Update Seminar coming Read February 26, 2016

Money Matters airs Thursday March 3rd at noon PST on KVMR FM and worldwide on the web at KVMR.ORG or moneymanagementradio.com.

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Seminar upcoming- "Investment Strategies for today's markets"

April 7th, evening- 2016 in Nevada County

(must have a minimum of $100,000 of investable assets)

Call (530) 823-2792 or email me at mcuniberti@cambridgesecure.com today to secure your spot!

Marc Notes:

The latest job creation figure out last week show a mixed bag of results.

Headline job creation missed expectations by a decent margin with 151000 new jobs hitting the books against an expectation of around 190000.

That was the lowest monthly reading in the last 2 years. For the last 3 months that figure is in clear decline.

The good news is unemployment sank to 4.9 % the lowest level since right before the crisis in early 2008. Comparatively this was indeed a bright spot in the report.

President Obama proposed a new tax, asking for a $10/ barrel Federal tax to pay for clean energy, high speed rail and other transportation projects. The Republicans say the request is dead on arrival. This analyst agrees what Americans need is more spending money and any new gas tax, like most taxes will be passed onto the consumer, making it even harder for the average working stiff to make a living.

Bad boy Turing Pharmaceutical CEO Martin Shkreli who jacked up a prescription price from under $10 bucks a dose to over $700 was called into Congress to explain himself and comment on such deeds. Shkreli took the 5^th refused to answer almost all questions then in blatant display of disrespect and general ignorance left the inquiry and immediately tweeted that Congressional Members were a bunch of imbeciles. Don’t be surprised Martin if they call you back for more after that idiotic move and I wouldn’t be surprised to see the IRS crawl up your skirt in the days ahead. Bad things happen to people that exhibit such stupidity. I am referring to the tweet of course. Legally Shkreli had the legal right to jack the prescription price all morals aside.

Puerto Rico is looking to Congress to help it out of its financial mess. Being a US territory and not a state, Puerto Rico under current law cannot seek bankruptcy in the courts. Puerto Rico is reeling under billions in debt from decades of overspending and mismanagement of their finances and now are in a world of hurt, owing something like 50 billion dollars that they can’t pay.

Meanwhile Argentina is also in the overspending group of mismanaged debt and is looking to partially default or otherwise right down what it can’t pay. Argentina defaulted in 2002 and apparently didn’t learn its lesson. The grand game of chicken now is in play as Argentina plays on the fact that debtors could be better off agreeing to accept amounts lower than what is owed versus them playing a game of hard ball if agreements cannot be reached. In what I can only deem an odd turn of events, a group of banks have agreed to loan them 5 billion more. With Argentina’s history of defaults, one has to think a government bailout guarantee might be hidden in the paperwork somewhere. Why else would big money banks risk even more money given Argentina is already trying to screw its current creditors.

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Looking for guidance in today's markets?

Building a portfolio for investors can be a daunting task. Many portfolios I see use what I call a “shotgun” approach.

What I call shotgun portfolios are built on a variety of mutual funds which may include large cap (large companies) mid cap (midsize companies) , small cap (small companies) , emerging markets, global stocks, municipal bond funds, corporate bond funds, high yield income funds (usually comprised of a variety of junk bonds) and even individual stocks. I also might see sector funds (certain industries), mortgage REITs (real estate investments trusts), business development companies (BDC’s) and even Treasury debt and a variety of other debt instruments.

The common thread among this shotgun approach is to buy some of everything with the belief is your “covered”, or in plain English “diversified”.

I often find this approach grossly inadequate for today’s markets but this is my opinion only.

Rarely if ever do we see all assets classes move in concert. Every day I see red and green on my board, meaning certain market areas will go up while others go down and some will even remain where they are on any given day.

That being said, holding a shotgun portfolio may have a tendency to be profit neutral, meaning it may be going nowhere fast, a complaint I hear often.

Going nowhere may be desirable in down markets but in up markets can be frustrating.

There are different strategies and many theories on how to build a successful portfolio and it may not include just buying a chunk of every asset class

Select a period in time and there will always be sectors that are hot and some that are not, some that have had tremendous runs and some that have been hammered mercilessly

The trick is of course when do you buy into a sector, hold a sector or outright sell it?

Although no one holds the proverbial key to guaranteed success, active involvement in selecting certain sectors and avoiding others may have its advantages.

Selling sectors whose run could be over might avoid losses. Buying beat up sectors (known as value investing) looks to capitalize on assets that could be regarded as “on sale”.

Avoiding assets that are sensitive to interest rates (fixed income such as bonds, preferred stocks and even utilities) might be considered when interest rates are expected to rise.

If world markets are reeling, the US market may attract “flight to safety” capital in lieu of emerging markets which tend to sell off more violently during global upsets.

If markets look to run however, emerging markets may amplify a move, allowing more profits to investors placed there.

In inflationary environments, precious metals and commodities may rise and during deflationary times, cash and cash equivalents hold value while most other asset classes may deflate.

For conservative investors, higher cash percentages might sooth anxious nerves and younger investors may want to take on more risk in high growth areas.High cash positions may also be warranted in uncertain times for all investors. High cash not only preserves portfolio balances, it’s also dry powder one can use to buy more of an asset after a crash when prices are lower.

Retirement accounts have compounded growth from assets that pay out cash because of their tax structure (avoiding the yearly tax that non IRA accounts may pay) while non retirement accounts may look to hold some tax free assets such as certain municipal bonds. Avoiding income tax on tax exempt assets essentially gives investors a higher net return if the asset is tax free or taxed at a lower rate.

Dividend paying stocks and funds pay an investor income while they hold the security in lieu of assets that yield nothing. In flat markets, these payments can bring smiles to the faces of investors while others wait for markets to rise with assets that pay nothing.

Target funds aim to maximize time frames with a moving mix of stocks and fixed income holdings. This means investors select a definitive time period to target maturity in which the fund then slowly goes from risk assets to lower risk assets as the target date approaches.

Target funds are popular in college accounts, where the age of child is known as is the projected date of college enrollment. The thinking is when a child is younger, the account can hold more stocks which might grow over time, but as the college date approaches, stock are slowly replaced with a higher percentage of fixed income assets such as bonds and preferred stocks which traditionally are less volatile.

There are many considerations which depend on the factors of the investor and of the market in general. Avoiding the typical “Shotgun” approach to investing could be compared to the mistake that one size fits all. Each market is different as is each investor. That being said, instead of a blasting away with shotgun, perhaps a better approach would be a carefully selected advisor with a good aim.