Crude Oil Is Not Going Out Of Business

My latest post for Alpha Baskets looks at what to do with energy exposure in a diversified portfolio. Quite a while ago I reduced exposure in the sector thanks to a big MLP M&A event and top down headwinds for emerging markets. Any reduction was good but of course any remaining exposure has of course been a drag but at some point oil prices will come back and when that happens it could be very fast and owning stocks that survive will likely be the fastest way to make up the drag. From the post; Oil is down 70%-ish from its high a couple of years ago and down much more from when it hit $150 in 2008. The energy sector’s weighting in the S&P 500 has about cut in half to 6.3%, that kind of change in sector weighting doesn’t happen very often. Oil itself cannot go to zero and it is now down dramatically. Something that cannot go to zero and has fallen 70% is closer to the bottom. If lower for longer turns out to be correct then there will be companies that fail or otherwise go out of business shrinking the field, this is the definition of the cure for lower prices is lower prices argument. Please click through to read the entire post. Had to make a quick run over to Sedona the other day;   And the second picture is a collage of older Type 6 engines (brush trucks) from Kalispell, Evergreen, MT, Rapid City and my department; Walker...

Selling Takes A Breather

The weekly Market Update is posted at Alpha Baskets and includes the following; When the markets were falling on Tuesday there was plenty of gloom to be had in the media and then when things turned up there was plenty of talk about V-shaped bottoms. Whether coincidental or not equities went down when oil went down and then equities rallied, especially on Thursday and Friday, as oil rallied. For now, the two appear to be very closely linked and the swift decline in recent months (longer than that really) has led to oil being viewed as an immediate proxy for economic activity as relates to demand. Last week in this space we posited that the decline in oil might be overdone. The bounce last week does not mean a bottom in and more importantly should not set the expectation that volatility is over. Please click through to read the entire update. The first picture is from the Hoot Owl Fire in May 2013. It was a tiny fire but were still able to get help with it.   The second picture is Engine 33 from Boston Fire. It is one of the oldest fire houses still in use in the country and also seems to be one of the most photographed...

Bear Market Confirmed?

My latest looks at whether a bear market indeed started last summer which very well could be the case. It doesn’t help that the market is up a ton today and CNBC has a lot of people proclaiming some sort of bottom. We’ll see. From the post; That sort of action meets criteria for what I believe contributes to a bear market. Bear markets tend to start slowly over a period of quite a few months giving people plenty of time to get out before the serious declines start. Of course this may not be the start of a bear market, I could be wrong but without knowing the future this sort of thing is what process and discipline are all about. Please click through to read the entire post. A collage of fire apparatus taken over the last couple of...

Well, The Market Didn’t Fall As Much

The weekly Market Update is posted at Alpha Baskets and includes the following; While there is no shortage of opinions about whether this is or is not a bear market for equities, we would say that the typical advisor doesn’t need to be correct about if it is a bear market but simply needs to meet client expectations in terms of communication and when appropriate, defensive action. And if this is the next bear market then it is important for clients to be reminded that bear markets historically are much shorter than bull markets and once a bear market ends, the next bull begins. Please click through to read the entire update. Over the weekend I played around with program called PhotoScape (free download, I have no affiliation with them) that lets you make collages and a few other things with your pictures. The first picture is a collage of several wildland fire apparatus from the last couple of years.   The second one is from the NASCAR race in Phoenix that I went to last March. I always thought this sort of effect was very neat but didn’t have the software to do...

The Most Useless Barron’s Quote Ever

My latest post for Alpha Baskets looks at a very useless idea put forth in this week’s Barron’s. Basically someone tied to make an argument that the S&P 500 was overvalued by about 1% based on the level of VIX at some moment in time. The opening week of 2016 put in a large decline for a five-day period and of course there was plenty of media coverage about it being the worst first week to a year ever and maybe there were other ominous stats too. But forgetting the calendar for a moment, as I have said many times here before, there is nothing happening in the market that hasn’t happened before. Please click through to read the entire post. A few days ago I was in Laughlin for the Arizona Fire Chiefs Association conference as the president of the Western Yavapai Fire Chiefs Association. It was a great learning opportunity as well as offering the chance to meet a lot of people to potentially draw on their knowledge in the future should Walker Fire ever need the help. On the way back I took Route 66 through Oatman (look it up) and was able to take what are hopefully some interesting pictures. The first picture was taken on the Interstate 40 side of Oatman near Golden Valley. It was closed for the winter. There were also several old rusted out cars and a pickup truck on the property. The second picture is of a 57 Chevy at the car museum at the Riverside Resort in Laughlin. You couldn’t get that close to the cars due to velvet ropes,...