That Was The Week That Was-4th Week December

The Mayan Calendar predicted the end of the world on the 21st of December. What we didn’t know was it all could have been a Mayan practical joke or just a scribbled opinion. Today’s economic soothsayers have little in common with their Mayan counterparts but sometimes toss in a few guesses of their own just for fun. Lately many scribes have been predicted a global recession if  a certain group of gas-bags in Washington don’t compromise on a tax and spend plan. An opinion or guess on the future is just that no matter the millennium. I am lately reading that a lot of bloggsters are pushing hard on the Emerging Market sector to lead in 2013. Robert Powell, everyone’s favorite economic doomster, reports on an overarching trend that includes investing in the emerging markets as it benefits from investments for the 65 plus crowd. I like the sector for other reasons which include fixed income and non-correlation with U.S. stocks. Health Care Mutual Funds should also do well as fund companies have broomed those companies that are in contrast with Obama Care. Home Builders and associated industries look to perk up in 2013. We’re seeing values in certain zip codes as a lack of good new housing is getting scarce. Still there are bargain spots such as Las Vegas for those looking to buy a condo on The Strip, or an entire subdivision. MarketWatch sooths slipped on a turban and gazed into their crystal ball and suggested that investors steer toward the following as they are considered poised for a strong 2013:

• MegaCap Companies- Dividend, cash plus growth equals stability.
• Dividend growth again and again.
• Europe goes up.
• China breaks out
• Gold =  $2000
• Real Estate Builds
• Industrials steam ahead – including building products, remodeling etc.
• Technology = Qualcomm and Apple mentioned.
• Finally…Dogs of The Dow. And if truly confused the writers at MarketWatch say stick with 2012 winners.

On NY Eve 2012 Still No Deal! Huffington posted Republicans would agree to a compromise only if a re-jiggering of COLA on Social Security would be included in the deal. A compromise on farm bill stalled a doubling of the cost of milk. Huff didn’t know if a vote had time on a new five year farm bill. Still there are huge gaps between parties on issues of food stamps and crop subsidies.   

Let’s Get The Silliness Over! Markets were all over the place this week. Some days opening slightly higher, dropping like a manhole cover and then staggering up to close off their lows. It could have been worse. The fact that unemployment numbers came in at surprising better than expected and housing continued to climb showed that the U.S. economy is poised to generate some serious growth. Retail sales were initially reported slightly less than last year after a glorious start. Still those numbers get re-examined as retailers count gift cards and after Christmas shoppers. Gold is way off its feed, closing last Friday at $1655-below support. Oil, in the meantime, has stealthily climbed over $90.00 a barrel. The 10-year bond has slowly charged to 1.73%, while the 30-year is less than 3%. Now the economy is in the hands of the politicians. Individuals and businesses are moribund waiting for direction- any direction. Until then Individual investors will be sitting on their hands.

 

   Speaking of Silliness…The 7 worst Predictions of 2012: (1) Facebook Rocks! (2)The Supremes will kill ObamaCare. (3) Brand damage Chick-fil-A will hurt sales by opposing gay marriage. (4) Housing has no headroom. (5) President Romney! (6) Mortgage Rates are Jumping! and the bestest       (7) The World will End on December 21, 2012.

 

StockAuthority Investor David Sterman blogs his choices for commodities in 2013.

• Copper
• Oil
• Silver
• Farmland Ag chemicals such as fertilizer and also farm equipment

CNBC Christmas Eve on Squawk Forecast A Decade of ‘The Nifty Fifty’. Large Cap stocks that pay dividends. These as a bond income replacement. A slight dip in assets in bond funds precipitated this insight. 

It’s All Politics…dumb politics… ‘Over the Holiday I re-watched the Ron Howard film, ‘Frost/Nixon’, and the words spoken reminded me of what a politician put us through and what politicians as a group are now putting the nation through, ‘…utter agony.’

Here’s where they were before the Holiday break…and they couldn’t make a deal because of politics!

The best deals agreed to are those that both sides feel they’ve lost.

Christmas Eve Markets Moved Down Slightly. A rally on Asian Markets on banks and realtors.  Gold closed $1659. Domestic automakers surged on news of better than expected sales.

My Home Office Sent Me a Memo From The Hartford…They’ve sold their individual Life Insurance Biz to The Prudential. We’re seeing more of this. Life Companies bailing from their primary business because of low interest rates. If you own an annuity or life policy under the Hartford label and cannot get in touch with your agent- call or e-mail me.

Most People My Age Didn’t Start Investing Until 1987.   A lot of them bought US Saving Bonds, CDs and insurance policies long before they’d put a penny into a mutual fund or common stock. Savings and Loans were even considered risky. Mom and dad bought income stocks like utility companies. If you worked for an auto company you also  bought stocks in manufacturing companies.  Grandparents owned real estate. The one thing they all had in common was no one taught them what to do with their money once they earned it. There was no school or education program for saving money. There was no computer, no tout sheets, no real place you could study what the markets were about. In 1987 the wheels came off the stock market. It was a real crash- with about a 25% fall. Some hard lessons came from that market disaster. Here are a few from Wallace Witkowski of Dow Jones:

• Don’t Lose Your Head. If Exxon Drops 50% in One Trading Day it Doesn’t Mean Anything Really Changed in 24 Hours.
• Buy on Fear, Sell on Greed.
• Make a Crash Shopping List.
• What Goes Up Fast Comes Down Faster.
• There is No Such Thing as ‘It Can’t Happen.’
• Tune Out The Daily Noise.
• Don’t Bail.

 

 

Morningstar Reported…The stock, fund and ETF evaluation service gave a three point analysis that sums up where we are and going forward in 2013:

• The Market is Fairly Valued.
• Market Volatility Will Be A Way of Life as Europe woes continue and China remains closely scrutinized.
• The Fiscal Cliff, contrary to the press, will end up being a non-event.  More Like a slide than a cliff. Unemployment will be cut plus payroll withholding on social security will go back to 6%-  biggest hurt those in lower income classes.

Gold

2012 Production

A scarcity caused by lower production may impact price in 2013.

Here’s Some More Picks, Opinions and Buys by Professional Investors. These could change but if making a potential buy list you could do worse.

• Mark Holder likes Seagate and Kohls.
• Chad Brand finds Apple dirt cheap.
• Thomas Lott likes Alliance Resource Partners
• Eddy Elfenbein puts Microsoft and Wells Fargo on his Buy List.
• Amit Chokshi updates his opinion on shorting Jarden.

Short or Intermediate Bonds Kaput…

Ignoring fundamentals some investors stayed away from the markets for the entire year. They preferred losing money in bank savings or money market funds. Others have pulled their money to the sidelines for the last four years. James Paulsen, CIS at Wells Capital Management, said, ‘Our biggest liability in the stock markets has been the total destruction to confidence.’ The loss to investors by sitting out the last four years, according to Bloomberg, was a whopping $200 billion as the markets moved higher.’

 A Happy, Healthy and Well Deserved Prosperous New Year to All!

Questions call Paul @ 586 783 7080 or email him at pstanley@westminsterfinancial.com. Share this blog with someone who is serious about their money.