Death Cross, not just a Christian Metal Band

The Death Cross weighs on us.

The Death Cross may be the place to take defensive action. For us that means selling something and letting it sit in cash until we feel like we can buy it by. Alternately, we can selling something that is falling and buying something we think will do okay in this financial climate.

We are pretty terrible at timing things, because honestly we don't put a lot of effort into monitoring our portfolio between meetings. That makes our timing more macro. Doesn't that make it sound fancy?

Knowing who we are, we're probably going to let it ride. This seems like a good long-term play anyhow. Of course, this approach works better if your portfolio is super-diversified.

We continue to do the Death Cross watch on SPY. 

But look who just Death Crossed. Thanks EWZ.

We have a portfolio that has a lot of stuff in it. By our understanding, it is pretty diverse. We buy. We hold. So SPY is tanking, so we probably don't want to buy it while its tanking. But we really should consider buying some when we think it's hit the bottom.

Or, do we diversify outside the US? A lot of purchases have been domestic. We should look at that.

The next time we meet, we need to do an update to the KOL account summary.

Trying to save a few dollars isn't worth it.

We've been trying to buy an ETF, but it hasn't gone through because it went up slightly over our buy threshold. We're pretty hands-off, so after two weeks of it not going through, we decided to put in a market order for the fund. This way the buy will go through no matter what. That's what we get for trying to be cheap bastards.

Now let's talk about the DEATH CROSS, which, despite sounding like a rad metal band is actually a real thing:

The blue line in the chart above is the current price for SPY. The orange line is the 50 dma (daily moving average). You can think of this as how things have gone in a fairly recent time frame. The purple line is 200 dma, which is how things have been doing in the longer term.

Watching how these lines are doing in relation to each other is a standard tool for assessing price changes over time. These trend lines could be used to let you know when increases and declines are happening in a sustained way. In the chart above, the three lines appear to be converging. When the blue line is crossing one of these dma lines, it means that the price is under what is has been for the last 50 or 200 days. So when the 50 dma crosses the 200 dma that means that prices are steadily going down. That's our friend, the "death cross". Crossing the 200 dma with the daily price for a few days is a first sign to take defensive action. The "death cross" is when you should really think about or should have already done something. Defensive action doesn't mean we have to dump everything into cash, but potentially the portfolio balance should be change slightly.

Next time, let's talk about what this defensive action may look like. We have a fairly diverse portfolio, so we may already be partially prepared for this.

Profit!

Waiting.

Brexit? Apparently the Brits don't know much about it either. As far us as though, we'll have to wait and see. We're not so Euro-centric in our portfolio, so it probably won't have too much of an impact on our buying.

Infosys is in executive free fall. The founder and the board have been fighting over how the company has been run, but it doesn't seem to be tanking the stock price so who knows? We still have not triggered our auto sell, order (which had to be re-upped).

And EWZ, you are always on our minds:

You want out now?  No... Ok...

This chart shows EWZ's continued descent into the toilet or right where it was in 2009. Unfortunately we bought it when it was in the 70s.

Here you can see the up and down a little more zoomed-in. There is still movement on it, but it is beyond us as to what that might mean. Basically, there's a lot of theory that drives how people analyze movement on stuff. These tools are "more for short term trading looking for hyper volatile instruments," says a friend of ours who knows about these things. There a bit of risk, because it "comes down to timing as opposed to valuation fundamentals" he goes on to say.


More for short term trading looking for hyper volatile instruments. I'm not a big fan because it comes down to timing as opposed to valuation fundamentals

As far as a buy, if we like the idea of SPY, there are a few dividend options for something related. We like stability, and we like dividends. We like stable dividends.

Profit!

Magic 8-Ball, or we also know there are known unknowns

There are two types of people in this world. The shakers and the spinners. You know, you have the magic 8 ball, and you need some answers. You think on it. Eat, pray, love on it, and ask your question. And either you're an animal who shakes the thing, making those weird inky bubbles appear that never seem to leave. Or--or you're a careful spinner. You rotate the soothsaying globe, and you get an unsatisfying answer, and you like it. What I'm saying is nobody knows anything, and we're a bunch of nobodys.

Here's the nothing we don't know:

• Weirdly EWZ is up. This is significant because we've lost so much money on it. At this point, we might as well stick with it. This is another case of how you can't predict the future. Like never. 

• So we've got all this healthcare craziness, and we're holding a healthcare ETF. This would be where we make wild predictions and big decisions. Instead, we're going to wait and see, as is our way. 

• There's a lot of craziness going on with Infosys, but it doesn't seem to be impacting the stock negatively. In fact, it's up. 

So I guess we're just buying more SPY.

Next week, a portfolio check and maybe a decision on Infosys, etc.

Thanks Magic 8-Ball.

Profit.

Care Bear Stare

Might be getting a bit bearish on SPY

We started off talking about saving. One of our members suggests a $100 a month maintenance saving scheme to take care of anything that comes along. While, you won't spend nearly that a month, or even most years, that will cover that new roof you'll need, plumbing nightmares, conditioning of the air, etc. Even if you don't set aside this money, its a pretty good way of conceptualizing the unseen costs of homeownership and ultimately accounting for them.

We just bought some INFY and since there has been some drama with the board, but that didn't seem to shake the market on it at all. In fact, the stock is up a bit.

With everything going on in our country, it might be time to prepare to be bearish on SPY. Now does that mean not getting more of it, or does it mean getting something to counterbalance it? For now, we'll just sit on it and see how things go.

We have basically put our lot into a diversified portfolio, but it's probably best not to have a portfolio that is ALL diversifiers, even if we have hedged our losses pretty well. Although, we've certainly sacrificed some gains too. We knew this going in, but what happens when there's a super-down global market? One consideration is that we don't know what would happen when global economic turmoil occurs--we're looking at your Greece! It might just come down to our appetite for risk.

Profit!

Let it go

Recently a few items in our portfolio have taken a bit of a dip, but that is to be expected given all the uncertainty in the air. However, we've done approximately thirteen buys since the beginning, and if you look at our cumulative investment, we have still made a profit. It should be noted that this is largely due to SPY, the S&P ETF.

This train of thought led us to talk about historical returns of the US stock market in general over time. A lot of folks have said that you should essentially throw all the money into the S&P and just let it go. We can see why some people recommend that, because historically it gains in the neighborhood of 7% a year (adjusted for inflation), which generally outperforms most portfolios. Basically, you can put everything into an index fun and do okay. Unless, of course, the market crashes. Isn't this fun?

We participated in this, because, again, most of the gains in our portfolio have come from SPY being such a large part it.  SPY has far outweighed some big losses--we're looking at you EWZ. One of our team made a comment that small cap funds have done twice as well. Then we took a few minutes to research and we found SLY, the SPIDR for small caps. It could be a little brother to SPY, our current big holding. Morningstar has good things to say about. It provides about half of the dividend yield as SPY at 1%.

Basically, this just refers to the size of the company:

• Large cap is anything over $10 billion
• Mid Cap is $2-10 billion
• Small cap is anything under $2 billion
• Then there's micro, nano, and mega cap. It gets crazy. 

Mom and pop shops aren't a part of this, for example Take-Two Interactive, which makes Grand Theft Auto. You know, the old lemonade stand. 

So if we like the idea of investing in the US, but we're looking to find something just a little bit riskier, maybe we give this a shot. 

Hey remember that stock we bought a few weeks ago? We'll we are down $10 (total), so we should keep an eye on it. 

Profit

Last week we talked about doing a purchase of SPY. As you can see, it has been steadily going up, which gives us a little pause, because there's always the worry that we're buying it at or near a high, and it can only go down (see EWZ). Of course, that risk is always present, but the other side of that is we DON'T know, and it could go up. SPY has been a good, steady investment for us, nothing flashy but consistently growing. In the past we have decided to set our buys automatically at 1% below the current price, so we can get a little bit of a profit bump. This isn't foolproof, but it has worked for us for a while. Buying SPY at a 1% discount would cover our trading fee. The big thing here is to try not to be greedy. If you want your buy to go through, don't get greedy with it. Sounds a lot like buying a house.

After this buy, it would be interesting to try something smaller, say a small stock or a single company. Go through the research process, just like you used to do in school. It might be fun. We've been playing the stock market from a very macro sense, big funds representing sectors or countries, with an eye toward keeping everything in balance. Then there was AT&T, which we bought for dividends or PG, as a proxy for a sector (more on all those here).  The point is, we're still trying to find ways to get some educational benefit. The nice thing is that we have enough invested that we aren't in danger of losing everything. The macro approach has been good for us, but it would be good to try out the more targeted approach, however impractical it seems. We have to keep in mind that this is really an educational experiment.

As a side note, in 2014 PG sold off a lot of their brands, and we could learn something from taking a look at the long term effects of this.

Profit.

Remember when CDs were a thing?

No, not those CDs.

One of our members set up an IRA around ten years ago. IRAs can be any type of account, and this one just happened to be a CD. At the maturity of the CD, the company managing it automatically rolled the money into a new CD at a much, much lower rate for another ten years. The kicker is that there is a stipulation that if he were to pull the money out early, he would be charged the equivalent of the interest he would have received for the remainder of the term. Needless to say, that was pretty fishy, what with consumer protection laws and such. After some minor phone time with the company, things will be made right. The moral of the story: open your mail, and don't be afraid to stand up for yourself.

Meanwhile, SPY has been dipping below the 200 DMA, which tells us that it has been trending down. The thought is that in general when you go below the 200 DMA, you're going to be in for a longer term downturn. If that is the case, we should try to buy around when we see the bottom or perhaps just past it.

For next week, we'll talk about estate planning.

Profit!

Cobra Commander would like to make you aware of a lucrative investment opportunity.

Members present: Brian, Bickford, Danak

After a thorough discussion of the finer points of political commentary in Rocky & Bullwinkle vs. G.I. Joe, we got down to talking about finance.

EWZ hit $40 and is basically oversold at this point, which means that the price is artificially low. This is kind of like the opposite of a bubble--would that make it a black hole? Since we bought it around $72, we might as well hold onto it for a while.

We really need to buy something, anything, anything at all. None of our prospective investments are perfect, but we are trying to balance several factors as we understand them. For example, AAXJ has a high expense ratio but has a better risk to return in its category. CHIQ and MAPIX are really diversified, which is comforting.

We are trying to avoid having high expense ratios, having too much of our portfolio in a single sector or company, or having too much in emerging markets. Diversification does mitigate losses but also gains. This is the double-edged sword of conservative investment. Since we are in it for the long haul, we have anticipated this.

The standard investment advice is to invest heavily in the US economy, and we wondered a bit as to why. We were curious if we are too heavily invested in foreign markets. Is it time to start thinking about making a more domestic buy? The US is still probably the most stable economy in the world, which is reassuring. The S&P 500 is on the upswing, which implies that the US economy is not a good "buy" right now. If we want to catch something on the upswing, we might want to find something that is low or wait for a downturn. In the meantime it seems logical to try and find something that is undervalued.

To get back to our three contenders for the next buy, it seems like CHIQ and MAPIX are good, but AAXJ seems to make the most sense. CHIQ is heavy in consumer cyclical and defensive, which would balance out our portfolio. Its emerging markets in Asia (which is exciting), the returns have been good, etc. There's a lot to like, a lot that is even exciting. However, CHIQ could hit a very frightening bump with all those exciting factors. AAXJ seems more responsible, because it is cheap, it is out of Japan (MAPIX is 22% in Japan), it is well-diversified, and it seems to be performing really well. We could take a look at its peer group of stocks to see if there is an even better buy.

We must remember, that a high risk investment scheme seems good in the long run, but you don't want to end up like COBRA.

For next week, Income Inequality.

Profit!

The Return of the King.

Members present: Return of once and future King of Lutz, Avi. Also present Brian, Bickford, and Danak. What are they grabbing at?

Today we talked about how our portfolio started diverging from the domestic market as a whole:

The problem seems to be that the international markets we've invested in have not performed as well as  the S&P 500, specifically SPY, the index fund where we have some shares. Some of our portfolio is kind of stagnating. SPY is going up, while everything else stays in place. In hindsight, it would have been better to just go big with SPY, but then we lack the buffer of diversification. If SPY started to really tank, we would be up a creek, as they say. 

Avi shared his portfolio strategy with us. Basically  he  places a high priority on dividends. In the future it might be a good idea to take a deeper look at some of his investments and evaluate how they might fit into the experiment we are attempting with this group. 

Additionally, it might be good to take a listen to this recent episode of Fresh Air about some of the details of 401Ks. 

Also, next week we should take a look at the pdf that Brian sent to the group about the market as a whole from a business perspective.We really should take a look at some of the Asian investment categories to find the best performers for investment. Finally, Avi promises to give us some pointers on business accounting, too! That should be interesting. 

Profit!

Talk to Hal.

Members present: Brian, Bickford, Danak

SPY is currently doing pretty well, and we were wondering if we wanted to see if it is going to go higher or do we want to lock in our profits. If there is some downturn on the horizon, when do we want to get out? Granted, SPY is an index of the S&P 500, which means that as long as the parts of the fund are doing well as a whole, we are good.

SPY is hovering at $151, and historically it hasn't gone much past $160. We purchased it at $119, so it has been mildly profitable. It might be a good idea to set an automatic sell, say at $140, just to limit the amount that we can lose in the case of a crash. Using automatic orders is good for a small, informal group such as ours. We meet once a week, and none of us is at the computer all day looking at the numbers. Using these tools allow us to keep a watchful, robotic eye on our money.

EWZ is steady.
ENZL is humming along, as is ATT.

Now, on to the problem of figuring out where to put our money.

We took a look at a few different funds, and did some reading. A while back, we were thinking about investing in HILO, an emerging markets ETF. It is billed as a low-volatility, emerging market, dividend ETF. Also, we looked at EELV and EEMV. HILO is unfortunately a little more "expensive," because it has a high expense ratio. The fund is performing well, but it drags a little because it has to work that much harder to make up for the higher expense ratio.

Next week we should delve further into these funds, and maybe even make a decision on a buy.

Profit!

Yousef forgets to write the minutes [insert joke here]

We started talking about retirement, and some among us are less inclined to crunch the numbers for fear of realizing they will be absolutely destitute, so we crunched some numbers. Here's the take-away:

A pension plan is a stable option, if you can secure one. However, it hinges on the idea of not leaving that job before retirement. If you do go with a pension plan, you need to take the few minutes to look at the calculations of your benefit. It is not as painful as you think...promise. Also to consider, is what happens should you leave and take on another job.

Stocks:

SPY is still doing well, still above the [rising] DMA.
ATT is doing okay, even if a little down--still getting dividends.
ENZL is still going up.
EWZ is still doing it's crap self.

What to buy next?

Profit!