- - Page 7 of 11 The Finance Gourmet

Calling a Market Top

August 17, 2016 by Finance Gourmet

As a financial planner a few years back, I noticed that my clients’ attitudes about stock market investing changed along with the tenor of media reports. That isn’t surprising. Many of our ideas are influenced by various media. But, if you look closer, you can see that it isn’t really the media, it’s the same mindset that occurs in the general population about any phenomenon in live. Trendy Stock Market Opinions Think about a recent trend. Not some edge trend that never was mainstream, but some big trend that “everyone” got into at one point in time. It doesn’t really matter what the trend was, whether it was a new band, a fashion trend, or something else. How about we use Pokemon Go as an example? These trends follow a familiar pattern. First, the initial wave of popularity gets going. These people love whatever it is, and tell everyone they know about it: friends, family, co-workers, you name it. Your friends ask you to download the app. The news is all about how there is this great new thing. Their motivation is just that they like something and want to spread the word. The next phase are the people who …

Walmart Buys Jet.com

August 8, 2016 by Finance Gourmet

A couple years ago, when Yahoo bought Tumblr for $1 billion, I wasn’t the only one who wondered what value Yahoo saw in the acquisition. It takes a special kind of Silicon Valley mind to think that a money losing internet business plus a money losing internet business somehow adds up to profit. It turns out that even the modest goal of $100 million in annual REVENUE, not profit, set by Yahoo, was too much for the internet property supposedly worth so much that Yahoo shelled out $1.1 billion for it. It seems that the great lesson of the internet bubble years earlier, that eyeballs and name recognition, do not equal money, still isn’t something tech companies are ready to learn. Which brings us to today’s multi-billion dollar buyout of Jet.com, a money-losing online retailer that goes head to head with Amazon. It’s just over a year old now, and it crossed the $1 billion in revenue line earlier this year. Revenue, not profit. The company, by all accounts, hemorrhages cash and funds its operations by taking on more investors. But, somewhere in there, Wal-Mart sees something worth $3 billion, plus an additional $300 million in Wal-Mart stock. I guess tech companies …

Sell In May and Go Away 2016

August 5, 2016 by Finance Gourmet

There are all manner of investing sayings and “wisdom” out there. One of the most common is a little rhyme that goes: Sell in May and go away. Don’t come back ’til Labor Day. This saying comes from older days when traders actually needed to be in New York City. So, when they ran for the cooler pastures of their summer homes, the volume of trading would decrease, and the volatility would ramp up. Of course, these days, you can trade from anywhere at any time, and a great deal of the market’s volume is actually made up of computers that don’t care how hot it is outside. Does Sell in May and Go Away Actually Work? Pretty much everything works sometimes if it is a Yes/No question. If you go to Vegas and bet on black, you’ll win eventually. Same thing with betting whether it will or will not rain. For 2016, the sell in May and go away strategy isn’t officially over, so it might still end up being correct. But, today, the S&P 500 hit an all time hight, making the strategy a loser, so far at least. In fact, very little of this summer has been …

Elections and Investing

July 24, 2016 by Finance Gourmet

Here it comes (actually, we’ve been seeing it for a while), the pontification about which U.S. Presidential candidate will help or hurt the American Economy, and by extension, the U.S. Stock market. As you might expect, in the world we currently live in, these articles are tinged, if not rife with, political bias. If you are a Republican, then obviously, the Democratic candidate will destroy the economy and ruin your investments, and vice versa. However, some “neutral” economists and financial journalists will write similar articles. So, how do you know the difference? The reality is that it doesn’t matter as much as everyone likes to pretend. Presidential Reality People love to forget that the U.S. President is not a king. No matter who is elected this November, the reality they inhabit involves a grid locked Congress, among other things. While there is a great deal of power invested in the American President, much of that is policy based. While these decisions will eventually influence the course of American business, such changes will not immediately effect either the economy or the U.S. stock market, both of which are enormous in size and scope. Just like spinning the wheel on a super tanker slowly makes …

How To Start Saving for Retirement

July 20, 2016 by Finance Gourmet

If you’ve done some research on retirement savings, you know that there are a lot of options out there and a lot of various factors to worry about and navigate correctly. But, the reality is that if you haven’t really started saving for retirement yet, then every one of those ifs, ands, buts, and maybes apply to people with a lot more retirement savings than you have. Stop reading. Get started now. When To Start Saving for Retirement There is an old saying that the best time to plant a tree was 20 years ago. The second best time is now. Retirement savings works the same way. The best time to start saving for retirement is the day you started earning a paycheck. The next best time is now. If you read up on retirement planning strategies and investing for retirement, you may develop paralysis about your retirement savings plan. This delay is way more costly than any “retirement planning mistake” you might make. So, stop researching. Start Saving for Retirement Now Plan If your employer offers a 401(k) plan, then we are done talking. Walk down to human resources, or better yet, go on the company website and fill …

Did He Really Recommend Stock Picks?

July 13, 2016 by Finance Gourmet

“He recommended Amazon and Apple. What is he recommending now?” “He predicted the market crash of 2007. Here’s what he says now.” And so on. You may have seen ad headlines just like the ones above recently. The specifics change, but the idea is always the same. Here is a person who predicted a certain event, or recommended certain stocks at the perfect time, and if you would have followed that advice, you would have made a ton of money. That being the case, shouldn’t your find out what they are recommending or predicting now? Did He Really Predict Stock Market Moves? If you doubt that these people made these recommendations, or predictions, I admire your skepticism. However, these ads and their subjects can often back up these statements with records showing that they did, indeed, predict or recommend the perfect stock moves at the perfect time. So, should you run out and give them your money and subscribe to their newsletters? To answer that question, let’s backup for a second. There is a scam whereby a company claims to be able to predict the winners in certain sporting events so you can bet on them and make money fast. …

There is a catch…

May 27, 2016 by Finance Gourmet

More coming later today, but a quick note this morning: A MarketWatch article talks about “the most accurate” market timing system but notes that while it is accurate over the long-term, it has “trailed the market for the last decade.” So, long does it take to become inaccurate?

April Market Update

April 25, 2016 by Finance Gourmet

Well, after a mostly sunny looking April, last week and this week look like speed bumps ahead. The trick is the interlacing of several economic events pulling on the markets. First, oil prices are still causing havoc after a meeting of OPEC oil producers produced no plan or reduction in oil supply. That’s bad news for producers in the U.S. that increasingly depend on more expensive extraction techniques such as fracking to produce oil. Of course, the add-on difficulty spreads to other companies that provide equipment or assistance to oil production businesses, as well as the potential problem for banks financing such oil related companies. Second up are company’s reporting earnings, most of them coming in below expectations, or with warnings of expected future declines in business trends. Third, is potential action from the Fed, and other central banks around the world. The trick is navigating the concept that being “hawkish” on inflation is better, and the fact the the economy may be teetering on a point between growth and decline. In other words, no matter what the Federal Reserve ends up doing after their meeting Wednesday, someone isn’t going to like it. If they make it clear that economic …

Model 3 Pre-Orders and Tesla Stock

April 4, 2016 by Finance Gourmet

Tesla has had a big weekend. At last count, according to Elon Musk’s Twitter account, there were 276,000 pre-orders for the new Tesla Model 3. An earlier tweet referenced an average order price, with options, of $42,000. Musk is Tesla’s CEO, so this counts a public disclosure of material facts of a publicly traded company. As you can imagine, there is a lot of jabbering about what this does or does not mean for Tesla. Let’s look at the facts to get an idea of just how much good news there is, or is not, going on here. First, as some have pointed out, multiplying $42,000 times 276K pre-orders comes out to over $11 billion in Model 3 pre-orders. That would be by far the biggest income Tesla has ever had. However, that is nothing more than a paper calculation. How much of that money Tesla actually sees depends upon a lot factors, including how many people decide to cancel their fully refundable pre-order. That being said, pre-ordering a Model 3 Tesla requires registering, and a $1,000 deposit. While the deposit is fully refundable, it is money paid. In other words, this isn’t a bunch of internet kids running bots to …

Market Still Crashing… Wait, No It Isn’t

March 18, 2016 by Finance Gourmet

Still waiting for that market implosion everyone was certain was going to happen a few months ago? Looks like you’ll have to wait a little longer. I usually have to wait a little more to pull out the “I told you so,” on the stock market being a constant swirl of ups and downs that should be ignored by long-term investors. Long-term investors, of course, should be sticking to their long-term plans and only making adjustments to rebalance their portfolios. This is often easier said than done. Usually, in the middle of a down period, people start showing up or calling to tell me that they were, “right,” and that they pulled all of their money out of the stock market and now they weren’t losing anymore money and I am dumb for saying they would be better in the long run if they had just stayed put. They never call me to tell me they put their money back in right before things start going up, but that’s another matter *eyeroll*. This super, mega, down, recession is coming, batten down the hatches, plunge was too short for that to happen this time. Market Back To January 1 Levels Right …