Monday, March 30, 2015 10:09am
North Adams, MA now: 36 °   
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: Patience Is A Virtue
By Bill Schmick On: 08:10AM / Saturday March 10, 2012
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0
"So was that the pullback you were looking for?"

"Let's say it was the beginning of one," I answered.

"So how much longer am I supposed to wait? I've got tons of cash and it's not earning me anything."

Sometimes the hardest thing in the world is to do nothing. This appears to be one of those times. Yes, we did pull back over 1 percent earlier in the week in all three averages but the downside was short lived and the markets regained all they had lost by the end of the week. We can thank world governments for that performance.

The EU and its central bank successfully concluded the renegotiation of Greek debt. Just over 80 percent of Greek bond holders "volunteered" to exchange their old bonds for new ones that are worth less than half the value. For all intents and purposes this amounts to a massive bond default by the Greek government, but that's not how it is playing out.

When governments are involved, what normally would have become a default becomes something else. In this case it becomes a "restructuring" and not an embarrassing default. The markets rallied, bidding up European stock markets at the news. They ignored comments from the head of the European Central bank who said that further interest rate cuts and other stimulus measures are at an end. At the same time, the fact that Europe is also entering a recession seemed to be unimportant. 

In the U.S., the Federal Reserve added to the cheer by planting a story in The Wall Street Journal. The gist of the article was that the Fed is considering a new kind of bond purchase that would boost the economy further but would be designed to reduce the inflationary impact of such purchases. The economic term for this is "sterilization" and just the mention of additional easing had investors buying back stocks. As I explained last week, the entire move up in the markets since October has been based on central banks flooding world markets with more and more money. This is like offering investors a huge punchbowl with all you can drink right now. Nothing else matters right now and like those who indulge too often and too much there will be a price to be paid down the road.

As I pointed out to a client this week, the markets did recover on all this good news but are still at about the same level they were when I suggested lightening up on your most aggressive equity holdings. Actually, the Dow Jones Industrial Average was around 13,000 at the time and it is now trading lower than that.

The S&P 500 Index and NASDAQ are where they were on March 1. Gold and silver have been losing trades for the last few weeks as well. But don't get me wrong; I'm not bearish, just cautious in the short term. I expect a choppy market at best and in that kind of environment it pays to wait it out.

Many investors believe the sidelines are an unacceptable position in today's markets. Granted, sitting in cash at money market rates yielding next to nothing is akin to watching grass grow in the middle of winter. The point I would make is that sitting in cash is not about making money. It is about not losing money and that can be a smart move sometimes.

I have no crystal ball that tells me this period of caution will only last a week or two or drag on for a longer period of time. I'm guessing it will be shorter than longer so I'm willing to keep the cash and forego investing it in bonds or something else that provides a greater yield. Part of that decision is based on tax considerations and trading costs. However, those may not be important considerations to you. I can only council patience; the rest is up to you.

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 (toll free) or email him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.




0 Comments
     
News Headlines
Three Williams Swimmers Qualify for Olympic Trials
Living With Ghosts: My Time At the Butler Goodrich House
Architects Make Presentation to Mount Greylock Building Committee
Vietnam Veterans Honored at Snowy Pittsfield Ceremony
Williams Women's Tennis Beats No. 1 Emory
Lanesborough School Approves $182K Budget Cut
North County Group Lobbies for Hospital Reopening
Finance Committee, Selectmen See ACRSD Proposed Budget
Former Pittsfield Councilor Pete White Seeking at-Large Seat
Williams College Admits 1,159 Students for Class of 2019

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 (164)
Independent Investor (221)
Archives:
March 2015 (6)
March 2014 (1)
February 2015 (7)
January 2015 (9)
December 2014 (7)
November 2014 (4)
October 2014 (9)
September 2014 (5)
August 2014 (7)
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
Tags:
Pullback Election Retirement Stocks Interest Rates Crisis Taxes Debt Ceiling Bailout Rally Oil Europe Euro Debt Fiscal Cliff Federal Reserve Metals Stock Market Congress Commodities Europe Economy Selloff Japan Fed Stimulus Jobs Energy Banks Currency Housing Recession Markets Deficit Greece
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
The Independent Investor: How Will Wall Street II Play on Main Street?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
@theMarket: The Fed Does It Again
The Independent Investor: Financial Challenges Facing Single Parents
@theMarket: Pay Attention to Diverging Markets
The Independent Investor: Kids & Money
@theMarket: Home on the Range
The Independent Investor: Rise of the Smoothie
@The Market: Full Steam Ahead
The Independent Investor: New Fiduciary Rule Would Benefit All of Us
The Independent Investor: How to Make the Most Out of Social Security
@theMarket: A Race to the Bottom


View All
Spark Event @ Sohn Gallery
Sohn Fine Art in Lenox hosts a Berkshire Creative Spark...
Hoosac Valley Does 'Grease'
The Hoosac Valley High School drama team is producing the...
North Adams Chamber @River...
The North Adams Chamber of Commerce held its monthly mixer...
Birds of Prey
Julie Anne Collier of
Berkshire Chamber Nite @ UP
The Berkshire Chamber of Commerce held its monthly...
Pitt House Series at Dottie's
The first in the Pitt House Concert Series was a sold out...
Berkshire Awards 2015
Lila Berle, Churchill Cotton and Mary Rentz were honored on...
BYP Networking at AIER
The Berkshire Young Professionals gathered at the American...
Berkshire Art Fellowship Show
The 12 Berkshire Art Association College Fellows for 2015...
Hoosac Boys Lose to Old...
The Bulldogs scored the next six points and later used a...
Hoosac Girls Drop State Final...
The Hoosac Valley girls basketball team ended its season...
Massachusetts Region I High...
Near 80 students from throughout the region met in the...
Mt. Greylock SEE Fund
Williamstown's community access television station,...
2OT, Sends Hoosac to State...
Jameson Coughlan scored on a baseline inbounds play from...
HV Win State Semi-Final
Last season, with 1 min., 30 sec. to go Bellingham was down...
Hoosac Girls to Western Mass...
On Saturday afternoon, it had a chance to hang one more...
Spark Event @ Sohn Gallery
Sohn Fine Art in Lenox hosts a Berkshire Creative Spark...
Hoosac Valley Does 'Grease'
The Hoosac Valley High School drama team is producing the...
North Adams Chamber @River...
The North Adams Chamber of Commerce held its monthly mixer...
Birds of Prey
Julie Anne Collier of
Berkshire Chamber Nite @ UP
The Berkshire Chamber of Commerce held its monthly...
| 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