Question:
My father is still hounding me to buy gold for his portfolio. I’m going to try to talk him into a gold ETF rather than actual gold. I’ve been looking at SPDR Gold Trust. If I have to buy this for him to appease him, how much should I get the man? He’s in his late 70s.
Answer:
If you have a well-balanced portfolio, and wanted to own gold, we suggest SPDR Gold Trust ETF (NYSEARCA: GLD). The Trust holds gold and issues shares. We recommend that gold be no more than 5% of your portfolio. In the past year, gold has not been a stellar investment. We believe when the bull market for gold is over, gold will fall quickly.
Question:
You’ve mentioned in the past that Basic Materials shouldn’t be a heavily weighted position in a portfolio. What do you recommend? And what do you think of PPG? My husband wants to buy.
Answer:
We recommend a diversified ETF, Materials Select Sector SPDR (NYSEARCA: XLB) instead of individual stocks in Materials. The sector comprises only 3% of the S&P 500; however, there are about 250 stocks in that sector. We believe it is very difficult for an individual investor to be properly diversified in the industry. PPG Industries (NYSE: PPG) is a good company, which we have owned. The company produces paints and glass for several industries. While the company is in a good cycle, it is expensive in our opinion. We recommend XLB for investors.
Question:
I’m looking to sell Ethan Allen soon. I still want to stay in that industry space. What do you think of Tempur-Pedic or Select Comfort?
Answer:
We do not recommend Select Comfort Corp (NASDAQ: SCSS) or Tempur-Pedic International, Inc. (NYSE: TPX). We believe the mattress industry has vicious competition, and no company is able to create a strong brand identity. Perhaps, you may consider Leggett & Platt, Inc. (NYSE: LEG) a diversified manufacturer that conceives, designs and produces a wide range of engineered components and products found in many homes, offices, retail stores and automobiles. Ethan Allen Interiors, Inc. (NYSE: ETH) is at least diversified in the products they sell. Perhaps consider holding Ethan Allen, as the company is in a good place. With a recovery in housing, people will be looking to purchase furniture. The company trades at 16 times earnings and pays a 1.3% dividend. It is a well-run company with good, high-quality products.
Question:
Teddy spoke of Unilever last week, but what is the difference between UL and UN? Both are on the NYSE, and both seem to be Unilever. What is the difference, and do you prefer one or the other?
Answer:
There is no difference between the two companies. There was a merger years ago, but they kept the ownership separate for tax reasons. Generally, they move in tandem, as they trade about the same and pay similar dividends. Unilever ADR (NYSE: UN) is traded as an American Depositary Receipt, where J.P. Morgan buys shares of a foreign traded company and issues shares on an American stock exchange. Unilever plc (NYSE: UL) trades on both the London exchange and the New York Stock Exchange. UL has less currency risk and more liquidity. We prefer to own ADR shares, as they have to comply to the accounting standards accepted by the U.S. Securities and Exchange Commission.
Question:
I have shares of Avis Budget Group. I’ve held them about six months. Should I buy more, sell or hold?
Answer:
We do not like Avis Budget Group, Inc. (NASDAQ: CAR). We believe as the economy continues to improve, people are more likely to buy their own cars rather than rent one when needed. There was a time when the United States car manufacturers made lousy cars, and they sold them to car rental companies cheap. As that is no longer the case, the cost of purchasing vehicles has increased, and is reflected in the price they charge to rent a car. Another concern is Avis Budget’s interest in buying Zipcar, Inc. (NASDAQ: ZIP). This company has a business model that works in few cities, in our opinion. Our final concern about Avis Budget is their amount of debt. We recommend that you sell this holding.
At Henssler Financial we believe you should Live Ready, which includes understanding your holdings. 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.
