Tag Archives: Investing

Bulls, Bears, and Ballots: Election Years & the Stock Market

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Dear Mr. Market:

If you’re watching an NBA basketball game and you have one player to take a final shot to win the game, who do you choose? Like him or not the guy who has scored the second most points in the history of basketball is LeBron James and he has made 50.5% of all shots he’s ever taken. Let’s switch sports to much worse odds, like baseball, where the average hitter is around .250 for a batting average. Even the best the game has ever seen was the great Ty Cobb who hit .366 for his career. Speaking of winning or losing, the mecca of odds making is in Las Vegas of course, and if you’re ever interested in losing money, just know that on average you can come out with a winning blackjack hand only 42.4% of the time.

New year, fresh canvas, but pretty much the same problems….So what are the odds of the market going up, down, or sideways in 2024?

Read more: Bulls, Bears, and Ballots: Election Years & the Stock Market Continue reading →

Good news = Bad news

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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).

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Protecting Your Fiefdom: Issues for First Time Landlords to Consider

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Dear Mr. Market:th-22

Over the past couple of months we’ve had all eyes on you and to state the obvious it’s been a wild ride!  With all the recent volatility, the risks (and rewards) of the stock market were on clear display but today we switch gears to a different asset class and share some insight from our friend and guest author, Mr. Brian Chou, Esq.

Owning investment real estate can be a very rewarding and profitable experience, but it can also be a huge headache and a drain on resources. I remember when I purchased my first investment property several years ago, my head was filled with conflicting images of myself sunbathing on my private island and lying penniless in a gutter.  The possibilities and the liabilities seemed endless. Continue reading →

May Gray turns into June Gloom

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Dear Mr. Market:Unknown-3

We have discussed many times how emotionally driven you are. On some days you tempt us with your record setting high wire acts and on others we have our lips virtually wrapped around the barrel of a gun in desperation; the stock market is a wicked playground.

We don’t believe that computers or sophisticated investment algorithms can completely mitigate the perils of the stock market or protect everyone from getting out of their own way, but it can at least be used as a starting point. My Portfolio Guide relies on some very unique tools that assess the stock market each month with a fresh set of eyes. While our method of “reading the tea leaves” is not necessarily a crystal ball, it’s definitely not what most investment advisors use….which is the rear view mirror. Sadly enough, many investment advisors are just like you…they’re human and they chase recent returns and mistakenly look back in history as to what has done well. While this method of analysis is the easiest to sell clients (and themselves) it’s not as effective as taking a completely fresh look at what is happening right now and how that is statistically likely to play out in the near-term. Continue reading →

Who does Mr. Market vote for…Donald Trump or Hillary Clinton?

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Dear Mr. Market:

160323171742-hillary-clinton-donald-trump-investors-780x439How dare we put you on the spot like this?!? What an awful question! How will you (the stock market) react if Trump wins or if Hillary wins? By the way…as an aside….a great client of ours recently asked why everyone refers to Trump by his last name and Hillary by her first name. Why is that?

Depending on which side you’re on, this question may initially seem like simple semantics but it’s not. Are you “presidential” if you roll with a campaign based on your first name? Do you “feel the Bern” or did you “Trust in Ted”? Whether you’re a proponent of Hillary for President or Hillary for prison…it’s still Hillary. Where are we at America?

At My Portfolio Guide, the one thing we typically don’t shy away from is having a clear opinion. There are some great firms out there that simply can’t give you one! You’ll hear what you want to hear. They fear losing your “vote” or ruffling feathers. Yes…we understand that balance too, but as much as our job is about deciphering news versus noise…it does become important to take a stance. Continue reading →

John Hussman says we are headed for a stock market crash!

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UnknownDear Mr. Market:

If you’re smart…does it imply that you’re always right? In many instances that may often be the case, but when it comes to investing, some of the most brilliant people on the planet are reduced to buffoons by irrational and unpredictable markets. When you add in a 24/7 media cycle and the fact that human beings are emotionally driven creatures…your IQ (or stubbornness) can actually work against you.

As huge fans of behavioral finance we also want to once again remind you that your own brain (whether it be “smart” or pedestrian) is wired to connect certain dots even if the conclusion is wrong or completely random. One famous adage will serve as the theme for this entire article:

“Even a broken clock is right twice a day.”

Take a brief moment to read the following article that surfaced last week: Continue reading →

Even a broken clock is right twice a day

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analyst 3Dear Mr. Market:

Wall Street is notorious for putting analysts (or any individual) on a pedestal when they make a prediction that happens to be correct. As quickly as their ‘celebrity status’ is awarded it is often just as quickly taken away! The recent downfall of Meredith Whitney offers a lesson that everyone can learn from.

Whitney was awarded her ‘star status’ the fall of 2007 when she made a bearish prediction on Citigroup (C) as an analyst at Oppenheimer. Shortly after she made her call the stock tumbled and the CEO, Charles Swift, resigned. She was credited with predicting the financial crisis that followed in 2008 and became a regular with the business media. With her ‘celebrity status’ she resigned from Oppenheimer in 2009 to form her own firm focused on research and hedge fund management.

It did not take long for her shining star to become tarnished as she missed on several predictions that Wall Street followed her on. She called for municipal bonds around the country to default in 2010 and then in 2013 for the central U.S. to flourish economically while both coasts would struggle. Neither came anywhere close to becoming a reality and Whitney found herself struggling to regain the notoriety that she once enjoyed. Most recently she launched a hedge fund in 2013 that she shut down just last month. Continue reading →

MPG Core Tactical 60/40: March 2015 Performance Update

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 MW-BB798_sm6040_20130422180557_MDDear Mr. Market:

You don’t have to be a professional money manager to be aware that the swift decline in oil prices has been one of the most impactful financial headlines in years. As a matter of fact if you didn’t own a computer, read a newspaper, or have basic access to media, you would still know that oil has dropped like a rock. All you had to do was go to the gas station and see that it costs far less to fill up your tank today than it did last year.

What you may not have noticed, however, is the huge appreciation in the U.S. dollar. The U.S. dollar index compares the dollar with a basket of other currencies and it spiked up 50% in the first couple weeks of March. It has already risen almost 8% year to date and this has impacted the stock market in ways that many are unprepared for. With any situation like this there are silver linings and opportunities that we’ll discuss later in this article.

First let’s review where we’re currently at and what we did last month:

Here’s the current summary of the MPG Core Tactical 60/40 portfolio mix, which is updated as of this writing (April 1, 2015).

Click here to compare our portfolio against the benchmark

What adjustments did we make?

The following moves were made during the month of March:

3/13/15:  Bought 200 more shares of VO (Vanguard Mid Cap Index) @ $126.19 ~$2 worth

3/25/15:  Bought 75,000 final shares of MONIF (Monitise) @ $0.191 ~$14k worth Continue reading →

Target your sell discipline

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Target arrow 1Dear Mr. Market:

There you go again Mr. Market … You’ve trumpeted your tempting sirens and lured in people who were deathly scared of the stock market to now jump in. The S&P 500 is once again flirting with all-time highs but is the music about to stop? You make it easy to buy a stock but why is it so hard for you share the catalysts that tell investors to sell? Mr. Market is famous for encouraging you to sell with emotion but isn’t there a better way?

In our opinion, there are three main criteria that should be used in forming a disciplined and repeatable sell decision. In order to be a successful investor you need to master and take them all into account before you ever buy a stock.

So…what are the three main criteria?

  1. Fundamental Analysis: There are a slew of fundamental issues that could warrant a sell decision. If you’re willing to buy a stock you’ll need to monitor fundamental metrics ranging from earnings, valuation, cash flow, and debt, among others. Lumped into this category should be a keen awareness of key changes in management and their effectiveness.
  2. Technical Analysis: Whether you believe in following the charts and trading patterns of a stock or not…you still need to be aware of them. Like it or not, many decisions from the bulk of the investing world are made or triggered due to technical analysis so even if you think it’s hogwash don’t be short-sighted and ignore them.
  3. Investor Sentiment: Ideally, you’ve kicked the tires and performed your due diligence (reasons #1 and #2 above) on what made you buy the stock in the first place. If the honeymoon phase is no longer there, it may be time to sell. Don’t get us wrong here…this is not about selling because everyone else is. The idea here is to analyze whether the trend is moving in a direction that is not going to help you as a shareholder. Of the three criteria this is perhaps the most challenging to master because it forces you to use your eyes and brain as opposed to your emotions.

Continue reading →

Who told you the S&P 500 is your benchmark?

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benchmark4Dear Mr. Market:

Everyone wants to be associated with a winner. We are all familiar with the famous quote, “the thrill of victory and the agony of defeat” from ABC’s Wide World of Sports. Imagine that you are at a sporting event, you glance at the scoreboard but it shows nothing … at the end of the game you have no clue if your team won or loss. Some people claim your team won while others are not so sure. Mr. Market does exactly this to investors with their investment portfolios on a consistent basis.   As an investor how do you effectively gauge how your investment portfolio has performed and if you are victorious or humiliated in defeat?

The media would have us all believe that investors should use the S&P 500 or the Dow Jones Industrial (DJIA) as a benchmark against their portfolios. Turn on the nightly news or open a newspaper and you will quickly spot what each index closed at and what percentage they are up or down for the year. While everyone would agree that it’s important to have a sense of how the market is performing, is this the proper measuring stick investors should use to gauge how their own investments are performing?

A quick summary of the indices the media force-feed us on a daily basis: Continue reading →