Archive for the 'portfolio' Category

Investopedia Q & A

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WILLIAM DESHURKO’S ANSWERS
How can a nontraditional college student gain more income to provide for a brighter future?
Well you could try and win the lottery, search www.ancestory.com for an unknown rich relative, or marry rich. Rule those out and your best alternative is to get that degree… Read More
Are qualified dividend paying stocks a reliable source of passive income for retirement?
Yes…Yes…and Yes!!! Not only are taxes lower on dividends then an IRA withdraw, but think of it this way; if you take regular distributions from a mutual fund within your IRA,… Read More
Does rolling over 401(k) funds to an IRA for charitable contributions satisfy my RMDs?
Regardless of the purpose, you can always roll over a 401(k) plan investment into a rollover IRA without paying taxes. Since the money is not taxed at this point and remains… Read More
How would rolling over my 401(k) to a Traditional IRA affect my contribution limit for 2017?
Rolling over a 401(k) plan account will have no effect on the amount you can otherwise contribute to a regular or a Roth IRA. Congratulations, you have a nice start on… Read More
Should I hold on to a temporarily suspended stock?
Well, if its been suspended, you don’t have much choice! Once the stock begins trading again, you will need to make that decision. My suggestion is to do as much… Read More
What should we do with two mature IRA CDs?
I see some form of this question all the time, and it is confusing. An IRA is not an investment, it is a tax designation that applies to virtually any… Read More
I received a lump sum pension when I retired. Can I roll this lump sum into a 401K or IRA?
You can roll it into an IRA and defer taxes until you make withdrawals. If you already received the money, you have 60 days from the receipt to deposit it… Read More
Are penny stock mutual funds a solid aggressive investment?
You assume that an “aggressive” mutual fund will make you more money than a less aggressive mutual fund. Why? Aggressive means more risk. Risk means there is an increasing possibility… Read More
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Dividend Investing

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401 Advisor, LLC specializes in building client portfolios using dividend paying stocks due to their long term history of providing superior returns over non dividend payers. I recently contributed to an article posted by U S News on their web site. The article highlights warning signs that a stock may be cutting their dividend in the future.

Another Raise

One of our more popular holdings, McDonalds (MCD) has come under a bit of pressure lately  both in the media and on Wall Street. After reaching a high near $102 a share in May of this year the stock price has dropped to below $90 a share in October. The media has pounded their menu saying that the younger millennials are avoiding MCD for healthier alternatives. And yet Ive doggedly held their stock in many  client accounts.

While the jury is still out, we are starting to see the reasons for holding and our continued purchase of MCD. First, MCD is held in our Dividend and Growth strategy accounts. Their dividend has been above 3% even at its peak price. More importantly the dividend has been increased for 38 consecutive years and in this area MCD did not disappoint  they announced a 5% dividend increase payable to shareholders at the end of November. This brings their current yield to 3.59% as of market price on 11/6/2014 and annualizing the dividend.

Part II of my thesis is that McDonalds is still a cherry job for anyone in advertising. Their contract has to be one of the largest in the advertising world. Money buys the best and the brightest. MCD will find a way to come back into the good graces of the fast food consuming public. Surveys are already showing some in roads from campaigns such as this social media campaign that coincides with the relaunch of the McRib sandwich.

MCD is a great example of an investing concept I will come back to in future posts: the difference between buying a company and buying a stock. Stock buyers look for price appreciation in the near term. The media is created for stock traders. Investors like the Warren Buffets of the world buy companies.  Companies generate cash flow that is unaffected by stock price that allows them toraise dividends by 5% even when their stock price slides by 12%.

While Im not happy with the stock, I am happy owning the company, mainly because they pay my clients a 3.59% dividend while we wait for their stock to turn around. And next year we will likely get another raise.

While the markets have shown some recent volatility, the one thing we can count on is our dividends and dividend increases. One of our popular holdings, Microsoft (MSFT) announced a dividend increase yesterday. Their quarterly payment has been upped from $.28 to $.31 giving investors an 11% raise in their income. When is the last time you received an 11% raise?

For more information on how to have a life long stream of rising income schedule a free portfolio analysis today!

bill@401advisor.com

Investors.com quote

Here is a link to an article, Biotechnology ETFs Show Rebust Health In August I was quoted in posted at investors.com – the online publication of The Investor’s Business Daily (IBD). Short article focusing on two of the hottest market sectors, biotech and solar/green energy. My take is that it is mainly a consequence of a “risk on” market attitude that comes from global central banks jointly adding money into their respective economies. “Don’t fight the Fed” is particularly appropriate when multiple Fed’s are all pursuing the same easy money policy. Especially now that the ECB has decided to join the party.

No Need to Worry: Positive Trends Remain in Place

Last week I published an article at horsesmouth.com that can be downloaded here: Liquidity Worries.

The short version is that the stock market seems to be continuing along in its uptrend. Despite a few recent bumps and a little volatility the trend is firmly in place. However, and this is becoming a more and more troublesome however, there is definitely some signs of worry appearing. You may have heard or read about a selloff in high yield bonds. Or you may have noticed that we sold a large position from your account (BKLN) if you are a client in our Dividend and Growth Strategy. High yield bonds have in the past acted as an early warning signs to trouble in the stock market. A sharp selloff is worth watching.

Specifically in this case, it is my opinion that such a selloff has occurred because there is way too much money in the high yield market that doesnt really belong there. That is normally safe money that would be in bank CDs or maybe higher quality corporate or even government bonds or mutual funds. But since yields and interest rates are so low, the money has migrated up the risk sladder to grab the 5%+ yields in the high yield market. Money that is stretching for yield is typically skittish it heads for the exits quickly with a hint of trouble. And that is what we saw at the end of July into early August.

The point of my article is that the same conditions safe money stretching for return, exists in the stock market. CD money is eschewing sub 1% interest rates for 3%+ dividend yields. Investors have taken out record amount of margin debt (borrowing money using stocks as collateral to buy more stocks). Record high margin levels as we have now were associated with both the Tech Wreck of 2000 and the Financial Crisis collapse in 2007. Although I dont see a particular reason for a stock market collapse, should a selloff get started it could very easily begin to snow ball, and a normal 10% correction could become twice that or more very quickly.

Bottom line. Now is not the time to take on added risk to your portfolios unless you have a very defined plan to act and act quickly should a market selloff start. We have refocused our portfolios on high quality dividend payers, and have sold our high yield investments. Im currently targeting a 25% cash position.

For more information read the entire article here, or give me a call at 937-434-1790, or send an email to: bill@401advisor.com

“Growth” portfolios

As of noon today our “Growth” portfolios will be 80% in cash.

I anticipated that the market would be a little volatile as we head into earnings season, but selling sentiment seems to have been unusually strong over the past week.
Hopefully markets will rebound with earnings announcements, but if sell off is related more to China and Europe, than this could be more than just a 10% “correction.”

How Are Those New Year’s Resolutions Going?

If you’re like most Americans you made a list of New Year’s resolutions in the best of faith to follow for the year. And like most of us the year’s resolutions became more like this week’s to-do list! If your list included improving your finances, we’re here to help and get you back on track.

I’ve heard that many younger people want financial help, but don’t think they have enough money to ask for professional help. At DeShurko Investment Advisors, we believe that financial planning is the process of saving and investing. It doesn’t matter where you start, what’s important is to reach your goal. Wealth management is the investment process to manage money, once accumulated.

To help out those who want to get started, with a financial plan for their future, we’ve adopted an age-based service and fee model for our financial planning clients. Simply put – for one low annual fee we’ll provide a review and roadmap to financial success. We’ll also use our award winning investment process to manage and invest your 401(k) plan account. No more worrying about what funds you should own and when. We’ll take care of the decision making for you!

Give us a call, and we can discuss your situation with a free initial consultation. Let’s get that Financial Resolution back on track!

Portfolio Changes

Last week market sentiment was decidedly negative. While the news has focused on turmoil in emerging markets (not a factor), the real question is economic growth in the U. S. As I have said many times, corporate earnings have to be strong in 2014 to justify current market values. Last week’s sell off centered around a PMI report that came in much weaker than expected. My feeling was that the market did not fully consider December’s bad weather, and the affect of mid-week Christmas and New Year’s holidays. This week we have seen some stabilizing technical indicators that imply the market is holding at these levels and is due a rebound.

In response, for our Dividend and Growth Strategies we have sold off a fixed income position and purchased Ford (F), Altria Group (MO), and GE (GE). I have avoided owning tobacco stocks for 27 years, but at current valuation and a 5.65% yield I had to jump on MO. GE is one of my favorite stocks, and looks better now after an 11% decline and a 3.59% dividend yield. While Ford is more cyclical than I like, it has suffered an 18% decline and is cheap with a 2.72% yield. I am very bullish on the outlook for the aluminum bodied Ford F-150 pickup truck.

While these purchases over allocate us to equities, I expect to re-balance in a couple of months if not weeks. I’m comfortable that we can ride through a correction due to our relatively high dividend yields and low valuations across the portfolios. If we see the short term rally I expect, we’ll take profits and reallocate back into our 20% fixed income position.

Stocks today

I just wanted to post a quick note that the stock market is giving us a very bullish signal – so far today. First, yesterday’s low did not drop below a level of support that would be consistent with this bull market trend that started in March of last year. Second, today’s price history on the S&P 500 is creating what we call a “Spinning Top” candle formation. This is a very bullish turnaround formation. We saw a similar formation in both June and October of last year when the market bottomed at the support line as well. While one day does not make a (new) trend, I would not sell holdings today. Aggressive investors might be buyers if you have cash on the sideline. More prudent action would be to give the market a couple more days to discern its direction.

 For more information feel free to give me a call – 937-434-1790, or drop me an email  – bill@401advisor.com.


bill@401advisor.com • 937.434.1790

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Charles H. Dow Award Winner 2008. The papers honored with this award have represented the richness and depth of technical analysis.

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