The Felder Report (TFR) was established in 2005. Editor Jesse Felder brings a wealth of experience to the Felder Report. He previously worked at Bear, Stearns & Co. and co-founded a multi-billion-dollar hedge fund firm headquartered in California. His writings have been featured in many major financial publications including The Wall Street Journal and Barron’s, among others.
The Felder Report is web-based, meaning that you access his reports via his website and not a PDF. Jesse is an articulate writer and great aggregator of financial information. His philosophy is not to provide investors with specific investing advice but with actionable ideas. Jesse explains this in his Teach A Man How to Fish overview which you can find on his website. This overview should be one of the first things you read before deciding if you want to become a paid subscriber of his service.
One of the biggest questions Jesse receives is how to apply the information he supplies to your own money. The short answer provided in his Teach a Man How to Fish overview is that he can’t because everyone’s situation is unique. While I agree with this to a certain extent because we all have different risk tolerances and investment goals, it’s also a disservice to his readers. Without a track record of the results of his ideas and guidance to help subscribers use the information provided to their individual portfolio’s, they are left on their own.
That isn’t to imply that the Felder Report is worthless, or you shouldn’t subscribe to it. The paid content provides some valuable information that can be used to help guide your investment decisions. The above is just something to keep in mind when deciding if this service is right for you or not.
The Felder Report provides information broken into four categories; reports, indicators, ETF portfolio and trade ideas. Below I will give a brief overview of each offering along with my experience with them. Remember this is only my personal experience and is not meant to be indicative of everyone’s experience. Consider it food for thought.
Trade-Ideas. The trade ideas are mainly related to stocks and some ETF’s. Like an actual hedge fund, Jesse provides both long and short-term trade ideas. The stock picks lean on insider buying or selling in conjunction with valuations and technical analysis. His favorite technical trigger tends to be DeMark Sequential signals, but he also uses more traditional technical indicators such as head and shoulder patterns along with identifying critical support and resistance levels.
Although Felder provides a list of his active trade ideas, he does not offer a track record of how those ideas have performed, nor will he provide one for you. You are left to your own devices. One of the most significant improvements Mr. Felder could make to his service is to list his trade ideas in a table or spreadsheet with the date and price of the initial and subsequent opinions. The addition would establish credibility and a verifiable track record of performance.
Over time I was able to compile and track the result of 25 of his trade ideas that had a minimum of a 12-month holding period. I focused on long ideas as I’m not a short trader and short trades tend to be more short-term. While there were some big winners, there were also some significant losers. Overall results soundly trailed the S&P 500 during the holding times and as of the time of this writing.
Before I invest my own money on someone’s ideas, I need to get comfortable with their thought process, types of stocks recommended and a sense of their track record. While I found some good investment ideas, I’m still not comfortable with the overall track record and the lack of transparency that the Felder Report provides in recording the results of his trade ideas.
The Felder Report provides a wealth of information regarding the markets. The reports cover a wide variety of topics on the market with supporting valuations, charts, analysis, and insight. Jesse Felder is highly adept at synthesizing information and providing insightful analysis that can help subscribers manage risks in the market.
To get an idea of what type of information the reports contain, and the depth of the information supplied I suggest you first start with his free blog. If you find the information in the free blog valuable, you will enjoy the reports as they cover the financial markets in greater detail, with additional in-depth insight and financial metrics.
I enjoy the reports and find them valuable but also rely heavily on market commentary by Warren Buffett and Ed Yardeni to add additional insight. I learned this the hard way after first being introduced to the Felder Report in 2014.
In his 11.24.2014 blog post he stated that “This Is Probably The Second Worst Time In History to Own Stocks.”
In a subsequent 2.24.2015 blog post he wrote; “Don’t Kid Yourself: Stocks Are Just As Overvalued Today As They Were In 2000.”
To help determine if the market is overvalued or undervalued, Felder often points to the Buffett Indicator. The Buffett Indicator is a measure of the U.S. equity market cap-to-gross national product made famous by Warren Buffett. The big difference is how Buffett uses it while taking the current economic cycle and interest rate environment into account. This philosophical difference led to a diversion in thinking between the two. While Buffett was buying new stakes in companies, Felder was calling the stock market one of the most overvalued in history.
Other indicators include the median price to sales ratio, median enterprise value-to-revenues ratio, household net worth relative to disposable income, Tobin’s Q ratio, market breadth, leverage, moving averages and sentiment indicators. It’s a very comprehensive list based on sound economic theory. Overall Felder adds valuable insight into the current opportunities and risks in the financial markets.
Before being too judgmental about Felder’s premature warning that the market was historically overvalued in 2014, remember that market trends can last far longer than anticipated. It’s extremely difficult (some say impossible) to accurately time the market consistently.
To his credit, Felder did share that he considered the housing market extremely overvalued in 2005. He sold his house at that time to lock in gains. When the housing market continued to peak in 2006, it appeared to be a poor decision until the ensuing housing collapse.
Bulletproof ETF Portfolio
The Felder Report provides its “TFR model ETF portfolio, aka “The Bulletproof Portfolio.” The model ETF portfolio is based on Meb Faber’s Global Asset Allocation model of not putting too much money into any individual asset allocation. With proper diversification, investors can achieve the same or better returns to traditional allocation models with less risk.
Felder then overweights or underweights the individual allocations to achieve better performance. The allocation adjustments are made based on whether the specific sector is considered overvalued or undervalued. Quarterly updates are provided with market analysis and the reasoning for any suggested changes to the portfolio.
TFR does not provide a track record of the ETF portfolio. The ETF/Index portfolio’s I’ve seen by Paul Merriman, Morningstar and a plethora of other portfolio newsletters I’ve subscribed to provide models, risk assessments, guidance and a track record for their subscribers. I want TFR to do the same for accountability and to help their subscribers. An ex-hedge fund manager would demand that at the very minimum for anyone providing them with financial ideas.