Friday, October 13, 2017

Performance Year-To-Date {Market Sectors}



We will finish up our review of the  year-to-date performance covering different parts of the market based on our own unique view of asset allocation.  Today we'll finish up by showing various sectors and subsections that we think are representative of their various parts of the market.  Again this data is through October 4th 2017.  You can click on the chart above if you want to make it larger.  Performance chart is from Stockcharts.com, although the ETF selection is my own.  Also I believe the performance data shown above does not include dividends.  If I am correct then the total returns on these indices is actually better than what is shown above.

Once again we can see that growth and international exposure has been the world's fair in this year's market.  If you have both of these i.e healthcare and technology then you've outperformed.  Energy and its related components have been the losers.  Consumer staples have also been lapped in 2017 with the so called "Amazon effect" hurting some of these traditional names.  Concern with staples companies is that Amazon is hurting their margins by offering access to cheaper products.  More or less a market performer have been financials and this could potentially be an area to pay attention to as higher interest rates have the potential to help their bottom lines.

Back early next week.

*Long in client and personal accounts in some manner most of the sectors listed above with the exception of clean energy, transports and utilities.  Also Amazon is a component of certain ETFs we invest in for client and personal accounts.  Positions can change at any time without notice on this blog or via any other form of electronic communication.

Thursday, October 12, 2017

Performance Year-To-Date {Total Return}


We continue today our year-to-date performance review covering different parts of the market based on our own portfolio programs and overall asset allocation process.  Today we're taking a look at various ETFs we have in our total return strategies.  Again these results are  through October 4th 2017.  You can click on both charts  if you want to make  them larger.  Performance chart is from Stockcharts.com, although the ETF selection is my own.  Also I believe the performance data shown above does not include dividends.  If I am correct then the total returns on these indices is actually better than what is shown above.

If international investments have been carrying the performance torch this year than strategies based on total return have been the laggard.  This should not be surprising as dividend and interest related investments often underperform in the face of rising interest rates.  Also many of these ETFs had done better than the overall market coming into 2017 so a period of outperformance by more broad based and growth oriented investment was at some point going to occur.   I'd also note that in most years the current return on these assets would be considered pretty decent.  However,  their return looks a bit subdued when compared to some of the higher flying areas of the markets.

No place can this be seen more broadly than in REIT assets or Real Estate Investment Trusts.  No is not a time to go into REITs in particular but just understand that higher interest rates hurt REITs because it raises their borrowing costs.  To compensate of course REITS have much higher dividend yields so it can pay to wait.

Another way to see the impact of higher interest rates is to view the performance of certain bond ETFs below.  Higher rates hurt these just like they do the overall return of regular bonds.  The exception of course is that bonds have a maturity date whereas funds do not.


*Long in client and personal accounts in some manner the indices listed above with the exception of the fixed income ETFs.  These are shown for illustrative purposes only.  Positions can change at any time without notice on this blog or via any other form of electronic communication.

Tuesday, October 10, 2017

Performance Year-To-Date {International}


We continue today our year-to-date performance review covering different parts of the market based on our own unique view of asset allocation.  Today we're taking a look at various international indices through October 4th 2017.  You can click on the chart above if you want to make it larger.  Performance chart is from Stockcharts.com, although the ETF selection is my own.  Also I believe the performance data shown above does not include dividends.  If I am correct then the total returns on these indices is actually better than what is shown above.

International has been the place to be in 2017 as it performance has clearly been better than that of the overall US indices.  Then again these markets have had anemic performance over the past decade so at a minimum a bit of catch-up was to be expected.  International still is more attractive on a valuation basis than the US but with foreign exposure usually comes heightened volatility.  Investors need to think about whether or not they can stomach the more pronounced peaks and valleys that comes with investing in this sector before they allocate assets.

Back Thursday.

*Long in client and personal accounts in some manner the indices listed above with the exception of Latin America.  Positions can change at any time without notice on this blog or via any other form of electronic communication.

Friday, October 06, 2017

Performance Year-To-Date {Value vs. Growth}




Today we continue our series of posts looking at year to date performance covering different parts of the market based on our own unique view of asset allocation.  Index performance is through October 4th 2017.  You can click on the chart above if you want to make it larger.  Performance chart is from Stockcharts.com, although the ETF selection is my own.  Also I believe the performance data shown above does not include dividends.  If I am correct then the total returns on these indices is actually better than what is shown above.

Today I want to continue showing a theme that growth has been doing better than value related ETFs.  Again this makes sense in a year where technology and international investing has been some of the best places to be.  One of the best places to look at this is the S&P 500 vs the Vanguard Growth ETF {symbol VUG}.  The S&P 500 is up nearly 15% through October 4th but VUG has outperformed that by nearly seven percentage points.  All across the board in terms of the indices we follow growth has thumped value in 2017.

Back Tuesday.


*Long in certain client and personal accounts SPY and VOT.  Short S&P 500 in a personal account as part of a separate individual strategy.  Positions can change at any time without notice on this blog or via any other form of electronic communication.

Thursday, October 05, 2017

Performance Year-To-Date {Broad Indices}


We are going to do a series of posts over the next week or so looking at year to date performance covering different parts of the market based on our own unique view of asset allocation.  Today we're kicking off looking at broad market indices through October 4th 2017.  You can click on the chart above if you want to make it larger.  Performance chart is from Stockcharts.com, although the ETF selection is my own.  Also I believe the performance data shown above does not include dividends.  If I am correct then the total returns on these indices is actually better than what is shown above.

A lot of performance comparisons usually is against the S&P 500.  If you just owned that you'd be sitting pretty this year with an almost 15% return as of October 4th.  Using that index versus those I've shown above would actually put you in about the middle of the pack in terms of performance.  More growth oriented indices, such as those on the Nasdaq have significantly outperformed as have those companies in the mega cap space.  It's been a year where growth and international exposure have done particularly well and the nasdaq and mega cap world surely reflect that.

*Long in client and personal accounts in some manner the indices listed above.  Short S&P 500 in a personal account as part of a separate individual strategy.  Positions can change at any time without notice on this blog or via any other form of electronic communication.





Tuesday, October 03, 2017

Bloodless

I was asked several times yesterday why in the face of what to the ordinary person seems like a horrendous weekend for news did stocks power to new highs yesterday.  This would seem counter-intuitive to most and I appreciate that sentiment.  The best way to understand why markets were all in the green yesterday is that they are bloodless.  The market's guiding star for the most part is economic growth and future earnings, not the flesh and blood everyday occurrences that mark most human lives.  

There is no doubt that Las Vegas is a horrific national tragedy.  Talk show host Jimmy Kimmel probably expressed the feelings of most in his tearful opening dialogue last night and it's not like the people who buy and sell stocks don't have feelings as well.   However, markets, and the underlying instrument they trade, are themselves bloodless without a moral compass.  Investors and trader may look and weep at the tragedy that has occurred in Las Vegas.  They send contributions and perhaps volunteer to help out the victims of hurricane in Texas and Florida.  They send money to Puerto Rico.  However, they also weigh in on how those events impact forward US growth prospects.  If the events bring uncertainty or can be extrapolated as a negative then stocks will go down.  If it is seen as an event with little to no impact on the broader economic outlook then more likely than not stocks will shrug it off.  Las Vegas is seen by the markets as a moral tragedy but not an economic brake so stocks went higher as good economic news outweighed the events there.  You may be troubled by this but understand that all investors, whether they know this or not are in on this.  We are all complicit in weighing the cost of certain events against the economic backdrop, whether we invest money for others or you do it on your own.  In the act of investing money "this is the business we've chosen" and those are the rules....like it or not.

Remember this when either you or somebody you know scratches their head in wonderment on why markets are higher under the Trump Administration, for it's the same principle.  Investors don't have to like the President to appreciate economic growth and they don't have to like all of his policies or what many see as a  coarsening of the national dialogue to be happy with higher stock prices.

Back Thursday.

Rest in Peace Tom Petty.
                       "I wanna free fall out into nuthin"
                       "Oh I'm gonna leave this, this world for awhile"
                              Tom Petty, "Free Fallin", {Full Moon Fever- 1989}

Monday, October 02, 2017

Sadness

These are some of the things that happened over the weekend:

Catalonia and Spain are at loggerheads after Catalonian independence referendum descends into chaos.

President Trump squabbles with the mayor of San Juan over the progress on hurricane relief.

President Trump continued to ratchet up the verbal pressure on North Korea.

There were terrorist attacks in Canada and France.

50 killed and over 200 injured when a gunman opens up with what seems to have been automatic weapons at a Jason Aldean concert on the Las Vegas strip.

In spite of all that stock futures are higher.  I just don't know what to say except sadness.  Sadness for not only what has happened, but what I think is coming.  We are going to have to become a much more security conscience world.  I think you're going to be screened and go through metal detectors or some such thing much more in the coming years.  I also think you're going to have to surrender much more information about yourself than we've ever had to in the past.  In the process I fear certain liberties and freedoms of movement that many of us take for granted will be curtailed.   It may be necessary, but it is sad.  

We'll get back to talking about the markets tomorrow.  Today we'll pray for all these innocent victims around the world.  

Thursday, September 28, 2017

Chart Talk: Reimagining The USA


We tend to think of the US as a country made up of 50 states.  In reality though those 50 states could be broken down into regions and metropolitan areas to better explain how it is we actually live.  I reside in the Chicago area which is mostly in Illinois, yet most people here think of themselves as Chicagoans as opposed to much allegiance to the state.  States may have at one point defined us but today there are better ways.  In that manner, here's a cool image from the website Visual Capitalist that shows our Gross Domestic Product by metropolitan areas.  {You can double-click on this map to get a larger picture of it.} 

You can see that metropolitan clusters are where much of the economic growth and innovation are occurring.  According to the post, "80% of Americans live in cites-and the 10 largest metro areas alone combine for a whopping 34% of the country's total GDP"

Back early next week.

Tuesday, September 26, 2017

The New iPhone


Apple Inc. {AAPL} has moved lower in the days since they announced their new series of iPhones.  There have been a few theories why that is and while I don't pretend to have all the answers I'm gonna throw out my theory on what's at least part of the problem.

I have an iPhone 6 or 6s. You can see a picture of it above.   I bought it three years ago and it was state of the art.  I upgraded the memory since I use it for business and paid I think $699 for it plus tax.  That iPhone was the first I bought where a substantial part of the price of the phone wasn't subsidized by my carrier like it had been in the past.  Yes, they gave me some small deal but the majority of the cost fell on me.  For the first time I became aware that I was paying what amounted to the cost of a cheap laptop for the privilege of carrying around a mini-computer in my pocket.  

I have managed to drop this phone more than all my others combined.  A particular bad fall out hiking in the summer of 2016 led to a cracked screen which I've been dealing with ever since.  You can see the cracks in the screen above.   I could have fixed it for about $100, but since it didn't really bother me and it worked,  I decided to leave it alone.  I could have also replaced it as my contract with my carrier was up but I gambled that I could wait about a year or so for whatever the next generation of wonder products Apple was sure to bring out.  Besides upgrading to the iPhone 7 meant that I'd have to buy a pair of the wireless ear buds as the ear phone jack is now gone.  Those look like they're begging to be lost about the first time I wear them or set them aside and while I know that eventually I'll have to bow to the inevitable, I'd look to put that off as long as possible.

I've won my gamble with time.  My iPhone 6 or 6s has made it to this year's anticipated new rollout.  After three years it's going to be time for me to upgrade to a newer generation of product......except I'm not excited about any of the new phones.   Yes they offer a faster processor and it's my understanding the screen's are going to have better resolutions and colors.  I know the phones have a better camera {the one on my 6 is pretty decent though} and if I want to splurge for facial recognition in the iPhone X it's there.  Apple is betting on augmented reality being the next big thing and I know that at least the X will give you that.  Time will tell but it wouldn't surprise me if augmented reality at least initially goes the way of the 3-D television.  

For me, and I'll guess millions of folks like me, all the things I need my iPhone to do it now does.  What I really need Apple to develop is a method of projection so that it's not so hard for my 57 year old eyes to see on the little screen.  I don't care how big you make the phone, you can't make the screen in a practical manner big enough that it still functions as a phone and older folks can comfortably view it.   That this isn't being offered tells me that either it's too expensive or not available given today's technology.   All the rest of the bells and whistles on the new phones are in my opinion "nice to have" sort of things but they don't move the needle enough for me to run out there and be the first in line to upgrade.  They're to me incremental upgrades, not "wow I gotta have this!" improvements.

Now I think Apple is going to sell millions of phones in this cycle if for no other reason than all the folks like me that need a new phone.  These things are built to last it seems maybe three years and while I won my bet from last year it's time for a replacement.  Only I don't know which phone that's going to be.  For me the X is out.  I can't justify paying that sort of money for what to me are unnecessary improvements, albeit likely cool improvements.  They say the processor on the 8 and the camera are the same as the X and so far for me that looks like the way to go.  

But I just might go with a 7 given it's price and what I need it to do.  That makes me wonder how many of us are going to feel the same way.  If Apple sells more of the 7s than thought and more users vote for the 8 over the X what does that do for Apple's margins?  How does that affect Apple if consumers consistently going forward opt to hold their phones longer and buy last year's model when they upgrade?  I don't know of course but I wonder if  that sort of thinking may be what's hit Apple's stock since they announced the new phones.  It may not be much of a wrinkle in the long term investment thesis and Apple's still going to make a boatload of cash from these new phones.   But for the first time that I can remember Apple announced new products and consumers yawned.  We'll have to see if this is a long term event in terms of consumer behavior or if I'm wrong about what may be going through consumer's heads.  I'm pretty sure it's been a short-term concern in the minds of traders in Apple's stock.

And I'll let you know what I decide to do when the time comes.  I may just hang on to my 6 until it gives up the ghost.  

Back Thursday.

*Long Apple in a few accounts who have wanted to own the shares and asked us to purchase the stock for them.  Apple is a component in many ETFs we own in client and personal accounts.  I have no opinion on Apple's investment merits and write about it in this blog solely for the purpose of  discussing it's current short-term weakness.  Therefore, nothing in this post should be taken as either an explicit or an implicit recommendation regarding Apple's stock.  You should do your own research or have a discussion with you investment advisor before making any decisions regarding the company's shares.

Monday, September 25, 2017

Vietnam: Go Watch

Sadly, I have to be out this morning attending a funeral so that is going to take up a better portion of my day.  Instead of talking about the markets I want to make a suggestion that if you have the time and the stomach for it then go watch Ken Burn's PBS series on the Vietnam War.  

Vietnam was the background of my childhood.  We ate dinner every night when I was a kid around 6:00 and my father kept CBS news on in the kitchen so he could listen to Walter Cronkite at the same time.  Vietnam was front and center every night for us.  It was the background noise to our dinner conversations.   I was born in 1960 and obviously as a young kid I was pretty oblivious to the early years of the war.  But by the time I was about seven I became interested in the space program.  The mid-1960's were also the glory days of the Apollo moon program so I watched the news for information about NASA and the astronauts.  In the process I was served a healthy portion of Vietnam.  I don't remember much about Vietnam until the Tet Offensive in 1968.  I know Tet was the turning point in the war but it was also the turning point in my hometown.  After Tet, after Walter Cronkite came on the TV and said we couldn't win the war, opinions in my hometown changed.  A lot of folks thought we should just get out at that point and a lot of other people believed if we had a national effort like World War II then the war could be over quickly.  We didn't go that far and the war dragged on for years afterwards.  

Watching the Vietnam documentary, especially when they show scenes of America in the 1960s, is like rerunning memories from my childhood.  If you're about my age or older go watch it if you can and see if you feel the same way.  If you're younger then go watch Vietnam and compare it with today.  They say that history doesn't repeat itself but it rhymes.  See if you agree.  I know that it seems as if we forgot the lessons we should have learned in the past twenty years or so.

Back soon talking about the markets.