Beyond Mere Alpha; March 2017

Monday, March 6, 2017 - 8:18pm

February was a memorable month for the markets, as multiple records highs were hit in all major indices that we follow: the DOW Industrials, S&P 500, NASDAQ, and Russell 2000.  But the real news was made the day of this writing: March 1st. In the aftermath of President Trump’s joint address to Congress, the Dow Jones Industrial Average surged 300 points to top 21,000 for the first time. As well, the dollar advanced and Treasuries fell as investors grew increasingly confident global economic growth is accelerating, clearing the path for higher interest rates in America.  Many stocks in the Financial sector traded at all-time highs, as the odds for a rate hike in two weeks swelled past 65%. President Donald Trump’s address to Congress confirmed that his administration will seek pro-growth policies. On March 1st, the Industrial and Energy sectors surged as the S&P 500 Index rallied the most since the day after the election. The Information Technology Sector and Small-Cap Indexes closed at record highs.

The market has now increased in value by more than three trillion dollars since Donald Trump was elected President on Nov. 8th, 2016.  By any possible measure, as of today’s (March 1st’s) market action, this is the most significant market gain-since-election of any president in history. The question is now this: after the speech, after the promises, and after the record applause, what happens now?  What do we expect to see?

And now, something new for you!  In response to numerous clients’ questions from my last two Fireside Chats, as well as various e-mails I have received over the past few months, I am pleased to announce that I plan to create  several videos over the duration of 2017 — in addition to my Mid-Month Market Minute presentations — to address these inquiries from you, our clients.  Here are some of the topics I plan to video-record:

·      How CB3 selects stocks and fixed-income instruments for your portfolios.  How is our methodology different from other portfolio managers?  What is our time frame for holding an asset?  When do we sell an asset?

·     International influence on the U.S. stock market. How do the Asian and European markets influence the U.S. Stock markets?  What benefits does international investing offer?  What risks are associated with these markets?

·     What is inflation risk?  How could high or low inflation hurt — or help — my portfolio’s performance?

·     Becoming an informed investor. Even if an individual does not want to personally manage their own money, what questions should be asked of their portfolio manager?  How do you know if your portfolio manager has “skin in the game” as regards to the investments they are choosing on your behalf?  How do you analyze a monthly statement?

·     Stocks versus Funds in portfolios. What are the advantages and disadvantages of holding stocks vs. mutual funds and ETFs in portfolios?  What are the cost advantages and disadvantages?  Is it possible to “beat” the market?

There are some of the topics that have been requested.  Do you desire a topic not mentioned here?  If so, please e-mail me at

Our goal at CB3 is to educate our clients so that they can make the best decisions for their investments held with us.

As I look at sectors of the U.S markets bellow, I see that Financials, Industrials, Materials and Energy — all “risk-on” sectors” — are weakening vs. the S&P, even with March 1st’s incredible rally. It appears the “risk-off” sectors are awakening and are now starting to attract substantial monies.  We at CB3 are observing this trend and adjusting our buy/sell patterns to take advantage of this.  With the market continuing to successive lifetime highs, we remain 99% invested in each of our SMAs. We do recognize that there could well be a correction at any time.  We see this as normal market behavior, and are not concerned beyond that.

 Until the March Mid-Month Market Minute, please know that we continually watch your accounts, ready to adjust as we believe it necessary in this volatile environment.  Please remember that we don’t just manage your assets; we become one of them!