How crazy has this market been? As always the stock market has been very volatile, right?

 

Not even close…. The stock market is essentially in a coma right now and you need to ignore whatever news source or preconceived notions that tell you otherwise. The irony is that some of the “smart money” could not have got the volatility prediction more wrong.

In January of this year Scott Wren, senior global equity strategist at the Wells Fargo Investment Institute, predicted dramatic swings in many areas of the market. He summarized this sentiment by saying, “I don’t see this volatility going away anytime soon.” We’re not out to point fingers but it’s blanket statements and unaccountable predictions like this that paralyze people or simply clutter their investment strategies and overall mindsets.

We’re actually in an extremely low level of volatility. It’s been eight weeks since we’ve seen a move of at least 1% or more in the S&P 500 and that hasn’t happened in 21 years! We also just wrapped up the first half of 2015 and there wasn’t a gain or loss of 2% which marks the first time that has happened since 2005. (Click here to see 2015 volatility relative to recent years)

As the stock market inches higher it all comes without a healthy and much needed correction. As of this writing we haven’t had a correction (-10%) for 1,359 days! You can look to our previous articles on how often corrections and pullbacks should be occurring to put this flat environment into perspective. 

As an investor you actually should be doing what we would call a “volatility rain dance”. Bring it on! You want volatility. If your long-term belief is that the economy will improve and inflation seems to remain very much in check, you want a pullback in the market in order to put some money to work. Cash sitting in a bank earning “zero point zilch” needs to work harder and smarter but without a material pullback in the market it makes it somewhat uninviting to deploy cash.

Low volatility doesn’t necessarily equate to the “quiet before the storm”…although it’s certainly easy to think that way. The market is not a weather system but rather it needs a catalyst to move strongly up or down. Unless we slip into a recession you can expect the stock market to meander along for a while. If we do indeed continue to trade in a range bound fashion don’t feel the urge to make changes just for the sake of it. Lastly, turn off your television because every sensational interview with an analyst needs to grab eyeballs and predicting low volatility doesn’t fall into that category…

 

If you’re new to this monthly series…remember what we’re doing. This exercise, as we like to call it, is not an attempt to pick the best stock or “time the market”. We leave that futile task to those who own time machines and accurate crystal balls. For a refresher, see our first article on the MPG Core Tactical 60/40 portfolio.

 

Here’s the current summary of the MPG Core Tactical 60/40 portfolio mix, which is updated as of this writing (June 5, 2015).

Click here to compare the portfolio against the benchmark

What adjustments did we make?

We didn’t make any portfolio moves in May. Aside from collecting nice dividends through BND, LQD, and Conoco Philips (COP), the market environment did not warrant making any adjustments.

Why?

Read more...

Have you checked out and signed up for our free investment blog called "Dear Mr. Market"? If not, sign up now and receive a notice each time we publish a new article. We've just written our 100th "letter"! Check it out and sign up today!

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Dear Mr. Market:

How time flies! Our first letter to you was on March 20, 2013.   This marks our 100th article. Over the last two years we have covered a variety of topics and events that our clients and readers have been confronted with. Over 15,000 individuals have visited the website and our top rated articles have been viewed over 12,500 times!

As we look through the library of topics we have assembled, there are several articles that stand out for various reasons. It’s challenging to pick favorites so we’ve decided to share the most popular “letters” we’ve written:

Target Your Sell Discipline (click here to read)

Buying a stock is easy but when do you sell it? What if it doubles in price or worse yet what happens if it gets cut in half? Be disciplined and have an exit strategy in place before you hit the buy button.

Who told you the S&P 500 is your benchmark? (click here to read)

Your portfolio is up for the year but are you a winner or a loser when compared to the market? Identifying what your benchmark should be is something investors often struggle with. Make sure you are truly comparing apples to apples!

Read more...

*** IF YOU'RE INTERESTED IN RECEIVING AN EMAIL ALERT EACH TIME WE POST A FREE BLOG ARTICLE, SIGN UP FOR "DEAR MR. MARKET"! SIMPLY CLICK HERE AND TOWARDS THE UPPER RIGHT HAND CORNER YOU CAN INPUT YOUR EMAIL ADDRESS WHERE IT SAYS "FOLLOW DEAR MR. MARKET". ***

 

Dear Mr. Market:

Every month we write to you and chat about the markets and how people are behaving based on your results. Sometimes it’s good to refresh (click here) our memory of why we do this and what the MPG Core Tactical 60/40 portfolio is intended to do.

First and foremost, our aim with this series of monthly articles is not to “beat the market”, race against any benchmark, or pretend we have a crystal ball. In the most ironic way possible, those that follow this series of articles will eventually understand that the primary focus of this exercise is to show you how picking stocks and trying to “time markets” is usually a hit or miss expedition. At the end of the day (or in this case, whenever we decide to stop writing these “letters”), you will likely see that holding a properly disciplined and balanced portfolio of instruments tracking specific indexes beats out most “potpourri” type portfolios.

Every month of the year offers the financial media something to tease investors with. Here come all the headlines that tend to repeat themselves much like in the movie Groundhog Day. It begins with reminders of the supposed “January Effect” and ends in December with the “Santa Claus Rally”. As 2015 races along we’re already in May and it’s time to digest fabled warnings of “Sell in May and Go Away”. Some things never change (the media) and some things always will (the market).

What’s different this past month is that volatility really slowed down. April still jostled investors around but for the most part the month ended with mixed results and couldn’t really give us a feel for any real direction. Unlike what we saw in March, the market rollercoaster flattened out a bit. The Dow Jones only had four days of triple digit swings (up or down). We also witnessed a few highs mid month to only see them come right back down and essentially give it all back to keep us range bound.

Here’s the current summary of the MPG Core Tactical 60/40 portfolio mix, which is updated as of this writing (May 11, 2015).

Click here to compare our portfolio against the benchmark

What adjustments did we make?

We decided not to

Read more...

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