A Random Advisor's Walk

Dow Jones Rallies to Close UP 132.39

2006-08-15T20:17:00.000-05:00

I've been waiting since July 24th for another day like today. We're still seeing turbulence in the market continuing into the 4th quarter. It's fun to wall this Bull vs. Bear battle playing out. The bearish sentiment is also prevalent throughout the blogosphere. I personally remain optimistic about the short-term outlook.

Watching the resilience in the market has also been very interesting as we saw minimal volatility as a result of the airline terrorism plot. We did not even budge towards similar losses to those seen in previous years following increased national security threats. I would be willing to accept the idea that we are a safer America today than we were pre-9/11 and think that the market reflects a similar belief.

Counterintuitive Strategies

2006-07-17T19:16:00.000-05:00

Here at RAW I think it is important to have a wide coverage of investing themes and strategies to compliment the typical soundbites the media gives us. A common investment strategy that works against the common investor is the concept of chasing returns. This would involve analyzing any stock or mutual fund based on its prior return characteristics. Often this results in the purchase of securities that have already completed their "run" and are at a higher risk of below average returns or even declines. This is the stereotypical "buy high and sell low" that causes the headaches for the "home gamer" as Jim Cramer would call it.

When looking at the fad of the day it is important to keep this effect in mind. Institutional money managers and at home traders will tell you that by the time a story becomes public knowledge it is too late. The run is over. Gold is the perfect example here after we have seen the pull-back from well above $700 a troy ounce. The market had been pushing gold etfs and mutual funds as the next big opportunity. Those individuals who seek to make fast short term gains with disregard to the risks associated will often be those who allow market volatility to dictate the downside of their investment (i.e. they are buying at statistically higher than average prices).

When feeling the common urge to seek out these alternative investments, may I suggest limited your portfolios exposure to these riskier instruments. Perhaps looking at a diversified commodity ETF or fund to round out your investments could help you actually diversify away a portion of the risk. I personally would limit my exposure to being no greater than 10% of my portfolio as a whole for even the riskiest investor profile. These diversified commodities funds may allow you to capture the value that can be seen in rising oil prices, the gold fever, and the various commodities used for producing ethanol.

Skiddish Markets

2006-07-17T10:02:00.000-05:00

It looks as though all the major indices are opening sideways for the most part. We opened up and then reverted back almost immediately. This is typical of the volatility we've been seeing over the past 6-8 weeks. I expect that we trend sideways or remain in our current downtrending channel leading into earnings season.

A Look Forward...

2006-07-16T19:57:00.000-05:00

This is the first post of RAW (I just realized what a great acronym the title makes), and I figured it would be appropriate to explain the topics I intend to cover as well as give some background. I currently work as an independant Investement Advisor. This is a great career as it allows me to be both self-employed and work in the financial arena. Entrepreneurship is exremely important to me. I'm always analyzing potential business plans for myself and have become a goto for all of my colleagues for assistance in their seed stage ventures. I've been instrumental in the management of portfolios in excess of 25 million on both the sales side of retail business and individual/institutional client asset management.

In RAW I hope to cover a range of business topics that are relavent to the small business owner and the institutional investor alike. I'm going to tend to avoid any technical stock analysis in favor of more general observations of recent market behavior with a look at ADRs and global markets. I'll also be talking about the struggles of self-employment and establishing effective client relationships. I'm sure i'll be posting some motivational tidbits as well.

As the title does suggest though, this will be a random walk. I welcome all the readers to supply feedback as to questions and comments. I look forward to providing a glimpse into the business/financial realm as I see it.