Hindsight Bias Catches Up With Even The Best Of Us

My latest post takes a look at some comments from Jim Cramer about ETFs and includes the following; The point is not to trash Cramer or to say using individual stocks is a bad idea but the notion that anyone is perfectly infallible avoiding stocks that go on to fail is simply wrong. A modest weighting in an individual stock like Baltimore Opera Hat Company (fictitious name owned by Mr. Burns on the Simpsons) that goes on to disappear either from obsolescence, mismanagement or something else will be a drag whether it is owned individually or as part of a fund and while Cramer seems to assert failures in the making can always be avoided his track record is proof that they cannot. Please click through to read the entire post. We are in Maui for a few days.  This is from Po’olenalena Beach near...

Healthcare Fails, Equities Waiver (sort of)

The American Health Care Act of course failed on Friday when it was determined there would not be a sufficient vote count to pass the bill so it was never brought to the floor for an actual vote. The bill was complex and the process is complicated and while this would appear create uncertainty around where the administration goes from here, markets were essentially flat on Friday. For the week the Dow Jones Industrial Average fell 1.49%, the S&P 500 was down 1.41%, the NASDAQ gave up 1.19% and the Russell had a drop of 2.62%. Bespoke Investment Group pointed out that last Tuesday’s greater than 1% decline for the S&P 500 was the first such decline in 109 trading days. It was only the 11th time since 1928 that such a streak exceeded 100 days The story in the bond market is probably more interesting, the yield on the Ten Year US Treasury Note fell another ten basis points on the week to 2.40% which continues a flattening trend that has been underway over the last few weeks as perhaps the ten year has put in a double top at around 2.60% back in mid-December and then again earlier this month. We place a lot of importance on monitoring the slope of the yield curve as it has historically been a useful indicator for the economic and stock market cycles. As a quick refresher, the slope of the yield curve is often viewed as a proxy for the health of bank lending in terms of it being more profitable to lend when the curve is steeper, less so...

It Doesn’t Have To Be Doom & Gloom

My latest post for Alpha Baskets is posted at Alpha Baskets and includes the following; Another point I would reiterate from past posts is to realize that whatever number you end up with as your investment account, you will figure a way to make due with it because you will have to. The context here is believing your number to be $800,000 and retiring with $600,000. That is not ideal, something might have to give but it is not disastrous as opposed to ending up with only 10% of what you believe your number to be. Please click through to read the entire...

Hawkishly Dovish?

This week’s Market Update is posted and includes the following; On the optimism side of the ledger, the University of Michigan consumer sentiment survey registered the highest numbers since 2000 for Current Conditions. Looking a little closer at the numbers, there is a shocking disparity along political lines. Republicans registered at 122.4,versus an overall number of 97.6, while Democrats came in at 55.3. As an adviser you likely have had clients ask you if they should make changes to their portfolio because Trump won the election. You also probably had different clients ask you the same question after Obama won in 2008. We are unaware of any long term investment strategy (as opposed to short term trading) that avers reactionary portfolio changes based on political outcomes. Staying disciplined is of course key to clients’ long term financial success and only being disciplined 90% of the time won’t get it done. Please click through to read the entire update. Taken in the Mint 400 pit area before the Mint 400. From the Mint 400 inspection day in Las Vegas Pink...

No, You Don’t Own An ETF

My latest post for Alpha Baskets looks at a few interesting (and funny) items from the current Barron’s issue. From the post; There was an article about one of the publicly traded asset managers (naming names is complicated for compliance reasons). A reader shared that he owned one of this company’s energy sector ETFs in the comments section. No, he owned a closed end fund from a company with a similar name. The name mix up is one thing but not knowing the difference between a closed end fund and an ETF is problematic, potentially very much so. The CEF he owns just announced that 78% of its current “dividend” is actually a return of capital. An ROC does not have to be bad, but is something that someone who owns the fund should know and I am guessing he doesn’t. Please click through to read the entire post. Support vehicle with a topo map paint job. One of my favorite trophy trucks for the color. I get a kick out of the spare tire (s)...