What Do You Want to Know About Stocks? Here's Your Chance to Ask.

• Report this Comment On November 05, 2009, at 10:13 AM, viperjock wrote:

  How does the MDP team view the likelihood and impact of a continuing slide in the value (real and perceived) of the dollar?

• Report this Comment On November 05, 2009, at 10:14 AM, viperjock wrote:

  Tim,

  Now that we've sold some foreign companies, when can we expect to see that cash re-deployed?

• Report this Comment On November 05, 2009, at 10:18 AM, kjohnson3 wrote:

  Some of us Baby Boomers are good at saving, but now that we are getting close to retirement, what recommendations do you have for us to turn our savings into an income stream?

• Report this Comment On November 05, 2009, at 10:19 AM, TMFMmbop wrote:

  @How does the MDP team view the likelihood and impact of a continuing slide in the value (real and perceived) of the dollar?

  It's a good and important question. As you may know, I was just recently added to the team to help increase the portfolio's international exposure for precisely this reason. While we may see a near-term rise in the dollar as it recalibrates against some currencies that have gotten super-strong (see the euro, the South African rand, and the Brazilian real), the long-term trend for the dollar is down. That's a consequence of our declining role in the global economy and the emergence of resource rich and fast-growing economies such as Brazil, Indonesia, India, China, and more.

  Now, this doesn't mean we're going to be trading currencies. As I said, we will see currency volatility in the short-term. But we will have long-term currency assumptions built in for all of our international allocations, and I suspect you will see us increase our exposure to a basket of global currencies, particularly if we get a sell-off in foreign stocks if the dollar shows some strength in 2010.

  In terms of currencies we'd like to get exposure to, think about the big economies and the resource-rich economies: Chinese yuan, Indonesian rupiah, Indian rupee, Canadian dollar, Brazilian real, Chilean peso, and Peruvian new sol to name a few.

  Tim

• Report this Comment On November 05, 2009, at 10:22 AM, TMFMmbop wrote:

  @Now that we've sold some foreign companies, when can we expect to see that cash re-deployed?

  Sooner rather than later. Generally speaking, I'd like to keep the money we had in MR in China, but focus it on the rural part of the country, and I'd like to keep the money we had in CX in LatAm, but in a company that is more LatAm focused and not tied so closely to the construction cycle.

  We have regular idea meetings within the MDP team, and while I can't tell you exactly what we're discussing yet, we are vetting a few candidates that I have brought to the table.

  Stay tuned...

  Tim

• Report this Comment On November 05, 2009, at 10:26 AM, Golf4Fun51 wrote:

  I am new to MF --- Two Questions:

  1. What should I take into consideration when deciding between mutual funds or ETF's in my portfolio? What are the pros and cons of each.

  2. Like many, I have taken a big hit on my $1.5M portfolio. What strategies should I consider to recover?

• Report this Comment On November 05, 2009, at 10:33 AM, TMFGreedandFear wrote:

  @Some of us Baby Boomers are good at saving, but now that we are getting close to retirement, what recommendations do you have for us to turn our savings into an income stream?

  As you may know, MDP is designed to help members build their equity portfolios. But, as we get older it's appropriate to shift some of our assets into more conservative areas that provide a relatively safe income stream.

  Our retirment guru, Robert Brokamp of the Fool's Rule Your Retirement service, stops by the MDP stables from time to time to offer some sound advice. In our Around the Fool series he recommended looking for cheap bond funds, such as The Vanguard Total Bond Market (NYSE: BND) Index Fund and the Vanguard Intermediate-Term Bond (NYSE: BIV) Index Fund.

  You can also check out the Retirement section of fool.com.

  Thanks for the question,

  Ron

• Report this Comment On November 05, 2009, at 10:38 AM, TMFHumbleServant wrote:

  @Golf4Fun51

  @Question #2. Like many, I have taken a big hit on my $1.5M portfolio. What strategies should I consider to recover?

  Here are a few things to consider:

  1. Don't immediately feel you need to take more risk to try and get back to breakeven. That can cause more harm than good.

  2. Be patient. The stock market works best when you give it time to work for you.

  3. Allocate capital to your best ideas. This is easy to say, but hard to do. But allocating additional capital to the best opportunities can help your portfolio.

  And yes, these are some of the things we do at MDP.

  Best of luck!

  Dave

• Report this Comment On November 05, 2009, at 10:43 AM, TMFGreedandFear wrote:

  @I am new to MF --- Two Questions:

  1. What should I take into consideration when deciding between mutual funds or ETF's in my portfolio? What are the pros and cons of each.

  There a few things I would focus on when picking a mutual fund. First, the track record and tenure of the person managing the fund is very imortant. make sure to find a seasoned professional. Second, keep your costs low. Don't invest in a fund with high fees. Vanguard is respected for keeping fees low.

  ETFs typically also have low fees but you need to be careful with them. Many of them are very knew and have no track record. Some use stratgeies such as leverage to try to juice returns. These may not be appropriate for you. The main benefit of ETFs over mutual funds is that ETFs trade like a stock during market hours. You can buy and sell mutual funds only at the end of each market day based on the closing price of the fund.

  Whatever you decide, make sure the investment vehicle you use matches your desired strategy. If you're goal is diversification, you can try an index fund or an ETF like the SPY.

  Thanks for the question,

  Ron

• Report this Comment On November 05, 2009, at 10:50 AM, creek138 wrote:

  1. The fool has done a good job at outperforming the S&P over the years, but as with all of investing their have been some magnificent gains as well as some egregious losses. In addition you guys periodically prune your selections. This can be troublesome to the small investor where sometimes the commissions on the trades take out a large dent of the gains and magnify the losses. In addition, although your portfolio may do well, individual investors may not be able to purchase all stock recommendations with an adequate amount of capital so we have to pick and choose. There's greater potential there to pick more losers than winners. Other than due diligence are there any strategies that you would recommend to the small investor that would provide a better hedge against these potential losses?

  2. Would you consider the imbalance in worker compensation to executive compensation excessive? Are there any benefits to companies paying executives so richly? Do you think we'll see more worker revolts in companies with such imbalances?

  3. Would you consider investing the best risk/reward option to obtain wealth? How does an entrepreneurship, or obtaining the education necessary for placement in a skilled job correlate? Hypothetically, if someone in their 20's/30's had $10000 and could only pick one option in the short term, would you recommend that s/he invest, to obtain a degree in college and work for a company, or attempt a business in a niche market?

  Thanks for your consideration ahead of time.

• Report this Comment On November 05, 2009, at 10:53 AM, jabez1 wrote:

  I am about 6 years away from retirement and would like to protect what I have and shoot for 5 or 6 percent average annual gains from here to retirementment.

  A few years ago I would have just bought a couple of good bond funds that make up about 40% of the portfolio and forgot about it.

  However, today I hear so many warnings and / or exhortations about inflation, deflation, (flatuation??), treasuries, gold, commodities, dollar devaluation and corporate bonds, I'm confused about what to do.

  It seems like nothing is "safe" anymore. What do you guys think should make up the non-equity portion of a good balanced portfolio?

• Report this Comment On November 05, 2009, at 11:01 AM, Khanster wrote:

  Folks,, Just Started Investing in Stock ,,

  I want advice and your views on COSTCO (COST).. Is this a Good Buy at the current price of $58 odd or shud I wait for it to drop a Little more,, What do u folks visualise as the Upswing target for this in the Near Term -6mths to a Year ?

  Please also let me know your thoughts on Eli LLY (LLY) at current $34odd and Walgreens at $39 odd.. Would these be Good Numbers for a Beginner to get into these Stocks?.. Your advice and views are greatly appreciated...

• Report this Comment On November 05, 2009, at 11:11 AM, viperjock wrote:

  Is there a direct, consistent relationship between inflation/deflation and the equity markets? IOW, should we be fearful of an inflationary economy from an investing standpoint? Should we make any adjustments in our portfolios in that economy?

• Report this Comment On November 05, 2009, at 11:11 AM, TMFGreedandFear wrote:

  @I want advice and your views on COSTCO (COST).. Is this a Good Buy at the current price of $58 odd or shud I wait for it to drop a Little more,, What do u folks visualise as the Upswing target for this in the Near Term -6mths to a Year ?

  Costco is without a doubt one of my favorite companies. Fantastic management, a great business model and a value proposition that consumers need in good times and bad.

  The stock has increased in value since we added it to the MDP portfolio and has risen above our Buy Around guidance of $50. But, we still have it as a Buy (rather than a Hold) because we think there is additional upside left and relatively low risk.

  Sorry, but I don't think about stocks over short-term time periods. Costco is the kind of company I would want to own for a long period of time.

  Thanks for the question,

  Ron

• Report this Comment On November 05, 2009, at 11:12 AM, TMFTenacious wrote:

  @creek 138 question #1 (diversification)

  When you own a concentrated portfolio as you have described, the impact of your losers -- and winners -- will be amplified. If commission costs are preventing you from assembling a well-diversified portfolio of individual stocks (let's say at least 15 different companies), I'd suggest buying a low-cost index fund. I'll echo Ron's statement from before: The folks at Vanguard have some good, cheap offerings.

  You can use this as the diversified base for your portfolio and add individual stocks opportunistically over time.

  Rich

• Report this Comment On November 05, 2009, at 11:12 AM, HunterEu wrote:

  I recall seeing that MDP activity will also take advantage of the best of other fool services such as "Stock Advisor". How can an MDP subscriber discern when an activity is based on the best of another service. Maybe the obvious escapes me.

  Best regards, HunterEu

• Report this Comment On November 05, 2009, at 11:13 AM, henryking54 wrote:

  What has the performance of the MDP been since inception? Have you made money or lost money?

  If you've lost money, any thought to changing the name of the service to $750,000 portfolio?

• Report this Comment On November 05, 2009, at 11:13 AM, TMFHumbleServant wrote:

  @jabez1

  @What do you guys think should make up the non-equity portion of a good balanced portfolio?

  That is a very difficult question, especially considering that there are many possible outcomes. But let me give you some thoughts.

  In a recent chat, our retirement specialist Robert Brokamp recommended having at least 30% of your portfolio in cash and bond once you get within a decade of retirement. So that's one place to start.

  Depending on your outlook, you could take that ratio higher or lower. If you think deflation is on the horizon, more cash would give you increased buying power in the future. If you think inflation is on the way, hard assets such as gold could make up a larger part of your portfolio to protect against the loss of buying power.

  I wish I could give you a better answer, but it really depends on your view.

  I hope that helped.

  Dave

• Report this Comment On November 05, 2009, at 11:19 AM, TMFGreedandFear wrote:

  @ recall seeing that MDP activity will also take advantage of the best of other fool services such as "Stock Advisor". How can an MDP subscriber discern when an activity is based on the best of another service. Maybe the obvious escapes me.

  The MDP team has the incredible benefit of picking from a group of stocks that have already been analyzed and recommended by other Foolish services, such as Stock Adviser. The MDP team sifts through the universe of Foolish picks, rolls up its sleeves and does some additional work on each company, and then builds a portfolio from its favorites - making sure to keep an eye on proper sector diversifaction and risk levels.

  Thanks for the question,

  Ron

• Report this Comment On November 05, 2009, at 11:19 AM, TMFTenacious wrote:

  @creek 138 question #2 (executive compensation)

  We have no problem with highly-paid execs -- as long as those execs are being paid commensurately with the value they create for shareholders. Management's compensation and ownership position is a core component of our stock evaluation process.

  You can check out a brief description of our OATS management evaluation framework in the article above. Thanks for the questions!

  Rich

• Report this Comment On November 05, 2009, at 11:21 AM, TMFBrich wrote:

  @henryking54,

  MDP was launched in October 2007. Since then, the portfolio has lost money but has outperformed the S&P 500 by 3 percentage points. The returns are:

  -24% for MDP; -27% for the S&P 500.

  Best regards,

  Brian Richards

• Report this Comment On November 05, 2009, at 11:25 AM, ethan1234 wrote:

  Hey MDP gang,

  1. Are there any macrotrends that you guys are focusing on or especially excited about? I don't mean to imply that you are doing top down investing, just curious if this is part of your thought process

  2. Besides international stocks, what sectors are you guys looking at to add to the MDP.

  I've been enjoying the service for the last 2 years and have really liked some of the recent changes in the last few months. Keep up the good work.

  -Ethan

• Report this Comment On November 05, 2009, at 11:29 AM, TMFHumbleServant wrote:

  @viperjock

  @Is there a direct, consistent relationship between inflation/deflation and the equity markets?

  The best chart I have seen on this subject comes from Ed Easterling at Cresmont Research. It shows the market's P/E ratios during periods of inflation and deflation. Here is a link.

  http://www.crestmontresearch.com/pdfs/Stock%20Inflation%20&a...

  The conclusion is the P/E ratios tend to contract during episodes of high inflation and during deflation. So investors should fear both outcomes.

  You next question asks "what should an investor do about it?" That's much more difficult to answer as one has to make a prediction about the future.

  But one thing is timeless: investors should buy stocks when the opportunity is right and sell stocks where the opportunity has passed. That's the best way to manage a portfolio, IMO, especially because inflationary and deflationary environments can create future opportunities.

  I hope that helps.

  Dave

• Report this Comment On November 05, 2009, at 11:36 AM, miteycasey wrote:

  How do I protect my 401K if/when the market crashes again when I'm limited to mutual funds?

  I have 20% in an international fund.

  40% in a S&P500 index fund

  10% in a small cap growth-fund

  10% in a small cap value-fund

  10% 2040 planned date retirement fund

  10% in company stock(commodities company)

  All through Vanguard where my fees aren't any larger than 2% on any fund.

• Report this Comment On November 05, 2009, at 11:37 AM, miteycasey wrote:

  I don't want to put my eggs in so many baskets that I don't gain anyting.

• Report this Comment On November 05, 2009, at 11:39 AM, TMFGreedandFear wrote:

  @1. Are there any macrotrends that you guys are focusing on or especially excited about? I don't mean to imply that you are doing top down investing, just curious if this is part of your thought process

  2. Besides international stocks, what sectors are you guys looking at to add to the MDP.

  Although we are without a doubt bottoms up analysts, we do take macroeconomics into account when analyzing our companies. For example, we discuss factors such as the strength of the American consumer, the potential for inflation or deflation, and the direction of energy prices and interest rates. I think these discussions are useful and can help us to build our valuation models.

  We're always looking at a variety of sectors. Energy, infrastructure, technology and bio-technology to name a few. We'll go where the values are but we'll always make sure the diversifacion and risk level of the portfolio is appropriate.

  Thanks for the question,

  Ron

• Report this Comment On November 05, 2009, at 11:49 AM, TMFGreedandFear wrote:

  @How do I protect my 401K if/when the market crashes again when I'm limited to mutual funds?

  This is a tough one. It depends on your investing time horizen and how close you are to retirement. If you're 20 years or more away from retirement, the short-term fluctuations (even the severe ones) might not matter that much to you. But, if you're closer to retirement you should probably adjust your asset allocation to be more conservatively invested and protected. Bond funds would be a good example of this.

  Sorry, but I can't give you any direct advice about your personal portfolio.

  Thanks for the question,

  Ron

• Report this Comment On November 05, 2009, at 11:59 AM, viperjock wrote:

  What do you think about owning two very similar companies--competitors, as it were, such as Coke and Pepsi, or Costco and BJs, other than the obvious "if they're both at good value points and poised for long term growth..."

• Report this Comment On November 05, 2009, at 12:02 PM, Maximus88 wrote:

  What is your opinion on the state of REITs in the US? Do you think it's a good time to enter or wait until you see signs of life. I'm currently looking into LXP. Thanks.

• Report this Comment On November 05, 2009, at 12:10 PM, TMFBreakerCharly wrote:

  @ viperjock: What do you think about owning two very similar companies--competitors, as it were, such as Coke and Pepsi, or Costco and BJs, other than the obvious "if they're both at good value points and poised for long term growth..."

  In some circumstances this is a good idea. We will do this if we want broad exposure to an industry but don't want to make a heavy allocation to any particular company. For example with domestic natural gas we have invested in both XTO and Chesapeake.

  However, we do also want to know which companies in a particular space have superior economics. We wouldn't want to invest in a competitively disadvantaged company unless we had a deep value/turnaround type thesis.

• Report this Comment On November 05, 2009, at 12:13 PM, DPMann wrote:

  Do you think a minimum $ is necessary for an investment in MDP to work as designed, i.e., balanced, diversified portfolio? If yes, what do you think the minimum $ is?

• Report this Comment On November 05, 2009, at 12:19 PM, TMFBreakerCharly wrote:

  @ Maximus88:

  What is your opinion on the state of REITs in the US? Do you think it's a good time to enter or wait until you see signs of life. I'm currently looking into LXP. Thanks.

  I just spoke with Income Investor advisor James Early to get his take since he follows them closely. His take is that REITs that have a niche, like medical, will be the most stable. Also that office & retail will rebound the strongest since they have been beaten down so much, but this introduces an element of timing since a double dip recession, if it happens, would hurt them.

• Report this Comment On November 05, 2009, at 12:22 PM, creek138 wrote:

  Thanks for the information. Re: Question 1: Are you guys considering a MDP or Stock Advisor ETF at some point? Cuz well, that would be most excellent.

• Report this Comment On November 05, 2009, at 12:32 PM, TMFGreedandFear wrote:

  @What do you think about owning two very similar companies--competitors, as it were, such as Coke and Pepsi, or Costco and BJs, other than the obvious "if they're both at good value points and poised for long term growth..."

  I actually think it can be okay with one important caveat. You have to fully understand that you are making a bet on that industry or sector. By owning more than 1 company you will probably be overweighting your portfolio in that area. If you're correct than you'll do well. But, if you're not right, your portfolio will obviously suffer the consequences.

  For non-commodity type businesses, I'll usually pick the best company (most undervalued) in that industry and go with it. I probably wouldn't own 2 retail wholesale clubs. But, in an industry like natural gas or oil, I might be more inclined to own several companies with each one focusing on a slightly different aspect of the sector.

  Thanks for the question,

  Ron

• Report this Comment On November 05, 2009, at 12:37 PM, TMFBrich wrote:

  @creek138: Are you guys considering a MDP or Stock Advisor ETF at some point?

  No plans, but we are always looking for innovative product ideas, so I'll pass along your request to the gang at Motley Fool Asset Management.

  Fool on --

  Brian Richards

• Report this Comment On November 05, 2009, at 12:37 PM, TMFKipper wrote:

  @DPMann: Do you think a minimum $ is necessary for an investment in MDP to work as designed, i.e., balanced, diversified portfolio? If yes, what do you think the minimum $ is?

  There's no magic number in terms of portfolio size required to follow MDP. We have members with portfolios of $5,000, $50,000, $500,000, and more. We have member following our every move -- and members picking and choosing their favorite stocks.

  As a general rule, the Fool recommends you keep your commissions for each trade at 2% or less, so that's something to think about when considering our service.

• Report this Comment On November 05, 2009, at 1:01 PM, TMFBrich wrote:

  Fools: One hour until the live chat closes. Submit your questions now!

• Report this Comment On November 05, 2009, at 1:32 PM, strictfool wrote:

  What strategy can be used to short the commercial real estate market?

• Report this Comment On November 05, 2009, at 1:42 PM, mrmolar119 wrote:

  I've noticed that some of my foreign stocks pay the dividend and a foreign tax is taken out the same time, is this fact taken into account when MDP invests?

  Are dividends taken into consideration in the research process?

  Lloyd

• Report this Comment On November 05, 2009, at 1:46 PM, TMFMmbop wrote:

  @I've noticed that some of my foreign stocks pay the dividend and a foreign tax is taken out the same time, is this fact taken into account when MDP invests? Are dividends taken into consideration in the research process?

  Some foreign dividends are subject to withholding taxes depending on the tax treaty that US has with the company's home nation. If you hold that foreign dividend outside of an IRA, you can reclaim that foreign withholding tax from on your tax return. Obviously, our portfolio is subject to the same tax laws as yours (if you're a US citizen) and managed accordingly.

  And yes, when we are analyzing stocks, we are judging them based on their total return potential, which dividends plus capital appreciation. To do otherwise, would not make much sense.

  Tim

• Report this Comment On November 05, 2009, at 1:47 PM, TMFHumbleServant wrote:

  @strictfool

  @What strategy can be used to short the commercial real estate market?

  Interesting question. Some ideas that pop into my head are:

  1. Shorting REIT with heavy commercial real estate exposure perhaps with heavy exposure to office space or retail. However, you have to be careful and consider geography, vacancy rates, and whether or not this is/was a crowded trade already.

  2. Short local and region banks with heavy commercial real estate exposure and light loan-loss reserves associated on their books. Again, be careful as this may be a crowded trade, too.

  3. Perhaps purchase an ETF that is short commercial real estate is another idea

  Let me say that shorting is a very difficult game to play and that you need to be very careful.

  Dave

• Report this Comment On November 05, 2009, at 2:01 PM, weaverjs wrote:

  Care to speculate on the future of health care insurance - UNH, CVH??

• Report this Comment On November 05, 2009, at 2:09 PM, mrmolar119 wrote:

  Instead of companies buying back their stock, why not give the money back to shareholders.

  Lloyd

• Report this Comment On November 05, 2009, at 2:10 PM, TMFBreakerCharly wrote:

  @ Care to speculate on the future of health care insurance - UNH, CVH??

  We do own shares of UNH for full disclosure.

  You used an appropriate word with "speculate." While more information is available out of Congress today than a few months ago, clearly significant compromise and negotiations are left to come. So it is hard to be specific.

  What looks to be the case is that the health insurers will not be put out of business by the government. There may be some margin pressures, which I think is likely, but that should be offset by serving a larger number of people.

  There is always risk in making an investment in an area that is undergoing a paradigm shift, but in the case of UNH we believe the stock is sufficiently attractively priced to compensate us for taking that risk.

  Charly

• Report this Comment On November 05, 2009, at 3:02 PM, TMFGreedandFear wrote:

  Thanks for the questions everyone. The MDP team really enjoyed this. Hopefully we can do it again soon.

  MDP is re-opening it's doors for the first time in 15 months. If you're interested in learning more I encourage you to head over to mdp.fool.com.

  Fool On!

  Ron

• Report this Comment On November 06, 2009, at 11:08 AM, CaptainMotley wrote:

  Can you comment on ETF immunity to institutional trader price manipulation? ie are there classes of ETF's that would be more susceptible to institutional trader maniupulation?

  Thanks,

  Captain Morgan

• Report this Comment On November 11, 2009, at 2:37 PM, cemilty wrote:

  I would like to know about some preferred stocks with DUE dates? There is one in particulare that says it was issued at $10.00 par value and earns 8%. It has a "Due date" of 3/10/2010. What does that mean? Does the company that issued it HAVE to buy it back on that date? and at what price? It is currently trading at $6.00 or so.

  I can't seem to find out if they have to buy it back at $10.00 on the due date or can they just keep paying the dividend, or worse, stop paying it?

  Thanks,

  Chris

• Report this Comment On November 11, 2009, at 6:43 PM, HLambooy wrote:

  My, fairly new, six stock portfolio contains some stocks recommended by people other than Motley Fools. Would you folks be willing to review my portfolio to make sure I am starting off on the right track? ( NTGR, CSIQ, NOV, CGA, CMIN, AKAM.)

  Thank you.

  Henry Lambooy

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