Miley Portfolios

My commentary for this week will be relatively brief.  But I need to say something about Facebook (FB).  There have been a lot of comparisons to FB to being the “big tobacco” stock of 2021 because of the threat of legal actions.  Personally, I think that is fallacious as FB is a vital part of small business and I doubt that any legislation will stop it from collecting ad dollars.  I regard any weakness as a buying opportunity – not a reason to sell.  But let’s suppose that FB is like Altria ( née Phillip Morris).   Many years ago I bought 1,000 shares of Phillip Morris at about $18/share.  That 18,000 dollar investment netted me thousands of dollars thru growth, dividends and spin-offs.  Of course FB doesn’t pay a dividend but it makes it up in growth.  My point here is that hated stocks which fulfill a want like tobacco in the case of Altria or advertising in the case of FB, they often overcome adversity, thrive and grow.  read more

The above quote from the “ole Blue Eyes” song sums up my thoughts on the Miley Growth Fund and the Miley Income Fund.  On the Growth Fund, I have regretted recommending BABA and VIPS – the performance of the fund would have been a lot better without them.  But as I mentioned, I think that the Chinese government will eventually come to its senses (and the stocks are improving a bit today).  It also illustrates the fact that diversification lessens the impact of bad choices like BABA and VIPS.  As for the other stocks in the growth fund, notice that my confidence in NFLX has been rewarded – the stock is rebounding today.  I may make some adjustments to the fund in January on the fund’s year anniversary, but for now stay the course with all of the stocks in the fund. read more

The Senate has passed the 1.9 Trillion-dollar bill.   I cannot fathom how a married couple making $150,000 per year is “struggling”.  And if they have 2 children, they will be getting $5,600!  As Margaret Thatcher said: “The problem with socialism is that you eventually run out of other peoples’ money.”  I believe that will be extraordinarily inflationary.

So, how should this affect the affect the “Miley Growth Fund” and the “Miley Income Fund”?

As for the “Growth Fund”, be prepared for more volatility and the fund may turn negative for a period.  But the fund is intended for medium to long term investors, so I believe that the fund will still outperform the S&P for 5-10 years.  And if you have been lucky enough to buy VIP Shop Holdings (VIPS), I would recommend that you take some profits, since the stock has exceeded my expectations by growing at over 50% in the short period since I picked it.

On the “Income Fund”, it has outperformed the “Growth Fund”, mainly because of the presence of several financial stocks like Jefferies Financial Group (JEF).  Financials have been going up lately because of the rise in interest rates.   As for the poor performers like Pfizer and Merck, I am disappointed, but the stocks pay a healthy dividend, so sit back and collect your dividends and don’t worry.

As for asset allocation today, the traditional 60-40 mix of stocks-bonds is in trouble since interest rates are on the rise.  If you are using aggregate bond fund like AGG, I would recommend investigating some actively managed bond funds or perhaps a real estate investment trust like Reality Income Corp (O).  Another alternative would be to lighten your bond index fund allocation to 30% and move the remaining 10% into Treasury Inflation Protected Securities (TIPS) and/or into mortgage-backed securities with a fund like GNMA.  Moves like this should smooth out your returns.  And if you have a 401k, I recommend that you utilize a Stable Value Fund for the 10% allocation – these funds are backed by insurance companies and pay a much higher return than money market funds.

So there you have my current commentary, please feel free to comment or write to me directly.

Dan