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Terrorism and Your Portfolio

I gave my thoughts to Kyle Woodley for a piece he wrote for US News and World Reports: 5 Ways Terrorism Affects Your Portfolio. Here is an excerpt:

Terrorist attacks like the one in Brussels leave too much in their wake – fatalities and injuries, destruction, fear among the populace and many unanswered questions.

But one thing they rarely seem to leave anymore is a lasting effect on stocks.

“Most terror attacks – and particularly those on foreign soil – have only a passing effect on the markets,” says Charles Sizemore, a portfolio manager on Covestor and chief investment officer at Sizemore Capital Management, a registered investment advisor in Dallas. “Most U.S. investors are barely aware that anything happened, and economic effects here tend to be negligible.

“While terrorism is devastating to the people that experience it firsthand, it’s exceptionally rare for an attack to have a big enough impact on investor sentiment or economic activity to really change a market’s trend,” he says.

You can read the full article here.

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Chipotle is an Orphan Stock


I gave my thoughts to on Chipotle (CMG) to Kyle Woodley for a story he wrote for US News and World Reports. Chipotle is a great company and one of the great growth stories of the past decade. But unfortunately, the stock is something of an orphan right now:

“This is the issue with Chipotle today: It’s a stock without a buying clientele,” says Charles Sizemore, founder of Sizemore Capital Management, a fee-based registered investment advisory firm based in Dallas. “It was a high-flying momentum stock that has now lost its momentum.”

Chipotle was a hot mover for years prior to 2015’s nosedive. Shares more than tripled from their October 2012 lows in the mid-$200s through its all-time high of $758.61 in August 2015. That included a rapid move of about 25 percent that drove CMG to its peak in about six weeks.

However, a decline of roughly 35 percent hasn’t exactly been followed by a lot of dip-buying…

Before Tuesday’s report, CMG was trading at 28 times trailing earnings and 37 times forward earnings. “And while those numbers aren’t off the charts for a restaurant stock,” Sizemore says, “Chipotle doesn’t follow a franchise model. A franchise model is generally more profitable in terms of return on equity and commands a higher earnings multiple. Chipotle manages its own stores and has no plans to franchise.”

That leaves CMG in a precarious position. Sizemore says Chipotle’s lost momentum means “trend followers probably won’t return to it. But it isn’t cheap enough yet to attract value investors. So it’s something of an orphan right now.”

You can read the full article here.

Photo credit: Mike Mozart

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All About Fees…

I gave Jeff Reeves my thoughts on fees and the impact they can have on your portfolio. You can read Jeff’s USA Today piece here. And the following is an excerpt:

The thing to remember, Sizemore adds, is that you don’t get a bill for mutual fund fees; they are “baked in” to your investment’s performance. For instance, if that same mutual fund charging 0.7% each year generates a 10% annual return, it passes 9.3% in gains on to you and takes 0.7% off the top.

Furthermore, “returns lost to fees actually compound over time,” he said, since you lose not just that fixed fee up front but also potential investment returns that could have been made on that extra cash.

Given all this, it’s crucial for investors to keep an eye on what they are paying and try to keep costs as low as possible…

“A fee number in a vacuum really doesn’t tell you much. If you’re investing in a strategy that really is different and really adds something to your portfolio, then paying a higher fee shouldn’t be a deal breaker,” he said. A few investment areas that tend to be more sophisticated and charge higher management fees include emerging market investments or unconstrained bond funds, Sizemore said. However, he adds that “If you’re getting a fund that tracks pretty closely to the S&P 500, then it’s hard to justify paying a premium.”…

“When presented with many different ways to do the same thing, always err on the side of lower costs,” Sizemore said.

You can read the full article here.

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The force is with these ‘Star Wars’ stocks

I gave my thoughts on the importance of the upcoming Star Wars movie for Disney (DIS) to CNBC’s Tae Kim:

The release of the “Star Wars: The Force Awakens” this December will not just be a cultural phenomenon, but an economic one with several companies in the movie, merchandise and gaming industries set to ride this unstoppable force to big profits.

Some investors think the importance of “Star Wars” to Disney can’t be overstated.

“The ‘Star Wars’ franchise is probably the single biggest bright spot for Disney right now. Disney’s biggest cash cow, ESPN, very well may already have peaked in terms of total viewership. That’s a big deal, as media networks make up about 60 percent of Disney’s profits, and this is completely dominated by ESPN,” said Charles Sizemore of Sizemore Capital in an email.

He added, “Disney will need strong performance from its studios to keep Wall Street happy. The latest ‘Star Wars’ installment may very well prove to be the highest-grossing movie in history, and it may break all merchandising records, as well.”

View the full article here: The force is with these ‘Star Wars’ stocks

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Stocks to Capitalize on the Baby Boomers

Kira Brecht, writing for U.S. News and World Reports, quoted me in a piece about investing in the aging of the Baby Boomers:

“Boomers value quality, and you can see that in everything from their grocery bills, which are heavy in organic produce, to their home remodeling,” says Charles Sizemore, founder of Sizemore Capital Management, a Dallas-based registered investment advisor…

Investors should also consider the nostalgia factor. “Look at today’s 40-year-old man and figure out what car he wanted but couldn’t afford when he was 16. Buy that car today, at jalopy prices, and sell it to one of those 40-year-old men in another five years, when he’s having a midlife crisis, thinking back to his youth and looking to restore a classic car,” Sizemore says.

Finally, remember grandparents like to spoil their grandkids. “Don’t neglect the grandparent angle. Look at what grandparents are spending money on today, and understand that there will be a lot more grandparents coming down the pipeline in the years ahead, Remember, the millennials – the boomers’ kids – have barely started the family formation process,” Sizemore says.

You can read the full article here.

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