The Zombie-Like Stench of Precious Metal Funds
Posted on July 18, 2013 | Investor Update
Yesterday, I was handed an investment report entitled “Zombies!” The report by Harris Associates L.P. focused on interest rates, but it could well have focused on precious metal funds instead. Investors holding those funds will feel like their portfolios were afflicted by the same plight causing havoc in AMC’s hit show “The Walking Dead.”
Think Twice Before Dumping Your Bond Fund
Posted on July 11, 2013 | Investor Update
Investors have been yanking their dollars out of bond mutual funds. An estimated $66.6 billion has been pulled over the past five weeks, according to the Investment Company Institute (ICI). This is more than eight times the amount pulled from domestic equity funds over the same period.
Don’t Be Quick to Bail on Emerging Markets
Posted on July 4, 2013 | Investor Update
The first half of this year was not kind to emerging market stocks. The MSCI Emerging Markets index lost 9.4% on a total return basis during the first six months of 2013. Not only was it more than 23 percentage points worse than the S&P 500, it was also 13 percentage points worse than the MSCI-EAFE index, which includes troubled Europe. On the surface, two words come to mind: Not good.
I Made a Mistake
Posted on June 27, 2013 | Investor Update
Since I am someone who does not like to trade frequently, it was unusual for me to place an order to sell a stock I bought last Friday, June 21, on Monday, June 24. Yet, this is exactly what I did to fix what turned out to be a mistake.
The Cloud of Interest Rate Uncertainty
Posted on June 20, 2013 | Investor Update
Uncertainty over interest rates remains a short-term problem for the financial markets.
Yesterday’s Federal Open Market Committee (FOMC) statement failed to calm the nerves of traders. Though traders were looking for more clarity, the June meeting statement only contained two notable changes from the May meeting statement. The committee altered its assessment of economic and labor market downside risks to “having diminished,” from continuing to see those risks. The second change was the dissension of St. Louis Fed president James Bullard. Bullard thought a stronger defense of the committee’s willingness to defend its inflation target was needed.
Streaks, Observations and Notes
Posted on June 6, 2013 | Investor Update
I have a few observations and notes to share with you this week. None long enough to warrant their own weekly update, but still worthy of mention.
The first is the streak of winning Tuesdays. Until two days ago, the Dow Jones industrial average rose on 20 consecutive Tuesdays. According to Bespoke Investment Group, this was the longest such streak since at least 1900. It may be the longest such streak ever.
Focus on the Fundamentals, not the Story
Posted on May 30, 2013 | Investor Update
Every so often a stock with a good story catches the eyes of traders and experiences a price spike in response. Tesla Motors (TSLA) is currently that stock. Since the end of April, shares of Tesla have approximately doubled in price, soaring from $53.99 on April 30, 2013, to $104.95 today. When hoopla such as this occurs, it is easy to forget that good stories do not always result in good investments.
Be Careful About What You Invest In
Posted on May 23, 2013 | Investor Update
I want to start with a short comment about Japan before moving onto the main subject of this week’s newsletter. As you probably heard, the Topix index plunged almost 7% today, the biggest drop since 2011’s earthquake and resulting tsunami. According to both Bespoke Investment Group and James Mackintosh of The Financial Times, this was also just the ninth time in the past 50 years that the Nikkei has fallen by more than 7% on a single day. (The Nikkei encompasses 225 stocks; the Topix tracks about 1,700.)
Why You May Not Want to Go Away
Posted on May 16, 2013 | Investor Update
Take the money and run or keep your allocation to stocks?
I’m sure this is a question many of you have. The market has had a good run so far this year, with the S&P 500 gaining 17.3% on a total-return basis through yesterday’s close, despite a long list of worries. Then there is the old adage of “sell in May and go away.” But, Mr. Market remains in a chipper mood as is evident by the new record closes continually being set by the Dow Jones industrial average and the S&P 500.
New Junk Bond Record, But Risks Remain
Posted on May 9, 2013 | Investor Update
The quest for higher yields is going to end badly for some investors. There is new evidence that some investors are ignoring risks in exchange for quenching their thirst for income.
The latest is junk bonds. Yesterday, the yield of the Barclays US High Yield Index fell to a new record low of 4.96%. It broke the 5% level for the first time in its entire 30-year history on Tuesday. Barron’s noted that prior to this past January, the index’s yield had never fallen below 6%.