Archive for February, 2017

New Trade: Long Netflix ($NFLX) & Short Etsy ($ETSY)

By: ispeculatornew | Date posted: 02.21.2017 (3:00 am)

Today I am opening my 7th trade of the year and surprisingly they are all still live. So far so good but no need to jinx it at this point. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
ETSYEtsy Inc12.9N/A59.279.6839.833.833.061.893N/AN/A
NFLXNetflix Inc142.22338.1260.1514.7130.263.956.231.4620.5923.4695.62

Both of the two charts that follow are tremendously bullish for AMZN. That it’s seeing revenue growth accelerate while much newer player Etsy’s growth is quickly declining and as you can imagine that is also reflected in the interest from Google trends.


credit: Google Trends

Long Netflix (NFLX)

I have a long term very bullish view on Netflix that I hope to write about very soon but suffice to say that I think the company is starting to gain incredible leverage from its position in the market and I do think that while it will hit occasional stock price hits (difficult to avoid them when trading at such high P/E’s), the company remains tremendous value at these levels and I do expect Netflix to keep driving both the top and bottom line forward in the coming years thanks to its position in the market where consumers see it as a must have and content producers are in many ways forced to sell their content to help their long term competitor.

Next earnings: April 24th


Short Etsy Inc (ETSY)

Etsy is another one of those great businesses from a client perspective but that I have strong doubts about from a investor’s point of view. I don’t think any of the users of Etsy directly competes with eBay and Amazon. I would disagree 100%. Fact is that both sellers and buyers can find/sell some of those items at eBay and Amazon and that will end up putting huge pressure on margins for Etsy making growth both on top and bottom lines more difficult. Customer service, shipping, the overall experience all end up being components where Etsy is competing with the sky-high standards that players like Amazon have created.

Next earnings: February 28th 2016

Disclaimer: Prior to opening this trade, I do not have a position on NFLX or ETSY

How to Turn Investments Into Tax Write-Offs

By: IS | Date posted: 02.17.2017 (12:30 pm)

Investing has many benefits: it supports the economy, breathes life into new ideas and businesses, and can lead to profit further down the line. In general, it’s a very good idea to invest a portion of your savings as early as possible, since the benefits reaped increase as time passes.

While most of these are long-term benefits, there are some short-term benefits as well, such as the potential for tax write-offs. In certain situations, expenses incurred while investing can be written off, reducing the amount of taxes you need to pay each year.

Capital Losses

 

Similar to how capital gains are taxed when investments have gained value, capital losses can be written off when investments have lost value. In this way, capital losses function as the opposite of capital gains. These losses can only be deducted when they are realized, meaning the only way to write off depreciating value of your investments is if they have been sold that year for a lower value than their buying price.

The maximum value of capital losses that can be written off in one year is $3000—any greater losses will roll over into the next year. In the event of a married couple filing separately, that maximum is split evenly between them, so they can only deduct $1500 each.

 

Investment Interest Expenses

 

If you’ve taken out a loan in order to purchase investments or securities, the interest paid on such loans can be deducted as a tax write-off. This even includes interest on loans taken out to purchase property, provided that the property in question derives interest or royalties, or if you take a passive role in the property’s business activities.

The maximum deductible investment interest expenses you can write off on your taxes is found by taking your net investment income and subtracting any miscellaneous itemized deductions, which are outlined below.

Miscellaneous Itemized Deductions

 

This category includes general expenses that are greater than 2% of your adjusted gross income. The main sources of miscellaneous itemized deductions are usually interest on home mortgages, charitable contributions, and taxes from property and income. However, certain expenses relating to investments are able to written off in this category as well.

As investments are considered by the IRS to be income-producing activities, fees incurred through the investing process can be deducted if declared as such on your tax forms. Some deductions that can be written off include custodial fees, clerical and attorney costs, and fees for transportation and safety deposit box rentals.

Investment expenses that count as miscellaneous itemized deductions:

 

  • Attorney costs for collecting taxable income
  • Accounting costs for collecting taxable income
  • Expenses for owned real estate that collects income
  • Rental fees for safety deposit boxes
  • Subscriptions to finance-related publications
  • Costs from transportation to financial advisors and brokers

Conclusion

 

Taxes are an unavoidable fact of life and can be very stressful when they sneak up on you. However, just as there are a seemingly limitless amount of taxes that are charged on your assets, there are many ways to write off these taxes as well. Losses incurred through investing can easily turn into a short-term boon, and may eventually become tax breaks in the years to come.

In addition, standard operating costs to acquiring and maintaining successful investments can be written off, however miniscule these write-offs can seem. Several small tax write-offs do add up, and the money saved from these breaks can be used to pursue future investments and increase the value and diversity of your portfolio. However, it is still important to consult with a tax professional before pursuing any of the potential tax breaks outlined here.

Christine Sato founded the CPA Review Courses website – an online resource dedicated to helping professionals pass all four sections the CPA Exam on their first try. Christine provides reviews of best cpa study materials and gives expert cpa study tips to ease the process of becoming a CPA.

 

New Trade: Long Apple ($AAPL) & Short IAC Interactive ($IAC)

By: ispeculatornew | Date posted: 02.10.2017 (6:50 am)

Today I am opening my 6th trade of the year between between 2 names that I have traded quite a bit over the years. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaEarningsRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
AAPLApple Inc132.4215.813.114.5-7.734.5424.811.214/25/201739.4211.5612.27
IACIAC/InterActiveCorp76.8228.0317.4217.78-2.824.323.841.085/2/201739.237.0547.37

 

Long Apple (AAPL)

The surprise here of course is not that I’m going long AAPL but rather that I wasn’t already long (apart from that long term speculative position). I continue to feel like the market is undervaluing AAPL but last year that trend clearly remained and I didn’t want to keep going against it. I do feel like that might have started reversing following its latest earnings release and continue to believe that there is a lot higher for the stock to go given its valuation. Yes, growth will remain a challenge for AAPL given its sheer size but it is also being priced much cheaper than the overall S&P500 and is the cheapest stock among the stocks that I follow in terms of forward P/E ratio. That is TOO cheap for a stock that will continue to grow steadily thanks to iphones but also services.

 

 

Next earnings: April 25th


Short IAC Interactive (IAC)

IAC has been proving for over a decade now how well managed it is and I expect that to continue. It has a very diversified business and has been able to knock out hit after hit over the years, spinning out several of those (EXPE, TRIP, MTCH for example) but I do think its valuation, especially when compared with Apple’s is expensive. IAC has been especially good at improving its bottom line in the past few years but AAPL has actually improved its top line at a higher pace.

 

Next earnings: May 2nd 2016

Disclaimer: Prior to opening this trade, I do have a long AAPL position

New Trade: Long Priceline (PCLN) & Short Twitter (TWTR)

By: ispeculatornew | Date posted: 02.01.2017 (7:11 am)

Today I am opening my 5th trade of the year between between 2 names that I have traded quite a bit over the years. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
PCLNPriceline Group Inc/The1575.1327.0621.569.299.264.64199.321.25181.0820.759.49
TWTRTwitter Inc17.62N/A28.283.9358.092.856.491.483.3599.28N/A

Long Priceline (PCLN)

For this trade, I wasn’t sure if I’d go long Priceline (PCLN) or Expedia (EXPE). Both have been solid performers and trade at comparable valuations but I do think a clear difference is that Priceline has been so steady over more than a decade. One truly impressive aspect has been its ability to generate both top and bottom line growth so consistently over time. That reduces the odds of a miss that could hurt this trade. For that reason, I’m going with PCLN even though it has (slightly) slower growth in recent quarters.

 

Next earnings: February 15th

Short Twitter (TWTR)

I have started writing a post about Twitter but the short story is that the company has been incredibly slow in improving its product and that is a big part of why its user growth has stalled. The company could be taken over of course but I think that’s a risk that’s worth it in these circumstances given its current valuation and growth perspectives. Twitter continues to be a great product to use and perhaps the application I spent most time on personally but it’s been unable to grow and I believe the issue is mostly around product execution rather than having a product that’s difficult to use or understand.

 

Next earnings: February 9th 2016

Disclaimer: Prior to opening this trade, I do not have a position on PCLN or TWTR