Happy 2018! Wasn’t January nice?

Of course, January was nice, but gave back a lot of ground in the last couple of days. February is starting off poorly, but we were long over due for a pullback in stocks.

Sadly, today, it seems like everything is being sold.

Our balanced portfolios are performing well so far this year. Of special note is the fact that gold and long-term US Treasuries have entered a medium term downtrend. That change is reflected in our allocations since just after the 1st of January.

As we’ve stated before, our methodology dynamically adjusts asset allocations based on their volatility relative to the rest of the portfolio. This means that the most volatile asset classes, based on how they are CURRENTLY behaving, get the smallest percentage of the portfolio.

Also, I’ve enhanced my model by incorporating individual stock selection for the US large and small cap portions of the portfolio.

Questions? Give me a call at 615-414-1942.

Merry Crypto Christmas

It has been a great year for stocks. The other asset classes have been mixed, with US Treasuries hanging in there far better than many people predicted for 2017.

Probably the biggest news in financial areas has been the explosion of the valuation of BitCoin and the introduction of so many digital currencies. My sense is that this interest in Bitcoin is a manifestation of a global mistrust of fiat currencies and the governments that devalue them.

Gold has lost it’s place in the public mind as a hedge against financial disaster and devaluation of “paper money”. Now, “everyone” wants bit coin. Fortunes will be won, and lost, by people speculating in this new currency, although the upward trajectory might last for months or years to come.

I doubt bitcoin will be the long-term answer, although the blockchain technology underlying the currency is an idea that is here to stay, in my view. I don’t recommend more than a tiny speculative holding in bitcoin, and that only if you are a sophisticated, nimble, knowledgeable trader.

Our conservative portfolios have met expectations this year. As always, when people compare a diversified portfolio to the S&P 500 during a bull market, there is a temptation to feel left out of the big gains. However, nobody minds being in a diversified portfolio when the inevitable bear market in stocks comes along.

Nobody knows when that will happen. However, we can manage risk and adjust portfolios based on how the market behavior changes.

God bless you and yours during this festive and sacred season.

Dale

 

Stocks Pull Back?

Well, in the last couple of days, stocks have had a little bit of a pullback. But it’s so small it hardly seems noticeable in light of the recent gains.

US Treasuries  are getting hammered, however.  There is no reason yet for the bulls to get worried.

Have a great weekend!

Dale

Never Before in U.S. Market History…

Not much has changed over the last few weeks in the markets. The major U.S. indexes have continued to inch upward. Jason Goepfert at Sentimentrader.com has spotted a run of concurrent daily, weekly and monthly consecutive gains in some indexes never before seen in U.S. market history.

The extremes reached by sentiment indicators Jason tracks are unprecedented.

Clearly, this can’t go on forever, but it already has gone on longer than ever before… and it could continue longer than we could possibly expect. As a result, portfolio managers, like myself, are facing two significant risks:

  1. That clients will lose money if they buy stocks here and the market tumbles quickly into a bear market, and
  2. That clients will fire them if they manage risk by raising cash, and markets continue to climb through the end of the year.

The percentage play here is to step aside and keep extra cash on hand to buy at lower levels. Actually, that was the percentage play six months ago. However, money managers or advisors who made the percentage play six months ago are now feeling the pressure of Risk #2… getting fired.

As a Registered Investment Advisor(RIA), my belief is that my fiduciary responsibility means accepting risk #2 in order to mitigate risk #1. That is the way I am proceeding for the rest of 2017… with extra cash.

We’ll see how it goes.

Cheers.

New Highs in Stocks This Week!

Well after hovering for weeks just below the Summer highs, stocks had the biggest day in the last 6-9 months, depending on which index you follow. That big day pushed stocks to new highs … all time highs.

The markets seem to be able to shrug off North Korea’s hydrogen bomb test, missiles over Japan, Russia’s war games, and our President’s tweets… All in September, one of the worst months historically for stocks.

Who am I to argue?

I now plan to begin dollar cost averaging back into our models next week.

Thankfully, gold, the position we continued to hold, has done well … reaching new one year highs in the last few days.

Have a great weekend.

The Bulls are Thrown Back

As I write this on Tuesday afternoon, 9/5/17, stocks are off their lows but still having a no good very bad day. Precious metals and miners are up big. The US dollar is getting hurt, but US Treasuries are up along with the Swiss Franc.

I’m beginning to lose count, but I think this is the third or fourth time a test of the recent all-time highs in the major stock indices has failed.

Let’s wait and see what happens, but it feels pretty good to be heavy in cash with some gold.

Cheers.

 

Still Treading Water …

I’ve had no reason to regret my move to 80% cash during the last week… but haven’t made any money either.

Gold pulled back slightly from $1300/oz. but stayed above $1,290/oz. all week. Stocks have basically gone sideways.

The last week in August is historically the lightest volume week in the year (least buying and selling activity). Because of the lack of liquidity, there have sometimes been market swings that were immediately reversed when traders returned in force in the beginning of September. Not so much, this week.

I expect one more push to test recent highs next week going into Labor Day, but September and October have been rough on stocks in some years we all remember. So, we’ll sit tight and appreciate our blessings.

Cheers.

This Could Get Ugly

Happy Friday! As I write this post, it is 10AM Central Time. Yesterday was ugly for stocks and good for gold and the bonds.

Today, gold is up again … touching $1300/oz. for the first time since December 2016. It will be interesting to see if gold holds this level. Since the price of gold is heavily manipulated, forecasting is difficult … especially about the future! Ha!

I moved our clients to an average of 80% cash a couple of weeks ago, but kept some allocation in the precious metals. So far that has been very profitable.

However, I have learned over the years that preempting my asset allocation methodology is usually a bad idea long-term. The reason I got out is the growing number of new stock market highs combined with the growing number of individual stocks hitting 52 week lows, combined with the record-setting LACK of volatility. Too many things are happening that have NEVER happened before. . . thinks that make no sense to me.

When markets begin behaving a little more normally, I’ll get back into my methodology. Now that I’m out, though, it would be cool if we had a quick 15% drop so I could buy back in at lower levels…

Time will tell.

Cheers