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?

Lee Munson talks market volatility with Neil Cavuto

Shut-Down Low-Down with Neil Cavuto

When markets are down big, I usually get an invite to be on TV to talk about it. Today I got an invite to be on Fox News with Neil Cavuto. Regardless of how you feel about Fox News, it’s a huge platform to discuss what I think are the important aspects that investors should think about. Plus, I get to explain a big complicated idea simply.

Here are the big points to remember as we enter a time of volatility. First, the only real policy issue in America that affects markets deeply is the trade deal with China or the lack of it. Everything else is noise. Second, housing is soft, and most recessions start with a big blow-up in that market. Well, soft housing isn’t a blow-up and rates are lower today than they were last quarter, which produced weak housing numbers. Third, we already know that China had a bad year. It’s the reason why their markets are down well over 20%. So, volatility should come to no surprise today.

In the end, there are things that are uncertain that we have known about for many months. This gives us the opportunity to buy low and sell high. Considering that the market has rallied for weeks since the Christmas Eve low, it’s not really news that there was a down day coming.

Lee Munson's thoughts on the volatile Christmas markets with Bar Rescue host Jon Taffer

Bar Rescue is a late night guilty pleasure of mine. So, when Fox Biz called and asked if I would spend some time on the show Jon was hosting, I jumped.

Feeling introspective, I realized something about the wild market movements of the past few weeks. I made a weak bear case to show the tremendous effort it takes to pull down earnings fast enough to justify the Christmas Eve prices – of which, I did buy for all our clients. Why? I don’t believe the bear case. Neither do most in the business nor most of our clients. I pulled the trigger to buy on Monday’s low of 2350 on the S&P 500. My hand got a little sweaty when I pulled the trigger, but that only proves I’m human.

During the interview, I told Jon what I really thought. We don’t need justification of a bearish fundamental case to explain the market’s action. Eight-five percent of the volume is computerized algorithmic trading (a computer program that only looks at price and not fundamentals).

I think, computers don’t. Let computers stretch the prices too high and too low. I’ll have my “buy prices” set ahead of time. So, rejoice in the volatility. It proves markets work, and that those patient with trades succeed in the end.

Lee Munson on Market Volatility

My monthly residency at Yahoo Finance. Jen Rogers, my favorite person to interview me, asked questions for Yahoo Finance's The Final Round. Miles and Brian got in there too.  

I loved the interview. I got across exactly how I feel about markets. The first question Jen asked was, “What are you selling right now?” I explained clearly, "Why would I be selling because that would be a form of capitulation? I want other people to capitulate so I can buy their shares."

That's exactly how we run portfolios, and that's why we have both bonds and stocks.  

What's most interesting about the last month is that the market has gone no place. After four, five, six weeks of volatility people wonder, ‘Should I be doing something?’, ‘Should I be changing things around since all we hear is bad news?’.

My answer is straightforward: News, while it can move markets, is not as important at the particular levels that you want to buy or take profits on.

To use a real-life example, I have a trigger to strongly think about purchasing stock if the S&P 500 gets near 2500. Now will the news make it go there, I don't know, and I don't care. Could a strange announcement from the Trump administration or the Federal Reserve or Apple Computer cause the market to get down to that level? It could, but again, I don't care. What I do care about is what the price of the market is since all we can buy is price. I look at a few other things like how volatile the market is when it gets to that price, what the trading volume is, and honestly you do have to take the pulse of the planet and figure out where the crowd is heading.

That's different than trading on the news itself, as in the content of the news, because you can't buy a trade war. You can't buy a financial blog. The only thing you can buy is price, so while the news is interesting, sometimes entertaining, and sometimes depressing, the reason I keep abreast of it is because it lets me know what the mood and what the sentiment is for investors and speculators when the markets get to that magic moment where I have to make a hard decision on behalf of all my clients.

Now for the fun stuff: I got to say New Mexico, I got to mention the type of clients I have, and I got to tell people that they should be skiing right now instead of watching the news. Lastly, I’m at the point in my career where I’m able to wear a cool sweater by Ted Baker instead of a white shirt and tie. Thus, it was a success.

FBN: Munson on Markets, Tech decline

Last month all the shows on Fox Business were changed around. As most know, I like the 5-7pmET for interviews because they fit with my family time.

So - the new show at 6pmET (still produced by the incredible Charles Gould who rocketed Charles Payne to crush Kramer in the ratings...) is now the Evening Edit with Elizabeth MacDonald. Okay, I'm not a fan of the name, at all. However, Elizabeth is a host that I respect. She's tough, all business, and I've had the pleasure of sitting next to her a few times when I was back in NYC doing on set work with Payne.

Today was my first hit, and Blake Burman was filling in. What did we talk about? How Apple is a barometer for big tech, the oil prices that didn't spike, the so-called trade war, and the spiking dollar.

If you want to geek out and listen to what I really think this week - here it is.

I tried on a new tie, black with small flowers down the middle - current season for Paul Smith. Jacket is custom from Stitched in Las Vegas.