Allocation Change at Portfolio Wisdom

As of Monday, 5/21/18, the medium-term trend turned down for Small Cap US  Stocks.

Now, the only asset class in our portfolio in an uptrend is gold (GLD or SGOL). All bond classes and all stock classes are trending down.

Accordingly, I reduced stock holdings, increased gold holdings, and increased cash to 15% of our portfolios. (For my diversified clients, we continue to hold a 5% position in the gold miner ETF, GDX). For my speculative clients, we are primarily in precious metals, buying on dips and selling on rallies around the core positions.

Any Question? Call me at 615-414-1942.

Cheers.

Ugly Day on Wall Street

Precious metals are getting killed on this Tuesday, May 15. All of the other major asset classes are down also, as of this writing.

It seems that a sell-off in bonds, raising the yield on the 10 Year Treasury above 3%, is the catalyst for today’s action. What is interesting to me is that when bonds sell off, I would expect gold and silver to be steady or up, but that is not the case. The last time I looked, gold was down $20/oz. and had broken below $1,300/oz. for the first time in ages.

US large cap stocks and international stocks are already in an intermediate negative trend, as are US Treasuries.  US small cap stocks and gold are still positive based on the linear regression of prices the last six months or so.

Time to stay alert. Have a good day!

 

The Iran Deal is Off. How Does This Affect Your Portfolio?

President Trump just showed Iran a big stick and a little carrot.

As of this writing just a few minutes after his speech, gold and commodities are up slightly while stocks remain about where they were just before the announcement.

In summary, there is not a great deal of reaction to the news initially.

However, yesterday, our allocation model changed our asset allocations, decreasing international stocks and large cap US stocks while increasing small cap US stocks and gold.

Cheers.

We are back at the S&P lows for 2018

As of this writing on Thursday morning, the SPY is trading at 259.23. The closing low for 2018 was at 257.63, less than 1% away.

Gold and bonds are up, so our portfolios are actually gaining today, While the S&P 500 is down 1.5% since yesterday’s close.

No changes to our asset allocations since March.

Cheers.

Sell on May 1st and Go Away?

Yuck. The financial markets look ugly today. All major asset classes are down, with stocks and gold leading the way lower. US Treasuries and TIPs are also down.

My blog entry from last week about paying the piper is still on my mind today. The longer we meander sideways without a convincing move back to January’s highs, the more pessimistic I will become.

Whatever the future holds, our asset allocation remains the same for now, having adjusted to the volatility increase in January.

Cheers.

So When (and how) Will We Pay the Piper?

US Government debt, at approximately $237 Trillion is estimated to have ballooned $20 Trillion in 2017. Unless the tax relief act leads to a tremendous jump in US productivity and GDP growth (and taxes paid into the US Treasury), the only option I see is devaluation of the US dollar. I don’t see the US ever admitting to the need to overtly default on our debt.

Roughly one in five conventional mortgages are owed by families paying 45% or more of their income on debt payments. This percentage of people paying this percentage of their income on debt is the highest it has been since just before the housing crisis in 2006-2007. It seems that we do not learn.

Subprime car loans have hit record highs in the last 12 months. The number of people delinquent 90 days or more on their car payments is at an all-time high.

The demographic wave of people retiring or being forced into much lower paying jobs is rolling toward us. These people are selling homes and downsizing. They are reducing their investment risks by reducing their stock investments.

Yet US stocks (the S&P 500) are just 7% or so below the all time highs they hit in January 2018.

When (and how) will we pay the piper?

I don’t know, but I’m glad our automated asset allocation methodology has reduced stocks, increased TIPs (Treasury Inflation Protected Securities) and increased Gold.

Cheers.

 

No Asset Allocation Changes this Week

Happy Monday everyone!

I just checked the Portfolio Wisdom model on our home page and see we’ve had no allocation changes since March 26, 2018. This is completely in keeping with our high efficiency, low drama approach to investing. Even that change was a minor adjustment of less than 1% in several allocations.

Today is a big up day for US stocks. It looks like the S&P-500 (up 1.64% at this writing) is trying to regain the ground it lost last Friday (down 2.3%). We’ll see. In the meantime, people who are not well diversified have to be getting sea-sick as the waves on the investing ocean get bigger and bigger.

Hope you have a great week!

Huge Day for US Stocks Yesterday

Wow. Just before the open, stocks gapped down more than 2% from the previous close. Then a 3% rally occurred with US stocks finishing the day up more than 1%. That type of action is often an indicator of an intermediate bottom in prices, as the last few weak hands get scared out of the market.

In the premarket hours today, stocks are indicating a positive open… up by over 1/2% from yesterday’s close. I would not be surprised to see US stocks stay strong for several weeks if we trade up today.

Of course, there is always the chance of some big political shock, given the propensities of our current administration and the misbehavior of the Russians, but that was quite a day yesterday.

Cheers.

Stock are Gaining About Half of Yesterday’s Losses

Volatility continues with US stocks up about 1% as of this writing after losing over 2% yesterday. We are back above March’s lows and about where we finished the month of March.

No real changes to our asset allocation. since mid-March.

It feels like the bull market in US stocks is finally ending, although it may be months before we know one way or the other.

We’ll just stick to our knitting. Portfolios are doing well, thanks to the allocation to Gold and TIPS.

Have a great week.