That Was The Week That Was-2nd Week June

Most investors believe that all Roth IRAs provide tax-free withdrawals, and no Required Minimum Distributions.  While true for those that initiated the Roth, not so for those that inherit and those that have Roth 401(k)s. Choosing a Roth option in your company 401(k) plan does allow tax-free withdrawals but owners do have to begin making withdrawals at 70 1/2, the same as the Traditional 401(k) owner. A beneficiary of a Roth IRA is also subject to RMD rules. Many Roth owners should plan accordingly before converting traditional IRAs into the Roth.

Robert Frank at CNBC reported 6/7/2014 that millionaire investors have admitted to making investment mistakes. The number one mistake is not adequately diversifying. Yes, diversifying. Not asset allocating but making sure that not all their eggs were in one basket. Interesting, no?

Markets Over Due For a Correction? Trading volume and volatility are at low levels (see chart from Barclays/FactSet 6/9/2014). The Dow has been 32 months without a 10% pullback. A market correction of 10% or more happens roughly every 12 months. With complacency among investors, low trading volume and equally low VIX the opportunities for a correction are very likely.  

Sometimes people who want us to think they are real smart talk in a way that makes us want to check the batteries in our hearing aids. Alan Greenspan, former Fed chief, was one of those who would discombobulate word phrases. Now Nouriel Roubini, famous for picking correct Bear cycles, said at the Aberdeen Asset Management conference, ‘There’s schizophrenia between what the stock and bond market tell you.’

Markets closed mixed Tuesday.

Watching CBS News and the ‘ragtag’ army of insurgents beating the Iraqi Army sans American support gave pols in Washington, DC and Markets Angst Wednesday.  Brent crude up Thursday am to $111.00. The not-ready-for-prime-time Iraqi army left their uniforms and weapons on the street as they melted back to civilian life. The Dow fell over 100 Wednesday and I have to believe there is more to come in the coming weeks.

In the past 12 months, at least 10 companies have repurchased shares from activist investors.  In the past this was called Greenmail. It was hot in the 1990s until corporations beefed up defenses and new laws were put in place to discourage raiders. Now it seems, according to WSJ 6/11/2014 the ‘greenish mail’ is back. Here’s the charts- you decide.

chart by Chris Philpot WSJ 6/11/2014.

Markets Dropped  100+ points on Thursday.

Oil has been moving higher and the war in Iraq will only add to the cost. While the U.S. has decreased its dependence on overseas energy Iraq is still a huge global exporter of oil. How high and for how long will the price of oil go is unknown. One thing for sure this is a huge mess, and will only get uglier. I would expect much higher prices at the pump and and subsequent slowing of consumer spending. This could well be the catalyst for a market correction.

Friday Markets Edged Slightly Up.  But First Weekly Loss in 4 Weeks.

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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