Monthly Stock Market Report – March 31, 2014

Stock Market ReportManaging Risk is Essential to Investment Success

The month of March 2014 was an important test for all global equity markets, especially the U.S. stock market. With the threats from the on-again, off-again Russia/Ukraine geopolitical conflict and the confusing U.S. Federal Reserve (Fed) monetary policy statements, it’s a wonder that a significant correction of 10% or more was not sparked by these daily scary headlines.

It seems that the bulls and the bears are evenly matched to fight on, with each able to put only minor dents into the armor of the other’s expectations. At some point, one side will dominate and it will come down to the GDP economic data to be reported in late April.

As long-term investors, we need not worry about daily stock market gyrations. However, it is important to make efforts to manage the risks that impact our portfolios. For example, our Fun Stocks Index corrected down – 9.94% in March even though the entire market barely moved. This divergence occurred because two of our holdings which constitute over 50% of our index (Netflix/NFLX and Priceline/PCLN) corrected down  – 21.00% and down –11.64% respectively during March. NFLX and PCLN are two of the best performing stocks in the last 4 years (NFLX up 1391.00% and PCLN up 1731.00% on 2/28/14 since 1/1/2009). As such, it is not unusual for such “high flyers” to drop a significant amount during a short-term period of general negative stock performance. Long-term investors, however, should view these drops as excellent buying opportunities as long as the fundamentals of these companies have not changed. If you are currently holding these stocks in your own Fun Stocks Portfolio with significant profits, it may be wise to lower your risks by taking some profits in these stocks now and then buying them back later at lower prices.

In fact, given the current overall valuation of stocks, it would be prudent to take some profits to remove some of the market risks in your total holdings. Do this with your non-taxed accounts (e.g., Roth IRAs) to avoid capital gains taxes. Retain the cash to buy back the same shares at lower prices, hopefully later this year. This is one essential way to better manage your investment risks.

Due to the herky-jerky actions in the overall U.S. stock market since the beginning of the year, only one index managed to eke out a small gain for the 1st quarter as indicated below:

Year-to-Date Performance

Fun Stocks Index (no ETF)                           – 0.38%

Dow Jones (DIA)                                             – 0.74%

NASDAQ (QQQ)                                             – 0.33%

S&P 500 (SPY)                                                 + 1.26%

There is no change in our TSOA Employer Retirement Accounts Allocations. However, be sure to check out your “My Optimal Asset Allocation Analyzer” (MOAAA) score to make sure your risk tolerance and risk preference have not changed.

Good Investing!

Jim Tso

Monthly Stock Market Report – February 28, 2014

Stock Markets Recover in February; Fun Stocks Index Achieves Historic Milestone: Up 704.25% since January 1, 2009  - “Creaming” Major U.S. Indexes February 2014 proved to be a positive month for the U.S. stock market. The S&P 500/SPY was up 4.6%, allowing it to recover from the January losses of 3.5%. As a result, the […]

Continue reading...

Anytime is a Good Time For Money Resolutions

Although we’re well into the New Year, it’s not too late to make and implement 5 essential money-related “resolutions” to achieve a better financial future. Here are those resolutions and some suggestions on how to implement them: 1.  Structure your investments to increase your returns. Action items include the following: Achieve the best allocation formula […]

Continue reading...

Special Stock Market Report – February 10, 2014

Major Indexes Down; Fun Stocks Index Up – Sets Another Record Fun Stocks Index Gains 645.90% in 4+years; Up 2.58% Year-To-Date After gaining a record 76.44% in 2013, the Fun Stocks Index of 15 high growth companies created by Jim Tso on January 1, 2009, reached another record high (up 645.90% for 4+ years) on […]

Continue reading...

Monthly Stock Market Report – January 31, 2014

A Healthy Small Correction or Start of a Big Drop?  Fun Stocks Index Holds Up Well with Minor Drop The 2014 stock market started with a dud, as January produced a loss of 3.55% as represented by the S&P 500. Among the negative factors that adversely impacted the market were: Profit-taking by money managers who […]

Continue reading...

December 2013 Year-End Stock Market Report

An Amazing 2013 Investment Year: Great for Stocks but Lousy for Bonds. Fun Stocks Index Breaks Records (up 76.44% for 2013 and up 627.07% in 4 years since January 1, 2009) 2013 is over. And if your portfolio was heavily allocated to stocks, you are a “happy camper.” S&P 500 and Dow Jones stock indexes […]

Continue reading...

Inspiration – December 23, 2013

Christmas Inspiration - Dec 2013Continue reading...

Special Stock Market Report – December 19, 2013

Bernanke’s Christmas Present; Fun Stocks Index Sets Another Record (Up 625.34% since 1/1/09) In his final official public act, Federal Reserve (FED) Chairman Ben Bernanke announced that the FED will begin tapering down its program of buying U.S. bonds to keep interest rates low (QE3). The markets had initially feared any tapering action, but Bernanke […]

Continue reading...

Do Your 2014 Financial Planning Now!

Yes, it’s Christmas with all the sometimes overwhelming holiday festivities. It’s “shop till you drop” and parties galore. And it’s “24/7” worrying about the perfect gift for everyone on your Santa list. OK, now take a deep breath, because now is also the best time to think seriously about your financial planning action items for […]

Continue reading...