This is a stock market blog about portfolio management,foreign stocks, exchange traded funds and the occasional musing about my firefighting experiences. The point here is to share process

Simplicity In All Things Including Portfolio Management

My latest post for Alpha Baskets looks at what I think is an overly complex idea for asset allocation. Before getting to the excerpt, I was included on the Top 100 Advisor Blog & Website list compiled by Feedspot. Thanks for including me!

From today’s post;

However, the idea that a job that is in the realm of being normal should dictate asset allocation strikes me as being very incorrect. I will concede exceptions (never say never) but if you’re 60 and either of your parents are alive then you need to plan on being around for a while. And if you are going to be around a while you probably want your money to last and that circumstance is far more important in determining a suitable asset allocation.

Please click through to read the entire post.

I had to go pick up a truck from the fleet maintenance shop that works on the engines for most of the departments around here.

Copper Canyon Fire District Water Tender.

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And a collage of Mayer Fire’s new structure fire engine.

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Market Melting Up

The weekly Market Update is posted and includes the following;

The rally is being attributed in part to the rising dollar and rising interest rates and while small caps are clearly overbought we would not attempt to guess when this run will peter out but it might make sense to rebalance if we see another couple hundred basis points of alpha added. Barron’s Striking Price column chimed in on the rally observing that the market appears to be pricing in “Trump perfection.” If that is correct and perfection is not achieved it will bring back two-way volatility shortly after the inauguration. (we would note a half dozen other articles in the current Barron’s expecting the rally to continue).

Please click through to read the entire update.

We went hiking in Sedona the other day on the Brins Mesa Trail.

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The Art Of Doing Nothing

My latest post for Alpha Baskets looks at over reacting and over trading.

Knowing all these things when sitting around a table with an advisor or looking a computer screen in the den is a whole lot easier than in the middle of a bear market or after a year where the benchmark is up 10% versus a portfolio gain of 2% due to a bias to some factor that lagged this year but historically has done well or when the stock that has been raising its dividend every year since WWII goes down 15%.

Please click through to read the entire post.

Capitol Reef National Park

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Grand County Fire Department in Moab, UT

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Hiking down into the hoodoos in Bryce National Park

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Still Trying To Decipher The Post Election Market

The weekly Market Update is posted at Alpha Baskets and includes the following;

After massive gains during the week of the election, domestic equities took a bit of a breather last week but still rallied. The Dow Jones Industrial Average only gained 11 basis points but the S&P 500 went up 0.81%, the NASDAQ rallied 1.61% and the Russell 2000 was the leader again with a 2.54% lift. The sector bifurcation from right after the election was less extreme last week and actually technology was strong last week after getting left far behind the previous week. Healthcare was in the red after strong gains (no Clinton maybe means no war on drug companies) which may have been a case of too much too soon. Financials continued to show strength expressing the market’s certainty for a rate hike in December. Predictions are obviously always difficult but this sort of back and forth between haves and have nots at the sector level for the time being should not be a surprise. The market is likely to bump along with the Presidential transition process until a little more certainty about what the new President actually wants to do.

West Texas Intermediate Crude had a strong week with a $4 gain after a large decline during election week. The initial reaction Trump as drilling friendly, more supply leading to lower prices. Similar to the above, the market may need time to sort out what Trump actually will do here and while that is going on the price could very well ping-pong back and forth as OPEC tries to work through implementing a production cut.

There was wild, and we mean wild, action in some of the domestically traded shipping stocks over the last few days with moves that might remind longtime market participants of Andrea Electronics in 1993 and then again 1997. DryShips (NASDAQ: DRYS) as the poster child for this event rose from $12 on November 11th to a close on Monday the 14th of $43, then to a close of $71 on Tuesday after having been as high as $97 that day. It was halted on Wednesday, opening much lower on Thursday and ultimately closing Friday at $11.81. We were unable to find a great explanation, Wells Fargo posited that it was a post-election trade that then fizzled out.

The yield on the Ten Year US Treasury Note continued to rocket higher to close at 2.33% on Friday. For a little context, one month earlier the yield was 1.77%. Rates are considered to be going up on expectations for a Fed rate hike as well as expectations that Trump’s policies will be inflationary (the current Barron’s splashes water on that second one). Global bond yields were mostly higher last week except for the German bund yield dropped to 0.31%. The French OAT upticked to 0.76% the UK guilt tacked on another nine basis points to 1.45% and the big news was that the JGB after many months with a negative yield went positive to the tune of four basis points. We would also note the 0.4% pop in CPI and the ten year inflation breakeven has hit an 18 month high.

Add to the list of markets reversing course last week, copper, zinc and nickel all sold off last week after a big post-election bounce on the expectation of infrastructure spending under the new administration.

Please click through to read the entire update.

I had to attend a meeting last week and got this shot.

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This one is from Dead Horse Point State Park in Moab, UT looking out over Canyonlands National Park.

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And a tarantula from our hike a couple of weeks ago.

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It’s Getting Real In The Fixed Income Market

My latest post for Alpha Baskets looks at the kick to the stomach taken in the bond market with some thoughts on what to do about it.

From the post;

The parts of the income market that should be relatively safe to own have in fact been relatively safe as rates have been rising over the last six weeks. High yield tends to be far less interest rate sensitive because the duration tends to be short and the yield is thought to offer a cushion against rising rates in lower yielding segments. Bank loan funds have done well through this because their interest rate resets every 90 days. Short dated paper is doing well because it will pay out at par so soon. Gundlach likes TIPS and while there are short dated TIPS and TIPS funds available, even longer dated TIPS funds are holding in just fine.

Please click through to read the entire post.

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