FINANCE & INVESTING
By Don Freeman
Don’t Stick Your Head In
The Sand, Start Investing
Lately, a lot of the phone calls I’ve been getting
are from nervous retirees. They’re nervous for two reasons. One, many of
my clients have seen their accounts go up by quite a bit. After all, the
U.S. stock market is at all-time highs. If clients just purchased the
ETF of the S&P 500, they’re up 17% in the past year.
For those that might have been more aggressive and purchased a stock
like Facebook, they’ve made over 100% on their money.
Now a year ago, when Facebook was trading at $25, it was a no-brainer
investment for me. I use it every day and many expats that I know use it
stay in touch with their families. The average Facebook user spends
about 40 minutes a day on it. The company now accounts for $1 of every
$5 spent on mobile advertising.
The reason shares had sold off after the IPO was that investors were
concerned that more users were logging into Facebook on mobile devices
and that Facebook would not be able to monetize mobile. Well, a year
ago, Facebook CEO Mark Zuckerberg came out and said that he will win the
war for mobile ad dollars. Boy, did he deliver.
The problem now is that the Chairman of the Federal Reserve, Janet
Yellen, issued a cautionary statement on social media and biotech stocks
in the middle of July. The Fed said that share prices of certain sectors
“do appear substantially stretched.” When the Fed speaks, I listen.
This leads me to the second reason many of my callers are nervous. Many
are seeing these headlines and have not invested in the stock market
yet. They’re fearful that the market is going to crash and they don’t
want to be investing at a market top. Remember, it’s buy low and sell
high and not buy high and sell low.
So the question facing many investors today is “what do I do next?” If
you’re already invested, do you sell and get out of the market? And if
you haven’t invested yet, how do I start after the market has gone up so
Well, there’s no clear answer to these questions. A lot depends on your
individual situation. For instance, some of my clients are offshore oil
workers. They have a good income coming in every month and they can
invest through the markets ups and downs. Over the long-run, blue chip
stocks and equities have proven to the best investment for retirement.
For those that haven’t invested yet and don’t have the income of an
offshore oil worker, they have to get defensive. What do I mean by this?
Well, you want to be in stocks that will do well no matter what.
Two of my favorite defensive stocks are McDonald’s and Coca-Cola. People
all over the world are going to continue eating McDonald’s and drinking
Coca-Cola. Just go to our local McDonald’s here in Phuket and we can see
all the Chinese and Russian tourists choosing to eat a Big Mac and fries
over our delicious Thai food. And what’s the beverage of choice at
McDonald’s? It’s a Coke.
Why I like these two stocks is that the Great Depression of our lifetime
was in 2008 and 2009. This was when the global economy almost collapsed,
but shares of McDonald’s and Coca-Cola held up better than other stocks.
Throughout this period, both McDonald’s and Coca-Cola paid their
dividends and investors got a 3% dividend yield. McDonald’s and
Coca-Cola’s businesses are so strong that it’s like putting your money
in the bank and collecting 3%. They’re not going out of business
Buying McDonald’s and Coca-Cola is not for everyone. Some may not like
their businesses and think that trend is towards healthier food and
The point is that McDonald’s and Coca-Cola are just two options when it
comes to getting defensive with your investments. There are a number of
ETFs, MLPs, REITS, utilities, and other consumer companies that do just
as well in a down market. They also pay the nice dividends that we
retirees need to live here in Thailand. (Stay tuned for my next article
on the Vanguard Real Estate Investment Trust ETF which pays a nice
The first step towards financial freedom is realizing that you need a
plan and then making the call and devising that plan. So give me a call
and we can discuss what options are right for you. We can tailor a plan
that fits your needs and that’s what’s important.
Don Freeman is president of Freeman Capital Management, a Registered
Investment Advisor with the US Securities Exchange Commission (SEC),
based in Phuket, Thailand. He has over 15 years experience and provides
personal financial planning and wealth management to expatriates.
Specializing in UK and US pension transfers. Call 089-970-5795 or email:
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