Let’s say you were one of the millions of investors who didn’t trust the gasbags in Washington for doing the right thing and thought the world would end January 1st and so you sold your stocks and funds and put everything into cash. The question you ask yourself now is, ‘Now what?’ The problem with going to cash is deciding when to get back into the market. That’s the real problem. Because no matter what had happened or didn’t happen nothing looks right when the time comes to step back into the batter’s box. Investors initially may look at their getting out of the market as a temporary time-out. 
Then when the ump sez, ‘Play ball,’ the investor doesn’t want any part of it. The fact is those talking heads that scared investors into a time out rarely do they get it right. A real market meltdown is like a Seal Team Six raid, it comes almost with no warning. Certainly those same talking heads had no clue as to the 2008 market meltdown nor do they have a plan to guide investors back into the market. They are Johnny One-Notes, knowing only fear to confuse and separate investors from their money. Emotion trumps knowledge every single time. The radio and cable talking heads count on scare tactics and work on those nerve endings that make investors think ‘bomb shelter’. Quality rarely changes. A Tiffany lamp, a Faberge’ egg or shares in a quality blue chip from day to day but underlying value, for the most part, remain constant. ( There are influences on rare objects and stocks but for this discussion severe events need to happen.) Outside forces may perceive something being worth less than it is- for a time. Value or bargain hunters will eventually notice and buy what others have discarded. Traders sell on market strength buy on weakness. The Buffett has always employed buying when there was ‘blood’ on the Street. Always keep some cash on the side for the opportunities to buy value. And, if you really want to lose significant amount of money follow the emotional rollercoaster and ‘Buy High and Sell Low’.
The Experts Continue to Feel Good About The Economy: Keith Hembre, CFA, Chief Economist and Investment Strategies Head of Quantitative Strategies at Nuveen Asset Management, LLC said, 
‘We expect the domestic economic trends of the past few years to continue in 2013.’
Do You Want to Feel Better about Stepping Back In? IF you haven’t noticed, builders are getting back to work, employment numbers are gaining, car sales are approaching ‘excellent’ numbers, retail (while not great) is holding fairly well, interest rates are at all time lows, inflation –so far- is moderate.
And there are few, if any, places to make money on your money other than dividend paying stocks, funds and ETFs; and an assortment of bond funds.
Here’s my bestest advice for those who bailed out of the market and looking for that ‘perfect’ time to step back in- There is no perfect time. You may just close your eyes and end up buying at a great time or a bad time but at the close of this year or next the difference will be slight.
In all the years I’ve been in the business I have never met anyone who has bought at the perfect time. Sometimes you buy and the markets laugh at you and other times you just get lucky. In the end, if you bought quality and at a fair price, things will work out. Even The Buffett doesn’t time it right and buys higher than the market.
The Investments du Jour of 2012 were Exchange Traded Funds. ETFs are like mutual funds in that they have a lot of parts but trade like stocks. You can buy and sell them any time during the trading day unlike funds that you can only buy and sell at the close of business. There is no free lunch and you have to buy ETFs through a broker-dealer. 
Fees include brokerage fees, ETF fees and, if working with a financial ‘expert’, management fees. Unlike what the financial press tries to sell you ETFs are not cheap. Nor are they safe from market meltdowns. Of all the securities hardest hit by the 2008 mayhem a full 70%, according to Kiplinger, were the ETFs. Another myth about ETFs is that they track precisely a given sector or market. Wrong! GLD, the gold ETF, is a smidge off the real price of gold. So is SLV, for silver, and I could go on. Even those ETFs that are designed to track a certain sector or benchmark don’t get it right. Sometimes investors often ignore basics and go right to the total return numbers and sometimes find that those with the largest returns are leveraged ETFs. These funds may give a boost for a day or two but at the same time tank as options expire and the leverage works against the investor. Jack Bogle, the originator of fund indexing, is no huge fan of ETFs. Most sector ETFs fall far short of matching their index with fees and expenses. The other problem that investors have with ETFs is the actual risk and volatility, which is not discussed in any detail by those who promote the product. If you want additional information on ETF products please call me.
New Rules on Mortgages Starting in 2014. As part of the Dodd-Frank Act of 2010 getting a mortgage will not be as easy-peasy as it once was. 
The new rules limit the debt to income payments cannot exceed 43% of gross pay and for lower incomes allows for 45% debt to income ratio. In addition banks will check credit, employment, assets and income. Exotic mortgages such as interest only are not considered as qualified and are not eligible or purchase by a federal housing agency. In addition the law forbids a mortgage holder from suing a bank who issued the mortgage and caps origination fees at three percent. This all may cool the housing arena as both banks and consumers digest these new regulations.
Stuff I learned while looking up other stuff…Tim Horton’s named for its
co-founder…’Tim Horton, a Canadian hockey player who was killed in an car crash while driving under the influence. per capita there are more Tim Horton’s in Canada than McDonalds.
Sell off? Triple Top? March Woes? Here we go again- All that being whispered around and about as the next worries about a possible future market pullback. Leading this again is the mess in Washington which is coming to an ugly head come March Madness time. The Prez sez he isn’t going to get involved- did I hear/read that right? What he said, ‘The Congress spent it and let them fix it,’-and hopped Air Force One to resume his vacation. 
He even had The Cliff Bill robo-signed, letting one and all know how important he viewed it.
Monday Markets were off. Gold was up as earning season started after hours with Aluminum giant Alcoa. 
Earlier Monday I spent a few hours calling about and talking to my friends at Templeton, Fidelity Advisor, Sun America and others. Too early to get a fix on a full year but always I call to see where analysts are betting and when I get a consensus is where I am suggesting to clients to allocate. You also get it here in my blog. The interesting thing when you talk to the folks at these money factories is that they ignore the shouts and panic of the internet, cable and radio hypers. So while most investors get their panic attacks from the streets I am able to talk to folks who talk to the folks that manage their money. Possibly a rotation by traders from small cap to large cap as they re-allocate.
Whenever some analysts sez markets are 
prepared to drop it doesn’t mean that he or she thinks they’ll stay there. It simply means if you have cash there is a buying opportunity and if you don’t you can either lighten up your holdings, or not. That is if you can believe in an analyst.
Alcoa Beat Expectations and shares climbed afterhours on Monday. And then pulled back when trading opened. The company announced they were cautiously optimistic.Global demand for aluminum should increase by 7% in 2013. Target Retail ain’t going to continue be kicked around by Amazon. 
Jeff Bezos who believes the internet has a long way yet to go to grow continues to take away business from Target and other retailers. Target vows to match Amazon’s prices 24/7. Shares in Amazon closed over $266 with a $250 fair value by Morningstar. Goldman Sachs announced they will provide money market fund values daily rather than monthly. Friday Fidelity said, me too. This is to give greater transparency. Money markets broke the buck in 2008 and almost had a run on if the U.S. Treasury hadn’t stepped in and guaranteed all money market funds. Since then regulators and fund companies have been at odds in providing transparency and allowing funds to fluctuate. Fund companies have worried that investors who see a fluctuation in the fund values may pull their money out.
Wednesday Markets Inched Up a Bit. Folk at Fidelity Advisor talked up their Materials fund saying some analysts like it over the next three to five years. It’s a fund that invests in companies that make the stuff that are used to make other stuff. Genworth Financial fell 4.6% on Tuesday as Credit Suisse analysts tagged it with an underperform. The company has been ‘buying’ the long-term care insurance business with more than competitive rates. Costs for insurers in the LT Care biz have been increasing and insurers have either increased premiums or bailed out of the business. Caution if you have a policy here. Gold still holding under $1700. Oil sneaking up over $94.00. Apple plans a cheap knock-down iPhone to compete with rival Samsung. Schmart thinking as cannibalizing their own product line is better than losing it all to the competition. 
And Apple has a way of gaining additional income through the integration of its products from music, video and apps.
If You Haven’t Yet- Get with lowering interest rates on current installment loans and mortgages. This party is not going to continue forever. 
Speaking of a Party? Markets up again on Thursday as gold pulled back and oil was unchanged. Japan announced a huge stimulus to solve their 3rd recession in five years. Here at home Ford increased their dividend saying they want to share the wealth with shareholders and the stock responded. Auto’s have been on a roll. F also said it would add another 2200 jobs. Jeff Reeves wrote that the three sectors investors should avoid this earning season are financials, materials and healthcare. Alcoa fell and closed under $9.00 a share.
Required Minimum Distributions Are In and Calculated for 2013. 
If you hold an IRA with Pershing, LLC and not direct at a mutual fund company I now have the complete list of clients and the amount of money needed to be withdrawn and taxes paid for 2013. If you were born 1946 and prior there is no Michigan tax, otherwise its 4.35% on all pension and IRA withdrawals. If you are taking income from your plan on a systematic method the amount of the RMD is not in addition to what you are taking out. I will be getting a letter to you this week informing you of the amount needed to be withdrawn by the end of 2013. If you have questions, please call of email me.
Friday Markets up and finished that way for the week. Gold was off $16 and Oil finished at $93.77. It was a relatively quiet week with the biggest news was the huge influx of money into equities. This was the largest flow of dollars since 2008. Remember there is a huge amount of investor money wanting some sort of a signal to enter the market. The question is whether the money sticks or not. My whisper is that the regular investor is always late to the party and some folks wonder is that the case now? Howard Gold at MarketWatch wrote that Sam Stoval at S&P Capital IQ said that a change in leadership sectors a coming while there is still life in financials and consumer discretionary through this spring. Homebuilders have also had their run and the easy money has already been made. Later this year Stoval says the markets line-up for materials and industrials.
Has Anyone Priced Facebook Recently?
FB closed Friday at $31.72. JP Morgan analyst Doug Anmuth call it the ‘Top Large Cap Internet stock for 2013’ and gave it a price of $35.00. The company has been able to get a premium for its mobile app advertising and a lot of it. Seems the ad campaigns are working. The company is able to define and direct ads to those people the advertiser wants to reach. Stay tuned. Millions who got caught in the IPO market mess and couldn’t sell or even know if they owned FB until the following Monday may still have the last laugh.
Finally- FDIC shuttered the first bank of 2013 last Friday. The score for 2012 was 51 failed banks and 2011 there were 92. 
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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