Question:
How often should an investor check to see how my investments are doing? My husband is an “every week” guy, while I barely remember to check once a quarter. Another question too—if I’m checking and my investments are down—say in my 401(k)—should I rebalance or change my investments based on that performance information?
Answer:
How often you check your investments often depends on how strong of a stomach you have for market movements. If you can watch your investments decline 20%, without making irrational moves when the drop is a result of a broad market economic decline, then feel free to monitor them as often as you like. However, if watching the daily fluctuations bothers you, we, generally, recommend checking your investments once a quarter. For 401(k)s or similar company-sponsored retirement plans, you should look at your statements when you receive them. Unfortunately, we’ve seen clients come in with accounts that they haven’t looked at in two or more years. The strategy should be “buy and hold” not “buy and forget.”
As for rebalancing, we usually recommend you do it once a year. Some 401(k) plans may have an automatic rebalance feature. We also consider rebalancing when we create new projections for a client or when a client has changes in his goals. You should rebalance when some of your investments have grown to be too large of a position in your portfolio. We recommend that no one position be larger than 10% of your portfolio. If you have a stock that has experienced a meteoric rise, or perhaps, if you participate in a company stock purchase plan, you should watch how large it has become. When a stock becomes overweight, consider trimming the position and reinvesting the proceeds into your underweight positions.
Question:
We’re considering GulfMark Offshore, Seacor Holdings, and Hornbeck Offshore Services. Gulfmark pays a dividend, Seacor is much larger, and Hornbeck seems to have had a good run. While it’s not a large portion of our portfolio, I still want to know what my best buy would be.
Answer:
GulfMark Offshore, Inc. (NYSE: GLF); Seacor Holdings, Inc. (NYSE: CKH), and Hornbeck Offshore Services, Inc. (NYSE: HOS) do not meet our strict standards for financial strength; therefore, we do not recommend either of these stocks.
All three companies are in essentially the same business, providing various equipment and services for the offshore oil and gas industry. Though it has been a choppy ride, Hornbeck definitely has had a good run so far in 2013, rising about 25%. It now has a price-to-earnings ratio of nearly 40, which is more than twice that of the overall market. Hornbeck’s rapid rise has pushed its market cap to about Seacor’s level, at $1.4 billion.
Seacor, on the other hand, has fallen about 15% year-to-date, but the company still trades at nearly 77 times earnings. Gulfmark pays about a 2.5% dividend, but it trades at more than 40 times its earnings, which is obviously a very expensive valuation.
If you insist upon getting into oil and gas equipment and services, we prefer the iShares Oil and Equipment ETF (NYSEARCA: IEZ). It holds a multitude of these companies, and thus, offers a very diverse portfolio of the major players, including Schlumberger Ltd. (NYSE: SLB), Halliburton Co. (NYSE: HAL), Transocean Ltd. (NYSE: RIG), and Diamond Offshore Drilling, Inc. (NYSE: DO). It also provides you access to the small players like the ones you mentioned.
Question:
I read an article recently where one expert said that there is still considerable room for growth in the housing market, and that investors should consider stocks that focus on homebuilding and even basic materials for that sector. Other experts have warned, “once a stock tip hits the news, it’s time to get out because it’s a bubble and it will burst.” What is your take on the housing stocks and materials market?
Answer:
We believe there is room for growth in the housing market. Even the most conservative forecast from ValueLine predicts that housing starts will grow by 15% over the next four years. Rather than trying to invest in home builders, we recommend you consider home improvement stores such as, The Home Depot, Inc. (NYSE: HD) or Lowe’s Companies, Inc. (NYSE: LOW). These two companies should benefit from both new and existing home sales. We believe both companies are attractively priced and have room to grow in the market. If you are truly interested in home builders, we recommend you consider a diversified approach with an exchange-traded fund like SPDR S&P Homebuilders (NYSEARCA: XHB).
At Henssler Financial we believe you should Live Ready, which includes knowing how to take advantage of the current market without trying to time the market. If you have questions regarding your investments, the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
