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.

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