That Was The Week That Was-2nd Week August

Morningstar Interview August 7th with Jason Stipp and Bob Johnson came to the conclusion that our economic Indicators were looking up, but Johnson said for investors to mind the headwinds. On employment Johnson said that we got the boat headed in the right direction. Manufacturing has been softening for some time and he believes we’re at the bottom of the cycle. Purchasing Managers Indexes are picking up. The service number for last month’s PMI was stunning. Even some areas in Europe are picking up. The durable goods orders have also been improving. The GDP report showed that the government wasn’t really a very big drag in the June quarter. China, Johnson said, he wasn’t worried about. But a lot of our commodity goods and manufacturing is going over there and those are seeing some slowing. Finally, Johnson said he thinks the stock market tumbles back a bit right about here. He was right on the money as the first and second weeks in August were a real stinkareeno.

The WSJ Sunday Last Published Brett Arends, ‘Five Ways You Can Really Mess Up Your Retirement.’

1. Mishandling Social Security. Take it later say the experts. Take it now I say because no one knows how long you got. The winner is living the longest. The loser is not taking it at all.
2. Splurging on Big Ticket Numbers. Experts are right! Paying cash for a $40,000 car when that same money can provide a lifetime income of about $2,000 a year. Or, the payment/lease for the same auto.
3. Not Making a Budget.That’s soo 1950s…
4. Not Making a Nonfinancial Plan. Duh?
5. Moving. Yes, indeed. Heading south and discovering 110 degrees in the shade and lizards in the toilet. Next spending a bundle moving back home.

How Many Ways Can You Create a Retirement Income Plan? The other day I was working on some investment income ideas and wondered how many different ways was it possible for someone to establish an income plan that would stay the course of time and economies. I came up with a huge number of specific sectors that couldn’t and that included bank interest, stock dividends and real estate. I came to the conclusion there were only one way someone could maintain a long-term income plan: Systematic Withdrawal. Systematic withdrawal plans simply target a reasonable rate of return and can be modified up or down as the markets dictate without incurring huge losses either of principal or income and be used in either fixed or equity portfolios. If you need to know more about how to design and implement an income plan call or write me.

Markets Mixed Monday…

Robert C. Doll, CFA, Nuveen Asset Management, Chief Equity Strategist, wrote Monday August 12th:

• Expect a slow multi-year rise in U.S. Treasury yields after an abrupt start this spring.
• A sustained increase in inflation is unlikely since wage growth remains weak.
• Growth should increase in the 3rd quarter.
• Chinese economic activity shows signs of stabilization, including a stronger than expected rise in exports from China.

Sunday. August 18th, MarketWatch.com reported that this week’s market tone will be dictated by FOMC Minutes and earnings from Target and JC Penny. The DJIA is off 3% off its high and experienced the worst single week of the year as Cisco reported steady earnings but gave weak guidance going forward, along with stating they planned on laying off 4,000 employees. Wal-Mart also reported weak earnings and similar guidance. Higher interest rates and an almost certain revision on earnings has caught investors almost unaware. As Cisco shares fell Talking Heads on CNBC last Friday still supported the company and a much higher share price. Housing stocks are off 25% from their 2013 highs. Apple had its best week since 2011 as Carl Ichan Twittered that he took a huge position in the company and had spoken to the company CEO to expand their stock buyback plan. Shares in Facebook also got a boost and Big Money has jumped into the party as Seeking Alpha reported Saturday. Rounded off over $321 million new money bought FB shares while $137 million were sold. Jack Hough in Barron’s wrote that the markets are more richly valued than you think. CNBC on Friday were conflicted as to the length and depth of the sell-off. We should see some bottom after or around Labor Day, said one analyst.

Extra Cash on the sideline?   Do what the pros do and make you stock wish list and price you’d pay for your favorite stocks which may have gotten away from you earlier in the year when ‘almost’ everyone thought the markets would tank on the re-election and government do-nothing. Then call me.

Questions call Paul @ 586 205 0430 or write him at pstanley@westminsterfinancial.com Share this blog with someone who cares about their money.

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