Thursday, November 14, 2013

11/14/13 It Was A Very Good Year!

[After composing the following post, I noticed that the percentages reported using Yahoo Finance charts are not necessarily accurate, probably due to failure to account for dividends, especially if reinvested. But I'm too freaking tired to re-calculate everything. I'll correct one entry: AOM is up +8.62% YTD, rather than the +5.6% print in the YHOO chart. It doesn't really matter. The points I'm making should be clear either way.] (1) 2013 has been a very good year for any portfolio invested in the US indexes. (2) Any diversification away from the US indexes has hurt performance. Let's take a look. (a) DIA (DJIA) is up +18% YTD: http://finance.yahoo.com/echarts?s=dia#symbol=dia;range=ytd;compare=;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=off;source=undefined; (b) SPY (SPX) is up +22% YTD: http://finance.yahoo.com/echarts?s=spy#symbol=spy;range=ytd;compare=;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=off;source=undefined; (c) EEM (Emerging Markets) is down -9.8% YTD: http://finance.yahoo.com/echarts?s=eem#symbol=eem;range=ytd;compare=;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=off;source=undefined; (d) EFA (EAFE ETF [developed markets in Europe, Australasia, Far East) is up +13.2% YTD: http://finance.yahoo.com/echarts?s=EFA+Interactive#symbol=efa;range=ytd;compare=;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=off;source=undefined; (d) BND (Vanguard Total Bond ETF) is down -3.83% YTD: http://finance.yahoo.com/echarts?s=BND+Interactive#symbol=bnd;range=ytd;compare=;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=off;source=undefined; (e) GDX (Miners) is down -49% YTD (ouch!): http://finance.yahoo.com/echarts?s=gdx#symbol=gdx;range=ytd;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined; So what's performance been like for the average Joe, invested in a diversified portfolio? Let's use AOM as a proxy (iShares Moderate Allocation). You've heard of hedge funds that are comprised exclusively of mutual funds (a fund of funds)? AOM is an ETF of ETFs (comprised of other iShares ETFs), with exposure to both stocks (US, Europe, emerging markets) + bonds (short- and long-term Treasurys, TIPS, corporate). In other words, a prudent mix of assets (note that the mix/percentages are quite similar to the La-Z-Boy portfolios I mentioned earlier in the year). AOM is up +5.6% YTD. What about so-called target date funds? FFKDX (Fidelity Freedom Fund 2020) is up +7% YTD. Hey, suddenly my own portfolio (which clocks in at a paltry +5.5% YTD), isn't looking too bad! (Considering I've sat in cash for most of the year, it actually looks half decent.) Let me close with two points: (1) If you have to stay in the La-Z-Boy, consider reallocating assets from the US to Emerging Markets for the next 12 months. (2) Don't get too comfortable with the recliner setting!
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27 comments:

  1. 2nd_aveNovember 14, 2013 at 6:53 PM

    Corrected numbers as follows:

    DIA +23%
    SPY +27% (Wow!)
    EEM -5.5%
    EFA +17.8%
    BND -1.82%
    GDX -48.5% (Ouch!)
    FFFDX (the 'commercial' version of FFKDX) +10%

    So obviously the 'hit and run' strategy was not a good choice this year. Probably a result of 'recency bias' on my part.

    ReplyDelete
  2. ChickenpookieNovember 15, 2013 at 6:29 AM

    Silver still remains higher than pre-crisis, however, so does most everything else, right? So, there's probably not much chance we'll see $12...

    I'm trying not to become complacent....

    ReplyDelete
  3. MarkWNovember 15, 2013 at 6:36 AM

    Different type ship, but maybe the same idea???

    Charter rates for mid-size vessels likely will rise next year as demand expands and ship supply either stays the same or shrinks, Teekay (TK) says.
    There will be almost no growth for the next two years in the supply of Suezmaxes and Aframaxes, which haul ~1M barrels and 650K barrels of oil, respectively; the fleet of the smaller vessels may even decline while demand will increase by 3%-4%, TK says.

    ReplyDelete
    Replies
    1. AnonymousNovember 15, 2013 at 6:58 AM

      This is the same thing I'm reading from a variety of sources (except EGLE). Everyone has an agenda of course, but I think this rally is for real. Granted I said the same about WLT at $17 BEFORE it went to $10 so take it with a grain of salt. Chart patterns are different though than with coal stocks back in May.

      Delete
    2. MarkWNovember 15, 2013 at 7:08 AM

      I've actually been looking into this quite a bit. I think you have the right idea.

      Delete
    3. AnonymousNovember 15, 2013 at 7:28 AM

      I've taken a different approach with these ones that I think could be huge winners longer term and am just adding slowly over time. I've been adding into this for over two weeks now slowly.

      Delete
  4. 2nd_aveNovember 15, 2013 at 7:38 AM

    Remember the position I opened in EEM yesterday morning? Around 715 am, I placed orders to open RYWVX (Rydex 2x Emerging Markets). For some reason, when I watched EEM spike to 41 from 40.80 it prompted me to cancel the orders for RYWVX (around 727 am). Had I stuck with it, I would be booking a +6% gain. Quite seriously bummed. It's funny how a missed opp can sometimes have a greater emotional impact than a loss.

    ReplyDelete
    Replies
    1. 2nd_aveNovember 15, 2013 at 7:42 AM

      Bummed to the point where I also passed up the opp to open RYWYX (Rydex Inverse 2x Emerging Markets) a few minutes ago.

      Delete
    2. AnonymousNovember 15, 2013 at 7:45 AM

      The latter is probably a smart move but I know you're only looking for a day trade. Chinese / emerging markets should outperform over the longer term given their relative valuations. That's why I'm paying attention to plays tied directly to EM demand (AA, BALT)

      Delete
    3. ChickenpookieNovember 15, 2013 at 7:52 AM

      Man, you've been doing great at nailing the bottom on EM's, just gotta point that out.

      Delete
  5. ChickenpookieNovember 15, 2013 at 7:45 AM

    AGCO - Looks like bull flag

    ReplyDelete
  6. ChickenpookieNovember 15, 2013 at 7:57 AM

    BALT - Well, I have an GTC order at $4.38, in preparation for the knock out if it occurs. Not saying I think it will happen but just trying a low-budget approach in preparing for the unexpected.

    ReplyDelete
  7. ChickenpookieNovember 15, 2013 at 8:01 AM

    Okay so yeah, looks like some profit taking into eagerness out of the shoot this morning, I guess we close positive again, we've got momentum.

    ReplyDelete
  8. ChickenpookieNovember 15, 2013 at 8:36 AM

    PAL - Not your friend....

    ReplyDelete
  9. AnonymousNovember 15, 2013 at 9:30 AM

    By the way, if you do buy BALT I'd recommend doing it before the ex-date so you can take advantage of the monstrous $0.02 dividend.

    ReplyDelete
  10. MarkWNovember 15, 2013 at 10:27 AM

    JB's getting paid off in NSPH today.

    ReplyDelete
    Replies
    1. ChickenpookieNovember 15, 2013 at 10:49 AM

      Didn't know he was in, did he find out something we don't know about?

      Delete
    2. MarkWNovember 15, 2013 at 11:48 AM

      No, he bought the last spike down to 1.70ish for a gap fill trade. Nothing fundy.

      Delete
    3. ChickenpookieNovember 15, 2013 at 11:50 AM

      Ahh, good move! Gutsy-good! :)

      Delete
    4. illiniNovember 15, 2013 at 7:58 PM

      I too am happy with NSPH today. Also GEVO. A double hitter.

      Delete
  11. MarkWNovember 15, 2013 at 11:56 AM

    Anyone have time to check out MRIN?

    ReplyDelete
  12. MarkWNovember 15, 2013 at 12:00 PM

    FONAR- Where you guys on this boner? Sheesh...

    ReplyDelete
  13. 2nd_aveNovember 15, 2013 at 12:49 PM

    Split trade

    (a) Opening RYPMX (Rydex miners) at the close.
    (b) Opening RYWYX (Rydex inverse 2x emerging markets) at the close.

    ReplyDelete
  14. AnonymousNovember 15, 2013 at 1:14 PM

    MY looks interesting again. Right before earnings of course.

    ReplyDelete
  15. AnonymousNovember 15, 2013 at 2:11 PM

    Some fun facts on BALT:

    If you assume a doubling in spot rates and account for a 70% increase in fleet size (based on carrying capacity with new ships coming on board their total capacity will be 70% higher), the company would earn $0.25 per quarter. Here's the math:

    Revenues: $31MM
    Operating Exp ^ 70% to $7.8 MM
    G&A Exp ^ 50% (assumption) to $2.7 MM
    Depr ^ 70% to $6.5 MM
    Oper Inc = $13.9 MM
    Int Exp ^ 50% (new ships partially funded by debt) to $1.7 MM
    Net Income = $12.2 MM
    Shares = 48 MM (fully diluted after this weeks share offering)

    EPS = $0.25

    FYI: Rates on average this quarter are 38% higher than last qtr. Rates would have to average 2,500 to be double last quarter's average. So far this quarter they're averaging 1786. They peaked around 2,100. Based on the current average so far this quarter they will earn around $0.04 EPS, assuming fleet capacity is 20% higher and so too is operating expenses and depreciation / int exp. This is why they upped their dividend to $0.02.

    Remember they pay the majority of their income as a dividend.

    ReplyDelete
  16. ChickenpookieNovember 15, 2013 at 3:40 PM

    PEIX - Wonder why, considering the news of possible reduced ethanol requirements... Corn futures took a hit on this.

    ReplyDelete
  17. 2nd_aveNovember 15, 2013 at 4:37 PM

    new post

    ReplyDelete

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