That Was The Week That Was-5th Week December

 

Annual Client Meeting

Because There Shouldn’t Be a Cruise Control for Your Investments.

February 21st Saturday 8:30-10:00 A.M. Sycamore Hills Golf Club, Macomb, Michigan

Larry E. Powe, Esq., Principal with the law firm Keller Thoma, P.C. will present estate planning ideas and discuss Revocable Living Trusts. Larry has been our family attorney for years and what he has to share on what you should and shouldn’t do regarding estate continuity is vital for all of us.  I will recap markets 2014 and give what experts consider will forecast going forward in 2015 markets. Also, how you can create a process to possibly safeguard assets during extreme market selloffs. Continental breakfast. You must register so I know how many Danish to order. Call or email. 586 295 0430.  Lovely Partridge Creek Shopping Center right down the road and opens as we’ll be wrapping up.

 

CLUNK! Markets fell as year closed. Low volume as investment firm offices were cleared for winter holiday vacation until sometime after the first of the year. Wall Street bonuses and parties celebrated  what had started as an awful year with cruel winter temps wrapped up as a surprisingly not so bad performance. Tuesday’s markets had the DJIA off 55, Naz down 30 and gold and oil both off a bit. Wednesday also saw selling with the Dow off 160. REITS had their best year in a decade with subsector apartments leading the pack and health-care properties the second best performer of the major property types. Experts contend that REIT performance can continue even in the face of rising interest rates expected for 2015. WSJ 12/30/2014. I’ve been a fan of the health-care property REIT sector.

Market Tops. Last week I wrote about Dow 740 during the Nixon days and related that to where we are today. Back then investors were just as impressed with Dow 700 as we are with Dow 18,000. There were even investors who didn’t believe a Dow 1,000 was possible in their lifetime. Investors may now be thinking that we’re at market tops and should take some, if not all, investments off the table. After all, they rationalize, how much higher can the market go even as pundits point to a possible Dow 20,000 for 2015. Arguing for the Mount Everest position that there is nothing more to climb, market contrarians point to the Nasdaq. It has not matched its once lofty 5000+ reached in March, 2000. For the naysayers I can only say, ‘Give it time.’ While no one knows if 18,000 is the temporary top and a less than subtle market retracement will take place any time soon; we do know that given time 18,000 will be looked upon by future investors with nostalgia. The Dow, and other Indices, will always report numbers that reflect a true account of the economy through a careful combination of current price, future growth, and earnings.

Contemplate? January myths prevail. As goes January so goes the year? If the year ends in five it will be a winner. As to the champion of the the Super Bowl so goes the market? AFC winner spells doom, according to those that pick ponies by their silk colors. So far the whispers, by the Trading Intelligentsia as 2014 wraps up, paint a gloomy picture for January. Why? Maybe because December was such a up and down month. Going from 5% correction to breaking new records while energy fell 40% is unexplainable by the best of minds. We may see a sector rotation in the next thirty days, or a simple selloff. No one really knows what will happen. In 2014 we had a terrible January due to the harsh weather. It took almost six months for the markets to gain traction. The end result for 2014, while not spectacular, was acceptable by anyone’s standards. Let’s not put too much credence on January results as a barometer for the year no matter what they are.

 

Oil Cooties. Any business remotely related to the oil/energy business seems to be infected. Downgrades by analysts on everything from oil service companies to multinational corporations that own energy related businesses are giving investors dyspepsia. The difficulty in finding the investment gems is: 1. Not knowing how far oil prices will fall. 2. How long oil prices will remain at these levels. 3. Which industries/firms will recover and which will not. Investing in the wrong company may result in ‘dead’ money for years before seeing a meaningful return. Whispers on insiders buying may be premature as oil still hasn’t stabilized in price and some of those ‘early’ buyers have been badly burned. Talking heads on New Year’s Eve CNBC echoed this sentiment as one wag considered we’re 85% to the bottom and this was the time to dip one’s toe into the oil patch and another suggested buying only those that can continue to pay shareholders a dividend.

 

IN 2015 WHAT WILL DRIVE THE MARKETS HIGHER?

Huge Johnson on CNBC thinks that there will be no Dow 19,000 in 2015. He was the guy that wasn’t that crazy about the markets in either 2013 or 2014 , and said he was surprised by the actual positive results. Back now he comes on CNBC the day after Christmas to give his thoughts on the year ahead saying he believes large domestic stocks are the place to be for the coming year. He also thinks international developed and then emerging markets for the second and third picks for the coming year. Johnson is sour on corporate earnings and doesn’t see a pick up over the next twelve months.

Bob Doll, CFA Nuveen Asset Management Senior Portfolio Manager: 2015 Predictions:

1. U.S. GDP grows 3% first time since 2005
2. Core inflation contained but wage growth begins to increase.
3. Federal Reserve raises interest rates as short term rate rise more than long-term.
4. European Central Bank begins a large scale quantitative easing program.
5. U.S. contributes more to global GDP than China for the first time since 2006.
6. U.S. equities enjoy another good but volatile year as corporate earnings and the dollar rise.
7. Tech, health care and telecom outperform utilities, energy and materials.
8. Oil falls further before ending the year higher than when they started.
9. U.S. mutual funds show first significant inflows since 2004.

 

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

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