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Protecting Against An Inflation Surprise

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I don’t see much in the way of inflation coming down the pipeline. In fact, I see the same deflationary forces that are plaguing Japan and Europe to continue nipping at our heels for the next several years.

But… let’s say I’m wrong. Let’s say something comes out of left field that ignites inflation. What then?

I gave my thoughts on inflation to Kira Brecht, writing for US News and World Reports:

“Real estate is a natural inflation hedge that also tends to pay decent current income. A basket of REITs is generally a good addition to any portfolio, and now more than ever,” says Charles Sizemore, founder of Sizemore Capital Management.

One option for investors includes the Vanguard REIT ETF (VNQ). Sizemore calls it “a very solid option. It gives broad diversification to the REIT sector and has the lowest fees of any of its competitors.”

Sizemore says the best advice for investors now may be to stay flexible.

“Be willing to invest in new ways you’ve never invested before,” he says. “We’re in uncharted territory. We’ve never had negative interest rates, nor have we had this level of central bank manipulation. We don’t know how this story ends, so we need to stay nimble and flexible.”

You can read the full article here.

Charles Sizemore is the principal of Sizemore Capital Management. As of this writing, he was long VNQ.

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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What’s Ahead for Ford and GM?

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Photo credit: Adam Dooley

I recently gave my thoughts on Ford (F) and General Motors (GM) to US News and World Reports’ Lou Carlozo:

“Ford and GM have both had excellent runs operationally,” says Charles Sizemore, a portfolio manager on Covestor and founder of Sizemore Capital Management in Dallas. “Sales have been robust and profits have followed. Yet Wall Street seems unduly pessimistic about their prospects going forward, pricing in pretty significant sales declines.”

Another reason for the pessimism revolves around a bad accident that hasn’t even happened yet: skyrocketing interest rates.

“Yes, rising interest rates — if they ever actually happen — are bad for auto sales, which depend on credit,” Sizemore says. “I get that. But if the economic outlook is as bad as the prices of auto stocks suggest, then U.S. stocks should not be trading at a Shiller price-to-earnings ratio of 26. So either investors are wrong about auto stocks — or they’re wrong about the rest of the market.”

You can read the full article here.

As of this writing, I’m long both General Motors and Ford in my Dividend Growth portfolio.

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Lessons Learned From Prince’s Untimely Death

I gave my thoughts to Kiplinger’s Stacy Rapacon on lessons we can learn from the unfortunate passing of Prince. The music legend apparently passed away without a proper estate plan. Or if he had an estate plan, no one knows where it is… which is just as bad. See below:

Keep a copy of your will somewhere handy and be sure to tell your family—or at least your lawyer—where it is. All the estate planning in the world is for naught if your loved ones don’t know where the documents are. In Prince’s case, he was unmarried and had no surviving children, so at least in this case there are no grieving widows and orphans to worry about. But chances are that Prince intended his multi-million-dollar fortune to go, if not to a friend or friends, then to a charity. His wishes may never be carried out if his will cannot be found.

I’ve told my wife repeatedly where to look for the documents in the event I meet an untimely end. But I also know good and well that, if that day came, she might not be mentally able to deal with it at first. So, I keep one of the estate lawyer’s business cards pinned to the bulletin board in our kitchen. Yes, it’s a little morbid, but at least the number is there to call if she needs it. The estate lawyer has copies of all of our documents in the event that the originals are lost or destroyed.

You can read the full article here.

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Will Oculus Propel Facebook Higher?

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I gave my thoughts to InvestorPlace’s Kyle Woodley for a piece he wrote on Facebook’s (FB) Oculus. Here’s an excerpt:

Charles Sizemore, portfolio manager on Covestor and chief investment officer at Sizemore Capital Management, a registered investment advisor in Dallas, is among those who think virtual reality will stall again.

“Gamers might embrace it, but I don’t see a lot of people watching movies on their couch wearing a face mask,” he says. “A lot of the consumer innovations of recent years — 3D television, curved screens, etc. — have failed to make much of a splash. I expect this to be mostly a niche product.”

But even if Oculus does sink, don’t count Facebook out as dead money.

Facebook is great, goggles or not. Facebook is sitting near its all-time high following a 40 percent run over the past year, and has expanded its reach to more than 1 billion people on a hunk of rock that has just 3.3 billion Internet users. How much more can we expect Facebook to grow?

Even a true Oculus bear thinks Facebook is chock full of upside.

“Facebook is the lone standout success story in social media,” Sizemore says. “None of the other social media platforms have managed to monetize their user base like Facebook has. And the closest thing Facebook has to a true rival — Twitter (TWTR) — is still something of a niche player. Given that Facebook is only starting to find ways to monetize Instagram, the company should have a lot of healthy growth in front of it.”

You can view the full article here.

Charles Sizemore is the principal of Sizemore Capital. As of this writing, he had no position in any security mentioned in this article.

 

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Chipotle is an Orphan Stock

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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

Charles Sizemore is the principal of Sizemore Capital. As of this writing, he had no position in any security mentioned in this article. 

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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