PORTFOLIO PRESENTATION by Eric Hoffa
Contents
Investment Approach
Equity: Northrop Grumman Corp. (NOC)
NOC ROI
Futures Investment: S&P 500 E MINI 6/10
S&P 500 E MINI 6/10 ROI
Questions
Investment Approach
The Coronavirus, which has now spread to 47 countries, has put pressure on businesses and supply chains around the world. 1*
China’s sluggish economy, which slowed to 6.1% rate of annual growth last year, reflected the lowest reading for Beijing in nearly three decades. 1*
We live in a social-media driven news cycle, coupled with the interconnectedness of global supply chains and a pricey stock market make Wall Street more vulnerable to a black swan events. 1*
Consumers have changed their behavior by avoiding vacations, canceling business trips, minimizing spending and lowering personal consumption, which reflects 68 percent of G.D.P. 2*
Analysts at Goldman Sachs predicted that companies in the S&P 500 would generate no profit growth this year as a result of the crisis 2*
1* https:
www.marketwatch.com/story/heres-how-the-stock-market-has-performed-during-past-viral-out
eaks-as-chinas-coronavirus-spreads XXXXXXXXXX
2* https:
www.nytimes.com/2020/02/27
usiness/stock-market-coronavirus.html
Investment
Approach
Epidemic Month end 6-mo % change of S&P 12-mo % change of S&P
Cholera Nov. 2010 13.95 5.63
MERS May 2013 10.74 17.96
Ebola Mar. 2014 5.34 10.44
Measles/ Rubeola Dec. 2014 0.20 -0.73
Zika Jan. 2016 12.03 17.45
Measles/ Rubeola June 2019 9.82 N/A
https:
www.marketwatch.com/story/heres-how-the-stock-market-has-performed-during-past-viral-out
eaks-as-chinas-coronavirus-spreads XXXXXXXXXX
The index has gained an average 0.4% in the month after an epidemic, 3.1% in the ensuing six-month period and 8.5% a year later (see graphic below):
3
Equity: Northrop Grumman Corp. (NOC)
4
The Yahoo Finance story, 3 Defense Stocks for Geopolitical Turmoil postulates that the defense sector does particularly well in times of uncertainty
The top four defense contractors win the vast majority of the government awards
Lockheed Martin (LMT), Boeing (BA), Northrop Grumman (NOC), and Raytheon (RTN) are the four defense contractors 1*
Northrop Grumman serves as a subcontractor on Lockheed Martin’s F-35 fighter aircraft model. Not only that, but Northrop also produces the Global Hawk drone and enhanced its market footprint in the space race in 2018 when the company acquired O
ital ATK. 2*
1* https:
people.defensenews.com/top-100/
2* https:
finance.yahoo.com/news/3-defense-stocks-geopolitical-turmoil XXXXXXXXXXhtml
I decided to go long in blue-chip defense stocks
NOC was selected because the government is expected to announce a significant increase to the number of airplanes that they intend to purchase in the near future
stock has a strong Composite Rating of 90 and an EPS grade of 94. 1*
1* https:
www.investors.com/news
est-defense-stocks-to-buy
NOC ROI
My strategy is to cut my losses when -20% under purchase price and to sell when +20% over purchase price (excluding comm.).
20% = + or - $ 65.33/share ($ XXXXXXXXXXvs. $261.30 )
Futures: S&P 500 E MINI 6/10 (ES)
S&P 500 E MINI 6/10 (ES)
About E-mini S&P 500
An electronically traded futures contract one fifth the size of standard S&P futures, E-mini S&P 500 futures are based on the underlying S&P 500 stock index.
Made up of 500 individual stocks, the S&P 500 is one of the most comprehensive proxies for US companies and the US economy as a whole, and thus one of the most traded index futures in the world.
ES futures provide one of the most efficient, liquid and cost-effective ways to gain market exposure to the S&P 500 Index.
https:
www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500_quotes_globex.html
S&P 500 E MINI 6/10 (ES)
Purchased Future:
Meets my trading strategy and risk tolerance
Highest Liquidity, so I won't be stuck in a position
Lower Volatility due to diversified portfolio
Trading hours in line with my hours
Contract Month Product Code Settlement
Mar-20 ESH20 20-Mar-20
https:
optimusfutures.com/tradeblog/archives
est-futures-markets-daytrade-2020
ESH20 ROI
My strategy is to cut my losses when -20% under purchase price and to sell when +20% over purchase price (excluding comm.)
20% = + or - $25.52 ($3,123.27‬ vs. $3,072.23)
Questions