SYNOPSIS
Last week we had a really nice extension of the one week gains a week earlier, resulting in 2-4% gains for the major indexes that we report.
Trading Activity… We sold 1 position in the ProfiTrend Portfolio this past week, but are actively looking for opportunities to invest a currently over-sized cash position. The annualized growth rate for the PTP is now 45%, compared to 22% for the S&P 500 and 29% for the S&P/TSX Composite Index companies. This falls short of the customary lead of the PTP over our benchmarks, but we’ve only held our current (smaller set of) holdings for an average of 4 weeks!
Topic of the Week… Niche Investing: The Dope on Dope!
Warning: You may find that this week’s topic gives you the munchies. Have some snacks nearby!
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We have at least a few followers here who like to play super low-priced stocks that have no earnings now (or perhaps ever). More often than not these are different from other “loser small caps”, because their business is in a niche area that may one day develop into something big. We think a perfect example of this to kick-off a discussion on niche investing is the legalization of marijuana. Believe it or not, here are already publicly traded companies in this “blossoming” business out there with no earnings and questionable prospects. But that doesn’t mean that will always be the case.
The point is that niche investing logically can’t rely on traditional fundamental analysis, and the technical analytics have serious drawbacks too, as you’ll see below. This is a leap of faith way to invest, that we don’t recommend to most investors; but let’s talk about it anyway. More below.
State Street Investor Confidence Index… The latest data for the month of January are included. The results are showing that the “smart money” is pouring into stocks like crazy! Biggest jump in the index in four years!