That Was The Week That Was-4th Week February

 

 It was a very good client breakfast meeting the Saturday before last, and I appreciate all those who attended. A few drove more than fifty miles one way BRAVING the early morning freezing cold. For those that were not able to attend I have a few of the materials that were handed out. If you are a client and want a copy just email me or call and I’ll get  them out to you. This will include the Larry E. Powe, Esq. estate planning information as well as my 2014 year-end and forecast booklet. Thanks to all for attending.

The nice lady after the meeting who was packing up our left-over pastries and fruit was a dear client/friend who, along with her hubby, was on their way to help feed the hungry. They do this all the time (and not just on that particular Saturday), and I’m glad that our bounty was being shared.

 

S&P 500 and DJIA Hit Records.

Friday, February 20th markets rallied on news that an agreement, of sorts, was reached by the ‘anti-austerity Greek government & the Euro Zone ministers for a  4 month extension of Greek’s bailout. WSJ 2-21. We’ll back to this page, you can bet. On CNBC Monday commentary that Germany got more than Greece out of the negotiations.

Not the time to unload stocks, according to Steven M Sears, The Striking Price, in Barrons.com 2/22. Quoting RBC market strategist Jonathan Golub, who has a 2015 price target for the S&P 500 Index of 2325, far above the recent number of 2089. There is expected a massive inflow into stocks as there is a structural imbalance between stocks and bonds. A chart shows that there is a $1.63 trillion spread between bond fund inflows and equity fund outflows from January, 2007 to January 2013. Over that period $1.23 trillion flowed to bonds and $409 billion exited equity funds. This suggests a massive influx from the bond market when the Fed  starts raising rates.

‘1 in 3 Americans on Verge of Financial Ruin!’ If there is one thing financial news has not skipped is the hyperbole in its reporting. We seem to have taken our message reporting from nighttime news when a cough is translated as an epidemic, and a snowstorm is nicknamed a ‘killer’. MarketWatch.com reported that Bankrate.com released a survey of 1,000 people and found that 1 or of 3 has more bank credit card debt than their emergency fund asset value. Unsurprisingly it’s the 30 to 49 age group with the most debt to savings ratio and the 65+ with the least. 2/23/2015 I’ve been doing this so long that even this is old hat. The numbers are pretty close to what they’ve always been. Younger folk higher debt. Old poops less. It’s what it is.

 Monday markets ‘chillin’ waiting on Fed Chair Yellen’s Testimony to Congress later this week.

According to CNBC U.S. Tech Companies will continue to be ‘flush’  with cash, and it’s likely to be another big year of acquisitions. CNBC 2/24

The Nasdaq is again clawing its way back to 5000, once visited in March, 2000 before dissolving like a cheap cardboard belt in a rainstorm in what was called the dot.com bubble. Is another bubble forming? According to Jim Cramer it isn’t. Back in 2000 this company … had a valuation of $550 million. That was the market leader 15 years ago. Now it’s this company… leading with a $736 billion market cap. But, according to The Cramer, it’s the market multiples. Back then the former was trading at 80 times earnings while now the leader is trading around 18 times earnings. Big difference, says Cramer. On CNBC 2/23/2015.

 

Lift-Off?!  That’s what’s being called the moment when the Federal Reserve raises rates. Fed Chairwoman Janet Yellen, according to the WSJ 2/25, offered up an upbeat take on the economy to the Senate Banking Committee Tuesday. The only soft part is inflation, and excluding energy and food, that’s running 1.6% annually. The Fed is looking for around 2%. The countdown to a June liftoff will begin – unless the economic situation changes. The risk is that the markets may tumble or overreact on the first tightening move.

MARKETS HIGHER TUESDAY ACROSS THE BOARD.

Saudi’ Naimi says oil demand is growing, markets calm. The oil minister made the comments since the price of crude rebounded from a near six year low. There has been grumbling and some public criticism among OPEC members that the Saudi decision may not have been the right approach. North Sea Brent trading about $60 a barrel. CNBC 2/25

 

Through good and bad times the stock market’s broader average returned over the past 20-years 9.2%. The average investor earned a measly 2.5%. One reason is that American investors don’t have a clue what’s happening with the economy or the market. MarketWatch.com reported 2/24 that  U.S. adults answered correctly 2.9 our of 5 basic financial questions. In a Gallup poll, a few months later, when asked how the market performed that year, after the S&P 500 rose 30%, only 7% could recall what it had done. If you’re managing your own money, or even if you have someone else doing it for you, here are a few reasons why you may be trailing the indices (from the same above article).

• We have no idea what we are doing.
• We grow older but no wiser.
• We don’t know when we are getting scammed.
• We treat investing like a high school popularity contest.
• We’re too scared to invest to much.

POLITICS?

 The President’s 6th veto.

 

 

WHAT HAPPENS TO THE MARKET WHEN THE FED HIKES RATES? S&P CAPITAL IQ’s SAM STOVALL PROVIDED THE FOLLOWING CHART.

The index fell 11 out of 16 times initially but slightly further out, as you can see on the above chart, the markets calmed and declined 6 out of 16 but recorded a median gain of 4.8%. S&P Capital IQ 2-25-2015 PS Don’t forget the massive inflation fighting hikes from 1977-1980.

Thursday Markets Closed Mixed. U.S. crude fell 5.5% to $48.17 per barrel.

 

Alan (where the heck you been?) Greenspan, former Fed Chief, told CNBC Thursday that the reason that yield on Treasuries were falling is an indication of how weak the overall global economy. He went on to say that it’s probably to what we saw in the later stage of the Great Depression. And, it’s not anywhere near what the problems were back then but we haven’t seen anything like that since then. And, maybe that’s why we called the 2008-2009 Market Crash a Depression!? 2/26 And, he got a bunch of stuff wrong when he was writing his memoirs.

  Irving Kahn, who called the 1929 Market Crash, died at 109. He worked to the day he died at his investment firm. At 100 he told Barrons he was married to the business. In 1928 he was convinced that stocks were overpriced and shorted Magma Copper. When the markets crashed in 1929 his $300 had turned to $1,000. He was a student of Benjamin Graham, and worked with Graham on his first major work, Security Analysis. He also met his wife at one of Graham’s lectures. Barrons.com 2/27

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 February

 

 Some people get stubborn about paying for something they think should be free. Take investing. According to a few it should be like air or bank savings-free. Or, maybe you pay a little once and it’s good for a lifetime of trading.  The fact is free air, depending on where you live, may not be so good for you. A friend of a friend, a reformed three pack a day smoker, came back from a year long slog in China and said it was the worst quality of air he ever experienced, even when he was smoking. Some part of Detroit area are so polluted the ‘free’ air strips paint off cars and houses. Free air isn’t always clean air, and then not so good for you. Bank savings is never free. Banks allow you to park your cash over a variety of time tables and you never see a bill. You never see a substantial return, either. Banks borrow your money. Make money on your money and then return a small amount of cash for your trouble. You agree to all that when you open an account. Free investing is a myth. Every product has some sort of a fee or charge. It is either added to, added on or built in. The day you run into someone who’s in the investment business and tells you they work for free or cheaper than where you are start counting your fingers. The person making the offer may be after more than just your savings.

 

 

Big Day DJIA Closed Over 18,000, S&P New Record High 2097 & Nasdaq Creeping Up on 5,000. 2/13/2015 Brilliant! Just Brilliant. And so quietly done. The week before last the S&P closed at a record high. The Naz is methodically grinding to its high it hit back in 2000. Peter Cardillo, chief market economist at Rockwell Global Capital said the S&P has a little more to go, as high as 2125, before pulling back to below 2000. CNBC 2/13.  Energy was up 1.95%, and utilities were the biggest decliner.  Oil closed at $52.78. With this latest run money will be coming out of bonds as many analysts have voiced their bearish views on the sector. The money should flow to equities and we should see the markets go higher. 

Jeff Reeves at MarketWatch.com Warns: Don’t Be Dumping Stocks Right Now. MarketWatch.com 2/11. Here are a Few Reasons:

• Labor Market is strong.
• Corporate earnings are robust.
• Shorts aren’t winning.
• Cheap energy is boosting spending.
• Housing has a solid foundation.
• Banks are in good shape.
• Consumers are confident.
• Interest rates will stay low longer.
• There are few alternatives to U.S. stocks.

 

You Wanna Know Which Way The Stock Market is Headed?

‘Ask a Four Year Old,’ said Dennis Gartman on CNBC Monday. ‘A four year old would look at the chart and say I’m not sure what it is, but it’s moving from the lower left to the upper right. We try to look too deeply into things…’ explained Gartman.

WHAT’S BETA? If you’ve had your portfolio reviewed by me you know one of the first things we talk about is ‘Beta’. Beta is a calculated on how a security moves in relation to ‘the market’. A beta of 1 indicates that it moves with the market. A beta of less than one means it moves less than the market. A beta of 1.5 means the security is 50% more volatile than the market. Use beta to ensure that your portfolio is on track to meet your risk/reward goals.

 

uNDERStANDING bASiC iNvestMents  is essential in today’s world. Whether you have someone else manage your money or do it yourself knowing the difference in investment sectors and the general market is basic to avoid losing your money or having someone else lose it for you.

MARKETS UP TUESDAY. slightly.

 

 State Department Spokeswoman Marie Harf said on ‘Hardball’ (2/17) that to go after the ‘root’ that causes people to join groups (ISIS) whether it’s lack of opportunity for jobs…’ Even arch liberal Matthews had to blink hard and say that there is always going to be poor people. Yes, some in the State Department thinks a Terrorist Jobs Program may solve problems in the Middle-East. Harf is the #2 in the State Department and obviously shows she understands nothing about the Middle-East.

Basic Materials Rally

Shares of companies that grow or find basic materials are showing signs of recovery. Barrons.com ‘Getting Technical’. Feb. 17, 2015. ‘The stock market, which looks many months into the future, seems to expect demand for basic materials to perk-up, and that’s good news for the market and the economy.’

 

West Coast Labor Dispute Could Be Behind Huge Oil Inventory. Crude supplies saw a whopping 14.3 million barrel jump from the week previous. That news saw prices for crude fall to $50.48 a barrel. The ongoing west coast longshoreman and ship owners dispute has put a slowdown on work that is getting close to a total walkout by the union. NY TIMES & MarketWatch.com 2/19

Markets Closed Mixed Wednesday.

 

IBD News… Marissa Mayer, CEO of Yahoo, said that ‘mobile went from a ‘hobby’, with 50 people working on it, to a quarter of our company.’ Wal-Mart announced a pay hike for 40% of their workers. It announced it will spend $1 billion for its workers, including training. Top home spenders from abroad. From Atlanta to Oklahoma its China house hunters. You bet your chopstick that China took the lead involving dollar volume while Canada still ranks first (eh?) in terms of number of purchases. Chinese not only are buyers of residential real estate but also of commercial investment real estate. Thursday markets ended mixed but restaurant sector was up. Investors Business Daily 2/20/2015

 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.

That Was The Week That Was-2nd Week February

 THIS IS POSITIVELY THE LAST INVITE FOR 2015.

ANNUAL CLIENT BREAKFAST MEETING FEBRUARY 21ST. Now is the time to call and register or send an e-mail. For those that have never attended the annual client meeting it never involves product but does involve providing you with information, a Q&A period and a chance to get out early on a Saturday morning in the middle of winter and enjoy the brisk walk from the car to the banquet room at Sycamore Hills Golf Course, Macomb, Michigan. I’ll talk about how things went in 2014 ,what to expect in 2015, how to create a Life Boat investment plan, and Larry E. Powe, Attorney at Law, Principal/Partner Keller Thoma, P.C. will discuss estate planning, wills and Revocable Living Trusts. Everyone gets their 2015 Workbook. Register, now and all you need is to bring yourself and a pen. I’ll supply the rest. The meeting starts at 8:30 and a continental breakfast is available plus an assortment of beverages.

Be Careful Who You Listen to and Believe because there are people who sound so convincing that you may believe anything that comes out of their mouth. Brian Williams, the NBC newsman, has developed a ‘credibility’ problem telling listeners experiences that may have been nothing more than a figment of his overactive imagination.   (USA Today 2/6/2015) The same is true with a few folks who are in the ‘Investment Planning’ business and now promote themselves as experts who predicted the 2008-2009 Great Depression. The actual number of people worldwide who openly predicted a deep and lasting Depression that are verifiable you can invite to a game of Canasta. There were just not that many people globally, including economists, who could put together the string from real estate loans to stock markets crashing and driving the world into a huge Depression. There were those of us that thought the housing market would certainly go bust because it was getting silly giving away homes to people without verification of income or down payment. None of us, however, could foresee the global damage. So the next time someone says that ‘they knew’, it would be best if you did some homework and find out if indeed they did know, and more importantly went on record warning people.

 

SMART MONEY MANAGEMENT AIN’T COMPLICATED. Brent Arends wrote his last WSJ Sunday Column 2-8 and repeated his basic investment saving mantra. If you get a chance go and Google it, Simple, Bedrock Rules on Personal Finance. He boils it all down, everything you should and have to do in less than 1,000 words. Here’s a few and if you do get his article pin it someplace you can read it often anytime you get the idea to get silly with your money. Or, think that someone else has the ‘secret’ to making you rich.

• Know thyself. Don’t pursue complex financial or tax strategies if you’re not a details person.
• Plan for a long-life. A third of your life comes after age 65.
• Cut the fat in your budget. (Most people don’t have a budget!).
• Tune out advertising. If you consider it all to be a pack of cynical lies designed to steal your money, that’s about right.

WHICH WAY THE STOCK MARKET?  Last Friday’s CNBC had one article state that investors would finally see a disconnect between oil prices and equities (Alex Rosenberg reported), and in the Sunday WSJ reporter E.S. Browning wrote that the recent oil rebound would lift stocks but other obstacles lurked to create problems. E.S. Browning reported that oil and stocks so far in 2015 moved in tandem 64% of the time. However, worries about interest rates and earnings are also likely to keep market volatility high. Concerns about economic growth outside the U.S. also continues. William Hackney, senior partner at Atlanta Capital Management LLC is worried about earnings partly because of soft global growth and the strong dollar.

Monday Markets Down Oil Up.

Ronald Read was a Vermont gas station attendant and janitor who amassed an $8 million fortune. According to his attorney, Laurie Rowell, he only invested in what he knew and what paid dividends. Read died at the age of 92 and bequeathed millions to a local hospital and the library. According to CNBC.com to replicate what Read did one would have to invest $300 a month earning 8% for 65 years. The secrets of emulating Read’s success include reading every day on what is happening in the markets, being frugal with your lifestyle; and buying investments that you understand and pay a dividend.

Confused over the price & direction of crude? So are the experts. On CNBC’s Mad Money Tuesday one expert said that the worst was over and oil should slowly climb to $70 a barrel. Another expert, Tom Kloza, chief oil analyst at Oil Price Information Service, said the worst wasn’t over and you can expect to see oil hit $30. The OPEC Wins story was in Tuesday’s WSJ as an OPEC official was quoted saying, ‘There are strong indications that U.S. shale producers are taking a hit, and by the second half of this year a lot of marginal barrels will disappear from the market and demand will rise for OPEC members.’ Zacks.com offers 2/11 that there may be more bottom than recovery for oil at this time.

FINDERS KEEPERS …except in China…  A Chinese herdsman stumbled onto a 17 pound gold nugget that, he said, was sitting uncovered on the ground a few weeks back. Lucky guy you’d think? Not so fast. Seems the government wants more than a fair piece of the find. They’re saying the nugget is a mineral resource and as such is the property of the government.  MarketWatch.com 2/11/2015 The Herdsman hired an attorney! You’ve got to love Capitalism even if it’s Chinese Capitalism.

TUESDAY MARKETS DJIA +140, S&P 500 +22 & NASDAQ +62.

Stock dividends are a return from earnings. They are not interest because you own the stock or mutual fund that holds the stock. Understanding dividends is key to building long-term wealth.

 

MARKETS MIXED WEDNESDAY. 2/11/2015.

 

 

Potpourri  

CNBC reported February 12th: 1: Gold demand falls to a five-year low. 2:The EU, Greece bailout talks faltered. 3: Putin said leaders agree to a Ukraine ceasefire. 4:Tax fraud expected to soar to $21 billion by 2016, according to the IRS. The agency admitted it can do little because of outdated fraud detection systems. 5: The phone company associated named after a fruit is now worth $700 billion and some value worth more than the Russian stock market, and valued higher than Microsoft and Google combined. This was discussed on Mad Money and Cramer spoke of the comparison and was reminded of the time Babe Ruth made more money than President Herbert Hoover. When asked about the difference, Ruth replied, ‘I know, but I had a better year than he did.’ Bloomberg.com 6: Governor Scott Walker of Wisconsin was at London’s Chatham House on Wednesday when he boasted, ‘If my state was a country it would rank fourth in the world for cheese production, just behind the USA, France and Germany, and just above Italy.’  The Gov. was there with fellow govs Bobby Jindal and Chris Christie to show off his foreign affairs skills and ended up talking foodie.

Thursday markets up across the board with DJIA +110. More M&A as the travel business consolidates. American Express and Costco are ending their long-term exclusive relationship. That news was more than a bump in the road Thursday as AmEx said that they and the discounter couldn’t come to an agreement that was beneficial. (WSJ 2-13). Robert Shiller’s old new edition of his book, ‘Irrational Exuberance’ updated, warns investors that bond prices might be irrationally high. (CNBC 2-13). Germany’s GDP grew more than expected (CNBC 2-12) in the fourth quarter bolstering EU economy is back on track.

WHO DO YOU KNOW WHO COMPLAINS ABOUT LOSING MONEY? It just may be that they need to talk to me about their investments. Tell them to call or email me or just pop their name and number to my attention and I’ll call and talk to them. You can’t tell but you may be doing them a huge favor.

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.

That Was The Week That Was-1st Week February

 

2015 CLIENT BREAKFAST MEETING. RESERVE SEATS NOW.

 What’s More Fun & Informative Than Jeopardy, Family Feud & The Price is Right? It’s my annual Client Breakfast Meeting! If you want to know where the experts predict the winning sectors to be invested in for 2015, where you shouldn’t be invested and how to create your personal investment portfolio lifeboat if and when markets crash, you have to attend my client breakfast meeting February 21st, 8:30 AM- 10 AM at the Sycamore Hills Golf Club in Macomb. Call or email me with the number attending so I can have seats available. A continental breakfast along with coffee,tea and juices will be served.

 

 

James Bullard, President of the St. Louis Federal Reserve Bank, said in a Bloomberg interview 2-1-2015, Investors are not taking the Federal Reserve seriously. A more than significant amount of money has been invested in 2015 in the 30-year Treasury as the market volatility from December has spilled over into 2015. The Federal Reserve has indicated that it will raise interest rate in 2015. The only question is when. Investors holding bonds will suffer when rate do move up. The question is not of if but of when in 2015.

 

JANUARY’S POOR PERFORMANCE REMINISCENT OF JANUARY, 2014. Close your eyes and ignore a year has passed and you’d think that we were in 2014 rather than 2015. While the mythmakers say that as goes January performance so goes the year we know that isn’t true as 2014 proved.

DEEP FREEZE AND WINTER STORMS ALSO CUT INTO BUSINESS AND THE MARKETS IN 2014.

STUFF I FOUND and DIDN’T KNOW WHILE LOOKING UP OTHER STUFF. Medicine,to treat infection from bacteria called C. difficile, that can be administered through endoscopy or capsules, is made from human poop that the company, OpenBiome, is willing to pay as much as $250 a week from human donations. CNBC on 1/31 reported that donors could earn as much as $13,000 a year selling their waste. The criteria is rather vigorous and only 4% of interested donors have passed the screening process. 

 How much of the four and a half hours of football is football?

WSJ Reported Small Cap Stocks Gained in 2015 as Large Caps Faltered. 2/1/2015.

As the stronger dollar hit large cap multi-nationals by diminishing the value of revenue earned overseas the Russell 2000, small cap index, has proven to be more buoyant. The Russell YTD is down 3.3% as compared with a 3.7% decline in the DJIA. In 2014 the Russell was up 3.5% as the Dow climbed 11%. To be fair small company stocks are extraordinarily volatile. Expect big swings with these but usually small caps lead any market recovery.

NFC Team Wins Signals Positive for The Market! February started on the right foot with the Dow up 4 points short of 200 point gain. News (rumors) of Greece settling their differences with the EU brought cheer to our markets. CNBC 2/2/2015. Oil was up but Dan Dicker on CNBC said that oil prices have not bottomed. Gas savings will be felt in the economy by this July, reported Goldman Sachs. Jack Ablin, CIO, at BMO Private Bank, talked about earnings and reported that consumer-oriented companies are likely to see better earning results. Analysts are particularly interested in this group and the small cap stocks. CNBC 2-2-2015. Albin went on to say that he was concerned about over-valuation and the best thing we could see is higher revenue.

2 Days in a Row! Dow up +300. Oil down $1.33. A down day for oil brought the Bulls out and just about everything went up as buyers scooped up stocks that only a few days earlier they were selling. In the news Wednesday was the report on negative yield bonds and who was buying them. Yes, bonds that you bought and paid the issuer for the privilege of parking your money, a report on CNBC 2/3/2015. It could be you if you own a bond fund or bond ETF. There are $1.7 trillion of euro-area government bonds with maturities longer than a year with negative nominal yields.There are $1.8 trillion Japanese bonds doing the same. All in all, reported JP Morgan, there are six type of investors that are going for the trade. Here are a few reasons:

• Some investors are betting that certain currencies will appreciate.
• Betting that bond prices will rise further making their principal higher.
• Central banks are big buyers because of their Quantitative Easing.
• Index funds that buy government bonds just don’t have a choice.

ANY CONCERNS OVER BEING AUDITED BY THE I.R.S. IN 2015 HAVE BEEN GREATLY REDUCED. Bloomberg News reported 1-26-2015 that consistent budget cuts over the past five years have had a devastating ‘erosion of service.’ Since 2010 the number of IRS personnel enforcing tax law has fallen by 15% according to the Center on Budget and Policy Priorities. Taxpayers may also expect longer waits on the phone and delayed refunds this filing season. While some taxpayers may look at these cuts as an opportunity to get aggressive, and or imaginative, you have to remember that the IRS can go back three years in an audit.

 

Dennis Gartman Issued Warning to Investors to Be Careful, in an interview with ‘Closing Bell’ Wednesday the 4th of February. He went on to say the volatility the past week and a half was unlike anything he’d seen in his 40 some years in the business. Knowing that volatility is part of 2015, and all of us have been warned in 2014 to expect it. I checked the volatility index or VIX and over the past five days it was down 1.43% and over the past 90 days UP almost 13%. What investors should know is that the past 12 months it’s down 34%. Certainly the VIX was a lot more volatile in 2008-2009 and I wonder where old Gartman got his information and experience from?

Markets flat to negative on Wednesday on renewed EU tough talk. Germany and Greece square off as the anti-austerity party of Greece is at odds with the EU. Germany wants the Greeks to stick with the plan and Greek officials want to restructure their agreed upon debt and get a discount to boot. It’s a question who blinks first and the odds favor the Germans who brook no breaking of past agreements. CNBC 2/5/2015.

The Dow Popped +200 points Thursday to 17,885 and the Naz was up 1% to 4,765. The S&P 500 Index closed up 1% to 2,063. All three indices are positive for the year. IBD reported February 6th that exports declined less than November and imports rose. The trade gap hit a 2 year high. Retailers in general, reported IBD, posted decent sales gains in January fueled by a brighter economy, lower gas prices and better jobs picture. Consumers are more optimistic than at any time since the Great Recession.  Ken Perkins, president of Retail Metrics told IBD Thursday. Consumers are spending on products like cars. They are also spending on home furnishings, smartphones and other electronic products.

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.