Dear Mr. Market:
Dear Mr. Market:
What’s more exciting to watch: Duke versus North Carolina or Apple versus Amazon? If you’re reading this you know by now that it’s not a trick question but rather our annual opportunity to have some fun spinning the NCAA college basketball tournament into a platform to share our favorite investment themes.
My Portfolio Guide was the first investment firm to publish a March Madness investing tournament where we share our picks and match them up against each other. We break down and assign each of the four “regions” with an asset class and then pick teams (companies) that we think have the best chance at doing well relative to others.
This is the eighth year we’ve done this and it’s become one of the most popular articles on the entire internet!
Click the following link to see the entire bracket for 2018:
Many people now have the rearview mirror or armchair quarterback mentality right now. If you’re to be honest with yourself there are very few folks we met at this point last year that said without question that the stock market would soar to record highs. As a matter of fact, it was quite the opposite. Think back to the start of 2017 as most of us were still digesting the fact that Trump won the election. Most pundits felt that the “Trump bump” would be short lived and that the one thing the stock market doesn’t like is uncertainty …and we had plenty of it!
All that being said, we couldn’t have been more clear that if you kept your politics out of it you could have had a nice year! The easy trade was betting on America and the Large Cap asset class turned in a fine year. Guess what? We still think there is room to run here and the recent correction we experienced is exactly what the doctor ordered.
#2 US Steel (X) vs. #3 Reliance Steel (RS)
Unless you’ve been living under a rock you’ve heard that President Trump wants to reset the playing field on trade imbalances. Continue reading
Dear Mr. Market:
Have you seen the movie “Groundhog Day”? If you haven’t it’s comedy-fantasy from 1993 starring Bill Murray. In this movie he portrayed a Pittsburgh weatherman who was on assignment to cover the annual Groundhog Day event in Punxsutawney, Pennsylvania. Murray’s character ends up being stuck in a time loop where no matter what he does he ends up repeating the same day again and again.
Until just the past couple of days it feels like the stock market was also trapped in some sort of Groundhog Day paradigm. We have not experienced a correction in over 15 months and no matter what the headline the results on the markets where the same as the day prior; green, positive tickers, and smooth sailing. We just saw the best January in 20 years after a year where the S&P 500 recorded a positive return every single month for the first time ever. All these records transpired with the lowest market volatility ever. So what just happened?
Did the groundhog pop his head out and cast a different shadow than anyone was expecting? No…not really. Everyone we know (layman or expert) has been saying eventually it would end. Nothing keeps going up forever. While we disagree with lightweight analysis that stocks are overvalued, the bull market eventually has to take a breather in order to make a final push higher. There is no recession in sight so what we’re finally seeing is a long overdue correction.
What is a stock market correction?
It’s been so long that it might be helpful to refresh your memory! First and foremost, you must recall that prior to Groundhog Day (sorry…couldn’t resist!), stock market corrections happened all the time! On average they occur once every 357 days, or at least once a year. They’re part of the economic and stock market cycle and for a healthy market to advance you actually should want to see them pull back every so often. We have strong fundamentals right now and things are trending in the right direction otherwise we wouldn’t be minimizing this recent market action.
By definition a correction is -10%. (a pullback being in the -5% range) A full on bear market is where we would see -20% or more from peak to through. With the average correction, not only can it not be predicted, but by the time people figure it out it’s too late and the market is back to moving higher. Continue reading
Dear Mr. Market:
We certainly spend a lot of time writing to you about the stock market and all the twists and turns it brings investors. Today, we have the pleasure of mixing things up a bit as we dive into something far larger and more intricate than the stock market; we’re going to talk about the bond market!
On a recent trip out to Denver, CO My Portfolio Guide had the opportunity to meet with Troy Johnson, CFA and Director of Fixed Income Research at Denver Investments. We were able to ask him and his team several questions about the bond market and how they’re navigating it in these interesting times.
My Portfolio Guide: First and foremost, thank you very much for making yourself and your team available. As you know, we own positions in the Westcore Plus Bond Fund as well as the Westcore Municipal Opportunities Fund. We understand your team was awarded a Lipper Award. Without necessarily giving us a pitch on your firm, could you briefly expand on the recent accolades?
Westcore: The Westcore Fixed Income funds won the Lipper Fund Award for best fixed income small fund group for the three-year period ending November 30, 2016, placing first out of 74 eligible fund families. The award was granted based on Lipper’s measurement of risk- adjusted returns across our multiple fixed income fund offerings. We believe that winning the award affirms the soundness of our approach across multiple strategies as well as the hard work and talent within our fixed income team.
My Portfolio Guide: Excellent, and congratulations on the awards and success. Related to this, could you share your opinion on what makes your firm or approach different than some of the larger bond shops?
Westcore: We utilize an investment approach that emphasizes income and security selection rather than a focus on trading. This generally results in a heavier weighting towards credit oriented issues that offer enhanced income. We recognize rigorous fundamental research is a necessary component of such an emphasis and differentiate ourselves within that process in the following manner: Continue reading
Dear Mr. Market:
Is your bracket already busted? This year’s March Madness tournament opened up with very few upsets until this past weekend. Much like the stock market, we see a similar trend happening right now. What follows is how we see things panning out but first, here’s a little background on how one of the most famous sporting events in the United States correlates to the investing landscape.
Seven years ago we became the first Registered Investment Advisor to use the NCAA basketball tournament as a way to show our readers a forward-looking view on the stock market! We break down and assign each of the four “regions” with an asset class and then pick teams (companies) that we think have the best chance at doing well relative to others.
CLICK THE LINK TO VIEW OUR Final Four Investing Bracket Picks 2017
Last year started off much differently than 2017 and as we wrap up the first quarter …some trends are emerging while others continue. If you eyeball the overall theme of this years bracket it will become clear that we’re picking some stocks that should continue to do well under the Trump administration. Whether you love him or hate him, ever since Donald Trump assumed office, the stock market has risen. The proverbial “Trump bump” is real and while we personally believe he needs to stay away from Twitter, there is no question that the stock market and certain economic sectors are primed to perform. Continue reading
It’s that time of year again….here comes the holidays. One of the most famous Christmas poems ever begins like this:
‘Twas the night before Christmas, when all thro’ the house
Not a creature was stirring, not even a mouse;
The stockings were hung by the chimney with care,
In hopes that St. Nicholas soon would be there;
What if we changed a few words to reflect what Mr. Market will be thinking about instead of sugarplums and Christmas stockings? What is he thinking on Election Day?
‘Twas the day of the Election, when all through the nation
Every citizen was encouraged to get to a voting station;
Constant stories of Wikileaks and groping
Had every American and the stock market moping;
The media was franticly filling their time with endless chatter
All in hopes that our eyeballs would think a new President would matter;
Whether you’re liberal or conservative we all want a sound future for our girls and boys
As it relates to the stock market it simply prays for an end to this noise;
So goodnight to all and may you wake tomorrow
Knowing full well that some will be joyful and others in total sorrow.
We’ve obviously abbreviated our stock market poem to center on the real question so many investors have: Will this election result drive the markets higher or lower? Continue reading
Dear Mr. Market:
We find ourselves back in earnings season, which always brings several surprises with well-known stocks…both positive and negative. Analysts and the media will tempt investors to chase returns as quarterly earnings are dissected and trading ‘advice’ is thrown around like a hot dog vendor working the crowd at a baseball game.
Our world is currently swimming in uncertainty which pushes investors to hunt for stability and returns that will enable them to reach their financial goals. Imagine if there was a stock that has posted impressive returns in both up and down markets and all the while you most likely have been supporting it yourself without even realizing it!
Constellation Brands (NYSE: STZ) is an international beverage producer and marketer with operations in the U.S., Canada, Mexico, Australia, New Zealand and Italy. They own iconic brands like: Robert Mondavi, Svedka Vodka, Ballast Point, Corona and Modelo to name just a few. In total they currently have over 100 brands in their portfolio with sales in 100 countries, 40 facilities and approximately 9,000 employees. In 2015 Constellation was one of the top performing stocks in the S&P 500 Consumer Staples Index. Continue reading