Buy, Sell and Ponder December 2017 Old_Skeet's barometer report week ending 12/22/2017
This week Old_Skeet's market barometer finished the week with a reading of 136 (the same as last week) indicating that the S&P 500 Index remains overbought. Generally, a higher reading on the barometer's scale indicates there is more investment value in the 500 Index over a lower reading.
In review of my sector compass, even with the recent pullback in utilities (XLU), I am finding there are currently no sectors (from a technical basis) that have undervalued or oversold readings. The three best performing sectors for the week were energy (XLE), financials (XLF) and materials (XLB). For the quarter the three best performers are consumer discretionary (XLY), financials (XLF), and technology (XLK). Year-to-date the three best performing sectors have been technology (XLK), consumer discretionay (XLY), and industrials (XLI).
In review of my global compass the three best performers for the week were Asia ex Japan (AXJL), emerging markets (EEM) and metals (CEF). For the quarter the three best performers were Japan (EWJ), S&P Mid Caps (MDY), and S&P 500 (SPY). Year-to-date the three best performing have been emerging markets (EEM), Asia ex Japan (AXJL), and Japan (EWJ).
A good number of my mutual funds have now paid their year end capital gains ... and, with this, I am sitting on some excess cash as I take most fund distributions in cash. My worst performing equity sleeve thus far this year has been my small/mid cap sleeve with a year-to-date return of 12.8%. With this, I did some equity buying in this sleeve, this week, and raised it's weighting in the growth area of my portfolio. I'm thinking the smids should have a better year in 2018.
Currently, year-to-date my portfolio's investment returns have been 13.9% and in comparison the Lipper Balance Index is up the same (13.9%) while a static 50/50 Index allocation that I track is up 11.8% and a professional run 50/50 adjustable mix Index fund is up 12.4%. My portfolio's allocation mix is 50/50 +/- 5% and gets tweaked form time-to-time. According to my equity weighting matrix I am overweight equity by 5% over what the matrix is currently calling for due to a seasonal investment strategy.
With most assets currently being richly valued I remain in my cash build mode; but, doing a little buying around the edges. Thus far in December I have bought some muni's and smids. Looking at putting some money to work in a hybrid fund before year end.
And, so-it-goes ...
Thanks for stopping by and reading.
M*: Fight Inflation With This Low-Cost ETF: (STPZ)
Bitcoin - Is there an investment case for the cryptocurrency?
Buy, Sell and Ponder December 2017 I am bullish for the upcoming year, but have just sold a patch of DSENX (post-runup) in a Roth just to be able to think clearly about cash needs (dau wedding) next fall and possible dip buying prior (CAPE vs NOBL vs QUAL vs DGRO).
Also about $200k <4% heloc with interesting nondeductibility looming. Do I care whether it is 3.75% deductible, or a bit higher?
Am tracking SOI to buy in Jan, maybe.
Will be running ORP several times w new tax situations to see about where to fund non-SS cashflow for the year too.
Buy, Sell and Ponder December 2017 Hi guys!
I have a few ponderings...
I see that imports for the LA ports are at record highs for 5 months straight. Is it Christmas? Or jobs, maybe? Weather related? I wonder what they're importing.....fridges, washers, dryers, microwaves, toasters, etc. Now I'm waiting for Santa to come because I believe after that I'm going to sell some things.
What do I worry about in 2018? Healthcare: it's an election thing. Bitcoin: I heard enough already. Please do me a favor and crash next year.....like January 2nd, please. I also saw that the Japanese under own their own market. It seems to have a lot of foreign money driving it. I was surprised about that. In Europe, they don't have enough bonds to buy....yet it doesn't seem to stop them. Amazing! Only in the EU. I also worry about China and its debt. I get The Economist. They have been writing about it. Also, just saw something on CNBC: 40k pay half the taxes in New York City. Say, WHAT?! Half, and there are how many people that live there.
Now, sold FSRFX. Bought it in September on the weather thing. Also added to PONDX. Have a short buy list for January if things go well: BTBFX, DSENX, FJSCX, and FTIPX. I'm still bullish for 2018. It's all good 'til the flags fly, i.e., Memorial Day.
God bless
the Pudd
Bitcoin - Is there an investment case for the cryptocurrency?
Vanguard Alternative Strategies Fund (Investor class) in registration There is some type of change to the fund, but I am unsure what the change is. The filing does not make it obvious what the change is.
Whatever the change is will be effective 2/22/18. The filing has something to do with "merged filing".
I just found this line from the filing:
"Related Performance
Previously, the advisor managed an account (“Related Account”) with investment objectives, policies, and strategies that were substantially similar to those of the Fund. The Related Account ceased operations on July 31, 2015. The Related Account, however, was not subject to the investment limitations, diversification requirements, and other restrictions of the Investment Company Act of 1940 and the Internal Revenue Code..."
Possibly, that is why this is a new filing
Rosenberg Will Expand Am Century's ETF Team Quickly
Vanguard Alternative Strategies Fund (Investor class) in registration 250 K minimum ??
Derf
The Outlook For Tech Stocks Grows Dimmer For 2018 I'd have thought that tech companies would benefit a lot from the tax bill provisions. Some companies were paying way below 35% already, but I thought tech actually was up there.
Which mutual funds suffer disproportionately when tech suffers?
David
The Outlook For Tech Stocks Grows Dimmer For 2018 FYI: Wall Street doesn’t expect technology stocks to repeat 2017’s banner year that has seen the sector return almost twice as much as the S&P
500 index. After four consecutive years of outperformance, tech companies face mounting concerns about the potential for increased government regulation and continued rotation by investors into higher-taxed industries as a result of U.S. tax reform. Most analysts see the bull market continuing, but at a less ferocious pace. Here’s a look at their predictions.
Regards,
Ted
https://www.bloomberg.com/news/articles/2017-12-20/party-s-over-for-tech-stocks-as-outlook-grows-cautious-for-2018
Investing in a World of Overpriced Assets (With a Single Reasonably-Priced Asset) -- Jeremy Grantham Catch 22
Flexibility is key. My Fidelity rep has also upgraded many funds from investor
class to institutional like several Matthews and Seafarer funds. Bringing down the expense ratio by 25 basis points is important for me.
Also, many times the $49.95 fee for buying institutional share class funds has been
waived.
If your rep works with you like mine, it is important that you send an email to Fidelity telling them how pleased you are working with their rep.
Mitchelg
Vanguard Alternative Strategies Fund (Investor class) in registration
Investing in a World of Overpriced Assets (With a Single Reasonably-Priced Asset) -- Jeremy Grantham Jaba
I bought AZMIX through Fidelity. My relationship with a Fido representative allows me to do this. Originally, I mentioned to him that I could buy Pimco & Allianz institutional funds at Vanguard for $25,000 minimum. They wanted to keep my business so they allowed the purchases. Initial orders need to be through a representative.
Investing in a World of Overpriced Assets (With a Single Reasonably-Priced Asset) -- Jeremy Grantham A nice piece by Grantham who pretty much covers the bases in his suggestions. And I get the feeling he’s as befuddled by today’s equity markets as I am. Makes a lot of different suggestions depending which way markets run. I get that he likes EM. The problem with those kinds of suggestions is they can take years to pay off. Might double next week. Might also fall 2
5% in a year before rebounding and rising
50% over 6 months. Not for the conservative investor.
One of his suggestions is “liquid alternatives” - which
Investopedia loosely defines as
hedge funds for the little guy (low minimums and few restrictions on redemption) - as the answer to the conundrum he sets up. But, with these you’re paying a ton in management fees and are highly vulnerable to the decision making of the manager. I’m not convinced most are any better at guessing which direction to lean toward at any given moment than most of us are. Some get it right. Many don’t. A change in manager can spell disaster for a previously successful fund. Shorting equities costs the fund additional money in the form of interest and also increases risk. So I’m not a fan of liquid alts.
@bee - The knock against PRPFX has always been that as an individual you can purchase the bonds, gold, silver, natural resource stocks, Swiss
Francs, real estate and aggressive growth holdings
(and in the same proportions) cheaper yourself than paying Mr. C to do that for you. My answer is: Yes you can. But who among us has the time, resources and wherewithal to do all that - and than to rebalance it all periodically? If anyone here is replicating the fund on their own, they haven’t voiced it. I don’t know what the “right” amount is for that type of holding. I hold a bit - and sleep very well on it. Guess it amounts to something like
5-10% of my total. Content to leave it alone and take distributions elsewhere. I do consider it something of a
liquid alt - but not as normally viewed or defined in the investment community.
Emerging Markets Value
The word "value" doesn't appear once in that article.
It would take a major correction for EMQQ to be considered a "value" play. The fund is exclusively Internet and Ecommerce companies, which gives the fund and significant growth bias...
Ben Carlson: The Pros & Cons Of Momentum Investing FYI: Since I wrote this piece for Bloomberg in late-October there has been an additional 14 new all-time highs in the S&P
500. I’m often asked why the market continues to trudge higher in the face of so much uncertainty in the world. The simplest explanation is this idea of momentum. Momentum is by far the best performing academic risk factor in the markets historically, but it’s not always so easy to take advantage of and most investors don’t understand what it actually is. This piece takes a deep dive into what the momentum factor is and details some of the struggles the fund world has had in capturing its risk premium.
Regards,
Ted
http://awealthofcommonsense.com/2017/12/the-pros-cons-of-momentum-investing/
Allianz Global Investors Redefines Rules Of Active Management With Launch of PerformanceFee Funds Whenever you read expressions like "innovative" and "sets itself apart" (here, "in that the minimum management fee goes to zero if the funds don’t outperform their benchmark"), you should be wary of hype.
Here's what
M* had to say: "It's a
rare [but not unique] situation in the industry. The performance fees of most other funds that levy them are structured in a way that makes a negative or zero net expense ratio mathematically impossible."
It wasn't writing about these funds. That's a quote from 2011, where M* was describing Bridgeway Funds. The title of that article was "Bridgeway Pays Shareholders to Invest, for Now". Bridgeway reduced management fees so low (well below zero, unlike Allianz) that the
total ER of two funds were 0.00% or less.
Basing a performance fee on a twelve month performance is akin to companies jiggering quarterly performance to keep the market happy. A year is too short a period of time to allow a manager's strategy to play out. Instead, it encourages window dressing and conservative investing if the fund is slightly ahead, and excessive risk taking if the fund is way behind.
As noted in this
CBS Moneywatch article also about Bridgeway in 2011:
"[Bridgeway's] aggressive performance fee ... is calculated on the fund's average assets over the trailing five years, instead of the more common three years".
Funds don't generally use one year performance figures. For example, Fidelity uses a rolling 36 month period to benchmark performance.
See also Barron's
Should Fund Managers Get Paid for Performance
