If You Want It Done Right............

      Maybe I am just getting grouchy and particular in my old age, but sometimes when I get "help" out in the garden, I am never satisfied with the results. My fellow gardener, who is 15 years older than me, feels the same way when I help him. Everybody has their own ideas about the way things should be done. I feel the same way when it comes to my investments. Nowdays, people have choices about how they go about tending to their nest-egg. One option is to have a "guy" who is supposed to act in your best interest and make you money. The fact is that this guy will make money regardless of whether you do. If you don't have the knowledge to invest yourself, how do you know he is selecting appropriate investments for you? Another option is to buy all mutual funds. Most mutual fund families actually hire an outside firm as advisor to select the investments for the fund. So your actually hiring a company who hires a company who hires some people to manage your money. Another choice is to buy a passive investment which tracks an index like the S&P 500. This can be a mutual fund or an ETF which simply buys the stocks contained within the index. When the market goes up you might make money and when the market goes down you lose. Your only decision is whether you should be in stocks or not. Another mutual fund option is the "fund of funds" portfolio. This is where your advisor sells you a mutual fund that contains other mutual funds, usually within the same family of funds. I believe in diversification but this is simply dilution and usually a losing position. My last option is to just do it yourself. It takes a little conviction and some homework but the rewards can be worth it. Picking your own investments can be profitable in both up and down markets. Selecting undervalued stocks when the overall market is high can limit your risk and provide income when the averages are declining. Knowing when to lighten up on stocks and select alternatives is something passive investing doesn't do. Most mutual funds are required by charter to have a certain level of stocks in their portfolio. I own some mutual funds, ETF's, passive investments, and even have a "guy" or two to lean on but I like the control I have by owning stocks that I selected myself. Tending to my portfolio is a lot like gardening. If you plan your garden carefully, buy good seeds and stock, then keep it weeded, it should produce good yields. Likewise, buy good stocks, monitor their progress, weed-out the losers, and reap the rewards.

2018 Mid Year Review

     It's that time of year again for me to review the picks made in the 2018 Forecast. Even though I did mention some individual stocks, I now use ETF's and some sector mutual funds to indicate my favorite sectors. The first sector I recommended was the Financial sector and I used the XLF as my benchmark. This ETF is off about 2.25% so far this year. I still like this sector for all the reasons stated in my forecast but the fact is that overall loan demand is low at this time and the fundamentals of the business is in question. To compensate for the slow growth, big banks are planning to return record amounts of capital to investors through stock buy-backs and increased dividends. My second choice was in the energy sector. I  referred to two investments: VDE which is a Vanguard mutual fund and XLE which is an ETF. VDE is up about 7% this year and XLE is up 6%. As expected, energy has stabilized this year and I expect this to continue for the foreseeable future. Another oil related investment was the Alerian master limited partnership ETF symbol (AMLP). This investment has a yield of about 8% but has not appreciated this year so far due to some technical issues within the MLP space. My last recommendation was the XLK, which is the S&P ETF invested in Technology. This fund returned over 9% so far this year. Some analysts  believe that there is some trouble coming to the technology area for the short term. If a trade war breaks out- and it looks like it will, then the global supply chain for many technology companies will be interrupted.
     I am still comfortable with all my recommendations but I am getting a little nervous about the market as a whole. My reasoning is that we are in a historically long bull market and something is bound to end it soon. The old saying that bull markets don't die of old age is true-some catalyst will cause a reversal in stocks and a trade war may be it. There is also the possibility that the Fed will raise rates to a point that causes earnings to decline and investors to jump into fixed income investments like CD's or bonds. Some of my retirement funds have already been moved into the best yielding CD's that I could find through my brokerage account. These CD's are federally insured but don't yield a lot, however, if the market sells-off I will sleep better knowing that my retirement is still on track.