That Was The Week That Was-4th Week October

 

Good News! Lets start with that.

Thursday the markets went on an old-fashioned buying binge with the DJIA up, at one time, 300 points. News, late in the day, of a New York City Doctor being possibly infected with Ebola triggered a selloff and the Dow fell to close up over 200 points, the Naz finished up 70 and the S&P 500 Index up over 24. Bob Doll, earlier in the week, spoke at a NAPFA meeting reminding those in attendance to expect increased market volatility going forward. The doctor was later confirmed the first known Ebola case in NYC. Fears of people not using the subway, not going to school or work caused the market selloff before the close.  Now for the rest of the weekly recap.

 

The October1987 Stock Market Crash Had No Bottom! 

As long as we’re in October ( a month known for its ‘Bearish’ Moods’) I should remind you of Black Monday, October 19, 1987.  Somewhere I have the framed front page of the October 20, 1987 Detroit Free Press announcing the market crash as a saved piece of nostalgia. The Freep reported the carnage after the markets fell 22.6% and over 500 points in one trading day, and warned of the possible meltdown that Tuesday.  It wasn’t just our markets that fell but it was a global selloff. Back then there were no stock market circuit breakers to stop the free-fall as there are today. (Some traders complain that we shouldn’t have circuit breakers at all and allow nature and markets take their course.) The 22.6% drop is equivalent to 3,600 points today. Circuit breakers were created after the 1987 crash. Circuit breakers are programs to halt trading and allow the markets to catch their breath. Circuit breaker rules are adjusted constantly. For example if the Dow falls 1,200 points before 2 p.m. EST trading will be halted for one hour.A  3,650 drop will halt trading for the remainder of the day no matter when the decline occurs. Like I said, these are rules that constantly change as the markets grow.

 

‘CRISIS BOTTOM,’ WRITES McCLELLAN IN THE DAILY McCLELLAN MARKET REPORT. Chart McClellan Market Report. 10/2014.

The charts look familiar to Tom McClelland and that’s making him bullish. Tomi Kilgore reported in the 10/17/2014 MarketWatch.com. Back four years ago McClellan reports everyone was focused on the BP Oil wellhead spewing with no clue as to how to stop it. Today traders/investors have similar concerns about a different crisis. The psychology is the same. The sentiment and price action are also identical which is signaling to McClelland that the panic over the Ebola crisis appears to be reaching a climax point.

Brett Arends, WSJ 10/18/2014, in the Sunday Journal, reported that this most recent market correction is ‘routine’ and expected not to go much further. ‘We’re in the only business in which discounts are greeted with alarm.’ Rob Arnott, chairman of Newport Beach, CA. investment firm Research Affiliates.  The following chart illustrates two horrific slumps in prior periods.

Rex Nutting, Dow Jones writer, opinions in the October 16th MarketWatch.com article that even as the DJIA has lost 8% from its all time high in September the stock market is not going to crash the economy. Main Street is doing just fine, Nutting reports. The soaring bull market didn’t help the economy all that much, he adds. While corporate profits hit record levels hiring and business investment improved only slightly. The connected economies of Main Street and Wall Street are  particularly weak right now as they have been.

Two Days in A Row? Yes! Monday markets edged up even after a hefty run the previous Friday. In other news China growth falls to 7.3% down from 7.5% a year earlier. Chinese September industrial production rose, retails sales slowed and housing sales fell 11%. (Information gathered from CNBC, WSJ, Bloomberg 10/21/2014)

Good News! Tuesday markets were up with the Dow plus over 200 and the Naz an astonishing 100 plus points. The S&P 500 was up over 35 points with gold off and oil about even for the session. So with all that action you may wonder if ‘It’s Safe?’. According to Investors Business Daily the Indexes confirmed an ‘uptrend’. IBD reported, ‘The magnitude of Tuesday’s move was compelling, if not surprising.’ The year’s worst correction, has, the paper reported, ended, for the time being, with a flurry of buying. Not so fast, reports Lawrence G. McMillan at MarketWatch.com. Despite the relative strength the S&P 500 Index is still in a downtrend. After explaining the technical side of his argument McMillan concludes by writing that a S&P 500 close above 1960 would put a fine point on a strong reversal of the correction. In the meantime various hedge fund managers have said that they have been buyers the previous week, on weakness. One hedge fund manager said that it was…’the most fun he’s had all year’. He had investments that were attractive and could buy at a decent price.  Information gathered from CNBC, Investors Business Daily, Barrons.com and MarketWatch.com 10/22/2014

Gunman Attack Canadian Parliament Shake World Stock Markets. There was little news in the U.S. of previous attack in Quebec the day before when two Canadian soldiers were run down with a car before being shot by police. Then Wednesday’s attack in the heart of their government surprised Canadians because that sort of thing just doesn’t happen in Canada. It is unknown if 100% of the 150 plus drop in the Dow was caused by the terror attack or not. ‘Europe three years behind U.S. in recovery, but pace of policy response and reform is moving at about one-third of the U.S. pace.’ Richard Madigan, J.P. Morgan equity strategist in Barrons.com 10/22/2014. ‘This is not an exuberant recovery. It’s going to remain slow moving and increasingly uneven, but we are not seeing a slide back into recession.’

 Bob Doll, chief of equity strategist at Nuveen Asset Management, told a room of advisors in Charlotte, NC’s NAPFA fall 2014 conference Tuesday the 21st of October, that the September-October period right before a mid-term election tends to be the weakest in the four year election period. The six months following are typically the strongest months. In the last 16 mid-term elections, stocks were up an average 16% over that period.

Finally: 401 k Contribution level for 2015 increased to $18,000 from $15,000. With the ‘catch-up’ provision it will make the total for someone over the age of 50 to be able to contribute to their retirement a hefty $24,000. Questions or allocations for your plan call or write me.

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-3rd Week October

 

Zero!  It seems we’ve been swimming upstream all year only to see the Dow ending October 10th right where it was at the beginning of the year. Volatility, which was subdued for most of the year, has returned. One reason experts contend  is that central banks are out of lock-step with each other, along with economic headwinds coming from Europe. China fears of slowing growth are also in the picture along with Russia, Ebola and Middle East. On the central bank side the U.S. is on track to begin raising interest rates while the EU is planning on cutting rates. Some analysts are concerned about the return of King Dollar while other currencies are deliberately weakened. The week before last’s market slide was the worst since 2012. Certain sectors have simply been awful- small caps and energy come to mind. The large cap stocks have been fairly immune until lately.

How well did active fund equity managers do as compared to the indices up to October 10, 2014? Not so well as the above chart from Bloomberg and others illustrates. In my preferred equity fund list the best performers were in REITs, Healthcare, Utilities and Consumer Staples. Poorer performers were in Technology, Small Cap and Commodities. The Emerging Markets choice did very well as compared to the index. My select Mid-cap and Large Cap Funds also had a strong positive performance for the year. 

Emotion is the killer in these kinds of markets. Ben Levisohn in Barrons.com ‘Street Wise’, reports not to expect fear to subside anytime soon.The underlying causes of the rout are not as scary as they may seem. He also contends that a ‘steeper selloff may not be a terrible thing.’ It would take froth out of the market and refocus investor's attention on fundamentals. So far investors are ignoring both earnings and fundamentals.

Ride it Out! Said Larry Kudlow, on CNBC 10/10. He also said it was a terrific time to make those 401k contributions. Which I though odd since I thought most people ‘were’ making they’re 401k contributions.He did give reasons for his optimism which included rising corporate earnings, low inflation, low interest rates and a strong dollar. He said the strong dollar is going to attract capital from around the world now that commodities and especially gold are weak. Profits, he calls the mother’s milk, and expects them to continue to rise at about 5% per year.

Speaking of a strong dollar-domestic companies that derive a good portion of their sales/profits from overseas may get hurt in the currency trade.

Jim Cramer on Mad Money Gives 10 Steps For a Market Rally

• Containment of Ebola
• Have all stocks Go Down Not Just the Industrials
• Wrench Speculation from Market. The Cult Stocks Have to go.
• Oil Need to Find a Firm Footing.
• Tech stocks Need to Stabilize
• End Russian Sanctions.
• Great Beat in Corporate Earnings-
• The Technical damage needs to run its course
• Investors need a rally in commodities.
• Stop the ISIS Crisis.

CNBC 10/13/2014

Mixed Markets Tuesday. Dow was up 125 points in the early going only to close down a handful. The tug of war finally ended with the S&P 500 and Naz up, Gold, Oil and DJIA down.

Whispers that chip makers were leading the way into a bear market was discounted as one of the big players announced better than expected earnings at the end of Trading Tuesday, and provided good forward guidance. CNBC 10/14/2014 One investment pro called the firm’s earnings ‘robust’. This on the heels of a Barrons.com article on the demise of chip makers.

If you’re a trader get your buy list ready. Investors should be staying put.

 Yipes! The DJIA traveled both up and down a total of 1,268 points Wednesday in a wild day that had investors both wondering why and fearful. At one point, near mid-afternoon, the Dow was off 460 points! It was good old fashioned panic selling in the early going as (WSJ/Barrons.com reported 10/15) weak U.S. data, European bad news and Ebola all triggered a ‘whipsaw’ session. Analysts were at a loss to point to a single catalyst. It was almost as if someone yelled iceberg and it was everyone to the lifeboats. The CBOE Volatility Index, which measure implied volatility on the S&P 500 jumped to its highest level since December 2011.

In Barrons.com ‘Stocks to Watch’ the bad news should have been in the small caps, mused writer Ben Levisohn. In fact by the end of the day the small cap Russell 2000 finished UP for the day. And, not just a little but up 1%! So, the wondering if the Russell is the canary is this the beginning of the healing? Two sectors also ended up, Energy and Materials. Both have been beaten up with Energy down 13% and Materials off 8.4%. Citigroup’s Tobias Levkovich noted that signs of surrender are forming. He also remarked that, ‘…the froth of ebullience evident about a month ago is now very much gone’.  Pithy, eh?  Not exactly your ‘Irrational Exuberance’ but ‘frothy ebullience’ does roll off the tongue.

Not there-yet. Bottom? All Over by Halloween? Michael Kahn at ‘Getting Technical’ in 10/16/2014 Barrons.com, reported look for a drop to 1728 on the S&P 500 which at that level is support from the February 201 low and the September 2013 high. The S&P 500 is currently less than 8% from its all time high. October, Kahn laments, is living up to its fearful reputation of the 1929 and 1987 crashes. S&P closed Thursday at 1868.

Finally: Jim Cramer of CNBC on 10/16/2014 gave reasons he believes the Ebola fears are ‘rattling’ the stock market. He admits that there are other worries in play but the deadly virus is a big reason why so many traders are selling equities. Especially, he points out when the second nurse was diagnosed with the disease the markets tanked within minutes of the news. Blame is being spread on confidence of the U.S. government and the Centers for Disease Control. ‘The government has created a lack of confidence in its response.’ Cramer said.  Especially worrisome is the comments by the CDC that the disease isn’t airborne but the CDC would by have issues if someone was within three feet of an infected individual for any sustained period of time. Like on an airplane?!

 

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 October

 

 Bad News First: Markets continued their selloff with Tuesday being the first day when it became especially ugly. There was a brief attempt at a rally early in the day but quickly evaporated and  the tumble escalated into a full rout with the Dow down 273 points at the close. The Nasdaq also continued its slide. According to Kevin Marder at MarketWatch.com the Naz has not printed an accumulation day, or session of ‘concerted buying by large participants,’ in almost five weeks. Nervous investors were following similar selloffs in Europe and Japan. The Russell 2000, the small cap index, saw a continued selloff of almost 1.7%. Experts often point to the small cap index as a leading indicator of the overall market. Signs of a slower growth in China along with renewed slowdown in Europe, especially Germany; and continued economic troubles in Japan all have contributed to increased volatility. While the U.S. economy is attracting investor dollars there is a worry that the large U.S. firms, which generate a huge percentage of their sales from overseas, will have a slowdown. info from CNBC, WSJ, Bloomberg and MarketWatch.com 10/7/2014 and 10/8/2014.

 Thursday There Was Some Serious Profit Taking as The S&P 500 Index Failed to Stay over Key Support of 1950. It closed at 1928 off 40 points for the day. The Dow was off  334 points and the Naz fell 90. Within seven days the Dow has moved 2,000 points in total up and down directions. Still, on CNBC Thursday, several investment pros said the selloff was no reason to panic. Kirk Spano in his 10/9/2014 MarketWatch.com post wrote that this was not a collapse so investors should buy the big trends. ‘The stock market correction is closer to the end than the beginning.’ Spano points to the fact that small-cap stocks are already down 10%, Energy, depending on specific industry, is down 20-30%, and the natural gas index is off 30%. The large caps have withstood most of this correction, he points out. He also recommends buying the current trends and points to one beaten up sector in particular. Those investors interested in knowing what that trend is call or e-mail me.

Here’s more recap of last week’s news

  Oil Prices are down and likely to fall more as discord among OPEC members is turning into an old fashioned Texas gas war. Add into the mix the recent ‘New’ American Oil Boom and this should be a pretty nice holiday season for us with low fuel prices allowing more for spending and travel…unless you heat with natural gas, in which case, home heating costs could be higher than last year. First oil prices are falling because a petro glut and discord among OPEC ministers. Rather than cut production members are slashing prices for market share. This is causing fracturing in a once powerful union. According to news reports members don’t get along and there is no harmony of purpose. Saudi Arabia lowered its prices for next month’s delivery. On the natural gas front, you’d think we’d be swimming in the stuff but more seasonal demand for natural gas has left stockpiles at below their five year range. So with expectations for another nasty winter home heating bills can go higher.  Overall the good news with lower oil prices inflation will be subdued as petroleum is a huge contributor. Info gathered from WSJ 10/3/2014, Barrons.com 10/3/2014 and CNBC 10/2/2014. Photo of Saudi oil minister arriving at OPEC meeting in Vienna June, 2014.

 

Don’t Read Too Much Into The Week Before Last’s Jobs Report.  Bob Johnson, of Morningstar, shared his insight 10/4 in a Morningstar article, that concluded that the markets may have read more into the jobs number than was actually there. The year-over-year growth rates are still in the 2% range. The results are good and not great.The following chart gives readers a better understanding that while things have improved their not something one would say is a great recovery.

  Byron Wien in a Barrons OpEd 10/2/2014 wrote that there was much to worry about. Right now market valuations are not in bubble territory but he worries if earnings fall short of estimates what could happen. That doesn’t seem to be anything happening at the moment. Analysts are increasing their estimates on earnings and so investors shouldn’t be concerned now, Wein writes. Housing is an area that Wien finds troublesome, especially with the improvement in employment (under 6%), and with continued low interest rates. Housing is a key component and deserves close attention. Internationally Wien is especially concerned with geopolitical forces such as ISIS, Israel/Gaza, South China Sea and China’s ambition of extending its fishing and drilling rights into neighboring Japan and the Philippine waters, plus the breakdown in nuclear weapons negotiation with Iran. Finally Wien points home to the ‘dysfunctional’ democracy we have here in the United States. It may appeal to some ‘gridlock’ zealots, he writes, but its not constructive. Wien formerly of Morgan Stanley and currently Blackstone Advisory Vice-President.

Rival bond firms will be out bidding for business that is sure to or already has left PIMCO in the wake of Bill Gross’ leaving the firm. The amount of assets available, and if garnered, is enough to change a bond manager’s world for years to come. One bond manager calls it a, ‘Massive food fight.’ One public pension fund was contacted that had $1 billion invested with PIMCO. According to the WSJ this one firm did not think of moving its assets. (WSJ 10/4/2014) It’s reported that the fund Gross managed already some $23.5 billion of assets has left. You can bet, even without verification, that a goodly percentage is following Gross to Janus. How large was the bond portfolio that Gross managed? According to Morningstar the Total Return Fund had about 14 cents for every dollar invested in taxable bond funds. Out of 28,000 401k plans had $88 billion invested in the fund. SOURCES WSJ, CNBC, BLOOMBERG 10/3 10/4

Gold lower on dollar strength. The metal is off 9% over the past 6 months. Doomsters advocating buying gold may now be called ‘contrarians’?

  Stocks Usually Pop After Midterm Election.

MarketWatch.com reported on Sam Stovall,equity strategist at S&P Capital IQ, study of historical stock market returns six months after mid-term elections.Going back as far as 1944 Stovall discovered not only a pattern plus a reason, not a guarantee, for the market going higher. The prime reason, according to Stovall, is that the markets dislike uncertainty. Once that uncertainty passes the November through April average increase is 15.3%, and the frequency, according to Stovall’s study, is an impressive 94% of the time.  MarketWatch.com 10/06/2014. Chart S&P Capital IQ.

Stocks Jumped to close over 270 points on the DJIA Wednesday after Fed meeting minutes showed more ‘focus on slowing growth overseas and lessening inflation pressures. Investors say the U.S. economy looks better than those overseas, which should support continued but moderate gains in stocks over the long term. WSJ 10/8/2014

Investors will always find it easy to sell and not so easy to determine a point to buy back in.

According to the charts, Michael Kahn reports in Barrons.com 10/8/2014, the Bull market is faltering and the rally on Wednesday didn’t erase the bearish signals. The rally actually sent the market to fresh closing lows. Investors Business Daily 10/9/2014 shows the market 100% in correction. WSJ reported not much action in the small caps. 10/9/2014. Which is exactly what happened on Thursday as the global sell-off continued.

Questions call Paul @ 586 2950430 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 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

That Was The Week That Was-4th Week September

 

BAD NEWS FIRST. Thursday Markets Fell. Stocks were slammed globally and the plunge showed no favorites as it was an equal opportunity rout. It was the worst trading day since last July with the DJIA off more than 260 points at the close. The S&P 500 Index broke its 50 day moving average, which was major support for the market on Wednesday. Art Cashin, on CNBC, wondered if this sell-off was the beginning of something big. He admitted not knowing exactly what was the catalyst for selling except that it was broad based and may be setting it up for ‘one of those September-October things’. The sell-off wasn’t limited to any particular portion of the market. One bit of news/rumor alleged that in Moscow a pro-Kremlin legislature wants to allow seizures of foreign assets. That bit of news with countries with close economic relations with Russia caused concern. Rex Macey, chief allocation officer at Wilmington Trust Investment Advisors, said he would be surprised if the correction reached 10% before it ended. ‘The economy is doing too well and profits are doing too well, for the kind of 10% correction you may think about.’ In other news few money managers expect a large stock decline as they expect the U.S. economy to keep growing solidly. Jim Cramer came out on his CNBC show and told viewers to sit tight. Cody Willard at MarketWatch.com said he thinks the we’re in a bubble-blowing bull market with years to run but that doesn’t mean the market won’t correct 10% or more within a bubble-blowing bull market context. Info from various sources including live CNBC 9/25, Bloomberg.com., WSJ and MarketWatch.com

USA Today published a pre-retiree checklist. Here’s a few ideas to consider/do before retirement:

• Prepare a budget for retirement. Different than what you’d be spending while working. Less money for clothes, outside lunches, etc.
• Check your emergency fund.
• What to do with your health insurance. Options? Add dental and/or vision benefits. Medicare will not provide or cover.
• Review your life insurance.
• Where do you want to live?
• Meet with an accountant to get estimate of federal and state taxes.

In Pursuit of Happiness Sanjay Gupta, MD explores scientifically proven ways to increase your life satisfaction. People who are happy live longer and are healthier. The Danes are the happiest people in the world. Think Victor Borge who said, ‘The shortest distance between two people is a smile.’ Here’s a few tips on getting happy.

• Change your attitude.
• Work less.
• Focus on experiences.
• Build up social network.
• Volunteer.
• Laugh- a lot.

I’ll discuss when you should be buying fixed investments at the annual client meeting. Remember- as interest rates rise, principal falls.

Monday Markets Fell Most in 7 Weeks. DJIA Losing +100 points.  Concerns were about slowing China growth and fall in home sales. Scott Wren, Equity strategist at Wells Fargo Advisors said, ‘There is a lot of hype out there that the economy is going to consistently accelerate at a better rate of growth. I’m in the camp of modest growth and modest inflation, that’s not going to change anytime soon.’ Bloomberg Businessweek News 9/22/2014.

Bob Doll, CFA, in his Nuveen Asset Management Commentary for September 22, 2014 reported:

• Commodity prices will continue to fall.
• Small caps have underperformed in 2014 and trend is expected to continue.
• Third quarter growth appears to be tracking close to 3.5%
• Period following mid-term elections has been historically strong for equities.

Tuesday markets carry over losses from Monday as the reason du jour was bombings in Syria and drug makers fell on the crackdown on tax-saving mergers, allowing U.S. companies access to foreign cash without paying U.S. taxes. It was the third day of losses in a row for the markets. Bloomberg.com 9/23/2014.

Small Cap stocks big losers over the last 12-months and we’ve seen the Russell 2000 Index 50 day moving average cross over the 200 day which is called a Death Cross. Some analysts see this as the beginning of a Bear market. Others point to historical trends which illustrate once this Death Cross happens the small caps have a tendency to rally.

Info from Investopedia, WSJ, Barrons.com and Bloomberg.com

Cramer on CNBC Tuesday 9/23 said he’d only be buying two companies at this point in time. One is in tech and the other in pharmaceuticals. Wednesday markets took off as investors piled on after a three day losing streak. DJIA +150 points.

Questions on what will happen when the Fed does raise rates answered by Howard Gold who wrote in his MarketWatch.com Op piece 9/24 that stocks fell 13 out of 16 times the Fed raised rates. The S&P 500 lost 10% on average. But, if you continue to look at the numbers, within 6 months the markets were UP 1.3% after the first rate hike. Usually markets will start their correction about six months before the first rate increase. What investment sectors performed the best in a rising rate environment? Gold reports technology, energy and materials. What to avoid would be those sectors that are interest rate sensitive like financials, utilities and telecom.

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-3rd Week September

 

  Businesses and organizations love to do studies. One recent study answered the question on what happens when investors ignore their investments? In a Barrons.com article on 9/10 entitled The virtues of inactive investing, found that accounts that have been forgotten, with no buying and selling, have performed the best, according to Fidelity Funds, which studied those accounts that were with their firm. Another study of investment accounts that were involved in extended litigation, and because of the long court battle, there could be no buying only selling, were found that they performed the best over those that were micro-managed.  Doing absolutely nothing, not even rebalancing, while may be considered neglectful, actually increased returns. Again this seems to validate the studies that shown those investors that did nothing with their investments through the market correction did far better than those that sold and tried to time the market.

WSJ, in their Investing for Retirement section 9/14/2014, raised the worry that in the Prez’s 2015 Budget is a real kick in the pants for Roth IRA owners. It would require (1) To start taking distributions at 70 1/2. (2) For heirs an inherited Roth IRA would not have the ‘stretch’ distribution benefit but would be required to take the funds over 5 years. There has never been a real national policy to encourage personal saving in this country. With a ‘tax’ everything movement in this country I hope someone will realize that this was Not why the Roth was created.

Dollar-rally has fueled a demand for U.S. stocks and bonds. The gains reflect investor expectation that the U.S. will raise fed funds rate in 2015. Chart source Thomson-Reuters. WSJ. 9/13/2014

S&P 500 Advance Tuesday was the biggest in 4 weeks! The S&P was up almost 15 points, the DJIA +100. MarketWatch.com reported that data from Bloomberg showed 47% of the stocks in the Nasdaq composite down at least 20% from their peak in the past 12 months, and more than 40% of the Russell 2000 companies (small cap) have fallen by as much. The S&P index is another story with fewer than 6% of the companies in what is considered Bear territory. Because of most investor’s focus on the large cap portion of the market they miss the weakness in the tech and small cap arena.

The Federal Reserve signaled Wednesday that it plans on keeping rates low for a considerable period of time. It plans on doing that as long as inflation is low. The markets responded by moving higher at the close. Bill Gross, on CNBC, commented soon after that he believes the Fed will not raise rates for more than a considerable period of time. Gross, a pretty bright guy in his own right, believes inflation numbers, as they’re calculated by the government, will remain extremely low for quite some time. Others think the Fed, when it does begin to raise rates, will do so quick and often. A report in MarketWatch.com suggested that the Fed may raise rates four times in 2015. The Fed meets eight times a year and so a dot plot line suggests a rate hike of 1/4% beginning in the middle of 2015 and continuing until rates reach 3.75%.  Information gathered  9/17 from multiple sources including WSJ, CNBC, and others.

Warren Buffett told Wells Fargo executives earlier this year why he invests in certain businesses. He said he looks for companies that are simple to run, that even an idiot can run it, because sooner or later one will.

Jobless claims fell to 280,000, their second lowest level in 14 years while the Philly Fed index showed an increase in plans to hire and future orders even as the overall index fell Thursday. The Dow was up 100 points and JP Morgan’s Jason Hunter sees no signs that the bull market is running out of steam. In Barrons.com he reported that the longer term view remains intact. The chart does not a trend that suggests the bull market is faltering. ‘Corrections should be viewed as opportunities to add to core long exposure.’

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