Global Markets in 2015 have been a dud. What does it mean for 2016?

As far as the markets are concerned . . . 2015 has been a dud! All global market indexes are down for the year. Our common benchmark for global investing, the MSCI All World Country Index is down -5.49%. You can see the returns below. ACWI = All World Country Index  -5.49% EFA = Developed Non-US countries -4.50% SPY = S&P 500 -1.96% EEM = Emerging Markets -17.5%     So what does this mean for 2016? The only thing we can really look at is history. Meaning, when the last few times that the market has done what it’s doing now, what happened the following year? Historically since World War II there have 10 years that the S&P 500 rose or fell by 3%. (Most people would call that a flat year). In the subsequent year, the S&P 500 gained an average of 15% and rose in price 80% of
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Categories: Markets.

Someone finally described how I’ve been feeling . . .

I was recently listening to one of my favorite podcasts, Masters in Business with Barry Ritholtz. (I urge everyone to listen to the weekly interviews, they are fantastic!) One guest on the podcast said some things that explained exactly how I’ve been feeling for the past year. David Rosenberg was his guest. Mr. Rosenberg used to be the Chief Economist at Merrill Lynch and is currently the Chief Economist at Gluskin Sheff + Associates Inc, a Canadian Investment Advisory firm that manages several billion dollars. Below are two of my favorite segments of the podcast. Before you listen and learn from them, let me give you some background. In the industry there are two types of firms . . . Buy-side – Those that manage money for clients. Investment Advisors, including our firm, would be a buy-side firm. Sell-side – Those firms that sell products. Think of a broker-dealer that sells stocks, options, research, education, etc.
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Categories: Strategy.

December 16. An important date on the calendar.

December 16 is one important day. That is the day that the Fed (Federal Open Market Committee) will come out with the decision on whether they will be raising the Fed Funds rate .25%. There are, of course, two possible outcomes: Raise rates .25% while providing some of the most dovish language in history or . . . Push it back until 2016 because of inflation, global slowdown fears and low commodity prices. So what will happen? Janet Yellen herself hinted at raising rates in an address to college students. She said: “It will likely be appropriate to raise the target range of the federal-funds rate sometime later this year and to continue boosting short term rates at a gradual pace thereafter as the labor market improves further and inflation moves back to our 2% objective.” Note two very important things in her comments . . . “Labor market improves” – Certainly it
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Categories: Markets and Strategy.

One of the most important things you should do as an investor . . . (Icahn and Buffett)

One of the biggest issues with investors is expectations. We live in a world where people want every month, every quarter, every year to be profitable. This short term thinking destroys capital. I’ve seen it over and over again. People buy what’s hot in the market  and get burned when it falls. It’s THE vicious cycle for losing money.  So what should you do? Below are two of the most successful investors, Carl Icahn and Warren Buffett. They tell you in a very short and concise way what you should do. The problem is that it’s completely contrary to what everyone else in the world of investing actually does. Listen to Icahn and read Buffett and then decide what you’re going to do and how you’re going to act. First, Carl Icahn (for the whole interview with Icahn, click here) Second, Warren Buffett.     So you can do two things.
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Categories: Markets and Strategy.

Tech Check: What are the charts showing us?

As many of you know we use a bullish/bearish technical indicator when managing portfolios. If you are unaware of the system you can refer to our “Our Rule #1 – Risk Management” article. Bottom line, for people that are close to, or maybe already in retirement, the last thing they can suffer is a major draw down in their portfolio a la 2008. That is why we use the indicator. When it tells us we’re bearish we simply raise more cash to preserve capital in client portfolios. Now don’t get me wrong, I’m not saying another 2008 is around the corner . . . this system just allows us to keep individuals who have the goal of capital preservation safe and happy. Here’s how it works . . . When the blue line (10 period exponential moving average) is above the red line (simple moving average) then we are bullish. When the
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Categories: Markets and Strategy.

Thoughts from an ugly week in the market

Wow! What a terrible week in the market! I would be the first to admit that I hate weeks like this . . . they stink! That said, they have to happen. It’s how the market works. The market cannot go up every week, every month, every year. A normal market has what’s called “corrections.” They are 10% pullbacks before the trend keeps moving upward . . . that’s most likely what we’re seeing now. We don’t need to re-hash what happened this week. All of you know that market was blasted 6% (down 7% off the all time high). Let’s discuss why it was down and what we’re thinking going forward. Reasons why the market was down. Interest Rates. The Fed minutes came out this week and pointed to a likely interest rate hike this year, possibly (and most likely) in September. Interest rates have been historically low for
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Categories: Markets.