Businesses and organizations love to do studies. One recent study answered the question on what happens when investors ignore their investments? In a Barrons.com article on 9/10 entitled The virtues of inactive investing, found that accounts that have been forgotten, with no buying and selling, have performed the best, according to Fidelity Funds, which studied those accounts that were with their firm. Another study of investment accounts that were involved in extended litigation, and because of the long court battle, there could be no buying only selling, were found that they performed the best over those that were micro-managed. Doing absolutely nothing, not even rebalancing, while may be considered neglectful, actually increased returns. Again this seems to validate the studies that shown those investors that did nothing with their investments through the market correction did far better than those that sold and tried to time the market.
WSJ, in their Investing for Retirement section 9/14/2014, raised the worry that in the Prez’s 2015 Budget is a real kick in the pants for Roth IRA owners. It would require (1) To start taking distributions at 70 1/2. (2) For heirs an inherited Roth IRA would not have the ‘stretch’ distribution benefit but would be required to take the funds over 5 years. There has never been a real national policy to encourage personal saving in this country. With a ‘tax’ everything movement in this country I hope someone will realize that this was Not why the Roth was created.
Dollar-rally has fueled a demand for U.S. stocks and bonds. The gains reflect investor expectation that the U.S. will raise fed funds rate in 2015. Chart source Thomson-Reuters. WSJ. 9/13/2014
S&P 500 Advance Tuesday was the biggest in 4 weeks! The S&P was up almost 15 points, the DJIA +100. MarketWatch.com reported that data from Bloomberg showed 47% of the stocks in the Nasdaq composite down at least 20% from their peak in the past 12 months, and more than 40% of the Russell 2000 companies (small cap) have fallen by as much. The S&P index is another story with fewer than 6% of the companies in what is considered Bear territory. Because of most investor’s focus on the large cap portion of the market they miss the weakness in the tech and small cap arena.
The Federal Reserve signaled Wednesday that it plans on keeping rates low for a considerable period of time. It plans on doing that as long as inflation is low. The markets responded by moving higher at the close. Bill Gross, on CNBC, commented soon after that he believes the Fed will not raise rates for more than a considerable period of time. Gross, a pretty bright guy in his own right, believes inflation numbers, as they’re calculated by the government, will remain extremely low for quite some time. Others think the Fed, when it does begin to raise rates, will do so quick and often. A report in MarketWatch.com suggested that the Fed may raise rates four times in 2015. The Fed meets eight times a year and so a dot plot line suggests a rate hike of 1/4% beginning in the middle of 2015 and continuing until rates reach 3.75%. Information gathered 9/17 from multiple sources including WSJ, CNBC, and others.
Warren Buffett told Wells Fargo executives earlier this year why he invests in certain businesses. He said he looks for companies that are simple to run, that even an idiot can run it, because sooner or later one will.
Jobless claims fell to 280,000, their second lowest level in 14 years while the Philly Fed index showed an increase in plans to hire and future orders even as the overall index fell Thursday. The Dow was up 100 points and JP Morgan’s Jason Hunter sees no signs that the bull market is running out of steam. In Barrons.com he reported that the longer term view remains intact. The chart does not a trend that suggests the bull market is faltering. ‘Corrections should be viewed as opportunities to add to core long exposure.’
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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