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Clearly, Not Everyone Is Getting Rich Off The Stock Market

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Well, the NY Fed was out today with its Quarterly Report on Household Debt and Credit for Q4 2017. Clearly, Americans are in a lot of debt. Take a look. Just a couple of quick hits from the report. Total U.S. household debt rose $193 billion in the 4th quarter, to a new all-time peak of $13.15 trillion. That's 17.9% above the most recent trough in Q2 2013. Broken down by segment, what do you suppose was the largest gain in percentage terms? Credit cards, with a 3.2% increase. In the picture above, the widening gap represented by the red arrows reflects the fact that non-housing debt is rising at a faster pace than housing debt. Here's what's troubling about that. Below is a picture of the stock market, as represented by the S&P 500 index, over that same period; from the most recent credit trough in Q2 2013 to the end of 2017. And thus, the title of this article. Over that period, the S&P 500 index rose by 75%; from roughly 1,600 to 2,800. Apparently, ho
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Trading Wal-Mart For A Couple of Solid ETFs

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In a recent article, I featured the concept of being alert to various forms of "currency" when structuring and rebalancing your portfolio.

I would like to share with you a quick example of how I did just that in my own portfolio this morning.

Last October, I added Wal-Mart (WMT) to my personal portfolio. I wrote about the decision in this article for Seeking Alpha. As it turns out, this proved to be a timely purchase. While the markets in general have been extremely volatile to open 2016, WMT has risen a solid 10% from my average purchase price of ~$60.00.

However, several recent articles from Seeking Alpha authors whom I respect have questioned WMT's valuation at these prices. Here is one example of such an article. I decided that I agreed with their view.

So, this morning, I sold all my WMT and bought roughly equal amounts in two ETFs about which I have previously written for Seeking Alpha, the iShares Core High Dividend ETF (HDV) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT)

In the picture below, note the relative performance of these three vehicles over the past 3 months:


As can be seen, WMT was up over 10% during that span. Meanwhile, HDV was more or less flat and ITOT declined by almost 10%, or about a 20% underperformance as compared to WMT.

In short, I used the "currency" of appreciated WMT shares to purchase shares in two ETFs which underperformed on a relative basis over the same period. HDV is a defensive ETF comprised of carefully screened high-yielding stocks. This will replace a substantial portion of the income I would have generated from WMT. ITOT is a wonderful low-cost total-market ETF, adding to my diversity.

Buy low, sell high.


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Disclosure: I am not a registered investment advisor or broker/dealer. Readers are cautioned that the material contained herein should be used solely for informational purposes, and are encouraged to consult with their financial and/or tax advisor respecting the applicability of this information to their personal circumstances. Investing involves risk, including the loss of principal. Readers are solely responsible for their own investment decisions.




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Clearly, Not Everyone Is Getting Rich Off The Stock Market

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