That Was The Week That Was-3rd Week January

  Risk versus Return? The other day I was talking with a client regarding risk versus return and brought up the fact that risk and volatility went hand in hand but expecting to get a high return with a high risk portfolio, on a continuous year after year basis, was suspect if not impossible. Occasionally one will hit a fund or sector with high risk/volatility and end up a winner. Risk/volatility make up a winning strategy for traders- it’s a wonderful thing for those folks who buy-sell and do it over and over again versus the buy and hold investor. Personally, I search and invest in funds, stocks and ETFs that present a risk/volatility less than the overall market but are able to equal or match the market sector’s actual return. Investors can do that by researching a fund’s or stock’s Beta- which is a measurement of risk/volatility. Use the Beta as a measurement against the broader market- usually the S&P 500 Index and then compare it to other funds or stocks and how they’ve performed. The S&P Index 500 benchmark uses a 1 as the number benchmark and anything more than 1 is more volatility and anything less is less volatile. For example a fund with 1.5 Beta is 50% more volatile than the S&P 500 Index and a fund, stock or ETF with a Beta of .85 is 15% less volatile. Investors doing that will find their returns and overall volatility to correspondingly increase and decrease as time goes on. It’s important to continually check the numbers since nothing in the investment world is static and a low Beta fund, stock or ETF may suddenly change and you’ll want to know that before it damages your portfolio. Questions or an analysis of your portfolio call me at 586 783 7080.

MARKETS CLOSED MONDAY!

Back in the Day… Foreign funds and stocks were about as popular with American investors as the chicken pox. Eventually American investors realized that people in London and Berlin lived in regular homes with indoor plumbing and foreign companies, like Unilever and Bayer, provided quality and value and folks overcame their suspicions. Fast forward to the 21st century and for the average investor they’d rather take a long Sunday drive with their in-laws than even contemplate an emerging market mutual fund. Still emerging markets have considerable value as long as the investor does their homework. Demographics are just one component when choosing an emerging market fund. Today’s investors should examine not only the equity side of emerging markets but the income possibilities that provide higher yield and negative correlation to domestic income funds. Emerging does not mean the country is unsophisticated but one that has a high current capacity for industrialization. Frontier is what most people erroneously associate as emerging.

 

Inflation Breakfast Meeting February 16th at 9 AM a Saturday at Sycamore Hills Golf Course.

You may think inflation isn’t a problem and if it was you’d figure you’d have seen or heard about it on radio or from one of the ‘talking head-financial experts’. Well, you didn’t and it is. The usual reaction from folks my age is when inflation rears its head they say they’ll simply wait until bank interest rates are in double digits and then lock in as much as they can for as long as they can. The problem is that rates will not immediately ‘pop’ to double digits and in the meantime some serious losses will be incurred with other assets. Knowing what stock sectors to own, what fixed income assets can be held and how to allocate all or a portion of your portfolio into an Inflation Proof Portfolio will be discussed at my breakfast meeting. Plus I will reveal the single one investment that everyone should buy when interest rates start percolating upward.  Bring a pen, a friend and make sure you call me with your reservation. Nibbles, coffee, tea and juice will be there along with a take-home workbook. Call 586 783 7080. write for reservation www.pstanley@westminsterfinancial.com

The U.S.CONSUMER FINANCIAL PROTECTION BUREAU IS CONSIDERING WHETHER TO TAKE AN ACTIVE ROLE IN MANAGING AMERICAN’S RETIREMENT SAVINGS. Bloomberg reported last week that the government agency, which was created to make sure financial products and markets work for the American consumer, is considering managing the $19.4 trillion of retirement assets held by citizens. This would probably fall under their Office for Older Americans. Worried about fraud and scams the agency could well take an active role in the money management of assets. The SEC has jurisdiction over such matters but the CFPB could well step in to handle the money management duties. The following management structure of the agency is below. Let’s see how this works out…?

Eeeck! Apple Cuts iPhone 5 Production by 50%. That was the news on Monday and every blog was pulsating with opinions on how Apple was doomed. I spent the better part of the day reviewing pros and cons and with an Apple January 23rd quarterly report coming I think $500 is pretty darn cheap price for a company that keeps reinventing how I communicate, learn, entertain and work. Not just me but anyone who has one or more of the Apple products either tablet, phone or iPod. I won’t waste anyone’s time going through the reasons that Apple is cheap and leave that investigation to ya’ll. Trust me, Apple is cheap…Morningstar reaffirms a buy at these levels and a $770 value. And, let’s not forget the company has just begun marketing in China!! Cook sez it will be their single biggest market.

Another old stone in my shoe…FACEBOOK….Like millions of others I bought it at the open when the Naz and Morgan Stanley screwed up and couldn’t sell or even confirm if I owned it until the following trading day. If ya’ll listened to the talking head baloney the stock was dumb, Zuckerberg was a hoodie dope and I could have done better by burning my money. Cody Willard urged readers of his blog to buy more as the stock fell to the teens. Everyone else I talked to said I was a dummy buying it and as the stock fell none of them were so bright they thought of accumulating a few shares. Tuesday Cody said he’d be a buyer of more Facebook stock at these levels as long as his time horizon was a few years out. What the heck is a $35.00 price tag, he wrote, when shares are possibly $200? Rumors confound Facebook, too, as talking heads say the company has lost 600,000 members in Great Britain.

 Monday Last- Markets Quiet.

As Was Tuesday.

The only real-real news on Tuesday was on Facebook coming out with something called, ‘Graph Search.’  And Apple continuing seeking a bottom as it fell below $500. Graph search is stepping into other search engine territory allowing Facebookers to look up from their friends of friends the best restaurants, movies, possibly employees or a date for Saturday night. It will make Facebook users more active, create more in-depth information and allow Facebook to use that information to be sold to advertisers. This point to point marketing misses those that cannot be influenced by a certain product or will never be a prospect for that product. It all depends on how good members record their likes, dislikes and specific information. Shares fell as The Zuckerberg held his press conference announcing graph search. What? Someone thought it was The Bernanke press conference?

Detroit May Be #4 of the worst managed cities in America but shares #1 as bedbug capital of the USA. and we still beat the Yankees in the playoffs.

Worries confounded the Markets Wednesday… still a minor hiccup as Apple found footing amid widespread speculation before earnings announcement the 23rd. JP Morgan came out with big numbers and shares popped 47 cents. Dell whispers of going private and share price rose better than it had the last several years. Gold still off its feed around $1681 and Oil rose over $94.00 a barrel. There isn’t as much discontent this earnings session as there has been in the past. There is no major sell-offs on disappointments and no huge buys on good news. Everything is rather muted. Almost like old guys at a Gentleman’s English Reading Club. So far, outside of news and speculation on Facebook and Apple (and more Apple than anything) the entire week has been a snore.

Insider Buying! I have never seen this as an attractive reason to buy shares in a company. Some people think that it is just but one thing that should catch your attention before the serious homework starts. I remember Michael Dell spending millions on buying stock in his company only to see the investment shrink. And if Michael doesn’t know- who would? Here’s five picks from the folks at Marketwatch who say they’ve reviewed records and have compiled a list of insiders buying their company stock:

• Visteon
• Weatherford Int’l
• Nustar Energy
• Hilltop Holdings
• Access Midstream Partners

Why, some wonder at Seeking Alpha, are Interest Rates Low When Most of the Treasury Bonds are Owned by Private Investors and Not by The Federal Reserve?

The more significant question is that historically the 30-year averages about 250 basis points above inflation- meaning that they should be at the 30 year somewhere around 4 1/2% yield. The supposition is that the overall the economic outlook is genuinely bearish and investors are willing to pay a premium (see Treasury yields) for safety and security. This also gives an quasi-excellent indicator that the Fed may not be able to keep rates significantly low for much more of an extended time period.

Peeve…People who say, ‘I must say,’ after they say something. It takes the place of, ‘Okie dookie.’ …

Grind ‘em Out Week. Stocks for the most part in a holding pattern. Not much excitement Thursday Trading Day. Bank of America, Citi and JP Morgan announced earnings and as expected JP beat estimates while Citi and BAC missed. Most active stocks for the day included the aforementioned plus Ford, AT&T, CBS, GE and Pfizer. Dow up 88 points. Doomsters wrong (again) on Chinese economy as GDP raises above forecast 7.8%. S&P 500 at 5 Year High. Bloomberg noted PM Cameron prepping for speech in which GB would renegotiate its role in the EU or they’d split.

Securitization- Sounds really professional but simply means taking something that creates a cash flow or income, bundling it up with other like related cash creating things and selling it to someone else. Investment managers have been doing that with debt from credit cards to mortgages. Usually there is something backing the debt. Now real estate investors are scrambling to create Rental Bonds- securitizing rental payments. The snag is that rating agencies will rate these as junk offerings reducing the customer base. If the real estate mavens can figure this out it could mean additional area of financing to buy more real estate. All this from current Bloomberg news. Stay tuned….

Markets ended their 3rd Straight Week of Gains…Apple hangs onto $500 stock price waiting next week earnings report. Gold finished down, Oil @$95.25.  Worries over consumer spending consumed Friday’s trading day as the payroll tax reduced the amount available for spending.This could prove troublesome going forward.

Oil Production in USA Grew More in 2012 than in any year in history. 2013 is expected to be a boom year with 900,000 barrels of crude produced per day. Increased crude will not necessarily reduce the cost of gasoline, said San Antonio based refiner Valero Energy Corp.

Double Digit Returns Came From REITS in 2012. Real Estate Income Trusts pass earnings direct to investors and last year was a good one both for earnings and capital appreciation.  Mall companies were the best performing REIT in 2012 after industrial real estate and warehouse owners. Bloomberg reports that Mall owners such as Simon and General Growth are ditching failed shopping malls and mortgages. Operators are focusing on the most lucrative malls. Tired operations are being turned back to lenders which is a good sign for REITS and bad for certain banks and lenders in the commercial real estate business. Two years earlier there were whispers of major commercial real estate defaults yet to hit banks and corporate lenders….

Next Week Top Picks From Morningstar Strategists Plus Five Money Moves to Make to Cushion a Bond Market Meltdown…

Earl Weaver and Stan Musial Died last Week. It was like Jefferson and Adams of the Baseball Hall of Fame.

Finally- FDIC closes 2nd Bank of 2013 in Minnesota, First Regents. 

Questions call Paul @ 586 783 7080 or write at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

That Was The Week That Was-2nd Week January

Let’s say you were one of the millions of investors who didn’t trust the gasbags in Washington for doing the right thing and thought the world would end January 1st and so you sold your stocks and funds and put everything into cash. The question you ask yourself now is, ‘Now what?’ The problem with going to cash is deciding when to get back into the market. That’s the real problem. Because no matter what had happened or didn’t happen nothing looks right when the time comes to step  back into the batter’s box. Investors initially may look at their getting out of the market as a temporary time-out. Then when the ump sez, ‘Play ball,’ the investor doesn’t want any part of it. The fact is those talking heads that scared investors into a time out rarely do they get it right. A real market meltdown is like a Seal Team Six raid, it comes almost with no warning. Certainly those same talking heads had no clue as to the 2008 market meltdown nor do they have a plan to guide investors back into the market.  They are Johnny One-Notes, knowing only fear to confuse and separate investors from their money. Emotion trumps knowledge every single time.  The radio and cable talking heads count on scare tactics and work on those nerve endings that make investors think ‘bomb shelter’. Quality rarely changes. A Tiffany lamp, a Faberge’ egg or shares in  a quality blue chip from day to day but underlying value, for the most part, remain constant. ( There are influences on rare objects and stocks but for this discussion severe events need to happen.) Outside forces may perceive something being worth less than it is- for a time. Value or bargain hunters will eventually notice and buy what others have discarded. Traders sell on market strength buy on weakness. The Buffett has always employed buying when there was ‘blood’ on the Street. Always keep some cash on the side for the opportunities to buy value. And, if you really want to lose significant amount of money follow the emotional rollercoaster and ‘Buy High and Sell Low’.

 

The Experts Continue to Feel Good About The Economy: Keith Hembre, CFA, Chief Economist and Investment Strategies Head of Quantitative Strategies at Nuveen Asset Management, LLC said, ‘We expect the domestic economic trends of the past few years to continue in 2013.’

Do You Want to Feel Better about Stepping Back In? IF you haven’t noticed, builders are getting back to work, employment numbers are gaining, car sales are approaching ‘excellent’ numbers, retail (while not great) is holding fairly well, interest rates are at all time lows, inflation –so far- is moderate. And  there are few, if any, places to make money on your money other than dividend paying stocks, funds and ETFs; and an assortment of bond funds.

Here’s my bestest advice for those who bailed out of the market and looking for that ‘perfect’ time to step back in- There is no perfect time. You may just close your eyes and end up buying at a great time or a bad time but at the close of this year or next the difference will be slight. In all the years I’ve been in the business I have never met anyone who has bought at the perfect time. Sometimes you buy and the markets laugh at you and other times you just get lucky.  In the end, if you bought quality and at a fair price, things will work out. Even The Buffett doesn’t time it right and buys higher than the market.

The Investments du Jour of 2012 were Exchange Traded Funds. ETFs are like mutual funds in that they have a lot of parts but trade like stocks. You can buy and sell them any time during the trading day unlike funds that you can only buy and sell at the close of business. There is no free lunch and you have to buy ETFs through a broker-dealer. Fees include brokerage fees, ETF fees and, if working with a financial ‘expert’, management fees. Unlike what the financial press tries to sell you ETFs are not cheap. Nor are they safe from market meltdowns. Of all the securities hardest hit by the 2008 mayhem a full 70%, according to Kiplinger, were the ETFs. Another myth about ETFs is that they track precisely a given sector or market. Wrong! GLD, the gold ETF, is a smidge off the real price of gold. So is SLV, for silver, and I could go on. Even those ETFs that are designed to track a certain sector or benchmark don’t get it right. Sometimes investors often ignore basics and go right to the total return numbers and sometimes find that those with the largest returns are leveraged ETFs. These funds may give a boost for a day or two but at the same time tank as options expire and the leverage works against the investor. Jack Bogle, the originator of fund indexing, is no huge fan of ETFs. Most sector ETFs fall far short of matching their index with fees and expenses. The other problem that investors have with ETFs is the actual risk and volatility, which is not discussed in any detail by those who promote the product. If you want additional information on ETF products please call me.

New Rules on Mortgages Starting in 2014. As part of the Dodd-Frank Act of 2010 getting a mortgage will not be as easy-peasy as it once was. The new rules limit the debt to income payments cannot exceed 43% of gross pay and for lower incomes allows for 45% debt to income ratio. In addition banks will check credit, employment, assets and income. Exotic mortgages such as interest only are not considered as qualified and are not eligible or purchase by a federal housing agency. In addition the law forbids a mortgage holder from suing a bank who issued the mortgage and caps origination fees at three percent. This all may cool the housing arena as both banks and consumers digest these new regulations.

Stuff I learned while looking up other stuff…Tim Horton’s named for its  co-founder…’Tim Horton, a Canadian hockey player who was killed in an car crash while driving under the influence. per capita there are more Tim Horton’s in Canada than McDonalds.

Sell off? Triple Top? March Woes? Here we go again- All that being whispered around and about as the next worries about a possible future market pullback. Leading this again is the mess in Washington which is coming to an ugly head come March Madness time. The Prez sez he isn’t going to get involved- did I hear/read that right? What he said, ‘The Congress spent it and let them fix it,’-and hopped Air Force One to resume his vacation. He even had The Cliff Bill robo-signed, letting one and all know how important he viewed it.

Monday Markets were off. Gold was up as earning season started after hours with Aluminum giant Alcoa. Earlier Monday I spent a few hours calling about and talking to my friends at Templeton, Fidelity Advisor, Sun America and others. Too early to get a fix on a full year but always I call to see where analysts are betting and when I get a consensus is where I am suggesting to clients to allocate. You also get it here in my blog.  The interesting thing when you talk to the folks at these money factories is that they ignore the shouts and panic of the internet, cable and radio hypers. So while most investors get their panic attacks from the streets I am able to talk to folks who talk to the folks that manage their money. Possibly a rotation by traders from small cap to large cap as they re-allocate.

Whenever some analysts sez markets are prepared to drop it doesn’t mean that he or she thinks they’ll stay there. It simply means if you have cash there is a buying opportunity and if you don’t you can either lighten up your holdings, or not. That is if you can believe in an analyst.

Alcoa Beat Expectations and shares climbed afterhours on Monday. And then pulled back when trading opened. The company announced they were cautiously optimistic.Global demand for aluminum should increase by 7% in 2013. Target Retail ain’t going to continue be kicked around by Amazon. Jeff Bezos who believes the internet has a long way yet to go to grow continues to take away business from Target and other retailers. Target vows to match Amazon’s prices 24/7. Shares in Amazon closed over $266 with a $250 fair value by Morningstar. Goldman Sachs announced they will provide money market fund values daily rather than monthly. Friday Fidelity said, me too. This is to give greater transparency. Money markets broke the buck in 2008 and almost had a run on if the U.S. Treasury hadn’t stepped in and guaranteed all money market funds. Since then regulators and fund companies have been at odds in providing transparency and allowing funds to fluctuate. Fund companies have worried that investors who see a fluctuation in the fund values may pull their money out. 

Wednesday Markets Inched Up a Bit. Folk at Fidelity Advisor talked up their Materials fund saying some analysts like it over the next three to five years. It’s a fund that invests in companies that make the stuff that are used to make other stuff. Genworth Financial fell 4.6% on Tuesday as Credit Suisse analysts tagged it with an underperform. The company has been ‘buying’ the long-term care insurance business with more than competitive rates. Costs for insurers in the LT Care biz have been increasing and insurers have either increased premiums or bailed out of the business. Caution if you have a policy here. Gold still holding under $1700. Oil sneaking up over $94.00. Apple plans a cheap knock-down iPhone to compete with rival Samsung. Schmart thinking as cannibalizing their own product line is better than losing it all to the competition. And Apple has a way of gaining additional income through the integration of its products from music, video and apps.

If You Haven’t Yet- Get with lowering interest rates on current installment loans and mortgages. This party is not going to continue forever.  

Speaking of a Party? Markets up again on Thursday as gold pulled back and oil was unchanged. Japan announced a huge stimulus to solve their 3rd recession in five years. Here at home Ford increased their dividend saying they want to share the wealth with shareholders and the stock responded. Auto’s have been on a roll. F also said it would add another 2200 jobs. Jeff Reeves wrote that the three sectors investors should avoid this earning season are financials, materials and healthcare. Alcoa fell and closed under $9.00 a share.

Required Minimum Distributions Are In and Calculated for 2013. If you hold an IRA with Pershing, LLC and not direct at a mutual fund company I now have the complete list of clients and the amount of money needed to be withdrawn and taxes paid for 2013. If you were born 1946 and prior there is no Michigan tax, otherwise its 4.35% on all pension and IRA withdrawals. If you are taking income from your plan on a systematic method the amount of the RMD is not in addition to what you are taking out. I will be getting a letter to you this week informing you of the amount needed to be withdrawn by the end of 2013. If you have questions, please call of email me.

Friday Markets up and finished that way for the week. Gold was off $16 and Oil finished at $93.77. It was a relatively quiet week with the biggest news was the huge influx of money into equities. This was the largest flow of dollars since 2008. Remember there is a huge amount of investor money wanting some sort of a signal to enter the market. The question is whether the money sticks or not. My whisper is that the regular investor is always late to the party and some folks wonder is that the case now? Howard Gold at MarketWatch wrote that Sam Stoval at S&P Capital IQ said that a change in leadership sectors a coming while there is still life in financials and consumer discretionary through this spring. Homebuilders have also had their run and the easy money has already been made. Later this year Stoval says the markets line-up for materials and industrials.

Has Anyone Priced Facebook Recently? FB closed Friday at $31.72.  JP Morgan analyst Doug Anmuth call it the ‘Top Large Cap Internet stock for 2013’ and gave it a price of $35.00. The company has been able to get a premium for its mobile app advertising and a lot of it. Seems the ad campaigns are working. The company is able to define and direct ads to those people the advertiser wants to reach. Stay tuned. Millions who got caught in the IPO market mess and couldn’t sell or even know if they owned FB until the following Monday may still have the last laugh.

Finally- FDIC shuttered the first bank of 2013 last Friday. The score for 2012 was 51 failed banks and 2011 there were 92.

Questions call Paul @ 586 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

That Was The Week That Was-1st Week January

 

Wha happened? Time Magazine published the following from information obtained from the Tax Policy Center. Next -for those who worry about just everything -is the March deadline for the Debt Ceiling.

 

Still Cautious about Markets? Our friends at Northern Trust have released their 2013 Investment Strategy Commentary and their look ahead perceives 2013 as having Less Risk but also Less Reward. In 2012, they report, risk was rewarded. There was a lot of risk that year but in 2013 they expect  growth in the United States and emerging markets to modestly exceed investor expectations. They are concerned, however, that Japanese and European growth will disappoint. Here is their chart on select asset class total returns:

Very Often Crowds Do Get It Right!? Offhand I forgot the name of the book ,and its author, that declared the group often makes the right decision. Wisdom of the Crowd by Surowiecki?   Morningstar seems to have the same trepidation on the insight of crowd intelligence but wrote an interesting article that said while they are wary of amateur investor’s choices most recently the most researched and viewed stock analyst reports included a list of stocks that had the best sustaining competitive advantage and were tremendously under-valued. We could find fault with each and every company on the list. However, buying shares in all would make an interesting portfolio. Perhaps we should publish this now and then compare it at the end of the year against the S&P 500 Index.    

 

Robert C. Doll, Chief Equity Strategist at Nuveen Asset Management, LLC. writes, ‘The U.S. and global economy is slowly and irregularly improving.’ He calls it a Muddle-Though Economy and a Grind –Higher Equity Market. He also noted that as ‘tail-risks’ diminish slightly better growth may be realized which could cause inflation concerns.

 

Remember This! The Bernanke said interest rates would not be increased by the Fed unless employment fell to 6.5% or inflation rose to 2.5%. The WSJ looked at employment numbers perched around 7.7% and mused the possibility of employment percentages falling but before that happening the ‘expectation’ of rising interest rates from investors would ‘move’ markets. In other words, as the economic conditions improves investors could well move rates before the Fed pulls the trigger. Investors, especially those remaining in Treasuries, have been warned.   

Dow wrapped up the year gaining 7.3% in 2012 with a gangbuster performance on Monday. On NY Eve the Senate passed a compromise saving 99% of us from any major changes in our tax life. Gold was up $20 and closed at $1676 an ounce. Oil finished over $90 and both the S&P and Nasdaq were positive for the day and year. Facebook got a new friend as Daniel Salmon of BMO Capital Markets had a change of heart and labeled the stock an ‘outperform’ from an ‘underperform’. He was a huge Bear on the stock but recent events of profitability has made his raise his estimated price from $15 to $32. Let’s not forget FB in September announced buying back $2 billion in stock at huge discount from IPO!  Janet Levinne at AdvisorOne reported on commodities that are down this year- especially coffee, sugar and cotton down 2%. The World Bank is bullish on basic metals but bearish on precious metals, writes Levinne, in their latest report. They see gold moving down to $1600 but copper and nickel making significant price increases. On energy oil should falter while a slight improvement in the price of natural gas.

Bonds still okay? Maury Harris at UBS offered up a chart illustrating how the mortgage bond market has shrunk more than the Treasury bonds have grown. Once a huge source of income the mortgage bond sector is a faint shadow. Harris says that this inequity will have investors continue to buy Treasuries.  Won’t make money but they’ll still buy Treasuries.

Spencer Jakab wrote in WSJ January 1st, ‘ 2013 may be another 1973 for stocks.’  He offered up several scenarios musing on one side that this year could simply end up like 2005 with a total return of 4.9% or 1997’s excellent 33.43%. But he wrote with budget woes and the last election behind them bad news, Spencer reflected, comes soon after. He thinks that 1973 with Middle East problems brewing and stocks hitting an all time high in 1972 the wheels came off with a loss of 14.7% in 1973 and 26.5% the next.  

Bounce! Wednesday Markets Celebrated the Compromise. And, there may be more room to run in January as the ‘whew’ factor releases investor anxiety. Still there is a cloud on the horizon as the gang in Washington has 'kicked the can’ down the road till March. See below the chart from Thursday’s WSJ.

Let the dust settle. The exuberance die down. The sheer joy of our politicians accomplishing absolutely, positively nothing. In any other industry performance as we’ve seen would be grounds for dismissal. While this should be a good year for the economy expect volatility as businesses and investors settle in. Westminster’s Joan Goodman likes the major banks going forward but especially likes Wells Fargo. Expect lots of litigation and interest rate head winds for banks. Still they did have their best year since 2006 and fewer closures since 2008.  

You Retired? No major changes in Social Security or Medicare for now but you can bet its coming. Higher deductibles, premiums, less benefits and pushing ages out even further before getting a dollar from the social security pool are all on the table. Republicans have both entitlement programs in their crosshairs. Experts seem to agree that pushing ages out a bit before getting full benefits and integrating income with other assets would save the system for a long time. Medicare needs a complete overhaul including vendor’s charges and the huge amount of fraud in the system. Remember the early 80s when the Defense Department was buying $435 claw hammers, $640 toilet seats and $7,600 coffee makers? Does anyone know what a hospital, or emergency room, charges for a band-aide or aspirin?

Thursday Markets Cooled Slightly. Gold and silver fell after Fed minutes suggested that their mortgage asset purchases may likely end this year. Remember the QE is responsible for weakening the dollar and giving precious metals a boost. Rajiv Jain portfolio manager at Virtus named portfolio manager of the year by Morningstar. Clients will recognize he manages the Emerging Markets Fund. Ford getting a push from bloggers as the stock has been hot off its $8.82 low this past Fall.  Brett Kenwell wrote that the company has good stuff going for it: Strong Technical's, 3 straight earning beats, Mulally will hang through 2014, Strong China growth, handling EU losses and the #1 selling vehicle.  Morningstar likes Fair Value at $20.00 a share. Sell at $31.00 and buy around $12.00. Shares closed near $14.00 Friday.

Seeking Alpha Reports 2 Hedge Fund Managers Are Buying Facebook. Tiger Global has 11 million shares, recently buying 9 million. There was an impressive earnings report from Facebook. The stock was $18.87 in November and since has done nothing but soar. Experts are expecting that FB should be able to grow revenue at a 30% per year clip for at least five years. Also net income margins at a healthy 30%. and the huge buyback previously mentioned in this blog.

Tablets Are Expected To Be Big Sellers in 2013! Tech enthusiasts have been predicted the demise of the PC as tablets have been the du jour tech instrument of the 21st century. I have a Kindle and an Apple and both I enjoy. But, if there is one that stands out it would be the iPad. Certainly a price difference but speed, flexibility and long life between recharging makes it a hands-down winner.

Strange -Friday markets languished and then fell and then closed up. Banks and tech earnings were slashed for the fourth quarter but Goldman offered up strong guidance on Citi, saying the bank was on its way to health. Markets up and closed at highest level since 2007. No straight line up for equities but a bumpy road ahead with an economy that refuses to quit. Calamos Growth & Income Fund reopened to old and new investors Friday. The fund, once run by John Calamos, is fifty percent equities and the balance in convertible bonds. A convertible bond is one that pays a decent fixed rate and at the same time offers potential from the company stock appreciation. An investor does not have to convert and would only if shares were attractive. Otherwise an investor would hold the bond and earn the coupon. CME shares surged 4.3% even as Morningstar downgraded the exchange operator. 

Hostess is in talks to sell its bread business… Wonder, Nature’s Pride, Home Pride, Merita and Butternut are estimated to fetch $350 million. Sugar mavens are heartened that the cake biz which includes Twinkies will be sold later this year.

Finally- What Do You Sell & What Do You Do When Inflation Starts to Percolate? Call me for my Inflation Breakfast Meeting, Saturday, February 16th at 9 AM.

Questions call Paul @ 586 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.