For as long as I can remember, presidential candidates, their surrogates and the news media have always proclaimed every election as “the most crucial in our nation’s history”. Incidentally, my presidential campaign cycle awareness dates back to 1972.  #-ad_banner-#While I agree that presidential elections are an important exercise, I’m hesitant to label every one of them “crucial”. Case in point: George H.W. Bush versus Michael Dukakis in 1988. I mean…seriously? 2016’s contest has been anything but ordinary and, no surprise, I’m starting to field phone calls from nervous clients about what course of action they should take as the general… Read More

For as long as I can remember, presidential candidates, their surrogates and the news media have always proclaimed every election as “the most crucial in our nation’s history”. Incidentally, my presidential campaign cycle awareness dates back to 1972.  #-ad_banner-#While I agree that presidential elections are an important exercise, I’m hesitant to label every one of them “crucial”. Case in point: George H.W. Bush versus Michael Dukakis in 1988. I mean…seriously? 2016’s contest has been anything but ordinary and, no surprise, I’m starting to field phone calls from nervous clients about what course of action they should take as the general election cycle picks up engine pressure.  So I decided to go back and look at the performance of the S&P 500 during the general election cycles going back to the 1992 race. I did not include the 2000 and 2008 race, as both were extraordinary in circumstance. In 2000 there was the Gore v. Bush controversy that dragged out the final outcome to December of that year, and in 2008 the Obama vs. McCain contest occured during the depths of the financial crisis. I hope you like charts. … Read More

I have a long time client who is always convinced that the financial sky is falling. Recently he called me, worried that the nation is $19 trillion in debt. He’s not alone in this worry — $19 trillion sounds like a lot. But is that a real number? And how fast is the debt train hurtling towards us? So I decided to do some research. #-ad_banner-# In the most recent audit of the Bureau of Fiscal Services for fiscal years 2014 and 2015 by the Government Accountability Office, the total gross federal debt outstanding is $18.138 trillion. That’s 4.5% less… Read More

I have a long time client who is always convinced that the financial sky is falling. Recently he called me, worried that the nation is $19 trillion in debt. He’s not alone in this worry — $19 trillion sounds like a lot. But is that a real number? And how fast is the debt train hurtling towards us? So I decided to do some research. #-ad_banner-# In the most recent audit of the Bureau of Fiscal Services for fiscal years 2014 and 2015 by the Government Accountability Office, the total gross federal debt outstanding is $18.138 trillion. That’s 4.5% less than $19 trillion. Don’t you feel better? Here’s one of the most interesting facts I uncovered. Nearly one third of the outstanding debt, 27.6% to be exact, is held by federal government agencies such as the Social Security Administration, FDIC, the Postal Service Retirees Fund, or the Department of Labor’s unemployment trust fund. If we subtract federally held debt then that means that $13.12 trillion of what the report refers to as marketable securities (they can be resold at any time) are held by the public. But all this debt is going to mature one day? Yes it is. In… Read More

When discussing consumerism from a socio-economic standpoint, the term “upward mobility” is always used. When consumers move up in economic class, money moves with them. I’ve discussed the rise of the emerging market middle class in previous articles. One product/service that had trouble gaining traction among the new middle class is consumer banking. Financial institutions like Citigroup (NYSE: C) and JP Morgan Chase (NYSE: JPM) have established large institutional footprints in emerging markets in corporate banking, as well wealth management services for the emerging market rich. #-ad_banner-#However, unlike in the United States where there is a brick and mortar bank… Read More

When discussing consumerism from a socio-economic standpoint, the term “upward mobility” is always used. When consumers move up in economic class, money moves with them. I’ve discussed the rise of the emerging market middle class in previous articles. One product/service that had trouble gaining traction among the new middle class is consumer banking. Financial institutions like Citigroup (NYSE: C) and JP Morgan Chase (NYSE: JPM) have established large institutional footprints in emerging markets in corporate banking, as well wealth management services for the emerging market rich. #-ad_banner-#However, unlike in the United States where there is a brick and mortar bank on every single corner, brick and mortar banking has not grown in emerging markets. But money still needs to move and consumers will find other ways to do it besides a traditional bank. Enter Western Union (NYSE: WU). Spun off from First Data Corp (NYSE: FDC) in 2006, Western Union is recognized as one of the nation’s largest independent providers of consumer money transfer services. Nearly 80% of the company’s revenues come from consumer to consumer services such as its branded Western Union Money Gram product, pre-paid debit cards, and money orders. In the United States, these services are distributed… Read More

My friends all know that I’m not a new car buyer. I can’t rationalize the instant depreciation signing new car paperwork creates. It would probably keep me up at night. Recently, a client came to me dead set on buying a new Lexus ES. Then she asked my opinion. She wasn’t pleased with my answer, which ended with me saying “… a complete waste of money you and I have worked so hard together to preserve and grow.” It was clear she had made up her mind on a new car. So I suggested and alternative: why not by a… Read More

My friends all know that I’m not a new car buyer. I can’t rationalize the instant depreciation signing new car paperwork creates. It would probably keep me up at night. Recently, a client came to me dead set on buying a new Lexus ES. Then she asked my opinion. She wasn’t pleased with my answer, which ended with me saying “… a complete waste of money you and I have worked so hard together to preserve and grow.” It was clear she had made up her mind on a new car. So I suggested and alternative: why not by a brand new Toyota Avalon? It’s the same car. #-ad_banner-#Everyone knows that Lexus is the luxury brand of Toyota Motor Corp. (NYSE: TM). And, like their American counterparts, Toyota builds its brands on the same basic platform. A 2016 Lexus ES 350, built on the Avalon platform, has a base price of around $39,000. The Toyota Avalon has a base price of around $33,000. An 18% premium for basically the same automobile. Not a good way to deploy money. I’m also seeing similar behavior as equity markets grind higher. As markets hiccupped recently with the Brexit crisis, cautious investors who wanted… Read More

Investors have always referred to underperforming stocks as dogs. One of history’s most well-known dividend value investing strategies is known simply as “the Dogs of the Dow”. With the recent re-pricing of energy stocks, primarily master limited partnerships (MLPs), I’ve gone in search of some real dogs. Here’s what I’ve found. Take a look at a chart of the Alerian MLP Exchange Traded Fund (NYSE: AMLP) Shares of this popular ETF track the performance of a basket of the most widely held energy MLPs traded. And as the energy sector crashed, no one was spared. The price of… Read More

Investors have always referred to underperforming stocks as dogs. One of history’s most well-known dividend value investing strategies is known simply as “the Dogs of the Dow”. With the recent re-pricing of energy stocks, primarily master limited partnerships (MLPs), I’ve gone in search of some real dogs. Here’s what I’ve found. Take a look at a chart of the Alerian MLP Exchange Traded Fund (NYSE: AMLP) Shares of this popular ETF track the performance of a basket of the most widely held energy MLPs traded. And as the energy sector crashed, no one was spared. The price of the fund was basically cut in half at the darkest point and, while AMLP has recovered by well over 50% it’s still trading at an attractive 21% discount to the 52-week high. In all, AMLP holds a basket of 24 different energy MLPs. On average, the top ten MLPs are trading at around a 21% discount to their 52-week highs. I decided to drill deeper. I identified the three names trading at the deepest discounts to their 52-week highs:   Discount To 52-Week High Yield MLPX LP (NYSE: MPLX) 48% 6.2% Plains All American Pipeline LP (NYSE: PAA) 38% 10.2% Williams Partners LP (NYSE: WPZ) 32%… Read More

To paraphrase the late, great Hunter S. Thompson, “When the going in Europe gets weird, the weird go to Switzerland”. And now, thanks to the Brexit vote, things are officially weird in Europe. Throughout history, whenever things got dicey in Europe, people with assets have always fled to the safety of Swiss banks and even the country itself. Where were the von Trapps from “The Sound of Music” going to escape the Nazis? Yep. Switzerland. And my guess is that Captain von Trapp had some cash stashed in Geneva as well. #-ad_banner-#So will the new Brexit-induced cracks in the EU… Read More

To paraphrase the late, great Hunter S. Thompson, “When the going in Europe gets weird, the weird go to Switzerland”. And now, thanks to the Brexit vote, things are officially weird in Europe. Throughout history, whenever things got dicey in Europe, people with assets have always fled to the safety of Swiss banks and even the country itself. Where were the von Trapps from “The Sound of Music” going to escape the Nazis? Yep. Switzerland. And my guess is that Captain von Trapp had some cash stashed in Geneva as well. #-ad_banner-#So will the new Brexit-induced cracks in the EU stimulate asset migration to Switzerland? I think so. Switzerland is not part of the European Union (EU) or the common euro currency. However, the country maintains a solid, cooperative relationship with the EU — and having a stable, standalone currency in the Swiss franc and a well-regulated, albeit private, banking system make Swiss banks an attractive option for fearful wealthy Europeans.  Of course, customer and asset flows also mean profits which are why investors should have a look at Swiss bank stocks right now. Here are two timely ideas. With a global financial services footprint, Credit Suisse Group (NYSE: CS)… Read More

Recently, I was listening to a podcast interview with market guru Byron Wien of Blackstone. While the talk focused mainly on building wealth with large, concentrated bets, the winning combination of investing in technology and emerging markets caught my attention. #-ad_banner-#Technology changes worlds and history and, if you choose wisely, makes investors rich. The same can be said for macro market and demographic trends. The world changed as wireless telecom penetrated emerging and frontier markets. People who had never had a telephone due to lack of infrastructure in their communities were now connected. While wireless phone proliferation in these economies… Read More

Recently, I was listening to a podcast interview with market guru Byron Wien of Blackstone. While the talk focused mainly on building wealth with large, concentrated bets, the winning combination of investing in technology and emerging markets caught my attention. #-ad_banner-#Technology changes worlds and history and, if you choose wisely, makes investors rich. The same can be said for macro market and demographic trends. The world changed as wireless telecom penetrated emerging and frontier markets. People who had never had a telephone due to lack of infrastructure in their communities were now connected. While wireless phone proliferation in these economies has exploded over the last decade, there’s still room to grow. Now, as the same emerging societies give birth to a new middle class thanks to a globalized economy, banking is emerging as the next growth industry in developing markets. I’ve found a stock that covers both: Vodafone (Nasdaq: VOD). The leading provider of international wireless telecommunications, Vodafone’s footprint covers more than 20 countries across four continents. If you’re a Verizon (NYSE: VZ) subscriber, you used to do business with Vodafone. Up until 2014, Vodafone owned a 45% stake in Verizon. After selling back to Verizon, Vodafone walked away with… Read More

For the first half of this year, pundits and investors alike have been wringing their hands in anticipation of the Federal Reserve raising its benchmark Fed funds rate another quarter of a percent. But indications are strong that Fed Chair Yellen isn’t going to pull the trigger at the June meeting like she did in December of 2015. Seems like investors dodged that bullet, right?  Wrong. Rates are going to go up on their own without any help from the Fed. Over the last five years, the yield on the 10-year U.S. Treasury, the benchmark for… Read More

For the first half of this year, pundits and investors alike have been wringing their hands in anticipation of the Federal Reserve raising its benchmark Fed funds rate another quarter of a percent. But indications are strong that Fed Chair Yellen isn’t going to pull the trigger at the June meeting like she did in December of 2015. Seems like investors dodged that bullet, right?  Wrong. Rates are going to go up on their own without any help from the Fed. Over the last five years, the yield on the 10-year U.S. Treasury, the benchmark for all interest rates, rose an average of 11.2% during the month of June. Here’s proof. Will this year be any different? Five years straight is a strong indicator. And although of late equity markets have been a little weak, which will keep yields low due to investors fleeing to “safety”, the evidence is still strong for an organic rise in rates. Why did rates rise? The Fed only intervened once during the time period, and that wasn’t until December of 2015. Maybe we should blame the U.S. dollar. Here’s a five year study of… Read More

“Sell in May and go away” the old market maxim goes. It may not be far from the truth. That would have been good advice last year. #-ad_banner-#But this year? Who knows? I’ve never been a proponent of getting completely out of the market. As a long term investor, time is always on your side, especially if you’re getting steady, respectable cash flow from your portfolio. If your portfolio is paying you a steady 7% on an annual basis (in income, not capital appreciation) and you go to cash, which is earning you nothing, what are you truly giving up… Read More

“Sell in May and go away” the old market maxim goes. It may not be far from the truth. That would have been good advice last year. #-ad_banner-#But this year? Who knows? I’ve never been a proponent of getting completely out of the market. As a long term investor, time is always on your side, especially if you’re getting steady, respectable cash flow from your portfolio. If your portfolio is paying you a steady 7% on an annual basis (in income, not capital appreciation) and you go to cash, which is earning you nothing, what are you truly giving up for a little comfort from the volatility that comes with owning stocks?  While we may or may not have a summer swoon this year (who knows with an incredibly bizarre presidential election going on), it’s always good defense to not pay too much and get paid decently while you wait. Here are three ideas, all fairly priced and yielding north of 7%. The Blackstone Group LP (NYSE: BX) — With a market cap of over $30 billion, Blackstone is a dominant global player in the alternative investment management business. Focusing on private equity, real estate, hedge fund and other multi… Read More

When I started in the investment biz twenty years ago, the Tech Bubble was building engine pressure. When then Fed Chairman Alan Greenspan referred to the mania as “irrational exuberance”, he was understating. Valuations and expectations were insane. Period. #-ad_banner-#The Nasdaq Composite (COMP) was pretty much the benchmark for the technology madness. After a spectacular run up people from all walks of life were inspired to quit their day jobs to chase instant wealth day trading online. Of course it ended badly. From its peak, the Nasdaq gave up nearly 75% of the crazy money it made over… Read More

When I started in the investment biz twenty years ago, the Tech Bubble was building engine pressure. When then Fed Chairman Alan Greenspan referred to the mania as “irrational exuberance”, he was understating. Valuations and expectations were insane. Period. #-ad_banner-#The Nasdaq Composite (COMP) was pretty much the benchmark for the technology madness. After a spectacular run up people from all walks of life were inspired to quit their day jobs to chase instant wealth day trading online. Of course it ended badly. From its peak, the Nasdaq gave up nearly 75% of the crazy money it made over the five year party. Thirteen years later, the Nasdaq has reclaimed the dizzying highs from the heady days at the beginning of the 21st century. Are we headed for another crash? I don’t know, and I’m not going to utter the most dangerous phrase in investing: this time it’s different. But, I am going to talk about valuations of a two of the biggest names in tech then and now. Basically, it’s damned near impossible to move data anywhere without these two companies facilitating the process. The big two? Cisco Systems (Nasdaq: CSCO) and Intel Corp. (Nasdaq: INTC).   Peak… Read More