler
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I manage Wax Ink.net, a baseline equity research company comprised of individual investors not licensed or registered with any government agency. I have been all cap value investor and independent equity researcher for the past 30 years, and believe that patience is the key to successful... More
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Wax Ink
  • Performance - 09/20/2013 0 comments
    Sep 21, 2013 11:14 AM | about stocks: EW, FMC, ENTR, EEFT, FTI, MMM, XOM, MCD, AIR, FSTR, GRA, ARCB, MRK, IRF

    Wrong! Wrong! Wrong! Wrong! I was completely wrong. I said last week that individual investors would take it up the whazoo because the Fed was going to implement the taper. But it didn't happen. The Fed got a nut teasing the investment community and then went home.

    Golly Wally, how do you get a nut?

    Apparently the fed prez from Kansas City was a bit irked that the taper was put off while the fed prez from St. Louis appeared to be on the fence, noting that the if they wanted to during the October meeting, they could vote to start the taper.

    Golly Wally, what's a taper?

    The other thing I was wrong about was Larry Summers. I believed he would be nominated as the next chairman of the Federal Reserve. But surprise surprise Sergeant Carter, Mr. Summers withdrew his name from consideration.

    Golly Wally, who is Sergeant Carter?

    Economic projections. Obviously I'm not very astute when it comes to discerning the future. Certainly, like the rest of the world, I can make a guess, but that is exactly what it would be, a guess. Not an educated guess, just a guess.

    I would never consider an investment position based on what my perception of future economic conditions (aka guess) might be, just as I would never consider an investment position by how some charts and graphs were interpreted, regardless of how many confirmations I had.

    To me, that is simply tea leaf investing. While it can be successful, it does require a portfolio to contain equities, bonds, and cash. Then, depending on what the tea leaves detail, the portfolio is simply over or under weighted in those three investments. I would think that trading fees, while small, would have a tendency to push portfolio costs up, but I have no idea how much that would impact such an investing strategy.

    There are two reasons why I would never debate one investing strategy over. The first one is because I don't know what all the investing strategies are. The second reason is because I'm not interested in other investing strategies. If they are working for you, stay with them and best of luck.

    Have you ever heard the term opportunity cost, or standard deviation? Do you know what they mean? Do you know how to determine them? Do you know how and when to use them? When 1825 day (5 year) time periods are factored in to these terms, do you know how they are impacted?

    Now consider that five years ago when the markets were headed into the crapper at warp speed, you had bought a company that you actually knew like 3M (NYSE: MMM). Had you bought the stock at the close on 09/20/2012 you would have paid $72.68. The stock closed yesterday at $120.01, an approximate 65% gain.

    Same thing with Exxon Mobil (NYSE: XOM). Had you bought it five years ago you would have paid $79.61. It closed yesterday at $88.66, an increase of 11%. Similarly had you bought McDonald's(NYSE: MCD) five years ago, you would have paid $63.98. It closed yesterday at $96.90, an increase of 52%.

    Trying to simply keep up with inflation? Let's see, the individual 5-year average dividend yield for 3M is 2.70%, while for Exxon it's 2.30%, and for McDonalds it's 3.20% making the average 5-year dividend yield for these three stocks 2.73%. The five-year average inflation rate is approximately 2.50%.

    My point here is that you know what you want an investment to do for you and as I have shown, one way to make that happen is to invest in a very small basket of companies that you know, whose products you may even use, and to hold those companies at least 1825 (5 years) days. As the matter of fact, if you're really smart, you will simply forget that you own them at all.

    Hi. My name is Wax, and I am an individual, working class, investor just trying to do the best I can in a world that was never intended for investors like me.

    Throughout the course of the week, I post a Daily Alert, which is my review of an individual equity. It is intended to help the reader decide if that particular equity is worth their time to research.

    The other thing I do, is let the world watch as I manage the The Wax Ink Portfolio.

    Perhaps watching me make the mistakes I make will help other working class investors avoid the investing pitfalls that seem to find me.

    Enjoy your weekend

    Wax

    Markets
    The Wax Ink Portfolio was up 1.1% for the week. By comparison, the Dow was up 0.5%, the Nasdaq was up 1.4%, the S&P 500 was up 1.3%, the Russell 2000 was up 1.9%, and the Volatility Index, commonly known as the VIX, was down 1.0%.

    Year to date, the Wax Ink portfolio is up 23.9%, the Dow is up 17.9%, the Nasdaq is up 25%, the S&P 500 is up 19.9%, the Russell 2000 is up 26.4%, and the VIX is down 13.9%.

    Breakdown
    The Wax Ink Portfolio breakdown remains unchanged with roughly 70% of the portfolio in equities, 30% of the portfolio in cash, and 0% of the portfolio in bonds.

    Research
    I finished baseline equity reviews on the following companies during the course of the week. My rating follows the ticker symbol.

    Edwards Lifesciences Corporation (NYSE: EW) - Negative Investment Interest

    FMC Corporation (NYSE: FMC) - Negative Investment Interest

    Entropic Communications (Nasdaq: ENTR) - Positive Investment Interest

    Euronet Worldwide (Nasdaq: EEFT) - Negative Investment Interest

    FMC Technologies (NYSE: FTI) - Negative Investment Interest

    Holdings
    This week's moving on up stocks were airplane repair company AAR Corporation (NYSE: AIR), up 10%, basic materials company L.B. Foster (Nasdaq: FSTR), up 5%, and specialty chemical company W.R. Grace (NYSE: GRA) was up 3%.

    This week's floaters in the bunch bowl were trucker Arkansas Best (Nasdaq: ABFS), down 4%, pill maker Cubist Pharmaceuticals (Nasdaq: CBST), down 3%, and semiconductor maker International Rectifier (NYSE: IRF), down 1%.

    Not Performing
    The top portfolio choke and puke stocks remain communications equipment company Tellabs, down 56% since being added to the portfolio, garage door and telephone headset maker Griffon Corporation, down 32% since being added to the portfolio, and iron ore company Cliffs Natural Resources, down 35% since being added to the portfolio.

    Copyright © 2013 Wax Ink

    Wax Ink is a baseline equity research company not licensed or registered with any government agency

    Disclosure: I am long AIR, FSTR, GRA, ABFS, CBST, IRF.

    Stocks: EW, FMC, ENTR, EEFT, FTI, MMM, XOM, MCD, AIR, FSTR, GRA, ARCB, MRK, IRF
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