Weekly Update

May 20, 2016 Update


Yield inversion

This week?s Federal Reserve meeting minutes pushed investors toward thinking once again that interest rate hikes are coming sooner rather than later. The Fed minutes showed a group almost itching to push rates higher as long as economic data holds up. That shift in tone sent market interest rates upward somewhat and brought out all kinds of analysis of what might be coming in terms of yields/rates. The real fear of investors is that the yield curve will “invert” with short-term rates moving higher than longer-term rates. (more…)

Weekly Update

May 13, 2016 Update


The emotional side of investing

As most investment newsletters we do spend a lot of time on the markets and what affects them, on technical indicators and investment vehicles. Another topic we visit fairly frequently in this column is the emotional side of investing which we judge to be just as critical for success. A long-term wealth building program must by definition be emotionally sustainable. (more…)

Weekly Update

May 6, 2016 Update


Too many choices can lead to unexpected outcomes

Bill James is a sort of living legend among baseball writers. Mr. James is the creator of “sabermetrics” which fuses statistics and baseball as seen in the movie (and read in the book) Moneyball. This model-driven approach to building a baseball team is not so different from our model-driven approach to investing. We both seek solutions that remove subjectivity and bias. (more…)

Weekly Update

April 29, 2016 Update


Slow and steady with our “balanced” portfolio

Most of you are likely followers of our Turbo Model signals. It’s an active trading model for aggressive investors. You may not be aware that we also have many other models that serve investors who have less aggressive objectives. An example of that is what we consider to be the best “balanced” portfolio available to investors. That portfolio can be found indirectly at our FPResearch website. There, we display two portfolios – All-Equity and Equity-Income. The All-Equity portfolio largely tracks the returns of the S&P 500 while sidestepping the awful plunges that are a natural part of stock market investing. Substantially all of the stock market upside without the horrible downside. Sounds pretty nice we think. (more…)

Weekly Update

April 22, 2016 Update


Inflation trade ramps up

Over the past month markets have shifted once more in dramatic fashion with commodities surging higher across the board. This has brought sectors like mining and oil drilling back from the dead which, in turn, has led to a sharp recovery in high-yield bonds. (more…)

Weekly Update

April 15, 2016 Update


When index investing gets askewed

What can happen as money pours into index funds during a period of cheap and easy money? One example is explored in the article below by Bloomberg columnist Lisa Abramowicz. (more…)

Weekly Update

April 8, 2016 Update


King dollar

With the first quarter of 2016 now in the books, we reflect that movements in currency which then ripple through into commodities remain the major driver of market action. The vacillating tone of the U.S. Federal Reserve created some volatility. The Fed told us that rates would be heading higher over 2016 only to reverse course as the global economy continues to show an inability to get any real traction. That has caused the Bank of Japan and European Central Bank to be even more aggressive in their drive to lower interest rates and support economies and markets. The push downward on interest rates through the floor by these two major market players left investors wondering what the impact of negative interest rates would be. (more…)

Weekly Update

April 1, 2016 Update


A more nuanced definition of bull and bear markets

The stock market has familiar cycles dating back to at least the 1960s. The visual below (and the accompanying detailed set of tables below that) highlights these cycles and their direction. Each box in the graphic below shows the median return and duration for the seven of these cycles we’ve seen since 1968; but also the return and duration for the most recent phase of the current cycle. The cycles utilize the bull and bear market definitions pioneered by Ned Davis Research (NDR), which are more nuanced than the simple +20%/-20% traditional definition. (more…)

Weekly Update

March 25, 2016 Update


Buy and Hold investing

Passive investing involves buying index ETFs or funds of varying asset classes in some predetermined target mix, such as 60% of a portfolio invested in stocks and 40% in bonds. The investor focuses on buying this portfolio at the lowest possible costs, holding the ETFs/funds indefinitely while occasionally making minor adjustments to keep the portfolio near its target mix. The challenge in following a passive investment approach is setting aside our emotional response to a market under severe pressure. Seeing your account balance dropping 20% is difficult for most of us to stomach. We believe investors do not have to suffer through those gut-wrenching declines. (more…)

Weekly Update

March 18, 2016 Update


Are stocks in a bull or bear market?

Stocks have ripped off a four-week +11% rally after staring into the abyss during a very turbulent January and February. The bear market calls grew as the year got off to the worst start in history. By some measures, clues to a coming bear had been foretold months before. After all, the market for most stocks peaked almost a year ago now, back in April 2015. Since then, it’s been a rough ride with 2 drops of -10% and subsequent sharp snapback rallies. (more…)