Have you ever watched an old rerun of your favorite TV show or perhaps enjoyed the same movie twice? Of course you have…

Can the same be said for watching similar patterns in the stock market? While nobody wants to see the market go through a nasty quarter like we just witnessed, like it or not, it will happen again. Stock market corrections are not predictable and they air on their own time!

Our opinion, however, is that the stock market in 2015 is very much like the one we saw in 2011. History may not always unfold just as it has before, but several patterns and background indicators tell us that there is a lot to learn from the 2011 stock market year. Take a quick peak at the end of this article for a visual representation of how the markets did from May to late October in 2011 and 2015.

Most of us can’t remember what we had for dinner last night so as a quick refresher let’s summarize what was going on in 2011:

During the summer of 2011 all of the news headlines and the overall narrative was absolutely negative. The sovereign debt crisis in Greece rattled nerves daily. Comparisons of Greece vanishing were eerily similar to the disaster of Lehman Brothers going bankrupt just three years prior. Almost all the financial pundits also talked about the Fed raising interest rates and what a devastating impact that would have on the market. Sound familiar???

In the middle of this past quarter, similar story lines have emerged. The 2011 summer correction flirted with bear market territory (-20% by definition) and from its peak to bottom pushed the market down over -15%. This summer didn’t feel much better as the market peeled off almost -12% at one point. Believe it or not, Q3 of 2008 was much better at “only” -9%. Most people don’t remember that because of how bad Q4 of 2008 was at -22.54%! Current emotions also negate memories of what happened in Q4 of 2011 as well…the stock market actually rallied over +12%.

We don’t expect quite that strong of a finish but firmly believe that we’ll see high single digit returns this final quarter. Obviously, anything can happen but the odds of another 2008 unraveling in the next 60 days are miniscule. Will that day come again? Perhaps...but no matter how clear your crystal ball is you’ll never see it coming.


The challenge of having a well-balanced portfolio is that much like in 2011…the story line is International and Emerging Market stocks have suffered the most. Even with a rally they will likely finish 2015 negative. In closing, here’s some food for thought: International and Emerging Market stocks were down -11.73% and -18.17% respectively in 2011. Everyone sold but guess how they did the next year? They both beat the S&P 500 with respective returns of +17.90% and +18.63%...


Click here to see the 2011 stock market correction versus what we just saw in Q3 of 2015. 





First and foremost, what is the proverbial “wall of worry”? If bad news is bad…why is it that good news (or even mildly good news) … is also perceived as being ‘bad’?

Granted, this is not always the case but it certainly is now. What is the “wall of worry”?

DEFINITION of 'Wall Of Worry'

“The financial markets' periodic tendency to surmount a host of negative factors and keep ascending. Wall of worry is generally used in connection with the stock markets, referring to their resilience when running into a temporary stumbling block, rather than a permanent impediment to a market advance.”

Two weeks ago we were in Chicago for discussions with analysts, economists, and elite portfolio managers. What’s interesting is that the majority of the investing public is living in fear and at their utmost pessimistic levels of recent history, yet the underlying economics and pure fundamentals of the stock market actually counter such negative and extreme doom & gloom sentiment.



If you’ve never experienced a stock market correction until now (technically defined as -10% or more), you have either never invested or have only been investing since 2012. For the vast majority of others, you should know that markets “correct” on average at least once every 12-18 months. One reason why this feels worse than other corrections is because we just went 47 months without a correction of -10% or more! (third longest streak on record)


For a refresher, stock market corrections are short and sharp declines of -10% to -20%. They’re typically accompanied by sensationalized stories such as the European sovereign debt crisis, Greece’s exit from the Euro, or the “fiscal cliff”. For all those investors that ducked for cover and went to cash during the last correction you saw the Dow Jones move up over 6,000 points. Were you able to correctly “time” your reentry into the market? No…and you’re not alone. No matter what you read or hear there is not a single person or professional advisor that owns a crystal ball and can consistently time the market.

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 (September 1, 2015).

Click here to compare our portfolio against the benchmark.

From the last week in July to this writing the MPG Core Tactical 60/40 portfolio went down -4.49%. How did the rest of the markets do?

S&P 500                     -7.29%

Mid Cap                      -5.58%

Small Cap                   -6.71%

REITs                          -5.62%

International                -9.56%

Emerging Markets    -13.50%

The bottom line is this: While it feels worse this time…it’s not. Those that are close to or in the retirement phase will naturally get spooked or feel more emotional than others. Times like this allow fear to creep in and make you second-guess your investment strategy. Making investment decisions or allocation changes due to this natural emotion is the worst thing you can do. Fear is not a strategy and mistakes made in times like these, or attempts to jump in and out of markets are often regretted for years.

What adjustments did we make?

Losses clearly hurt. Behavioral economists have studied the human brain and the emotions caused by loss. It’s been documented that people feel the effect of market losses twice as powerfully as they do market gains. Although we’re not advocating burying your head in the sand, we want to remind you that unless your goals changed drastically you need to stay calm and disciplined.

The MPG Core Tactical 60/40 portfolio made the following changes:

8/25/15:       Sold 339 shares of Direxion Indexed Managed Futures (DXMIX) ~$13k

8/25/15:       Sold 2,000 shares of Merk Absolute Return Currency (MABFX) ~$18k

8/26/15:       Bought 300 shares of Apple (AAPL) @ $106.70 ~$32k

As vomit inducing as that Monday (8/24/15) morning may have been, there is some reassurance in long-term strategy by having something in your portfolio that you can sell in order to buy something that is being overly punished. Everyone wanted to buy Apple before it split at $700/share. Why not now? Is it really done being one of the best companies the world has ever seen? Do you think it might be over $200 in five years or under $50?



Yes…the stock market is down. Your portfolio is down. There is no way it is not down. We just said the word “down” three times in a row. Get it? Everything is down.


If you have a decently designed and intelligently constructed portfolio you are actually DOWN more than the overall stock market! What does that mean? Most people look at the Dow Jones as their benchmark. That’s what the media tells you every night as to what’s happened. The media reports on the Dow Jones as though it’s an accurate index to let you know how the stock market is doing. Nope….As you become a more savvy investor you will learn that that the Dow Jones is just an antiquated index that means nothing. Yep….we said that! The Dow Jones means zilch!

Make no mistake about it. This is one of the strangest and least predictable markets ever…

If, however, we were to tell you the Dow Jones was about to get blasted and go down to 6,000 (currently at 17,500) it would be easy to lead you down that road. There are plenty of reasons why the market will get hurt more. Ironically enough…we could paint just as equally convincing a story of how the Dow will go to 20,000! That’s where we’re at right now. When you can find two opinions so extreme regarding the end results, yet each has its merits, you’re in a very precarious market environment.


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