That Was The Week that Was-1st Week October

 

  Bill Gross, formerly CEO, CIO, and co-founder of PIMCO, bid a bitter adieu the week before last and moved his kit and caboodle to Janus Capital. In the past I have been a fan of the bond fund Gross managed, the world’s largest. The fact that Gross is moving to Janus doesn’t mean that that I will be blindly following the uber-manager to his new digs. If you own anything in the PIMCO fund family you shouldn’t be concerned. The fact is Gross probably had little to do with your portfolio which means that there are folks in place that handle the day-to-day investment management duties of your money. Until those money managers disappoint I plan on not changing any client’s investment. Gross, age seventy-something, is at Janus, according to news reports, to simplify his life and lead a newly created fixed income department. While Janus is headquartered in Denver Gross will have his office minutes from his home in California. It also doesn’t appear that Gross is taking any key people from PIMCO with him to Janus. From news leaks at PIMCO Gross was not a ‘warm and fuzzy’ personality. PIMCO, from reports in WSJ, Bloomberg, CNBC and others, planned on firing Gross the same day he turned in his resignation and announced his move to Janus. Monday, following the departure, the WSJ reported $100 billion (B as in Bad) left PIMCO Investment Management for investment parts unknown. The firm manages approximately $2 Trillion dollars. Bond firms everywhere will be scrambling for a piece of this business. It will get uglier before it gets better at PIMCO.

Steven Pinker, Professor at Harvard, writer, psychologist and one who doesn’t mince words about the world at large had a wonderful essay in September 29th WSJ. Anyone who works and writes or teaches in a specialized area such as doctors, scientists, bureaucrats, investment managers,engineers and the like would do well to read this piece. In it he assails ‘pseudo-intellectuals who spout obscure verbiage to hide the fact that they have nothing to say, hoping to bamboozle their audiences with highfalutin gobbledygook.’ He is especially incensed with those that write with not the intention to inform but to show off how bright they are as compared to the reader. We have all met someone at sometime in our lives who considers themselves so superior that they can barely contain a smirk at their own self-importance. These are usually not stupid people but those who have ’difficulty imagining what it is like for someone else not to know something they know.’ Pinker suggests that writers and lecturers put themselves in their readers/listeners shoes and try to find out how other people think and feel. If nothing else it may make you a better person, Pinker concludes.

Robert C. Doll, Nuveen Asset Management and Jeff Saut of Raymond James were in harmony on CNBC 9/29 as they were discussing the current market volatility. Both agreed that this Secular Bull market has 9-10 years left to run. Saut said the average Secular Bull runs  12-15 years.   Doesn’t mean less volatility or near term correction.

A Secular Market is one of rising prices and lasts, according to financial definition, 15-25 years.

Markets were scary Monday opening lower and falling 175 points before attracting buyers and closing way up off their lows for the day. If it was a prelude to October, it was spooky. Ditto Tuesday. Markets started positive but gave up the ghost in later hours finishing lower for the session.

 

Jeff Reeves, columnist Dow Jones, reported October 1st the economy is growing and with inflation under control and no signs of ‘irrational exuberance’ investors shouldn’t worry. He also says there is no ‘stock bubble’. The data is good, valuations are fair and Fed tightening isn’t a bad thing.

Stop Worrying, Already!  Adam Parker, Chief U.S. strategist for Morgan Stanley, thinks we’re set for the rest of the decade. His favorite sectors? Healthcare and technology. His interview in Barrons.com 10/1/2014. He believes this will be the U.S.’s longest economic expansion extending, possibly, to 2020. He believes a 50% return over the next five or six years isn’t that big of a stretch.

Utilities have been the ‘go to sector’ on pullbacks.

Happy Face Traders turned to frowns as markets opened lower Wednesday, in a continuation of previous days. But, by late morning we saw a glimmer of a correction to the upside only to hear the news that Ebola was confirmed in the U.S. That bit of bad news sank stocks and even lead to a lower open on Thursday. The Dow gave up over 250 points even with a good ADP report which showed 213,000 workers being hired in September. Construction spending dropped for the month as did the ISM manufacturing purchasing managers index. The Dow Jones Industrials took out a key level which was the 50 day moving average. See chart supplied by MarketWatch.com below. The question, of course, is this a real 10% correction, or will continuing geopolitical and economic events create more of a downward slide?  I know investment professionals are saying buy the dip. But confidence is waning and it could be a wait and see a bottom strategy more than a buy the dip. September saw a 1.6% slide in the S&P 500 index and implied volatility has been trending higher the last few months. MarketWatch.com 10/01/2014,

Thursday markets fell, recovered and closed up…for the most part. DJIA was off a smidge. In other news…Warren Buffett, who’s investment modus operandi is buying businesses that any idiot can run because, he’s said, eventually one will, bought the nation’s  fifth largest car dealership. (CNBC, WSJ, 10/3/2014). Brilliant! Taking a mom and pop business and bringing it to Wall Street by a major player is new. You’ll see consolidation as more entrepreneurs cast eyes toward this business model. With the average auto 12 years old and the car business just beginning to ramp up Buffett said it was a business model good for 100 years.

Finally, Cramer on CNBC 10/2 Mad Money said now is the time to buy.

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