Worst First 2-Weeks Ever

• What do we make of the stock market collapse early in 2016? Is this the beginning of a recession? Is this the end of Batman?
• Seriously, it’s not fun to watch the portfolio go down… down… down.  This is the worst “first two week start” of a year ever!  “The Dow and the S&P 500 are both down 8.2 percent since the beginning of the year. The Nasdaq is down 10.4 percent.”
• The opening rallies are sold off.  The high-beta stocks are falling.  Have you seen biotechs?

 

YEAR TO DATE SECTOR SPDR ETF PERFORMANCE

 

• Yay! Utilities!
• I’ve been caught long and flat-footed.  I don’t like to sell AFTER a 10% decline (or worse in some names).  I guess I just continue to add, hope, pray, and watch political debates, playoffs, and Netflix.
• (Say, Jessica Jones is very good).
• It seemed initially as if the financial folks were trying their best to pick a bottom.  Now, they’re trying to get out of the way of a further decline.  It seems as if we need more bearish sentiment and “get out on any move up” kind of sentiment, before a bottom shows up.
• (This is where I normally insert a picture of a bottom. You know.)
• Recession… Bear Market Fears.
• So there’s declining oil.  Oil is flooding the market.  Way too much supply.  We always thought cheap gasoline would help consumers, but retail numbers don’t show that.  Are folks saving?  Paying off bills?  Paying more for health care and student loan debt?
• Anyway, it’s a long weekend.  More later…

Stock Returns During Last Year of a President

$SPY – Here are the recent historical returns of the stock market during the last year of a President.

1980    32.40%    Jimmy Carter
1988    16.80%    Ronald Reagan
1992      7.70%    George HW Bush
2000     -9.10%    Bill Clinton
2008   -37.00%    George W Bush
2016        ???       Barack Obama

Nothing to do based on this.  But interesting.

There was the end of the internet bubble and subsequent recession that happened during Clinton’s last year.

George W Bush was hit with the collapse of the housing bubble, and the loans made to people who had no chance of every making monthly payments.

Are we in a bubble now?  Bonds?  Real estate?  Stocks?  All of the above?

Stay tuned!

2015 Review-2016 Preview

I beat the market in 2015, with a 7.5% return.  This is due to an overweighting in $QQQ and also some individual stocks.  The biggest winners were $MCD, $FB, $JD, and $DIS.

I also had a few ugly ones, including $LVS, $TWTR and $XOM (then rotating into another loser, $EOG).  Then I had a few names that towed the line with index, and didn’t do anything other that spit out a few dividends every quarter.

Fortunately, I was considerably overweighted in the better names.

2015 was a year where I bought and held companies I thought would beat the market.  I didn’t chase the IBD hot stocks or take the hot tip of the day.  I didn’t run my market timing model every day. I did raise a little cash before summer and reinvest in August, in a little nod to Sy Harding and “sell in May and go away.”

By the way, had I used my market timing system using $QQQ, I would have made 11% on 9 trades, with 8 of them winning trades.

Heading into 2016, I am fully allocated and remain in the holdings I mentioned.  I think my winning stocks will continue to be winners, although I would expect $MCD to slow down and $DIS to bounce back.  $FB is a big holding and I’m a believer of The Social Network growth.  Of the losers, I don’t know when energy comes back, but know it will.  Cheap energy never seems to last for long.

I think $TWTR makes it.  I don’t know how much money they’ll make or when the stock will get hot again if ever.  But I spend enough time on there to know it’s addictive and a great time waster.  This is a “buy what you know” kind of stock.  It’s just where people go for instant news and chat.  I think the company figures it out someday.  And the stock could be volatile for trading around the position.

$LVS is the ugly ducking where you just never know about the Chinese gambling market.  I’m going to stick with it for now, banking on a continuing growing economy in China and the reality that people love to gamble.  As the population grows, as affluence grows, the casinos will get busier.  The company also continues to pay and raise the dividend, too.

Then, there’s energy.  Energy.  Energy!  This is the amazing topic of 2015, where declining oil prices were supposed to help the economy and give consumers more money to spend.  Where is that money going?  Or, is the declining labor participation rate offsetting that?

Oh, the stocks.  I don’t believe oil prices are going to $0.  As companies cut back on production, eventually supply and demand issues work themselves out.  I rotated back into $XOM and think that’s the place to be for now.  Until things get better, some of the companies where R&D and investment money goes could get hit further.

Overall, I have about 10 stock tickers and mostly index ETFs.  I believe my big winners of 2016 will be $FB and $DIS, with the corner of my eye peaking at $TWTR.

I haven’t bought any Dow Dogs this year, but think $IBM is interesting.

Happy New Year!

Wayne Rogers

Wayne Rogers passed away on December 31, 2015.  I have spent many weekends watching Cashin’ In on Fox, as Wayne implored Jonathan Hoening, “Jonathan, shut up and let me finish!”

What Wayne did finish is leaving a lasting impression on me and all viewers across the country who tuned in weekly.  Wayne always came across as level-headed and thoughtful, providing insights into the financial news affecting our lives.  He also did so with a sense of humor and quick wit.

Many remember Wayne fondly from the early days of MASH, along with other TV shows and movies.  I loved MASH!

Thank you, Wayne!

2015 – Dollar Cost Averaging into an Index

If you had invested $1000 in an index ETF every Friday (or last trading day of the week) at the closing price in 2015, how would you have done?



Excludes dividends and trading costs. 

Some brokerages wave the trading cost if investing in certain index ETFs, as long as the investment is held for a certain period of time.

• $SPY – SP500
• $VTI – Total market index
• $QQQ – Nasdaq 100
• $IWM – Russell 2000
• $EEM – Emerging Markets

May add an international ETF for 2016.

Fox Business Block Gurus Update – 2015 Final Part 2!

Here how the Fox Business Block gurus performed individually (excluding dividends). 
This return is based on investing $1000 per weekly stock pick at the closing price Friday night. 
The stock picks started 12/28/2013 through the 12/27/2014 picks. In addition to total return, I tracked the percentage of winning picks.  Here is how they did, from first to worst!
















Best and worst picks of 2015!

IBD Top 50 Stocks Strategy – 2015 Final!

Here is the IBD 50 stocks investing strategies vs. $SPY. We have a winner!  Buying and reallocating weekly to the IBD top 10 stocks outperfomed this last year.  This analysis is from 1/1/2015 through  12/31/2015.
I didn’t track and blog about these weekly or monthly in 2015, as my overall blogging activity fell off a cliff!  These stocks tend to be high beta, and at times the portfolio was significantly ahead of the index, only to underperform like crazy on any market pullback.  It seems like high beta gets punished the most when the market mood sours. 

2015 is over, and the SP500 underperformed most of the IBD 50 investing strategies.   The opposite of 2014.
The portfolio is sold at the closing price Friday night, and rebalanced into the make-up of the IBD top 50.  Dividends are excluded from total returns.

The IBD monthly strategy also outperformed  the SP500 in most cases.  Holding and rebalancing each month into just the top 5 IBD stocks came out on top.
The more diversified portfolios were closer to the return of the SP500.

I will assume a $9.95 trading cost to sell last week’s or last month’s portfolio, and $9.95 to buy the new weekly or monthly portfolio.  (Imagine the costs of doing this with individual stocks, compared to using Motif.  Note that Motif limits the size of portfolios to 30 stocks).
The Top 25 holdings are listed at at Motif Investing.
None of the above strategies are a recommendation to buy or sell stocks.  These are model portfolios constructed for entertainment only.
Each portfolio begins with $10,000 and then invests an equal amount in the top 5, 10, 25 and 50 IBD stocks at the closing prices on Friday for the weekly model, and at the closing prices on the last trading day of the month for the monthly model.  Since IBD changes the make up of their top stocks daily, this will only rebalance on Fridays or end of month.  It is assumed that trading costs are $9.95 to “buy” a model portfolio, and $9.95 to “sell” a model portfolio.  Thus, each weekly or monthly rebalance out of the previous portfolio and into the new portfolio costs $19.90.  Daily changes in the IBD 50 or stock rankings are not considered.  Changes in IBD’s overall market views are not considered.  Stop loss orders or other market timing strategies are not considered.  The value for SPY is based on buying at the closing price the last trading day of the preceding year.
Based on a blog entry from Paladin Money.  See Investors Business Daily for more information on the IBD 50.  See Motif Investing for their IBD Top 25 portfolio, and the ability to construct your own portfolio of stocks.

Fox Business Block Gurus Update – 2015 Final! UPDATED

Here how the Fox Business Block gurus performed compared to the indices (excluding dividends).  This return is based on investing $1000 per weekly stock pick at the closing price Friday night.  The stock picks started 01/03/2015 through the 12/26/2015 picks, versus dollar cost averaging into the index ETFs during the same time period.

We have a back-to-back winner!  Gary Kaltbaum repeats!  But he barely came out in the green in a flat 2015 market.  Only the QQQ index outperformed.  Gary K. is not a weekly participant. He made 11 stock picks for 2015.  Gary B Smith again finishes in second place.  Repeating what I said last year, it doesn't surprise me to see Gary B. Smith and Gary Kaltbaum near the top of the list.  I've often thought that those two seem to be the most consistent. 

** Edit ** - Scott Martin made 4 stock picks on Bulls and Bears in 2015 and had a total return of 7.65%, as noted in the Part 2 post.  He should be the winner absent a rule on minimum stock picks to be eligible.  I don't want to modify this entire post, though.  But kudos to Scott for beating not just the other gurus, but the index tickers as well!

Near the bottom of the list is Wayne Rogers.  As you may have heard, Wayne just passed away.  Wayne hadn’t made any stock picks since early November.  In addition, the Cashin’ In show has relegated the picks of Rogers and Jonathan Hoenig to the Fox web site, while the show discusses non-stop politics on a weekly basis.  I haven’t watched the January 2nd episode, yet.  Will see what they say regarding Wayne and any changes to the show line-up.

As you can see in the graphic, most of the gurus underperformed dollar cost averaging into the major index in 2015.  The index did hold up better than the majority of stocks.  This is most likely because of the weightings of stocks in the index trackers.  Small caps and emerging markets performed poorly in 2015.

Ben Stein and Adam Lashinsky tend to pick stocks, ETFs, or funds that track a market index or are at least widely diversified.  And they’re in the middle of the pack.

Charles Payne "tends to" pick volatile stocks.  As the market trends strongly in one direction or another, his picks have a little extra beta to the upside or downside.  Another poor year for Charles.
Larry Glazer made one pick:  XOM.  The stock was down 16% from when he picked it.  I should consider deleting Larry from the list.  I think last year was the same story, with Ford as his pick.  LOL!

The Forbes on Fox gang also in the middle of the pack.  What I do like about their stock picking segment of the show is that they give a little more analysis of why they’re picking each stock.  Not that this lead to better performance, but at least you get some of the thought process.

That also points out that these stock picks are made without any future guidance.  Once you buy, there is no advice to sell or buy more.  The shows do have an occasional “follow up” show that goes over the best and worst picks for each guru, and what they’d do with that one or two picks going forward.

How did the shows do compared to each other?


Congratulations to Bulls and Bears for coming out on top!  Collectively, the picks underperfomed the index (SPY). 

On to 2016!  Good luck to all of the Fox gurus!