Monthly Stock Market Report – February 28, 2015

A Big Rebound but Proceed with Caution; PLUS Our Fun Stocks Index Is Changing

Stock Market ReportA big 5.5% rebound sparked by better-than-expected corporate earnings in the S&P 500 Index in February wiped out its 3.1% loss in January. As such, the S&P 500 is up 2.2% year-to-date. Investors, who maintained their asset allocations in stocks benefited from this rebound. However, bond investors and those who were over-allocated in long-term bonds suffered some significant losses. In fact, long-term bonds as represented by the iShares 20+ Year Treasury Bond ETF (TLT) lost 6.3% in February. In addition, asset classes such as utilities and real estate investment trusts (REITs), which are often substituted for bonds, also saw losses of 5-10% during February. These losses were, for the most part, due to growing expectations that the U.S. Federal Reserve will raise interest rates this year.

March will be a pivotal month for stocks as upcoming jobs and consumer spending reports will be key indicators of how the U.S. economy will perform going forward. Remember, the stock market leads and predicts the economy and not the reverse. Therefore, it is important for investors to understand that the stock market’s ability to foretell broad economic activity 3-6 months ahead is what they should key in on. Waiting for economic data that confirms the past is not a good way to invest.

Changes to Our Fun Stocks Index

In May 2013, when we launched our blog, we created the Fun Stocks Index as a motivational and teaching tool to encourage investors to take charge of their investment activities and goals. Based on our client portfolios, we used stocks of companies that have “fun” products and/or services very familiar to most consumers (e.g., Disney, Netflix, Expedia, etc.). We hoped to show investors that profits can result from using a simple theme like “investing in stocks that create fun for them.” We believe we have successfully demonstrated that.

While our Fun Stocks Index has performed quite well (up 37% since May 2013 and up 683% since January 2009 versus the S&P 500 Index’s gains of 25% and 133% during the same timeframes), we have decided to change this index and convert it from a static (unchanging) portfolio of 15 stocks to a dynamic portfolio consisting of current and ever-changing stock recommendations of “Fun Stocks” that meet our “fun generators” criteria. For example, as appropriate we will periodically remove some of the poorer performing stock recommendations from the original Fun Stocks Index (e.g., American Express/AXP) and add some other better performing ones (e.g., Sirius XM/SIRI). We believe this structural change will be more exciting and allow us to share with you dynamic new opportunities to profit from “fun-creating” businesses. This conversion will take a few months, so stay tuned. You’ll want to sign up for a free subscription to ensure notification when the conversion is complete.

Meanwhile, we suggest that you continue to accumulate shares in the cruise lines [Royal Caribbean (RCL), Carnival Cruise Lines (CCL), and Norwegian Cruise Lines (NLCH)]. These stocks will make excellent long-term profits by creating many fun times for consumers.

Maintain TSOA Retirement Model Allocations

Despite a cautionary outlook for stock and bond markets in the near term, we do not advocate any allocation changes in our TSOA retirement model portfolios at this time.

Good Investing,

Jim Tso

Monthly Stock Market Report – January 31, 2015

Stock Market Volatility Not for the Faint-Hearted U.S. stock market action during January 2015 was very volatile, with 14 of out 20 trading days resulting in up or down moves of around 1% in the S&P 500 Index. In fact, January 2015 marked the most volatile month in the last 5 years. Investors could not […]

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Forced IRA Rollovers: Are You a Foolish Ex-Employee?

Is your head in the sand?

How many jobs have you had in the last 5, 10, 20 or so years? Did you have a vested 401k or 403b with each job? (A 403b is a retirement account with a non-profit employer.) Did you roll over ALL your 401k/403b accounts from ALL your former employers into a rollover IRA account (or […]

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Monthly Stock Market Report – December 31, 2014

2015 Outlook Positive with Cautions The U.S. stock market action in December 2014 was nothing to write home about. In fact, it was a small month-to-month loss due to usual low-volume stock trading losses just prior to New Year’s Day. While the 2% loss from December’s final days of volatility may not be too scary, […]

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Monthly Stock Market Report – November 30, 2014

November Rallies with a Warning about Energy  5 Reasons to Buy Royal Caribbean (RCL), Carnival Cruise Lines (CCL), Norwegian Cruise Line (NCLH), and Disney (DIS)! The November stock market was most unusual in that 14 of 19 days of trading (or 74%) resulted in gains. As positive U.S. economic data and pledges of continuing stimulus from Europe […]

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Monthly Stock Market Report – October 31, 2014

A Month of Corrections and a Big Rebound. Buy cruise lines! The “bumpiness” we predicted came true when the month of October began with days of scary “downs” followed by days of hopeful rallies. For the month, we experienced a 9.5% correction on October 15th (intraday low of 1,820 on the S&P 500 Index)  followed […]

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Monthly Stock Market Report – September 30, 2014

Some Bumpy Rides Ahead…Buy the Dips  If September’s stock market action (down 1.6%) and the volatility of the first few days of October (down 1.32% on Oct. 1 and up 1.12% on Oct 3) are any indication, the next few months to the end of the year will be a very bumpy ride. Investors can […]

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Monthly Stock Market Report – August 31, 2014

Good Time to Buy Ashford Hospitality Trust (AHT) August turned out to be an important rally-extending month. The U.S. stock market recovered from its July malaise (down 1.05%) and gained 3.89% in August. The market achieved this excellent performance despite the on-again off-again Russian/Ukraine conflict. While the situation in the Ukraine remains a major concern, […]

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Monthly Stock Market Report – July 31, 2014

Fun Stocks Index Beats S&P 500 by 124% Despite the downward volatility of the stock market in the last days of the month, we see no serious threats to our long-term allocation formulas. In fact, our Fun Stocks Index, which we presented in July 2013, has gained 29.49% since that date (1 year ago), while […]

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