Daily Gains Letter

retirement portfolio

Not Much for Retailers to Be Thankful for This Past Thanksgiving

By for Daily Gains Letter | Dec 3, 2013

Thankful for This Past ThanksgivingDespite the retail sector’s every attempt to generate sales this Thanksgiving, from sharp discounts to being open earlier than ever, their efforts fell flat. It’s further evidence that the U.S. economic recovery is not as entrenched as many think it is, and once again shows the economic disconnect between Wall Street and Main Street.

In spite of high unemployment, stagnant wages, consumer confidence at a seven-month low, and a smaller number of people forecast to hit the shops over the Thanksgiving weekend, the National Retail Federation still predicted sales to grow 3.9% from last year. (Source: Banjo, S., “Holiday Sales Sag Despite Blitz of Deals,” Yahoo.com, December 2, 2013.)

Over the Black Friday weekend in 2012, U.S. shoppers spent roughly $60.0 billion in the retail sector, but this year, it was a different story altogether. While the final numbers have yet to be tallied, early indicators show that total U.S. retail sector spending over the Thanksgiving weekend fell to $57.4 billion. It’s also the first time that retail sector spending over the Thanksgiving weekend has dipped in at least four years.

Even during the worst of the recession and the beginning of the so-called economic recovery, U.S. shoppers were willing to spend, buoyed by optimism. Five years into the so-called economic recovery, and shoppers are tightening their belts, weighed down by pessimism.

But it didn’t start out that way; in fact, most U.S. retail sector stocks were initially quite enthusiastic about their prospects. Wal-Mart Stores, Inc. (NYSE/WMT) had originally planned to open its doors at 8:00 p.m. Thursday night, but instead opened its doors at 6:00 p.m. Target Corporation (NYSE/TGT) … Read More

Investing in These Collectibles a Better Bet Than Wall Street?

By for Daily Gains Letter | Nov 25, 2013

Investing in These CollectiblesNot all investing opportunities are created equal…

Thanks to Antiques Roadshow and American Pickers, everyone thinks investing in collectibles is a great idea. However, the truth is that few actually have anything worth more than the day they were first purchased.

That doesn’t prevent people from trying to guess what the next great cultural commodity is going to be. I remember (briefly) watching a home shopping channel years ago and listening to someone explain why “Beanie Babies” were the next big thing for those interested in investing in collectibles. He couldn’t guarantee they were a slam-dunk investment, but the prices on the secondary market had soared. Take that into consideration as you call in your order.

Interestingly, there is no Beanie Baby segment on any home shopping channel today.

Unlike stocks, there is no discernable way to say why, when, or if a collectible will ever increase in price; they also don’t provide a dividend. Investing in collectibles is as difficult as trying to time the stock market—it’s virtually impossible.

Collectibles can also be difficult to value, as it’s a subjective art. For example, on eBay (NASDAQ/EBAY), you can purchase a rare Princess Diana Beanie Baby bear for either $400,000 or get one from the same edition in similar condition for just $5,000. That’s quite a discrepancy for a really small target audience.

Here’s a hint: when it comes to investing in collectibles, look for the lowest-selling collectible you want, as that’s the bottom basement price no one is willing to pay. I’m not picking on Beanie Babies, I’m just using them as an example.

Investing in collectibles isn’t exactly … Read More

Can These Fast Food Stocks Provide Fast Profits?

By for Daily Gains Letter | Nov 11, 2013

Fast Food StocksLove them or hate them, fast food restaurants are an American institution. That’s not a huge surprise when you consider the hamburger was first created here around 1900 and the first fast food restaurant, A&W, opened its doors in 1919. For almost 100 years, our taste buds have been both regaled and assaulted by any number of fast food restaurants, now affectionately called “quick service.”

From its humble beginnings, the restaurant industry has become an economic juggernaut, generating around $1.8 billion in daily sales. In 2013 alone, restaurant industry sales are expected to generate $660.5 billion; that’s equal to roughly four percent of the U.S. gross domestic product. (Source: “2013 Restaurant Industry Pocket Factbook,” Restaurant.org, last accessed November 8, 2013.)

While the U.S. restaurant and quick service industry took a hit immediately following the Great Recession, the industry has bounced back. During the second quarter, trips to quick service restaurants—which account for 78% of industry traffic—were up by one percent, while consumer spending increased by three percent. (Source: “U.S. Restaurant Traffic Increases Modestly and Average Check Growth Drives Spending Gains in Q2, Reports NPD,” NPD Group web site, September 17, 2013.)

More specifically, traffic to fast casual restaurants, which is included under the quick service banner, increased by eight percent in the second quarter. After several consecutive quarters of decline, casual dining held steady. Things were not so good for midscale/family dining restaurants, however, which experienced a two-percent decline in traffic.

Even though the U.S. retail and food services sales results for the third quarter have not been released yet, the U.S. Census Bureau announced recently that advance estimates of … Read More

Stock Market Bulls Getting Too Bullish

By for Daily Gains Letter | Nov 8, 2013

Stock Market BullsWhether you’re in Pamplona, Spain or on Wall Street, when it comes to running with the bulls, the object is to stay ahead of the pack. This means not getting gouged physically or financially. However, there are an increasingly large number of investors out there right now who think they’ve got a handle on the bull market.

Why? The Federal Reserve says it won’t taper its generous $85.0-billion-per-month quantitative easing policy until the U.S. economy improves. And by that, it means—for now at least—an unemployment rate of 6.5% and an inflation rate of 2.5%.

As a result, the Federal Reserve’s easy money and artificially deflated near-record low interest rates have put the stock market front and center for income-starved investors looking for capital appreciation. As long as the Fed keeps its printing presses in overdrive, there’s no reason to think that the bull market will take a breather.

Case in point: in spite of a year marred with revised lower earnings in the first, second, and third quarters and a record 83.5% of companies issuing negative guidance for the fourth quarter, investors have been flocking with reckless abandon to the S&P 500, which continues to trade near record levels. (Source: “Earnings Insight,” FactSet web site, October 6, 2013.)

For the last week of October, 45% of investors were bullish on the market, down from 49.2% for the week ended October 24—the highest level since February 2011. Month-over-month, the number of market bulls climbed 25%. Over the same period of time, the S&P 500 climbed 4.8%. In the last week of June, just 30.28% of Americans were bullish, representing a four-month … Read More

Four Ways to Profit from America’s Wealthiest Citizens

By for Daily Gains Letter | Nov 7, 2013

Wealthiest CitizensHalf of the U.S. workforce is partying like its 1998—and not in a good way. According to the Social Security Administration, the median wage in the U.S. in 2012 was $27,519.10, marginally better than 2011’s median wage of $26,965.43.

That said, the median wage remains virtually unchanged since 1998, when the median wage was $27,519.55 when adjusted for inflation. So actually, you made $0.40 less in 2012 than you did in 1998. But I digress.

The report shows that more than half of Americans earned less than $30,000 in 2012. Incredibly, 15% of working Americans took home less than $5,000, with an average amount of just $2,024.79. During 2012, the S&P 500 climbed 13%, illustrating that the majority of Americans are not benefiting from the so-called recovery we call the U.S. economy.

Fear not, for there is hope. Stagnant wages are not hindering everyone: the number of Americans pulling in more than $5.0 million a year in 2012 increased by 26.8% year-over-year to 8,982. In 2011, just 7,082 Americans earned more than $5.0 million.

These stratospheric numbers only take net earnings into consideration; they do not account for capital gains made on the stock market, dividend growth, etc. Whereas America’s wealthiest citizens turn to the stock market to pad their retirement savings, the majority of Americans rely on increasing property values, income vehicles, and pension funds to pave their way to retirement.

Thanks to a record run on the S&P 500 and Dow Jones Industrial Average, America’s wealthiest have been seeing their holdings increase significantly since the Great Recession ended in 2007. On the other hand, thanks to the artificially … Read More

Coal: The Next Great Long-Term Play?

By for Daily Gains Letter | Oct 17, 2013

Long Term PlayWhen it comes to global energy production, the United States will be the top dog in a few short years. Back in November, the International Energy Agency (IEA) forecasted that the U.S. would overtake Saudi Arabia as the world’s top oil producer by 2017.

Over the last week, two more reports have positioned the U.S. as an even stronger near-term energy giant. The IEA said the U.S. will surpass Russia as the biggest non-OPEC producer of oil and natural gas in 2014. (Source: Harrison, V., “U.S. to pump more oil than Russia in 2014,” CNN web site, October 11, 2013.)

Over the last two quarters, the U.S. has produced more than 10 million barrels per day—its highest output in decades. Thanks to increased production in the Bakken oil field in North Dakota and the Eagle Ford shale formation in South Texas, U.S. production of oil and natural gas liquids will exceed 11 million barrels per day by the second quarter of 2014.

Perhaps more interestingly, it was announced earlier this week that coal is expected to surpass oil as the world’s primary energy source by 2020. Despite President Obama’s best efforts to reduce U.S. carbon emissions and phase out our dependence on coal, it looks like the fossil fuel is going to continue to be a major energy source. (Source: “World Coal Consumption To Surpass Oil By 2020 Due To Rising Demand In China And India,” Huffington Post web site, October 13, 2013.)

In fact, global coal consumption is expected to rise by 25% by the end of the decade to 4,500 million tonnes of oil equivalent, surpassing oil at … Read More

Has Washington Kicked Consumer Confidence into the Sewer?

By for Daily Gains Letter | Oct 15, 2013

Washington Kicked Consumer ConfidenceThe numbers are in, and we are not optimistic. The preliminary results of the University of Michigan’s October consumer confidence survey were released Friday, falling to 75.2, the weakest reading since April. October’s preliminary forecast was for a more modest decline to 77.2 over September’s 77.5 reading.

The ongoing erosion has been exacerbated by the U.S. government shutdown. Polls from both Gallup and the Rasmussen Consumer Index show consumer confidence has tanked since the beginning of October.

According to Gallup’s U.S. Economic Confidence Index, consumer sentiment fell 12 points for the week ended October 6 to -34. That represents the largest weekly drop since September 2008, when the index fell 15 points after Lehman Brothers collapsed. (Source: “Weekly Drop in U.S. Economic Confidence Largest Since ’08,” Gallup web site, October 8, 2013.)

By October 11, the end of the second full week of the U.S. government shutdown, the Rasmussen Consumer Index’s daily measure had slipped to 89.7, the lowest reading of the year. Consumer confidence is down 12 points since the U.S. government shutdown began and is down 13 points month-over-month. (Source: “Rasmussen Consumer Index,” Rasmussen Reports web site, October 11, 2013.)

American consumers may be resilient, but even these low readings, assuming they don’t get any worse, will still take a number of months to rebound. That could make Halloween, one of the biggest holidays next to Christmas, scary for U.S. retailers—and those ripples could extend into the December holiday season.

Even without the U.S. government shutdown, U.S. consumer confidence levels have been, for the most part, weak all year. But that can’t possibly be a surprise to Wall … Read More

Best Way to Hedge Against Political and Economic Uncertainty

By for Daily Gains Letter | Oct 11, 2013

Hedge Against PoliticalWe’re less than a week away from the perfect economic storm in the U.S., and, based on what others are predicting, just a few short months away from a major 15% stock market correction.

At the beginning of October, almost a million federal employees were furloughed after the U.S. government shut down because it failed to ratify its annual budget. Should the government fail to raise the debt ceiling and therefore default on its loans, that issue will be exacerbated when the debt ceiling deadline arrives.

Failing to raise the debt ceiling will just add to America’s economic woes and put a major dent in the global economy while also undermining America’s credibility on the world stage. While some think a short-term default on the debt ceiling will not cause a major ripple, history is not on their side.

In 1979, the U.S. breached the debt ceiling on about $122 million in bills, but that was blamed on a technical issue related to a new-fangled word processing failure. The glitch caused yields to increase by half a percentage point, where they stayed elevated for months. A default on the debt ceiling this time around couldn’t be blamed on a technical difficulty due to new technology (having a disproportionate ego, however, could be a valid excuse).

Even after the U.S. government shutdown is resolved and the debt ceiling is raised, the U.S. will have suffered a major blow to its credibility. After that, it could go from bad to worse.

According to French banking giant Societe Generale, the S&P 500 will go through a tumultuous correction, even after the debt ceiling … Read More

How to Protect Your Portfolio Entering QE Year Five

By for Daily Gains Letter | Oct 7, 2013

Portfolio Entering QEFor the last five years, the U.S. has relied on quantitative easing, one of the most unconventional monetary policies, to kick-start its economy. By printing off trillions of dollars and increasing the money supply on the back of artificially low interest rates, the government is hoping financial institutions will increase lending and liquidity.

Will it work? Not if history is any indication.

On December 29, 1989, during the heyday of the Japanese asset price bubble, the Nikkei Index hit an intraday high of 38,957.44, capping off a decade in which the index soared more than 500%. Despite those dizzying heights, no one could see what the next 25-plus years would bring.

Over the ensuing decade, the Nikkei continued to slide. To shore up the economy, the Bank of Japan held interest rates near zero and had, for many years, claimed quantitative easing was an ineffective measure.

In March 2001, the Bank of Japan unveiled its first round of quantitative easing. It didn’t take, and since then, Japan has initiated 11 rounds of quantitative easing, dumping trillions of dollars into the markets. Instead of stimulating the economy, it has been saddled with a negative real gross domestic product (GDP) growth rate and record-low interest rates.

By late October 2008, the Nikkei hit an intraday low of 7,141—an 80% loss from its 1989 highs. While it rebounded in 2013 and is currently sitting near 14,170, it’s still down more than 63% since the halcyon days of the late 1980s.

After a quarter century, quantitative easing and record-low interest rates are a regular part of Japan’s economic diet. Thanks to uncertainty in the … Read More

Should Income-Starved Investors Consider ETNs?

By for Daily Gains Letter | Oct 1, 2013

Income-Starved InvestorsWhile quantitative easing (QE) may have been put in place to kick-start the economy, it also had the added benefit of kicking income investors to the curb. Since implementing QE1 in November 2008, the Federal Reserve has printed over $3.0 trillion to snap up government bonds.

This has translated into artificially low interest rates, which are supposed to spur borrowing. A low-interest-rate environment has also helped fuel the stock market and put a smoldering spark in the housing market and auto industry. Those same record-low interest rates have also sucked the income out of America’s retirement portfolio.

In a high-interest environment, fixed income assets like Treasuries, bonds, and certificates of deposit are an important part of most retirement portfolios. In theory, they provide regular investors with a stable place to park their retirement money and a means to anticipate a reliable income stream.

In 1980, Treasury bonds peaked at an eye-watering 14%. Today, a 30-year Treasury bond provides a yield of just 3.67%, a far cry from 1980 and a long way from the 5.3% yield in late 2007—before the financial crisis began.

In order to diversify risk, invest in multiple asset classes, and take advantage of growing dividend yields, many investors have turned to exchange-traded funds (ETFs). ETFs are a great option for broad-based investing, especially for those who do not have deep pockets. In fact, with a simple ETF strategy, investors can build a well-diversified portfolio made up of small-, medium-, and large-cap stocks.

While ETFs continue to grow in popularity, investors looking for more options might want to consider exchange-traded notes (ETNs). On the surface, ETNs are … Read More

Profiting on Existing U.S. Home Sales Whether They Soar or Sour

By for Daily Gains Letter | Sep 23, 2013

U.S. Home SalesWhen it comes to the U.S. housing market, everything may look perfect on the surface, with homes being swept up at a rapid pace. However, this could all fall apart with the answer to one simple question: do existing-home sales numbers signal continued strength in the U.S. housing market and housing market-related stocks?

U.S. existing-home sales climbed 1.7% month-over-month to a seasonally adjusted annual rate of 5.48 million in August from 5.39 million in July. The year-over-year numbers are even more staggering, up 13.2% over the 4.84 million level in August 2012. While U.S. housing market sales are at their highest peak since February 2007, they are also above year-ago levels for the past 26 months (June 2011). (Source: “August Existing-Home Sales Rise, Limited Inventory Continues to Push Prices,” Realtor.org, September 19, 2013.)

Unfortunately, for many reasons, the party in the U.S. housing market might be short-lived.

In January, the interest rate on a 30-year fixed mortgage was around 3.41%; today, it’s 4.55%. While one percentage point might not sound like much, it translates into an increase of more than 30%. With mortgage rates on the rise, many first-time home buyers fear that affordability will be out of reach. (Source: “Average Mortgage Rates: January 2013,” MortgageNewsDaily.com, last accessed September 19, 2013.)

In an effort to do a runaround on rising interest rates, many first-time home buyers are jumping into the housing market. While interest rates are on the rise, it’s important to remember that they’re still well below the 6.48% level offered in August 2008, just before the housing market crashed. Still, the rise in interest rates was enough to … Read More

Poverty Rate Reveals Just How Little the Fed’s Helping Main Street

By for Daily Gains Letter | Sep 19, 2013

Poverty Rate RevealsAfter five years of pumping trillions into the U.S. economy, the average American really is no better off than before the Federal Reserve initiated its unprecedented economic stimulus efforts. This is in spite of Federal Reserve chairman Ben Bernanke’s claims that the Fed’s efforts at encouraging U.S. economic growth are helping Main Street more than Wall Street.

Bernanke may claim to be focused on helping the average American, but the U.S. economic numbers suggest his steely gaze is trained elsewhere. For example, even though unemployment numbers improved from 7.4% in July to 7.3% in August, the vast majority of those jobs were created in low-wage-paying industries. On top of that, more and more have given up looking for work and are no longer considered unemployed, so they’re removed from the equation. Voila, better numbers.

What about housing prices? While a slightly improving U.S. economy has lifted housing prices 13% over the last year and a half, they’re still down 25% from their 2007 pre-Great Recession highs. It’s also important to remember that any increase on the back of an improving U.S. economy, while a welcome sign, is only on paper.

At the same time, 7.1 million homes, or 14.5% of all residential properties with a mortgage, still have negative equity. Of the 41.5 million residential properties with positive equity, one quarter (10.3 million) have less than 20% equity. Borrowers with less than 20% equity could have a difficult time getting new financing. Interestingly, 1.7 million residential properties have less than five percent equity, meaning they are at risk of negative equity if the markets turn and home prices slide. (Source: … Read More

A Stock That Does Well Even If Consumer Confidence Is Falling?

By for Daily Gains Letter | Sep 16, 2013

Consumer ConfidenceAs consumers, we don’t always do what we say we do. Consumer confidence is, by all accounts, down, but spending in some areas is up. According to the Michigan Index, U.S. consumer confidence slipped in August from a six-year high. The Bloomberg Consumer Comfort Index, meanwhile, plummeted for four straight weeks to its lowest reading since April.

Yet interestingly, August auto sales were the strongest in over six years—proof, on some level, that low consumer confidence and optimism don’t portend weak consumer spending. But that doesn’t mean that we’re necessarily spending smartly—after all, lots of people spend money when they’re depressed—and with wages stagnant, high unemployment, and a record number of Americans on food stamps, we have plenty of reason to spend.

According to some, consumer confidence is unrelated to spending and is more closely aligned to our political affiliation. In fact, self-proclaimed Democrats and Republicans are showing the weakest correlation on the direction of the economy since 1990. (Source: Jamrisko, M., “Confidence Measures Show It’s the Politics, Stupid,” Bloomberg web site, September 10, 2013.)

Where zero indicates no trend and one shows them moving in step, the correlation between the confidence of Republicans and Democrats is 0.25 since Obama started his first term. During George W. Bush’s two terms, it was 0.55, and Americans of every political persuasion were in virtual agreement on the direction of the U.S. economy during the Clinton era at 0.95.

Up until the beginning of September, Democratic voters had been more confident overall than Republicans for 75 straight weeks. Their rose-colored glasses, on the other hand, couldn’t find the same disciplined focus when it … Read More

Weak Jobs Numbers & Manufactured Goods Keep QE Door Wide Open

By for Daily Gains Letter | Sep 10, 2013

Weak Jobs NumbersThere’s more to the recent jobs numbers and durable goods statistics than meets the eye. While recent economic data isn’t anything to celebrate, it does still open up a number of interesting opportunities for both short- and long-term investors.

The Bureau of Labor Statistics said last Friday that 169,000 non-farm payroll jobs were added in August. As a result, the unemployment rate dropped from 7.4% in July to 7.3% in August, the lowest rate since December 2008. Good news! But not really. (Source: “The Employment Situation – August 2013,” Bureau of Labor Statistics web site, September 6, 2013.)

At face value, August’s jobs numbers don’t tell the whole story. The vast majority of those jobs (71%) were created in retail, business services, hospitality, and health care; interestingly, only 19,000 jobs (11.1%), or 400 per state, were in manufacturing. In fact, the real reason the jobs numbers looked so encouraging is because more and more Americans have stopped looking for work—and no longer count as being unemployed.

July’s projected jobs numbers growth was revised downward from 162,000 to an anemic 104,000; June’s numbers were also revised lower. Add them up, and July’s revised jobs numbers means the U.S. has created 74,000 fewer jobs than previously believed.

The day before, the Census Bureau announced that new manufactured goods orders in July fell 2.4% month-over-month, the largest decline in half a year; in June, orders were up 1.6%. July’s slide came on the heels of weak demand for heavy machinery and commercial aircraft. (Source: “Full Report on Manufacturers’ Shipments, Inventories and Orders July 2013,” U.S. Census Bureau web site, September 5, 2013.)

Since … Read More

With the S&P 500 Down 4% in August, These Alternatives Make Sense

By for Daily Gains Letter | Sep 5, 2013

050913_DL_whitefootWhen it comes to the stock market, September is supposed to be the cruelest month. However, it might be hard-pressed to beat this past August. After starting the month on a record-high note, the S&P 500 closed out August down roughly four percent, recording its steepest drop since May 2012.

Whether it had to do with uncertainties in Syria, the long weekend, threats of tapering quantitative easing, or weak consumer spending numbers is anyone’s guess. Will tomorrow’s U.S. unemployment rate figures add to the despair? For risk-averse investors unsure about the future direction of the stock market, consumer defensive exchange-traded funds (ETFs) and money market funds may be two of the best options out there.

August started out promisingly. On August 2, the United States Department of Labor announced that the U.S. unemployment rate improved slightly to 7.4%, the lowest level in more than four years. Unfortunately, the bulk of the jobs (retail trade, food services, and drinking places) were mainly in low-paying areas. Still, news that the U.S. unemployment rate came in at 7.4 % and not 7.5% was enough to lift the S&P 500 to a record high of 1,709.67.

But not for long. Against the backdrop of so-called “encouraging” U.S. unemployment rate numbers, the markets cratered on August 15, suffering their biggest loss in almost two months, after Wal-Mart Stores, Inc. (NYSE/WMT) reported lower-than-expected second-quarter results. That same day, Cisco Systems, Inc. (NASDAQ/CSCO) reported disappointing earnings and, citing difficult economic conditions, said it plans to slash 4,000 jobs.

The markets slid further on August 27, as tensions over a possible U.S. strike on Syria rattled global markets. … Read More

The Kind of Companies You Don’t Want in a Retirement Portfolio

By for Daily Gains Letter | Aug 19, 2013

The Kind of Companies You Don’t Want in a Retirement PortfolioMy friend, a passive investor who, in his own words, doesn’t “like losses,” called me and asked if JC Penney Company, Inc. (NYSE/JCP) is a good place to be. “Should I buy,” he asked, “or just stay away from it?” To add a little background context, the investment portfolio he is managing is for his retirement; he wants stable and consistent returns over time.

Why J.C. Penney? The company has come under scrutiny for a while. The stock prices have plummeted due to the company posting poor performance, and its survival has become questionable. The company’s shares were traded as high as $42.00 in the beginning of 2012; now they hover close to $14.00. Look at the chart below, and you will see a clear downtrend in which the stock’s value declined 67%. My friend thinks there’s value in this company over the long period.

JC Penney Company Chart

Chart Courtesy of www.StockCharts.com

I think the better question that my friend should have asked is: “Should an investor who is saving for retirement add companies under severe stress to their portfolio?”

Some will definitely disagree with this, but companies that are under stress are not worth risking the retirement savings—J.C. Penney is just one example.

If I go a little back, I remember some saying that Bear Stearns—an investment bank and one of the early casualties of the financial crisis in the U.S. economy—was a great buying opportunity. Later on, the company’s share plummeted and it was forced to be taken over by a big bank. Investors who bought the stocks in their retirement portfolio then faced severe losses.

For all we know, J.C. … Read More

Considering ETFs in This Market? Here’s How to Think Global but Invest Local

By for Daily Gains Letter | Aug 5, 2013

How to Think Global but Invest LocalWhen it comes to diversifying your retirement portfolio and investing in as many companies and industries as possible, nothing beats an exchange-traded fund (ETF). Similar to a mutual fund, ETFs are investments that (attempt to) mirror the return of a particular index. Unlike mutual funds, investors can buy and sell ETFs on the open market like a regular stock.

Both retail and institutional investors like ETFs because they give them the chance to add a basket of equities to their retirement portfolio that they could not otherwise afford to purchase individually. And with more than 1,400 ETFs available, covering every corner of the market (currency, oil, gold, livestock, grain, precious metals, etc.), and more hitting the markets all the time, it can be tough for investors to know where to begin.

But now, it might be getting even tougher.

On August 1, LocalShares launched the Nashville Area ETF (NYSEArca/NASH), the first city-specific ETF. With an initial unit price of $25.00 per share and an annual expense ratio of 0.49%, the Nashville Area ETF invests in a basket of Nashville area publicly traded companies.

But not just any old Nashville company gets included on this ETF. Not only do the companies have to be listed on the major U.S. exchanges, they also have to have their corporate headquarters in the Nashville region, a market capitalization of $100 million, and a daily volume of at least 50,000 shares. (Source: “Nashville Area ETF,” U.S. Securities and Exchange Commission, July 26, 2013.)

The Nashville Area ETF is made up of roughly 25 companies that collectively had more than $94.0 billion in revenue in 2012. … Read More

The Best Stocks for Cushioning Your Retirement Portfolio

By for Daily Gains Letter | Jul 30, 2013

defensive stockWord on the street is that the U.S. Federal Reserve will soon be announcing its intention of keeping interest rates low for a long time. While this may be good news for first-time home buyers looking to lock their mortgages in at near-record-low rates, it’s terrible news for anyone with a retirement portfolio made up of fixed-income investments like cash, bonds, and annuities.

To make up the ground lost to artificially low interest rates, investors may need to rebalance their retirement portfolio to include a higher allotment of stocks. But where should investors turn? During the first five months of the year, it was pretty hard to lose money on the stock market.

Between January 2 and May 21, the day before the Federal Reserve hinted it would scale back its $85.0 billion-per-month quantitative easing policy, the S&P 500 was up more than 17%. Since then, the Federal Reserve-inspired roller coaster has rewarded patient investors with a one-percent return.

For much of June, the S&P 500 experienced a volatile ride, with investors wondering just how well Wall Street would do without the intervention of the Federal Reserve. To calm investors, the Federal Reserve intervened and said that there is no hard and fast set time for any tapering. Not only that, the Federal Reserve said that eventually cutting back won’t necessarily translate into higher interest rates. Disaster averted!

What that means is that those with large sums of money to plunk down on the stock markets will continue to do well. While those with their money tied up in their homes—the majority of Americans—will not.

Those investors parked somewhere in … Read More

The Stocks You Need to Know About Now to Protect Your Retirement

By for Daily Gains Letter | Jun 27, 2013

retirement savingsThe dream of retiring comfortably is a mirage for the vast majority of Americans. According to the National Institute on Retirement Security (NIRS), the retirement savings shortfall in the U.S. is worse than anyone thought. But it’s not an impossible dream for wise investors.

After the U.S. markets crashed in 2008, many Americans saw the value of their hard-earned nest egg evaporate. While the S&P 500 and Dow Jones Industrial Average have been on a five-year bull run, this hasn’t trickled down to the average American. In fact, unemployment remains high, a record number of Americans receive food stamps, wages are stagnant, and personal debt is up.

All of that makes it difficult to set aside money to save for retirement.

And we are now bearing witness to the number of Americans who are sorely unprepared for retirement. In fact, the NIRS study found that roughly 45%, or 38 million, working-age households do not have any retirement account assets. (Source: “The Retirement Savings Crisis: Is It Worse Than We Think?,” National Institute of Retirement Security web site, June 2013.)

More specifically, when all working-age families are accounted for, the typical family has just $3,000 saved for retirement. Those nearing retirement don’t fare much better, with only $12,000 in the bank.

On top of that, 80% of working families have retirement savings less than one times their annual income. As a result, the U.S. retirement savings deficit has ballooned to between $6.8 and $14.0 trillion.

Even at the best of times it can be difficult to plan for retirement. After two recessions (2001 and 2008), even the most optimistic can give … Read More