OIG General Board Meeting (04/02/2014)

Market Update: 
  • The U.S. stocks rose after the postive economic reports that gave investors more reasons for optimism about U.S. growth. This gain in stocks came after decrease in the Treasury bonds.
  • General Motors issued a recall for about 1.5 million vehicles because of a steering defect.
  • Apple increased by 0.1% as it was in talks to buy Japan’s Renesas SP Drivers, which makes power-saving smartphone chips, for around $1 billion.
  • Goldman Sachs edged up 0.7% as it is close to selling a trading business based in New York.
  • Google splits into GOOG and GOOGL. Shareholders will get two shares for every one they owned. One set of shares , called Class A, will trade under GOOGL while the other, Class C, will be listed under historic ticker GOOG. Votes of Class A will be counted as one vote while Class C will be worthless in terms of voting.
  • The first quarter of this year was busiest since 2000. 64 companies went public in the U.S. and raised $10.6 billion. Around 50% of the IPO’s were from healthcare sectors. Technology firms were active as well. Companies such as Box Inc., Go Pro are also expected to go public.

Stock Pitch: 

Name: TLT (Treasury Bond) 
TLT reflects the price of 20 years or older treasury bonds.It was priced around $109 and also has dividends of 2.9%.TMF is another similar stock which is leveraged three times more than TLT. 
Trends: TMF shot up in April through July and then declines until following year. 
Why? TLT is a safe stock because it is not a company, which means that it will not go bankrupt.However, it will also not hoot up like other stocks do. Our portfolio has many bull stocks, so TLT will counterbalance them. 
Prediction for the stock: Since Quantitative Easing (QE) has been reduced, which means that printing of money has been reduced in economy, less stocks are bought. As demand for stocks decrease, price of stocks are increasing. This means that people will look for safer haven, which is provided by bonds.

What can we do? We can buy 100% TLT bonds, which means fewer risks,less volatility and fewer gains. Also, we can buy 100% TMF bonds which entails nore risks. Thus, a balanced combination of TLT and TMF bonds is another option. 

Investment Terms: 

Bond Investment: It is a long term investment. In Bond investment investors loans money to either governmental or corporate entity that borrows funds for a defined period of time. Bonds are then utilized by the entity to finance various projects. (http://www.investopedia.com/terms/b/bond.asp)
Exchange Traded Funds (ETFs): It is a security which tracks index but trades like stock on an exchange. (http://www.investopedia.com/terms/e/etf.asp)
One we have in our portfolio mimicks S&P 500. 
Helpful fact: Bonds and index funds can be used along with stocks to diversify portfolio.