Thursday, September 22, 2016

Yellen Comment



I wanted to get this out yesterday, but I actually forgot to hit the "publish" button. Yeah I know embarrassing.

I was listening to Janet Yellen's press conference to see if she gave any additional clues to interest rates. The reason is some of the names I'm looking at are rate sensitive. Sorry I can't let you know about each pick I'm eyeing!! It would ruin the surprise! Either way remember a few weeks ago in a weekly review when I talked about the central bank having no clue?

Well, Yellen just reinforced the reason why you can't put to much faith or credibility in any central bank. Here is her actual comment.


“I can assure you that any specific projections I write down will turn out to be wrong, perhaps markedly so.” – Janet Yellen

Yep there it is clear as day. Central bankers actually have no clue just like most of us. They are playing a guessing game to for the most part, and use the data the best they can to guide decisions. Furthermore while they are currently projecting the economy to grow mildly around 2%, in theory they could be way off. Growth could skyrocket to 5% or crash to -5%. Their response would be - "Well we did our best". That'd be it.

Just some food for thought on this first day of Autumn. Enjoy the change in seasons! 

Wednesday, September 21, 2016

No Rate Hike

Ok we can all breathe a sigh of relief now that this is behind us.  We focus on the long term here at The Long Haul so a small rate hike is really not a ton to worry about, although it must be monitored. Here is the Fed's policy statement.

Information received since the Federal Open Market Committee met in July indicates that the labor market has continued to strengthen and growth of economic activity has picked up from the modest pace seen in the first half of this year. Although the unemployment rate is little changed in recent months, job gains have been solid, on average. Household spending has been growing strongly but business fixed investment has remained soft. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will strengthen somewhat further. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.
Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action were: Esther L. George, Loretta J. Mester, and Eric Rosengren, each of whom preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.

Monday, September 19, 2016

Low Volatility vs High Beta

One of the things I love doing is comparing different sector performance against each other.  With the advent of ETF's this is so easy to do and interesting.  One of my favorite pairs is the S&P Low Volatility(SPLV) & High Beta(SPHB) ETF.

VGR Stock Dividend

If you own shares of Vector Group(VGR) don't be alarmed as the stock did not horrifically fall by a large amount. The company paid its annual 1:20 (5%) stock dividend today, plus it's $0.40/share quarterly dividend. That means the shares were adjusted by $1.55 to reflect payment.  Depending on your broker you should have received actual shares, and it's possible in some cases you were given cash in lieu of shares so check your account.

Saturday, September 17, 2016

The Long Haul Weekly Review 9/17/16

“If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.” - Peter Lynch

Couldn't agree more Peter.  For most people they don't bother looking at the actual financial performance of a company.  Most people are infatuated with the talking heads on CNBC or Bloomberg about the hottest and latest technology.  Don't get me wrong it can sound intoxicating and make you feel like the riches are right around the corner.  You have to resist the instinct to buy what's hot, and buy what's boring instead. 

This week I made a few buys,

Friday, September 16, 2016

Should I Have Gone Apple Picking?

Fall is just around the corner. With this time of year comes apple picking at the orchards, warm apple pies, and spiced(or spiked) apple cider.  Ah it's a great time to feel incoming arctic air, the fading strong sun still on your skin, and nature's beautiful color. I can almost feel it now.

It's no secret Apple(AAPL) is one of the most widely followed companies not only in the investment community, but worldwide by customers, competitors, and hater's alike. It only makes sense then that The Long Haul Investor also keeps an eye on the company too.

I was looking at Apple just before it was announced Warren Buffet's Berkshire Hathaway(BRK.A) took a position.  Of course that gave the shares a nice little pop.  It also made me feel kind of cool to think I was looking at the same company thinking it was a decent value just as some of the richest and smartest investors in the world were too.

When shares were in the $90's there was a lot to like. The stock had

Monday, September 12, 2016

Interest Rates Fuel Volatility

Last Friday I posted that rough tides might be ahead. I didn't realize how many people followed me and decided to hit the sell button based on that article! All kidding aside the S&P 500's 2.45% drop was the largest since Brexit. Also the VIX shot up to 20%. Things have calmed down a bit today as the market advances over 1%.

Visit StockCharts.com to see more great charts.



One noteworthy item is without anyone really noticing Financial stocks(XLF) have started to outperform their rate sensitive cousin Utilities(XLU). It shows the market has slowly been factoring in a rate hike since August.  Lately the rhetoric from the Fed is only fueling the fire.