Tag Archives: investing

Emerging Markets, Stock Markets

Closed-end Funds: Global Exposure In The Asia Pacific Fund

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Closed-end Funds: Global Exposure In The Asia Pacific Fund

The Asia Pacific Fund, Inc (NYSE: APB) is registered as a closed-end management investment company, with an objective to achieve long-term capital appreciation through investment in Asia Pacific Countries (excluding Japan).  This creates the opportunity for investors to gain access to emerging markets throughout the region while still maintaining broad regional diversification.

Source: CEF Connect

Most analysts agree that a significant portion of global growth will be present in emerging Asia over the next decade.  These assets can be accessed at cheaper levels given the Asia Pacific Fund’s attractive discount to net asset value (NAV).  The fund has rallied strongly since February 2016, and investments here come with an attractive dividend yield of 2.14%.

Economic Trends in Asia

The year 2017 was positive for Asian markets.  Stocks throughout the region recovered against the backdrop of upward revisions in earnings and stabilizing political factors externally.  The MSCI Asia All-Country Index (which excludes Japan) closed with a 42.1% gain for the year, and its dividend yield index rose by 29.8%. The rising tide lifted many regional funds, and this positivity in global markets helped the Asia-Pacific Fund gain approximately 50% in 2017.

The MSCI Asia All-Country Index (which excludes Japan) closed with a 42.1% gain for the year, and its dividend yield index rose by 29.8%.  The rising tide lifted many regional funds, and this positivity in global markets helped the Asia-Pacific Fund gain approximately 50% in 2017.  These are strong gains which are more closely in line with the longer-term expectations for Asia (relative to Western economies) through the year 2022.

Source: IMF

However, shorter-term volatility has remained in place, and the first quarter of 2018 was not as expected.  In the wake of faster-then-expected interest rate hikes by the US Fed Reserve, investors enacted strategies tied to risk aversion.  

The world also saw itself on a brink of a trade war between the U.S. and China, which hastened with widespread tariff implementations.  The Asia-Pacific Fund fell 0.9% during the period extending from January 2 to April 2, 2018. The greatest drop in the share prices was between January 31 and February 12, wherein the stocks plunged by 10% before entering correction territory in the next few days.

Fund Holdings

The reality is that as interest rates have increased in Asia, liquidity has tightened.  Even though the NAV and the market price of the Asia-Pacific Fund both increased by more than 20%, the year its share of challenges.  

Problematic sectors were seen in the internet and software industry.  To mitigate the negative influence of global trends, the Asia-Pacific Fund has balanced its portfolio to increase exposure to top performing sectors (like industrials, information technology hardware, and real estate).

Source: Fidelity

The major sector concentrations of the fund are devoted to Real Estate (17.7%), Industrials (16.2%) and Consumer Discretionary assets (15.9%), with 5% given to holdings in both Longfor Properties Company and China Construction Bank (Class “H” Shares).

Financial Performance

The overall performance of the fund was positive during its annual period ending on March 31, 2018.  The Asia-Pacific Fund shows that price-to-book multiples, price-to-earnings multiples and its yield remain favorable when compared to the benchmark MSCI AC Asia Index (ex-Japan).  Positive developments in this regard prompted the Board to advise shareholders to vote against the proposed liquidation of the fund.

This looks to have been a wise choice given the subsequent performance seen in share prices.  Currently, the Asia-Pacific Fund has total net assets of $148.8 million and has 10.3 million outstanding shares as of July 31, 2018.  The net asset value stands at $14.38 and a commitment to its Dividend Reinvestment Program is what makes APB a favorable option for prudent investors.

Source: Morningstar

The fund’s NAV per share has increased from $12.96 on March 31, 2017, which means we have seen gains of nearly 11%.  On December 21, 2017, the fund paid out a dividend of $0.61 per share (with a yield of 2.11%). The PE Ratio stands at 4.53 and the EPS is $3.2.  For the Asia-Pacific Fund, the momentum in earnings revisions has acted as a key driver of growth.  Investors can look forward to a potential growth in the stock prices as the fund has posted a consistent performance over the past two years.  

After facing a drop in February 2016, the stock raised back by 75% in the period ending November 2017.  The increase in the stock was due primarily to the positive performances seen in the real estate and hardware sectors.  This suggests that markets are well-prepared to buy the stock when it is trading at a significant discount. The positive performance and economic growth of the Asia Pacific region continues to have a positive impact on share prices – and this looks set to continue in the quarters ahead.

Market News, Stock Markets

Mexico Fund: Stable Exposure To LATAM Emerging Markets

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Mexico Fund: Stable Exposure To LATAM Emerging Markets

The Mexico Fund (NYSE:MXF) is a closed-end fund designed with the investment objective of providing long-term capital appreciation through strategic portfolio allocations in the markets.  Incorporated in June 1981, and domiciled in the U.S., has always been managed by Impulsora del Fondo Mexico S.C. The fund offers well-positioned access to Mexico’s economy through a broad range of public listed companies.  

Economic Trends in Mexico

Since MXF mainly offers exposure to equities securities listed on the Mexican Stock Exchange, the economy of Mexico has a substantial impact on the fund. However, several of these companies now earn a significant portion of its income and profits abroad, through exports and subsidiaries in other countries or regions. Broadly speaking, the macro trends look highly encouraging.

Economic: Mexico GDP
Economic: Mexico GDP

Source: World Bank / Trading Economics

In 2017, the economy of Mexico grew at a rate of 2%, while in the first half of 2018 the pace maintain the 2% rate. Analyst surveys at the Mexican Central Bank predict sustained full-year expansion of 2.3% and 2.2% for 2018 and 2019, respectively.

Political uncertainty due to Presidential elections held on July 1st 2018, and the significant volatility seen in the global stock exchanges earlier this year had a visible impact on the share prices of MXF.  Share prices reached its yearly low on June, however, the stock has posted a sharp bullish reversal, and this suggests that a long-term bottom is likely in place for the stock.

The prior negative trends in the stock price can be attributed to strong movements in the global environment.  Some of the major events that have impacting the MXF fund during this period:

  • Sharp decrease in oil and other commodity prices staring on 2014.
  • Political environment in the U.S.
  • Pending resolution of NAFTA renegotiations.
  • Political uncertainty in Mexico due to Presidential elections.

Finding Opportunities At Lower Valuations

Macro trends over the last few years have not been favorable for regional assets.  But these declines have created significant opportunities for investors. When viewing the closed-end fund through the lens of its discount to net asset value (NAV), we can see that the Mexico Fund is now trading at some of the deepest discounts in its recent history.

Source: Morningstar

On June 12, 2018, the Board announced a dividend of $0.15 per share to its investors.  This represents an annualized dividend of $0.60 per share, and an accompanying dividend yield of 3.63%.  The quarterly dividend was increased from $0.13 per share to $0.15 per share in April 2018, representing an increase of 15.38%.

Source: Fidelity

During the first seven months of 2018, the Mexico Fund has had a productive year, with a positive NAV total return of 8.78%, while outperformed its benchmark (the MSCI Mexico Index) by 250 basis points. As of July 31, 2018, the fund’s market price was $16.63 and its NAV per share was $19.23.  The Fund has outperformed its benchmark during the last one, three, five and ten year periods ended on July 31, 2018.

Positive Improvements in Share Prices

During the May-June period this year, the broader market experienced the broader ramifications of the ongoing trade-war tussle between the U.S. and China.  The Mexico Fund saw a nice rebound following this period, however, and the stock correction generated gains of 13% through mid-July. This creates a more positive outlook for the remainder of 2018, as trade war fears have subsided, global trade exchanges have resumed their previous rallies and an improved political environment.

Fund Exposure

Changes in fund holdings in the first half of 2018 have created additional positives, as exposure in the domestic consumption sector was reduced in favor of increases in exposure to the financial services sector.  Widespread gains have been seen in financial stocks over the last year, and this puts the Mexico Fund in a much better to capitalize on those trends going forward.

The rising cost of raw materials and high relative valuations have impacted the profitability of companies in the domestic consumption sector, while the financial services sector is still showing higher projected margins. All together, this bodes well for the outlook and sets the Mexico Fund on a course to close its NAV discount heading into next year.

Market News, Stock Markets

Brookfield Real Assets Income Fund Set to Move Higher

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Brookfield Real Assets Income Fund Set to Move Higher

In December 2016, Brookfield Asset Management merged three of its funds (HHY, HTR and BOI) to form the combined Brookfield Real Assets Income Fund (NYSE:RA). Since then, RA has helped raise Brookfield’s profile in the asset management sector and infused flexibility into the fund’s asset allocation.  RA is also showing signs that a bullish reversal has been in place since the middle of March.

Stock Chart
Stock Chart

The three original funds had a focus largely on debt.  But these more recent moves have allowed Brookfield to pursue a more dynamic approach, allowing investment decisions to be dictated more closely by the changing needs of the market.  

Stock Chart
Stock Chart

The fund’s elder sibling is the Brookfield Global Listed Infrastructure Income Fund (NYSE:INF), which was formed way back in August 2011.  When looking more deeply into the fund, we can see that 80% of its managed assets are in publicly-traded securities tied to companies in the infrastructure sector.  INF has $196.46 million worth of assets under management, and the stock has moved steadily higher since the beginning of 2016.

Impact of Political Upheavals and Monetary Policy

As is the case with most of the market, the impact of political upheavals on these stocks should not be ignored.  We are still seeing escalating trade tensions between US, China, and the Eurozone – and this is having a rippling effect throughout stock exchanges across the globe.  This generated many of the declines experienced in stocks such as RA and INF during the month of March 2018.

Ultimately, those declines can be viewed as new buying opportunities for the stock.  In March, RA saw a steep drop in share prices, falling by 9.9% from its earlier highs of $23.93 in January.  To a large extent, these bearish moves can be attributed to the panic felt by investors which relates to potential interest rate increases at the Federal Reserve.  This was especially true after the release of January’s nonfarm payrolls report.

Deeper NAV Discounts and Higher Returns

On a YTD basis, RA is trading lower by -2.14% and INF has shown losses of -4.8% over the same period.  This creates added discounts for investors relative to net asset values.  With $888.3 million in net assets, RA has consistently generated higher returns through current income values and capital growth. RA’s most recent monthly distribution was $0.1990 per share and its NAV discount currently stands at 5.29%.

Stock Chart
Stock Chart

RA’s weighted average duration of 1.4 years is another positive sign for the prudent investors.  When considering the rate of inflation and the consistently upward path of interest rates, it is important to understand that there will be repricing effects in most of the fund’s assets.  As rates go up, RA stands to gain (due to its weighted average period).

On the negative side, the Undistributed Net Investment Income (UNII) for the stock should be noted.  Since UNII is a direct indicator of dividend payment availability, investors focused on income might highlight the possibility that Brookfield will have distribution difficulties.  However, when looking at the larger picture, we must understand that roughly 41% of all closed-end funds have a negative UNII. In the case of RA, this risk is partially mitigated as a portion of its current portfolio is devoted to infrastructure companies that pay their distributions as return-on-capital.

Elevated Dividend Yields

In all likelihood, the fund could continue to attract income investors because of its elevated payouts.  RA offers broad exposure to U.S. and International securities with investments in high-yield and floating-rate debt assets.  The stock yields 10.43% at current price levels ($2.39 per share). This creates some interesting opportunities for value investors given the recent declines in share prices.  The promise of elevated income and a diversification into real assets helps RA stand out in the current market environment.

Similar characterizations can be made in relation to INF, which most recently paid a monthly distribution of $0.817.  On an annualized basis, this represents a dividend payout of $0.98 per share, and a percentage yield of 7.94%.  As the stock continues on its positive trend, broader sentiment seems to be falling in line with expectations. Accern Sentiment Analysis is now seen giving the stock a positive score of 0.15 on the Accern scale.

All together, the outlook looks stable and investors should consider RA as a steady option in closed-end funds that is prepared to capitalize on its four core advantages: portfolio diversification, a closing discount to NAV, strong probabilities for capital appreciation, and its elevated dividend yields for income investors.

 

Market News, Stock Markets

Stock Markets: Global Trade Summit Could Change Investor Sentiment

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Stock Markets: Global Trade Summit Could Change Investor Sentiment

The first half of 2018 has proved to be an average year for DIA index compared to the first half of 2017.  DIA is down by 2.16% (YTD), while in 2017 it was up by 7% during the same period. It has a dividend yield of 1.86% and an annualized payout of $4.52.  The annualized growth in the last three years was 9.6% with a growth of 7% in 2017.

ASX 200
AUSTRALIAN ASX 200

The current half of 2018 has seen its own mix of political and economic upheavals thus bringing in serious volatility in all the exchanges around the world.  The events that caused headwinds were the historic meeting between President Donald Trump and President Kim Jong Un of North Korea and, the G-7 Summit. 

Macro factors continue to dominate the investment news headlines, and this is unlikely to change any time soon (as long as the trade war discussions are widely covered in the financial media).

How is global trade affecting performance in 2018?

The graph of DIA has been showing substantial ups and downs in the first half of 2018 due to the impending fears of a trade war and the federal interest rate hike.  

In mid-June, the stock tumbled down 1% on the wake of President Trump’s threat of imposing tariffs on $200 billion worth of Chinese products. The major stocks to be hit were Boeing (BA) and Caterpillar (CAT) which dropped by 4% each.  Goldman Sachs (GS) was up by 0.9%, 3M (MMM) was up by 0.6% and Home Depot, Inc (HD) was down by 0.3%.

Dow Jones Industrial Average
Dow Jones Industrial Average

The DIA index fell down from its 50-day moving average.  Compared with S&P 500, DIA has been seeing a downtrend mirroring the performance of Dow Industrials.  It is a signal that DIA would thus be weaker than SPY and S&P 500. The tariffs would come in force on July 6; however, its impact on the broader exchange market is yet to be seen.  In the meantime, the trade war continues between US, China, and the Eurozone markets.

Trends in stock market ETFs

DIA, like other ETF’s, showed a positive growth in June 2018 due to the recently released job data and falling unemployment rates.  The greatest shock to the Dow Jones Industrials was the removal of General Electric, the longs standing and continuous member since 1907.  

In the DIA, Boeing had a weight of 10% in the index, while General Electric was 0.35%. Wallgreens Boots Alliance Inc (WBA) entered as the replacement stock on June 26.  The removal of GE will have a big impact on thousands of investors who have holdings in the Dow Jones.

All in all, the stock market is now in precarious territory and investors in assets like the SPDR Dow Jones Industrial Average ETF will need to remain nimble (and attentive to economic data) in the weeks and months ahead.

Australian equities markets

After facing considerable plunges during February and March 2018, the shares of S&P/ASX 200 showed substantial volatility during the first six months of 2018 after settling down with a YTD growth of 2.2%.  The Index had shown a steady growth of 7% in October 2017 ($6,029) against the backdrop of the positivity brought by the announcement of the US tax cuts.  This growth remained steady till February 2, 2018 ($6,121), when the S&P/ASX 200 fell down 4.7% in the next two days.

The Index plunged by 5% or 300 points during the period from February 2 ($6,121) – February 12 ($5,820).  The stocks fell due to nasty selling by the investors due to the fear of an increase in the interest rates followed by the testimony from new Fed Chief Jerome Powell.

February 5 was the worst day for the index since June 2017 as prices fell 95 points or 1.6%.  This was primarily due to the release of the US jobs data. The wage data led to panic among investors that interest rate hike was likely too.  This uncertainty coupled with the inflation fears started the market rout on Wall Street which then affected other exchanges across the globe. The Australian dollar too touched an all-time two-month low.

Banking stocks

The stocks, however, rebounded back in the coming weeks by 4% after National Bank of Australia (ASX: NAB) posted an increase of 3% in the first quarter profits.  Following NAB was AMP Limited which posted an increase of 24% in its revenue, while Mirvac Group and AGL Energy both posting an increase of 8% and 7% in its half-year revenue.

In March 2018, the ASX 200 dropped another 5% (February 27 – March 29) due to the US-China trade war.  This heavily impacted the Wall Street and spiraled across Asia leading to a fall in the ASX 200 and All Ordinaries, with Banks and the Miners taking the biggest hit in this debacle.  However, the market gained momentum in April helped by the rising commodity prices and positive growth in the Energy (+10.7%) and Materials (+7.4%) sector.

From its all-time 2018 low of $5,751 on April 3, it shot up to $6,225 on June 22, an increase of 8.35%.  This was particularly due to key global events like the meeting of the President of the US and North Korea and the updates on the jobs growth in Australia and China.  June 15 was termed as the best day in the ASX, as All Ordinaries saw a growth of 1.2%, while ASX 200 grew by 1.3%.

Dividend Stocks, Long Ideas

Dividend Stocks: Prospect Capital Trading Near Lows

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Dividend Stocks: Prospect Capital Trading Near Lows

The Federal Reserve has set low interest rates for the US economy.  This makes dividend stocks especially attractive, and one of the most popular companies in this category is Prospect Capital Corp. (NASDAQ:PSEC).  Those with long positions in PSEC capture dividend yields of 10.5%, which is massive compared to most of the traded stocks in the market.

Stock Price Chart Prospect Capital (PSEC)
Stock Price Chart Prospect Capital (PSEC)

In this chart, Prospect Capital has posted negative earnings performances over the last three years:

Stock Market Earnings
Stock Market Earnings

Stock Analyst Recommendations:

Stock Analyst Recommendations
Stock Analyst Recommendations

The stock is trading at a 25% discount to net asset value (NAV):

Closed End Funds NAV Discount
Closed-End Funds NAV Discount

Stock Price Chart: PSEC Technical Analysis

Stock Price Chart: PSEC Technical Analysis
Stock Price Chart: PSEC Technical Analysis
Energy Stocks, Market News

UK Markets: British Petroleum Basing For Stock Rally?

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UK Markets: British Petroleum Basing For Stock Rally?

One of the most surprising stock market trends over the last few years has been the extreme decline seen in energy markets.  After hitting highs near $150 per barrel in 2008, crude oil has fallen to extreme lows.  Will these trends be able to reverse in 2018?  It is starting to look at though this is a strong possibility.

USO Oil Price Chart
USO Oil Price Chart

We prefer to view the broader trends in oil using exchange-traded funds, or ETFs, as they tend to smooth the volatility that might be seen in a spread betting account in many areas of the market.  The United States Oil Fund (NYSEARCA:USO) provides an excellent gauge in this regard, and we can now see that markets have essentially flat-lined since 2015. From a chart standpoint, this type of trend activity can be read in two different ways — and both may be significant for oil coming stocks during the next few quarters.  

UK stocks in these areas include British Petroleum PLC (NYSE:BP) as one of the largest companies in the industry (by market cap).  The long-term trends in energy markets have a significant impact on BP’s profitability expectations, which are already quite low relative to the levels the stock has seen in the past.  If we do see a turnaround in energy markets, however, a company like British Petroleum could represent one of the best trading opportunities available in the current market landscape.

We can add to this the fact that the stock pays a very healthy dividend, as the stock comes with a yield of 5.46%.  Interest rates remain low both in the US and throughout the global economy, and so those focused on income or retirement savings opportunities stand to benefit from long positions in these types of assets.  

British Petroleum Stock Price Chart
British Petroleum Stock Price Chart

In our analysis for this chart, there is building evidence that the long-term downtrend in BP has reached a completion point.  Specifically, markets have invalidated the decline that began while crude oil prices were at their all-time highs, and this is being further confirmed by the technical indicator readings on the weekly time frames.  

BP Earnings Data: Yahoo Finance
BP Earnings Data: Yahoo Finance

On the break higher in BP, markets have moved above $40 per share and have broken a key psychological level in the process.  Now that the most significant downtrend line for the underlying energy assets (crude oil) have been broken, there is clear scope for these gains to continue.  Lack of technological progress in self-driving cars has only made it more difficult to pass clear legislation for stricter oil mileage standards and so there will continue to be external factors that could weigh on companies like BP.

At the same time, changes in the underlying oil price will need to filter through to earnings, which have been in decline over the last three years.  On the positive side of things, a return to the mean in oil prices would likely mean that BP is able to break through the selling pressure and resistance levels that exist above the current valuations.  

US Dollar Declines

It should also be remembered that, since oil is still priced in US Dollars, foreign exchange markets will continue to have a high level of importance.  The USD has posted declines against many of its major forex counterparts, and the ETF that is typically associated here is the PowerShares DB US Dollar Index Bullish (NYSEARCA:UUP).  

Assets that are denominated in US Dollars traded under pressure for most of last year, as investors sold the currency in favor of its global counterparts.  Most of the attention has focused on the European Central Bank (ECB), which may be adopting a policy perspective that is more aggressive than previously anticipated.  

There were portions of the financial analyst community that actually believed the ECB might initiate an entirely new QE stimulus program and so any change from the norm in these areas could impact currency values during the first half of this year.  Commodities have also gotten a lift, as there has been increased gold buying by European corporate investment banks.  Many of these decisions came as a response to the declines in the US Dollar, further strengthening the Influence of gold on currency markets peripherally.

Current Market Expectations

Current market expectations suggest that we will see a predictable series of three interest rate increases in 2018, so if we do not see any policy changes that are more aggressive it is more than likely that precious markets will have a strong performance over the next several quarters.  Increased buying activity in the Euro could put pressure on the US Dollar in ways that actually support oil prices and, by extension, the mega-cap oil companies like British Petroleum.

Given the recent trendline breaks in the stock price, positions that implement scaling and EMA trading strategies could benefit from the changes that are currently taking place within the underlying momentum.  Lower interest rates could spur economic activity and put further downside pressure on the US Dollar.  Since this is almost always positive for commodities, it should support crude oil prices over the next three months.

The energy space has had a difficult time over the last five years but if we see a confluence of events in a certain direction, there is a strong possibility that valuations could start reverting to the mean.  Earnings trends within BP as a company need these sorts of macro influences in order to drive momentum, so these are potential areas for investors to watch over the next few weeks.  

Market News, S&P 500

Taxes, Insurance, and Portfolio Planning at Morris Retirement Advisors

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Taxes, Insurance, and Portfolio Planning at Morris Retirement Advisors

Retirement planning is one of the most important investment phases in the lifetime of any person, and there are several important issues that are often missed in the process.  Some of these issues include less-glamorous factors like investment insurance and taxes but the fact that they are often neglected makes them no less important.  In order to successfully structure your retirement portfolio, you need to find a retirement advisory that can help you plan in these areas.  One of the fastest-growing names in the sector is Morris Retirement Advisors, which has shown a stable track record in all of these areas.

Morris Retirement Advisors (MRA) offers solutions for:

  1. Financial Planning
  2. Wealth Management
  3. Taxes
  4. Insurance

Investment Solutions for Retirees

MRA offers 5 basic service plans for clients based on differing needs:

  1. Wealth Management: A basic investment management solution allowing investors to select and automatically invest from a list of risk-based model portfolios. Expensed as a fee-based investing plan wherein customers are charged a wrap fee on percentage of assets managed. Tax planning and preparation with an in-house accountant/CPA is also offered for an additional fee.
  2. Wealth Management and Basic Financial Planning: In addition to the services offered by the wealth management basic plan, this plan offers basic financial planning solutions including Budget, Cash Flow, Net Worth Projection and Analysis, Cash Management Strategies, Retirement Planning, Goal Tracking and Education Planning. A Digital Wealth Management Portal offering a consolidated view of all the client’s in-house and external accounts is also provided. Insurance solutions are also available as additional commission based solutions.
  3. Wealth Management and Advanced Financial Planning: Aimed at career professionals and business owners with emerging wealth, this plan offers advanced financial planning solutions like Executive Benefits, stock option analysis, Estate and Legacy Planning along with Tailored Goals based wealth planning in addition to the services offered by the above plans.
  4. Wealth Management and Complex Financial Planning: This plan is tailored for pre-retirees and retired clients looking to preserve, grow and distribute their wealth across generations. This plan offers Retirement Income and Distribution Planning in addition to the services offered by the above plans.
  5. Customized Solutions for Business Owners: Offers solutions for business owners customized to their business needs. The wealth management solution allows clients to select and automatically invest from a list of risk-based model portfolios. Financial planning services include Complimentary Tax Assessment, Executive Benefits Planning, Key Person Retention Strategies, Quarterly Tax Filings, strategic planning for board of directors, Employee Benefits (retirement, life, health, etc), Succession Planning, Entity Formation and Use Evaluation, Estate and Legacy Planning. Insurance solutions are offered as additional commission based solutions.

Broad Approaches to Wealth Management

MRA’s wealth management approach focuses on helping clients understand and manage investment risk, as well as increasing their chances for goal achievement. The portfolio return expectations of clients are set using risk rather than return, which is generally preferable for a long-term outlook.  The investment risk is quantified using a risk number. The risk number is determined using Riskalyze, a cutting-edge technology that identifies acceptable levels of risk and reward. Individual client portfolios are also stress-tested for a variety of stock and bond market scenarios.

MRA maintains multiple model risk portfolios that are used as the basis for implementing a client’s investment plan in the Wealth Management Program. The models range from income, conservative, moderate, moderately aggressive and aggressive. Each portfolio has varying degrees of asset categories and is reviewed with the client prior to implementation and periodically thereafter. The Wealth Management program can be summarized as follows:

Financial Planning for Retirees and Pre-Retirees

Investment advice offered by MRA is tailored for each client to address his/her financial goals, objectives and risk tolerance and structured in view of any outside investments held by the client, considering each investment’s effect on the client’s total portfolio. The financial planning services offered are:

  • Personal budgeting and cash flow
  • Personal financial statements
  • Life, disability and long-term care insurance consulting
  • Investment due diligence, management and portfolio construction
  • Financial independence planning
  • Estate planning and wealth transfer
  • Education and specific goal/need planning
  • Foundation management and charitable giving
  • Business investment analysis and succession planning

The Financial Planning program for every client has 4 stages:

Proven Investment Strategies

MRA maintains multiple model portfolios that are used as the basis for implementing a client’s investment plan. Portfolios are comprised of Core (traditional asset allocation) and Explore (tactical asset allocation) investment themes. MRA’s Investment Committee meets monthly to review investment policy and strategy. 

During the investment committee meeting, there is a review of each investment model that may result in tactical adjustments to each model determined by market and economic conditions. The committee also reviews core recommendation list of investments, analyzing each individual asset class that supports the investment models.  In the video below, we can see how Morris Retirement Advisors is redefining what it means to plan for retirement:

Here, we can see that MRA investment strategies work because they employ the following analytical criteria to select the funds and securities in its recommended portfolios:

  • Past risk-adjusted performance and expense ratios relative to other investments within the same asset class having similar investment objectives
  • Consistency of performance and rankings over time
  • The historical volatility and downside risk of each proposed investment
  • Consistency of investment style and tenure of the portfolio manager
  • How each investment complements the others in the portfolio
  • Economic conditions and comparisons to other investment opportunities

MRA re-evaluates portfolios using fundamental and tactical analysis each quarter, and rebalances them as necessary. For portfolio risk assessment, the company utilizes its sophisticated software services that provide risk management analytics for investing. Based on the risk metrics of each portfolio, these strategies can limit exposure to volatility and enhance your returns over the long-term.  These are strategies that have been tested over time and can be tailored to the needs of the individual.  For more information, visit MorrisRetirementAdvisors.com.

 

Options

Australian Stocks: Options Trading in the ASX 100

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Options markets have quickly risen in prominence over the last several years, and there are many reasons to explain why these trends have been seen.  Global markets are quickly adding many different trading instrument types in order to meet the needs of everyday investors.  

For those most focused on Australian companies, this will often mean establishing positions in the ASX options contract. These option types allow investors to gain market exposure to the stocks listed on the Australian Stock Exchange, which is one of the most interesting and dynamic stock collections in the world.

Just like bonds and mutual funds, trading options is a kind of investment portfolio strategy for sophisticated investors. Options are a derivative security type, with a price derived from (or dependent upon) one or more underlying assets. Working as a contractual agreement, options grant the rights of buying and selling those assets on or before a certain date and at a set price – known as the strike price.

CALL Options and PUT Options

There are two basic types of options: CALLS and PUTS.  With CALL options, the investor gets the right to buy a particular stock at a fixed price on a fixed timeline, but it is not an obligation to make the purchase. CALL options work like a future deposit. Within the expiry time, the stock can be bought at a fixed price (the strike price), and it does not matter if the market value of that stock has doubled during the timeline. This can help investors make big gains. CALL options are exercised when the market value of stocks seems to be going up in a bullish fashion.

With PUT options, investors have the right to sell a particular stock at a fixed price within an expiration timeline. Again, making the sale is not an obligation. This can be profitable in cases where the market value of the stock goes down while the investor can still sell it at the higher strike price. But for both CALL and PUT options, there is a set expiration date. After that, the right expires and all purchases and sales must be made at the actual market rate.

Options Premiums

A premium is the price/value of an option in options trading. It is the amount paid by the investor at the time the options trade is selected. Technically, the only potential risk for the buyer is to lose the initial premium amount paid for the option (in cases where the trader does not utilize his/her buying or selling right before expiration timeline). These premiums can range from narrow to wide bid/ask spreads, and are often quoted by market makers who build market activity in that specific option.

Expiration Date

Every option contract comes with an expiration date, which is the total life span of that contract. The right to buy/sell a stock is valid until that period of time. Expiration deadlines vary for different stocks and products. The premium is lost if the purchase/sale is not made within the specific time period.

 

Market News

Stock Trading: Oracle Shares Surges to New Highs

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Stock Trading: Oracle Shares Surges to New Highs

Stock markets continue to post major bull rallies but one sector that has been largely missed by investors is the technology space.  This can be seen in professional indices trading trends, which have recently shown that assets tied to the NASDAQ have underperformed those tied to the value of the S&P 500.

But we are starting to see some of these trends change, as tech stocks have been able to post better rallies in recent weeks.  One of the best examples here can be seen in Oracle Corp. (NYSE: ORCL) which is now trading at long-term highs.

Stock Price Chart: Oracle Corp. (NYSE: ORCL)

Stock prices in ORCL have surged above prior resistance levels en route to new highs above $45 per share.  “Information driven,” Oracle is one of the most prominent names in tech development and marketing of business software products, database technology software and cloud engineered systems.  Based in the USA and established in 1977, the company is a public multinational entity having more than 136,000 employees currently with head office in California’s Silicon Valley.  

Key products among others related to Oracle are storage, servers, oracle applications and oracle enterprise manager. Enterprise resource planning, supply chain management, and customer relationship management soft wares are also specialized names which are associated with Oracle. It reported annual revenue of $37.04 US billion Dollars (2016) and net income worth 8.90 US billion Dollars (2016).

Tech Manufacturing Companies

In addition to manufacturing and marketing of business software products Oracle also offers other services which comprise consultancy, training and financing which is also a unique element in relation to Oracle. Since its inception Oracle has gone through a comprehensive process of acquisition of entities both corporate and individuals.  In 1995, IRI software was acquired by it under consideration of $100 million US Dollars.  

Other notable acquisitions include:

  • PeopleSoft in 2005 $10.3 billion US Dollars
  • Seibel Systems in 2006 for $5.85 billion US Dollars
  • Hyperion Corporation in 2007 for $3.3 billion US Dollars
  • Sun Microsystems in 2010 for $7.4 billion US dollars
  • Micros Systems in 2014 for $5.3 billion US Dollars
  • NetSuite in 2016 for $9.3 billion US Dollars
  • Apiary in 2017  for which the valuation of purchase consideration is yet to be agreed

According to reports in 2015 Oracle after Microsoft was second-largest software maker revenue wise which is indeed an impressive and substantial outlook internationally. Since the beginning company has introduced multiple technological dimensions like UNIX-based Oracle applications in 1987, PL/SQL in 1988, 64 bit RDBMS in 1995.  

This was followed by its free database to qualify industry standard security evaluations in 2002, smart scans that enhance software query response in HP Oracle Database machine in 2008 and in particular initiative in the shape of Oracle 12c which can facilitate cloud services along with Oracle Database in 2015.  Conclusively, despite facing multiple challenges since the beginning, Oracle has proved itself among preferred and highly recommended global tech entities.

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Gilead Sciences: Sluggish After Healthcare Reform Debate

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Gilead Sciences: Sluggish After Healthcare Reform Debate

Gilead Sciences is an American biopharmaceutical company that discovers, develops and commercially sells a range of therapeutics including antiviral drugs for the treatment of Hepatitis, HIV, and influenza.

The company was founded in 1987 by Michael Riordan, a medical doctor. He served as CEO till 1996. A venture capital firm Menlo Ventures made the first investment of $2 million dollars in Gilead. In 1996, it entered a collaborative research agreement with Glaxo for the development of genetic code blockers or antisense. This was terminated in 1998 and its antisense intellectual property portfolio was sold to Isis Pharmaceuticals.

Gilead IPO

Its Initial Public Offering raised $86.25 million. It launched Vistide for the treatment of CMV in patients with AIDS. It collaborated with Pharmacia & Upjohn to reach more markets outside the United States. In 2010, it acquired CGI Pharmaceuticals for $120 million which expanded its research into kinase biology and chemistry. It also acquired Arresto Biosciences for $225 million and their research for treating fibrotic diseases and cancer. It acquired Pharmasset Inc. for $10.4 billion dollars.

Drug Pipelines

This gave it control over the HCV treatment market by holding Sofosbuvir (medicine for Hepatitis C). It was the first firm to manufacture a pill which is known to reduce the risk of HIV infection. It had a market capitalization of US $113 billion and its stock doubled its value after the acquisition. It was ranked the 4th best drug company by Forbes. It attributed its success to FDA approval and potentially revolutionary drug Sovaldi.

The drug has faced its fair share of criticism for its high price. The committee of finance of the United States Senate investigated wherein it sent letters to the CEO of the company as to how it derived its price. It has recently also acquired Phenex Pharmaceuticals, EpiTherapeutics and Nimbus Apollo. This has given access to treat liver diseases such as non-alcoholic steatohepatitis, inhibitors of histone demethylases which regulates gene transcription in cancer and potentially treating hepatocellular carcinoma and an anti-inflammatory drug filgotinib which may be used to treat arthritis and Crohn’s disease. It’s current president and chief executive officer is John F. Milligan.