That Was The Week That Was-2nd Week March

The World Looks A Little Different From Here Then It Did in 2008. The DJIA hit an all time high last Tuesday and even the Bears had to admit that the Technical Indicators support a higher Dow. But before we get too carried away only five stocks really contributed to the Dow’s rally: IBM, Caterpillar, 3M, Chevron and United Technologies. All indices were up with the Dow tacking on 126 points, the Naz 42 with gold and oil flat for the session.

 Still if anyone’s calculating where we are by including an inflation factor the folks at MarketWatch reported the Dow needs to be about 10% higher than where it closed to truly reflect a ‘brand-new’ high. Nonetheless the emotional factor provides some with relief that maybe this time the economy is starting to percolate. Thomas H. Kee, Jr., wrote that while ‘technically’ the markets broke out to the upside that there are risks that have escalated in a big way lately only ‘ the markets don’t care that right now.’ In other words, be careful out there. 

 Better Than Expected Jobs Report Spurred The Markets Higher Friday. Still CBS News reports that the total number of unemployed that include those that have dropped off the jobs rolls, those that have quit looking and those that have been so discouraged that they’ve opted for retirement number 14 million.

Last Friday Morning Randy Frederick, managing director at Charles Schwab took the five year chart of the S&P 500 Index from Jan 2, 2003 through Dec 31, 2007 and compared it to the S&P 500 since Jan 2, 2009.

The Week Ended Up but Howard Gold Cautioned That A Short-Term Correction May Be Soon Here. If you haven’t stepped in to the market the next few months may give you an entry point. If you missed on your favorite stock and the price just ran away, here, again, is another opportunity. Craig Johnson, technical analyst for Piper Jaffray, declared the market has entered what he calls, ‘ a hop, a drop, and a pop.’, and a key indicator just gave the sell signal. If you’re trading take profits on additional price strength, said Mark Arbeter. The sell-off could take the S&P to around 1400.

Clients- if you have not received your Tax Forms Please Call. It is important for you to know that neither Westminster Financial Services, Inc. nor I are involved in the calculation or sending of these forms. We also have no control over the timing of when these forms are being sent. This is done by Pershing, LLC. and the various fund families. I have noticed certain mistakes including missed cost basis on a client’s account and I have to remind you that it is the client’s responsibility to make sure that the information is correct. The other thing is the time frame. Investment firms such as Pershing, LLC were not required to provide cost basis for any stocks before 2011 and for mutual funds prior to 2012. That means that anything bought prior to 2011 and 12 will not have their cost basis automatically calculated. I will help clients get the numbers but remember it may take time and possibly not before the April 15th deadline.

 

  When I taught basic financial management one thing I talked about in the estate planning section was that each person should create a book to leave to heirs on things they wanted them to know and to do when they died. I haven’t given it much thought until a recent blog got me thinking about that class and since my client’s are all getting a bit more mature this may be a good review.

Over the past few years I’ve had several clients pass away and in just about every instance it has taken the family a great amount of time and effort to organize the estate assets. Surprisingly it was not because the deceased was disorganized but because their affairs were scattered about in a variety of funds and investments with different insurance agents and stockbrokers. These were people of means who had more than a home, check-book and social security income.  Over time, and just by living, a great amount of different assets had been accumulated. Some accounts were registered in only one name and had to be taken to probate, others needed updating. The single biggest problem in almost every case was the rounding-up of assets and finding out what was owned, how it was owned and who were the new owners.

No one expects to die. Preparation in contemplation of death is something you just do and not when you think you have time.  It wouldn’t hurt to give heirs an idea of where all your stuff is. Here are some things you should write down and keep in a book that anyone in the family can find or know what to do once they see it:

1. A list of your advisors, attorney, accountant, insurance and investment professional, with phone numbers.
2. Investment account numbers.
3. Insurance policies including annuities.
4. Bank accounts and numbers.
5. Safe Deposits, keys and instructions.
6. Funeral instructions.
7. Wills-Trust Doc locations
8. List who gets some of the stuff you accumulated and anything of value they should be aware of. Joey gets the Porsche and Fred the VW. Stop the family arguments before they start.
9. Any notes, last words, pictures, mementos that will be appreciated long after your gone.

 

Back When Social Security Was Established A Lot of People Didn’t Make it To Age 65. Franklin Delano Roosevelt died at age 63. To fix today’s entitlements the age of entitlement has to be raised. The average lifespan for an American male today is 78.8 years. According to experts who study this sort of thing if you live to 75 your chances of seeing 87 are pretty darn good. And if you make it to 87, well, you get a few more years tacked on. The point is that if age 65 was the end back in the day now folks reaching 65 have another 22 years ahead of them. And social security can be easily fixed by hiking the age requirement to the current full benefit.

Another issue is inflation… Too much is being falsely preached by people that should know better that seniors need to get their money into fixed investments and preserve principal. Fixed investments don’t match inflation expectations and seniors, more than ever, need to keep their money on pace to keep pace with inflation’s increases.

This is an investment that doesn’t get much respect… In Arizona, parts of Texas, California, Nevada, Florida and the list goes on these states and peoples are running out of potable water. According to resource consultants by 2025 2/3rds of the world population will experience water stress- still we see population drifts to Az and due south. Matt Sheldon, portfolio manager who runs the Calvert Global Water Fund, said that two years ago he would have said utilities presented the best opportunity but now its infrastructure. Forget the stress in the U.S.A. what is happening in Asia, Latin America, Middle East and Africa is downright scary. The World Economic Forum in Davos recently had water risk high on their list. The wake-up call for strategic action is as old as the Great Depression, writes Rachel Koning Beals. Getting investors to understand that opportunities abound is yet another problem. Average investors get the scarcity concept with oil, gold and housing but for some reason, maybe because it comes out of the tap with no immediate price-tag, there doesn’t seem to be a concern or desire to explore opportunities. Call me if you do.

Who is After Sheldon Adelson and Las Vegas Sands? The WSJ and the New York Times cited a Las Vegas Sands, Corp. 10-K filing that it found likely violations of the books and records and internal controls provisions…aw shucks, here’s the deal…The news was that an unidentified individual with ties to certain ‘bad’ people made a huge transfer from Las Vegas to Macau. The Times article was headlined, ‘Casino says it Likely Cheated.’ Less than 24 hours later Sands management disputed all and said it would defend itself against that type of uniformed and misleading reporting. In the meantime LVS shares down and the world ‘probably, bribery and investigation plastered all over financial web sites.’

Some Investors Chasing Yields into a Sink-Hole. Student loan securities are the du-jour hot income stock. SLM, Corp. sold $1.1 billion of securities backed by (chuckle) student loans. Through February, 2013, dealers have sold $5.6 billion of student-load backed securities, more than triple for the same period in 2012. The numbers show that 31% of all student loans are late. This is going to eventually really hurt….someone.

Thomas H. Kee, Jr. writes that the smart money is shifting to ‘risk-off’.  Warren Buffett said to Cook, CEO of Apple, should ignore hedge fund manager Einhorn and concentrate on building long-term investor value. Others see Apple’s 2 1/2% dividend that is in excess of the 10-Year Treasury as an entry point to get paid while waiting for the stock to recover. Whispers on an Apple iWatch are numerous with no proof. Estimates that an iWatch would be a $60 billion product have nothing to base this on-especially price. Yeah, I’d buy one…

Allan H. Meltzer has taught economics for 56 years. He is America’s foremost expert in monetary policy and author of the three volume book, ‘ A History of the Federal Reserve’. He said, ‘We’re in the biggest mess we’ve been in since the 1930s. We’ve never had a more problematic future.’ He went on to say that former Treasury Secretary was one to take care of today’s problems today and letting tomorrow take care of itself. The Fed, he said, suffers from the same myopia. He blamed the president for refusing to compromise and many business people convinced the President is hostile to business. So what would Meltzer do? He would reduce tax rates, put the Fed’s mortgage debt into a lockbox, to preserve its balance sheet, and then gradually start raising rates. Just too sensible for the present administration and desire to spend and tax.

  The most tricky of maneuvers is the current high wire act using fixed income as the primary portfolio allocation that many investors have carved out for themselves. Pssst, there ain’t no net.  

Markets Wednesday Mixed. Gold and Oil up a bit but a lackluster day across the board as traders digested recent gains. Jimmy Cramer on the Today Show, Wednesday morning, smiled as he said he wouldn’t be a buyer at these levels and said that there would be better entry points. (Someone muzzle The Mouth, or what?)  Cody Willard in his blog wrote that many of his kinspeople have missed the recent 400 point run-up in the market. Remember the economic world was supposed to run to ruin January 1st. Businesses are in no hurry to hire as they’ve learned how to maximize profits with less people. Still a big surprise as the jobs picture brightened to average over 200,000 a month. Did you know Campbell Soup does not advertise its Baked Beans? They make them just don’t advertise. Genworth will stop selling long-term care insurance policies in California. Both Met and Prudential have stopped nationally the sale of these products due to higher than expected claim costs. Shares of Genworth up on the news.

Bottarelli Research Predicted The Sequester Will Drastically Hurt the Military First. The folks at Bottarelli provided a chart illustrating how Lockheed-Martin stock has already been discounted by 11.1% so far in 2013. Military contractors will get hurt to the tune of an estimated $45 billion. LMT may indeed get hurt harder with shares already weakened. The research suggests that investors may benefit by buying put options on select defense contractors.

Thursday Markets Repeated Action. Gold and Oil up a Touch. Bank Stress Tests by the Fed 17 Banks Passed and Only Ally Fell Short. The WSJ predicted that this would lead the way for banks to begin to shore up investment value through stock buybacks and increased dividends to shareholders. But the Fed is paying especial attention to those banks with large trading operations: Goldman Sachs, Morgan Stanley and JP Morgan.

This is all about the Fed’s concern about too Big to Fail. Those big banks which also included Citi, Wells and Bank of America along with the previously mentioned generally ranked lower than many regional banks. See the following:

 

Finally- One Bank Closed in Georgia Bringing the Total for 2013 to 4.

Questions call Paul @ 586 783 700 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

Securities Offered Through Westminster Financial Securities, Inc. Member FINRA/SIPC.