Eight years into a bull market, investors who have remained in cash since the financial crisis are coming off the sidelines and entering the financial markets; prompting concerns from financial professionals. This month’s issues of The Samra Report covers: digital currency, the blockchain revolution and the future of cryptocurrency.
The world of finance, is a lot like the world of medicine: An infinite number of variables, countless areas of expertise, and immeasurable opinions from both professional and novice sources. With the recent barrage of hurricanes leaving 16.5 million Americans without power, this issue of The Samra Report focuses on the weather and your portfolio.
The general practice amongst financial advisors, is for the advisor to assess their client’s risk profile and allocate assets amongst off-the-shelf investment vehicles. This flawed practice illustrates a strong disconnect between the financial advisor, the client’s tax advisor and the client’s enthusiasm towards reaching their financial goals. This month’s issue of The Samra Report highlights the widely unknown area of impact investing, contrasting the benefits against charitable donations, and our preference of allocation with regards to geographic location and sector.
In February of this year, Warren Buffet, slammed Wall Streets’ active managers, while praising passive investment pioneers such as Jack Bogle, founder of The Vanguard Group. This month’s issue of The Samra Report explains: how Warren Buffett’s remarks were taken out of context, how to beat the S&P 500, and provides insight from Benjamin Graham, Warren Buffet’s mentor, professor and widely known as the father of value investing.
This month’s issue of The Samra Report will focus on the dangers of over-diversifying, the need for global diversification, and how investors should allocate their portfolio’s 8 years into a bull market.
Investors and advisors with a flawed fundamental understanding of macro-economics, are certain to experience negative returns during times of market appreciation, as they neglect to factor an appreciation of domestic currency, against the appreciation of foreign equity and debt instruments. This month’s issue of The Samra Report will focus on divesting vs. reallocating exposure, depression babies, and alternative investments in the new housing market.
With the media focusing on the Presidents Twitter account, and a list of failed accomplishments over the administrations first 100 days. This month’s issue of The Samra Report will focus on identifying sectors of growth, as well as areas that have been overlooked as skeptics criticize the president on his campaign promises, while President Trump continues to push his agenda towards policy change.
Over the last 8 years, many investors have followed the crowd into passive strategies, oftentimes quoting media headlines of “Passive Strategies Outperforming Active Managers”. However, these statistics are misleading, as most investors who invest in an active strategy, invest in a strategy with little active management.
Investors have few resources to determine the caliber of their financial advisors, as most investors commit to following a strategy of buying low and selling high. Such strategies recommended by a financial advisor show a flawed investment foundation, and can help investors determine if their financial advisors are investment professionals, or amateurs regurgitating corporate sales literature. To the layman, the philosophy of buying low and selling high is common sense, however, the intelligent investor understands the goal is to own a stock at an attractive price. In this scenario, the correct course of action is to sell a put option on the stock. As a result, there are two possible outcomes: (1) Should the stock not reach the strike price, the investor collects the premium from selling the put contract, however, does not own the stock (2) At the strike price, the investor owns the stock they wished to purchase at a quoted price, however, also collected the premium from the sale of a put contract, effectively allowing them to purchase the stock at a lower price.
Discrepancies such as these, differentiate the novice from the investment professional.
With a new administration occupying the White House, investors have been pleased to see the stock market continue to rally, after the Presidential election, with the Dow climbing to over 20,000 for the first time. Although President Trump has clashed with the media, and the new administrations’ actions have caused liberals to protest, nearly shutting down airports, the stock market has been little effected. Economist Larry Summers pointed out that although President Trump’s policies have caused frustration, they have not yet affected trade. Translation: The Presidents’ bark is worse than his bite, for now at least.