2016

No Picture

HBTM: 12-27-2016 Dow 20,000 Edition

How ‘Bout That Market?  This is a question I hear at social gatherings often enough that it makes sense to make it a regular entry on this website. The Market The last week of the year is usually pretty sleepy.  This year’s final week is book-ended by holidays which means a terrific drive in to work for me as everyone takes advantage of long weekends.  I don’t usually expect financial news this week, but this year the Dow Jones Industrial Average is bumping up against 20,000 which is a MAJOR MILESTONE/PSYCHOLOGICAL BARRIER.  Will we hit 20k?  It wouldn’t take much, but it really wouldn’t mean much either. 20,000 is just a number.  Don’t forget that the DJIA is just 30 stocks and the index is price-weighted rather than market cap weighted.  This means that even though Apple is the largest public company on the planet, eight other stocks have a…


No Picture

HBTM: 12-19-2016

How ‘Bout That Market?  This is a question I hear at social gatherings often enough that it makes sense to make it a regular entry on this website. The Market The Federal Reserve raised rates last week, but everyone expected that so the announcement was received with an initial shrug of the shoulders.  As more people read into the Fed’s statement, they noticed the Fed expects to raise rates three times in 2017.  This caused the market to drop by less than a percent?  Maybe?  Speculating about the market’s daily moves just isn’t my thing and if it’s your thing, then I think you should get a different thing. Focusing on the daily noise makes it easy to neglect the long-term and that’s dangerous for any investor.  Also, millions of actions influence the markets every day.  It’s silly to point at one thing and say, yep, that’s why the market…


No Picture

HBTM: 12/12/2016

How ‘Bout That Market?  This is a question I hear at social gatherings often enough that it makes sense to make it a regular entry on this website. The Market The stock markets have been going up since the election.  Is this a Trump rally?  I hesitate to say so as the election still looms large in the rear view mirror.  It’s also worth noting that this gets filed under Obama’s record.  The markets seem to be adjusting quickly to what they expect under a Trump administration.  There is a shift in sentiment from the tech sector to what I’d call Make America Great Again (#MAGA) stocks (industrial and manufacturing – financials, too).  This makes sense from the standpoint that the President-elect focused on these types of businesses during the campaign, but if protectionist policies are implemented, I would expect a negative impact on these companies.  But really, who knows?  What’s…


Filthy Casual

Filthy Casual

I am a gamer.  I like role-playing games like Fallout and Final Fantasy as well as real-time strategy games like Starcraft.  However, according to the internet, I play these games all wrong.  I like to take my time and get lost in the story.  This is not the fastest or most efficient way to beat a game which puts me dangerously close to being a ‘Filthy Casual’ in internet-speak.  That is, my goal is not to optimize my playthrough like a ‘Hardcore’ player might.  It could be worse.  I could be a n3wb. This really does tie back to investing, I swear. There are countless blog posts dedicated to crafting the most efficient portfolio.  Finance Twitter is full of people who will argue asset allocations past the decimal point.  Advisor forums are almost toxic with folks who belabor semantics, dredge up endless white papers, and worship at the altar of Modern…


No Picture

Castro

This post is not about investing.  It will not have witty anecdotes.  Feel free to skip this one if you’re looking for that stuff today. Fidel Castro is dead. It can feel like this is a news blurb about a place so far away about a people who are not like us.  Why is this such a big deal?  Not everyone’s family was as lucky as mine.  On the way out of Cuba, my great-grandfather merely suffered through the indignity of having a soldier paw through his bag, keeping anything that looked valuable.  Others risked the open water.  Some didn’t make it off the shore.  It’s not my place to tell their stories, but I can tell you the short version of my family’s tie to Cuba and why Castro’s death is a big deal to me. I do not look Cuban.  I don’t speak Spanish.  My grandmother was born there,…


No Picture

When to Change Plans

One of my favorite bits of wisdom comes from a Fairway client, “Change your plans because of the weather, not because of the forecast.”  He was referring to boating, but it applies to investing as well.  The political winds have shifted, potentially changing the economic and investing climate.  Don’t get caught up in blanket statements about how things should turn out according to an expert’s model.  The markets never behave the way they should.  Likewise, we have three or four false alarms of snowpocalypse every winter and besides, a snow forecast for northeast Ohio means one thing if you live in Westlake, but something else if you live in Chardon (and something completely different if you’re in Naples for the winter!). Have a very happy Thanksgiving.  I hope you get to spend it in the company of family and friends. Matt    


No Picture

Certain Predictions

I’m tired of hearing the predictions. The people who were certain Brexit would fail were certain Trump couldn’t get elected President.  These same people are certain of how the market will move going forward.  Paul Krugman pulled the fire alarm the night of the election when market futures were down huge saying the market would never recover.  Citigroup and Goldman Sachs predicted the possibility of every scenario except the one that happened (a market rally post-election). These folks wear their authority like a crown and revel in lording it over the masses.  Perhaps once upon a time this authority derived from real, actionable knowledge, but today that crown has been pawned in exchange for pageviews, CNBC appearances, and perfect hindsight.  They are desperate for your cash, but even more desperate for your attention.  There is a fear underlying the headlines.  It is not fear of political change or market turmoil….


Donald Trump

Donald Trump is President-elect of the United States of America.  This election reminded me of the Brexit vote across the pond earlier this year.  An entrenched power bloc assumed it had already won, but woke up the day after the election to a powerful reminder of the world outside of their ivory towers.  I voted and I hope you did, too. So What Does Donald Trump Mean For The Markets? It means the uncertainty over who will be President is over.  No kidding, right?  It is cliche by now, but the market does hate uncertainty and knowing who will be in the White House allows companies to eliminate a variable from their business calculus.  You don’t need to be a genius to navigate your portfolio through an election cycle; you need patience and informed optimism.  Even smart people screw up and overreact to short-term blips.  Nobel laureate Paul Krugman of the New…


Right Said Fred Forecasting

Right Said Fred Forecasting

You couldn’t do a little turn on the catwalk in the 1990s without hearing Right Said Fred’s song about the tail wagging the dog.  “I’m Too Sexy” lampooned fashion’s focus on the model rather than the clothes.  More and more it seems that financial pundits are performing Right Said Fred Forecasting rather than providing any realistic or actionable information.  “Smart Beta” firm Research Affiliates recently put out a study that is summarized by Bloomberg in the article “The Next 10 Years Will Be Ugly for Your 401(k)“.  Their prediction tells us more about the forecasters than it does about the future. The Research Affiliates study gives investors a 0% chance of earning 5% annually for the next ten years with a portfolio of 60% stocks / 40% bonds.  This is a great way to catch investors’ attention.  We know that negative outlooks carry more weight with people than positive outlooks.  A…


Pick Good Funds

Pick Good Funds

The Wall Street Journal and the financial community have been abuzz about passive investing.  I wrote about settling for average and outrunning a bear via active management previously.  The newest argument for choosing active management over passive is that investors should choose ‘good’ managers, not average or bad managers. Why didn’t anyone think of that before?  Choosing a good manager sounds like common sense, but really this is an attempted rebuttal of the fact that benchmarks outperform 70-80% of actively managed funds.  Capital Group (parent company of American Funds) even published a scorecard in a sort of homage to S&P’s SPIVA report that touts the performance of ‘good’ funds.  Tim Armour, chairman of Capital Group, asks why an investor would buy Blockbuster stock in the early 2000s when they could have bought Netflix – the assumption being that a good manager would have bought Netflix while an index would have been forced…