We think Water is a very good investment. Dr. Michael Burry, (remember The Big Short), also thinks so. Dr. Burry said in a recent interview that he wants to approach water as an investment through food. For instance, he says it takes 40 bottles of water to make one bottle of wine.

Most of the pure play water stocks and ETFs are doing well, AWK, CGW, CWTS, VEOEY, and on and on. But CWT, California Water Service Group just dropped 6%, trading now at around $30. Why, they disappointed Wall Street in their 3rd Q earnings by $.09, they only posted $.48. That's about a 16% miss. I guess that's a lot, but a  6% drop on trading that was 4X normal volume. Somebody dumped a lot. Everything else looks good for this stock, it has a Beta of .43 and a dividend/yield of 2.14%. I plan to buy some on this dip.

(This not advice to buy, I'm wrong a lot)

 
 
George Lee, partner and Global Technology Chief at Goldman Sachs said this week on CNBC that Artificial Intelligence is on it’s way to becoming huge in the not very distant future, (he really didn't say huge - I've got Donald Trump on my mind), but that's what he meant. He said that three things in the technical world must and will further develop in order to facilitate this future:

1. manage at scale. (Refers to the infrastructure or all the components that play a role in IT-enabled operations).
2. chip technology
3. compute stack Wikipedia says this is an abstract data type that serves as a collection of elements that have two operations; a push, and a pop. Sometimes a peek is also added. (Ah yes, now I understand)

George Lee was also the guy who engineered the $50 Billion Facebook deal so he knows what he's talking about.

What is AI?

AI to most of us is still a rather vague term, is it a robot, is it virtual reality? It's actually way more than that if you look again at Wikipedia;
"AI is a flexible rational agent that perceives its environment and takes actions that maximize its chance of success at some goal. Colloquially, the term 'artificial intelligence' is applied when a machine mimics 'cognitive' functions that humans associate with other human minds such as 'learning' and 'problem solving'." So, it's like a person, only it doesn't have to be born or go to school, that must be where the “artificial” comes in.

Investing in AI.

OK, so how do we profit from AI? Research turns up that the known players in the field are all the big boys; Facebook, Amazon, Alphabet, Apple, Microsoft, IBM, Baidu, Boeing, and Tesla. These companies all do a million other things as well so it’s difficult to judge how much actually goes into AI, and what the risk and reward would be. Nvdia (NVDA), seems to be the only large pure play AI company, and it’s doing very well trading at an all time high of $72 with the greatest growth coming since March of 2016. NVDA is a favorite of the institutions with 87% of the shares and 92% of the float being held by 547 institutions, Fidelity and Vanguard being the largest holders.

Among the ETF’s that claim the AI label are XT, BOTZ and ROBO, but when you look closely at their makeup, it becomes clear that they are mostly involved with industrial and non-industrial robotics, and automation, and not directly connected to the three things that George wants to see grow, (although AMD is in ROBO’s top 10 holdings). It’s interesting that you don’t see many of the big names in these ETF’s, where you do see them is in mutual funds and in special stock bundles such as those offered by Motif. All those big names appear in some combinations.

Conclusion:

There are probably some small firms specializing in AI out there that have not yet been gobbled up, but if they’re any good they might be already gone. It’s hard to tell where NVDA will go from here, it would be nice to see a slight pullback in order to get in. For us as small investors, we need to watch the big boys and see who jumps out to take the lead.

 
 
If you've never checked out Mike Maloney at goldsilver.com you really should. His "Hidden Secrets of Money" is an incredible education.

Anyway, he came out with a special report today saying that the Commitment of Traders Report show that about 22% of the short positions on gold and silver have been covered. (Those positions were much higher). He thinks the speculators are starting to get out. However, many of the technical indicators indicate that the prices for both gold and silver may go somewhat lower before they shoot up.

Looking at worldwide gold Mike says although India and Turkey may still be buying gold for weddings and gifts, Russia, China and most of the Silk Road countries are also buying gold but in their case the reasons are all monetary.

China has been unloading US Treasuries and buying gold in increasing amounts. Russia has also been accumulating gold faster than ever. Mike thinks they are preparing for something. Perhaps we should be also.
 

Avacados

10/24/2016

5 Comments

 
According to CNBC Avacado prices may double or triple between now and Super bowl, (big guacamole day). There is apparently a shortage accompanied by high demand.

Avacados grow on trees primarily in warm climates, Dept. of Agriculture Zones 8-11
. A labor strike in Mexico may be part of the problem affecting supply.

The largest producer seems to be Calavo Growers, Inc. (Nasdaq CVGW  62.05 +1.05). Several Funds hold a significant number of CVGW shares, such as the Neuberger & Berman Genesis Fund and at least one of the Lord Abbett Developing Growth Funds. Price increase may not have hit these yet.


Update 10/25 CVGW is back to where it was before this news 61.35 on lighter than normal trading. Wonder where it will go from here?
 
 
The easiest way is to buy EUO at about $25

Nobel Prize winner Joseph E. Stiglitz indicates in EURO, (W.w. Norton & Co 2016), that the Euro will probably fail in the not too distant future. He states that austerity as is practiced by the Troika* will backfire and lead to economic contraction just as it did in Argentina and Est Asia, and even in the US when  Hubert Hoover tried to use cutbacks in expenditures and other austerity measures after the 1929 stock market crash. What he managed to do was convert the crash into the Great Depression.

* The group made up of the European Commission, International Monetary Fund and European Central Bank.
 
 
An article in today's Wall St. Journal says that Irish Whiskey is the world's fastest growing major spirit. So how would one invest? Apparently there are a few ways;
  invest in limited edition bottles
  invest in new distillery projects
  invest in casks
  buy bonds
  buy stocks

For me the first three are off my list right away, I'm not smart enough to go there. Looking up all the popular brands including Bushmills, Cooly, Irish Distillers, Teeling, Tullamore Dew, and Walsh indicates that they are all privately owned -except Irish Distillers, who's top brand is Jameson. Aha!

Irish Distillers is owned by Pernod Ricard S.A which trades on the Paris exchange as well as on the Pink Sheets in the US (PDRY.PK), current price about $24. Bonds for this company also trade under the symbol RIFP.


However, there is a brand new whiskey and spirits ETF out, (WSKY) which is also trading at about $24. WSKY's top holding, 25%,  is Diageo, (DEO). Their 2nd place holding is Irish Distillers. The consensus on Seeking Alpha is that you are better off buying those two individual stocks rather than paying .75% in expense fees. Volume is still thin on the new WSKY ranging from 3k-10k per day while PDRY averages about 12k per day.

As for Diageo, it seems to be a  good stock, but within their huge list of brands listed on their main website, although there are plenty of Scotch Whiskeys, I didn't find even one Irish whiskey, how can that be?

So for me, my only choice is to buy Pernod Ricard S.A., either the Paris shares trading at about $120 or the PDRY version trading at about $24. They are both around the high for the year and pay a 1.75% dividend with ex-dividend date coming up in mid-November.
 
 
From Seeking Alpha, Jamie Ellis
Gold market is frustrating and unpredictable. One thing that works is the relationship between gold prices and gold miners.  GLD and GDX. He uses the RSI. His current advice: Buy GDX on any weakness with a Stop at 4% below the 200 day movin average. Current GDX prce 24.62.

 
 
10/19/2016
From Seeking Alpha
With increasing troubles with Russia watch for increasing prices in:
    Precious metals
    Oil
    Nickel
    Iron
    Steel
    Fertilizer
    Aluminum
    Other commodities produced in Russia