News

Market

How ‘Bout That Market: 2/13/2017

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 How is the market doing?  Before we get to the market today, let’s look at how the market was doing a year ago.  On February 11th, 2016, the market was off to its worst start ever, down over 10%.  This was it.  This was the other shoe to drop.  Except that it wasn’t.  2016 ended up 12% in spite of significant headline risk (Brexit, Trump, Cleveland sports successes, etc). How is the market doing today?  Twelve months after the market bottom, the S&P 500 is up over 27%.  The market continues to climb the wall of worry.  I don’t know when the march upward will end.  The only thing I would take as a sure sign of a market top…


fiduciary

Cacti and Poison Ivy

You don’t have to be a botanist to know not to jog naked through a cactus grove.  Even an idiot can see the danger in that.  People like to think that identifying investment dangers is just as easy.  You’ll know when someone is taking advantage of you or a loved one, right?  Rather than a bramble of cacti, the investment landscape is a beautifully manicured garden.  There are so many plants in this garden that many people seek out a guide, but few make the distinction to search for a good guide.  They merely grab whoever’s most convenient and wind up with a case of poison ivy or worse.  The kind of guide investors need is called a fiduciary. When it comes to finance, the US is mis-regulated.  Small banks are at a disadvantage due to the costs of complying with rules meant to rein in mega-banks.  Well-meaning legislation (like FASB 157)…


No Picture

If I Could Give You Just One Piece of Advice

If I could give you just one piece of advice, it would be this: Don’t read the comments section. Many news organizations still have comments sections.  Comments sections provide a nourishing habitat for trolls, toxic creatures whose egos are fed with belligerent virtue signalling.  It’s basically Mos Eisley: you’ll never find a more wretched hive of scum and villainy.  The easy fix: don’t read the comments.  I don’t have comments on this website to avoid headaches with trolls and spammers. The problem: Facebook and Twitter are basically free-form comments sections.  I love news, sports, and investing, but each has their own particular breed of troll.  Are you a [political party affiliation]?  A college student would love to tell you all about how the world REALLY works (stay woke!).  Love the Indians?  There’s a 14 year old in Toronto who wants to tell you how much your favorite player sucks.  Finance…


Trump Portfolio

We’ve witnessed the peaceful exchange of power in the most powerful country on the planet.  Now, how do we create a “Trump Portfolio” of only the best, really the greatest, everybody says so securities?  Does it make sense to overweight small cap manufacturing stocks that might benefit from a strong dollar or perhaps bank stocks to take advantage of rising rates? Here’s a better question: What’s more important, the person in the White House or the person who owns the portfolio?  It doesn’t make sense to put Grandma in volatile small cap stocks if what she really needs is income.  Likewise, it wouldn’t be prudent for a 20-something to move everything to cash because they don’t agree with the President’s politics.  I hope you already knew this, but there is no optimal “Trump Portfolio”.  Rather than rebuilding their portfolio every time the winds change in Washington, D.C., investors should build around their personal needs…


No Picture

How Bout That Market: 1-16-2017

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   My quarterly commentary for Fairway Wealth Management is posted here.  As we approach inauguration day, it’s prudent to maintain perspective in the face of media noise.  It may be a good time to audit your news streams and trim the dead weight.  I love Twitter and Feedly as they make managing the noise easy.  The key is to cut bad sources without regret.  If the rest of your follows are solid, they will help you fill in the gaps that you may miss by posting things they think are relevant. I cannot stress enough that investing never requires minute by minute updates.  The same goes for the news.  It is human nature to want access to news before other…


ASS

Don’t Invest Like an ASS

ProTip:  Don’t invest like an ASS.  That is, don’t give in to the temptations of investments that are Aspirational, Signalling, or Sexy.  I didn’t plan it this way, but like all great concepts, the acronym is there.  It sounds silly, but these can be serious portfolio killers. Aspirational Investments Aspirational marketing has been around for as long as there has been stuff to sell.  The product is promoted as something used by the person you want to be in the setting you wish you were at.  A great way to sell bad beer is to show bros with washboard abs drinking on a beach with girls in bikinis.  This is an obvious aspirational marketing gimmick.  You’re entirely too smart to fall for that, right? There is a sneakier technique almost imperceptible to adults.  Watch commercials aimed at children.  You’ll notice that the children in the ads are usually slightly older…


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…


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…