Financial Floyd Blogspot

Good Morning, These past days have been fairly turbulent for the markets based on economic indicators trending lower, governments are starting to question the operations of the largest public companies, increased political uncertainty, and companies issuing lower earnings guidance. With everything going on, it made me think about a diversification article that Marketwatch posted last week. A couple of takeaways from the article are: 1. There is no way to consistently identify long-term winners 2. Based on a recent study: 1 of every 25 stocks was a long-term (4 to 7 years) winner 3. You should diversify among asset classes (small companies/large companies/stocks/bonds) The author mentioned Target-date retirement funds as a possible solution because these products automatically diversify for the client, but the diversification is based on a broad-based assumption/rule. They do offer a "set it and forget it" option, but it leaves the investors at the mercy of that fund c...

Good Morning, Recently I received a question about what stocks I’m looking at it and while I always have a couple of stocks that I might be considering I never have shared my reasoning behind looking at a couple stocks (FYI, if you are looking for free stock tips this is probably not the blog for you). This week CNBC wrote an article on Shaquille O’Neal and his investment philosophy that I thought would be good to share. A couple takeaways from the article are: 1.    Shaq overheard Jeff Bezos (founder of Amazon) saying that “he makes his investments based on if it's going to change peoples lives” 2.    Shaq has owned Alphabet (Google) and Apple for multiple years 3.    If Shaq doesn’t believe in an investment he doesn’t look at it As a person that is a fan of growth investing, I truly believe the first point, but I do understand at times there will be stocks that might be staples in peoples lives that are undervalued. At that same time, I understan...

Good Morning, We are halfway through 2019; most of the stock markets globally are doing well, the bond market is struggling with low yields, but the operating environment around us is changing. Marketwatch released an article this week painting a less rosy picture of the stock market. In the article that the author mentioned two points worth noting: 1. Firms with $5 Billion on average are down 5% this year 2. Mega cap firms are leading the way of creating a false narrative for most market cap-weighted indices This article is fairly brief, but it does provide good insight into what is going on in the market place. By pointing out that the stock movements this year have been dominated by the largest firms, this author sheds light on the concentrated nature of movements which is dangerous territory for investors. Stocks usually move in groups which give out hints about where we are in the economic cycle. When leadership is clustered within the largest stocks that is usually a sig...