Monthly Archives: January 2018

POCKETBOOK: Week ending Jan. 26, 2018

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Personal income up and so is spending

Funny thing about our money habits—the more we get the more we tend to spend. When it comes to income, personal income rose 0.4 percent in December and in all of 2017 rose 3.1%, according to the Department of Commerce.
Who can deny that there’s a bit of a rush in having more money thanks to an increase in salary, take-home pay or an unexpected bonus check. So for many, the answer to “What to do with the extra moola?” takes less than a nano-second to decide: Spend it.

Spending, lest you forget, is one of the big slight-of-hand strategies that can come with double-edged feelings: A gain on the one hand when received and the feeling of loss on the other after spent/redistributed.

While consumer spending was up in December (not surprising given the holiday season), the savings rate dropped to 2.4 percent that month, the lowest since September 2005.

What’s troubling about that low savings part is this: Are folks hitting their savings accounts because they believed the New Year would be hugely financially rewarding and as such they would be able to replenish their savings accounts? Or, are they tapping their accounts because their paychecks still aren’t enough to cover life expenses?

I’m inclined to go with the second point and root for a national minimum wage for every one of $25 bucks an hour. That’s doable, you know, and oh what a difference that would make to our lives and for the economy.

 

  • Market Quick Glance

New “up a lot” highs were recorded for all the indices followed here last week: Three on Friday and one, the Russell 2000, at the close of business on Wednesday, January 24.

Overhead: Two women were having lunch at a trendy restaurant and talking stocks when one asked the other how much higher she thought the stock market would go expecting a definite answer.

Her friend answered, “I don’t know but it’s gotta fall some time.”

“Well I know that,” the woman snipped back disappointed in her friend’s answer.

To which the friend replied: “That’s all there is to know.”

Smart friend.

Below are the weekly and 1-year index performance results for four major indices— including the dates each reached new highs—according to CNBC.com based on prices at the close of business on Friday, Jan. 26, 2018.

 

DJIA +7.28% YTD up a lot from last week’s 5.47%

  • 1 yr Rtn +32.42% up from last week’s 32.12%

Another new high for the DJIA was reached on January 26, 2018 of 26,616.71. The previous high reached January 18, 2018 was 26,153.42.

 

-S&P 500 +7.45% YTD up a lot from last week’s 5.11%

  • 1 yr Rtn +25.09% up from last week’s 24.15%

A new high for the S&P 500 Index was reached on January 26, 2018 of 2,872.87. The previous high was reached on January 19, 2018 of 2810.33.

 

-NASDAQ +8.73 YTD up a lot from last week’s 6.27%

  • 1yr Rtn +32.72% up a pinch from last week’s 32.42%

Nasdaq hit another new all-time high of 7,505.77 on January 26, 2018. The previous high was reached on January 19, 2018 of 7,336.38.

 

-Russell 2000 4.72%YTD up from last week’s 4.05%

  • 1yr Rtn +16.90% down a pinch from last week’s +16.97%

The Russell 2000 reached a new all-time high on January 24, of 1,615.52. The previous high was reached on January 16, 2018 of 1,604.02.

 

-Mutual funds

Higher returns, again.

On Thursday, January 24, 2018, the year-to-date average cumulative total reinvested returns for equity funds that fall under the broad U.S. Diversified Equity Funds heading was 5.32 %, according to Lipper. That’s up a heap from the 3.87% return posted one week earlier.

The three fund types under that heading that enjoyed the greatest y-t-d- increases were the same three this week as  from the previous week. Here’s a look at the changes in each:

-Equity Leverage Funds, +12.08% —last week +8.37 %.

-Large-Cap Growth Funds, +8.00%—last week +6.06%

-Multi-Cap Growth Funds, +7.47%—last week +5.59%

 

Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

  • Consider a stop-loss

There’s a whole heap of questions investors need to ask themselves before buying any stock. Some include: Why have I decided to purchase this company’s stock, at what price, what kind of return do I expect, how long do I plan on holding the stock, and at what price will I sell it?

Answering all of those questions is great prior to purchasing any stocks—and even logical. But logic isn’t necessarlity at home on Wall Street.

Given that fact, when it comes to the ups and downs of investing in stocks, one way to protect yourself when the market turns south is to use a stop-loss.

From investopedia.com:”A stoploss order is an order placed with a broker to sell a security when it reaches a certain price. Stop loss orders are designed to limit an investor’s loss on a position in a security.”

The market is not going to go up forever. At some point in time a correction is going to come along and if you don’t want to stomach seeing your stocks plunge say 15, 20, 25% or more, consider utilizing a stop-loss strategy. It may be the smartest investment move you make.

Like always, there is a down side as no one ever knows how low a stock price can go, when the fall will happen or how long it will take for that stock price to recover.

Nonetheless, a stop-loss order is worth considering.

 

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$1 and sense

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Blog entry Jan 26, 2017

Funny thing about money, for the vast majority of us, managing the total amount of dollars we have coming into our households on a daily, weekly and monthly basis is challenging. And, for the vast majority of us, we do a better job of managing our money than the U.S. government does. Pat yourself on your back for that.

When it becomes a question of us vs. the government, what’s most important to the vast majority of us is how far our dollars go in the keeping of a roof over our heads, our ability to buy stuff and in the covering the costs of our all-around living expenses.

All of which makes the U.S. dollar really valuable to us. So, when the value of the dollar falls it can make a difference in our lives. Here are two instances:

•For those lucky enough to be international travelers, if the dollar is considered weak when measured against other currencies—as it is now—traveling abroad becomes more expensive and a buck doesn’t buy as much as it does when the dollar is strong. In other words, if you’re a value player and enjoy getting the biggest spending bang for your buck, that happened three years ago when the dollar was much stronger. Now that’s not the case and you’ll need more money to enjoy the same pleasures you did back then.

•For the most of us, however, international travel isn’t a part of our every day, every month or every year lives. But having to put gas in our cars is. And if you haven’t noticed, the price of a gallon of gas has been going up lately.

I’ve noticed a spike of between 20-30 cents a gallon over the past few months alone.

That means, if the gas tank in your vehicle holds 15 gallons of gas that increase translates to paying about $4.50 more a fill-up than it did months ago. Need to fill-up four times a month and odds are that that 18 bucks will eat up most, if not all, of the whoop-tee-do tax savings you’re expected to see in your paycheck coming in a month or so thanks to the new tax law.

From Oregon Business News story published online Jan.2, 2018 comes this: “Gas prices in particular are incredibly relevant to most American households,” Wells Fargo’s Erik Nelson said. “As the dollar depreciates more consistently and more significantly, I think you’ll see commodity prices, in dollar terms, tend to rise.”

But wait, there’s more: A weak dollar makes life more expensive on a host of other everyday living costs. Costs  the likes of Sallie, Sam or Grandma Sue aren’t going to be able to cover thanks to their stock investments because many ordinary folk don’t own equities…. they are far more familiar with the realities of debt.

So don’t believe brand new are-you-kidding-me Treasury Secretary Mnuchin when he says that a weak dollar is good. It isn’t.

………

Below are two  Bloomberg  charts  from a January 25, 2018 story, “A Doomsayer’s Guide to the Dollar and Why It Could Keep Plunging”. That piece begins, “The dollar’s worst start to a year since 1987 may get a lot worse.”

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POCKETBOOK: Week ending Jan. 19, 2018

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  • Government shutdowns

It’s Monday, January 22, and  Day 3 of our government shutdown.

Based on history, and likely your common sense, the longer the shutdown, the more impact it has on everything from stock market returns to the economy and perhaps even your life.

Looking back, CNN.com reports that the 16-day shutdown five years ago, in 2013, was the costliest in our history: “$20 billion, according to an estimate from Moody’s Analytics.”

That said, should the current shutdown go on for that same amount of time, the pros don’t think the results would be as costly because our economy is in much better shape than it was in 2013.

We shall see.

  • Market Quick Glance

And more high scores for stocks prices last week as three of the four indices followed below hit new all-time highs on Friday and one—the DJIA—on Thursday.

I’ve heard from more than one professionally reliable source that stock prices are likely to continue their current upward trend through earnings season—like May. Provided, of course, nothing out of the ordinary happens.

But something already out of the ordinary has happened—a government shutdown. So, take that projection with the mixture of a grain or two of salt and reality.

Re the current market environment, another source reminded me of the huge impact a rising interest rate environment has on stocks. In short, the higher interest rates move, the more unattractive stocks become.

In other words, an increase in interest rates translates into fixed-income returns with  higher yields positively impacting income-focused investors. It also means less attractive returns on things like utility and dividend paying stocks and more money to financial institutions.

Given that change is the current and future name of the investing game, the stock market has been living in a low-interest rate heaven for years now and rewarding stock investors delightfully for longer than anyone could have imagined eight or nine years ago.

Below are the weekly and 1-year index performance results for four major indices— including the dates each reached new highs—according to CNBC.com based on prices at the close of business on Friday, Jan. 19, 2018.

DJIA +5.47% YTD up from last week’s 4.39%

  • 1 yr Rtn +32.13% up from last week’s 29.72%

Ho hum, a new high for the DJIA was reached again this year on January 18, 2018 of 26,153.42. The previous high was reached on January 12, 2018 then 25,810.43.

-S&P 500 +5.11% YTD up from last week’s 4.21%

  • 1 yr Rtn +24.15% up from last week’s 22.72%

A new high for the S&P 500 Index was reached on January 19, 2018 of 2810.33. The previous high was reached on January 12, 2018 of 2,787.85.

-NASDAQ +6.27 YTD up from last week’s 5.18%

  • 1yr Rtn +32.42% up a pinch from last week’s 30.89%

Nasdaq hit another new high on January 19, 2018 of 7,336.38. The second new high for this index was reached on January 12, 2018 of 7,265.26.

-Russell 2000 4.05%YTD up lots from last week’s 3.68%

  • 1yr Rtn +16.97% up a lot from last week’s +13.71%

The Russell 2000 reached another new all-time high on January 16, 2018 of 1,604.02. The previous high was reached on January 12, 2018 of 1,598.18.

 

-Mutual funds

More gains.

On Thursday, January 18, 2018, the year-to-date average cumulative total reinvested returns for equity funds that fall under the broad U.S. Diversified Equity Funds heading was 3.87% at the close of business on Thursday, January 18, 2017, according to Lipper. That’s up from the previous week’s figure of 3.33%.

Three fund types enjoying a positive new year under that broad heading include:

-Equity Leverage Funds, +8.37 %

-Large-Cap Growth Funds, +6.06%

-Multi-Cap Growth Funds, +5.59%

Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

 

  • ETF Investing 24 hours a day

Once upon a time, when I was a broker and for decades before that, the stock exchanges had fixed hours that they were open. Investing on Internet platforms didn’t exist back then. Neither did things like dot com stuff, iPhones or anything “i” related.

Today things have changed dramatically  and investors can purchase shares before and after traditional market hours, currently 9:30-4:00

Now, TD Ameritrade has changed all that and beginning today that online brokerage firm offers 24-hour trading possible for ETFs.

While that may sound super-duper to some, the most important part of this story is that it comes with a caveat worth remembering: “The problem with trading equity around the clock is there’s not that much demand to keep a natural supply-demand balance, “ Larry Tabb of The Tabb Group says. “Small amounts of supply and demand can really move prices, so you have to be careful.”

Again, remember that.

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POCKETBOOK: Week ending Jan. 12, 2018

 

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Thank You, Dr.King.

 

  • A Rich Market

No two ways about it, last week stock prices continued on their upward tear.

With that fact behind us, consider the following SeekingAlpha.com piece from Victor Dergunov of Albright Investment Group:

  • U.S stocks are quite expensive relative to most other countries by historical standards.
  • The S&P 500s Shiller P/E ratio is about 34, more than double its median ratio of 16 and has only been higher one time in history—at the height of the dotcom boom.
  • The price-to-sales ratio for the S&P 500 is at an all-time high, 2.35—the media is 1.44 “suggesting that stock prices are rising relative to revenue growth faster than at any other time throughout history.”

We all know stock prices, indices, charts don’t always go up and that that upward trend will turn south sometime. But until it does, do enjoy the ride.

 

  • Market Quick Glance

And it was another extremely rewarding week for equities. Of the four indices followed here, all reached new highs—each gaining roughly 2 percent! That’s a remarkable start for any year.

Below are the weekly and 1-year index performance results for four major indices— including the dates each reached new highs—according to CNBC.com based on prices at the close of business on Friday, Jan. 12, 2018.

DJIA +4.39% YTD up lots from last week’s 2.33%

  • 1 yr Rtn +29.72% up from last week’s 27.12%

A new high for the DJIA was reached on January 12, 2018 of 25,810.43. Its previous high was reached one week earlier, on January 5, 2018 of 25,299.79.

 

-S&P 500 +4.21% YTD up lots from last week’s 2.60%

  • 1 yr Rtn +22.72% up from last week’s 20.92%

A new high for theS&P 500 Index was reached on January 12, 2018 of 2,787.85. Its previous high was reached one week earlier on January 5, 2018 of 2,743.45.

 

-NASDAQ +5.18 YTD up a heap from last week’s 3.38%

  • 1yr Rtn +30.89% up a pinch from last week’s 30.04%

Nasdaq its second new high of this year on January 12, 2018 of 7,265.26. Its previous new high was reached on January 5, 2018 of 7,137.04.

 

-Russell 2000 +3.68%YTD up lots from last week’s 1.60%

  • 1yr Rtn +16.97% upa lot from last week’s +13.71%

The Russell 2000 reached a second new all-time high of January 12, 2018 of 1,598.18. Its previous high was 1,560.84 reached on January 4, 2018.

 

-Mutual funds

More gains.

On Thursday, January 11, 2018, the year-to-date average cumulative total reinvested returns for equity funds that fall under the broad U.S. Diversified Equity Funds heading was 3.33%. That’s up a hike from the previous week’s figure of 1.64%.

Three fund types not enjoying a positive new year include:

-Dedicated Short Bias funds, down on average -5.69%

-Real Estate Funds, -3.75%

-Utility Funds, -2.32%

Place your bets now as to whether that trend will continue for each knowing in advance that the direction of interest rates plays a big part in the relative performance of both real estate and utility funds.

Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

 

  • Compound It

As a big fan of dividend-paying stocks, I can’t think of any reason not to reinvest the dividends the stocks in your portfolio pay back into those companies.

Remember, compounding works the same no matter how much money you are working with—a few bucks or millions.

Its rewards come to you based on percentages and time—the percentage rate that’s paid and the amount of time the security is held hence allowing the reinvested dividend to work for you.

 

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POCKETBOOK: Week ending Jan. 5, 2018

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  • Dogs of the Dow 2018

I’m a big fan of dogs. And dividends. Both are rewarding in oh-so many ways. And, can provide us with some of life’s finest simple pleasures—- faithful companionship and income.

With that in mind, below are this year’s Dogs of the Dow. Lest you think this investment strategy  (basically purchasing the shares of the 10 stocks of the DJIA 30 that pay the highest dividends ), isn’t worth your time, think again.

Yes, it’s true that in 2017, the Dogs’ return of 19% didn’t match or beat that of the 25% return of the DJIA,  but 19% is nothing to turn your nose up at no matter what market conditions are.

That said, below are the 2018 Dogs of the Dow, according to DogsoftheDow.com:

Verizon 4.5%
IBM 3.9%
Pfizer 3.8%
ExxonMobil 3.7%
Chevron 3.5%
Merck 3.4%
Coca-Cola 3.2%
Cisco Systems 3%
Procter & Gamble  3%
General Electric  2.8%

FYI: New to the pack of 10 this year are Procter & Gamble and General Electric.

  • Market Quick Glance

After a year in which the equity market indices continued to make new highs and new highs and new highs, many investors were smiling all the way to the bank. That said, during the last week of 2017, all four indices followed below lost ground. Not a lot of ground—but all wound up lower than they had at the end of the previous week.

Below are the weekly and 1-year index performance results for four major indices— including the dates each reached new highs—according to CNBC.com based on prices at the close of business on Friday, Jan. 5, 2018.

DJIA +2.33% YTD

  • 1 yr Rtn +27.12% up from last week’s 24.72%

A new high for the DJIA was reached on January 5, 2018 of 25,299.79. Its previous high was reached on December 18, 2017 of 24,876.07.

-S&P 500 +2.60% YTD

  • 1 yr Rtn +20.92% up from last week’s 18.87%

A new high for the S&P 500 Index was reached on January 5, 2018 of 2,743.45. The S&P 500 reached its previous new high on December 18, 2017 of 2,694.97.

-NASDAQ +3.38% YTD

  • 1yr Rtn +30.04% up from last week’s 27.09%

Nasdaq reached a new high on January 5, 2018 of 7,137.04. Its previous new high of 7,003.89 was reached on December 18, 2017.

-Russell 2000 +1.60%YTD

•1yr Rtn +13.71% up from last week’s +12.64%

The Russell 2000 reached a new all-time high of 1,560.84 on January 4, 2018. Its previous new all-time high was reached on December 4, 2017 of 1,559.61.

-Mutual funds

After a financially rewarding year for many mutual fund shareholders, on Thursday, January 4, 2018, the year-to-date average cumulative total reinvested returns for equity funds that fall under the broad U.S. Diversified Equity Funds heading was 1.64%.

As a point of reference, on the day before the 2017 trading year ended, Thursday, December 28, 2017, the average return was for this fund category was 18.91%. All data figures according to Lipper.

Below are fund types with a weekly performance that screeched out of the box in this new year:

  • Equity Leverage Funds, up on average +4.20.

FYI: This group had the BEST average return for fund types that fall under the U.S. Diversified Equity Funds in 2017 of +42.86%.

  • Energy MPL Funds, up on average +4.16%.

FYI: This group was the WORST average return for fund types that fall under the Sector Equity Funds heading in 2017 of -5.95%.

  • China Region Funds, up on average +3.74%.

FYI: This fund group had the BEST average return for funds that fall under the World Equity Funds heading in 2017 of +43.34%.

Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

 

  • Investing round the world.

I’m a keeper of lots of paper stuff. Lots. The other day one of the items I ran across was a chart from Thornburg Investment Management. It was a Country Indices chart showing the annual return of 20 different countries from 1995 through 2004.

Given that country investing was rewarding for many investors in 2017—world equity funds, for example, were up over 22% on average—here’s a 20-year look back at what the top three performing countries were in 1997. And then in 1998.

In 1997, the top country performers were: Switzerland, +44.84%; Italy, +36.38%; and US, +34.09.

And in 1998, the top country performers were: Korea, +141.15%, Belgium, +68.73%; and Italy, +53.20%. (The US came in in sixth place that year, up +30.72%.)

Since it’s always been and will continue to be a changing world, and, that history has a way of repeating itself in that ever-changing environment, figured the above might be an interesting read.

Wishing you much investing luck in 2018 wherever you decide to place your bets.

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POCKETBOOK: Week ending Dec. 29, 2017

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  • Not every stock makes money

One of the honest-to-goodness realities of investing in stocks is that all stocks don’t make their shareholders money. In fact, every year—including in 2017— there are some winning doozies and some losing doozies.

Louis Navellier, in a recent email, included a listing of companies in which shares lost money and were on his “sell” list in 2017. Some included General Electric, down -43%, AmTrust Financial Services, down 63% and L Brands, down -44%.

Some of the winners on his “buy” list included TSL Education Group, up 150%, Align Technologies, up 146% and Burlington Stores, up 30%.

The way I see it, if your investments were up 10% or more, consider it a profitable year.

Wishing you another lucky year in 2018.

 

  • Market Quick Glance

After a year in which the equity market indices continued to make new highs and new highs and new highs, many investors were smiling all the way to the bank. That said, during the last week of 2017, all four indices followed below lost ground. Not a lot of ground—but all wound up lower than they had at the end of the previous week.

Below are the weekly and 1-year index performance results for four major indices— including the dates each reached new highs—according to CNBC.com based on prices at the close of business on Friday, Dec. 29, 2017.

DJIA +25.08% YTD down from last week’s 25.26%.

  • 1 yr Rtn +24.72% up from last week’s 24.27%

The last new high for the DJIA was reached on December 18, 2017 of 24,876.07.

 

-S&P 500 +19.85% YTD down from last week’s 19.85%.

  • 1yr Rtn +18.87% up from last week’s +18.68%

The S&P 500 reached its latest new high on December 18, 2017 of 2,694.97.

 

-NASDAQ +28.24% YTD down from last week’s +29.29%.

  • 1yr Rtn +27.09% down from last week’s 27.77%

Nasdaq reached its latest new high of 7,003.89 on December 18, 2017.

 

-Russell 2000 +13.14%YTD down from last week’s +13.69%

1yr Rtn +12.64% down from last week’s +13.23%

The Russell 2000 reached its last new all-time high on December 4, 2017 of 1,559.61.

 

-Mutual funds

Although the final year-end numbers for mutual funds has yet to be published, the year-to-date average cumulative total reinvested returns for equity funds that fall under the broad U.S. Diversified Equity Funds heading were still charming.

On the day before the 2017 trading year ended, Thursday, December 28, 2017, the average return was 18.91%, according to Lipper. That’s up from the close on Thursday of the previous week of 18.57%.

Below are the best and worst average returns for the fund types that fall under the Lipper’s four broad equity fund category headings through 12/28/17:

  • U.S. Diversified Equity Funds

-best: Equity Leverage Funds, average +42.86%

-worst: Alternative Equity Market Neutral Funds, -0.06%

 

  • Sector Equity Funds

-best: Global Science/Technology Funds, +44.61%

-worst: Energy MLP Funds, -5.95%

 

  • World Equity Funds

-best: China Region Funds, +43.34%

-worst: Global Equity Income Funds, +17.30

 

  • Mixed Asset Funds

-best: Mixed-Asset Target 2055+Funds,+21.48%

-worst: Alternative Multi-Strategy Funds, +4.80%

Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

 

  • Market volatility

2017 was a rewarding one for many. It was also a year in which the markets didn’t jump around as much as one might remember.

In fact, according to a recent SeekingAlpha story by Lance Roberts, the DJIA “enjoyed less adversity in 2017 than any other year in history going back over 100 years, (beginning data in 1915).”

Here’s hoping that 2018 is as easy going a year.

Happy New Year!

 

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