That Was The Week That Was-1st Week June

 

They Only Call It a Crash! If you were stuck on the highway and saw in your rearview mirror a car approaching yours at the speed relative to the 2008 Global Market Recession Stock Market Crash you could order and eat breakfast, lunch, dinner, text all your friends, settle your affairs and take zillions of selfies while you waited. According to my calculation the market top before the Great Recession-2 was in October 1, 2007. The low reached February 1, 2009. That is about 15 months. Even an old poop like me can move out of the way of anything moving at the speed of paint drying.  Here’s My Point…  A Market Crash It’s More Like a SLOW-MO Tumble.  Go to any stock chart to see the S&P 500-Index during that time period. A market recession or depression is a series of events that may, or may not, create a massive one day crash. It takes time, events and yes, a big drop in price is usually there, but it’s not the one or only. Most investors who stayed in for the long-haul in 2008 did better than those that tried to time the market. But if you don’t like sitting through the mess of a crash and recovery you should have a  plan in place to fit your comfort level. I talked about this at my annual meeting this past February. Modifying your asset allocation to take advantage of market conditions is a great strategy. If you want to be active during all kinds of markets you have to have a plan. Sometimes people get flustered and forget the plan they made. Tape your plan to the refrigerator or your computer monitor so when things happen you know exactly what you want to do. If you know someone who’s been on the sidelines for a good many years share this with them and ask them, why. I betcha they don’t know.

The stock market crash of October, 1987 the Dow lost 22% in one day. However, for the most part the market had recovered the majority of its losses by December, 1987.

Circuit Breakers to Halt Trading Were Created Due to The October, 1987 Crash. The new circuit breaker rules allow time for traders to remove automatic trading systems and give investors a breather. A 7% fall before 3:25PM will stop trading for 15 minutes, a 13% decline before 3:25 a 15 minute cease in trading, after 3:25 for the remainder of the trading day. A 20% decline will stop trading at anytime for the entire day.

 

 

1st Quarter GDP 0.7%

For the second year in a row the economy contracted in the first quarter– certainly a far cry from the projected 3% annual growth economists expected. Higher imports and moderate spending by consumers were highlighted. Investors will look forward to additional data this week. MARKETWATCH.COM 5/29/2015

 

 

DIVIDENDS WORK EVEN WHEN THE MARKET DOESN’T. Investors get paid to wait, is the way I look at it. If you own a stock that pays 2% but hasn’t gone anywhere in a year you are earning what a 10-Year Treasury is yielding, with the potential for growth. If this year turns out to be dead-even from where it started and you own a slew of mutual funds that pay dividends you may well be better off than the person who parked their money in a money market or passbook savings account.

Made me smile…

New Yorker June 1 2015

 

S&P 500= 4300

  Barrons.com interviewed Jeffrey Saut, chief investment officer at Raymond James, May 30, 2015. He said, ‘We are in a secular bull market-secular meaning multi-year, if not multi-decade. …secular bull markets last somewhere around 14-15 years. And they tend to compound at double digit rates. There is probably another eight or nine years left.’ Saut projects that the S&P price objective in 2023-2024 should be around 4300.

Maybe the Bubble is in Art?  A Picasso sold a few weeks back for the tidy sum of $179+ million for what, some art experts call, a so-so piece from Picasso’s just O.K. later period. Thirty-five years earlier, in 1980 the art critic Robert Hughes wondered how a ‘spiraling market’  …had produced auction prices that had seen a mediocre Picasso from 1923 sell for $3 million. ‘The rising bubble in the art work has not affected the Old Masters. Rather the rising tide of money has elevated the resale value of contemporary art and the work of living artists sometimes close to the level of the distinguished dead’ –The Talk of The Town, New Yorker June 1, 2015. And perhaps investment managers take heed as bubbles in non-correlated assets brew from strange places. Consider the Japanese Bubble from 1986-1991 where there was no price that was too high or unattractive for Japanese investors to snatch up everything from Rockefeller Center to Pebble Beach. The Japanese bought it all at the top and then sold it back to us at the bottom.  

 

Construction Spending Fastest Pace in 6 Years

 

June Swoon?

Talk Monday June 1st on Markets souring  as June is typically a weak month for stocks.  Previously, Cramer on CNBC said a,  ‘June Swoon’ was about right as long as the dollar remained strong and the negative effect it had on American companies. May 29, 2015 CNBC. Swoon is used to define an overall decline in the value of the stock market. On the 27th of May Cramer explained that he believes it is ‘almost necessary for investors to call for a market wide correction. The fact that if you don’t call for a correction you’re going to look silly. And I think that’s part of the problem with this market.’ –CNBC May 27, 2015

 

 

Markets were tepidly up at the close Monday June 1st. Tuesday off a bit. Wednesday Markets  closed up off their highs. Naz was unchanged.

 

Circuit Breakers For Treasury Bonds? London Based ICAP PLC is studying the possibility of temporarily halting Treasury trading following large price moves. There is argument for and against but price gyrations have been unnerving traders. Worries over a bond free-fall have precipitated these discussions. WSJ 6/2/2015

WORRIES OVER GREECE, JOBS REPORT & OPEC plus the RUMBLINGS OF THE ‘R’ WORD saw the markets fall 171 points on the DJIA, –18 points on the S&P 500. The Naz was unchanged. Treasury yield also fell Thursday June 4th. CNBC had discussions throughout the trading day on a Recession. Were we in one, were we approaching one? No one knew. Both the Dow and the S&P 500 closed below their 50-day moving average. The IBD ETF Market Strategy was confirmed up-trend and to remain 100% invested. IBD June 5, 2015.

Questions call Paul @ pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

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