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another pick list update ?2


The internet is awash this morning with articles on how Fitbit's market share has declined.  They all stem from this IDC report, which shows the company in a dead heat with Apple and Xiaomi.  The reality is that we always knew this was coming in the form of new competition from Apple, Samsung and others.  I've said all along that the fitness trackers will cede ground all-purpose devices.  The risks are real, but the only thing that has changed about the investment thesis is the price of FIT.  The time to be bold was when shares were closer to $5, and I think now is the time to be cautious.

That's because the risks are still there.  Yesterday saw robust market action, and futures appear unfazed after a jobs report that missed expectations, but not so broadly as to really sound alarm bells.  The next report will probably be disregarded due to the effects of Harvey unless it shows surprising strength.  What this says is that the only thing the market truly cares about is the Fed's balance sheet, and to a lesser extent, interest rates.  Even so, there are other things it could come to care about, some of them still mostly unnoticed.  One of them is the market itself.  Markets like this work on a feedback loop, and it does have the potential to reverse dramatically.

If that happens, you'll want stocks with good balance sheets.  Fitbit actually belongs in that category, and Westport is getting there.  I've continued to watch the progression of energy markets, taking particular interest in a DoE report that basically says that natural gas is solely and justifiably responsible for the death of coal.  It still looks like a race between gas and solar, as nuclear continues its death spiral.  Regulation could make all the difference, and there is every reason to remove it entirely, but I doubt the U.S. government is that capable.  Some clarity would make AES a more obvious fit, but I still like its chances and pricing for the long term.

Another area that is starting to see regulatory interest abroad is robotics.  This morning's market pop in ABB seems to be currency-based and I would avoid buying into it.  Like wearables, automation is seeing very broad competition.  I continue to think that ABB is positioning itself well for the long term by developing not only automated machinery, but a platform that ties it all together.  Even so, such environments can be very tricky, and I am content to wait for better pricing.  That statement goes for a great many stocks at the moment.