-Stock market corrections, technically defined as -10%+ drops, are natural and typically occur every 18 months or so - the last one was four years ago. All sectors are off over -2% today. We are finally finding some bargains in healthcare & consumer staples today – these sectors are more resilient during sharp market drops.
-Markets capped a week of Aug 21st with volatile sharp selloffs on Thursday and Friday. All major indices declined in the worst week of trading since 2011 and are now in negative territory for the year; notably, the Dow Jones Industrial Average, the NASDAQ, and the Russell 2000® Index slipped into correction territory after falling 10% below their recent peaks. Sectors to overweight when markets sell-off are utilities, consumer staples and certain pockets of health care. Sell positions that simply are not working. If they are not working in a strongly rising market, they will hurt your portfolio more when the market drops. Periodically reduce winning positions back to original portfolio weightings. This allows you to harvest profits but remain invested in positions that are working.
-We continue to increase allocations to strategies that benefit from negative market forces of prolonged market volatility as downward market trends persist; marked by signals of investor capitulation related to China/Greece/Fed worries. For example, one of our liquid tradable manager strategies benefits from market weakness and volatility and returned +50% in 2008; this fund had a +16.9% annual inception return since 2006, returned +8% in 2014 and +7.3% year-to-date thru 8/21/15. This asset class category of funds all have daily liquidity and are tradable within our Charles Schwab Institutional platform.
-Fed's aggressive easing policy of cheap money has fueled high margins, high executive stock-option compensation drove stock buybacks, along with stock culture fixation with short-term results. Over the past several decades senior executive remuneration moved from 20% stock option to 80% today. For example, Goldman Sachs estimated the stock indices would get a $1 trillion lift for company stock buybacks in 2015.
-A helpful equity investment article we published, "10 Stock WInners in A Market Crash"
-New Stocks Top Billionaire Hedge Fund Managers Are Buying Now: Williams (WMB), Mylan (MYL), Facebook (FB), Broadcom (BRCM), Applied Material (AMAT), Perrigo (PRGO), JD.Com (JD) & Dow Chemical (DOW). All of these stocks are current acquisitions holding by multiple billionaire hedge fund managers.
-Famous investor, Carl Icahn via Twitter "If more respected investors had warned about the market in '07, we might have avoided the crisis in '08. I think the public is walking into a trap again..." In a later CNBC interview, Icahn expressed his worry about "fudged earnings" and espoused his view that many publicly traded companies are using creative accounting to boost their share prices.
-US high-yield bond funds -$1.2 billion in outflows, US investment-grade corporate bonds biggest cash withdrawals since June 2013, at -$1.8 billion
-Are Mutual Funds Under Fire? Charles Schwab, the leader in no-load mutual funds, pulled in $253 million into its mutual funds over the past year, compared to $32.8 billion into Exchange Traded Funds (ETFs).
-Markets capped a week of Aug 21st with volatile sharp selloffs on Thursday and Friday. All major indices declined in the worst week of trading since 2011 and are now in negative territory for the year; notably, the Dow Jones Industrial Average, the NASDAQ, and the Russell 2000® Index slipped into correction territory after falling 10% below their recent peaks. Sectors to overweight when markets sell-off are utilities, consumer staples and certain pockets of health care. Sell positions that simply are not working. If they are not working in a strongly rising market, they will hurt your portfolio more when the market drops. Periodically reduce winning positions back to original portfolio weightings. This allows you to harvest profits but remain invested in positions that are working.
-We continue to increase allocations to strategies that benefit from negative market forces of prolonged market volatility as downward market trends persist; marked by signals of investor capitulation related to China/Greece/Fed worries. For example, one of our liquid tradable manager strategies benefits from market weakness and volatility and returned +50% in 2008; this fund had a +16.9% annual inception return since 2006, returned +8% in 2014 and +7.3% year-to-date thru 8/21/15. This asset class category of funds all have daily liquidity and are tradable within our Charles Schwab Institutional platform.
-Fed's aggressive easing policy of cheap money has fueled high margins, high executive stock-option compensation drove stock buybacks, along with stock culture fixation with short-term results. Over the past several decades senior executive remuneration moved from 20% stock option to 80% today. For example, Goldman Sachs estimated the stock indices would get a $1 trillion lift for company stock buybacks in 2015.
-A helpful equity investment article we published, "10 Stock WInners in A Market Crash"
-New Stocks Top Billionaire Hedge Fund Managers Are Buying Now: Williams (WMB), Mylan (MYL), Facebook (FB), Broadcom (BRCM), Applied Material (AMAT), Perrigo (PRGO), JD.Com (JD) & Dow Chemical (DOW). All of these stocks are current acquisitions holding by multiple billionaire hedge fund managers.
-Famous investor, Carl Icahn via Twitter "If more respected investors had warned about the market in '07, we might have avoided the crisis in '08. I think the public is walking into a trap again..." In a later CNBC interview, Icahn expressed his worry about "fudged earnings" and espoused his view that many publicly traded companies are using creative accounting to boost their share prices.
-US high-yield bond funds -$1.2 billion in outflows, US investment-grade corporate bonds biggest cash withdrawals since June 2013, at -$1.8 billion
-Are Mutual Funds Under Fire? Charles Schwab, the leader in no-load mutual funds, pulled in $253 million into its mutual funds over the past year, compared to $32.8 billion into Exchange Traded Funds (ETFs).