Archive for May, 2012
I never thought my daily routine would be dominated by checking European markets before our domestic open, but these days it is appearing like the European tail is wagging the global dog. Tracking Spanish bond yields from the Tesoro Publico and the Italia Borsa index is currently having a larger bearing on my portfolio than U.S. fundamentals. When explaining short term performance to others, I feel a little like an elementary school student making an excuse that my dog ate my homework.
Although the multi-year European saga has gone on for years, this too shall pass. What’s more, despite the bailouts of Portugal, Ireland, and Greece in recent years, the resilient U.S. economy has recorded 11 consecutive quarters of GDP (Gross Domestic Product) growth and added more than 4 million jobs, albeit at a less than desirable pace.
Could it get worse? Certainly. Will it get worse before it gets better? Probably. Is worsening European fundamentals and a potential Greek eurozone exit already factored into current stock prices? Possibly. The truth of the matter is that nobody knows the answers to these questions with certainty. At this point, the probability of an unknown or unexpected event in a different geography is more likely to be the cause of our economic downfall than a worsening European crisis. As sage investor and strategist Don Hays aptly points out, “When everyone is concerned about a problem, that problem is solved.” That may be overstating the truth a bit, but I do believe the issues absent from current headlines are the matters we should be most concerned about.
The European financial crisis may drag on for a while longer, but nothing lasts forever. Years from now, worries about the PIIGS countries (Portugal, Ireland, Italy, Greece, Spain) will switch to others, like the BRICs (Brazil, Russia, India, China) or other worry geography du jour. The issues of greatest damage in 2008-2009, like Bear Stearns, Lehman Brothers, AIG, CDS (credit default swaps), and subprime mortgages, didn’t dominate the headlines for years like the European crisis stories of today. As compared to Europe’s problems, these prior pains felt like Band Aids being quickly ripped off.
Eventually European worries will be put on the backburner, but until some other boogeyman dominates the daily headlines, our financial markets will continue to correlate tightly with European security prices. How does one fight these tight correlations? For starters, the correlations will not stay tight forever. If an investor can survive through the valley of strong security association, then the benefits will eventually accrue.
Although the benefits from diversification may disappear in the short-run, they should not be fully forgotten. Bonds, cash, and precious metals (i.e., gold) proved to be great portfolio diversifiers in 2008 and early 2009. Commodities, inflation protection, floating rate bonds, real estate, and alternative investments, are a few asset classes that will help diversify portfolios. Risk is defined in many circles as volatility (i.e., standard deviation) and combining disparate asset classes can lower volatility. But risk, defined as the potential of experiencing permanent losses, can also be controlled by focusing on valuation. By in large, large cap dividend paying stocks have struggled for more than a decade, despite equity dividend yields for the S&P 500 exceeding 10-year Treasury yields (the first time in more than 50 years). Investing in large companies with strong balance sheets and attractive growth prospects is another strategy of lowering portfolio risk.
Politics & Winston Churchill
Some factors however are out of shareholders hands, such as politics. As we know from last year’s debt ceiling melee and credit downgrade debacle, getting things done in Washington is very challenging. If you think achieving consensus in one country is difficult, imagine what it’s like in herding 17 countries? That’s the facts of life we are dealing with in the eurozone right now.
Although I am optimistic something will eventually get done, I consider myself a frustrated optimist. I am frustrated because of the gridlock, but optimistic because these problems are not rocket science. Rather these challenges are concepts my first grade child could understand:
• Expenses are running higher than revenues. You must cut expenses, increase revenues, or a combination thereof.
• Adding debt can support growth, but can lead to inflation. Cutting debt can hinder growth, but leads to a more sustainable fiscal state of wellbeing.
Relieving all the excess global leverage is a long, tortuous process. We saw firsthand here in the U.S. what happened to the U.S. real estate market and associated financial institutions when irresponsible debt consumption took place. Fortunately, corporations and consumers adjusted their all-you-can-eat debt buffet habits by going on a diet. As a matter of fact, corporations today are holding records amounts of cash and debt service loads for consumers has been reduced to levels not seen in decades (see chart below). Unlike governments, luckily CEOs and individuals do not need Congressional approval to adapt to a world of reality – they can simply adjust spending habits.
Governments, on the other hand, generally do need legislative approval to adjust spending habits. Regrettably, cutting the benefits of your constituents is not a real popular political strategy for accumulating votes or brownie points. If you don’t believe me, see what voters are doing to their leaders in Europe. Nicolas Sarkozy is the latest European leader to be booted from office due to austerity backlash and economic frustration. No less than nine European leaders have been cast aside since the financial crisis began.
The fate for U.S. politicians is less clear as we enter into a heated presidential election over the next six months. We do however know how the mid-term Congressional elections fared for the incumbents…not all sunshine and roses. Until elections are completed, we are resigned to the continued mind-numbing political gridlock, with no tangible resolutions to the trillion dollar deficits and gargantuan debt load. Obviously, most citizens would prefer a forward looking strategic plan from politicians (rather than a reactive one), but there are no signs that this will happen anytime soon…in either party.
Realistically though, tough decisions made by politicians only occur during crises, and if this slow-motion train wreck continues along this same path, then at least we have something to look forward to – forced resolution. We are seeing this firsthand in Greece. The “bond vigilantes” (see Plumbers & Cops) and responsible parents (i.e., Germany) have given Greece two options:
1.) Fix your financial problems and receive assistance; or
2.) Leave the EU (return to the Drachma currency) and figure your problems out yourself.
Panic has a way of forcing action, and we are approaching that “when push comes to shove” moment very quickly. I believe the Europeans are currently taking a note from our strategic playbook, which basically is the spaghetti approach – throw lots of things up on the wall and see what sticks. Or as Winston Churchill stated, “You can always count on Americans to do the right thing – after they’ve tried everything else.”
There is no question, the European sovereign debt issue is a complete mess, and there are no clear paths to a quick solution. Until voters force politicians into making tough unpopular decisions, or leaders come together with forward looking answers, the default position will be to keep kicking the fiscal can issues down the road. In the absence of political leadership, eventually the crisis will naturally force tough decisions to be made. Until then, I will go on explaining to others how the European dog ate my homework.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds (including commodities, inflation protection, floating rate bonds, real estate, dividend, and alternative investment ETFs), but at the time of publishing SCM had no direct position in AIG, JNJ, Bear Stearns, Lehman Brothers, or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.
In the world of modern finance, there has always been the search for the Holy Grail. Ever since the advent of computers, practitioners have looked to harness the power of computing and direct it towards the goal of producing endless profits. Regrettably, nobody has found the silver bullet, but that hasn’t slowed down people from trying. Wall Street has an innate desire to try to turn the ultra-complex field of finance into a science, just as they do in the field of physics. Even JPMorgan Chase (JPM) and its CEO Jamie Dimon are already on their way to suffering more than $2 billion in losses in the quest for infinite income, due in large part to their over-reliance on pseudo-science trading models.
James Montier of Grantham Mayo van Otterloo’s asset allocation team was recently a keynote speaker at the CFA Institute Annual Conference in Chicago. His prescient talk, which preceded JP Morgan’s recent speculative trading loss announcement, explained why bad models were the root cause of the financial crisis. Essentially these computer algorithms under-appreciate the number and severity of Black Swans (low probability negative outcomes) and the models’ inability to accurately identify predictable surprises.
What are predictable surprises? Here’s what Montier had to say on the topic:
“Predictable surprises are really about situations where some people are aware of the problem. The problem gets worse over time and eventually explodes into crisis.”
Just a month ago, when Dimon was made aware of the rogue trading activities, the CEO strenuously denied the problem before reversing course and admitting the dilemma last week. Unfortunately, many of these Wall Street firms and financial institutions use value-at-risk (VaR) models that are falsely based on the belief that past results will repeat themselves, and financial market returns are normally distributed. Those suppositions are not always true.
Another perfect example of a Black Swan created by a bad financial model is Long Term Capital Management (LTCM). Robert Merton and Myron Scholes were world renowned Nobel Prize winners who single handedly brought the global financial market to its knees in 1998 when LTCM lost $500 million in one day and required a $3.6 billion bailout from a consortium of banks. Their mathematical models worked for a while but did not fully account for trading environments with low liquidity (i.e., traders fleeing in panic) and outcomes that defied the historical correlations embedded in their computer algorithms. The “Flash Crash” of 2010, in which liquidity evaporated due to high frequency traders temporarily jumping ship, is another illustration of computers wreaking havoc on the financial markets.
The problem with many of these models, even for the ones that work in the short-run, is that behavior and correlations are constantly changing. Therefore any strategy successfully reaping outsized profits in the near-term will eventually be discovered by other financial vultures and exploited away.
Another pundit with a firm hold on Wall Street financial models is David Leinweber, author of Nerds on Wall Street. As Leinweber points out, financial models become meaningless if the data is sliced and diced to form manipulated and nonsensical relationships. The data coming out can only be as good as the data going in – “garbage in, garbage out.”
In searching for the most absurd data possible to explain the returns of the S&P 500 index, Leinweiber discovered that butter production in Bangladesh was an excellent predictor of stock market returns, explaining 75% of the variation of historical returns. By tossing in U.S. cheese production and the total population of sheep in Bangladesh, Leinweber was able to mathematically “predict” past U.S. stock returns with 99% accuracy. To read more about other financial modeling absurdities, check out a previous Investing Caffeine article, Butter in Bangladesh.
Generally, investors want precision through math, but as famed investor Benjamin Graham noted more than 50 years ago, “Mathematics is ordinarily considered as producing precise, dependable results. But in the stock market, the more elaborate and obtuse the mathematics, the more uncertain and speculative the conclusions we draw therefrom. Whenever calculus is brought in, or higher algebra, you can take it as a warning signal that the operator is trying to substitute theory for experience.”
If these models are so bad, then why do so many people use them? Montier points to “intentional blindness,” the tendency to see what one expects to see, and “distorted incentives” (i.e., compensation structures rewarding improper or risky behavior).
Montier’s solution to dealing with these models is not to completely eradicate them, but rather recognize the numerous shortcomings of them and instead focus on the robustness of these models. Or in other words, be skeptical, know the limits of the models, and build portfolios to survive multiple different environments.
Investors seem to be discovering more financial Black Swans over the last few years in the form of events like the Lehman Brothers bankruptcy, Flash Crash, and Greek sovereign debt default. Rather than putting too much faith or dependence on bad financial models to identify or exploit Black Swan events, the over-reliance on these models may turn this rare breed of swans into a large bevy.
See Full Article on Montier: Failures of Modern Finance
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds, but at the time of publishing SCM had no direct position in JPM, Lehman Brothers, or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.
The financial crisis of 2008-2009 was painful, not to mention the Flash Crash of 2010; the Debt Ceiling / Credit Downgrade of 2011; and the never-ending European saga. Needless to say, these and other events have caused pain akin to burning one’s hand on the stove. This unpleasant effect has rubbed off on investors.
Admitting one has a problem is half the battle of conquering a challenge. A key challenge for many investors is understanding the crippling effects fear can have on personal investment decisions. While there are certainly investors who constantly see financial markets through rose-colored glasses (my glasses I argue are only slightly tinted), Nobel Prize winner Daniel Kahneman and his partner Amos Tversky understand the pain of losses can be twice as painful as the pleasure experienced through gains (see diagram below).
Said a little differently, faced with sure gain, most investors are risk-averse, but faced with sure loss, investors prefer risk-taking. Don’t believe me? Well, let’s take a look at some of Kahneman and Tversky’s behavioral finance work on what they called “Prospect Theory” (1979) – the analysis of decisions made under various risk scenarios.
In one specific experiment, Kahneman and Tversky presented groups of subjects with a number of problems. One group of subjects was presented with this problem:
Problem #1: In addition to whatever you own, you have been given $1,000. You are now asked to choose between:
A. A sure gain of $500
B. A 50% change to gain $1,000 and a 50% chance to gain nothing.
Another group of subjects was presented with this problem:
Problem #2: In addition to whatever you own, you have been given $2,000. You are now asked to choose between:
A. A sure loss of $500
B. A 50% chance to lose $1,000 and a 50% chance to lose nothing.
In the first group, 84% of the respondents chose A and in the second group, 69% of the respondents chose B. Both problems are identical in terms of the net cash outcomes ($1,500 for Answer A, and 50% chance of $1,000 or $2,000 for Answer B). Nonetheless, due the different “loss phrasing” in each question, Answer A sounds more appealing in Question #1, and Answer B sounds more appealing in Question #2. The results are irrational, but investors have been known to be illogical too.
In practical trading terms, the application of “Prospect Theory” often manifests itself via the pain principle. Due to loss aversion, investors tend to cash in gains too early and fail to allow their winning stocks to run higher for a long enough period.
The framing of the Kahneman and Tversky’s questions is no different than the framing of political and economic issues by the various media outlets (see Pessimism Porn). Fear can generate advertising revenue and fear can also push investors into paralysis (see the equity fund flow data in Fund Flows Paradox).
Greed can sell in the financial markets too. The main sources of financial market greed have been primarily limited to bonds, cash, and gold. If you caught those trends early enough, you are happy as a clam, but like most things in life, nothing lasts forever. The same principle applies to financial markets, and over time, capital in today’s winners will slowly transition into today’s losers (i.e., tomorrow’s winners).
A healthy amount of fear is healthy, but correctly understanding the dynamics of the “Pleasure/Pain Principle” can turn those fearful tears into profitable pleasure.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds (including fixed income ETFs), but at the time of publishing SCM had no direct position in GLD, or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.
The recently reported lackluster, monthly employment report made stockholders grumpy (as measured by the recent -168 point decline in the Dow Jones Industrial index) and bondholders ecstatic (as measured by the surge in the 10-year Treasury note price and plunge in yield to a meager 1.88% annual rate). Stocks on the other hand are yielding a much more attractive rate of approximately 7.70% based on 2012 earnings estimates (see chart below) and are also offering a dividend yield of about 2.25%.
In my view, either stock prices go higher and drive equity yields lower; bonds sell off and Treasury yields spike higher; or a combination of the two. Either way, there are not many compelling reasons to pile into Treasuries, although I fully understand some Treasuries are needed in many investors’ portfolios for income, diversification, and risk tolerance reasons.
Not only are equity earnings yields beating Treasury yields, but so are dividend yields. It has been a generation, or more than 50 years, since the last time stock dividends were yielding more than 10-year Treasuries (see chart below). If you invested in stocks back when dividend yields outpaced bond yields, and held onto your shares, you did pretty well in stocks (the Dow Jones Industrial index traded around 600 in 1960 and over 13,000 today).
The Dynamic Dividend Payers
The problem with bond payments (coupons), in most cases, is that they are static. I have never heard of a bond issuer sending a notice to a bond holder stating they wanted to increase the size of interest payments to their investors. On the flip side, stocks can and do increase payments to investors all the time. In fact here is a list of some of the longest paying dividend dynamos that have incredible dividend hike streaks:
• Procter & Gamble (PG – 55 consecutive years)
• Emerson Electric (EMR – 54 years)
• 3M Company (MMM – 53 years)
• The Coca-Cola Company (KO – 49 years)
• Johnson & Johnson (JNJ – 49 years)
• Colgate-Palmolive Company (CL – 48 years)
• Target Corporation (TGT – 43 years)
• PepsiCo Inc. (PEP – 39 years)
• Wal-Mart Stores Inc. (WMT – 38 years)
• McDonald’s Corporation (MCD – 35 years)
This is obviously a small number of the long-term consecutive dividend hikers, but on a shorter term basis, more and more players are joining the dividend paying team. So far, in 2012 alone through April, there have been 152 companies in the S&P 500 index that have raised their dividend (a +11% increase over the same period a year ago). Of those 152 companies that increased the dividend this year, the average boost was more than +23%. Some notable names that have had significant dividend increases in 2012 include the following companies:
• Macy’s Inc. (M: +100% dividend increase)
• Mastercard Inc. (MA: +100%)
• Wells Fargo & Company (WFC: +83%)
• Comcast Corp. (CMCSA: +44%)
• Cisco Systems Inc. (CSCO: +33%)
• Goldman Sachs Group Inc. (GS: +31%)
• Freeport McMoran (FCX: +25%)
• Harley Davidson Inc. (HOG: +24%)
• Exxon Mobil Corp. (XOM: +21%)
• JP Morgan Chase & Co. (JPM: +20%)
Lots of Dividend Headroom
The nervous mood of investors is not much different from the temperament of uneasy business executives, so companies have been slow to hire; unhurried to acquire; and deliberate with their expansion plans. Rather than aggressively spend, corporations have chosen to cut costs, hoard cash, grow earnings, buy back shares, and pay out ever increasing dividends from the trillions in cash piling up.
When a company on average is earning an 8% yield on their stock price, there is plenty of headroom to increase the dividend. As a matter of fact, a company paying a 2% yield could increase its dividend by 10% for about 15 consecutive years and still pay a quadrupling dividend with NO earnings growth. Simply put, there is a lot of room for companies to increase dividends further despite the floodgate of dividend increases we have experienced over the last few years. If you look at the chart below, the dividend yield is the lowest it has been in more than a century (1900).
Perhaps we will experience another “Summer Swoon” this year, but for those selective and patient investors that sniff out high-quality, dividend paying stocks, you will be getting “paid to wait” while the dividend floodgates continue to widen.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds (including Treasury bond ETFs), CMCSA and WMT, but at the time of publishing SCM had no direct position in PG, EMR, MMM, KO, JNJ, CL, TGT, PEP, MCD, M, MA, WFC, CSCO, GS, FCX, HOG, XOM, JPM, or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.
Article is an excerpt from Sidoxia Capital Management’s complementary May 2012 newsletter. Subscribe on right side of page.
The last five years have been historic in many respects. Not only have governments and central banks around the world undertaken unprecedented actions in response to the global financial crisis, but investors have ridden an emotional rollercoaster in response to historically unparalleled uncertainties.
While the nature of this past crisis has been unique, experienced investors know these fears continually manifest themselves in different forms over various cycles in time. Despite the more than doubling in equity market values over the last few years, as measured by the S&P 500 index, the emotional pendulum of investor sentiment has only partially corrected. Investor temperament has thankfully swung away from “Panic,” but has only moved closer to “Fear” and “Skepticism.” Here are some of the issues contributing to investors’ current sour mood:
The Next European Domino: The fear of the Greek domino toppling the larger Spanish and Italian economies has investors nervously chewing their finger-nails, and political turmoil in France and the Netherlands isn’t creating any additional warm and fuzzies.
Job Additions Losing Steam: New job creation here in the U.S. weakened to a lethargic monthly rate of +120,000 new jobs in March, while the unemployment rate remains stubbornly high at an 8.2% level.
Domestic Growth Losing Mojo: GDP (Gross Domestic Product) growth of +2.2% during the first quarter of 2012 also opened the door for the pessimists. Consumers are still spending (+2.9% growth), but government spending, business investment, and housing are taking wind out of the economy’s sails.
Emerging Markets Submerging: Unspectacular growth in the U.S. is not receiving any favors from slowing emerging markets like China and Brazil, which took fiscal and monetary actions to slow inflation and housing speculation in 2011.
Humpty Dumpty Politics: Presidential elections, tax policy, and deficit reduction are all concerns that carry the possibility of pushing the economic Humpty Dumpty off the wall, and as a result potentially lead to a great fall. The determination of Humpty Dumpty’s fate will likely have to wait until year-end or 2013.
Any student of history knows these fears and other concerns never go away – they simply change. But like supply and demand, gravitational forces eventually swing the emotional pendulum in the opposite direction. As Sir John Templeton so aptly stated, “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” Or in other words, escalating bull markets must climb the proverbial “Wall of Worry” in order to sustain upward momentum. If there was nothing to worry about, then all the buyers would already be in the markets. We are nowhere close to experiencing “Euphoria” like we saw in stocks during the late-1990s or in the housing market around 2005.
Positively Climbing the “Wall of Worry”
With all this bad news out there, surprisingly there are some glimmers of hope chipping away at the “Wall of Worry.” Here are some of the positive factors helping turn pessimist frowns upside down:
Slow & Steady Wins the Race: The economic recovery has been weaker than hoped, but I can think of worse scenarios than 11 consecutive quarters of GDP growth and 25 straight months of private job creation, which has reduced the unemployment rate from 10.0% in October 2009 to 8.2% last month.
Earnings Machine Keeps Chugging Along: With the majority of S&P 500 companies having reported their quarterly results for the first quarter, three-fourths of the companies are beating forecasted earnings, which are currently registering in at a respectable +7.1% rate (Thomson Reuters). One company epitomizing this trend is Apple Inc. (AAPL). The near doubling in Apple’s profits during the quarter, thanks to explosive iPhone sales, pushed Apple’s shares over $600 and helped drive the NASDAQ index to its best day of the year.
Super Ben to the Rescue: The Federal Reserve has already stated their intention of keeping interest rates near 0% until 2014. The potential of additional monetary stimulus spearheaded by Federal Reserve Chairman Ben Bernanke, in the form of QE3 (Quantitative Easing Part III), may provide further needed support to the stock market (a.k.a., the “Bernanke Put”).
Return of the IPO: Initial Public Offerings (IPOs) have gained steam versus last year with more than 53 already coming to market in the first four months of 2012. This is no 1999, but a good number of deals have done quite well over the last month. For example, data analysis company Splunk Inc. (SPLK) share price is already up around 100% and the value of leisure luggage company TUMI Holdings (TUMI) has climbed over +40%. In a few weeks, the highly anticipated blockbuster Facebook (FB) IPO is expected to begin trading its shares, so we can see if the chronicled deal can live up to all the hype.
Dividends Galore: Dividend payments to stockholders are flowing at an extraordinary rate so far in 2012. Companies like IBM (increased its dividend by +13%), Exxon Mobil – (XOM +21%); Goldman Sachs – (GS +31%) are but just a few of the dividend raisers this year. Through the first three months of the year, the number of companies increasing their dividend payments was up +45% as compared to the comparable number for all of 2011.
Emerging Growth Not Dead: While worriers fret over slowing growth in China, companies like Apple grew by more than +100% in this region and collected nearly 20% of its revenues from this Asian country (~$8 billion). Coincidentally, China is expected to surpass an incredible one billion mobile connections in May – many of those iPhones. In other related news, Starbucks Corp. (SBUX) plans to triple its workforce and number of stores in China over the next three years. China has also helped fuel a backlog of Caterpillar Inc. (CAT) that is more than triple the level of 2009. Emerging markets may have slowed down in 2011, but with inflation beginning to stabilize, emerging market central banks and governments are now beginning to ease policies and reduce red-tape. For example, Brazil and India have started to lower key benchmark interest rates, and China has started to reverse capital flow restrictions.
Stay Off the Trampled Path
The mantra of “Sell in May and go away” always gets a lot of playtime around this period of the year. Over the last few years, the temporary spring/summer sell-offs have only been followed by stronger price appreciation. Individuals attempting to time the market (see also Getting Off the Treadmill) generally end up in tears. And for those traders who boast about their excellent timing (like those suspicious friends who brag about always winning in Las Vegas), we all know the truth – nobody buys at the lows and sells at the highs…except for liars.
With all the noise and cross-currents flooding the airwaves, investing for individuals without assistance has never been so difficult. But before hiding in your cave or reacting to the next scary headline about Europe, the economy, or politics, do yourself a favor by reminding yourself these chilling news items are nothing new and are often great contrarian indicators (see also Back to the Future). The emotional pendulum is constantly swinging from fear to greed and investors stand to prosper by adjusting sentiment and actions in the opposite direction. To survive in the investing wild, it is best to realize that the grass is greener and the eating more abundant when you stay off the trampled path of the herd.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds and AAPL, but at the time of publishing SCM had no direct position in SPLK, TUMI, IBM, XOM, GS, SBUX, CAT, FB, or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.