That Was The Week That Was-4th Week October

 

 

 Money & Relationships. Second marriages, even third and fourth marriages are not uncommon in todays age. While romance blooms the asset-relationship philosophy in the early stages of the 2nd, 3rd or 4th association should be, ‘What’s mine is mine and yours is yours.‘ It shouldn’t be the other person’s business what their partner has or plans on doing with what they have. Unfortunately not all people  stick with that simple advice. I’ve told all my recently single clients this, ‘Don’t talk about your money, or what you own or owe for at least the first five years to someone you date or plan on spending a lifetime with. Don’t ask your partner for advice. Don’t let bank accounts, investment statements or check books lay about so they tempt someone to peek. If your in a relationship it should not be because of money.’ In my decades of experience I’ve seen too many tragic ends where one person has taken advantage of another because of money. In almost all those cases it was the woman who was the victim. And when the rule was broken the woman ended up with far less than when she entered the relationship. Not only did these women end up losing just about everything but some ended up owing money on bills incurred by their partner. If you want to keep the relationship and your independence don’t talk about your money. It’s just that simple. Here’s some other rules:

• You don’t buy property together until you are married.
• You keep separate financial advisors.
• Don’t co-sign other family member’s loans.

‘No Recession,’ Goldman Sachs Asset Management. Q4 2015 Report.

‘Chinese market turmoil, a Greek fiscal crisis, plunging oil prices, and the prospect of rising interest rates can put investors on guard. But we believe this year’s bouts with volatility are the sort which stir markets without shaking their foundations. Most significantly, the ongoing recovery in key developed markets, from the US to Europe, remains early to mid-cycle.’ Goldman Sachs Q4 2015 Report.

 

 

check the mirror’s name…

 

 

AMID THE WEAKNESS IN THE OVERALL S&P 500 THREE INDUSTRIES- RELATIVELY SMALL GROUPS- THAT ARE SURGING:

• Construction Materials
• Airlines
• Automobiles

These 3 industries with the largest expected earnings growth. CNBC.com 10/18/2015

MONDAY MARKETS ESSENTIALLY FLAT- OIL DOWN BIOTECHS UP. Investors note the old standby stocks slowly creeping back to pre-correction numbers. IBD reported Tehran put the world’s oil producers on notice it plans on reaching its pre-sanction production of 3.5 million barrels of oil within months of sanctions being lifted. Analysts scoffed saying at best the Iranians could get 300,000 to 400,000 barrels by the end of 2016 and a few hundred thousand barrels after. IBD 10/19

Bob Doll, CFA in his Weekly Commentary, 10/19: The rally continues but equities appear stuck in a trading range. A shift from growth to value with some areas of energy and materials assuming leadership. Retail, healthcare, equipment and services are all lagging on a relative basis.

Quick. Name the Newly Elected PM of Canada. Hint: He’s a former school teacher, liberal and has the last name of a former PM who shaped Canada for decades. His mother was a famously known first lady who loved to boogie at Studio 54. If you don’t know him I bet you even don’t know who the ousted PM was.

LOOOONG BOND? There appears to be a demand for ultra-long, high quality assets from institutional investors that match very long term liabilities.The British government has the solution  by selling 50-year bonds last Tuesday. The offer was over subscribed by…a lot! The U.S. so far has turned a cold shoulder to such stuff while borrowing money at close to zero by offering short term Treasuries. The question many institutional investors are asking is why not have the U.S. borrow cheaply well into the second half of the 21st century? ‘By issuing 50 year bonds this,’ according to Randall Forsyth in Up and Down Wall Street, Barrons 10/21, ‘would be a good deal for taxpayers and their children.’ But the U.S. is reluctant to innovate even in the face of 2019 where hundreds of billions of dollars of assorted bonds will be coming due. Source Barrons.com 10/21/2015

There is a huge demand for long quality bonds from institutional investors such as pension plans, insurance companies and other governments.

 

Industrials are Back! For weeks the market absolutely hated industrials. They became oversold. Then big portfolio managers, in a blink of an eye, had a bullish view. This at the expense, said Jim Cramer, of what he believes is a split with health care. Industrials have gotten too cheap to ignore and the same investors now hate drug and health care stocks. CNBC.com 10/21/2015 Markets closed down on earnings.

IBD Reports Mutual Fund Capital Gains and Dividends Could Be Flat This Year. IBD 10/22/2015 This could be one of those years investors hate when they get a capital gain distribution they have to pay tax on and their fund has lost money. They scream foul but the rule is that active managed funds have to distribute their capital gains.

DOW & S&P 500 HIT 9 WEEK HIGHS. Thursday Markets rocked from the opening bell and there was no looking back. All sectors were up except healthcare! The DJIA closed over 300 points. There was surprises galore and even companies that had poor results had a little reversal. Source Reuters.com 10/22/2015

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.

That Was The Week That Was- 3rd Week October

 

No One Writes of Says Anything Bad About Trust Companies. Maybe They Should…

 Trust Companies are usually a division within a banking organization to provide fiduciary duties and act on behalf of a person or business entity for the purpose of administration, management and the eventual transfer of assets to a beneficial party.

In addition to bank linked Trust Companies you will also find independent Trust Companies, with no banking connection, that provide the same services and can be introduced through your lawyer, financial advisor, accounting professional or search online. (Call me for names).

Fees for Trust services range from competitive to outrageous. The quality of services also range from sophisticated, competent to clueless. Many, not all, Trust Companies have a broker-dealer relationship through their bank that handles the investment side of the client’s assets. The Trust department dictates to the investment management people how to invest the assets in the trust based upon their interpretation of their client’s needs. These same Trust Companies usually do not allow outside investment firms manage client’s assets even if they introduced the client to the Trust Company. They also ignore input from Trust beneficiaries. However, some Trust Companies do allow outside investment professionals.

A fee for the most basic Trust may be 1% of the account assets charged by the Trust Company and another 1% charged by the bank’s investment broker/dealer. In other cases there are Trust fees for services that range from 200-300 basis points plus the investment firm’s fees and investment management costs. It’s possible for a modest Trust account to incur annual fees totally 4-5% of assets which includes the investment management costs.

It is difficult to tell what you are buying when signing documents appointing a Trust Company. They all sound professional and experienced. The bad thing is that you may choose a Trust Company and then you’re not around to experience their lack of competency.

Here are some of the biggest complaints I have found about Trust Companies:

• Once the Trust is funded rarely do they reach out personally to clients after the point of sale, and smallish accounts get less attention than those with larger assets. Expect boiler plate letters and statements of charges deducted from the Trust account. 
• Trust asset allocations are mostly geared to the conservative side.
• Almost all services, other than the basics, are A la carte. Need accounting work? That’s extra.
• Trust Companies attract young lawyers with little experience looking, of course, to gain experience.
• Trust Companies may have revolving doors with both staff and Trust Officers leaving for greener pastures.
• Phone calls and complaints are like teeth to be pulled from a chicken. Finding someone to return calls timely or clear up a mistake is a process.
• Personalized investment service is almost impossible since the Trust Company sets allocation and risk parameters. Some have cookie cutter allocation for all accounts no matter size.
• One Trust Company recently contacted me and provided identical instructions for three Trust Accounts for three different individuals. When I attempted to have the Trust officer clarify how that was supposed to work she refused my phone calls and I never did get to speak to her. Subsequently the same Trust Company provided written instructions to sell all assets in two of those same three accounts at the lowest point in the recent 2015 market correction costing the client’s significant losses.

What to do:

• Ask your Trust officer for their qualifications and experience specifically in the area of Trusts and Trust management.
• Present hypothetical situations and ask the Trust office how they’d handle the problem. (Remember, that individual may be competent but be-gone by the time you revisit the offices).
• Shop and compare.
• Be aware of the revolving door and constant changing of staff.
• You can appoint a family member to act as Trustee if they are capable of managing money or the Trust is simple to manage.
• Look to a Bank Trust Company that allows your personal investment professional to handle the investment portion of the Trust ( Yes-The Trust Company could fire them and replace them with someone else).
• Negotiate all terms and get them in writing before you sign.
• Don’t be bashful to pull the business and take it to another Trust Company. Most people don’t know they can move an existing Trust from one Trust Company to another.

 HERE’S THAT R WORD. Recessions are strange economic moments. You cannot tell for sure you are experiencing one until it is over. Here’s the question, how long does a recession last? The following chart helps.

The fact that we’re due for an economic pullback isn’t surprising considering that it’s been over 6 years since the Great Depression 2.

Message to The Fed From IMF Central Bankers: Quit Dithering!

It’s called ‘Fed Fatigue’ and its enveloped emerging market officials to the point that they just want the Fed to raise rates and move on. The waiting is consuming unknown amounts of energy and creating huge amounts of uncertainty. The Fed understands and wants to mitigate more capital flowing to the U.S. markets once they do raise rates from emerging markets. The EMs understand that and have done what they can but say delaying the increase will not solve the issue.They say, almost in one voice, that those EMs that have taken on too much debt there will be a day of reckoning. Delaying a Fed rate hike won’t do much about that. The one thing good about all this most EM bankers realize is that the Fed has given them plenty of time to move their money and prepare. But it is the uncertainty that hangs over them and volatility has become a permanent order of the day. WSJ 10/11/2015

 

EARNINGS SLOWDOWN…

 

Bad News & Uncertain Markets Seem to Go Hand in Hand. Housing Bubble, the end of Emerging Markets are just two articles posted on CNBC.com Tuesday 10/13/2015. For investors looking for substance beyond the froth it’s difficult find. Robert C. Doll, CFA, in his weekly commentary, October 12, 2015:

• Modest levels of job growth should promote consumer spending.
• The rise in the dollar and corresponding decrease in energy prices shouldn’t hurt the economy as much as many think.
• We expect the U.S. economy to continue to accelerate modestly, but see possible drags. A correction in inventories and a drag from foreign trade will act as headwinds for the third quarter growth. 

PIMCO QUARTERLY UPDATE:

• U.S.Growth in the range 2.25%-2.75% next four quarters.
• CPI inflation 1.75%-2.25%
• Fed rate hike commences sometime in the next 12 months, but the pace of the hike will be even more gradual than previously expected.  PIMCO QUARTERLY JOURNAL 3Q 2015

 

 Clean Up, Aisle… Markets slide triple digits Wednesday as Wal-Mart forecast a 6% to 12% earnings drop for 2017. The bleak outlook dragged the DJIA down 100+ points shortly after the announcement. USA Today 10/14/2015

 

MARKETS CLOSED UP THURSDAY ON BAD NEWS! Speculation that the Fed would not hike rates in 2015 and not until sometime into 2016 rallied stocks 200+ on the Dow. New York Fed President Bill Dudley added that recent data indicated a slowing economy. Historically the last quarter usually bodes well for stocks and according to CNBC traders may well be trying to get ahead of the rally.

U.S. Economy Continues Modest Expansion, Beige Book. The report cited a strong dollar for holding back tourism in several cities while manufacturing turned in a mixed, but generally, weaker performance.- WSJ 10/14/2015

QUESTIONS, CALL PAUL @ pstanley@westminsterfinancial.com. SHARE THIS BLOG WITH SOMEONE WHO CARES ABOUT THEIR MONEY.

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

That Was The Week That Was- 2nd Week October

 

DJIA +300 Monday! A five day rally with testing of August lows successful and markets close at resistance levels. Naz and Oil up. ART CASHIN, CNBC 10/5/2015

 

 In his new book,  The Courage to Act: A Memoir of a Crisis and Its Aftermath,’ former Fed Chairman Ben Bernanke explains to readers what happened during and through the economic crisis, and what the Federal Reserve can and cannot do. In an opinion piece published in the WSJ October 5th, 2015, Bernanke enumerates the results of his Fed’s policies and criticizes U.S. and European policymakers. Bernanke took a jab at German Finance Minister Wolfgang Schauble for calling Bernanke’s second round of ‘Quantitative Easing,’ clueless. He pointed out that while today U.S unemployment is at 5.1% Europe’s had risen to 10.9% and only recently had the EU adopted an aggressive program of quantitative easing. Bernanke closes with a scolding to Congress that they need to step up. ‘It is only so much the Fed can do,’ he writes. ‘We need to improve worker skills, foster capital investment and support research and development.’ WSJ 10/5/2015.

 

The September Jobs Number Was Less Than Compelling & A Temperamental Market Dove Triple Digits at The Open Last Friday. The rose dramatically as traders realized that the Fed may not raise rates until 2016 and the DJIA closed up over 200 points. WSJ 10/2/2015

 Are Home Owner Insurance Companies in Cahoots With The Roofing Industry? Something that I discovered and thought you should know if you’re a homeowner. Be scared if your Casa Grande is 20+ years of age and has the original roof. Some insurance companies are declining home insurance coverage and cancelling others to those homes with roofs that approach or exceed 20 years. As a kid I lived in a house where if there was a leak in the ceiling someone climbed out a window with some roofing tar or a shingle and plastered the hole on the roof shut. Back then no one replaced a roof unless it was missing. Today the insurance companies are keeping an eye on potential, possible water damage because of a worn roof. Argue your roof may be perfectly fine. No leaks, shingles in good order, no curling around the edges; it doesn’t matter. Insurance companies have done their homework and reasoned that claims for roofs that are 20+ years old are costing them profits. Not only are your premiums going out of sight but insurance companies are looking to increase your deductible, as much as $5,000, which, when you think of it, could be the price of a new roof.

Keep track of homeowner and auto premiums and coverage by requesting declaration page from your insurance agent which spells everything out. You can scan and keep those pages in an insurance file on your computer. Once a year call four-five casualty firms and ask them for a quote. Compare their prices versus your new forward premiums and benefits. You won’t have to search for insurance pages and you’ll know what will be your next renewal premium. This will make your car and homeowner insurance review quick and relatively painless.

RETHINKING EQUITIES FOR RETIREMENT?

30-Year Retirement Income Withdrawal Based on Allocation. Using a 50-50 mix of stocks and bonds and a 6% withdrawal rate plus a 3% inflation rate the percentage of non-depleted assets at the end of 30-years was 53%. A 100% stock portfolio, using the same calculation, had a 83% non-depleted asset portfolio over the same time period.  Based on hypothetical $500,000 investments in the Ibbotson Large Cap Stock Index and the Citigroup Long Term High Grade Bond Index, portfolio rebalanced annually, with monthly withdrawals, and increasing each year for inflation. Rolling periods 1955-2014. Source American Funds Retirement Income Brochure Changing Dynamics of Investing in Retirement 2015.

 The Last Few Weeks I’ve Been Scouring Lists Looking for Beaten Up Quality Stocks With Great Franchise and Paying Sustainable Dividends. Here’s Your Chance to Buy That Favorite Stock at a Discount. Do your homework.

 

OIL STOCKS BOTTOMED: CHARTS SEND A BUY SIGNAL. Before the market Monday there was good trading action in the major integrated companies. Refiners, oil services and even shale oil stocks were up sharply.The energy sector seems to have found a floor, but still offers fat yields. Here is the ENERGY ETF chart.Michael Kahn, Getting Technical, Barrons.com 10/5/2015

TRANS-PACIFIC PARTNERSHIP READY TO PASS.

The TPP is a trade agreement linking 12 countries, including the U.S. and Japan, but not China. It will begin when enough countries ratify the agreement through their own domestic process. In the U.S. that seems like 2016. The deal may be fast-tracked in Congress but if politics gets in the way there may be pressure to oppose the deal or the fast track.WSJ 10/5/2015

 5 Day Winning Streak Ends Wednesday For S&P- Dow Gains 0.1%.  It was a mixed close with the S&P down and the DJIA up a tad. David Tippin and Ron Meisels think October will be as volatile as September and August. Wells Capital’s James Paulsen sees more downside before the bull market resumes. Paulsen also says that while the correction may not be over he would not tilt significantly away from equities. Cash, he explains offers zero return and bonds also exhibit significant risk in the intermediate term. –Barrons.com Commentary- Stocks to Watch.

Proxy War Heating Up in Syria. – source Business Insider.  10/6/2015 Is this Putin’s plan to see oil prices skyrocket?

IBD NEWS October 7th source:

• Not Materially Different From Quarter 2- Q3 Earnings Will Be Weak. –IBD 10/7/2015. Weakest Earnings Since 2012. Expect utilities, Consumer staples, Industrials, Materials and Energy to report 3rd quarter profit loss. A strong dollar hurting S&P 500 companies. Industrials will suffer earnings decline and revenue fall. U.S. Exports Falling Sharply- a strong dollar and weak overseas growth sent exports down 2%. IMF Cuts Global Growth View.

The ‘R’ Word is Being Whispered. cnbc.com 10/7/2015.(Recession)

Markets closed up 100+ Wednesday but the rally may have hit a ceiling, according to Michael Kahn at ‘Getting Technical’, Barron’s. Kahn reports that the charts still favor the Bears with too many negatives out there.Source Barrons.com 10/7/2015.  INVESTORS BUSINESS DAILY (IBD) ETF MARKET STRATEGY HAS A CONFIRMED MARKET UPTREND WITH 100% EQUITY INVESTMENT. IBD 10/8/2015.

There you have it. Two ways to look at the market. One shows caution going forward and the other suggests that the time to be fully invested is now. It’s these times that cause investor confusion if trying to time the market rather than being a long-term ‘buy and hold’ investor and allowing fund managers do the heavy day-to-day lifting.

  Dow, S&P and Oil all up at the close Thursday after the release of ‘Dovish’ Fed Minutes. Earnings season has begun but U.S. stocks took off after the Federal Reserve released minutes of their last meeting on why they didn’t raise rates. Citing global weakness and no inflation the Fed decided to wait for evidence of a global economic slowdown and that it was not knocking the U.S. off its economic course. Oil was up and hit a 5 week high. Investors are waiting how U.S. companies hit by slowing growth and a strong dollar will fare as earnings begins. Alcoa was first after the bell and missed. Reuters The Markets 10-8-2015. Sinead Carew.

 

Columbus Day Today & Markets Open.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 FINANCIALSECURITIES, INC. MEMBER FINRA/SIPC.

That Was The Week That Was- 1st Week October

 

UGLY QUARTER THAT NO ONE EXPECTED

More on the 3rd quarter of 2015 later in this blog. At the beginning of the year no economist or trader looked ahead to 2015 to predict what an ugly mess this year would turn into.It’s been a series of events coupled with a strong dollar (that’s only getting stronger), weak energy prices, worries over a China slowdown, and the loom of unknown interest rate hikes by the Federal Reserve. So far there are no winners only losers and even the ‘buy on the dip’ bargain buyers are MIA.

 

Dow Dives 300+ Monday. Bonds & Stocks Fall. Commodities in Bear Mode. Winner Dollar.The only thing beating stocks, bonds and commodities so far in 2015 is the ‘Almighty’ dollar. The U.S. dollar is still king and it isn’t helping ordinary investors. Until the dollar gives up some of its strength, and it doesn’t appear that it will, according to Michael Kahn, at Getting Technical, Barrons.com 9/28/2015 the trend for the market continues to be pressured. Both the Canadian and Australian dollar are in declining versus the dollar. The effect of the Federal Reserve raising interest rates hasn’t been taken into account. As interest rates move up the demand for securities that offer interest- mainly Treasury bonds and markets such as corporate bonds that are prices relative to them-rises. There will be an increased demand from foreign investors for dollars to buy those securities. –Barrons.com 9/28/2015

RBC Capital Markets Cut View of S&P But Remain Bullish. Jonathan Golub at RBC slashed his expectation of the S&P 500 Index hitting 2325 to 2100. Which is a 10% move higher. Pipper Jaffray amended their original projection to 2135. Golub said, ‘Our longer term outlook for the market trends remain largely intact. We believe the market will deliver 10% annually for the next several years.” Just 2 of the 10 S&P 500 sectors remained out of correction territory Monday. The only positive was consumer discretionary. SOURCE CNBC 9/28/2015

Private Sector Jobs Rose 200,000 in September. Employment Growth remains strong and broad based, except in energy and manufacturing. WSJ 930/3015 I discussed this before that we can have a great economy and a stinker stock market, or vice versa.

Overheard: The Market is so oversold. cnbc

 

If You’ve Been Paying Attention: There is a slew of stocks that pay a tasty dividend that have been beaten up. These are quality business models that have been trashed along with the overall markets. Call me for more information.

 

Superforecasting: The Art & Science of Prediction.A new book by Philip Tetlock entitled, Superforecasting: The Art & Science of Prediction, co-written with Dan Gardner shows that under the right conditions ordinary people are capable of improving their judgment enough to beat the experts. Who were those ‘elite’ ordinary people? They were the most careful, curious, open-minded, persistent and self-critical. Most experts, the book points out, are too quick to make up their minds and too slow to change them. They are in fact like most people. Those that were the best at forecasting were those that were ruthlessly honest about why they think what they do. In a project called, ‘Good Judgment Project,’ the author pitted 20,000 amateur forecasters against some of the most knowledgeable experts in the world and the amateurs won.  SOURCE WSJ 9/25/2015

Yet, emotion creates more havoc in losing money in the markets than any other attribute.

 WHYARE PRESCRIPTION DRUGS SO EXPENSIVE? Linda Johnson of the Associated Press reported that from 2008-2014 the average price for the most widely used brand-name drugs jumped 128%, according to Express Scripts Holding Co. Many new drugs for cancer, Hepatitis C and rare disorders carry list prices of $100,000 or more for a year of treatment. Here are some reasons Johnson discovered:

• No price controls
• Lengthy patents – people live longer
• Limited competition
• Small markets- many new drugs are for rare conditions or cancer subtypes.
• Development and production costs –Industry groups say it can take about a decade and well over a billion dollars to get a new drug approved.
• Fewer new generics.

 Carl Icahn, activist investor, calls it a potential dramatic catastrophe. He was referring to low interest rates, which he said should have been hiked 6 months ago but now it’s difficult because of global concerns. Low rates caused bubbles in art, real estate and high yield bonds. CNBC 9/28/2015

A Wall Street Journal article of a few weeks back reported on a popular fund manager who doubled down on high-yield oil bonds, and now the fund (name available to those that call me) has about 1/3 of its holdings in that high yield sector. The reason, explained to me, when I called the fund company to verify the accuracy and was informed that the manager was maximizing income return for investors. ‘He’s always done that,’ was the explanation. The fund has been labeled as a conservative income fund by one of the major investment rating firms.

 

 

 

 u.s.export hamper growth. The one –two punch of a strong dollar and slowing overseas market has contributed to an export boom that has gone kaput. The weakness overseas and the dollar have contributed to an overall economic drain in four out of six quarters. ‘Foreign demand remains the weakest part of the economy,’ said Jim O’Sullivan, chief U.S. economist at consulting firm High Frequency Economics.  U.S. exports are on track to decline for the first time since the financial crisis this year. Exports of goods and services are down, through July 3.5%, as compared to the same period last year. Higher interest rates will contribute to a stronger dollar and only add to the continuing weakness. WSJ ECONOMY 9/29/2015

EVEN WITH A 235 POINT LAST DAY OF THE MONTH DOW THE LAST QUARTER OF 2015 WAS A STINKER.

Worst quarter since 2011. It may not be over, according to the WSJ, as some analysts expect quarterly earnings to decline for the second quarter in a row. Carl Icahn said on CNBC 9/31/2015 he expects bad news on the earnings report and more selloff in the market. ‘Not as bad as 2008,’ he said. Investors are holding back buying on the dip as some are worried about valuations while others are waiting to see if turbulence in the bond and emerging markets will subside. WSJ, CNBC 9/31/2015 & 10/01/2015

MARKETS SNAPPED BACK AFTER WILD RIDE THURSDAY TO A MIXED MARKET DECISION.  Down triple digits the markets see-sawed for much of the day until finally ending about where they closed on Wednesday. cnbc, wsj 10/1/2015

 

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.