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Every successful investor needs to take a hard look in the mirror occasionally to ensure that he or she is focused, on point, and most importantly, making money.
Today, it's my turn.
I've spent some time examining how my advice played out last year with one question on my mind…
…did I help you make money?
Some call this transparency, but I call it "owning up" – warts and all!
Here's your full report on how I did for you in 2016.
I've been known to make some jaw-dropping predictions over the years, including both the dot-bomb crash and Global Financial Crisis, the rise of oil prices to $150 a barrel, the Chinese buying Hummer, the ascent of the Japanese yen in a trade that helped readers double returns achieved by legendary traders like George Soros, and even Brexit… to name a few.
But those things all pale in comparison to what I said on Nov. 5, three days ahead of the most contested U.S. presidential election in history.
My Most "Out There" Prediction: What Trump Would Mean for Markets
FOX Business Network host Stuart Varney of "Varney & Co." asked me point blank what the markets would do if Trump won and my answer stopped him cold.
There would be a "rip your face off rally," I said.
Bear in mind this was at a time when legions of "experts" were calling for a massive decline, including such notables as Nobel Prize-winning economist and New York Times columnist Dr. Paul Krugman, MIT Professor Simon Johnson, and American entrepreneur Mark Cuban, among others.
I'm not a genius, but something the legendary Jim Rogers said to me years ago rang very true at that moment. "When everybody knows something to be true, you need to look at the other side of the trade." So I did.
The economic backdrop reflected the earliest stage of an earnings reversal. Traders I spoke with around the world were looking to go long and popular sentiment was excessively bearish, an important detail that's almost always a powerful contrarian indicator.
Long story short, you know what happened. The Dow, S&P 500 and Nasdaq all took off like a rocket, and investors who stayed "in to win" did… win, that is.
How My Calls for a "Retail Ice Age" Held Up
Last May, I was asked on FOX Business Network about the carnage in the retail sector, and specifically the slumping share prices of Macy's Inc. (NYSE: M), Kohl's Corp. (NYSE: KSS), Target Corp. (NYSE: TGT), and JCPenney Co. Inc. (NYSE: JCP).
Would I buy any of them? I said no, pointing to falling earnings and the fact that the brick-and-mortar retailers were in serious trouble from an investing perspective. The better bet would be online alternatives like Amazon.com Inc. (Nasdaq: AMZN), Alibaba Group Holding Ltd. (NYSE: BABA), and even Alphabet Inc. (Nasdaq: GOOGL) – I said at the time.
This one's tough to call.
Online sales volumes have quadrupled over prior years as expected, but brick-and-mortar players have proven to be far more resilient than I thought possible. Of the four, Kohl's surprised me the most, with its stock shooting up 38% for the remainder of 2016. Target also did respectably, turning 14% for investors. Macy's finished the year up 6% since my call to avoid it, but that's a paltry return to settle for in a year where the Dow returned 13.4%. JCPenney's 11% loss didn't surprise me at all, however.
Incidentally, I still wouldn't recommend brick-and-mortar retailers. It's Amazon versus everybody else these days, and I think that any money invested in conventional players will be trapped for years to come. I see no reason for investors to take that risk at a time when the tide is going out, for lack of a better description. More aggressive traders, perhaps.
Was I Right to Dismiss Overvaluation Rumors?
Last September, CNBC anchor Sue Herrera asked me what I made of fears that the markets were overvalued. I replied that markets frequently hit new highs, so I'm careful to call them overvalued. I stressed that there are always great deals to be found in the stock market if you know what to look for – toppish or not.
I cited Apple Inc. (Nasdaq: AAPL) as a company that looked "especially attractive" at the time. I also predicted it could hit $200/share within 24 months, based on the value of its technology ecosphere, rather than devices.
That advice was spot on, with the Dow tacking on another 9% after my appearance. Apple, meanwhile, ran up nearly double that at 16%.
Late this fall, I moved Apple to a "hold" though, because the company appears to be oozing MBAs rather than the creativity that got it where it is. That makes $200 suspect any time soon.
Reviewing My Banking Pick for 2016
In March, I wrote a column entitled "If You Want an Accurate Financial Forecast, Ask a Waiter," and I named Bank of New York Mellon Corp. (NYSE: BK) as my favorite play in the banking sector, calling it a bank that could "roar back as interest rates normalize."
It finished 2016 up 26.3% since I recommended it, beating even the roaring overall bull market by 50%.
Honestly, I wish to hell I'd stuck with JPMorgan Chase & Co. (NYSE: JPM) which turned in 46% in the same time frame – especially since I was halfway there, calling it "well-positioned" in the same article.
Then again, the cliché that hindsight is 20/20 rings true for a reason – and you can't argue with profits.
Was Facebook Really a Fabulous Stock?
On Jan. 7, 2016, I called Facebook Inc. (Nasdaq: FB) a "fabulous stock to buy" now that it'd finally grown up.
Since then, the stock has returned more than 24%, while outpacing the other three famous names that round out the "FANG" stocks we talk about frequently – Apple, Netflix Inc. (Nasdaq: NFLX), and Google – now Alphabet Inc.
Meanwhile, with Facebook growing earnings at a dizzying 165.5% pace, there's no indication it's stopped being a "fabulous" stock.
How My Three Top Choices to Make "Serious Money" Panned Out
On Feb. 29, Stuart Varney asked me a very pointed question. "I want serious money to be made by me and my viewers. Where should I put some money to make some money?"
I said stick with big tech because that's where the momentum was and still is. That's because "serious" money means you make a lot then don't lose it… which is why smaller tech is a risk that doesn't fit the definition.
All three companies had a great year and remain poised for still more gains that could literally come "at the click of a button."
Checking In on the Stock I Said Terrorism Couldn't Destroy
Last March in the aftermath of the horrific bombings in Belgium, the financial world was naturally buzzing with talk about what terrorism would mean for markets going forward. So I turned my attention to stocks that would survive even in the face of growing terror – despite the fact that many analysts expected it wouldn't.
The company I chose, Ryanair Holdings Plc. (Nasdaq: RYAAY), was an unlikely candidate because it's an airline company, and therefore theoretically vulnerable to downturns from hundreds of millions of people becoming frightened to fly.
My view was that terror threats wouldn't intimidate customers from travelling – nor would growing terrorist fears prevent that company from reaching its goal of flying 180 million passengers by 2024.
Ryanair is up more than 16% in the nine months since.
Did I Make Good on My Forecast for Microsoft?
On March 28, I was asked on FOX Business Network's "Varney & Co." if Microsoft Corp. (Nasdaq: MSFT) would hit $60/share in 2016.
At the time, it was brushing an intraday trading low of $53.45/share having gone nowhere for months, meaning $60/share would represent a more than 10% surge – or an extra $47.2 billion in market capitalization.
Nonetheless, I said Microsoft would hit the landmark… no thanks to its uninspiring list of acquisitions. Six months later, MSFT closed at $61/share in October, and has floated a little higher since.
Did My No. 1 Summer Investing Insight Make Your Summer… or Break It?
Late last May, the tea leaves I was reading pointed to major market movement. So I sent out a message to Total Wealth members titled "Make or Break Your Summer with This Investing Insight."
In it, I described a phenomenon markets hadn't seen in 20 years – markets had become historically narrow, meaning they were trading with very little price movement from top to bottom at a time when volume had fallen precipitously.
That told me we were due for major market movement – but, crucially, it was hard to say in which direction.
The uncertainty made risk management the order of the day – and among other things, that meant a renewed emphasis on "must-have" investing. I called Apple, Becton Dickinson and Co. (NYSE: BDX), and American Waterworks Co. Inc. (NYSE: AWK) choices that were especially appealing for these market conditions given their ties to Unstoppable Trends, relatively stability, and high current income.
Sure enough, the movement I sensed was around the corner, with the Dow plunging 4.8% in less than a month.
My expectations for Apple were on the mark, with the stock shooting up more than 16% by the end of the year. BDX and AWK surprised me, though, by finishing the year about 1% in the red from where I recommended them.
I'm inclined to grade myself well for correctly sensing a major market move and calling Apple. Yet, at the same time, I'm inclined penalize myself a bit for overestimating both BDX and AWK during the balance of the year.
Was It Really So Foolish to Fight Last Summer's Rally?
Last August, markets were a whisker away from all-time highs despite slowing corporate earnings, leading a lot of observers to wonder if a correction might be in order. Again.
But I explained why it was better to be "long than wrong," as I pointed out that central bankers had made it very clear where they intended to march the markets – higher. Anyone listening was glad they did, with the Dow up more than 7% in the months since. In other words, it was, indeed, foolish to fight the rally.
How Did My 2016 "Five with 'Fitz" Interview Hold Up?
I made quite a few projections in my 2016 "Five with 'Fitz" interview, and one of them didn't hold up… at all. I misread the direction oil prices were going, having called for $20-$25/barrel oil when in fact prices began their gradual march higher the following February after dropping to a low of $38.
On the other hand, I was correct that National Oilwell Varco Inc. (NYSE: NOV) would benefit from a burst of merger and acquisition activity. Sure enough, the following summer NOV announced it had snatched up the completion tools business of Trican Well Service Ltd. for an undisclosed amount. The company also shelled out approximately $144.9 million for its acquisition of Fjords Processing from Norway-based Akastor ASA. NOV closed out the year 26% higher after my "Five with Fitz" Forecast.
In the same interview, I also said that the volatility that had defined early 2016 would "undoubtedly" continue, and that ended up being the case as markets shed 4% of their value by mid-February, then went on a 10% run leading up to April 20, suffered the brief but severe correction after Brexit, and of course, went on to finish with the "rip your face off" post-election rally.
Was I Right to Pooh–Pooh the "Permabears?"
Last June, I wrote to you with a message to keep in mind whenever you heard very serious people calling for a steep market correction or even catastrophe. Pessimists never make money, I counseled.
Never forget that the stock market has enormous catalysts propelling it higher even during the darkest moments. Further, that capital is a constantly growing and very positive influence that can overcome even the worst sentiment.
Between the Brexit, Trump's victory, and half a dozen other overblown fears that have held investors back much to their detriment, I think it's advice that holds up pretty well today.
Did My Dividend Picks Deliver?
I authored a column titled "How to Make 2,426% Gains in a Bear Market" to show just how powerful dividends can be to your total returns at a time when many people were worried that there were bear tracks and the markets felt tenuous.
Lockheed Martin announced a 10.8% dividend hike in September, following Raytheon's March announcement of a 9% dividend hike. Altria raised its dividend hike by 8%, and now has a stellar 3.61% yield. Not for nothing, all three also enjoyed 15.7%, 18.2%, and 20.6% appreciation, respectively.
All three are still great buys today, especially for income-starved investors who still need growth.
Yellen's Lost Control (and Then Some)
I've been as consistent as I have been emphatic since the Financial Crisis began, especially when it comes to Janet Yellen and her rate hikes. The charge higher would be part and parcel of the slowest rate normalization in recorded history, as I noted on CNBC during several guest appearances throughout the year. At the same time, I observed that it'd be traders – not Yellen – who actually took yields higher.
In the meantime, I encouraged you to keep bonds around because they'd still be relevant both for principal protection and income. It was advice that stood in direct contrast to people like "Bond King" Bill Gross, formerly of PIMCO now of Janus, who said they were through.
Did My Advice Get You Through Your "Templeton Moment"?
It's easy to forget after the monster rally of these last few months, but 2016 got off to a grim start, with the Dow closing down 5.2% in the first week of trading, including a gut-wrenching 1,079-point drop in the second week of January alone.
But I told you not to reach for the "sell" button reflexively, likening the time to your own "Templeton moment" when huge profits are made even as others are frantically selling.
With 88% of global markets trading under their 50- or 100-day moving averages, I saw plenty of buying opportunities – and I had one in mind. Pfizer Inc. (NYSE: PFE) went on a tear culminating in June, and while it's given back some in the months since, Total Wealth members who acted on their "Templeton moment" had the chance to lock down 20% profits in mere months from the pick. Members who held onto the stock were rewarded with a 75% dividend hike last month that led to a yield of almost 4% – no small reward in this income-starved era.
If there was ever a year you had to be "in to win," 2016 was it.
How'd Ekso Bionics Go?
Tiny Ekso Bionics Holdings Inc. (Nasdaq: EKSO) remains my favorite way to play Human Augmentation. Not only is the company making all the right moves when it comes to product development, but sales are building and the payoff is going to be ginormous.
Just not fast enough.
The stock has become an exercise in patience rather than the fast mover I'd anticipated. I'm not ready to give up on it by any stretch of the imagination and encourage you not to, either. Ultimately, I believe we're going to laugh all the way to the bank.
Still, this is a tough one and I let you down.
In closing, I'd like to leave you with a thought from a famous martial artist named Lee Jun-fan.
You're not alone if you don't recognize the name. He was far better known simply as Bruce Lee, an actor, filmmaker, and philosopher who created Jeet Kune Do – a very effective fighting style combining Chinese Wing Chun, Western boxing, and several other influences.
Lee famously observed that the height of cultivation always runs to simplicity.
I have no doubt he'd love Total Wealth because keeping things simple is what we do in pursuit of profits.
…line your money up with Unstoppable Trends.
…buy the best companies making "must-have "products.
…manage risk carefully.
I'm thrilled you're here!
Thank you for being part of the Total Wealth Family.
Best regards for another great year of investing,
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.