Wednesday, July 30, 2014 07:10am
North Adams, MA now: 55 °   
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: Expect More Volatility Ahead
By Bill Schmick On: 09:47AM / Saturday April 14, 2012
Important
1
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0
As we enter the second quarter, this first week is a taste of things to come. After months of enjoying a straight-up stock market, we are getting back to the new normal, so strap on your seat belts.

Monday and Tuesday were downright ugly. The next two days we climbed back up and then on Friday gave some back. It was a roller coaster and is reminiscent of the period from May through October of last year. Imagine that.

It was a down week, despite a surprise upside earnings surprise from Alcoa, which is usually the first company to report each quarter. Further good news from some big banks failed to inspire the market, however. Once again, as I wrote last week, the rain in Spain has flooded our plain.

Spanish banks borrowed twice as much from the European Central Bank in March as they did in February amounting to $419 billion. The ever-present angst among European investors has focused on Spain this month. Next month (or week) it could be Italy, Portugal or that popular whipping boy, Greece, that's back in the news.

Underlying the recent climb in Spanish sovereign bond yields is a brewing housing crisis and a faltering economy. Spanish banks are also bleeding. They are grabbling with 300 billion euros in property loans and the Spanish government has said it isn't prepared to inject any more capital into the sector. It's the same old song that will most likely end in another bailout for Spain.

I shouldn't blame Spain for all our worries. China's slowdown has also contributed to investors' worry. The annual rate for Chinese GDP growth slowed in the first quarter to 8.1 percent from 8.9 percent. I wish our growth could be even half that rate but everything is relative. And relative, in the context of Chinese economics, equates to slower growth, slower demand for materials and commodities, and a host of other goodies that the world depends on to drive their own economies. A hard landing in China coupled with a recession in Europe would not be an auspicious development for world economic growth. Right now the state of China’s economy is muddy at best.

As for our markets, the decline I have expected has begun. Pullbacks vary. If we take a look at the last nine times the markets have declined going back to mid-2010, we see that the longest correction was 22 days. The average was 15 days. Snap-back rallies can last from two days to seven days. This week's snap-back lasted two days.

What is clear is that volatility increases substantially during times like these. My advice: do not try to trade the ups and downs. You will be left with a big hole in your portfolio and end up losing far more than the market corrects. If you had decided prior to this pullback that you were going to stick with the markets, then do so, take your lumps and look to the long term.

If you followed my advice and raised cash, it is time to be patient, watch the markets gyrate but don’t let that cash burn a hole in your pocket. Patience in this kind of environment is worth its weight in gold.


0 Comments
     
News Headlines
Williamstown Public Safety Building Committee to Pursue RFP
Weather Service Reports Dalton Hit by Tornado
Mohawk Trail Being Honored at 59th Fall Foliage Parade
Melito Family Reunion in North Adams
Three Berkshires Men Fighting Fires in Northwest
Pittsfield Councilors Favor Opposition to Gas Pipeline
North Adams Housing Agency Reaching Asset Deal With City
Williamstown Town, Fire Discuss Coordinating Annual Meetings
Wilber Off to Strong Start at YMCA Nationals
Berkshire Force Set to Host Softball World Series
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)
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:
Housing Selloff Bailout Fiscal Cliff Energy Debt Japan Federal Reserve Europe Euro Commodities Recession Taxes Election Jobs Economy Fed Metals Rally Debt Ceiling Europe Stocks Markets Pullback Oil Greece Retirement Deficit Interest Rates Banks Currency Congress Stimulus Crisis Stock Market
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
Pittsfield Ethnic Fair 2014
North Street in Pittsfield had a double-dose of block...
LaFesta Baseball 2014
The LaFesta Baseball Exchange, celebrating 24 years, pits...
Adams Polish Picnic 2014
Adams residents enjoyed traditional Polish food and music...
Mingo's Sports Bar & Grill...
Over 50 cars packed into the Mingo's Sports Bar & Grill...
BYP Networking at Naumkeag
The Berkshire Young Professionals met at the historic...
Pittsfield Shakespeare...
Pittsfield's Shakespeare in the Park free performances at...
Lanesborough Kids Fire Camp...
Lanesborough Fire Department held its annual Kids Fire Camp...
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...
Pittsfield Ethnic Fair 2014
North Street in Pittsfield had a double-dose of block...
LaFesta Baseball 2014
The LaFesta Baseball Exchange, celebrating 24 years, pits...
Adams Polish Picnic 2014
Adams residents enjoyed traditional Polish food and music...
Mingo's Sports Bar & Grill...
Over 50 cars packed into the Mingo's Sports Bar & Grill...
BYP Networking at Naumkeag
The Berkshire Young Professionals met at the historic...
| 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