Turn off your TV and enjoy your family, friends & some turkey!

Dear Mr. Market:

When it comes to the stock market it’s easy to see the road we just traveled; what’s more difficult is trying to assess and figure out where we’re going. In last quarter’s newsletter from My Portfolio Guide, LLC we put out a fairly bold prediction of the S&P 500 hitting 5,000 and the Dow Jones reaching 40,000 within the next year. Also included in that edition of “the Guide” (click here to view it if you haven’t already), we discussed some common behavioral biases that we’re all vulnerable to. As we head into Thanksgiving and then the last month of the year, the fear levels are beginning to mount again. There’s plenty to worry about, such as inflation, and speaking of that, it’s sort of like your in-laws visiting….They arrive earlier than you expected and stay longer than you’d like!

While we’re not telling people to be 100% into equities…it’s becoming more and more clear that for the foreseeable future there is no better horse to ride. We’re going to call this proverbial horse “Tina” and share why in a moment. Sure, our gold hedge is not providing instant riches but remember that is not why we bought it. Additionally, we’re seeing more and more people buying crypto as the “new gold” yet most can’t even explain what it actually is. We’d prefer to see Tom Brady pitching Subway sandwiches but now he’s doing crypto commercials. Bonds are awful and going nowhere (yet to some degree justified as part of your overall allocation). Cash is still earning “point zero nothing”. Real estate has exploded and bubbled upwards some more but does it feel smart to you to be the highest bidder on a property right now? All this leads us back to our horse TINA… There Is No Alternative.

Continue reading

Don’t be Gone Phishing

Dear Mr. Market:

This isn’t the type of letter we like to write you. Our brief note today will not center around anything of stock market or economic interest. Mr. Market dupes people with his manic, unpredictable, and volatile ways but one thing that we can guard ourselves from is the ever growing threat of phishing.

What exactly is “phishing”?

Phishing is when fraudsters send fake emails and texts appearing to be from a trustworthy source, hoping that you will click on a link or download an attachment. Their goal is to trick you into inputting and capturing your sensitive information. You may already be up to snuff on the following tips but they are worth repeating since fraudsters are becoming more and more sophisticated:

Continue reading

Pssst….That was NOT the stock market correction we’ve all been waiting for!

Dear Mr. Market:

Yesterday seemed like the start of the Great Depression for some pundits and nervous nellies. Fear sells, and negative prognosis appears smarter than positive outlooks for whatever reason. The reality, and key reminder we wish to bring up again, is that the long awaited correction has yet to come. As of this writing, we are literally only -3.91% off of all-time S&P 500 highs in the market.

It should be noted that AAII Bearish Sentiment reading is as high as its been since the last most major S&P 500 sell-off.

Continue reading

Cargo Ship Gridlock

Dear Mr. Market:

What’s the first term you think of when discussing the economy? Stocks, bonds, gold? How about Supply & Demand?

On a recent flight to Salt Lake City, Utah, we saw a “picture worth a thousand words”. Matt Pixa, founder of My Portfolio Guide, LLC, took this picture from the air and also went out to pick the brains of some contacts he has in the import/export business to help put more color to the canvas.

Long Beach, CA port

If you zoom in on the picture it almost doesn’t do it justice. There are almost 50 cargo ships waiting to unload but basically stuck out there for weeks. Why are all these cargo ships lined up and floating outside the Long Beach and Los Angeles ports?

Continue reading

Buy the Rumor and Sell the News

Dear Mr. Market:

The stock market has provided many sayings and memorable catchphrases that people tend to regurgitate ; some have merit and some are just garbage.

If you’re a regular reader of Dear Mr. Market, or a client of My Portfolio Guide, LLC, you’ll know that our all-time favorite is “The four most dangerous words in investing are …This time it’s different” -Sir John Templeton. Here are some other all-time adages that you’ve undoubtedly heard:

Buy low sell high” Uh…yeah, but easier said than done.

“The trend is your friend” Sure….until it’s not!

“If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks” -John Bogle

“Markets can stay irrational longer than you can stay solvent” -John Maynard Keynes

So…what does “buy the rumor and sell the news” mean? You probably know that the stock market is full of speculation, great stories, and chock-full of hidden nuggets as well as potential land mines. Even if you’re not an experienced investor or trader, at some point you’ll figure out that by the time your neighbor (you know the guy who never loses and is always up) tells you about a stock tip…the ink on the newspaper is already dry and that idea is likely stale.

Continue reading

I got in at the top of the market…Now What?!?

Dear Mr. Market:

It’s over.

The “fat lady is singing”, the alarm bells are ringing, and you are literally the last dunce in the room who decided to get into the market at the all-time high. Now Mr. Market shows you what real pain looks like and sells off like nobody has ever imagined.

Let us preface this article by stating it’s worth bookmarking and revisiting for those times when you may be rethinking your investment time horizon or just how much risk you truly are able to take on.

Continue reading

Good news = Bad news

Dear Mr. Market:

Last week was a microcosm of how stock market headlines can really lead you to hear one thing yet see another. For a while now we’ve been barking about how the FAANG stocks have artificially propped the market as there are some serious underlying health concerns. As a reminder for our newer readers, FAANG refers to the five major U.S. technology companies – Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Google (GOOGL). These household names have driven the markets and camouflaged some warning signs of risk on the horizon for quite some time. If you want a peek under the hood or a refresher on just what their impact, valuation, and market caps are relative to the broad market, please click here. (pay close attention to figure 18 which shows market cap with and without FAANG as well as Figures 13 & 14 for some relative earnings/revenue performance)

So…what happened last week? Why did the markets get hit so hard? It was indeed a rough week but then again not too many weeks feel all that bad when we take a quick look in the rear view mirror. (last year there were some mornings when the stock market was down literally -9% before you had your first sip of coffee) Albeit not a pleasant memory, don’t ever forget that (we’ll touch on why later in this article).

Continue reading

Commodities Now! Too many dollars chasing too few goods…

Dear Mr. Market:

You’ve heard us barking about this before but as the world navigates its way out of the Covid-19 pandemic, it won’t be just the stock market that recovers. In many respects the market has mainly bounced back due to a lot of “sugar in the blood” from massive fiscal stimulus and has still primarily been led by some mega cap names. What’s brewing below the surface and actually could turn into something far more sustainable, is a boom in commodities.

Have you ever heard the expression “Even a blind squirrel find a nut once in a while?”

Continue reading

All-Time Favorite Stock Chart

Dear Mr. Market:

It’s been a while since we’ve had to talk about you. The world has been focused on many changes which sometimes leaves you to quietly do your thing while we catch our breath. We’ve ushered in a new year, the United States has a new President and administration, and we’re finally seeing some light at the end of the tunnel with regards to the most surreal pandemic one could imagine.

How have you been… Mr. Market?

Up, down, sideways, and all over the place…That’s how.

Today we write you a quick note to share our all-time favorite chart as well as a reminder to all those investors who may fall prey to short-term memory lapses. The recent stock market sell-off is a great wake up call to the fact that markets obviously don’t just go up in a straight line. It’s a bit more than that though…

Below is our all-time favorite stock chart and we’re going to share why it’s important to look at this every so often.

Continue reading

Revisiting the Permanent Portfolio

Dear Mr. Market:

It’s been seven years since we last reviewed the Permanent Portfolio. Please click here to view the original article.

Why do we bring up this article now? Lots has changed but lots has not! More than anything we believe that our current environment has so many unknowns embedded in it after one of the wildest rides in stock market history. We won’t dig into the weeds too much but one could easily make the case that any of the following scenarios could take place over the next year:

  1. The Stock Market could absolutely continue to defy odds and climb higher.
  2. We could see another market crash like we saw in the spring this year as there are plenty of issues that have not gone away (Covid-19, political unrest, handcuffed economy, geopolitical concerns)
  3. A deteriorating dollar, inflation on the horizon, a ticking time bomb of debt, and more fear of a prolonged recession, negates any appeal for stocks for quite some time.
  4. We trade up, down, and basically sideways as this market consolidates and digests one of the most tumultuous years in history.

Without rehashing all that has transpired in 2020, we believe that being properly allocated and prepared for just about anything that comes our way seems like a wise way to go. The market is almost always unpredictable but there are times when reading the tea leaves and figuring out clear direction is even more difficult; we believe that’s exactly where we’re at right now.

If you didn’t read our old article from 2013, the basis for the Permanent Portfolio strategy is simple at face value: You divide your portfolio into four distinct and fairly uncorrelated asset classes (Cash, Bonds, Gold, and Stocks). Ideally at any point in most economic cycles one of these asset classes will stink it up but the others could compensate and outperform. During prosperous times Stocks should win. When there is inflation a case can be made for Gold. Should the opposite occur and we get deflation you would ideally see long-term Bonds do well. Lastly, during a severe recession Cash is perhaps your best friend. When coupled together you may never hit a home run but this approach can mitigate disaster and still produce modest long-term returns.

Continue reading