Category Archives: Investment Ideas

IMF Chart On continued weak commodity prices – I’m not so sure

 

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My Comment::  Watch copper and crude, they should rebound first.  Two weeks ago in this blog I said I like crude for the medium to long-term in the mid-forties.  Crude will bounce around on news of demand shifts, economic outlooks, etc.  However, over the next couple of years, it should move higher as the global economies rebound and supply cuts from OPEC. 

IMF Report: Commodity price declines have not abated and have led to massive
terms of trade shifts.  Looking forward, commodity prices are unlikely
To recover while global activity is slowing. (IMF Report)
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Filed under Commodity Prices, Credit Crisis, Economy, Investment Ideas, Stock Market, Stock Picks

Target date asset allocation funds miss the mark!

 

In theory I have always been excited about target date asset allocation funds because I have seen the bizarre and down right scary portfolios individual investors have constructed.  I get asked by inexperienced investors how they should allocate their retirement accounts and usually start with telling them to take a look at target date funds.

 

However, I was wrong.  This bear market has shown these funds to be disappointments. Target date funds providers are cheating!  Shorter target date funds are much too heavily invested in stocks.  For example, those retiring in 2010, which is about a 1 year time horizon have anywhere for 59% to 48% percent of their portfolio in stocks.   Why would these fund families allocate so much to stocks?  Mutual fund shops sell performance numbers and the marketers realize in bull markets you get better performance numbers by investing in stocks compared to boring old bonds.  As a group, target date fund providers invest too much in stocks because they need competitive performance numbers. Without strong performance numbers what will those NFL halftime commercials of the guy rowing a boat, riding a bike or climbing a mountain have to tell you about how their funds?

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Filed under Asset Allocation, Investment Ideas, Personal Finance, Stock Market, Stock Picks

Staggering S&P 500 earnings drop will put more pressure on dividends and credit ratings

 

S&P 500  earnings sank 82% in 2008 (including write downs).  This is below the previous 1991 low.  The Q4 2008 loss of $23.03 a share was bigger than the best quarterly profit of the past 20 years (Q2 2007 $21.88).  This staggering earnings drop will lead to more dividends and credit ratings being cut.
 
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Filed under Credit Crisis, Death and Taxes, Dividends, Economy, Investment Ideas, Personal Finance, Stock Market

Bullish on Oil

Last year I hated oil and sold almost all my client’s holdings when it was running all the way up to 147.  It was probably the only place I actually made money for my clients in 2008.  Now oil is hovering in the mid $40s.  Here are some of the reasons why I like it over the next twelve months. Continue reading

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