August 2015 - Runnymede Capital Management

3 Bubble Warnings to Listen to Before It’s Too Late

It's time to listen to the best and brightest. The world's economies are stagnant or weakening while the stock market is overvalued. The time has come to be conservative. Most investment firms do not place importance on asset protection. Runnymede is an exception; we take asset protection very seriously. As such, we devote much time to market analysis and will make changes when necessary depending on our clients' objectives.

Here are 3 bubble warnings that experts are telling you to take note of right now.

Runnymede Receives Top US Captive Services Award For “Innovation in Investment Management”

Morristown, New Jersey — Runnymede Capital Management has been named winner of “Innovation in Investment Management” at the 2015 US Captive Services Awards. Runnymede is the only firm to have won a captive services award for four consecutive years having been previously named “Best Client Care in Investment Management” in 2012, 2013, and 2014. This is the first year that Runnymede has won “Innovation in Investment Management.”

The US Captive Services Awards recognize service providers to captive insurance companies who have outperformed their competitors and demonstrated the highest levels of excellence over the past 12 months. The awards took place in Burlington, Vermont on the eve of the Vermont Captive Insurance Association’s (VCIA) annual conference – the largest captive insurance gathering in the United States. This year's awards drew a record number of firms submitted for nomination and included seventy four firms vying for top honors.

“Wide diversification is only required when investors do not understand what they are doing.”

– Warren Buffett

We've all heard the old idiom, “Don't put all your eggs in one basket.” For more than five decades, portfolio diversification has been considered a basic building block of any investment portfolio — with the critical function of reducing risk and dampening volatility. There is a trend toward what may be deemed over-diversification. Should you own a stock in your portfolio to dampen volatility or because of positive underlying fundamentals of a company?

The Stock Market is Overvalued According to Buffett and Shiller

When looking at the financial weather, Runnymede uses a multi-factor model to track where we are in the market cycle. One of the key components is valuation. Two of the most famous valuation models are Warren Buffett's total market capitalization to GDP and Nobel laureate Robert Shiller's CAPE (cyclically adjusted PE) ratio. If you look at either of these measures, the market is overvalued.

The Dichotomy of the Dow

As of Friday's close, the Dow Jones Industrial Average was down 2.5% for the year to date. In 2015, it has traded in a narrow range and has been pretty much a sideways move thus far. However upon closer inspection, its individual components are acting very strangely. The bottom third of the Dow is down 9%+ for the year with 9 stocks down over 14%. With global growth slowing in China and Europe, it is no surprise that industrials, materials and energy stocks are at the bottom of the barrel. On the other hand, the top 8 performing stocks are up 9%+ with 8 stocks up double digits. Healthcare, consumer discretionary and technology sectors are holding up the boat. This is a very bizarre situation and one I can't recall ever seeing before.

A Lesson from Warren Buffett on Buying Fear Revisited

Last year in February, I wrote a blog post entitled “”A lesson from Warren Buffett on buying fear.“” The S&P 500 was down 5% from its high and the negative headlines focused on slowing global growth and worries about the Fed tapering. If you had bought on that day, you would be up over 20% on your investment!

Month: August 2015