It’s funny when Scooby-Do acts like he’s scared of his own shadow but not so funny when investors bail from the stock markets without pausing to allow common sense to analyze their fears. The sad part is that those investors invariably bail at the lowest level of the market and only return when the markets have rebounded and achieved their highest next level. Back in 2000 during the flame- out of the dot coms folks simply ignored their investment statements and tossed them in a drawer or the garbage. I knew people like that and you probably did, too. There was no way anyone could reason with them when they were in their fear mode. Those investors wouldn’t sell, cull their portfolios of tech or reallocate or listen to anyone who reached out. Today there are people that would rather sit and do nothing or lose money by holding money markets than invest in utilities or any Blue Chip stock even for a portion of their portfolio. On the flip side…there are investors who know more than the Street and are willing to lose everything to make their point. Some amateur investors need a plan. 
It can be a simple plan such as owning a Bogle-styled allocation or a widely diversified stock portfolio. No matter here are a few ideas:
- Understand there are few places that can provide the return of the stock markets long-term. Not real estate, cash saving accounts or the next door neighbor with the perpetual money machine.
- Today’s investor has more choices than ever before from real estate to commodities. Knowing what to own and when to own is key.
- It is virtually impossible to time the market.
- There is nothing wrong with building a retirement plan using 100% cash as long as you understand you have to save three to four times more to get to the same place as bond and or equity investors.
- Know what you buy.
- Conservative to moderate investors use dividends to buy additional shares in both up and down markets. Historically dividends have accounted for approximately 30% of a fund’s total long term return.
- Understand basic fundamentals. If you have no interest or your brain doesn’t wrap around financial concepts than hire someone who you can trust. PS: Don’t expect to pay someone to manage your money less than you’d pay the newspaper delivery person. If you wouldn’t work for what you expect to pay someone that should be your clue.
- Understand what kind of an investor you are: Conservative, Moderate or Aggressive. Don’t chase or change when and if the markets change.
- Understand the basic premise that what goes up comes down and what goes down comes up. Nothing is forever but equity markets historically soldier on higher the longer you hold them.
No Matter Your Situation 
There is A Place For Your Money to Work.
On this past Saturday MarketWatch reported that China reported its trade surplus widened in September, easing worries about global consumer demand. 
Exports rose almost 10% to a record monthly high. Those that predicted China’s economy to collapse were a bit hasty. By any stretch China’s growth is extraordinary for any country except China. The GDP numbers coming out this week are expected to show a small slowdown to 7.4% growth rate. Owning share in funds that specialize in China as part of an overall allocation call my office for prospectus and fact sheets.
Charles Scwab’s Liz Ann Sonders 
discussed an optimistic attitude for 2013. Liz Ann talked at the Morningstar ETF Invest Conference of a week back and stressed that investors should not be pessimistic about 2013. She sees housing as a bright spot as mortgages come down even more. Stocks, also, should be attractive as idle sidelined cash needs to find a home.
MarketWatch.com published list of Romney and Obama stocks for 2013.
- Excelon
- Deere and Company
- Alcoa
- HCA Holdings
- Cisco
- Cenovous Energy
- General Motors
- Lockheed Martin
- JP Morgan Chase
Picks and analysis were completed by Russ Brit at MarketWatch and not me or anyone at Westminster Financial Services. Before buying anything always do your homework!
Gas Price in 1962 28 cents per gallon. Average Annual Income in ‘62’ $5,556.00. 
When Social Security was initiated the starting age to receive benefits was 65. The average mortality was 61. Now that’s how you fix Social Security.
Columbus Day Started and Ended Badly as 
Markets were down across the board. Oil fell under $90 a barrel as investors contemplated a soft earnings season to coincide with the recession in Europe.
Cheap Money is for now and for…the next 30 years. Corporations are loading up on borrowing. There have been more 30-year investment grade bonds sold in 2012 than in any full year since 1995. Almost $92 billion from 166 offerings as issuers are being drawn to low interest rates. Longer maturities are better for investors as they lock in higher rates and the investment grade negates worries about default. Mike Gray at Moody’s said, ‘No CEO or CFO wants to be the one that didn’t get cheap long-term money when it was available.’
General Motors is doing just fine, thank you. A $10 billion line of credit is being put together, a larger line than that of Ford. GM’s expected rate will be 2.25%. Investment maverick and Hedge Fund Manager David Einhorn said of GM last week, ‘fixed costs are down, the balance sheet is clean up and pension risk is overblown.’ Share of the company are still below the $33 IPO price and the company is labeled a tad under investment grade, although that can change soon. Zacks rates shares a hold.
‘I should have had a V-8! You say To- mato and I say…lycopene. Its an antioxidant found in 
tomatoes and other fruit like watermelon and said to reduce strokes in men up to 55%. Highest concentrations are found in cooked tomatoes. Cooked have more lycopene than raw. A cup of marina sauce has more than 31,000 micrograms of lycopene while a ran tomato has 3,165. Interestingly one tablespoon of ketchup has 2,146 micrograms.
Markets Fell Tuesday as more bad news from overseas and worries over less than stellar earnings caused investors to pull money off the table. 
The Dow was off over 100, Naz off 47 while Gold and Oil were basically even for the session. Japanese stocks continued their slide. In ETF news investors were dumping shares of TIPS. This, according to the editors at ETF Trends, suggests that either investors are locking in profits or see deflation as a bigger threat.
‘ ‘About Face!’
Goldman Sachs retreats on its 1500 target on the S&P instead predicting 1250 before year-end. Citing the fiscal cliff and slow earnings along with recession in Europe GS makes prudent prediction. Zacks suggests not so much actual earnings but forward expectations will make more of a impact.
Bond worries…
This is not a misprint. Yields on stock are neither historically high or low but bond interest is 1/3 of what it is compared to stocks. We are at or close to the end of the bond cycle. Still investors have little confidence in stocks and the inherent risks associated with equities.
Explaining his Tweet…where he accused the administration of putting up false employment numbers, Jack Welch writes an op-ed piece for the WSJ…’The 7.8% 
unemployment number released by the Bureau of Labor Statistics last week is downright implausible. And that’s why I made a stink about it.’ Welch goes on to state that in his day-to-day work day he is privy to meeting with and interacting with business leaders from all sectors. He sits on dozens of business reviews and not one report, he writes, reported better results in the 3rd quarter compared to the second. ‘The economy is not in a free fall. Oil and gas are strong, automotive is doing well and we seem to see the beginning of a housing comeback. But for unemployment to drop to 7.8% from 8.3% over 12 months the economy has to be growing at breakneck speed.’ Expect the numbers to be revised AFTER the election. 
There was some pencil whipping.
Remember when I wrote about Transports lagging Manufacturing? You got to ship what you make according to Dow Theory. On Wednesday 26 out of the Dow 30 stocks were lower.
As part of my job I get to watch television. Only sometimes the television I get to watch is not for fun…
Last week on CNBC Jimmy Cramer was on the morning Squawk and said that Dell and HP don’t get how close to extinction they really are. The PC business, according to Cramer and also WSJ on Thursday last, is doomed. PC shipments fell 8% from a year earlier. This is the first decline in 11 years. The next big thing is the iPads and their cousins. According to experts core PC market is expected to stay flat through 2015….at which point they may be extinct except for office/business use.
Foreclosure activity drops to 5-year low. Florida has the highest foreclosure rate in the country. It’s not all peachy keen but a start.
Those Looking For Tax Free Income/Yield Pay Attention to This:
Tax Free Municipal Income Bonds are risky to own if you have only enough money for one or two individual bonds. Rising interest rates will crush principal if savers own longer maturities in search of higher yields. Bond mutual funds are also exceptionally vulnerable but overall less risky. Now there are products that combine the best features of fund diversification plus defined maturity in tax free muni bond funds. I’ll talk more about this Tuesday at my breakfast meeting but clients and friends interested in more info call me now for prospectus and fact sheets.
The Markets Continued Their Slog Down. 
Thursday was a mini-recap of events of the week. The Dow was off 19 while oil inched up to $92. S&P 6000? According to Justin Lahart in the WSJ ‘Heard on The Street’, the Fed Model states that the index should be following the yield on the S&P and at a P/E of 60/ it currently stands at 13.7/times. This makes stocks relatively cheap.
Sprint
has had a good run and shares closed under $6.00 but the company has experienced, according to experts and the WSJ, significant losses and carries a huge debt load. The company lost an opportunity earlier with MetroPCS and now a Japanese company is looking to buy around 70% of Sprint for a maximum $6.50 a share. Softbank, a telecommunication firm in Japan, isn’t looking to buy Sprint outright but get a toe hold into U.S, wireless market.
Al Lewis at Dow Jones reports on Joe Coors (the beer 
Baron) running for Congress… ‘touting his common-sense business sense and stating that the president couldn’t run a lemonade stand.’ But what the minions from the Coors’ camp don’t talk about is that Joe was the victim of a con that promised him and a partner 75% return per week! The two millionaires opened an account at Merrill Lynch, dumped in $10 million and gave the con artists access to the account. After $4 million was removed and spent on the con’s high-life Merrill (not Joe) grew suspicious and closed the account and notified the authorities. The two thieves are in federal prison and Joe is running for Congress praising his business acumen. …Joe may have been sampling the suds…?
Finally…U.S. stocks end worst week in four months. 
‘nuf said.
Questions call Paul @ 586 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.
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