That Was The Week That Was- 1st Week February

 

Best January in 15 Years! If you pulled out of the market in 2011 you won’t like reading this but all  indices were up  last month big time. Tech a whopping 8% ! But, some Poo-dunits say that a slowdown may be coming. Morgan Stanley warned that this rally may not be sustained.

On the other hand -At The Tycoon Report trader Chris Rowe reports that there may be reasons to be bullish in 2012. Reasons are (1) Election Year (2) Strong January (3) Internal Indicators show enormous strength                         (4) Momentum Indicators have shown strength and (5) Golden Cross- a technical signal when the 50 day moving average crosses over the 200 day moving average- historically indicates a long term buy signal.

  Year to date starts off not so shabby with Gold +10.5% and oil off 0.1% by the 2nd of February. Plus Friday’s Jobs Report showed the U.S. added 243,000 new jobs in January knocking the unemployment percentage to 8.3%! Here’s the Department of Labor Chart:

Needless to say the positive change moved markets big time! The jobs report was an astonishing 100,000 more than expected. According to Ed Pawelec creator of the Tycoon Report writing that investors could expect to see markets push past May 2011 highs. Equities have broken through technical resistance on the S&P 500 have possibly more room to run. Pawelec writes, ‘Should we successfully breach the 1365 area in the coming weeks or months, there may be little to keep the lid on this market until it reaches the 1540 mark. Now unless the European Union completely collapses, it seems we could be seeing 1500 sometime next year.’

9 our of 10 S&P 500 Sectors rose last Friday, with only utilities down.

Last Year, I reported to you, in the depths of the market collapse that several analysts and fund managers predicted the S&P 500 would be at 1400 within 6 months.

Joe Terranova, CNBC analyst of Fast Money, wrote that there were no holes in Friday’s job report. It’s for real and move on..

And Now For More News From Last Week…

  Barrons had a great piece last week on the wild ride for markets in 2011.  It was a year that made a lot of money for flash traders but didn’t do anything for the rest of us except raise our blood-pressure.

Investors still mentally link 2008 market conditions with 2012. Nothing could be further from fact. Today is so far from conditions four years back that I’d have to spend all month writing on the differences.

A survey by the Yale School of Management however showed a decline amongst investors who felt confident that there wouldn’t be a stock-market crash over the next 6 months.

One of the biggest complaints from investors of all stripes in 2011 was that diversification and asset allocation just didn’t work. The correlation between one and another asset was its sameness. Markets moved within a defined range which was good for traders. Bad for the nerves and pocketbooks of investors.

Much of investor angst was caused by the fact that the S&P average daily movement in 2011 just about doubled from the average daily move from 1928 onward. That alone  was enough to cause investors to worry. This fear, real, imagined or created by radio and cable talking heads, caused more money to leave equities since 2008, the year of Recession 2. 

Add in Washington’s economic do-nothing policies and the volatility index registered OMG! Plus we can look at same policies in Europe and investors continue to worry about a global meltdown. (Germany does not want a meltdown anymore than the school teacher in Michigan trying to manage a 403b account.)

- Planners, broker and investors, institutional and retail, are placing assets in a broad based allocation in the hope that not all sectors will be gridlocked in the same up and down elevator. 

 

Gone are the days when the one fund does it all days. Today’s investors need to be more pro-active.

Apple Is Now Bigger Than Exxon…According to Matt Petronzio, who had a lot of time on his hands, Apple is worth more than:

• All the Tea In China
• All Worldwide Lottery Sales
• The Global Coffee Industry
• The U.S. Beef Consumption
• More Than Four U.S. Civil Wars
• Two Entire Appollo Space Programs
• Ten National Football Leagues Combined
• All the Gold at the N.Y. Federal Reserve
• The Entire Economy of Singapore
• The G.D.P. of Denmark
• All The Farmland in Iowa and South Dakota
• And all the Star Wars, Star Trek, Harry Potter, Stephen King and Twilight Franchises Combined…

But soon comes Facebook…and expect everything to change! maybe…

Monday Markets Were Down Triple Digits at the Opening Bell but closed less than eight points down as news reached traders that the Eurozone was close to settling a deal. A deal Tuesday morning was announced with 25 out of 27 countries signing on for stricter financial rules. Europe banks may double or triple their requests for additional money in the European Central Bank’s three year money auction. Still, according to Monday’s NPR news, Greece plays loose with Euro rules to get additional bailout money.

New Rules For 401k Investors Finally greater transparency on fees and a greater investment menu offering for many investors this is good news. For other investors it matters little since they have no clue how to manage retirement accounts. No matter how many new transparent rules it still comes down to ‘teaching a man to fish’.

Yahoo May Be Hurt with Facebook IPO…BGC analyst Colin Gillis  said that Facebook will need to put pedal to metal and garner advertising dollars and the easiest place to get it from is Yahoo. ‘Ad budgets are fixed and so for Facebook to grow they’ll need to take dollars from rivals,’ said Gillis.Google may also take a hit but Gillis warns its only temporary.

The Laughter Index: According to CNBC the amount of laughter recorded at the official transcripts of Federal Reserve Open Market Committee from 2000 to 2006 correlates perfectly with the rise in housing prices. In 2006 there were 44 outbursts of laughter. Biggest guffaws came when Vice-Chairman Tim Geinthner gave warm praise to departing Chairman Greenspan. Tim ‘Shecky’ Geinthner said to Uncle Alan, ‘ Let the record show that I think you’re pretty terrific, too.’ Now the problem is that people on the outside have no way of knowing if the people at the FOMC really know what they’re doing.

It’s Fiscal Policy, Stupid! Dr. Irwin Kellner of Dow Jones writes that he’s never seen politicians shy away from boosting growth by cutting taxes and reducing spending until now. He writes the reason that America’s prior recessions have been short is because politicians have understood what needed to be done. Monetary policy alone doesn’t cut it. Low interest hurts savers, banks can’t loan/ or won’t and cutting back government spending reduces state employees by the thousands.  You don’t boost an economy by cutting defense spending, making big government smaller at the expense of workers and eliminating departments like NASA.  Is anyone listening? Hello? The Good Doctor says if Politicians were more concerned about our jobs instead of theirs we’d be better off. eh?

Amazon Profit Drops 57% as operating expenses increased 35%. The building of Amazon facilities continues and at some point weary investors will see rewards. The stock fell to $178.00 in after hours trading Tuesday. and has been slowly crawling back up.

Markets Mixed Tuesday. Up Wednesday…Oil below $100 mid-week. Thursday Dow off a smidge all other indices up. Friday markets boomed but gold off its feed. Some now think that gold is supported only as a momentum play. Ten year Treasury moves up, still under 2% yield.

 

WeekDay Trader- TripAdvisor a first class stock according to Barrons’ Bob O’Brien. He reports that site has 1/2 a billion hotels and covers 30 countries and is a dominant force in the travel review business. Company is capitalized at $4 billion, which Jake Fuller at Lazard Capital calls cheap. Ticker is TRIP

Shhhh, something good is happening in Detroit. Restaurateur Matt Prentiss is opening  five (count them) five new restaurants in the metro area in 2012, including reopening one of my old favorites Morels. Does this mean that things are getting better for De-Troit City?

GOING TO BE SICK AND TIRED OF HEARING ABOUT FACEBOOK I.P.O. The company earned $3.7 billion in 2011 up 88%. Almost 900 million Facebook members. If you look at total it could be the world’s 3rd largest country. Facebook is not just a meeting social place but will be a destination to do business for all wants and consumer needs. Think of it as a big Cheers Bar- where everyone knows your name.

Almost All Autos Up…January Sales revved up for all autos except GM. Daimler was up 25.8%, Toyota up 7.5%, Chrysler was up 44% and Ford edged 7.3% in a notoriously historically not-much- happening month in the auto sales calendar. All told, according to WSJ, the industry sold 913,287 cars. The availability of credit and the fact that the average car on the road today is almost a decade old has something to do with sales being increased in an industry some called dead three years back. zoom, zoom….!

Emerging Market workers in Indonesia taking a lunch break. Some Heavy- weight fund managers are shifting focus to emerging market debt. Not only providing liquidity, yield plus stability and sustainable growth. Some managers in the larger fund families have significant assets in these markets. You can be owning this asset in funds and ETFs.

Bank of America and General Electric Insiders Buying Stock, according to Barrons. This is no indication that the shares will move up, or give an inkling that this is a good time to buy. Michael Dell bought a while back shares in his company and shares went backward.

Just Like Regular Folk…almost.

Senate passed an Insider Trading Ban on members of Congress. What they learn in committee is now supposed to stay in committee. Representative Spencer Bachus, Republican (It’s always the Republicans when its money, eh?) first said he didn’t break rules before the approval and then later announced he would stop trading stocks. He then helped revive the bill and get it to senior members for a vote.

Mark Hulbert at MarketWatch.com writes…gold’s rally may peter out. Short term risk is quite high. Not to say that it means that the metal won’t end up higher by the end of the year.

Chuck Jaffe of Dow Jones writes that John Bogle’s advice is timeless. Keep things simple, set up an allocation, rebalance (if that’s your thing), make adjustments annually and the most important thing is to stick with it.

Those clients who stuck with a plan- good plan or bad

& made minor allocation changes but for the most part stayed invested did  x-times better than those that sold, waited for better times to buy or tried to time the market. sometimes you just have to hold your nose until the stink goes away,,,and it usually does…

Underwater on a stock or fund? You only lose if you sell. –anonymous  It is easy to sell. The difficulty is finding a spot to get back in…

Greek Bailout May Have to Be $19.7 Billion Higher! The meeting to resolve problems was postponed until this week.

No Banks Were Seized By FDIC Last Week. The total estimated cost to FDIC in 2012 for failed banks is $851 million. The National Credit Union Association Seized two credit unions in 2012. The latest was January 27th.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.