How To Play The Record-breaking NASDAQ Index
By Eliseo "Jojo" Prisno, CRPC, MS
Chartered Retirement Planning Counselor
PE CAPITAL INVESTMENTS
On June 18, 2015 the NASDAQ index hit a new high surpassing the March 2000 intraday record. Yes dear readers 2000 (this is not a typo error), some 15 years ago. I do remember vividly March 2000, this was when my daughter Paulina (now on her 2nd year at Loyola University) finished her first school year as a nursery pupil in Manila prior to her kinder 1 level at Colegio de san Agustin in Makati. This was when I started to consciously follow the global stock market and fell in love with it. Yes 15 years…Why that long? Why did it take two seven year cycles for the tech industry to recover from the crash?
We all know why the tech bubble burst in 2000 and how the hard landing redefined the sector. In fact if we take into account the original components of the NASDAQ that still exists today when it made the 2000 record, it’s nowhere near the record high. The recovery of this index is driven by new components which were not even invented yet when the record was notched in 2000, I’m talking of the likes of Facebook, Go-PRO, etc. “This milestone will make some investors’ hearts race with excitement, while others are filled with trepidation” as Matt Krantz of USA TODAY puts it. The big question though is how do we move forward given this new high? How do we play this sector of technology and biotech?
Let me share further portions of Mr. Krantz editorial and learn some pointers:
“There's no argument over the historical significance of the crash and comeback of the important index. The Nasdaq, which focuses on some of the riskiest corners of the market, like tech and biotech stocks, The index surged a remarkable 363% from the 2002 low during the bottom and closed at more than 5133 (on June 18, 2015). “This means good things are happening," says Chris Konstantinos, director of international portfolio management at RiverFront Investment Group. "It's been 15 years."
But those 15 years of waiting and climbing back to even still haven't repaired many investors' justifiable skepticism of the Nasdaq. The result is a conflicted attitude toward Nasdaq and its many biotech and technology stocks. Investors, though, can look at the strength in the index as a way to profit with a few strategies, including:
•Trim back on your risky plays that have worked out. The surge in the Nasdaq has pushed shares of stocks higher that probably didn't deserve to be pushed higher, says Michael Farr of Farr Miller & Washington. It's not a small number. Last year, 1,059 of the 2,557 stocks trading on the Nasdaq composite — or nearly half — posted net losses, says S&P Capital IQ. But of those 1,059 money-losing stocks, 257 have seen their shares shoot up 10% or more in the past month. That's speculation for you.
But that doesn't mean bail out of tech and biotechs completely, Farr says. "There's ample reason to be cautious when an index is making new all-time highs, but the trend is your friend," Farr says. But if you do own a risky, money-losing company that's up huge, think about selling it and replacing it with a tech stock that's more fundamentally sound. "What goes up can go down really fast," Farr says.
• Don't let the market dictate your financial plan. Seeing Nasdaq stocks soar might prompt some investors to think they need more large growth stocks in the tech and biotech industries. Don't think that way, says Alan Skrainka, chief investment officer at Cornerstone. He says now is a perfect opportunity to trim back on Nasdaq-type stocks if they've become an oversized portion of your portfolio. That's especially true since much of the market's rally is based on what he says is the false hope that the Federal Reserve is definitely not going to jack up short-term rates rapidly. "We don't know what the Fed is going to do," he says. "There's a lot of enthusiasm over stocks right now. Investors should review and trim their portfolios to meet their long-term asset plans."
The good news is that even investors who just buy the market are enjoying the Nasdaq rally. Currently, 112 members of the Standard & Poor's 500 index are listed on the Nasdaq — so if you own the market, you're enjoying the rally. But that's the risk, too. “
A very sound approach indeed however if you want to incorporate this sector or components of this sector in your investments portfolio, contact a financial professional licensed to deal with securities.
About the writer: Eliseo Jojo Prisno is a Chartered Retirement Planning Counselor and for over a decade has managed the wealth of select families and business owners. He founded P/E Capital Investments in 2010, a State Registered Investment Advisory Firm (CRD# 172695) and is the current Managing Director and Senior Investment Advisor of the firm. Mr. Prisno also manages a Fund of Funds Portfolio with Ameritas and runs an All Equity Growth and Income Portfolio in Separate Accounts via E-Trade Financial. If you have questions or desire a complimentary analysis of your retirement readiness, call toll free to 1-888-929-2825 or visit our page on facebook or our website: www.PEcapitalinvestments.com
MoneyGram Unveils Sleek, Reimagined Online Platform
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The state-of-the-art platform allows MoneyGram to rapidly update and introduce features, delivering a superior online customer experience. In addition to guest sending and transfer tracking, users will also benefit from enhanced security and risk management protection systems, and quick-click re-sends for frequent users, as well as instant ACH transfers as a funding option.
“The new MoneyGram.com is the next evolution of global money transfers,” says Alex Hoffmann, MoneyGram executive vice president of business development and global product. “We created a new experience based on direct customer feedback. MoneyGram’s focus on the customer, our trusted brand, and our global settlement engine are key factors driving the success of our new online platform and overall self-service transformation.”
About MoneyGram International, Inc.
MoneyGram is a global provider of innovative money transfer services and is recognized worldwide as a financial connection to friends and family. Whether online, or through a mobile device, at a kiosk or in a local store, we connect consumers any way that is convenient for them. We also provide bill payment services, issue money orders and process official checks in select markets. More information about MoneyGram International, Inc. is available at www.moneygram.com.
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