John Person shares some discretionary stocks he's looking to trade as we near the end of 2013, and fills you in on possibilities to consider heading into the new year.
SPEAKER: Well, as we head into the end of 2013, traders are always looking for what the opportunities are. My guest today is John Person to talk about what he likes in this business, so John, if there are some stocks out there or some sectors that you like here as we end the year and maybe into 2014, what are they?
JOHN PERSON: Very simple. Everyone's looking for a top and no one's trading in the stock market, so that tells me we're probably seeing more continuation to the upside. There's still a lot of excellent value. As of let's say the first week of October in the S&P 500 there were still probably 90 stocks above their 10-day moving average, and there's a lot of stocks that are still exceptional values, and I think a lot of individual stocks are confusing for people because you saw a breakdown in a lot of consumer discretionary stocks.
One thing I wanted to address is that probably to me, the most discretionary stock out there, or sector, is discretionary being after you pay your rent, after you pay your mortgage, after you pay your car payments and your necessities, then you have excess capital to splurge on yourself. Is that a fair assumption?
SPEAKER: Sure.
JOHN PERSON: So what's the first thing that would come to your mind that is the most frivolous amount of money that you're going to blow? Probably you're going to go to Las Vegas and gamble, right?
SPEAKER: Sure.
JOHN PERSON: I mean, isn't that the last place, and if you look at the gaming stocks and it's just not one company, Las Vegas Sands, stock symbol LVS, Wynn, and MGM, BYD Gaming, and looking at international game technologies, IGT, the whole sector has risen together, and so looking at that it's really amazing to see that there's that kind of strength in the market. You look at another amazing consumer discretionary stock, Harley Davidson. How many people are running around buying new motorcycles at the end of September and October, but the stock symbol for Harley Davidson HOG, you'll see that that's also broken out to make new highs on the year as we're in this overall S&P correction.
I think there's still some value, some areas that I like are in the drug makers. You can still find value with names like Merck, MRK. I like in the industrial electronic area, Siemens is a stock symbol SI. It hasn't really seen a major break out yet and it looks as if it is, and I still like technology, Cirius, CRUS, so there are still a lot of names out there that we like, and then towards the end of the year I think the XRT, the retail apparel sector looks good and we're looking at some of the department store names, generally speaking Macy's and Nordstrom's, M is the Macy's symbol and JWN is Nordstrom's.
SPEAKER: How about on the short side, anything that looks terrible to you that you think has still got room to go down?
JOHN PERSON: Yeah, and here's a great strategy that we see year after year after year, and I don't know if it's considered the dogs of the Dow, but you look at a lot of towards the end of the year, I think what the funny thing is people can, that's where seasonalysis (SP?) really does help us, because we forget. I mean, if you're like me, I forgot what I had for dinner last night, let alone what happened last year or the first quarter, or that the end of the fourth quarter every year.
Traditionally though stocks that are under pressure tend to remain under pressure for tax loss credit selling, and the high flyers like maybe you're Priceline at this point in time, you might see a muted pullback but if there is any profit taking, it's generally after the first of the year. It gives us that January sell-off, so the strong stocks tend to remain strong into the end of the year and the weak stocks get weaker, and then a great buying opportunity for those stocks that are selling off into the end of the year, those turn around to be the best buys in early January, so that's one of the trade set-ups that we're personally going to be looking at for our clientele.
SPEAKER: John, thanks for your time.
JOHN PERSON: Thanks a lot, Tim.
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