Munson and Bartiromo Talk Fed Cuts And Job Numbers 6.5.19

Summer in the city!

It's true, I love to fly out to NYC to see Maria and talk markets. She knows how to get to the heart at what is moving markets - it's her trademark superpower since she started taping on the floor of the NYSE more years ago than is polite to mention.

In this interview we talked about the Fed, and how I feel investors fundamentally don't understand the difference between Powell and past Fed chairs. Then we had to react to the ADP jobs numbers - what a horror story. It just feed my theory that we should be very careful and expect a re-test of some sort of the December lows. Okay, I'm not saying we go all the way back down (I'm not saying that won't happen either!); I'm just explaining what I'm doing for my clients on their time horizon.

Not everyday needs to be a trading day - but everyday I need to understand what is moving markets and separate out noise from reality. I also talk a little about where I would buy and take off exposure.

Munson: Why I Suddenly Care About The Fed June 2019

NYC, another name for Wall Street groupthink. . . .

At this point I thought we would have a larger summer selloff. While the retail crowd is very bearish - for once I’m with them.

My point was simple: Powell said last year if your fed fund rate inverts against the 10 year, your policy is too tight. So, that has happened and everyone is shocked and surprised the Fed might cut. Come on!

My theory is that people don’t get that Powell is a risk manager versus an ivory tower economist. If the data supports that, it will happen.

Lee Munson On Consumer Staples And Summer Correction 6.4.19

I love this new show! Some old friends are producing an hour long show that goes out to almost a million investors through the TD Ameritrade network. That's better numbers than most financial TV shows. Since I was in the city, I wanted to drop by the studio, located in the Nasdaq building, and shoot some tape.

The top was consumer staple stocks, specifically PG and CL. But, that’s not really the point I was trying to make. Sure, I use to trade stocks all day, but let me break down the core message:

1. The time to buy defensive stocks is before a correction, not after.

2. Don’t get caught up in short term stock movements - it tells you nothing.

3. Focus on the big picture and know where you would buy and take profits on a globally diversified stock and bond portfolio.

Of course, that doesn’t make great TV. So, I got into the weeds on an activist shareholder that pressed for changes at PG and made a ton of money off it. My big point? Don’t buy up some other guys winning position - cat’s out of the bag. On Clorox my point was simple, they are spending more to boost sales, but profits are suffering. My point is to beware of firms that buy revenues - a popular thing in tech-land, but it happens everyplace. Outside of that - I really ‘put it to the man’ by not wearing a white dress shirt, instead a vintage design by Ted Baker. It was so subversive, nobody even noticed. . .

Munson Talks Uber Eats/No Autonomous Cars 6.4.19

Here is a short clip about my take on how to value a hot stock. It’s simple, how is Wall Street valuing the firm? In Uber’s case, it’s about a third in food delivery. “Only the crappy places on are Uber Eats in Albuquerque” – it’s going to disappoint. Then I add some color to the conversation, and the disruptions that could happen. I keep talking about how Uber has to buy revenue, and until that stops, or the stock gets very cheap, I’ll take a pass. Again, I’m talking as a speculator – it’s not the thing we buy for our clients because they don’t need risk outside of a globally diversified stock and bond portfolio.

Tax Day - Lee Munson Hanging In NYC Talking Bank Earnings!

My hair looks great - Thanks Jessica!!!

Nothing is better after writing a big check to the IRS than being in NYC doing some interviews on my favorite shows. Okay, seeing my dentist would be better than writing a check to the IRS . . .

Okay, I admit it - I love to talk about bank earnings. Why? It tells you a lot about the health of the economy. This helps me with my portfolio management work by giving me insights. Specifically, if banks aren't expanding their loan book, the economy will find it hard to expand.

How does this help my client's? Well, if you have a major correction in the market and bank stocks are still expanding, we may make slightly different choices than if loan books are shrinking. Markets are always volatile - and you want to have a basic situational awareness of the fundamentals before pulling the trigger on a portfolio rebalance. Remember - just because you buy low cost index funds doesn’t mean you can forget the fundamentals of investing.

Munson Taking Profits April 4th 2019 on The Final Round

Each month The Final Round asks me to come on and talk about what I'm up to. This time I was able to explain how I have been taking profits in a rising market. Let's be clear - I have no crystal ball. But I do have a mandate to control risk and keep a diversified global basket of stocks and bonds. That means from time to time you need to rebalance.

In English - selling some stocks as they make big increases and buying bonds to keep the risk under control. This time around I focused on the REIT portion of portfolios. Also, I made some comments surrounding the IPO Unicorn fever. Our firm doesn't buy IPOs and we don't get involved in fads. If you want to know what was going on in my head that day, take a look.

Comments on New Mexico Cannabis Legislation

Over the years a handful of clients have asked me about cannabis stocks and investment opportunities. I have the same response: stay away. Why? It’s a brand new industry and still in the “Wild West” stage. My role is to learn as much as I can to better educate clients on the risks. It’s not enough to suggest people avoid it; you need to understand the industry to have a credible viewpoint or worthy advice.

I was asked to be on last weeks episode of PBS's In Focus. Gwyneth Doland was hosting the show and of course, I said yes. The big points are pretty simple. First, nothing is happening overnight in New Mexico. It’s going to take time, and maybe a few years to get recreational use approved. Second, it’s still illegal at the federal level. Period. Third, I think the taxes legislators want to levy on the plant is reasonable and I compared some big picture points of what wasn’t working in other states.

Sometimes it’s important to learn about a new industry to better understand why you don’t want to invest it in, for now.

Munson on Amazon Ditching New York

I was asked by the producers at Fox Business to give my reaction about Amazon pulling out of their New York second headquarters expansion. Okay, I’m a cynic. To me, this is just a ruse to take advantage of top tech talent in Manhattan, cheap construction costs in Newark, and connecting the two using the PATH train to cross the Hudson River.

The bottom line is that this would be a good deal for a few people. The shareholders of Amazon, the construction firms, and successful tech talent living in Manhattan. What you don’t know is if the billions in tax breaks Newark will give Amazon (more than what New York was giving) will pay off in the end.

Sounds a lot like what we are dealing with here in New Mexico - from the Facebook data center to Netflix's moving into Albuquerque Studios. Only time will tell if real economic development will transpire.

Will the problems in Venezuela affect my investments?

What does Venezuela have to do with the price at the pump?

I was asked on short notice to discuss the troubling events in Venezuela. Fox Business producers simply wanted to know: how does this affect the average American investor?

Let me be brief.

First, it affects diesel prices. You see, Venezuela imports heavy crude used to refine diesel fuel. All that new light crude that we are pulling out of our own soil through fracking is mainly used to make gasoline. So, while it’s not a big negative for shale producers, it’s certainly not a positive. Transportation costs may be affected, and that’s not good for anyone.

Second, it could affect the trade negotiations with China. While we didn’t have time to discuss this on air, it could be a big deal. Venezuela owes a lot of money to China and Russia. They get cash from selling oil to America. If we stop buying their oil, it will have a domino effect. So, don’t be surprised if we hear this issue come up over the next few months.

I don’t have a crystal ball. I’m simply sharing some basic knowledge of the different types of oil imports and the possible effects from choking supply through government intervention. What I do know is that there are many things each day to worry about. It’s best to get a high-level overview then move on. We can’t control what will happen, but we can control our emotions and not act surprised when news events hit.

Beware of the Cannabis Stocks

Start Low, Go Slow, Or Better Yet, Not At All

Several clients have asked over the past few years about Cannabis stocks. Yet, part of my job is to prevent clients from getting involved with speculative markets and dodgy companies. Nothing says that more than companies selling a product that is essentially illegal on the Federal level, and lacking a functioning banking or financing system in this country.

So, what does one do? First, just ignore it! You don’t have to speculate. You don’t have to fear missing out on a new industry. Isn’t that what lead people into Bitcoin? Isn’t that what people did with 3D printing stocks or internet companies from the past? I’ve been through this before during the dot com days when people felt they HAD to invest in companies with no earnings just because the internet was the future.

Second, if you can’t resist the urge to “be part of a brave new world” at least look in the mirror and be honest. You can throw money into all sorts of “bets” so make sure this is going to make you happier than visiting Las Vegas for a weekend.

If you must . . .

Like I said, don’t. I mean that. This isn’t some type of reverse psychology of “don’t look at this (but really ask me about it).” So how do I answer people who want to speculate no matter what and seek my guidance? Here is what I said on Charles Payne’s Making Money show on Fox Business. My take was simple. Make your own FAANG list for this industry. You look at the stocks with lots of volume that every trader in that part of the market is moving each day.

What am I really getting at? There is no safe way to play an unsafe market segment. You can’t diversify your risk away by buying “related” companies like fertilizer or pharmaceutical firms. Either put your money at 100% risk of loss or don’t play the game. Just realize that most likely, there will be wild swings with zero certainty that any of the stocks today will be around a few years from now. There will be layers of new firms, and even old firms that get into the business.

Like the warning label on a cannabis brownie: start low, go slow. And my corollary: do you really want to do this?