S&P-500 Set a New, Record High

Stocks are back in an intermediate uptrend and breaking new, higher ground. While stocks were turning around, precious metals and the miners have been consolidating after a huge jump this Summer. Real Estate has been on a tear, also setting new highs.

It seems that the financial markets are paying no attention to slowing capital expenditures, shrinking profits, larger Federal deficits, record debt of all kinds, and increasing consumer loan delinquencies. Go figure.

As a great investor once said, “The stock market can remain irrational far longer than you can remain solvent”. How does that apply to us? We can have an opinion about what should be happening, or what will happen soon. However, we allocate our portfolio based on our methodology and what the markets are doing now. Sooner or later, economic fundamentals will have their impact. Our goal is to respond to current market behavior and make money… not try to “be right”.

Cheers,

Dale

Precious Metals Dominate the Markets (but not the news) in August

Gold is up about 20% YTD 2019 through August 31, beating the stock indexes for the first time since probably 2011.

What is fascinating to me is that the US dollar continues to climb against other currencies. Usually, when gold rises in USD, the USD is sinking against other currencies. Not true right now. In spite of US debt, deficits, social security and medicare obligations, the USD continues to climb vs. other currencies.

And yet, gold, silver, and the miner are going up even faster. It sure looks like the bear market for gold that began in 2011 is over. Ray Dalio, of hedge fund fame, has opined that a new 10-year secular bull market in gold may be under weigh. Who am I to disagree?

Have a great September, and manage your investment risk.

Cheers.

PortfolioWisdom.com is 10 Years Old!

Thanks to our friends, customers, and investment clients for making portfoliowisdom.com a success. We founded Dale Beals Financial Wisdom, LLC (d/b/a PortfolioWisdom) on June 3, 2009, because there had to be a better way to treat clients than the way a typical “wire-house” (like Smith Barney or Merrill Lynch), or bank would behave.

Without going into many negatives about those business models, we set out to:

  1. Share your pain as well as your investment success by offering to reduce our fees in any year you had a net loss.
  2. Remove the financial conflict of interest by establishing a fee-only relationship instead of selling products on commission.
  3. Reduce your overall investment costs by eliminating hidden “middle-man” expenses, soft dollar agreements, and by charging reasonable advisory fees for our work.

During the last 10 years, we have developed and refined asset allocation models for both conservative and speculative clients. Those refined models are working well, and we use them to manage our own money.

We are very grateful. Thanks again.

Dale Beals

Quite an Interesting Week – The Fed Folds

Stocks got a nice lift when the Fed said that, all of a sudden, they were looking hard at LOWERING interest rates. Not two months ago, they were claiming the economy was great, and they would be RAISING rates twice more in 2019.

The real story is gold and the miners. They absolutely exploded right through the ceiling of $1350/oz for gold that has held for the last five years. Yes five years. Gold is finishing the week at $1404/oz.

Thankfully, we fully benefited from this move.

Have a great weekend.

Stocks Looking Dangerous

Gold and Bonds are up while Stocks are down big today. The trade war is being blamed, but there are a number of possible causes in addition to trade wars.

  1. Consumer debt has never been this high. People owe more than they did just prior to the Financial Crisis of 2008.
  2. Living costs are rising, even though the Fed says inflation is low.
  3. The US budget deficit continues to grow, and our total debt is growing at the rate of over $1 trillion per year. Actually, the last trillion dollars of debt took just 10 months to accumulate.
  4. More car loans are delinquent (more than 90 days overdue) than ever before.
  5. More credit cards are delinquent (more than 90 days overdue) than ever. I read today that 80% of American families are one missed paycheck away from serious financial trouble.
  6. And our politics! Don’t get me started.

In spite of these factors, the US Dollar seems to maintain its strength. Gold gets crushed every time the price reaches $1,350 / oz. And US stocks are still within 7% or so of all-time record highs… even after today’s selloff.

So who knows? I sure can’t predict what will happen. Is this the beginning of the big reckoning? Or just another sudden dip on the way to new highs? Time will tell.

For now, our methodology has Gold under-weighted due to its intermediate trend, and real estate under-weighted due to recently high volatility. We have roughly 9% in cash and 40% in Tips.

Have a great long weekend!

Brutal Day on Wall Street

As of this writing on Monday afternoon, the S&P500 is down approximately 2.6%. Gold is up 1%, Real Estate is flat and US Treasuries (TIPS) are up just a little.

Now that the test of top has failed, and we passed the deadline without any settlement in the trade war, pessimism rules.

Manage your risk carefully, based on your personal objectives and situation in life.

Dale

US Stocks Fail the Test of Top

Blame the trade war or blame the Fed. Whatever you blame, we’ve seen stocks nearly 4% below where they were just a week ago or so.

Every major asset class has been nicked, but stocks, coming off record highs, may be getting hit the hardest. Gold and real estate seem to have stabilized over the last couple of days.

Looking at the charts, I don’t anticipate any new signals from my methodology next week, but volatility is definitely beginning to creep back up.

Let’s stay alert!

US Stocks Holding at Record Highs Today!

My last post covered the test of previous highs for the S&P500. A few days ago, the stock market pushed above the previous highs. After the Fed’s rate decision and announcements about their interest rate policy, ALL of the major asset classes took a big hit for a couple of days. However, today, all major asset classes are back on the rise, and, at this writing, the S&P500 is right back at the record highs.

Interestingly, gold, silver and the miners all established intermediate downtrends just this week. Accordingly, I rebalanced the portfolios, reducing the gold allocation and increasing all the other asset classes. It’s nice to have the luck for all of these assets we bought Wednesday and Thursday to be up nicely today.

Have a great weekend!

US Stocks Near All-time Highs!

Well son of a gun! The S&P-500 is within 3-4% of the all-time highs last August. On Christmas Eve, I wouldn’t have thought that was possible. However, here we are!

On Monday, April 1, 2019, All three of our stock asset classes established intermediate (approximately 6 month) uptrends, bringing ALL of our asset classes back into the uptrend category. So, we added to the stock portions of our portfolio, investing almost all the cash, and continue to see slow, steady gains. Gold, bonds and real estate continue to climb as well, although gold has become more volatile since hitting an 8 month high recently.

One of the emotional challenges to following a methodology is that you feel “right” when things move the way you thought they might. Indulging that feeling is not too smart, though, because when the methodology disagrees with what you thought would happen, there is a tendency to avoid following the rules you so carefully researched years ago. You start evaluating what was “right” based on whether you see gains shortly after the move, rather than realizing that “right” means sticking to your discipline, knowing that you will do better in the long run.

So, even though I was surprised to see the stocks trending back “up”, I invested accordingly when our signals changed. If the trends turn down, or if volatility increases, I plan to reduce those asset classes accordingly.

Let’s see how the test of all-time highs goes over the next few weeks!

Have a great weekend.

Stock Are Almost in an Intermediate Uptrend

The S&P-500 has now climbed back to equal the highs of December and November of 2018. Quite a bounce after a 20% free-fall. There is still a ways to go to reach the all-time highs from last August, but the mathematics of our methodology are close to declaring a new uptrend for this asset class.

Today, Friday, 3/23/2019, stocks have been pulling back, perhaps because US housing purchases were much much weaker than expected. However, they could just be taking a rest after this strong bounce-back rally since Christmas. As the volatility in stocks has decreased, we’ve been gradually adding to our stock positions and reducing cash. If the upward trend materializes, we’ll add more stocks.

Gold continues its bumpy climb. After reaching about $1,350 / oz. the sellers came out and knocked it down to about $1,285. Today, though gold is hanging around $1,308, so the intermediate trend is still positive. When gold volatility spiked on the pullback, we reduced our position in gold accordingly.

There has not been much change in our allocations in spite of all the wild news, so I have not been writing as many blogs for the last few weeks. I expect the excitement to pick up over the next month or so.

Have a great weekend.