Go Read: Elon Musk's Future Vision of Tesla.

I thought this infographic over at the website Visual Capitalist was a fascinating read on Elon Musk and his future vision for Tesla.  This is too complicated to post the whole thing here so I'm sending you over to the site via the link below.

Link:  Visualizing Elon Musk's Vision for the Future of Tesla.

*Note that Tesla is likely a component of several ETFs we own for clients and in personal accounts but I hold no individual positions in the stock. 

Summer Hours

Memorial Day begins the summer season on Wall Street.  For the most part that can be characterized by slow starts on Monday and lazy Fridays in terms of trading.  We have our own schedule for summers in terms of posting and here it is.  This week we will have another substantive post tomorrow and nothing on Friday.  The rest of the summer we'll be on a schedule that will basically be either Monday or Tuesday, then Wednesday or Thursday.  We won't be publishing on Fridays unless events warrant.

Rest assured we'll break in as needed.  In the meantime, chew on this quote I saw last week over at the  Abnormal Returns blog site:  

Quote of the Day

"Portfolio construction is a lot like cooking. There are two equally important elements: the ingredients and the recipe. The ingredients are the signals that are used to select investments. The recipe is the set of rules used to transform those signals into portfolio allocations."

I may have more to say on this quote at a later date.

Hopefully the beginning of the summer season will bring warmer weather to the midwest and less rain!

Performance Year-To-Date {International}

Today we'll wrap up our year-to-date performance review.  We have been covering different asset classes  of the market based on our own unique view of asset allocation.  Today we're taking a look at various international indices.  Again, this data is through May 21, 2018.  You can click on the chart above if you want to make it larger.  Performance chart is from Stockcharts.com, although the ETF selection is my own.  Also I believe the performance data shown above does not include dividends.  If I am correct then the total returns on these indices is actually better than what is shown above.

International ETFs have so far mostly been market performers this year with the exception of emerging markets and Latin America.  The rising dollar hurts emerging markets and Latin America has other issues as well.  We do need to point out though that last year foreign markets and especially the emerging areas for the most part had better performance than most of the major market indices.   International markets seem to be like most markets here in the US in that they are probably fairly valued right now. I would remind investors that foreign exposure can also experience heightened volatility.  Investors need to think about whether or not they can stomach the more pronounced peaks and valleys that comes with investing in this sector before they allocate assets.

Back Thursday.

*Long in client and personal accounts in some manner the indices listed above with the exception of Latin America.  Positions can change at any time without notice on this blog or via any other form of electronic communication.

Memorial Day

Traditionally when we lived in River Forest we would fly two American flags between this day and the 4th of July.  We haven't figured out the logistics of how to do this at our new place so we'll put up an older picture of the old place one last time to honor Memorial Day.  

The flag you see off to the side of the old "Global HQ" was carried by my brother-in-law who flew Harrier jets for the Marines in Afghanistan. We honor his service as well as the services of all prior family members and all others who have served in our armed forces.   

This year we want to honor these folks, both past and present on both sides of our families, for their service to the United States of America.  I have tried to include both immediate and extended family members, but will apologize in advance for any inaccuracies or exclusions.  Please note that any mistakes were inadvertent:

The Honor Roll  includes:

Cornelius Murray {Revolutionary War-Pennsylvania}
James Gignilliat {Revolutionary War-South Carolina}

Capt. {Brevet} William H. Murray {Civil War-Co. K. 19th Indiana Volunteer Regiment}

Col. William Orr {Civil War-19th Indiana Volunteer Regiment}

Donn P. Murray, MD {WWI}

Brig. Gen. Leigh R. Gignilliat {WWI, Supt. Culver Military Academy, 1910-1939}

Fredrick R. Hazard Jr. {WWI & WWII}
Paul C. Gignilliat {U.S. Navy}

C.M. Hazard {U.S Army}

Richard J. English {U.S. Army-Reserve}

Lt. Col.  Michael Franzak {USMC (Ret.)-Afghanistan-Distinguished Flying Cross}

God Speed and God Bless to you all!

Happy Memorial Day everybody!

Performance Year-To-Date {Total Return}

We continue today our year-to-date performance review covering different parts of the market based on our own portfolio programs and overall asset allocation process.  Today we're taking a look at various ETFs we have in our total return strategies.  These results are through May 21, 2018.  Also, as always, you can click on the chart  if you want to make it  larger.  These performance chart are from Stockcharts.com, although the ETF selection is my own.  Also I believe the performance data shown above does not include dividends.  If I am correct then the total returns on these indices is actually better than what is shown above.

This strategy has on a price basis slightly underperformed the market on a relative basis.  However, when you take into account their dividends then their performance is more comparable to the overall market.  This should not be surprising as dividend and interest related investments often underperform in the face of rising interest rates.  Also many of these ETFs had done better than the overall market coming into last year so a period of outperformance by more broad based and growth oriented investments was at some point going to occur.  

The one exception to this would be REIT based ETFs.  REITs stand for Real Estate Investment Trusts.  No is not a time to go into REITs in particular but just understand that higher interest rates hurt REITs because it raises their borrowing costs.  To compensate of course REITS have much higher dividend yields so it can pay to wait.  Still the longer term underperformance over the last two years is pretty stark.  

Back Monday.

*Long in client and personal accounts in some manner the indices listed above with the exception of the fixed income ETFs.  These are shown for illustrative purposes only.  Positions can change at any time without notice on this blog or via any other form of electronic communication.

Performance Year-To-Date {Market Sectors}

Today we'll continue our year-to-date performance covering different parts of the market based on our own unique view of asset allocation.  Today were going to show various sectors and subsections that we think are representative of a broad strata of the sectors in the US markets.  This data is through May 21, 2018.  You can click on either of the charts below if you would like to make them larger.  Performance chart is from Stockcharts.com, although the ETF selection is my own.  Also I believe the performance data shown above does not include dividends.  If I am correct then the total returns on these indices is actually better than what is shown below.  Let's start with the more cyclical sectors.

Energy and technology have handily outperformed most market sectors and especially the S&P 500 which is listed in red all the way to the left.  This makes sense as oil has seen a substantial move higher in 2018 while most of the organic growth in the markets resides in the technology and information based sectors of the market.  Transportation and industrials have slightly lagged the market and the materials sector has barely managed to eke out a small gain. 

The more non cyclical areas of the markets have more or less lagged the S&P 500.  Only biotechnology and consumer discretionary sectors have done better than the market overall.  Consumer durables, utilities and staples have significantly underperformed.  Probability suggests that opportunities could present themselves in the consumer areas of the market at some future point.  Health care has also slightly underperformed, while financials have so far not seen much benefit from higher interest rates.  Higher rates still means there is a higher potential for outperformance for this sector in the coming months. 

*Long in client and personal accounts in some manner most of the sectors listed above with the exception of clean energy, transports and utilities.  Also Amazon is a component of certain ETFs we invest in for client and personal accounts.  Short S&P 500 in a personal account as part of a separate individual strategy.  Positions can change at any time without notice on this blog or via any other form of electronic communication.  Positions can change at any time without notice on this blog or via any other form of electronic communication.

Performance Year-To-Date {Major Market Indices}

We are going to do a series of posts over the next week or so looking at year to date performance covering different parts of the market based on our own unique view of asset allocation.  Today we're kicking off looking at broad market indices through May 18. 2018. You can click on the chart above if you want to make it larger.  Performance chart is from Stockcharts.com, although the ETF selection is my own.  Also I believe the performance data shown above does not include dividends.  If I am correct then the total returns on these indices is actually better than what is shown above.

A lot of performance comparisons usually is against the S&P 500.  It fits well into my thesis that we are in a consolidation mode of last year's gains and could remain in that state throughout the summer.  Even so it's up a bit over 2% for the year.  If you annualize that and add in the dividends it would be looking at a return of between 4-8%.  Pretty much in the historical realm of what markets often do.  Mid-dap indices, the largest of all companies and the tech heavy indices over on the Nasdaq have shown the best performance year-to-date.  If your investment theme has been "America First" this year then these parts of the markets have been some of the best places to have money.

Posting schedule this week will be Wednesday and Thursday.  I have to be out tomorrow.

*Long in client and personal accounts in some manner the indices listed above.  Short S&P 500 in a personal account as part of a separate individual strategy.  Positions can change at any time without notice on this blog or via any other form of electronic communication.

A Little Touch Of Harry In The Night

O, now, who will behold

The royal captain of this ruin'd band

Walking from watch to watch, from tent to tent,

Let him cry 'Praise and glory on his head!'

For forth he goes and visits all his host;

Bids them good morrow with a modest smile,

And calls them brothers, friends, and countrymen.

Upon his royal face there is no note

How dread an army hath enrounded him;

Nor doth he dedicate one jot of colour

Unto the weary and all-watched night;  

But freshly looks, and over-bears attaint

With cheerful semblance and sweet majesty;

That every wretch, pining and pale before,

Beholding him, plucks comfort from his looks;

A largess universal, like the sun,

His liberal eye doth give to every one,

Thawing cold fear, that mean and gentle all

Behold, as may unworthiness define,

A little touch of Harry in the night.

                                                                               

                                                                           -Henry V, Act 4, Prologue

Many, my bride included, will be up early tomorrow morning watching the Royal Wedding.  If I have to explain all of that to you or what Royal Wedding I'm referring to then you've been living under a rock these past six months.   It is hard to explain America's fascination with Great Britain's Royal Family except perhaps to say how different things might have been if George III had listened a bit more sympathetically to his American subjects prior to the American Revolution. 

Both Princes William and Harry have been in the news both in England and here since before they were born.  William carries the burden of history.  Harry has always reminded me of a normal young boy and then a rambunctious young man.  Like a lot of restless young men, he found an outlet in the military and along the way grew up.  William will make a fine King when it is his turn.  Hopefully Harry will have a place along side of him as Harry has more of the common touch.  It is hard not to remember a very young Prince Harry walking behind his mother's funeral procession barely keeping it together on what had to be one of the worst days of his life.

Hopefully tomorrow will be one of his best.

Rest easy Harry as you likely reach out to touch your mother in your thoughts this night.  You have made her very proud indeed.  Somewhere in heaven she is smiling down on you this day.

Good luck, long life, a blessed wedding and God bless to you all.

Annuit Cœptis!

Rising Interest Rates

Chart above from Charlie Bielo's twitter page shows the dramatic rise in interest rates this year.  In retrospect rages really began their move higher about a year ago but the biggest part of that increase began around the beginning of 2018.  Rates on the short end of the curve have moved a bit over 50 basis points {.50%} during that time.  That's a big move in such a short period.  Again, according to Charlie, short-term rates are at their highest levels since 2008.  

More on this at a later date.

Back next week at something I hope approximates a more normal posting schedule.

Thoughts {05.15.18}

Moving an office {as well as your home} is a much more complicated process than I ever imagined.  That being said I am starting to see light at the end of the tunnel in regards to the move.  There are still a few kinks to work out.  A major issue is the phones.  Not sure if the move from AT&T to Comcast regarding a business number is going to work out but we'll continue to give it a shot.  I will say one thing about Comcast customer service.  It is spotty.  That being said, "spotty" is a huge improvement over what you used to experience when trying to take care of even the most basic problems over the phone so there's hope.  The guys that do installation for them should all be placed in management someday.  They are top notch.

Doing a move means I've spent more time in stores and shopping malls these past few weeks than I usually do.  When you move, especially if you're downsizing, you find that you need a bit of everything.  I've been able to spend some time observing the American consumer's habits and these are my observations:

-Those betting that the mall is dead might need to revise that thesis.  All the ones I've been to are packed.  Oak Brook Mall on Sunday looked like the weekend before Christmas.  My guess is that the marginal malls are already gone or going and the ones that remain will probably do alright.  

-People aren't willing to buy everything on Amazon.  Sometimes you need things right away.  Also I still think many people, especially those older, are reluctant to buy clothes or shoes on line.  They still want to try things on and the return policy can be a hassle.  Also there's no way Mrs. E and myself are going to buy furniture on line, at lest not the big ticket items.

-Finally, for many, I think the mall is still pure entertainment.  I saw folks out at Oak Brook that seemed happy to just be outside walking about on a sunny day.  Purchases seemed a second thought to them but I'll bet most walked out of that mall with at least one bag or two.

-The demise of Apple or at least the "Peak Apple" theory needs to also be reviewed.  The Apple store in Oak Brook was packed as it always is.

On a different note after roughly a two week period where stocks shot straight up, we're seeing a pullback of about a percent in the early going today.  Markets are very overbought after this move so that shouldn't be surprising to anybody.

Back Thursday.  

*Comcast and Apple are components of various ETFs we own for both clients and in personal accounts.

Up For Air

Well we've made the move and I would say we are about 75% completed in the revamp of the office and I finally feel like I can come up for a bit of air.  In the meantime I thought I'd give us a bit of a look at "Mr. Market" as represented by the S&P 500 ETF, SPY.  The chart is from Tradingview.com although the annotations are mine. As you can see my thesis of a market consolidating last year's gains continues to hold. So far in 2018 absent the dividends the S&P 500 is only slightly positive.  We've seen a pickup in volatility but stocks seem mired in a range between those two blue trend lines you see on the chart above.  We'll have to watch how the market reacts to the upper band which is also resistance and also how it reacts to that downward sloping trend line shown in green.  It's interesting that where the market might encounter both of these is a point where they will intersect.  There is a higher probability that a break out from both of these points would be considered positive for stocks.

We'll commit to at least one post next week and hopefully two.  Thanks for putting up with me during our move.

*Long ETFs related to the S&P 500 in client and personal accounts.  Short S&P 500 in a personal account as part of a separate individual strategy.  Investments can change at any time without notice.

Moving Day

Today we move global headquarters from its current address on Ashland Avenue in River Forest to Oak Park, Illinois.  That of course means the house goes along with it.  Mrs. English and myself moved into our house almost 25 years ago.  Back then we had a little boy and a brand new baby.  My parents came up to help us move and to watch our children while we did all the things you need to do when moving into your new home.  We were 32 and 31 and I was a young stock broker trying to make it in the world at the investment firm of Kidder Peabody & Co.  If you had asked me then whether I would be staying that long in our current home I would have said no way.  

But stay we did.  Lumen Capital Management, LLC moved it's "Global HQ" to our home in 2005, about the same time as I started this blog.  Along the way we also added a third child, made great friends and watched our children pass from nursery school all the way through college from that same place.  Back when I moved the business into my house I would have told you I would be coming out of the place in a box.  Like my initial thoughts on how long we'd stay when moving in, I was wrong.  It is not the first time I've been wrong and will not be the last.

Times change and my children have all grown up.  They are spread out all across the country now and are starting lives of their own as young adults.  Someday I imagine, if Providence smiles down upon us it might be Mrs. English and myself sitting on one of our kid's porches taking care of their babies while the frantically try to tie up all the loose ends that come with moving into a new place.  

In our case we have come full circle.  We are selling it to a lovely young family with two little girls and a baby on the way, just the sort of people we'd hoped would buy our place.  Our big wonderful house needs little people again.   It is time to say good-bye to our house.

It is said that "childhood is the long process of saying good-bye and in the end it is the parents who have the hardest time letting go of their children's past".  That is certainly true for me in terms of selling the place.  A friend of mine says that the house stays but the memories come with you.  That is  correct, but the ghosts of memories past stay and some part of me will always be tied to the place.  What is coming not only for us but for Lumen Capital is exciting and I can't wait to share some of that with you in the following weeks.  I want to also take a moment to say thank you to all my friends, clients and acquaintances who have made the last 25 years at our home so wonderful.  I look forward to carrying on with you from our new spot in Oak Park.  In the meantime please forgive me if I take one long last look before I say good-bye this weekend.  We move today but close on the place next Tuesday.

"Don't adventures ever have an end? I suppose not. Someone else always has to carry on the story.....There was only one Road; that it was like a great river: its springs were at every doorstep, and every path was its tributary. "It's a dangerous business, going out of your door. You step into the Road, and if you don't keep your feet, there is no knowing where you might be swept off to."  Bilbo Baggins.  "The Fellowship of the Ring."

"I will not say do not weep; for not all tears are an evil."  Gandalf-"The Return of the King." 

*Long Kleenex and Memories!  

Back with a single post at some point next week.  I'll let you know when we get back to a more regular schedule.