That Was The Week That Was-3rd Week November

 

If You’re An Investor In The Camp of Sophisticated  Confusion…and Rationally Know Interest Rates Have to Rise & The Markets Collapse You May Have a Long Time to Wait. Outgoing Fed Chief Ben The Bernanke said on the 19th in prepared remarks at the National Economist Club annual dinner in Washington  said even if the jobless rate fell below 6.5% the fed fund rate would be kept at a very low rate for quite some time after.  Incoming Fed Chief Janet Yellen is certainly on board with this philosophy. Before raising rates the Fed policy will be to get the broader economy percolating and strengthened. It could be years before the Fed ‘begins’ to raise rates. And even then rate will move up slowly, steadily and controlled. I would expect that taxes and inflation would erode most value from early increased fixed income interest rates.

 

 

Here’s some news from our friends at Talmer Financial in their Monitor Newsletter of the 15th…

‘Stocks today are still not overvalued on a historical basis…we continue to see earnings beat stocks strongly outperforming earnings miss stocks.’ And for those still on the sidelines or trying to time the markets: ‘Missing the strong days in recent markets, and not participating during the downward trend, would have a strong magnifying effect on long term returns.’ What is scary is that there seems to be a logic disconnect with investors who experienced the 2008 Depression and refuse to believe that another market meltdown is not just right around the corner. A lack of confidence with Washington, DC and the present administration frightens a certain percentage of Mom and Pop investors who still shy away from something they know little about. Chuck Jaffe at MarketWatch.com wrote on November 15th that ‘Fear is Killing Certain People’s Savings. These investors shy away from risk. What they seem to be looking for is market returns without the market risk. It just doesn’t exist.’ Still with interest rates at fairly low rates and inflation muted investors don’t think they’re hurting themselves too much until they start withdrawing money from their portfolios. Then they see how fast their savings evaporate. I talked to people just like that who lived through the first Great Depression. There was nothing that anyone could say to convince them to put money back into the stock market. The 2008 Second Depression simply created more of the same.

 

Robert C. Doll, CFA, Chief Equity Strategist with Nuveen Asset Management: ‘We anticipate a relentless grind higher equity-market, as well as strong equity performance versus bonds in light of equity valuations, monetary policy, economic prospects and investor positioning.’ Doll has been a frequent guest on CNBC Squawk Box. Here’s another pro that the average investor should be listening to. 

My Internet was down due to the storms earlier last week. And when I called to inquire when it would be back on-line the recording informed me to go to www.comcast.com…….?!&*

Maria Bartiroma, CNBC anchor, and trademarked ‘Money Honey’, is leaving her afternoon program after a two decade run to anchor at Fox Business News. Becky Quick is said to fill in until a replacement is appointed. Bartiroma was tagged with ‘Money Honey’ back in the day and she quickly and shrewdly trademarked the appellation.  

Another Expert The Average Investor Should Follow- Mitch Zacks. In his Zacks Update 11-20 : ‘While its possible equities could be reaching a peak, I don’t believe odds are very good. Most likely we are in the middle of an economic expansion that could go on for years.’ Others have also expressed in previous blogs the same sentiment suggesting another 4-5 years of growth.

OMG…Beetlejuice2 in the works!? Keaton & Ryder supposedly on board and now if they can get Mr. Crusty (Alex Baldwin)…

Monday DJIA up all other indices down. Gold up $3.00. Tuesday everything down.

FDA wants meatpackers to provide greater transparency where livestock was born, raised and slaughtered. WSJ report 11/19/13. Tyson and Cargill, Inc. are lobbying Congress saying it is an unnecessary cost. China just bought the world’s biggest pork producer Smithfield and got a sweet contract to dissect U.S. chicken parts for soups, nuggets and stuff. Yes, I want to know where my Spam fixens come from, don’t you? 

Concerns Over Fed Tapering Are On The Table This Week as Market Indices Down Going Into Thursday. Traders get ready for the Thanksgiving Holiday.

There is goes….DJIA closed over 16000 on 11/22. Remember 18 months ago the question was if the Dow could or would ever close in on 14000. Reported on ‘The Tell’ the next Buy cycle for the S&P is for cyclicals.

The above chart was published in MarketWatch 11/21/2013. Source S&P Capital IQ. Cyclical stocks are made up of those products the consumer does not need but will buy during a boom economy. Example of industries are cars, hotels, furniture.

The Week Ended With S&P 500 Up For 7th Weekly Gain. While there are doomsters on the fringes most managers are optimistic. Karyn Cavanaugh, VP at ING US Investment Management said in Bloomberg interview Friday last, ‘I don’t see any reason why the markets shouldn’t go up.’ Whispers that once the Fed begins to taper the markets pull back 5%-10% seems reasonable considering how quickly the markets have moved in 2013. There have been no significant pullback so far. Health care stocks were the prime mover Friday. Job openings climbed in September. The Labor Department showed more hires in September since August, 2008. Happy Thanksgiving to All!

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares.

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That Was The Week That Was-2nd Week November

   A cover is worth a thousand words….

R -Bonds Coming to an employer and employee who doesn’t have a retirement plan, can’t afford a retirement plan but the Government plans on Fixing All That. Not yet a reality but probably soon enough those individuals who earn minimum wage and who’s employer doesn’t have a retirement plan (fast food, hotel-motel workers, home health aides, dishwashers, retail and amusement park workers) will have a portion of their income sent to the government to be invested/saved into something called an R Bond (R for retirement). Employees would need to opt out in order to not be enrolled. The R bond would not pay very much interest but arguments for the proposal say at least it would provide some savings for those less advantaged. The Treasury Department has not provided details including if the plan would provide income at retirement or a lump sum. No word on maturities or where the R-bonds would be invested. Robert Powell, at MarketWatch.com, reported on R-bonds November 9th, writing that some 75 million workers would be affected.

The WSJ, 11/11/2013 Reported There are signs the U.S. economy is gathering steam and Mom & Pop investors are now climbing aboard to ride the DJIA to new highs. Still professionals view this as a warning sign as Main Street has a long history of arriving late to the market rallies. Daniel Rowe, CIO of Budros, Ruhlin & Rowe, Inc. in Columbus, Ohio said that one of the firm’s former stock-market bears, who pulled out of stocks in 2010, called the firm in mid-October to put money back into the stock market. Rowe said it was scary when your bears turn bullish after such a large run up. Not everyone is as bullish as our friends in Ohio. Fears of ObamaCare, The President, The Administration, The Tea-Party Far Right and Far Left Liberals and worries about job security are still prevalent here in Michigan. These are the folk that won’t put a dime into the market until it reaches the very tippy-top. 

Ben Casselman, writing for Dow Jones’ Politics and Policy, The Job Gap Widens in an Uneven Recovery. The young, the less educated and particularly the unemployed- are experiencing hardly any recovery at all. The jobs that are available are the low-paying and mostly part-time. Last month employers added over 200,000 workers but mostly in low paying restaurant and retail. Those further up the ladder in education and experience the recovery has been stronger. Still nothing from Washington on stimulating jobs…

Robert Doll, CFA, Nuveen Asset Management, in his Weekly Investment Commentary, 11-11-2013: We still believe the path of least resistence for  equities is upward although near term conditions appear overbought.

MARKETS FELL TUESDAY. It wasn’t all that bad!

Brent Arends in Brent Arends ROI, 11-12-13, wrote: To Beat The Stock Market Buy Quality. Here’s How to: Buy stocks with the following characteristics-

• High Profitability-returns on assets
• High Growth- over the previous 5 Years
• Safety- Measured by low volatility
• Low Leverage- stable earnings.

The neat thing about the above recipe is that any investor can do this with the information available online.

Starbucks Owes Kraft $2.8 billion for backing out of a deal with Kraft selling Starbucks coffee.

Russia and South Korea Team Up for a Joint Sovereign Investment Fund- $500 million. They’re neighbors and this is what neighbors do…  reported in 11/13/2013 Bloomberg.com

All Indices Up Wednesday… Thursday &…Friday

Cover WSJ November 14th. I’m fed up with this already.

Ed Yardeni, CIS, at Yardeni Research sent a letter to clients last Wednesday, ‘Ride the Bull Market four more years.’ The 10-Year Treasury in 2014 will range between 2.5%-3.5% mainly because inflation is dead, he also predicted. He went on to explain the explosive growth he had been expecting was being replaced with steady expansion, increasing payroll and capacity and it was being done ever so cautiously by business. He predicts it should be a broad based expansion with cyclicals, consumer discretionary, financials, industrials and information technology leading the way. 

One of the Smartest People in The Room Abby Joseph Cohen, senior investment strategist at Goldman Sachs: Price-earnings ratios are lower now than the last time stocks were near these levels. “Companies right now are increasingly enthusiastic about the dynamism in the economy,” said Ms. Cohen in Bloomberg.com Nov 14th. She also predicts a better market 2014. You can’t do much better than listen and follow the wisdom of Ms. Cohen.

Finally- According to Arthur Herman @ Fox News November 15th, ‘The Reason That The President Lies Repeatedly and Blatantly-even when he knows people will catch him at it is not a character flaw but goes back 2,400 years. Blame it on Plato who wrote in his ‘Republic’ to tell lies deceiving both its enemies and own citizens for the benefit of the city….for the benefit of the masses. The Philosopher King knows that they…citizens… are too ignorant to ever see the truth about their city’s problems and how to fix them.’

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com Share this blog with someone who cares about their money.

SECURITIES OFFERED THROUGH WESTMINSTER SECURITIES, INC. MEMBER FINRA/SIPC. 

That Was The Week That Was- 1st Week November

  ‘ nuf said…’

Stock Overlap Some investors buy many mutual funds thinking that more is better but what they don’t realize is that they may be buying more of the same stuff only in different wrappers. This is especially true within mutual fund families. Fund managers often buy one stock ‘in-bulk’ to save on brokerage fees and commissions and then parcel out the same stock among various funds in their family. Investors try to allocate by investing in foreign, small cap and growth-income funds within the same family not realizing that the the same stock is in all three mutual funds. The problem isn’t understood as long as the markets chug upward. When Mama Bear awakens and most investment sectors start giving up gains is when the investor realize there is a problem. Several large mutual fund families employ this method of buying in bulk. It looks good from a pencil pusher’s perspective but in the end costs the investor in losses. That doesn’t mean buying funds from different families will remove the overlap problem. Popular stocks, or those that are part of a greater ‘have-to-have-it’ any costs usually will be in just about every large, small or mid-cap fund. Like the common cold you cannot eradicate it but you can minimize it by checking your allocation and choosing other investments. Call me for a complimentary stock overlap analysis.

 

Monday Markets Mixed. Gold edged up. No extraordinary news as traders waited for more data. Still more whispers about a market top and a need for a significant pullback in order to continue.

Picasso’s wooden replica of a half-smoked cigar sold Monday night at Christie’s for $1.1 million. But here’s the real interesting thing- there were two pieces the auction house hoped would bring as much as $60 million and neither brought a single bid! According to Paul Gray, director of Richard Gray Gallery in Chicago and New York, it wasn’t the fault of the auction house but the things that didn’t sell were overpriced. This is telling since the auction biz has been hot. It has been on a run almost in tandem with the stock market. A few other pieces got a so-so look and the less expensive works, according to Tuesday’s Bloomberg, fared much better.

 

Markets Mixed- again- Tuesday. SF Fed’s Williams said, ‘It’s not obvious that the stock market is overvalued.’ In Wednesday’s The Tell Williams was quoted as saying the media talks more about stocks than the Fed does. He went on to say on a historical basis with dividends included it is not obvious the market is overvalued. Going forward, he said, policy shifts will be pretty gradual.

BlackRock’s Russ Koesterich, CFA, in The BlackRock newsletter, ‘Investment Directions,’ 10-17-2013; Under their section: So What Do I Do With My Money: Overweight: Equities, Emerging Markets, U.S. Mega Caps and Fixed Income Credit Sectors. He also maintained that the company allocation was an overweight on China.

Wednesday The Market Half-Rocked!  The Dow blew the doors off with over 120 points and the S&P was modestly up with 7 points. The Naz was off and so was the GlobalDow.  A lot of the big caps were off their feed and watching them versus the action on the Dow was like seeing two different movie endings about the same thing. Me thinks traders were looking ahead to Thursday’s action…

Let’s Say You’re One of Those Investors Sitting on The Sidelines Because You Know the Markets Are Going to Tank. And the reason is because it did it before and caught you unawares and you just know that things cannot continue in the same upward trajectory without something real bad happening. You have some other sterling reasons:

1. Obama is still the President.
2. Every time You Invest the Markets Go Down.
3. Talk Radio Says So.
4. The Guy Across the Street Tells You It’s a Sucker’s Game.
5. ObamaCare Will Ruin The Country.
6. The P/E on the S&P 500 Index is tickling ‘Bubble Territory’.

While You’re Losing Money Sitting On The Sidelines Investors Are Still Making Money and May Still Have Another 4 Years of Market Gains, says Paul B. Farrell, MarketWatch on November 7th. No, he really didn’t say quite like all that. What he did write was that the currently high Price-Earnings was spooking investors. ‘Pessimism is now the market’s worst enemy.’ He finishes by reminding investors that ‘professionals’ warned investors of a possible bubble in 2004 and not until 2008 did the market fall apart. The Dow went from 10,250 range to 14,164 in that period of time.

The Most Recent Election Results are Causing Hard-Line Far Right and Left Washington Politicians to Reach for the Imodium.

Thursday Markets Fell- Hard! Gold and oil were up but every major index was off. The DJIA down 153 points. It was an ugly day. According to MarketWatch reason was again worries about Fed tapering. Chinese exports Popped and Bloomberg reported Friday the 8th of November that the European Central Bank had cut interest rates. This was the first ‘overt’ step in the central bank’s attempt to nudge the euro lower. Daragh Maher said in an e-mail these moves have often meant ‘currency wars’, as central banks attempt to make their money cheaper to help exporters and spark economies. Maher is a currency strategist at HSBC Holdings, Plc. Expect, reported Bloomberg, the euro to return by mid-2014 to 2013 lows.

The Jobs Report Last Friday Was Better Than Expected and Bulls Rejoiced as the Dow Shot Up 168 Points.

Finally….

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

SECURITIES OFFERED THROUGH WESTMINSTER SECURITIES, INC. MEMBER FINRA/SIPC.

That Was The Week That Was- 5th Week October

 

 

It’s That Time of The Year…!

 It’s not just me saying it but real rich and smart investment people like Warren Buffett who say, ‘Sell Your Losers. Keep Your Winners.’ The problem is that a lot of investors fall in love with what they own and won’t let go- even for the significant tax losses. What happens is they keep their losers and sell their winners and pay more in tax and ruin their investment portfolios. The advantages to culling your portfolio of losers is to take the benefits of the tax losses to offset any capital gains, and then other income up to $3,000.00 such as wages, investment interest and stock and mutual fund dividends. If you have more losses you can carry it over to the next year, and the next and the next.   The lesson here is to not end up with a portfolio full of dead investments. It’s harvest time, get rid of your losers because in a few weeks long-term capital gains will be declared and paid and that’s more income you’ll be paying tax on for 2013. As always I don’t practice tax accounting and you should consult your tax consultant on tax matters.

Robert C. Doll, CFA at Nuveen Asset Management in his October 28th Newsletter seems to think the global economy has been solidifying and will likely continue. ‘…a stealth recovery seems to be underway at the state and local level, and finances have improved to the point that hiring is expanding.’ Doll concludes, ‘…the slow moving economic expansion and lagging central banks mean the window of opportunity for equity gains will stay open…’

Gold Fades From the Investment Picture. Matt Day and Francesca Freeman at The WSJ Tuesday, 29th, reported that central banks have cut their gold purchases. The reasons include that the metal is costly to hold and yields nothing. In a twist from a few years earlier exuberance Joseph Murphy a senior analyst at Hermes Commodities said, ‘Gold really doesn’t have much to offer.’ Hermes has also trimmed their gold holdings this year.  That’s what they say now but all could be just smoke, as sophisticated investors have found.

The Bull Market Ends When The Last Bear Turns Bullish.

CEO Lawrence Fink sees ‘bubble-like’ markets and wants the Fed to start to taper. In the Tell on October 30th he said, ‘It’s imperative the Fed begins to taper. We’ve had a huge increase in the equity markets. We’ve seen corporate debt spreads narrow dramatically.’

Still the Markets Go Higher – Over 100 points on the Dow last Tuesday.

It’s been on the daily and national news. Bloomberg and WSJ have waded in on National Health Care, the mess, the web site, the lack of consumer interest! Wednesday Timothy Martin and Chris Weaver at Dow Jones reported that more and more plain, hard working folks are finding themselves kicked off their current health insurance plans and forced to buy coverage they don’t want and don’t need- like maternity and mental health care. Only now are people finding out how expensive the National Health Care Insurance will be as compared to their old healthcare coverage.  The Republicans will be kicking themselves as their October, short-sighted government shutdown  resulted in hurting small businesses and the economy, and the real battle in the health care fiasco is only now emerging. We can only assume that the next 3 years will be consumed by this same debate. By the by, still nothing being done by Congress or the Administration on the Jobs front, or the economy.

Markets Fell Wednesday On Fed Lack of Clarity. Nothing was changed in Federal Reserve policy and the bond buying program will continue. This is the same as last September when the Fed announced no new tapering until unemployment numbers fall below 6.5%. The economy is still too weak.

The U.S. Criticized Germany For It’s Economic Policies.  The U.S. said Germany was the reason for the malaise in the euro-zone and for all the global miseries (paraphrasing). ‘Germany’s anemic pace of domestic demand growth and dependence on exports have hampered rebalancing at a time when many other euro area countries have been under severe pressure to curb demand and compress imports in order to promote adjustment.’  That from the Treasury Department. on October 30th.

The Administration is not making many friends. It has been taking criticism from euro-zone friends on easy money policies. The global wrath on our political bickering has also inflamed world leaders. I can only assume this was the administration’s opportunity to take a verbal potshot while Berlin and Washington are still smarting about the whole spying biz. Germany shot back the next day said the Friday November 1 WSJ, saying exports were their national economic plan. PS- Years ago I did a blog where we discussed the euro and how important it was to the German economy. A moderate euro was and is better for German economic health than their own currency.

Thursday- Markets down, then up and finally finished off. It was a running back’s nightmare  zig, zag, zag and then tackled for a loss. Speaking of Zig and Zag…Bloomberg reported Oct 31st that Laszlo Birinyl, a really rich hedge fund manager, is on the opposite side of David Einhorn of Greenlight Capital, the great American Short-Trader (when Einhorn whispers everyone listens!). Laszlo believes in the short run markets will run to 1820 in the next 3 months. He’s long the S&P with a January 2014 expiration. Einhorn is not so bullish and maintains a more conservative allocation as the markets continue their climb. It wouldn’t be Halloween week if I didn’t do a story on someone with the first name of Laszlo.

 

WHO’s Been Called to Fix HealthCare.gov? It’s the guys and gals who should have been doing it from the get. Google and Oracle, according to MarketWatch.com, on Friday morning, are riding to the rescue to fix the messed up site. Here’s what I thought was worth an investigation by our lawmakers was that the same firm that was supposed to put together the national health care website also did  identical sites for state governments, charging huge fees for basically the work they did once and then simply copied, pasted and…well…messed up.

Yahoo CEO Marissa Mayer Buys a Funeral Home- the oldest in Palo Alto, California. If you had millions and millions cluttering your bank account what would be one of the first things you buy? This from MarketWatch and confirmed in the local Palo Alto news. The deal happened earlier this month and the 62 year old mortuary sits on 1.6 acres of primo Palo Alto real estate. Ahhhha

Bloomberg Reported Friday The Manufacturing Index Expanded at a Faster Pace than Forecast. U.S. factories were the source of strength for the economy at the start of the 4th quarter, reported Bloomberg. The budget impasse was simply a distraction. The Supply Management Index was the highest since April, 2011. Manufacturing accounts for about 12% of the economy.

U.S. Stocks Finished Higher for The 4th Week in a Row! According to Bloomberg, November 2nd, after a 2 day drop markets adjusted to news of better factory data and corporate earnings. The S&P 500 Index was up 4.5% in October. Of the 368 S&P 500 companies that have reported earnings for the 3rd quarter. 75% exceeded analyst’s expectation, while 53% beat sales estimates.

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com Share this blog with someone who cares about their money.

SECURITIES OFFERED THROUGH WESTMINSTER SECURITIES, INC. MEMBER FINRA/SIPC