We write letters to you during good times and bad. That’s the beauty of the stock market and all the drama you bring with it! Without a doubt there will always be something to worry or cheer about! Perhaps no asset class personifies this struggle better than Emerging Markets.
We’ve written before about the appeal (and risk) that Emerging Markets brings to investors. Right now, in our opinion, there is a potential “changing of the guard” and a shift in asset class leadership. Although our friend Warren Buffett often gets credit for the following famous quote, it was actually originally from the 18th century British Nobleman, Baron Rothschild:
“The time to buy is when there’s blood in the streets.”
Emerging markets have been absolutely hammered the past few years. As you know, the big headlines that drove markets in 2015 was the plunge in oil prices, an incredibly strong U.S. dollar, and massive concerns about China (the world’s second largest economy, albeit an Emerging Market). It’s easy for investors to get scared out of their minds with an asset class that is historically more volatile than most; that’s probably why most investors are underexposed to Emerging Markets. Continue reading →
You’ve certainly kicked 2016 off with a bang! Even investors that rarely, if ever, look at their portfolio are aware of the rough start to the New Year. Over $8 trillion in market valuations has seemingly disappeared in the blink of an eye. Many are pounding the table with a bear market narrative capturing your attention and emotions but is there anything truly different this time?
There are many different factors at play in this volatile market environment but in our opinion none of them are really all that new nor are they indicative of a bear market, a recession, or impending crash. We’ll briefly touch on each of them but at the end of this article you may be surprised to learn why we believe this market could bounce strongly when least expected.
Currently there are three factors that are dramatically impacting the markets: China, Oil and the Fed. It appears that when these are combined it creates a combustible combination that not even the most seasoned analysts know how to handle! The reality is that the stock market and all the ‘experts’, who analyze and report on it, seem to have short-term memories. For lack of a better description people have also been put to sleep and forget what it’s like to see a normal market correction. Let’s quickly break them down and attempt to put them in perspective: Continue reading →
If you’ve never experienced a stock market correction until now (technically defined as -10% or more), you have either never invested or have only been investing since 2012. For the vast majority of others, you should know that markets “correct” on average at least once every 12-18 months. One reason why this feels worse than other corrections is because we just went 47 months without a correction of -10% or more! (third longest streak on record)
For a refresher, stock market corrections are short and sharp declines of -10% to -20%. They’re typically accompanied by sensationalized stories such as the European sovereign debt crisis, Greece’s exit from the Euro, or the “fiscal cliff”. For all those investors that ducked for cover and went to cash during the last correction you saw the Dow Jones move up over 6,000 points. Were you able to correctly “time” your reentry into the market? No…and you’re not alone. No matter what you read or hear there is not a single person or professional advisor that owns a crystal ball and can consistently time the market.
If you’re new to this monthly series…remember what we’re doing. This exercise, as we like to call it, is not an attempt to pick the best stock or “time the market”. We leave that futile task to those who own time machines and accurate crystal balls. For a refresher, see our first article on 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 (September 1, 2015).
Click here to compare our portfolio against the benchmark.
From the last week in July to this writing the MPG Core Tactical 60/40 portfolio went down -4.49%. How did the rest of the markets do? Continue reading →
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….
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 →