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Jeff Binkley
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Mr. Binkley is the managing director of Binkley Wealth Management Group LLC, a fee-only, independent Registered Investment Adviser located in Avon, Indiana. Mr. Binkley has been an Investment Adviser Representative since 1993. In 2010, he formed Binkley Wealth Management Group as a wealth... More
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Binkley Wealth Management Group, LLC
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  • The Truth Neither Wall Street Nor Washington Wants You To Know

    No one really has any idea what's going on.

    It happens every time there's a pull back or downturn in the market. The financial press yet again (using Monday morning quarterbacking) anoints the "visionary investment guru" that predicted the correction in his or her newsletter or CNBC interview or Wall Street Journal article and saved their clients countless thousands of dollars. Well let me tell you, Dear Reader, if your investment guy or gal tells you they can predict when the next correction will occur, my advice is to RUN. Take your money and RUN from them. Even if you graciously assume that their advice is sincerely based on good intentions and wanting to save you financial pain, the level of vanity and hubris displayed by them in saying they can predict the market is a very dangerous thing when it comes to managing other people's money. They themselves may be blinded to their own fortune telling inadequacies by their hubris.

    Here's a little bit of truth: With hundreds of thousands of investment gurus out there, be it in the local branch of your national retail investment store chain, or one of the many talking heads on the financial news channels…. one of them is gonna get lucky and pick the exact date the correction begins and how far the market will fall. Funny though, that guru won't be identified until well after the correction has happened… (See Monday morning quarterbacking referenced above.)

    So Bink, if you think any opinion about when this Bull Market will correct is bull$#%+, why are you even writing this article? Because I want to try and give value to you who exchange a commodity to read this. That commodity is the most valuable in the world. Your time.

    Let me state plainly: I have no idea when the next correction will take place. Nor whether it will be a correcting dip of 5%, 7% or more then reverse to achieve new highs. Nor whether it will be the start of a prolonged bear market with a true downturn of 10%, 20% or more. I do suggest that the investor who would be successful should think about these truths:

    From the start of this bull run in March of 2009 through September of 2013, there have been 11 corrections of 5% or greater. With another 4% correction in October, 2013. These continuing corrections remind us that this continues to be one of the most "nervous" stock market recoveries since WWII. And while the corrections have been decreasing in percentage depth, they appear to be happening more frequently.

    At 4.75 years, this bull market is already one of the longest since the Great Depression. Since 1932, the average bull market duration (for the S&P 500) is 3.8 years and. So in comparison, this one is getting a little long in the tooth.

    My final thought on this matter is that when you start hearing those talking heads and investment gurus begin asking that with all our new technologies, efficiencies in the markets and investment products and our powerful, "wise" leaders at the Fed and in Government, have we "banished bear markets forever?" or something to that effect.

    That, my friends, is when we know hubris has truly run amok and we, in turn, should run our investments to the sidelines.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: The contributing author, Binkley Wealth Management Group, LLC, and/or its clients may be pursuing the strategies and may or may not hold positions in securities mentioned in this article at the time of publication. The opinions and strategies expressed are not meant to taken as advice to any individual investor. The opinions and strategies discussed are not to be construed as personalized recommendations to buy, sell or hold securities by any individual investor without first consulting with their own personal financial advisor.

    Dec 12 10:37 AM | Link | Comment!
  • How Does THE BIG MONEY Invest?

    Ready to invest like large institutions do? Consider a core and satellite strategy.

    A client recently asked me, "Jeff, how does 'The Big Money' invest its capital?" It's a great question and the answer may surprise you.

    Many large institutions, including not-for-profit foundations, universities and endowments have a whole team of money managers employed to get the very best performance from their investments. But the method many of those managers follow is relatively simple and available to you and me.

    It's called the core and satellite investing strategy.

    A core and satellite investment portfolio is built using investments designed to keep costs down, minimize tax liability, and reduce volatility while providing an increased likelihood to beat the broader markets as a whole. The core of this kind of portfolio consists of passive (non-managed), lower-cost investments that track major market indexes. Those indexes can include domestic stocks, bonds and foreign stocks. Additional positions, called satellites, are added to the portfolio in the form of actively managed investments.

    How does a smaller investor lacking the resources of a large institution develop a core and satellite strategy for themselves? Surprisingly easily.

    First and foremost you need to determine the asset allocation that makes the most sense for you. You accomplish this by defining your goals, recognizing your personal circumstances and understanding your tolerance for risk. Once you identify these you can then determine the most appropriate asset mix for your portfolio.

    Next you need to decide what percentage of each asset class should be allocated to core index investments and what percentage should be put in satellite actively managed or specialty index investments. Ultimately, this balance between index funds will be governed by the degree of volatility you are equipped to accept.

    Lastly, you need to select the specific index and active investments that make up both the core and satellite.

    Core and satellite portfolios can be as risk-averse or as bold in their strategy as any other portfolio. The blend of investments you choose will depend on your personal investment objectives.

    But does it work?

    One thing is certain. There is no magic beans asset allocation strategy that will work for everyone. With that said many organizations with large assets to protect and grow while maintaining a high level of stewardship follow this core and satellite approach. Their research and experience has led them to believe this method provides an opportunity to have the best of both worlds. Better-than-average performance, reduced volatility and expense containment all coming together in a flexible box that can be designed specifically to accommodate each individual's needs and risk tolerances.

    IMPORTANT DISCLOSURES Any information, strategies and opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Jan 26 3:00 PM | Link | Comment!
  • US Natural Gas (UNG): Promised Land… Or Another China Syndrome?

    In case you hadn't noticed, Matt Damon and John Krasinsky's anti-fracking movie "Promised Land" opened last weekend (January 4, 2012) to little fanfare, and even less box office success. And I do mean LITTLE box office success. For what theaters were taking in over the opening weekend, you couldn't buy a cheap used car… gas, cng, or even Hobbit-powered.

    Whereas movie reviews from elites have been generally positive, the film's potential impact on the future of fracking in America has already been written off by some pundits. I truly hope that remains the case.

    Thirty-three years ago another anti-energy movie opened with little fanfare. Then due to the Three Mile Island incident 12 days after its release the movie got some traction and went on to be a mild box office success.

    But "Promised Land" ain't no "China Syndrome."

    This current anti-energy tale need not worry about garnering that kind of success for three reasons.

    1. It is hard to imagine any kind of incident involving fracking that would generate the kind of apprehension and subsequent focus on the movie that the Three Mile Island situation caused.
    2. The 1979 flick had some great actors. Including the late Jack Lemmon turning in an academy award winning performance. Neither Damon nor the Krasinsky should feel any anxiety about duplicating Mr. Lemmon's feat.
    3. And finally, the "China Syndrome" had great characters and a story that carried the viewer through to the end. "Promised Land?" Not so much. Only 40% of its audience liking it at Rottentomatoes.com. http://www.rottentomatoes.com/m/1016837-promised_land/

    But what if there's a select audience that will see it and be moved greatly by it? And THIS audience is already pre-disposed to buying in to the anti-fracking argument, even if the movie ain't so great?

    The Obama administration continues to delay making any meaningful decision when it comes to energy policy. In fact, continued and rising apprehension from natural gas producers has become the norm. http://www.forbes.com/sites/matthewhulbert/2012/11/08/obama-win-concerns-natural-gas-producers/2/

    Exporters of liquefied natural gas (NYSEMKT:LNG) fears have continued as well. Prior to the election, the administration punted on a decision to let Cheniere Energy export LNG to countries without free-trade agreements from its Sabine Pass terminal in Louisiana. http://thehill.com/blogs/e2-wire/e2-wire/262337-doe-delays-decision-on-natural-gas-export-license

    Now as the new Congress takes its seats and the upcoming million-dollar-donated-debauchery http://www.google.com/hostednews/ap/article/ALeqM5ht43jBcd2XfPVgillpuvZe7xqSAA?docId=6efbd0a4df714c279862ebe1c3e71dc7

    of an inauguration soon wraps up, surely we can get down to the very important matter of our national energy policy.

    Don't count on it… and don't call me Shirley.

    Republicans continue to argue that though Mr. Obama says he supports natural gas, his energy policies have failed to walk the talk. That he is not pro natural gas and that this foot-dragging on liquefied natural gas exports validates their belief.

    http://thehill.com/blogs/e2-wire/e2-wire/251421-republicans-charge-obama-with-slow-walking-sales-of-natural-gas#ixzz2HPJmPlcX

    Mr. Obama's EPA is apparently dragging their feet on the matter as well as evident by their not weighing in on the contentious matter of the potential for groundwater contamination.

    http://pittsburgh.cbslocal.com/2013/01/06/epa-report-on-fracking-wont-address-contamination-stats/

    And now comes the story of the country's most powerful governor, and a democrat to boot, closely guarding an analysis from his own state health department declaring that fracking can be conducted safely. http://www.nytimes.com/2013/01/03/nyregion/hydrofracking-safe-says-ny-health-dept-analysis.html?_r=1&

    With powerful political interests on one side (i.e. the environmental lobby), and powerful economic interests on the other (i.e. energy companies), the future of fracking remains if not clouded, then at least unclear.

    On the economic side, you have billions of dollars and thousands of well-paid, hard-working employees from big name companies like Encana (NYSE: ECA), Baker Hughes (NYSE: BHI), Chesapeake (NYSE: CHK), Cheniere Energy and others either directly involved in the fracking process or waiting close by in the wings to move the fracked gas. On the environmental side you have thousands of concerned citizens passionately protesting from numerous lobbying groups principally headed up by the Sierra Club.

    What could "Promised Land" do for the US and its position in the global energy environment? What could a "China Syndrome" like stoppage of fracking in America do to our long term energy health?

    The International Energy Agency in November forecast that the U.S. will become the world's number one oil producer in the next ten years, eclipsing Saudi Arabia and becoming energy self-sufficient by 2030.

    " …the extraordinary growth in oil and natural gas output in the United States will mean a sea-change in global energy flows. In the New Policies Scenario, the WEO's central scenario, the United States becomes a net exporter of natural gas by 2020 and is almost self-sufficient in energy, in net terms, by 2035. North America emerges as a net oil exporter, accelerating the switch in direction of international oil trade, with almost 90% of Middle Eastern oil exports being drawn to Asia by 2035."

    "The China Syndrome" set back nuclear energy for decades. Thoughtful economists have argued that though it became a rallying point for anti-nuke protesters and other environmentalists, the movie, in a great example of the law of unintended consequences, became one of the greatest global warming villains of a generation. By effectively ending the building of nuclear power plants in the U.S. that would have safely and cleanly provided inexpensive electricity for the last 30 years, the energy companies instead built coal and fossil fuel fired plants. In another generation, the successful shuttering of nuclear plant in the 70's and 80's, and the "dirty" plants built to handle our ever growing energy needs, would foster the current anti-coal group of environmentalists. Talk about irony.

    www.nytimes.com/2007/09/16/magazine/16ww....html

    The current and very real potential irony would be if this new piece of fictional entertainment influences our national energy policy and we choose a path setting us back decades again in our pursuit of national energy independence.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: The contributing author, Binkley Wealth Management Group, LLC, and/or its clients may be pursuing the strategies and may or may not hold positions in securities mentioned in this article at the time of publication. The opinions and strategies expressed are not meant to taken as advice to any individual investor. The opinions and strategies discussed are not to be construed as personalized recommendations to buy, sell or hold securities by any individual investor without first consulting with their own personal financial advisor.

    Tags: BHI, CHK, ECA, LNG, long-ideas
    Jan 26 2:57 PM | Link | Comment!
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