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.