• <h5>Bluemound Asset Management

    Bluemound Asset Management

    A Kirk Spano company

A Better Way…

Kirk SpanoAccording to Warren Buffett, the top 2 investing rules are…

Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.  

The most important aspect of financial planning is having an investment approach that protects you from large permanent losses and still gives you an opportunity to make money over the long-term.  I founded Bluemound Asset Management after seeing that most of the sales driven financial industry comes up lacking.

My name is Kirk Spano. I am visible and easy to follow in the media. Please take some time to read about the advice I have given. Then, if you are ready to find a better way to secure your lifestyle and create a legacy, contact me so that we can talk about what is important to you.

Some of the places I’ve been published, syndicated and broadcast… 

Avoiding the Next Crash & Investing in the Next Boom

Buffett Indicator

In January 2012 I told people on MarketWatch not to miss the upside coming in American stocks. In June of 2014, I told people to sell their oil and gas stocks, most of which were cut in half by December 2014.

Today, I am telling people that the next few years are lining up for some very negative events in parts of the world that will effect your portfolio. In my special report “The Two Most Important Trades You’ll Ever Make — Avoiding the Next Crash & Investing in the Next Boom” I discuss how to protect yourself and how to preserve your lifestyle. 

Request your free report today.

2013: We’re Still Here

Happy New Year!  The new year will be a lot like an old year.  Not 2012, but quite likely a lot like 2011, marked by increasing volatility and possibly a correction, before we begin a new leg higher in the markets.  I reserve the right to be off by a year, but given a host of reasons covered in my year opening article for MarketWatch — Prepare for Zero Real Growth in the U.S. in 2013 (please read it) — it is time to err on the side of caution again as other investors decide to get back into the markets after several years.

When I discuss volatility, many people react with disgust or disjointed irritation about what they perceive as a high level of volatility in the markets.  Over the past fourteen years there has certainly been volatility, but in the past year, volatility has been very low.  Most people are not aware of this. 

In 2011, we saw the year begin with a low volatility uptrend, see volatility spike into a correction, then volatility diminish and support another rally.  As I discussed on MarketWatch the first week of January 2012, Your Major Risk in 2012 is Missing the Upside, I believed 2012 would be a pretty good year despite common perceptions that market volatility was a major risk.

Today, now that the Mayan calendar has recycled and we have survived, let’s take another look at volatility. 

Let’s start with something fresh from Warren Buffett’s 1993 letter to Berkshire Hathaway investors:

In fact, the true investor welcomes volatility.  Ben Graham explained why in Chapter 8 of The Intelligent Investor.  There he introduced “Mr. Market,” an obliging fellow who shows up every day to either buy from you or sell to you, whichever you wish.  The more manic-depressive this chap is, the greater the opportunities available to the investor.  That’s true because a wildly fluctuating market means that irrationally low prices will periodically be attached to solid businesses.  It is impossible to see how the availability of such prices can be thought of as increasing the hazards for an investor who is totally free to either ignore the market or exploit its folly.”

So, the world’s greatest investor is telling us to use volatility to our advantage.  We can do this through buying good assets when the markets make those assets cheap and also selling when the market prices assets higher than their value implies from time to time. 

As has been the case historically, the market generally makes many stocks cheap at the same time.  This is called correlation. Often, entire sectors fall at the same time, only to later rebound as a group.  In these situations, we might invest in an entire sector using an exchange traded fund (ETF) or via buying several stocks in the group.  Last year on Motley Fool I discussed how to Build Your Own Bakken ETF when I identified that Williston Basin North Dakota oil stocks were good long-term holdings.

Recently, most of the stock market has risen in a highly correlated low volatility way.  As a result, very recently, small investors have started to add money to the stock market for a the first time in a long time.  This phenomona of small investors getting into the market after a large run-up, you have noticed the market roughly doubled off of it’s 2009 bottom haven’t you, is known as “ImMissingItitis.”  It’s a psychological disease.

BingoThe symptoms of this disease can be very devastating.  The first symptom is marked by night sweats and irritation after hearing how their friend or neighbor made money in the stock market recently.  After stewing for awhile and watching the market continue to go up, the patient calls their advisor or broker, or worse yet, logs onto their formerly dormant online brokerage account.  What happens next is ugly — the patient orders their financial person to get more aggressive or starts clicking away firing off buy orders in their portfolio so that they can feel good again.

Inevitably the stock market falls again, generally to below the point where the patient has bought back in.  The patient, who needs self-validation (the strongest human emotion), does not sell until they decide the market is rigged.  The patient then blames others for their poor results and swears to never invest again.  What they do not realize is that they never invested in the first place.

ImMissingItitis is a disease with no cure.  Like many diseases, it only has treatment.  Without treatment, the patient can lose most of their money and never recover.  Effective treatment includes ignoring the noise, controlling emotions, patience, continuing to set aside money for future investments, learning to value assets and having the courage of conviction.  The side effects of treatment are many; including self-doubt, lack of confidence, sweaty palms, weak knees and dry mouth.  The medicine, like a kiss from mom, does eventually work however.

For 2013, as the year progresses, especially in January, we can expect old investors to become new investors, big investors to sell to small investors and governments to continue their slow dance of nincompoopery.  We should also expect an eventual increase in volatility.  We should not be suprised if the stock market, either this year or next, falls 20% to 30%.  We should be prepared for that eventuality. 

Here I will note something that is very important.  We should not probably expect another financial armageddon.  We already had it.  Remember 2008?  That was it. 

The world is now very slowly, in fits and bursts marked with setbacks, getting better.  Technology has unlocked and created new energy.  Agriculture is poised to expand capacity.  Debts are slowly getting paid.  Getting better will come with some price on the calendar, however, in a several years, the world will be noticably better. 

As investors, we will use 2013, and possibly 2014, to continue with our plan to focus on scarcity based investments which we can derive income and growth from, i.e. energy, alternative energy, water and waste infrastructure, agriculture, other various resources, medicines and basic goods as the world transitions to a more sustainable economic model over the next generation.  As many of those types of investments are highly likely to be volatile on short-term cyclical economic news, i.e. a recession, we will employ volatility to our advantage.

Your forward looking advisor,

Kirk Spano

Find Worthy Causes

Evaluate charities here.

Bluemound will match any donations that clients make to qualifying charities and causes up to 10% of the fees that we bill to a client.

Kirk on MarketWatch

Bluemound Asset Management founder, Kirk Spano, was tabbed “The World’s Next Great Investing Columnist” by MarketWatch.com of the Wall Street Journal network in 2011. He has been published and syndicated extensively, as well as, appeared on television and as a regular radio guest, for his views on the economy and markets. Find Kirk’s list of MarketWatch columns here.

Monthly Letter

Subscribe to Kirk Spano’s Important Updates & Article Links:

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Monthly Investor Call

On the second Saturday of each month, Kirk holds an investor call to summarize his views on the economy and finance, as well as, take some questions.

Link into Kirk’s next monthly investor conference call:

Saturday, April 11th at 11am Central

Investment Programs

  • Punch Card Stocks

    Based on Warren Buffett’s idea that if we limit how many companies we invest in, that our portfolio will be less risky and offer better performance.

  • Retirement Income Options

    A flexible income strategy designed to handle any interest rate environment and provide enough growth for a long life.

  • Global Trends ETF

    A low cost exchange traded fund (ETF) strategy for dealing with an uncertain global economy and financial markets. Growth or Retirement Income available.

  • Resource Investor

    An add-on strategy for those seeking to hedge looming scarcity issues for natural resources and inevitable inflation.

  • Mutual Fund Selector

    A flat-fee program for traditional investors who need a better way to manage a mutual fund portfolio with no new commissions.

  • 401(k) Monitor

    Fund selection, contribution strategy and ongoing asset allocation recommendations for your at-work retirement plan. 

  • Annuity Rescue

    Learn how to reduce expenses, increase net returns and avoid the nasty tax surprise awaiting many annuity owners. 

  • Self-directed Investors

    An option for experienced self-directed investors looking to add Kirk Spano’s analysis, investment research, risk management and trading techniques.