When you think about your portfolio, it can be easy to lose focus on what’s important and your goals. Just because there are some scary trends out there doesn’t mean that you can’t succeed and have the life you want. As you think about your portfolio, here are some important steps to remember as you invest:
Know what you need and keep your objectives in mind.
Take inventory of your assets
Don’t approach your long-term goals with fear – stay positive and continue to be smart, consistent and motivated as you work toward your financial goals.
For many of our long-time clients, you know that April is the anniversary of the financial newsletter that Doug’s mom and dad started from their dining room table in 1977, and that Doug has stewarded since 1990. Doug got a chance to reminisce about the newsletter and the family business with his dad over Easter weekend – the world has changed and evolved, but some things stay the same.
In other family business news, Doug’s two sons, David and Michael, struck out on their own in their own business endeavors in March of this year. We wish them well and the best of luck on their new venture, and we continue to focus our efforts here at Fabian Wealth Strategies, investing wisely and advising our clients and readers, just as Dick Fabian did for so many years.
There’s been a mix of positive and negative market action of late, and the U.S. is the top performing stock market in the world. It’s up on sentiment, expectation and money flowing from the Federal Reserve. We need to realize that the rest of the world is mostly down and that the fundamentals are looking risky for investors. There’s a disconnect between commodities and stocks – usually they move in the same direction, but right now they’re not. Growth is not that good, so we expect that stocks will fall to match commodities, rather than commodities rising to meet stock prices.
This is a podcast summary. For more information, please listen to the entire broadcast here.
Every week, we have lots of conversations with investors. One of the things we’ve really noticed lately is that most people are sitting on cash, because of fear of volatility. If that is your strategy, we want to encourage you to look at your options – for example: the bond market is stable right now. One thing that can disrupt a strong bond market is a weak currency, but right now the dollar is strong, so that’s not a risk at this time.
For our clients who invest in bonds, their income streams are steady. There are plenty of places to invest in the bond market that can give you income, capital appreciation and liquidity while we wait for market corrections and other opportunities. Our portfolios are conservatively positioned, awaiting other opportunities – but not necessarily all in cash.
We’ve also talked to several clients who have a highly appreciated assets, particularly in real estate. We are advising them to exit those assets in this “recovery phase” of the real estate market in order to get out of illiquid investments and be in a better position from a legacy standpoint. It’s important, if you have highly appreciated assets, to make a plan to manage those, taking taxes, legacy, philanthropy and other goals and considerations into account.
If you’d like to find out more about how we can help you and your money face upcoming challenges, act now by listening to the Monday Morning Market Outlook podcast, and then by giving us a call at 800-391-1118.
As always, email any investment questions or concerns to askdoug(at)dougfabian(dot)com. We want to help you make the best possible decision for your portfolio. This is a podcast summary. For more information, please listen to the entire broadcast here.
We’ve been asked to outline our top three favorite Exchange Traded Funds for investing in 2013. Over the next couple of weeks we’ll give you all three, and today we’ll talk about the first one: FXI.
FXI is an ETF made up of the China 25 ETF. It’s made up of the top 25 companies in China, and we picked FXI because the Chinese stock market has been underperforming for the last two years, and is likely to present some great investment opportunities soon.
If you’d like to find out about the opportunities, and perhaps more importantly, the risks you are likely to confront in the year ahead, then we invite you to join us this coming Tuesday, January 15, at 1:00 p.m. Pacific Standard Time, for our first live teleconference of 2013.
This teleconference, aptly titled, “Opportunities and Risks for Investors in 2013,” will give you our latest outlook on the equity markets as we embark on another year of uncertainty, and unknowns. Register here.
A couple of weeks ago, we asked for your feedback on how we can improve our advice and communication with you, and we have been so glad to see great responses. We’ve gotten over 75 emails and counting – if you have feedback, questions or special requests, please email us with your ideas at askdoug(at)dougfabian(dot)com.
We thought we’d share your responses, so here’s what we heard from you, listed in order from most frequently requested to least:
Help with market direction – what’s up, what’s down and what to expect.
Broad recommendations for investing. (obviously not as specific as for paid customers, but general advice)
(This is a summary of our exclusive live teleseminar with Doug Fabian on July 17th, 2012. If you’d like to hear the audio recording of the teleseminar, please click here.)
The Macro-Economic Big Picture
U.S. economy, facts: The U.S. economy is growing at less than 2%, and recent economic indicators are showing that the economy is slowing. Equities remain quite strong, and for many investors around the world, the U.S. is seen as a safe haven in stocks and bonds. One reason why the economy is OK is because of the amount of deficit spending our government is currently engaged in. Bond prices are at new highs, bond yields are at record lows and the U.S. dollar is strong, having not gone to a new low in over four years.
U.S. economy, opinions: Many investors think that the Federal Reserve will correct the market, but we disagree. We think it’s a mistake to not be concerned with downside action in the markets. The U.S. bond market is in bull market territory, and that tells us that the global market is in recession. Inflation is not a concern right now, despite many investors fears – however, the so-called fiscal cliff, debt ceiling and overwhelming entitlement spending are all still unresolved. It’s important to be aware of the political moves and their economic impact, but not paralyzed by them.
Europe, facts: Unfortunately, the banking and sovereign debt crisis is still unresolved in Europe. Southern Europe is in recession (Spain, Greece, Portugal, Ireland), the banking system is on life support and even though Europe is not in the news as much, it is still an economic mess.
Europe, opinion: We believe that a “European crescendo” is still coming. The negative economic picture continues to get worse and it seems that there are no strategies to spur economic growth, which should be a big concern.
China, facts: GDP growth is at 7% (compared to the usual 10%). It is obvious that growth is slowing. China is also dealing with a property bubble and a slipping manufacturing sector.
China, opinion: We believe that the slowing economy in China will have a global ripple effect and will effect commodities prices around the world. It is clear to us that economies are contracting around the world.
Looking back at the first half of 2012 – Looking ahead to the second half
We believe that the rally in the stock market is suspect but the bond bull market continues, at least for the short-term. The U.S. market had a brief correction this year, and it is greatly dependent on the global economy between now and the election. We are still of the opinion that stocks are overpriced for the risky market territory we’re currently in.
Best ETF Opportunities (for short and intermediate-term basis)
These are our “watch recommendations”:
EMB – emerging market bond ETF
IYLD – multi-asset income fund. New ETF, very unique
BOND – actively managed PIMCO total return ETF
RLY – another multi-asset income fund
VWO – emerging markets are an opportunity for growth investors
XOP – energy (buy in a panic)
IEZ – energy (buy in a panic)
GDX – gold (buy in a panic)
GDXJ – gold (buy in a panic)
A note about the greed/fear cycle: we are all susceptible to the warring emotions of greed and fear. Everyone has stories of how they’ve been caught up in either of these emotions and it’s hurt their investments – to combat that, we want to take charge of this greed/fear cycle. We want our investors to take advantage of it, not be victims of it.
How do we propose taking charge instead of giving into panic or greed? When you see panics in the market, we see those as opportunities, and when everyone feels fat and happy, we want to be cautious and not lulled to sleep. We want to be mentally prepared for opportunities – don’t see panics as the end-of-the-world, but as a chance to buy quality on sale. Finally, what’s your Asset Allocation? What are your investment objectives? What does your family need?
You have to mentally prepared for your next big move in your portfolio. It’s important to recognize and work toward your objectives. For instance, growth and income investors have very different ways of investing and seeing the markets. I believe you should have cash on hand and a list of what you want to buy when opportunities present themselves, and don’t be swept away on the waves of emotion.
Also, we think it’s important to not let your political opinions dictate your investment decisions. Some people will insist that only Mitt Romney, or only Barack Obama will be good for the stock market. Neither of those opinions are necessarily true and there are a lot of moving parts to pay attention to, besides just the President. So we suggest that you keep an open mind, and stay cool and collected no matter what happens in this election – we can’t control all of these pieces, but we can control how we take advantage of opportunities.
Questions and Answers from our listeners (if you have a question, please email us at askdoug(at)dougfabian(dot)com)
Q: I think we are falling back into recession – do you agree and do you think it will be long? A: We are not in a recession now, and we think with good political decisions we can avoid it. It seems like an oxymoron, but it is possible. Investing does not work with fear: there will be volatility, but there will also be opportunities. Focus on what is in your control, not what is beyond it.
Q: How do you invest for income and growth in a taxable account vs. a tax-deferred account? A: We don’t make a big distinction between the two – we sometimes own municipal bond allocations in fixed-income for taxable accounts, and more government and corporate for tax-deferred accounts.
Q: Are Emerging Market utility ETFs a good investment? A: We think they can be, but remember that emerging markets are volatile, so buy those kinds of investments on sale. Also, don’t try to find the very best, but find the one that is best for your specific needs and portfolio.
As always, here at Fabian Wealth Strategies we are available to discuss your portfolio and help you make these decisions in the best way possible. Call us at 800-391-1118 for your free portfolio review.
Note: The information expressed in this seminar is for educational purposes only and should not be construed as a recommendation to buy, sell, or hold any investment security. Doug Fabian is a registered investment advisor representative. The opinions expressed in the seminar are not considered personal investment advice. Consider the risks, fees, and expenses before making any change to your investment portfolio.
For the last five weeks, we’ve been discussing what is going on internationally and what to expect for the second half of 2012. As we wrap up our five-week series, we thought it would be a good idea to round up our previous posts about the news from around the world and how it impacts your investments.
If you’ve been a casual reader or listener, we encourage you to sign up for our e-mail newsletter and stay tuned on the blog and podcast for more information as we continue to analyze the markets and international happenings.
Feel free to read the following resources and call us at 1-800-391-1118 if you have any questions about our analysis.
The Fabian Plan Sell (FPS) was announced last week for some domestic stocks, and this week, the markets bounced back. This has some investors shaking their heads or perhaps even feeling frustrated – so we want to clear the air.
A couple of things to note:
A bounce after a sell signal is a typical reaction – because of our years of experience and the market technicals we are seeing, we think selling was a good move.
Globally, stock prices are in a downtrend, even counting this latest bounce. Don’t be fooled by the daily changes… look at the big picture.
We have not solved the world’s economic problems. Our stance is going to be cautious and defensive in this volatile market.
Our advice? Focus on your cash position to see if you are defensive enough. We have high cash positions right now, which is not paying any return, but we think will pay off when panic and opportunities come.
We’re going to get a lot of data over the next couple of weeks – from the Greek vote to the Federal Reserve meeting – so it’s important that you stay tuned to this podcast and stay educated here on the blog about what’s happening.
As always, here at Fabian Wealth Strategies we are available to discuss your portfolio and help you navigate these unusual circumstances in the best way possible. Call us at 800-391-1118 for your free portfolio review.
Fabian Wealth Strategies, Inc. is a registered investment advisor with the U.S. Securities and Exchange Commission. Doug Fabian is a registered investment advisor representative. The information expressed in this blog-post is for educational purposes only and should not be construed as a recommendation to buy, sell, or hold any specific security. Investing involves the risk of loss. Consider the risks, fees, and expenses before making any change to your investment portfolio.