As always it’s important for both our new readers and in some cases…our existing ones to revisit what we are doing here with this series of articles:


Click here to revisit the first edition of 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 (September 2, 2014).

Click here to compare our portfolio against the benchmark.

The expression of “the writing is on the wall” could not be more appropriate as we inch closer to wrapping up 2014. We work and interact with countless people in the financial services industry ranging from those who manage billions in the most sophisticated manners available, all the way to a retired blue collar worker who wants straight forward investor education and service on how to invest smarter.

What each of these two parties have in common is that they don’t trust tomorrow and all of the warnings about a frothy and dangerous investing environment are as documented as they’ve perhaps ever been.

What adjustments did we make?

The moves we made were as follows:

8/18/14:       Sold entire position of LSOFX (LS Opportunity Fund) @ $118.20 (~$50k total)

8/19/14:       Sold 100 shares of TSLA (Tesla Motors) @ $254.87/share (~$25k total)

8/25/14:       Bought 8,260 shares of MABFX (Merk Absolute Return Currency Fund) @ $9.08/share (~$75k total)

8/26/14:       Bought 1,569 shares of FTGC (First Trust Global Tactical Commodity Fund) @ $31.85 (~$50k total)

With the exception of the Tesla sale our moves this month were all in line with reallocating our exposure to alternative investments. We’ll touch on this more later but let’s first address the sale of a market darling that we haven’t owned for all that long.

The simple rationale behind this move was to take profit on a stock that has returned north of 40% for us since the time we bought it. The reality and likelihood of it running even higher is actually strong but in a case like this it’s critical to maintain some “sell side discipline”. Holding on a trendy stock for a few more months while the broader markets are also closer to the side of overheating is just asking for trouble. We may buy it back but even if takes off for the races again…this old adage will be applicable, “ You never go broke taking a profit.”



It’s clear that nobody has a crystal ball but there are a few simple tools and “rules of the road” which can help understand stock market behavior. For those of us who are visual learners this simple graphic is quite helpful in knowing where you may want to allocate your stock positions relative to where we are in the economic cycle. Click here to see Economic Sectors and the Stock Market

There are two curves laid over each other on this graph. Simply explained, the red curve shows you where the stock market is and the green curve shows you what stage we’re at in the current economic/business cycle. Aside from some possible ability to optimally allocate stocks within the most opportune sectors in the economy, the real impact this visual shows you is that the stock market is essentially a leading indicator. In general, the stock market is a forward-looking gauge of what investor expectations are of the economy and interest rates.

There are certain economic sectors that typically outperform others depending on where we are in the stock market business cycle. Every stock market environment is unique and believe it or not every business cycle also presents us with a few differences from the last. As a basic rule of thumb here’s how the 10 sectors typically outperform the broader markets:


Making money in the stock market is great but so many forget that eventually they have to reconcile with Uncle Sam come tax time. Look for example at some investments that we have recently discussed: Under Armour (UA) and InvenSense (INVN).   If you had purchased these stocks on the first trading day of this year (1/2/2014) you would be up 58% with Under Armour and up 20% with InvenSense. These numbers are impressive and would certainly make any investor happy but what happens when they are sold? How will they impact your tax return and how much of the gain will you have to pay?

Nothing is certain except death and taxes.

                            Benjamin Franklin 





Have you ever woken up long before your alarm clock was set to go off? Put yourself in that state of mind for a minute. You see the alarm clock, take a pleasant mental check that you still have some time to sleep and you pleasantly roll over and shut your eyes; it’s almost like you just were rewarded free time which is the one thing we can never get back!


CLANK, BANG, SCREECH, HONK!?!?! What on earth?? Something that is NOT your alarm clock rattles you awake and spoils this momentary feeling of pure relaxation.

That’s basically what Mr. Market did to everyone in July. The last day of July brought people a wicked reminder of what the market can do if you let it put you to sleep. We haven’t seen a sharp drop like this in a few years and it certainly got your attention, didn’t it?

We actually saw a rather sharp selloff in some of the technology and momentum stocks in April of this year but this time it is broad based and appears to be signaling something more. Before we talk further about the markets and how they may have finally awoken some of you, let’s refresh our often short-term memories on why we run this monthly series of articles.

Click here to revisit the first edition of 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 (August 4, 2014).

Click here to compare our portfolio against the benchmark.

What adjustments did we make?

One thing we try to avoid when it comes to managing money is to “pat yourself on the back without breaking your arm”. We did very little this month aside from clearly communicate that we thought not only was the stock market ready to correct but we also laid out what we planned to do about it. Read and click here to see exactly what we said. The moves we made in advance of the worst down day of the year were as follows:


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