Monthly Archives: August 2014

Alibaba – The next hot stock?

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Alibaba with chineseDear Mr. Market:

Every investor is looking for the next opportunity that looks like a ‘sure thing’. Throughout 2014 we’ve seen a plethora of IPO’s hit the market with the majority of them being well received. Currently there is a giant lurking out there and the markets have been licking their chops waiting to get a piece of it.   The stock is a behemoth based in China…Alibaba (anticipated to be listed as BABA).

Wall Street is expecting the IPO to hit the market sometime after the Labor Day holiday and this could certainly be an early Christmas present for the markets if it lives up to the anticipation. We have not seen hype like this surrounding a potential IPO since the dot-com era of the late 1990’s. Before you rush out in an attempt to participate in the IPO or buy through the open market, lets take a look at Alibaba to see if it warrants a position in your portfolio….

Summary:

It is challenging for the average U.S. investor to understand how large and diversified Alibaba is. Essentially Alibaba is: Amazon, eBay, PayPal, Cloud Services and much more wrapped up in one company. It has the fastest growing online commerce market in the world, last year it had transactions that totaled just under $250 billion! That is more than eBay (EBAY) and Amazon (AMZN) combined. To truly put the size of Alibaba in perspective let’s break down its largest components: Continue reading →

Top 3 Economic Sectors to Invest in Now

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Dear Mr. Market:

It’s clear that nobody has a crystal ball but there are a few simple tools and “rules of the road” which can help manage your unpredictable and volatile behavior. For those of us who are visual learners this simple graphic is quite helpful in knowing where you may want to allocate your stock positions relative to where we are in the economic cycle.

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There are two curves laid over each other on this graph. Simply explained, the red curve shows you where the stock market is and the green curve shows you what stage we’re at in the current economic/business cycle. Aside from some possible ability to optimally allocate stocks within the most opportune sectors in the economy, the real impact this visual shows you is that the stock market is essentially a leading indicator. In general, the stock market is a forward-looking gauge of what investor expectations are of the economy and interest rates. Continue reading →

Are you allowing the “tax tail” to wag the “investment dog”?

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Dear Mr. Market:Tax tail dog 1

Not only do you toy with the emotions of every investor; you also have a partner that often surprises them and hits investors where it hurts the most… their pocketbook. Making money in the stock market is great but so many forget that eventually they have to reconcile with Uncle Sam come tax time. Look for example at some investments that we have recently discussed: Under Armour (UA) and InvenSense (INVN).   If you had purchased these stocks on the first trading day of this year (1/2/2014) you would be up 58% with Under Armour and up 20% with InvenSense. These numbers are impressive and would certainly make any investor happy but what happens when they are sold? How will they impact your tax return and how much of the gain will you have to pay?

“Nothing is certain except death and taxes.”

                            – Benjamin Franklin 

*** Before we move any further in this discussion it is important to note that we are not tax advisors. In this article we will be discussing general guidelines. Every investor’s situation is unique and deserves personal attention. If you have questions we would encourage you to talk with a qualified tax professional.

Let’s take a moment to go over some of the basics when it comes to investor tax issues. Continue reading →

MPG Core Tactical 60/40: July 2014 Performance Update

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MW-BB798_sm6040_20130422180557_MDDear Mr. Market:

Have you ever woken up long before your alarm clock was set to go off? Put yourself in that state of mind for a minute. You see the alarm clock, take a pleasant mental check that you still have some time to sleep and you pleasantly roll over and shut your eyes; it’s almost like you just were rewarded free time which is the one thing we can never get back!

CLANK, BANG, SCREECH, HONK!?!?! What on earth?? Something that is NOT your alarm clock rattles you awake and spoils this momentary feeling of pure relaxation.

That’s basically what Mr. Market did to everyone in July. The last day of July brought people a wicked reminder of what the market can do if you let it put you to sleep. We haven’t seen a sharp drop like this in a few years and it certainly got your attention, didn’t it?

We actually saw a rather sharp selloff in some of the technology and momentum stocks in April of this year but this time it is broad based and appears to be signaling something more. Before we talk further about the markets and how they may have finally awoken some of you, let’s refresh our often short-term memories on why we run this monthly series of articles.

Click here to revisit the first edition of the MPG Core Tactical 60/40 Portfolio.

Here’s the current summary of the MPG Core Tactical 60/40 portfolio mix, which is updated as of this writing (August 4, 2014).

Click here to compare our portfolio against the benchmark.

What adjustments did we make?

One thing we try to avoid when it comes to managing money is to “pat yourself on the back without breaking your arm”. We did very little this month aside from clearly communicate that we thought not only was the stock market ready to correct but we also laid out what we planned to do about it. Read and click here to see exactly what we said. The moves we made in advance of the worst down day of the year were as follows: Continue reading →