‘A Confluence of Reasons to Go Lower. Not a single reason to move higher.’-Anastasia Amoroso, global market strategist for JP Morgan Asset Management on April 17th, and reported in Reuters. The Dow was off over 300 points at one time, the Friday before last, before closing down over 270 points to end the week on a losing note. ‘Confluence’ is usually used in context of a happy occurrence, or a peaceful event. On that trading day there were more sellers than buyers and the news of the day provided little excitement to buy. You can create all sorts of reasons why a market tanks but sometimes traders just want to sell. The reason is as simple as that. Especially on a Friday.Some traders may close their book early, take their profits, grab a bottle or two of Pinot at the local wine shop, and head to the Hamptons.
Trying to make sense of why a market falls for no good reason and no warning is like I’ve said before - because it can. They are like tornados these mega down days. They happen suddenly, do their damage and are gone. So why the stock drop? Here are a few things that happened that Friday that other folk smarter than I reported:
- Bloomberg terminals were on the fritz (These terminals are the lifeblood of Wall Street). Also put a kibosh on a bond deal scheduled for that day.
- China placed margin limits on some types of trading.
- U.S. data showed hints of strengthening and consumers feeling the most confident since January (It’s Spring!).
- Renewed fears of a Greek default. Stories of how Greek branches of banks have been told to dump their holdings of Greek sovereign debt ahead of potentially icky things that are to come. (Yep, they reported Icky as a real event.)
- And finally- apparently it was just time to sell.
And there was not a single thing that happened Friday that spelled an event that could have caused a massive global economic crash. Info gathered from WSJ, MarketWatch.com, Bloomberg.com and Reuters.com 4/17 & 4/18/2015
USA Today April 19, 2015
You have to wonder what took California so long to get tough on water use? Water has been and is an investment opportunity. Call me for more information.
Misinformation is Rampant on the Financial Radio Air Waves & Nothing Seems to be Done About It! Fear & Greed Are Great Motivators. Sunday morning last I’m driving to my local market and the radio’s tuned to a syndicated financial radio show and the host is informing listeners that they can buy no brokerage fee Exchange Traded Funds and save themselves 90% of the cost of doing business. In other words you can buy ETFs that are free of commission charges by stockbrokers. He then went on a rant how stockbrokers were ripping off their customers by charging a commission whenever a customer bought an ETF. The way he presented it you’d assume every ETF in the universe of ETFs was actually free of stockbrokerage charges, and brokers who charged a commission were bandits taking advantage of the small investor. The guy on the air is a RIA, meaning he charges a fee for his services. A fee that can be one, two or three percent of an investor’s assets on top of any expense charges that the funds or ETFS charge. What’s the truth? Yes, there are some commission free ETFs. Not all ETFs are commission free. On the other hand all ETFs have an expense charge that varies as to the type and the fund sponsor. There is no absolute free lunch like the radio host tried to infer.
The Radio host walked a mighty thin line and knew exactly what he was doing by phrasing his words that made the entire profession look as if they didn’t care for the average investor.
ETFs trade like stocks. There are open ended ETFs, and also closed-end ETFs; these trade at either a premium or discount similar to their mutual fund cousin. Some no fee ETFs charge a redemption fee if you sell them within 30 days of buying. (That doesn’t exactly mean free, does it?) You can trade, buy or sell, ETFs multiple times throughout the day. Janet Brown at Forbes.com in her article, ‘Are Commission- Free ETFs Really Cheaper’, revealed that not all the no broker fee ETFs are the best performing. And most of the free ETFs are proprietary.
Whenever you hear ‘free’ it’s best you do some homework because no one doing business is doing business for long doing it for free.
Greek Exit Worries Emerge – Again. Do your own research if you have concerns that a Greek exit from the Eurozone means global catastrophe. You have to ask yourself how vital is Greece to the entire world of commerce. What does it produce that cannot be purchased elsewhere? Does it provide some extraordinary ability to contain extremists, or is it a global police force against those that mean harm to other civilized nations? Does the possibility of its banks defaulting create a catastrophic run on our banks? The answer is that if Greece leaves the Eurozone it would cause turmoil for a few days, and or weeks. After that it would be Greece’s problem. Like other countries that have failed before it could take Greece decades, maybe a millennium, to recover. In the meantime many of its citizens would leave, Greek businesses would fail or pull up stakes and begin operations elsewhere. Life in the rest of the world would go on. Source Spiegel Online, 2/20/2015.
Markets Popped- Monday. 
The DJIA + 200, S&P 500 +19. That after a blow-up Friday. What caused the rally on Monday? According to Martin Weiss it wasn’t about earnings it was all about China’s decision to slash reserve requirements of banks; thereby freeing up over $200 billion for economic growth. And, Weiss writes, China has plenty more where that came from and can double that, triple it, and double it again. MoneyandMarkets.com 4/20/2015
WHERE DID THE DOLLAR GET THE SOBRIQUET ‘BUCK’? Back in the 1700s American Hunters traded deer skin for a dollar. The term ‘ for a buck’ stuck.
Diversification Not Asset Allocation for Stock Investors is Key. Jim Cramer recommends a personal portfolio of 10 minimum and 15 maximum stocks. That range allows you to keep track of your holdings. Here’s more rules to protect your stock portfolio from Cramer’s Smart Money Show April 19th.
- Gold
- A dividend paying stock with high yield.
- Growth stocks
- Speculative stocks
- Stocks from a healthy geography.
Medicare Covers Most Retirees Cost of Health Care
chart Fidelity 2011 Medical Expenditure Panel Study.
The average cost of healthcare over a retiree’s lifespan will be $220,000, according to Fidelity Investments. This does not include the cost of nursing home or long-term care. While Medicare covers most healthcare costs a significant amount needs to be paid out of pocket either as co-insurance or a deductible. An annual review of current insurance coverage, cost and what’s available should be done as a matter of prudent planning.
Markets Mixed Tuesday. 
Deducting Energy & Materials Sectors From Earnings Estimates Illustrates 1Q Earnings Estimate Not So Bad. Blackrock Insights April 20th 2015.
Expectations are for lackluster due to a strong dollar, lower oil and horrid winter. You can see things are not that bad when you delete the above two sectors.
Huge News From China! Wednesday China State Council indicated that it would relax it’s grip on bank and credit card clearing thereby leading the way for our two domestic giant credit card companies to enter a $6.8 trillion market. Consumer credit card transactions jumped 33% last year in China and are expected to grow as the country is trying to move from its industrial base to consumer focused spending. Our two major credit card brands accounted for $10 trillion in transactions last year. Up to now China’s UnionPay was the only allowed credit card in country. This is very telling news as it’s providing the length China’s government is willing to go to rebalance its economy. IBD 4/22/2015
Stocks bounced back Wednesday to close up. The 10-year Treasury closed up to 1.98%.
NASDAQ Closed Thursday @ A Record High. It took 15 years but the Naz finally pulled it off for a record breaking close 5058.06. Across the board stocks were higher and it was all due to a barrage of earnings reports. In other news Nymex crude surged 3%, The 10-year Treasury yield fell again 2 basis points. IBD 4/24/2015
Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.
Securities provided through Westminster Financial Securities, Inc.,Member FINRA/SIPC.
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