That Was The Week That Was-3rd Week August

  Unexpectedly my workhouse HP simply gave up the ghost last week. And contrary to any rumor I did not scatter its bits across Lake St. Clair. The past days have been devoted to downloading all old files to a new computer, uploading email and other vital service tools and today everything is secure and operational except for the blog. Be patient, dear reader, and I should be back with more Retirement Interruptus in 10-12 days. In the meantime I invite you to explore a new feature on my website that is dynamite! It’s a flipbook on investing basics. There are four flipbooks and the one I especially like is about social security and Medicare. If you are not sure how one or the other work take some time to read about them. Please go to my home page, click on Resources and then a drop down menu will show you Flipbooks. Click on that and choose your topic.

While I am working and you’re reading if you have questions you may contact me at pstanley@westminsterfinancial.com or call me at 586 295 0430.

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

That Was The Week That Was-2nd Week August

Smart Beta. What Is It? Beta, as you know is a measurement of risk/volatility. Lately a new buzz word has emerged that’s confusing investors- ‘Smart-Beta’.  According to the Financial Times this is also known as advanced beta, alternative beta or strategy indices.  There are numerous definitions for smart beta. One that I found I could understand is an investment style where the manager passively follows an index designed to take advantage of perceived systematic biases or inefficiencies in the market. While that reads like ‘Greenspan-speak’, the simplest explanation is a portfolio comprised of both passive and active management along with exposure to current trends or specific sectors such as timber, natural resources or agriculture. For example, a portfolio that the manager invests in the S&P 500-Index on one side, is actively managed on the other, and looks for specific trends to take advantage day-to-day  could be defined as a Smart Beta portfolio.

Utilities Have Hung In There. Expectation at the close of 2013 was that the sector would not be anything special in 2014, and investors could do better in other areas. Utilities have not only ignored the pessimistic predictions but have been a conservative bet that helped stabilize a ‘choppy’ market.

Barrons Economic Beat 8/10 :  While the stock market drifted lower the economy headed north- exceeding expectations. Everything from labor to auto sales points to continued expansion.

Markets Up Slightly Monday in Anticipation of Russia-Ukraine  Detente.  WSJ reported bank profits near record levels-second highest profit in 23 years- even as executives are complaining regulations are hurting their business. 8/12/2014.  Much of that has to do with better credit of consumer.

No Market Slump, says Morgan Stanley analysts. Markets could still expand because the economy is improving, real yields are higher, inflation is low and Fed policy accommodative. MarketWatch.com 8/12/2014

Bob Doll, CFA, Nuveen Asset Management, 8/11/2014: ‘Correction talk heats up, with Volatility Rising in Both Directions.  We do not expect a setback but a modest near-term correct could be possible. We would advice investors to ride out any volatility and consider adding to equity positions.’

Tuesday Markets Off- slightly across all indices.

Best Biggest Success Story in Europe? Poland!  According to Matthew Lynn’s London Corner the most remarkable European economic success story of the past 25 years has been Poland! It went from Solidarity in the ship building biz to joining the E.U. in 2004 and growing its economy at a 4% annual rate. Industry was privatized very early as it exited as a Soviet satellite. Taxes are kept under control with companies being taxed at one of the lowest rates in Europe. The mystery is the Warsaw Index is at 50,000 still well down from its high in 2007 of 67000. According to Lynn the Poles are building a modern developed economy and investors will surely be rewarded. MarketWatch 8/13/2014  ( Poland is considered an emerging market and there are several investments that you can investigate to take advantage of the country’s growth possibilities. Call or e-mail me.)

Markets Up Wednesday. Here’s an interesting chart to those investors that get nervous about a market correction. Richard Bernstein Advisors report that ‘Mom and Pop stink it up on a pretty steady basis and have lagged gains in every asset class with the exception of Asian emerging markets and Japanese equities, over the last 20-years.’ They have even managed to underperform cash- represented by the 3-month T-Bill.

Investors consistently bought assets that were overvalued and sold assets that were undervalued. In other words American M&P investors are the worst of the Buy High and Sell Low Folklore that so many others have talked about.

Markets Finished Up Thursday Across the Board. 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

That Was The Week That Was-First Week August

Northern Trust Asset Management 2014 Capital Market Assumptions Expects Global Growth Expansion to endure for another five years. Slow Growth Extends Economic Expansion. 8/1/2014. A good many ‘experts’ I’ve reported on argued we’re in the middle of the global growth story.

Deutsche Bank chief strategist Binky Chadha said the long and big run-up is ‘fairly typical’ outside of long recessions and crisis. He reported that we shouldn’t expect a big correction anytime soon. MarketWatch.com 8/1/2014. Chart provided by Deutsche Bank.

 

‘Have We Talked?’- The easiest way to get a question asked or a problem solved is to send me an e-mail. Each year I try to call every client and review their holdings, answer questions and get updated on goals and news. If we’ve missed connections so far this year- let me know.

Summer Scare? Market Tumble? Not Last Monday.

A wee bounce Monday 8/4/2014 as markets shrugged off geo-political bad news. Gold remained under $1300. Some experts worry the week before last was precursor to a 20% drop. Others see it as a knee-jerk reaction to good economic news that could mean the Federal Reserve could speed up a time table to increase rates. Still others are concerned it was a ‘dead cat bounce’. Remember Greenspan spoke of market’s reacting to Fed policy in last week’s blog. Robert C. Doll, CFA, Nuveen Asset Management, 8/4/2014, ‘The risk of correction are rising.’ Doll also makes the point that…’ while worries abound the economy continues to improve, the Fed slowly moving toward normalization, earnings are strong, valuations stable and the geopolitical environment is unsettled but not disastrous.’

Tuesday’s Action Saw Markets Fall. DJIA –139 Points. It’s lowest since May 20th. Gold moved up $7.00. WSJ article last Sunday (8/3) on 1/2 billion people in India with no indoor plumbing. New PM wants an indoor potty in every home and many of the 1/2 billion who don’t have a bathroom say a potty has no place inside a home and instead prefer going to the woods. It’s also a  social affair meeting neighbors and friends while out doing ..er..business. But the destination is also a crime & vermin ridden area, which the country wants eliminated.

Wednesday Markets Opened Lower. Finished Up. Gold Up. VIX down. Healthcare stocks have fared better than many thought after a banner year in 2013. (MarketWatch.com 8/7/2014). A joint study by the Employee Benefit Research Institute and the Investment Company Institute issued July 31st found that workers who stuck with their 401(k)s from 2007-2012 ended up with a 67% higher balance than the average of those who did not. In other words ‘the buy and continue buying and holding’ investment strategy  worked better than running to cash and stuffing it in Mason jars and burying it under the front stoop. A strategy advocated by certain ‘financial experts’ in October, 2009.

Thursday Moscow Curtailed Sale of  Billions Western Food Imports Sending European and U.S. Markets Down. Putin’s Response to Western Sanctions.  (Bloomberg 8/7). Markets at lowest since April. John Manley, Chief Equity Strategist at Wells Fargo Funds Management said, ‘The uncertainty over the situation in Ukraine has overshadowed the positive economic data we saw earlier today.’ Namely jobs report had a better than anticipated drop in claims. About 75% of companies have reported earnings this season that have beat analysts estimates for profit while 65% exceeded sales projections.  .

Finally- Thursday Night The President Approved U.S. Airstrikes in Northern Iraq. On Friday morning the geopolitical landscape got a lot messier. Ebola now an international health emergency. Russia massing on the Ukraine border. A Ukraine warplane shot down. Ceasefire in Israel-Gaza broken within a minute by rocket fired from Gaza. Genocide fears in Iraq. Pre-markets in Japan and U.S. down. European stocks down. MarketWatch.com/WSJ 8/8/2014  It’s a messy world out there.

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.

That Was The Week That Was-5th Week July

 

Bad News First. Thursday Markets Wiped Out July Gains as Indices Tumbled. This snapped a five month winning streak as losers outpaced winners. The DJIA closed down over 300 points. Argentina defaults.. for the second time in 12 years. Portugal’s Banco Espirito Santo fell almost 40%, as hopes of raising capital without state aide collapsed. S&P moved below its 50 day average and selling accelerated. ‘People are quick to take profit,’ said Wayne Wilbanks, CIO of Wilbanks, Smith & Thomas Asset Management, LLC. ‘' Maybe the markets getting a little tired here,’ said David Chalupnik, head of equities at Nuveen Asset Management. The Fed Open Market Committee reiterated it would likely reduce bond buying in further ‘measured steps.’ Info from Reuters, Bloomberg, WSJ, 7/31/2014. I got a sense of something stirring Wednesday. See my note.

 

Alan Greenspan, former Fed Chief, said in an interview July 24th that, ‘Bubbles can’t be stopped without a ‘crunch’’. He expects a ‘sharp’ market reaction when the Federal Reserve starts to ‘unwind’  the size of the balance sheet (and attempting that) with minimal impact. He went on that it will not be easy and it is not obvious how to do it. ‘Markets have always been sensitive. They reflect animal spirits.’ He also said it is impossible to remove ‘bubbles’ from this or any future market simply because of the human nature.  Markets will run from bubble to bubble. Marketwatch.com.

A week ago Friday Reuters reported that Britain’s economy now bigger than it was before the financial crisis struck six years ago. That meant total economic output was bigger than its previous peak in the first quarter of 2008. Germany passed that milestone in 2010 and France and the United States followed in 2011. (7/25/2014) The question remains why the U.S. press or investment managers of foreign assets haven’t made this bigger news. This is sensational information for all investors. While things are not cheap overseas certainly there is value that retail investors should be exploring.  The Commerce Department reported that U.S. durable goods increased 0.7 % as demand increased from transportation to machinery and computers and electronic products. Reuters 7/25. Here’s the important part: The increase in orders for these goods, which range from toasters to aircraft are meant to last three years or more, was above economists expectations. ‘This is consistent broad, increasing demand throughout the economy,’ said Gus Faucher, senior economist at PNC Financial Services in Pittsburgh. 7/25/2014

Buy & Hold Investing is Impossible- wrote Chuck Jaffe @ MarketWatch.com, 7/26/2014. It is emotionally infeasible to think a rational person would sit back and watch their portfolio ‘be gutted’. Natixis Global Asset Management committed to a three year research study on how investors can bridge the emotional gap between a desire to generate superior investment returns and an aversion to taking risk. The study is designed to find out when the average investor is to put their ‘hand back in the fire’ after they’ve been burned.

Bankers Still Not Playing ‘Nice’. CNBC’s Matt Clinch reported that while major banks have repaired their balance sheets the culture change in investment bankers that regulators had hoped for isn’t there. ‘Reckless banking’ persists. Today’s penalties are being seen as a ‘cost of doing business’. CNBC 7/28/2014. ‘History records that money changers have used every form of abuse, intrigue, deceit and violent means possible to maintain their control over governments by controlling money and its issuance.’-U.S President James Madison

Monday Markets Closed Mixed on Home Sales Decline in June. Concerns About Israel Which Contributed to Losses along With Russia-Ukraine.  Tuesday Additional Russia Sanctions by E.U. and U.S. Dampened Markets. The very interesting part is that the markets are not exhibiting any ‘real’ volatility. It’s very ‘ho-hum’ out there.

U.S. Economy Expanded at a more than expected rate of 4% in the second quarter. This from a revised expectation of 2.6% but did little for the markets Wednesday as the Dow ended down and Naz was up. The overall economy got a boost from business investment, government spending and investment in home building.-Reuters 7/30/2014  There seems to be the very beginnings of market unrest.

This May Be the Correction Investors Have Been Waiting For. U.S. junk bond funds post $1.48 billion in weekly outflow. ‘Fears that gains in riskier assets have outpaced the improvement in the outlook for global growth and the health of consumer finances.’ Alan Gayle at RidgeWorth Investments said, ‘The easy trade is over.’ WSJ 7/31/2014.   Friday morning U.S. payrolls rose 209,000 in July. Unemployment back to 6.2%. Consumer spending rose in June by most in 3 months. Futures show negative open.  Bloomberg.com 8/1/2014 Wages expected to track inflation for near future (CNBC Squawk 8-1-2014).

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.