That Was The Week That Was-1st Week August

 

STRONG LABOR MARKET-NEAR LOWEST LEVELS IN FOUR DECADES- SHOULD BOLSTER U.S. GROWTH. Labor Department reported lowest jobless claims week ending August 1, 2015, was the lowest since November, 1973.  Since early March, claims have remained below the 300,000, a level economists say is typically consistent with an improving job market. This is the longest stretch since 1972. The jobless rate held at a seven year low of 5.3%. Bloomberg.com 8/6/2015

2015 May Be Repeat of 1904!

    Investment Strategist Tom Lee looked back 111 years to find a year that is comparable to what is happening today. He found that in 1904 . It was the only other time of two quarters of zero stock market gains that happened back to back. What happened next was that the 1904 market surged 41% in the second half. Things were very different back then: There was no Federal Income tax. no woman’s suffrage and no S&P 500-Index. While agreeing we’re living in much different times Lee says that the lesson is to avoid shorting a dull market. He points to what happened in 1904 as a prime example. CNBC.com 7/26/2015

patience is more than a virtue…

 

WHAT EVERY SECTOR GDP DID IN 2ND QUARTER

401K ROLLOVER REDUX

Leaving Your Employer and Wanting to Roll Your Retirement Plan to an IRA? If the regulators get their way expect more paperwork, longer consulting time with your financial advisor, confusing compliance questions and lots of signing of documents if and when you want to roll your employer 401k/retirement plan to your I.R.A. It’s not all sorted out yet but it’ll be more difficult for an ‘advisor’ to assist you in a rollover because the new compliance rules on having you keep your assets at your old employer’s plan will be more in line with fee-only advisors than registered representatives. There are some good reasons why some people should hold their assets with their old employer. Here are a few:

• You are age 55 and want to start taking income without paying a 10% penalty for early withdrawal. (There is a specific window to do this).
• The expenses with your 401k plan are extremely low coupled with an extensive investment menu.
• You have a loan on your 401k and when you roll it to an IRA the loan becomes taxable income.

The problem is not all employees have great plans with great expenses and want to leave their money with their old employer.

 

 

Average Cost in Michigan For Nursing Home Care is Approximately $249.00 a day. New York charges $14,000 a month and with a median balance in a retirement/savings account of $104,000 for folks between 55-64, the cost of care easily eats up all the accumulated savings. The cost of long-term care insurance is also quickly escalating. Families need to do some serious planning on the consequences of the need for long-term elder care. Sources various including MarketWatch.com 7/25/2015 

 

EXPLAINING RISK & RETURN

Here’s an easy way to communicate with your advisor on how much you would like to earn and how comfortable you are with the associated risk on your investments. The above numbers represent annual returns. The 10 is an approximate of the annual return of the S&P 500 Index from 1928 to the present. That would be market risk. The number 1 represents cash and 3 the 30-year Treasury at this moment in time. The one thing you cannot have is market return (10) and zero risk. The two don’t go together. Risk and return are tied to each other like the foot bone is connected to the toe bone. As long as you understand that you won’t be disappointed or surprised.

 

 

The Concept of Asset Allocation (Not Diversification) Is To Minimize Risk While Maximizing Return.To do this one needs to know the risk/return of each asset. For example the less risky asset would be cash with equities having larger risk but greater possibility of return. The lesser risk is associated with sectors that do not provide as much return, and may continue to do so far into the future.

The normalization of interest rates to where they were before 2008 may not come in the Boomer’s lifetime. In the meantime inflation and taxes erode the value of the purchasing power of savings while fearful Boomers sit on the sidelines waiting for that ‘explosion’ of interest rates.

Why the Donald? Peggy Noonan answered in Sunday’s WSJ 8/2. It’s not because voters dislike government. It’s because they have contempt for government.

OLD NEWS:

Dick Fuld, ex-CEO Lehman Brothers, and the only CEO to have his lights punched out by a disgruntled employee for his corporate mismanagement, made a case for his decisions in the 2008 market meltdown  after a six year hiatus from the public eye. Fuld spoke at the May 29th Marcus Cronus MicroCap Conference in midtown Manhattan. Many insiders and outsiders blame Fuld for the demise of Lehman Brothers. He is reputed to have been the most despised CEO in the financial industry. After speaking one wag was reported as saying, ‘No one cares.’ Business Insider May 29 2015

NEW NEWS:

BEN LEVISOHN IN ‘STREETWISE’ BARRONS.COM 8/1/2015. In a cutely titled column, ‘Bad Breadth’, reported that only a handful of companies have been keeping the broader market afloat. While not a good sign Levisohn thinks of them like Spartan soldiers holding back the Persians until Greek forces could regroup and win the war. ‘Declining Breadth,’ Levisohn informs, ‘doesn’t always signal the end of the bull market.’ Adam Parker, Morgan Stanley strategist, said that the combination of a slowly growing economy, combined with mild inflation and a Fed that will take its time hiking rates, could actually be good news for the market.’

MONDAY MARKETS DOWN 200 POINTS DURING TRADING CLOSED OFF 92 POINTS ON THE DOW. TUESDAY MARKETS DOWN SLIGHTLY. Wednesday The Dow Shot Up at the Bell and By 2PM was in negative territory while the Naz was up. Markets closed mixed. Thursday markets opened higher, and quickly reversed direction as oil fell below $45 a barrel. In the last 11 market sessions oil and the DJIA have traded in tandem 10 out of those 11 days. CNBC 8/6/2015

Made me smile… USA TODAY

 

The following chart signals opportunities to invest in various business cycles. While not engraved in stone investors may use this as a general guide to add or delete certain sectors. Past performance is no guarantee of future results.

Source Fidelity Viewpoints 10/14/2014 www.fidelity.com Sector investing using the business cycle.

2015 MID YEAR OUTLOOK FROM IVY FUNDS: Phil Sanders, Ivy Funds CIO, and co-portfolio manager of the Ivy Large Cap Growth Fund: ‘…I think the strong cash flow story in the U.S. stock market is underappreciated and important. If you watch CNBC and read the news, you’ll find a lot of things to worry about in the world. But when you spend your time meeting with company managements and understanding what is going on at the individual company level, it is a different story. Many companies are doing really well. They are innovating, showing tremendous financial strength, finding market opportunities and keeping their balance sheets in great shape.’ Source Ivy Funds 2015 Midyear Outlook.

Oil cannot find support. Jim Cramer on CNBC 7/21 said, ‘If you’re long, you’re wrong.’ Either the fundamentals are wrong or hedge funds are liquidating. Oil and the DJIA have been trading in tandem. CNBC 8/6/2015

 

Questions, call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

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