We’ve written you hundreds of letters over the past decade and on occasion it’s nice to put a face with the name! Last week, Matt Pixa of My Portfolio Guide, LLC, was given the honor and opportunity to present an Economic Outlook to the Seal Beach Chamber of Commerce.
We share it with you here and look forward to your feedback and questions!
Today marks the anniversary of the stock market bottom 11 years ago. How ironic is it that on March 9th 2009, when the market and everyone in finance was curled up in a fetal position, we now are witnessing a market drubbing like we haven’t seen in years on that same anniversary date? For those with short-term memory lapses, 11 years ago the Dow Jones went from 14,164 in October of 2007 down to 6,547 on March 9, 2009. The “Financial Crisis” of that period effectively saw a -53.77% decline in the stock market. What has ensued since then happens to be the longest bull market run in history. Continue reading →
It’s without question that the recent headlines surrounding the coronavirus have escalated and are rattling everyone’s nerves. The markets have already given back all the early gains of this young year. With natural concern certain questions arise: (1) will this get worse? (2) will it lead to a bear market? , and (3) what should one do right now?
With some of these questions we want to share the viewpoint from our favorite economist, Mr. Brian Wesbury from First Trust.
Monday, fear over the Coronavirus finally gripped investors, as both the Dow Jones Industrial Average and the S&P 500 index fell over 3% – the largest daily declines in two years. These drops wiped out all the gains for the year.
Frankly, it’s amazing to us that the market had been so resilient! Maybe it’s because recent history with stocks and viruses is that markets overreact leading to significant buying opportunities along the way. Over a 38-day trading period during the height of the SARS virus back in 2003, the S&P 500 index fell by 12.8%. During the Zika virus, which occurred at the end of 2015 and into 2016 the market fell by 12.9%. There are other examples, but they all passed, and the market recovered and hit new highs. Continue reading →
We normally pen all of our articles (letters) to you but in this case the work was already done. This one has nothing to do with the stock market or economy but everything to do with your hard earned money being threatened by another scam.
Scams are nothing new but they sure seem to be getting more prevalent and slicker by the day. As you’ll note from the chart below the number of scams are predominantly centered around Social Security and that trend is on the rise.
Click here to read an article written by Michelle Singletary in the Washington Post. In the timely article she includes a helpful list and some links that serve as critical reminders of what to be aware of out there.
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 →
With interest rates at rock bottom levels many investors have gravitated to dividend yielding stocks over the last several years. Money markets, certificates of deposit and bonds simply are not delivering the rates that investors are looking for or have come to expect. It has left investors looking for other options to generate the income that they are counting on but what are the long-term ramifications? Are investors chasing yields with the risk of digging themselves into a deeper hole? What should investors look for and how can they manage their portfolios effectively?
It doesn’t take much effort to find a laundry list of stocks with very attractive yields. In fact if you simply run a screener on Google it will return a list of nearly 100 stocks that offer a yield of 10% or more! With the stock market continuing its upward trend investors have been moving to these stocks chasing the yields with little attention being paid to the underlying stock and the associated risks.
Before we jump into specific companies and industries let’s make sure we are all on the same page and understand what dividends are. Continue reading →
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.
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 →
Throughout 2014 consumers have proven that they can be extremely fickle, looking for superior products at the best possible price. They have been very selective how they spend their hard-earned money forcing companies to be both creative and resourceful. When looking at consumer discretionary companies returns have been all over the board, separating the contenders from the pretenders. For a company to be successful they must provide a superior product with quality service at a competitive price. When it comes to the sporting goods/apparel industry there is a relatively young company that has emerged as a leader and is playing ball with the big boys.
Under Armour (UA) has burst onto the sports/fitness industry scene over the last decade. With bold marketing and innovative products they have become a force and have caught investors attention. UA is up over 34% YTD and has left many of its competitors in the dust: Nike (NKE, YTD =-1.87%), Lululemon Athletica Inc. (LULU, YTD = -33%), Adidas (ADDYY, YTD = -24%) and Columbia Sportswear (COLM, YTD = +3%). With impressive numbers like this investors are forced to ask themselves if the stock still has positive upside or if it is too late to take a position? Continue reading →
Technology is a bit like true love. You have to believe in it but it can also bite you in the ass.
Read through this article and you’ll see how this relates to a particular investment!
The technology Industry can be a challenging sector for investors. Perhaps the best way to describe it is with a popular saying … “the one constant is change itself.” Plenty of analysts and investment firms scour through stock ticker symbols looking for the next Apple (AAPL), Amazon (AMZN) or Google (GOOG).
We couldn’t help but notice the Motley Fool’s recent …shall we say, “stock pitch” about a company that could be your next homerun! If you’re a die-hard Apple fan, wouldn’t you like to know who their next HUGE inside supplier is? Rewind the clock and take for example the desktop computer or the cell phone you have within inches of your hand right now…
Put Apple, Sony or IBM on the shelf for a minute and think about investing in the next company that has a stake in every sale regardless of the brand you choose? In other words, buy the “chip” or technology that’s inside of each device instead of trying to figure out which phone or computer manufacturer is going to win the battle. Continue reading →
The investment industry is notorious for not being transparent with investors. The industry tends to be a shade of grey as opposed to being black and white. There are often hidden agendas or conflicts of interest that the average investor is never aware of or informed about. Think back to some of the situations that have negatively impacted investors in just the last few years: Bernie Madoff, Insider Trading, the Mortgage Industry debacle and the meltdown of Enron! Conflict of interest is essentially why the Sarbanes-Oxley Act is now in existence.
Conflict of Interest – Occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation. (from Wikipedia).
Today we will take a look at an investment firm that has had incredible growth over the last several years: Windhaven Investments.
In 2010 Charles Schwab & Company (SCHW) purchased a small investment advisory firm in Boston named Winward Investments. The firm’s strategies had posted impressive results for several years and didn’t use the industry standard ‘buy and hold’ type of approach. They used primarily ETF’s (Exchange Traded Funds) and claim to invest in over 40 different sectors, participating in positive markets and protecting in downturns. Schwab paid a hefty price for the firm, paying $150 million in cash and stock (source: WSJ). Continue reading →