Home About Archives RSS Feed

@theMarket: Play it Again, Sam

By Bill Schmick
iBerkshires Columnist

It was a week of tension. Markets rose and fell on every word uttered by party leaders, who jockeyed for position and the national spotlight around the Fiscal Cliff. It was Washington at its worst. Get used to it because this deal is going to go down to the wire.

Remember last year's Greek debt negotiations? It was a game of he said, she said that dragged on for months. We are playing the same song once again only on this side of the pond. I guess the best that can be said for this American version is that if nothing happens before Jan. 1 we all think we know the outcome.

But unlike Greece, where the country either received a bail-out or went bankrupt, this U.S. event would not be as dramatic, at least at first. If for some reason the politicians miss the deadline, it would take several days and even weeks before we feel the tax bite. As for the spending cuts, those draconian measures will be enacted piecemeal and over several years. Why is this important?

Well, the stock markets are acting like January first is a do or die event. It's not. Politicians can continue to agree to disagree; delay a compromise and either extend the deadline or let the country fall off the cliff (really a ditch) temporarily. They would still have time to come up with a solution sometime in 2013 without much impact to the economy.

But that kind of scenario would sell fewer newspapers and reduce the ratings on business shows. Brokers would have less to talk about and retirees, rather than being pinned to their televisions, could actually go out and do something productive like exercise or read a good book.

If you are in that stressed-out category, remember this. How much did all that angst over Greece help you? In the end, Greece did get a bail-out, their market is up 25 percent since then and the U.S. market is up substantially as well. So relax, will you?

Warren Buffet may not be right about everything but one reason I believe he is so successful and still in the business is because he takes a long-term view. Sure, time has become compressed. Fortunes have been made and lost in years rather than decades and it has become fashionable to “trade” the markets. I am as guilty as the next person, but only to a point.

In the past, we've had to refuse clients because we didn't see eye to eye when it came to investment style. They insisted we sell every down move in the market before it occurred and jump back in "at the right time," which for them, was before the markets moved back up.

"If I could do that," I explained. "I wouldn’t need to work. I could simply sit home, trade my own account and make a couple billion dollars a year."

Here's my take. The anxiety over this Fiscal Cliff is overblown. Focus instead on the increasingly positive economic data in the United States. In addition, I expect the Fed may announce further stimulus moves in the coming month. The stock market, which is trading around 13 times earnings, is fairly valued given a modest growth scenario. We may be underestimating that growth and prospects for a better 2013 than most people expect. Buy the dips.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

0 Comments
     
News Headlines
Williamstown Elementary Principal Lays Out Priorities
North Adams Movieplex Holds 'Five For Free' Food Drive
North Adams Groups Holding Toy & Clothing Drive
Biz Briefs: Downtown Window Decoration Contest Winners Announced
Berkshires Beat: Young Democrats Mobilize in Western Massachusetts
Regional Planners Still Waiting On DLTA Funds To Be Released
Clarksburg Welcomes Reserve Officers, Hears From Ed Task Force
North Adams Indoor Sports Facility Marks Third Anniversary
Attorney General Upholds Williamstown's Waubeeka ByLaw
Berkshire County Arc Holds Annual Meeting

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 (213)
Independent Investor (294)
Archives:
October 2016 (1)
September 2016 (9)
August 2016 (5)
July 2016 (7)
June 2016 (7)
May 2016 (5)
April 2016 (7)
March 2016 (8)
February 2016 (5)
January 2016 (5)
December 2015 (5)
Tags:
Debt Ceiling Europe Fiscal Cliff Selloff Deficit Stimulus Interest Rates Commodities Taxes Election Stock Market Energy Euro Bailout Federal Reserve Banks Housing Greece Markets Europe Jobs Pullback Debt Economy Congress Retirement Recession Japan Crisis Metals Oil Wall Street Currency Rally Stocks
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?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
@theMarket: Day Traders Rule the Markets
The Independent Investor: Dementia & Your portfolio
@theMarket: The Same Old Song
The Independent Investor: The Impact of One Bad Apple
@theMarket: Much Ado About Nothing
The Independent Investor: Woman Need to Invest More
@theMarket: Markets Get Back to Business
The Independent Investor: The VA — If It Isn't Broke, Don't Fix It
@theMarket: A Tale of Two Interest Rates
The Independent Investor: The VA Political Football