Year end review

BCO member report;

This has been a difficult year for many including myself with investing. I have witnessed my capital decrease 1.75% even with dividends and options premiums. I was unable to call the bottom in oil and took a huge loss on Kinder Morgan and Cummins. I'm lucky I still have a pair of pants on! My passive dividend income has increased throughout this whole fiasco though and that was the purpose-a safe reliable income stream. Now as I approach retirement I must decrease risk. I am going to stay clear of speculation and barely investment grade companies bordering on junk credit ratings(KMI). I am reviewing my portfolio for companies with lower credit ratings (there won't be many) and will work to swap them out. I also do not intend to put any more capital to work in 2016 in stocks. I am considering I-bonds and municipals. I currently hold T, JNJ, PG, PEG, AAPL, BA, F, GE, GILD, KHC, OHI, XOM. I also hold an iShares fund and a health care fund, I use options once or twice a month, selling puts and calls.

Have a Merry Christmas, Happy Kwanza, Happy Festivus or whatever else you may celebrate! Take care of your health as it pre empts everything else-spend time with people you like and doing things to help others. Keep a gratitude list and read/edit it often.

September Update

Our philosophy is to not follow the herd - please see below to determine what the herd is focused on right now;

We are bargain hunting. Here is a quote that may help;

My strategy is simple, watch for %ticker% to make a 52 week low and begin to accumulate shares when it moves 5% off it's 52 week low. Then hold until it begins to make a new 52 week highs and begin to sell when it falls 5% from the new 52 week high. If you accumulate say 1,000 shares at $65 / share ($65,000 investment) you will receive about $4,600 / year dividend (at current 4.6% yield) income for the next few years. Then if you sell at say $110 you would have a $45,000 capital gain. Thats a 70% gain in capital plus you get $4,600 per year while you wait.

Timing the market is a risky business but the above is worth considering.

August Update

Stocks of interest are;


RAI Reynolds American, tobacco, PPS 86.16, PE 16.1, Div Yield 3.08%, est 1 yr eps growth 16.8%, payout ratio 18.46%, DGR 8.29%

F Ford, auto manufacturer, PPS 14.80, PE 16.1, Div Yield 4.05%, est 1 yr eps growth 14.93%, payout ratio 31.67%, DGR 24.57%

DOW Dow Chemical, chemicals and materials, PPS 45.50, PE 13.0, Div Yield 3.61%, est 1 yr eps growth 14.02%, payout ratio 49.82%, DGR 22.87%

July Update

Stocks of interest are;

 CMI (Cummins), manufacturer of diesel/nat gas engines, 130.50/share, PE 13.96, div yield 3% (after dividend raise), est 3 yr eps growth 11.23%, payout ratio 32%, DGR 20-25%-source yahoo finance. jmc sold put option on 7/16.

COP (Conoco Phillips), oil E and P, 57.95/share, PE 14.4, div yield 5% (just raised).

GE(General Electric), manufacturer medical equipment, jet engines, 27.04.share, forward PE 17.45, div yield 3.5%, est 5 yr eps growth 7.96%

GILD (Gilead Sciences), biopharmaceutical, 118.85/share, forward PE 10.75, div yield 1.5%, est 5 yr eps growth 20.6%

Jason Zweig

"The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists."- Jason Zweig

Ford into high gear?

http://finance.yahoo.com/news/strong-sales-could-shift-ford-003145009.html

If you have a desire for a 4% yield...

Good advice from the Oracle

Here is a great video from the Oracle of Omaha. He speaks about Ted Williams, the strike zone and investing. It is excellent.

https://www.youtube.com/watch?v=_5VQPIeZhMc

Buying Opportunities

A common question today is with the market at record high levels, are there any stocks representing a good value and worth opening a position in now? One sector that seems to be at a relative good value now compared with a year ago is energy. An example would be Exxon Mobil which is paying a 3.2% dividend at the moment. CVX is over 4% and BP is even higher. But has oil bottomed? I believe that if it has not, it cannot fall much farther. This sector is at a relative value compared with the last 5 years. I am selling puts on XOM knowing that if they execute, I have picked up an excellent company at a decent valuation in a beaten down sector.

Welcome to the BCO Group's first post!

We are excited to present to you the BCO Hedge Fund's founding and first blog post! 

Welcome to our blog. We are a group of 3 late career (1 semi retired) professionals who have worked in the educational field for most of our lives. We are the same as you-concerned about our family's financial future and our hard earned capital! We invest with a long term view and commit capital only when it fits in with our philosophy. Without further ado, we present our first commentary. This is an incisive and forward looking view from our esteemed senior member-thanks Jim!

........we know the feds are going to continue the bond buying, (they keep "blinking" regarding any rate hikes, keeping any middle class traditional returns near zero, thus a couple of new investments are in order-------i believe the next hype whether true or false will be the media/financial growing blitz on currency manipulation and the threat of another competing world currency to challenge the greenback---- which the IMF is still giving a green light on--i.e. China/Russia/etc.----thus i suspect there will be some significant correction coming in the months ahead, (buying opportunity) even if the correction is short in duration--- staying ahead of the curve--Jim