Market Commentary
September 10, 2012: “Predicted Policy Positives Priced In, Producing Potential for Precarious Pitfalls”: The series of economic policy actions in the United States, China, and Europe have already had a powerful positive impact in the markets. The policy events this week are: Germany’s constitutional court ruling, possible aid for Spain, the Fed’s likely announcement of yet another stimulus plan, and inspectors reviewing if Greece’s progress on reforms merits any more aid. The market is anticipating generally good news from each of these events, so volatility may return if they are mixed. Read More.
August 13, 2012: “Dog Days for the Dow”: As the dog days of summer draw to a close during the coming weeks, seeking yield with strategies like the “dogs of the Dow” may no longer be rewarding. The Federal Reserve (Fed) meeting at the end of the month may change the markets’ theme.
In general, we believe investors can prepare by seeking out more cyclical securities in August that may offer more potential for price appreciation in the months ahead.. Read More.
June 25, 2012: “Quarterly “Sweet Spot”": This week marks the start of the six-week period that has been the best for the stock market in each quarter of recent years. With investor expectations low, companies may provide positive surprises as they report their profits. Three key items we will be watching for this earnings season are: the impact of Europe, rising pension expenses, and falling
commodity prices. Read More.
April 15, 2012: “Cash: A Responsible Investment Choice”: Cash is a commonly used term in everyday life, often referring to the money in your pocket. It is easily accessible and readily available to convert into a known value. In investing, the terms “cash,” “cash equivalents,” or “short-term securities” are used in a similar way. Read More.
February 16, 2012: ”Spring Cleaning -Putting Your Financial House in Order”: As you file away your forms and schedules at the end of the tax season, it’s a good time to take a closer look at the big picture of your financial structure and tidy up where needed. Here’s a checklist of key considerations to help you get started. Read more.
January 1, 2011: “The 2012 Financial Outlook”: While the last few years have been highlighted with record swings in market returns and widely oscillating economic data, we expect 2012 will be less about the fringes and more about the middle. While volatility is likely to remain elevated, the market and its economic backdrop may begin to migrate from the extremes – often times even polarized extremes – toward a more normalized period where investor sentiment, economic activity and the market’s direction start to move increasingly in alignment.
November 17, 2011: “(Almost) End of the Year Commentary”: We want you to relax and enjoy the holiday season. So that you don’t worry too much about your investments during your end-of-year celebrations with family and friends, we will share our observations and perspective on the markets which influence your portfolios.
We seek out the best analysis from the smartest people we know. We read, think, discuss, and make decisions about your investments on a constant and daily basis, so that you don’t have to. Nevertheless, feel free to call us with any questions or concerns.
Equity markets in recent months have been extremely volatile. At the end of the 3rd quarter the
SP500 index was down -8.7% for the year. Then during the next month the SP500 Index rebounded by 10.9%, the largest October rally since 1987, leaving this market index slightly positive for the year. Read more.
October 28, 2011: “The European Rescue Package: The Devil is in the Details”: The European summit on October 26, the fourteenth in 21 months, finally produced a deal in a late-night negotiating session. European leaders announced a deal that was close to what had been carefully leaked over the prior weeks of deliberations and had helped the S&P 500 Index to rally off of the lows of the year. From the closing low on October 3, the Index has climbed nearly 17% in just three and a half weeks and is on pace for the largest monthly gain since 1987.
Overall, the statement confirms the view that the risk of a 2008-like financial crisis erupting in Europe, which has been the focus of global markets in recent months, has been taken off the table. However, over the long term, concerns remain about the outlook for economic growth in Europe and the ability of some peripheral countries to meet budget targets. While the statement does not clarify all the details, it does lay out the three most important aspects of the rescue package: Read more.
September 12, 2011- “Beyond the Near-Term Clouds the Outlook May be Brightening for Long-Term Investors”: We believe that the most consistently accurate predictor of long-term stock market returns is the S&P 500 Index price-to-earnings ratio (P/E). The P/E has demonstrated consistent success predicting long-term returns going all the way back to the 1930s. Focusing on the short-term can be paralyzing for many investors. Long-term investors can take heart since the P/E predicts that this is the best time in 20 years to consider buying, not selling, stocks. History shows us that what really matters is the price we pay, not so much what happens along the way. View Full Article.
August 22, 2011-”Concerned About the Economy?”: Are you increasingly concerned by the recent stock market plunges and were you disturbed by the dire warnings about the loss of your investments during the recent debt ceiling debate? Me too. But I remind myself of the following rules of successful investing. So, what should you do? I have a few suggestions and comments. View Full Article.
August 8, 2011-”The Downgrade: What You Need to Know”: We view the U.S. rating downgrade from AAA to AA+ as a disappointing, but lagging indicator of the pressures already reflected in the markets. We find plenty of historical evidence that markets have priced in the events that led to the downgrade much earlier than when the downgrades took place. While there are some negative consequences, there are not triggers stemming from the downgrade that would spark a chain of events leading to a financial crisis. Could this mark a “Sputnik moment” for policy makers tasked with finding the additional savings stipulated in the debt ceiling legislation?
The initial beneficiaries of the downgrade include precious metals and Treasuries given the hit to investor sentiment and the desire to seek safety and liquidity. Stocks, led by Financials, may initially suffer. However, low valuations and efforts to address the debt problems in Europe combined with improving economic data may put a halt to the stock market’s decline. View Full Article.
July 25, 2011- “Happy Days”: Recent news regarding a number of key market factors has been generally positive and our main concerns are beginning to lift For the past 12 months, the S&P 500 Index has been tracking its pattern of 60 years ago. If the pattern holds — and the big issues overhanging the market are resolved or deferred — we may be due for a nice stock market rally in the coming months. View Full Article.
July 18, 2011- “Debt Ceiling Debate Outcomes and Market Impact”: We update the probabilities of the four potential outcomes emerging from the debt ceiling debate over the next two weeks. We continue to believe the most likely outcome by Aug 2 contains spending cuts totaling $1 – 2 trillion over 10 years, but no substantive entitlement reform or tax increases. The markets have largely priced in this outcome and are unlikely to make a major move in either direction if this is the result. However, dramatic moves are likely in the event of alternative outcomes. The longer the uncertainty lingers the worse the market may fare, as last week’s performance attests. View Full Article.
July 11, 2011- “A Confidence Game”: Data on inflation, the consumer, and the manufacturing sector in the United States all will compete for attention this week with the latest round of debt ceiling talks in Washington, the Chinese economic data for June, and the start of the Q2 2011 earnings reporting season for most S&P 500 companies. The Federal Reserve (Fed) will also join the mix this week, as they release the minutes of the June 21 – 22 Federal Open Market Committee (FOMC) meeting and Fed Chairman Ben Bernanke will deliver his semiannual Monetary Policy testimony to Congress. View Full Article.
American Dream Video: Real Families, Real Dreams: Different American families discuss their lives, their families, their goals and the unique financial plan that accomplished it for them.
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July 6th, 2011- “2011 Mid-Year Outlook”: Our 2011 Outlook, published in November 2010, was entitled A Mix of Clouds and Sun. So far in 2011,we have not seen the dark storms of 2008 or the bright skies of 2009 and 2010. From an economic and market perspective, the year 2011 can be characterized instead as having experienced patches of clouds and sun with some ups and downs in the economy and markets. Overall, the investing climate of 2011 has been favorable. Two years after the green shoots of economic growth were first evident in mid-2009, they have blossomed and taken root. View Full Report.
July 4th, 2011- “The American Dream-Still Possible?”: To commemorate the 4th of July, I am writing my thoughts as a financial advisor about the blessings and opportunities as a citizen of the United States of America, founded 235 years ago. Recent news headlines are proclaiming that the American dream has died. If you Google the phrase “the end of America,” you get over 1 billion hits! We are being bombarded by a constant barrage of newsletters and videos portraying doom and gloom, pointing to the end of America and the imminent destruction of our quality of life. Sure we have problems, but to call for the end of America smacks of sensationalism meant to sell newsletters. So, are you expecting in America “…riots in the streets, arrests on an unprecedented scale, and martial law?” Me neither. View Full Article.
July 1st, 2011-”Proper Financial Planning-Critical for Women”: A key goal of investing for retirement is making sure you save enough to make your money last throughout your lifetime. On this score, women may need to save more than men. The current life expectancy of a female at birth is almost 81 years, compared with 75 years for a male. Although six years may not appear significant, many people in this age group incur expenses for health care and other items while living off of Social Security and personal assets. Keep in mind that life expectancy statistics are averages and many people live much longer. It is not unusual for an individual’s retirement to last 20 or 30 years or more. There is also the issue of the length of a person’s career and how much time an individual has to build retirement assets. View Full Article.
June 28th, 2011- “Double Dip Risks in the Economy”: As the second quarter of 2011 draws to a close, financial market participants are once again asking the question: are we headed for a double-dip recession? This week’s busy economic calendar in the United States is likelyto leave investors wanting more, but they will have to wait until next week (July 4 – 8th) for news on the debt limit and the employment situation in June.Even as the economic expansion in the United States (which began when the Great Recession ended in June 2009) reaches its second birthday this week, market participants are once again posing the question: is the U.S. (and global) economy headed for a double-dip? View Full Article.
June 20, 2011- “Greece Fire”: Grease fires are dangerous because they are hard to put out, burn very hot, and are easily spread. Europe’s Greece fire has been burning for well over a year, despite attempts by the ECB and IMF to put it out. Last week, Greece’s financial crisis intensified as debate continued over efforts intended to avoidthe Eurozone’s first sovereign default. This intensification was signaled by a plunge in the value of the debt of peripheral European countries. And it has spread to other nations as seen in last week’s announcement from ratings agency Moody’s that it is putting three of France’s biggest banks on review for a possible downgrade due to their high exposure to Greece’s debt. However, we think the Greece fire is not likely to be all that dangerous to most U.S. investors. View Full Article.
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