Too Late to Hop on The Stock Market Train? Yes, I’d be a bit cautious about here, even though professional managers like Robert C. Doll, of Nuveen Asset Management, and Jeremy Grantham, founder of GMO, a Boston based money manager, don’t see a ‘bubble’ just yet. Doll, in his July 14th, newsletter, reported: (1) This recovery is the slowest in post WW2 period, (2) U.S. manufacturing and energy renaissance is continuing to unfold, (3) Historically, bull markets falter when recessions ensure, not when valuations become more expensive. Jeremy Grantham, in a note to clients, said that he doesn’t see a bubble, just yet. He thinks S&P-500 2250, if he were to pick a specific number. Grantham also provides there is a bullish argument due to the huge increase in ‘financial’ deals. He calls in a veritable ‘explosion’. Never seen before. Also he reports when compared to other deal frenzies the real cost of debt this cycle is lower. Profit margins are still very high, and are expected to stay there. Third, this is a very young recovery. Just as our friends from Calamos Investments reported in their Economic Review and Outlook, July 18, 2014, ‘The U.S. remains in the middle innings of economic recovery. Because the Great Recession was atypically severe, we are likely to see a lengthier recovery cycle.
Geopolitical Tensions with Russia-Ukraine Added to the Mix along with Israel-Palestine.
Monday Markets Off Triple Digits at the Open –Closed off 48 on the DJIA and 7 S&P 500-Index. Russia Key Concern. ‘Although geopolitical events are creating challenges for the markets, fundamentals are improving. This should help equity prices to rise.’-Robert C. Doll,CFA, Nuveen Asset Management 7-21-2014.
Sales of Existing Homes in U.S. Rise to an Eight-Month High. Bloomberg 7/22/2014
The S.E.C. is expected to change rules on money market funds. Most rules apply to institutional and corporate accounts. The ‘stable’ dollar for dollar share price will be abandon and the fund price will float. Also during a crisis the money may not be always be (1) available (2) a fee could be charged for redemptions. In the 2008 it was the institutional investor that redeemed their money funds and not the average retail account holder. It is expected that the rules will go in effect in 2-years. WSJ 7-22-2014
Wednesday Markets Closed Mixed. Gold off $6. I probably had more fun Wednesday at the dentist than most folks had watching their stock portfolio. So I was thinking that there are those of us who still believe that the market is a bit long but not in danger of a 2008 crash and then those that have been sitting on the curb, fingers crossed, and hoping for another massive crash so they can make up for their earlier mistake of bailing when they should have been buying. More news on the markets from Morningstar (Barrons 7 –24-2014) that state almost all equity sectors are ‘fairly’ valued. CNNMoney’s Paul LaMonica in a piece he wrote said simply there are too many good reasons why stocks aren’t going to crash. ‘Bear markets often occur around the same time as severe economic downturns. The 2008 credit crisis. The 2001 recession following the dot com meltdown. The oil shock of the mid-70s.’
Joshua Brown, on investment portfolio management, ‘Anyone can outperform at any time, no one can outperform all the time, and persistence of performance is nearly non-existent.’
Jobless Claims dropped the week before last by 19,000. This is an eight year low. Bloomberg 7-24-2014. Bank of America saw an 8% growth in credit and debit card volumes and increased balances in the first quarter. Barrons 7-5-2014, reported- ‘European stocks are no longer in the bargain bin, but fund managers are finding a ‘lot’ to like- especially companies focused on emerging markets and the consumer.’
Treasury Yields were higher Thursday on news of stronger economic data here and overseas. Chinese manufacturing activity at an 18 month high, and similarly strong manufacturing data out of Europe. Barrons.com 7/24/14
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 FINANCIAL SECURITIES, INC., MEMBER FINRA/SIPC
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