The Big Flush Has Already Happened… See what the CIO of First Trust had to say later in this blog about that massive correction you may be waiting for.
Part-Time ‘Financial Planners’ Are Still Out There. From school teachers to fry cooks there are people that ‘think’ they can transition from one full time job to a career in the investments business but do it in baby steps. I used to do a lot of work in the 403b business in various K-12 schools and was amazed how many teachers counted another teacher as their financial advisor. When I started in the business the business of recruiting part-time mutual fund or life insurance salespeople was extremely active. There were few compliance concerns at the time so sales agencies didn’t care where they got their business. If someone was a full-time engineer but ‘thought’ they could make a career in selling financial products and only sold family, friends and co-workers, that was fine with their part-time agency managers.
Some years back I met someone who had over $100,000 invested in funds she knew little about, never saw a statement and her ‘financial’ advisor was a full time manager at the local fast food joint. She didn’t think this odd since she saw him several times a week when she stopped by for her food order. The broker-dealer I was affiliated with decades back had many ‘housewives’ as their representatives. These suburban homemakers sold financial products to their PTA friends, neighbors, their hair and nail stylists and one said to me, ‘It beats the heck out of selling Avon or Tupperware.’ The moral is if someone tells you about their financial advisor but they work fulltime somewhere else tell your friend to be wary. The investment business is a fulltime job and not something someone can invest four a five hours a week, or month, and be expected to do an adequate job. ‘You want fries with that non-correlated fund?’
Made me smile…
New Yorker 7/20/2015
Exactly How Much Cash Does This Company Have? According to CNBC.com 7/21/2015, Sarah Whitten reported over $203 billion which there are only 14 companies in the S&P 500 index that have a larger market cap than this company has cash! The total cash hoard is:
- The GDP of the Czech Republic
- Five times the value of all 30 MLB teams
- The GDP of Peru
- Handing each person in the U.S. a check for $632
Fear Mongers Amongst Us…
You cant turn on the radio, cable television or read an internet blog without having someone try to scare the dickens out of you that the economic world is coming to an end and the stock market is a meltdown just days or weeks from happening. We’re all going to lose if we’re invested in common stocks, corporate bonds or money markets. The safest place is whatever gimmick the Fear Monger is trying to sell and eventually, one day, maybe years from now, a correction will happen where they can say with authority, ‘Told You So.” But if you listen to the professionals, those with the real credentials who have a history of spotting ‘frothy’ markets and bubbles, they will say that the time is definitely not now. 
Jeremy Grantham told the 27th annual Morningstar Investment Conference in Chicago a week ago last Wednesday that he doesn’t see a trigger that would deflate valuations in the stock market…yet. He did say that the two popular methods for estimating fair value are ‘approaching bubble land, but that is not a cause for concern.’ The U.S.economic boom is still ‘middle-aged’ and bubbles don’t burst unless the economy has reached beyond its capacity.’ Grantham is co-founder and chief investment strategist of Grantham Mayo van Otterloo. He’s known for warning about the Japanese real estate valuations in the late 1980s, the tech stocks in the late 1990s and the U.S. housing crisis in the late 2000’s. Source CNBC.com 7/24/2015.
There is a World of Retail Investors that Still Loves Fixed Income and There Are Money Management Firms Only Happy to Oblige. The other day a fine mutual fund firm called and pitched me their latest new hybrid fixed income mutual fund that was sure to withstand higher rates and put a smile on investor’s faces. The sales talk is all about ‘yield’ but the total return tells a different story. When I declined to consider it for my clients the ‘sales desk’ asked, ‘Well what are you doing to help investors reduce risk?’ Cash comes to mind, I said. After the call I researched a handful of 4 & 5 star rated by Morningstar Corporate Bond Funds, including the caller’s, with yields ranging up to 150% of the 30-Year Treasury. The best fund’s total return that I researched was barely positive year-to-date (July 26, 2015), and negative for all the others. (There may have been some fixed income funds that have done much better but I did not see them). The sizzle some firms are selling is all about the yield but the real story is what you can actually end up with in your pocket. When someone tries to sell you a fixed investment that ‘yields’ a huge number that may make your ears perk up with interest. The one question to ask is what the investment actually nets year-to-date. Looking for bonds consider individual issues and then hold to maturity. True there will be volatility but with a quality issue and no default, you will receive your original investment at maturity something no one can say with certainty about a bond mutual fund or ETF at this juncture.
BEFORE THE BELL MONDAY CHINA MARKET DOWN 8.5%. CNBC.COM 7/27/2015
The worst month for China Markets in 6 years. MarketWatch.com 7/31/2015
U.S. CLOSES DJIA OFF 128 POINTS FOLLOWING CHINA ROUTE. Erosion of confidence, Brian Fenske, head of sales trading at ITG, said about China’s stock market that when an index falls 8.5% there are many individual stocks that are down 20%-30%.MarketWatch,com 7/27/2015
China selloff continued Tuesday as 11% lost from the Shanghai Composite Index. WSJ 7/27/2015
Robert C. Doll, CFA in Nuveen Asset Management Weekly Commentary 7/27/2015:
- Equities may be stuck in a trading range until uncertainties over Fed policy and global growth diminish.
- Improving economic growth should allow corporate earnings to improve, helping stock prices to grind unevenly higher.
Z’Bounce! 
Tuesday. The DJIA Closed Up 189 Points.
Concern Regarding The Dow Transports (If You Believe in Dow Theory) Are Down 9.5% Year-to-Date. The transports are the link between those that make the goods (Dow Jones Industrials)- and those that consume them. 
Chart FactSet MarketWatch.com 7/28/222015.Tomi Kilgore.
MARKETS UP AGAIN WEDNESDAY +121 DJIA.
cLOSEd mIXed Thursday.
Chris Hyzy, CIO, of U.S. Trust Reiterated His Belief We’re In the Beginnings of a Massive Bull Market on CNBC 7/29/2015. Yes- B E G I N N I N G S! He went on to say that people are waiting for that one big crash or drop in the market and it’s already happened. He pointed to several, almost double digit, drops last year. ‘The Big Flush Has Happened,’ he said. Hyzy is no stranger to the Bull Market scene having expressed his views last year in August on CNBC. Then he predicted 3 1/2% growth for 2015 and financials as the leading investment sector. He also liked energy and technology. .
Leon Cooperman,CEO, Omega Investment Advisors, appearing with Hyzy, said that we can expect a long low interest rate environment. This will be the longest Bull Market in history, he predicted. CNBC.com 7/29/2015 In August on CNBC Hyzy said it’ll last 20-years.
Inflation adjusted personal consumption grew at 2.9% annual rate in the second quarter of the year. Up from 1.86% in the first. This is a nice way of saying that folks are spending their energy cost savings. WSJ 7/31/2015
Questions call Paul @ 586 295 0430 or write him @ 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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