Friday, July 25, 2014 05:03am
North Adams, MA now: 54 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
@theMarket: The Dog That Wags the Tail
By: Bill Schmick On: 06:37AM / Saturday November 20, 2010
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

It is becoming clearer by the day that the U.S. is no longer the Big Dog in financial markets. Ten years ago what happened overseas would have little if any impact on U.S. markets. Today most traders won't make a move without first checking overseas markets.

Last week, I warned that we were in for at least a 5 percent correction and so far we've pulled back 4.4 percent on the S&P 500 Index. I expect continued choppiness through the holiday shortened week with a bias to the downside. There is a possibility that the markets could overshoot and register as much as 6-7 percent drop. I would buy that dip if it occurs.

This correction is a great example of how things have changed. It was countries such as China, Korea and Ireland, not America, which have dictated the turns in our markets.

Over the last two weeks (coinciding with the downturn in U.S. markets), the Chinese government had announced new efforts to slow its nation's growth. China fears that its economy is overheating. Inflation is already running at 10 percent and its citizens are actually hoarding all kinds of stuff from foods to gold to lumps of coal. The real estate market is also out of control and continues to rise each month despite the government's best efforts to slow its ascent. The government has threatened to raise interest rates, tighten monetary policy and take even more draconian methods such as selling commodities on the open market by the shiploads if necessary.

South Korea raised rates twice in two weeks for the same reason. Since April, (when we experienced a serious market pullback) a number of other foreign countries from Australia to Thailand have done the same thing in an effort to reign in their economies.

Markets here have declined in response to these moves because we have now become dependent on these countries for everything from supporting our deficit spending (by buying U.S. Treasury bonds) to the toilet seats in our bathrooms. Many Americans worry that we have traded our economic future for the short-term comforts of cheaper goods, living beyond our means and the "not in my back yard" attitude towards industrial expansion.

"The U.S. is rapidly becoming just another Third World power," laments a 90-year-old retired investor who I make a practice of calling every month or so.

No, he's not a client, but I find his perspective refreshing and his comments pregnant with wisdom and experience. Normally, you don't hear that kind of comment from someone whose family practically built Pittsfield; who was a hero of World War II, and who came home to become one of the county's pillars of industry.

He enumerated all the obvious failings: corrupt politicians, the disappearance of industry, the stratification of classes, our failure to compete educationally and the rampant greed among our captains of industry.

"Take a company I won't name that left this area, shipped off jobs and industry to places like Mexico just to get their share price up," he explained. "It practically wiped out this place, and for what? The price is lower now than when they left."

Hopefully, my friend is proven wrong and this turns out to be just a rough patch that we here in America are going through. I for one have been hoping that the financial crisis of the last two years would be a wake-up call for all of us from the White House on down. So far the jury is out, but Thanksgiving is coming and despite all of our issues, we here in this country have a lot to be thankful for.

Speaking of which, if you know of any families around the county who might need a helping hand during this holiday season, we here at Berkshire Money Management, 392 Merrill Road, Pittsfield, will be giving away 150 turkeys and $20 gift certificates to Wohrle's Foods beginning Monday, Nov. 22, between noon and 4 (as long a supplies last). It's our way of giving back to a community that makes us feel welcome and wanted.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.



Tags: correction, inflation, China, overseas markets      
@theMarket: Corrections Are Good for the Soul
By: Bill Schmick On: 03:40PM / Friday November 12, 2010
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

It was long overdue. For weeks, the stock market has registered overbought conditions and still it forged ahead. Investors had driven the averages back to yearly highs and only then did the rally run out of steam. Now it's time to step aside and watch.

"Is this the start of something big or should I just stay put?" asked a retired client from Pittsfield who has recouped much of his 2008 loses over the last year.

"Stay put," I said, "because this pullback will be short and unless you are a day trader, too volatile to do more than add to existing positions."

I'm thinking we could see the stock markets drop as much as 5 percent, which from here isn't such a big deal. Take the S&P 500 Index, for example. This week it hit an intraday high of 1,227 (almost 10 points higher than its peak in April). A 5 percent decline from that level would put the average at 1,165, a mere 30 points down from here. That's not worth getting excited about.

As a rule of thumb, I believe that 5 percent to 10 percent corrections in the stock market are the "price of doing business" or the risk one must accept in equity investing. These kinds of corrections occur 2-3 times a year on average. And it is not just equities that are falling.

Commodities are also declining. As I look at the present spot price of gold, the precious metal is off over $40 an ounce while silver is down $1.50 an ounce and oil has plummeted over $3 a barrel — in just one day. Commodities tend to have extremely sharp, if short, corrections that tend to wilt most amateur investors' resolve to stay invested. It appears that once again those who have chased energy, precious metals and agricultural commodities are suffering big reversals this week. Rather than buy this weakness, they tend to sell in panic.

For those with bullish convictions, this pullback is a buying opportunity, not only in commodities but stocks in general. This coming week should provide further opportunities to establish new positions. Some of the areas I favor for additional investment are emerging markets, real estate such as REITs, commodities, commodity companies and selected technology.

As for the culprits that triggered the pullback, most of the negative events have something to do with governments. The on-again-off-again saga of the European debt crisis has reignited fresh worries over Ireland's struggle to rescue its financial system. It has led investors to re-examine Europe's financial situation in general.

At the same time, China is rumored to be hiking interest rates in an attempt to slow their economy. That would spell bad news for everyone since China has become the new locomotive of global growth. Over in Korea, where the G20 adjourned without agreeing on how to curb the growing currency war, left investors worried and disappointed over the fate of the U.S. dollar.

All of the above are serious issues but they have been with us throughout the year. China has raised rates before and emerging market growth is still quite healthy. The problems of Europe's smaller economies will continue to plague the Euro and the European Community for the next few years, but has not stopped their stock markets from enjoying substantial gains over the last six months.

The financial world is fully aware of every nuance of the currency debate. The dollar has declined since late August, sending stocks and commodities ever upward. None of this is new. Consider this pullback a healthy correction and that's all you need to know.

All these reasons for the sell-off will still be with us a month from now when the averages have regained their upward ascent, so don't put too much stock in today's headlines. They are fleeting at best. Focus instead on the opportunities this sell-off will present.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.



Tags: corrections, stocks, metals, China, commodities      
Page 1 of 1 1  
News Headlines
New Pittsfield School Bus Fleet Arriving
Williamstown Con Comm Begins Review of Article 97 Question
North Adams Making Pothole Progress With New Equipment
Pittsfield Mosquito Control Program Sees Opposition
Best Soccer Camp Makes Annual Return to Area
Lager, Latin on Tap for Local Faithful
Lanesborough Reviving Solar Array Idea
Topia Arts Center Given Fundraising Extension
Clarksburg Town Administrator Off to Running Start
Pittsfield Passes Revamped Smoking Laws
Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (140)
Independent Investor (190)
Archives:
July 2014 (2)
July 2013 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
January 2014 (7)
December 2013 (8)
November 2013 (7)
October 2013 (6)
September 2013 (6)
August 2013 (8)
Tags:
Euro Banks Retirement Crisis Japan Taxes Pullback Stimulus Markets Stock Market Election Metals Greece Recession Rally Selloff Europe Housing Debt Ceiling Fed Bailout Debt Commodities Fiscal Cliff Energy Europe Congress Jobs Deficit Federal Reserve Economy Interest Rates Oil Currency Stocks
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
The Independent Investor: Does Cash Mean Currencies?
@theMarket: QE II Supports the Markets
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
The Independent Investor: How Much Is Too Much to Spend in Retirement?
The Independent Investor: The Fed Turns Off the Spigot
The Independent Investor: Should You Pay Off Mortgage Before Retiring?
The Independent Investor: Retirement should be a part-time job
The Independent Investor: Unhappily Ever After
@theMarket: June Swoon
@theMarket: Europe Is a Good Bet
The Independent Investor: A Road to the Future
The Independent Investor: Holy Cow
@theMarket: Flirting With Record Highs Again


View All
Lanesborough Fire Drill
The Lanesborough Fire Department trains on basement fires...
Pittsfield Polish Picnic
Crowds lined up for golabki and kapusta at the annual...
North Adams Kids Emergency...
The North Adams 21st Century Community Learning Center...
Gather-in Festival 2014
The 42nd annual Gather-In festival was held at Pitt Park in...
BFAIR Mini-Golf Fundraiser
Berkshire Family and Individual Resources held its annual...
Lanesborough Seeds of Harmony...
Bradly Farm in...
Hinsdale Block Party
The Hinsdale Fire Department hosted its annual block party...
Arrowhead Country Craft Fair
Arrowhead, Herman Melville's home in Pittsfield, is hosting...
Pittsfield 3rd Thursday July...
Shakespeare was the theme for this month's 3rd Thursday...
State Little League:...
Pittsfield South defeats Holden, 3-2, in the state...
Live On The Lake Concert
Greylock Band played at Burbank Park on Onota Lake in...
Summer Softball: Force vs....
Berkshire Force beat the Adams Thunder 27-7 at Russell...
Little League: Pittsfield N...
Saturday semi-final between Pittsfield North and Pittsfield...
The Pittsfield Suns
The Pittsfield Suns defeated the Seascoast Mavericks...
Babe Ruth Tourney: Pittsfield...
Pittsield scored nine runs in the first inning and beat...
BYP Networking at Ramblewild
The Berkshire Young Professionals were up in the air on...
Lanesborough Fire Drill
The Lanesborough Fire Department trains on basement fires...
Pittsfield Polish Picnic
Crowds lined up for golabki and kapusta at the annual...
North Adams Kids Emergency...
The North Adams 21st Century Community Learning Center...
Gather-in Festival 2014
The 42nd annual Gather-In festival was held at Pitt Park in...
BFAIR Mini-Golf Fundraiser
Berkshire Family and Individual Resources held its annual...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved