March Madness: Final Four Investing Bracket 2017

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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

Large Cap

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

Q1 is in the books – how does the rest of 2016 look?

Dear Mr. Market:

2016 #3The first quarter is in the rear view mirror and what a wild ride it was! The stock market started the year with the worst first 10 days in history and we finally experienced a ‘textbook correction’ of over 10%. Perhaps the most shocking part is when it was all said and done, Mr. Market rallied in March to finish out Q1 just above break-even. Volatility like this is typically played out over a 12-month or longer cycle, not in one quarter.

The question that investors are currently asking is … how does the rest of 2016 play out? Turn on your television or open any printed material and you will quickly be overwhelmed with the various talking points. Just look at a few of the headlines that have popped up last week:

  • Housing starts declined -8.8% in March.
  • Auto sales fell at a -14.6% annual rate in Q1.
  • Business investments in equipment fell -8% the first three months of this year.
  • Large declines in military spending by the government in Q1 will add 0.1% percentage points to the real GDP.
  • Industrial production dropped -0.6% in March coming in below consensus of 0.1%.
  • Production of high-tech equipment increased +0.5% in March, up +2.1% versus a year ago.

These are real economic data points that have driven financial headlines over the last few weeks. In our opinion here’s what they mean (or don’t) and how we think the rest of 2016 will play out in plain English: Continue reading

March Madness: Final Four Investing Bracket 2016

March MadnessDear Mr. Market:

The entertainment and shock value you provide us with the stock market might meet its match over the next few weeks. Are you ready for some surprises and wild finishes? That’s what March Madness brings each and every year! It’s also an opportunity to take a high level view of the current investment environment with what lies ahead.

Six 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.

This year we will dive right into our investing bracket looks and how we think the remainder of 2016 will play out.

Click here to see the entire bracket.

To set the table let’s take a quick moment to recall last year and the undefeated Kentucky team. They came into the Final Four 38-0 and were a virtual lock to win it all but as you may remember the Wisconsin Badgers shocked everyone and provided the surprise millions of fans tune in for every year! This type of “upset” is exactly how we think 2016 will pan out in the Large Cap asset class.

Large Cap

Five years from now people will look back at 2015 as a year that the stock market extended its bull market run for one more year. Investors will exhibit a short-term memory lapse and forget that it actually was a very rough year with heightened volatility, the first correction, and a market that actually turned in negative numbers if you looked “under the hood”. The problem is…most people will not remember this and only look to see the S&P 500 finished positive +1.38%.

Without the “FANG” stock phenomena, however, 2015 would have been very negative. In other words, Continue reading

MPG Core Tactical 60/40: July 2015 Performance Update

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Dear Mr. Market:

Yes…the stock market is down. Your portfolio is down. There is no way it is not down. We just said the word “down” three times in a row. Get it? Everything is down.

If you have a decently designed and intelligently constructed portfolio you are actually DOWN more than than the overall stock market! What does that mean? Most people look at the Dow Jones as their benchmark. That’s what the media tells you every night as to what’s happened. The media reports on the Dow Jones as though it’s an accurate index to let you know how the stock market is doing. Nope….As you become a more savvy investor you will learn that that the Dow Jones is just an antiquated index that means nothing. Yep….we said that! The Dow Jones means zilch!

Make no mistake about it. This is one of the strangest and least predictable markets ever…

If, however, we were to tell you the Dow Jones was about to get blasted and go down to 6,000 (currently at 17,500) it would be easy to lead you down that road. There are plenty of reasons why the market will get hurt more. Ironically enough…we could paint just as equally convincing a story of how the Dow will go to 20,000! That’s where we’re at right now. When you can find two opinions so extreme regarding the end results, yet each has its merits, you’re in a very precarious market environment.

Continue reading

March Madness: Final Four Investing Bracket 2015

basketball on cashWelcome to the fifth year of our March Madness Investing Bracket! This series of articles is always one of the most popular investing articles on the internet! We’re proud to admit that we were one of the first investing nerds to combine our love for the markets with the passion that college basketball brings!

It’s common knowledge that people love excitement and surprises. It’s also human nature to root for the underdog and many times those two themes can certainly play out on the basketball court as well as on the stock market floor. Much like two college basketball teams that never play each other our imaginations are swept up in wondering who will “win” between a relatively unknown investment or a popular stock that has the media in a frenzy.

You may be asking what does a basketball tournament have to do with managing your portfolio or the investment world in general? At first glance there might not be much but we thought we would have a little fun and couple it with some asset allocation parallels. After all, there are many folks who have simply thrown their hands in the air at one time or simply succumbed to the notion that investing is like educated gambling. There could be some truth to that depending on your approach…

For those of you that are not familiar with the NCAA and its annual basketball tournament there are 68 teams selected and each is seeded according to their results throughout the regular season and their relative rankings. Every March the NCAA holds a single elimination tournament to crown an undisputed champion. Part of the appeal of such a tournament is that theoretically any team that makes the “big dance” has a shot at winning it all. Each and every year there is a proverbial “Cinderella” team that surprises everyone including all the ‘so-called’ experts. Prior to the tournament there is always plenty of banter and opinion on who wasn’t invited or further arguments around the seeding of the teams that did make it. That’s where we see a parallel of sorts to investing and having to make decisions among the multitudes of investment choices. With so many investment choices available, there are also as many differing opinions.

In the “real” March Madness tournament this year there appears to be a hands down favorite with the undefeated Kentucky Wildcats. Hardly any office pool or basketball analyst is betting against such a heavily favored team. If they win it all it will be the first time in over 30 years that a team stays unbeaten the whole season. Our own version of this (using investment themes and choices) shares the premise that we have four very decent #1 seeds but there is no slam-dunk pick that everyone agrees on. For this reason, our 2015 bracket is perhaps as important as ever to understand that a dark horse could win it all…

Before we begin digging into each “region” of our bracket, let’s revisit something everyone claims they know but so very few actually follow with consistent discipline. (Asset Allocation)

If you have ever looked at a chart of all the different asset classes and how they perform year to year…there is rarely a pattern or consistent way to determine next years “winner”.

For the purposes our annual investing bracket we have “seeded” or ranked four major asset classes (like the regions) and chosen several individual picks within each. There is some basic science applied to this process. We consider how the “pick” did over the past 12 months and also how it has trended over the past three months. In some cases we gave a lower performing investment a higher seed if it was trending well with recent strength or was more consistent over a longer period of time.

Each asset class (Large Cap, Small Cap & Mid Cap, Bonds/Alternatives, and International) was ranked and seeded, then corresponding seeds were assigned to “picks” that we are either adding to the portfolio or establishing new positions in. Note that we’re not highlighting 68 new investments and will only discuss some investments that we are either actively involved in or looking to add to most portfolios.

OK…Let’s dig into some of the key match-ups and explain why our Final Four going into Q2 2015 looks the way it does (CLICK HERE to view our 2015 Bracket):

Large Cap

This is typically viewed as the ‘efficient’ asset class. Continue reading

Should you buy oil stocks now?

Oil price 4Dear Mr. Market:

Just a few short months ago we experienced the seasonal sensation known as Black Friday where consumers lose grasp of reality all in the search for a great deal. People camp overnight on sidewalks in an effort to be one of the first shoppers inside a big box store and take advantage of a bargain they can brag about to all their friends. Buying a large screen television at 50% of retail is certainly exciting but do the same individuals get excited when the equity markets present similar opportunities?

Investors display behavior that is nearly a complete opposite when the markets or an individual stock drop in price when compared to a retail store sale. Rather than racing to get in a store at the crack of dawn they dash for the exit, submitting sell orders as quickly as they can with no rhyme or reason. Throughout various market cycles and economic environments Mr. Market presents investors with buying opportunities yet few actually take advantage of them. You don’t have to look far to find a sector that has experienced a price reduction of 50% in the last six months (the majority of that correction taking place in just the last three months!). You would have to be living ‘off the grid’ or under a rock to not realize that what we are talking about is oil. Continue reading

Is the energy sector spOILing your portfolio?

OIl#2Dear Mr. Market:

The price of oil has been dropping like a rock! On Monday (12/8/14) the price of oil hit a new five-year low at $63.05 per barrel; earlier this year it was trading at over $100. We haven’t seen prices this low since October 2009!   The press and media can’t stop talking about oil prices lately and that has many investors thinking that the sky is literally falling around them!

Many investors portfolios are over allocated to energy stocks as the sector has delivered impressive returns along with some very attractive yields the last several years. This decline is impacting many well-known energy stocks like: ConocoPhillips (COP), Exxon Mobil Corp. (XOM), Marathon Oil Corp. (MRO) and Chevron Corp. (CVX) as they are all posting negative returns this year and several of them are down -20% or more in the last 3 months alone.

The media is quick to point fingers as to who or what is to blame for causing this drastic price decline. When you look at both domestic and international factors it is challenging to figure out where to even start! Is OPEC (Organization of Petroleum Exporting Countries), ‘fracking’, shale production, simple supply/demand imbalances, global economies or countless other factors to blame? Our answer might actually surprise you… it doesn’t matter! Even if you knew what was causing this volatility, would it make the situation you currently find yourself in any better? This is the perfect example of a time when listening to the financial media will not help you or your decision-making; especially if you have too much exposure in the energy sector. Continue reading