March 27, 2020

On Tuesday, March 24, U.S. equities had their best day since 1933. That +11% day was followed by the 9% advance of Wednesday-Thursday, so we’re talking a healthy, three- day 20% rally off the bottom. Unfortunately, given the disappointing New York City data,we’re not out of the COVID-19 woods yet, but how about the stock market woods?Frankly, given the severity of the current selloff, we’d call it a 50/50 ball (as they say in soccer), but some historical data suggest that the selloff’s end may be near.

Research is a big part of what we do, and lately, we’ve been spending a fair amount ofquality research time with the 2008-2009 archives. In that earlier period, of course, all the large company stock market indexes declined sharply in 2008, and then, as our jawsdropped, kept right on going. In fact, during the bear market’s last nine weeks, i.e., fromJanuary 1, 2009, until March 6, the large company Value indexes had a last gasp declineof 30% or so. That era’s 10-stock Yield Group, the backbone of our portfolios, declined about 33% during the same period (the more growth-oriented Momentum Group held up much better). Then, the work of the Grand Troika, i.e., Ben Bernanke, Tim Geithner, and Hank Paulson, and many others kicked in, and the S&P 500’s 666.79 of March 6, 2009, became the 3386.15 of February 19, 2020, which capped an exceptional 11-year run.

Continue reading “A Tale of Two Marches” →

March 19, 2020

The above title may be a bit melodramatic because we all are on the front line of this one, but what we really have in mind is the investment front line, i.e., watching that computer screen all day and listening to the accompanying chatter. In no particular order, here are a few tidbits:

The Far East

This is where COVID-19 began, of course, and there is a natural tendency to look at the Far East for indications of how it might play out. One very encouraging sign: The Asian stock markets, so far and on most days, have been holding up better than Europe and the U.S. Not a lot of data points, to be sure, but others and we have noted the pattern. If the virus itself moved from west to east, maybe the human and economic recovery will as well. Another encouraging sign: This morning, the Hormel CEO told CNBC that he had talked to his (China) team and that they are pretty much back to normal. Yet another: Starbucks has re-opened in Wuhan, COVID-19’s Ground Zero.

Continue reading “Notes from the Front Line” →

March 13, 2020

Geesh! Call it what you like: big-time hiccup, correction, bear market, whatever. We have seen several of these things over long careers, and “these things” never are fun. Anyone, male or female, young or old, beginner or professional investor, who dismisses it all with a wave of the hand, is kidding himself/herself and you. Still, you know and we know that staying the course with a well-conceived investment plan, even in (particularly in) the time of COVID-19, is essential if one is to deal effectively with the 1974s and the 2008s and the 2020s. The alternative, i.e., having an asset allocation strategy that responds to the 6 A.M. S&P futures or the pain of market volatility or the latest COVID-19 data is a prescription for mediocrity at the very least and, at worst, (dare we say it?) disaster. All of these years watching markets go up and down tell us that this is so.

Let’s see where we currently are and where we should go.

Continue reading “U.S. Equities in the Time of Covid-19 : Where Are We?” →

Well, here we are. It’s already Thanksgiving week, and so far, 2019 has been a good year for investors just about everywhere. Stocks, bonds, gold…they are important determinants of overall investment health, and all three asset classes have performed well. In fact, all three are on track to provide a 2019 investment return of 10% or more. That hasn’t been done since 1986. But, good times or not-so-good times, managing those asset classes so that they achieve our clients’ goals is a large part of what we do. Providing the best in client service also is a large part of what we do, so for the seventh year in a row, we ask that most important of all questions: Are we doing all that we could and should be doing for you? In a general sense, the objective always is to become a more valuable member of each client’s team. And, more specifically, as mentioned in the May Update (“The Path Ahead…Problem Solving in the Modern Era”), we always want to be problem solvers in an increasingly solution-oriented business. If we are missing any opportunities to achieve those objectives, by all means please let us know.

Continue reading “Our Regular Civic Duty (VII)” →

“If you’re looking for an insurance policy against volatility and economic uncertainty, gold is a great way to go…the whole point of diversification is to be prepared in case something goes wrong and your thesis doesn’t pan out.” -Jim Cramer, CNBC

“Say, answer me this, will ya? Why’s gold worth some twenty bucks an ounce? ” -Howard (Walter Huston), “The Treasure of the Sierra Madre” (1948)

In a world of zero inflation, negative interest rates, and trade friction, gold so far has had a banner 2019. Our proxy is Engelhard industrial bullion. Between January 1 and August 31, one troy ounce has gone from $1,283.83 to $1,528.00, an advance of over 19%. As surely as night follows day, many early-year naysayers have jumped on board, and talk of $2,000 and above has started to percolate. Maybe; but, we try never to get too carried away, and instead, like to focus on why an asset class does or does not belong in our clients’ portfolios. In this case, the asset class does belong, specifically as an honored component of our Total Portfolio Management (TPM) and Indexed Total Portfolio Management (ITPM) strategies. Why gold?

Humankind has had a fascination with and a reverence for the barbarous relic since about the time our ancestors discovered fire. Since then, gold has been used to adorn ears, necks, wrists, clothing, etc.; gold has been used to cap teeth; gold has been used in numerous industrial processes; gold has been used to treat disease; and, gold in an investment sense has been used as an alternative to fiat currencies and as a store of value. For these purposes, let’s focus on gold in the monetary/investment world of the modern era, and start with something called Executive Order 6102.

Continue reading “The Barbarous Relic” →