Home About Archives RSS Feed

@theMarket: Is Everybody Happy?

By Bill Schmick
iBerkshires Columnist

The Dow made a new record high every day this week, except Friday. The S&P 500 Index came within a hair's breath of its historical high as well. Most world indexes are doing the same thing. The consensus is that the markets are going higher — Uh oh.

I guess I should feel vindicated for remaining bullish over the last year or so in the face of all those "what will go wrong" scenarios. However, when just about everyone is bullish I start to get concerned. It's the contrarian in me.

There are a handful of readers I use as a contrary indicator. You know the type. When the markets are at a bottom, they want to go to cash. At market tops they usually call up asking if they are too conservative no matter how much they are making. I received several emailss this week from those kind of readers who were asking about getting more aggressive. Uh, oh.

When I compare the U.S. equity market with its counterparts in 30 other nations, I find that our market is the most overbought of any of them, although Japan comes in a close second. Uh, oh.

 But markets can stay overbought for a long time, so I wouldn't go out and try to short stocks right here, nor would I take profits.

So far, every dip in our markets has been met with renewed buying. The most popular explanation for this seemingly insatiable demand for stocks is that U.S. Treasury bond investors, tired of receiving record low interest payments from their holdings, are finally selling their positions and are seeking greater returns by investing in stocks. It is called "The Great Rotation," but the evidence is more hearsay than fact.

The financial media is doing their part to stoke the buying frenzy. They are having a field day citing financial statistics of this record or that. The Dow, for example, has been up 10 days in a row. That has only happened four times since WWII. An interesting statistic, but worthless when it comes to your portfolio or what happens next.

For those who feel compelled to put more money in the markets at this late date, do so with some financial acumen. Don't buy on the up days or buy everything at once. Average in and try to keep your emotions out of it. Remember, investors' greatest enemies are fear and greed.

Another suggestion would be to look for the laggards using the "rising tide lifts all boats" theory. If you truly believe that the global markets are going to continue to rise (with no breaks) in the foreseeable future than buy those stocks, sectors and country indexes that have lagged the U.S. market.

And for those who have stayed the course and are fully invested, remain so. However, I suspect that as March advances the rate of gains will slow. Once the S&P 500 Index breaks out to new highs, the markets will become a battleground of those buying the dips versus those wanting to take profits. That is not a game that most of us will be willing to play. I know that I would rather sit with what I have and watch the battle play out. Either way, I don't see much downside risk for long-term investors. Overall, I am still looking for double-digit gains in the markets this year.

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
Cages Baseball Club Offers Youth Camps
Maple Grove Civic Club Hears From Adams Candidates
Pittsfield Council Asked To Push For State Education Funding Changes
North Adams City Council Refers Zoning Proposal, Adopts Resolution
Letter: Vote for Christine Hoyt on May 1
Non-Binding Question Asks Lanesborough to Hike Retiree Health-Care Premiums
Williamstown Planning Board Candidates Participate in Forum
Adams-Cheshire Weighs Emergency Amendment for Cheshire School
Mount Greylock School Looking For Regionalization Vote This Fall
North Adams Eyes Tax Title Sales For Tax Relief, Engineering

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 (227)
Independent Investor (309)
Archives:
April 2017 (5)
April 2016 (2)
March 2017 (8)
February 2017 (8)
January 2017 (6)
December 2016 (2)
October 2016 (1)
September 2016 (9)
August 2016 (5)
July 2016 (7)
June 2016 (7)
May 2016 (5)
Tags:
Federal Reserve Stock Market Debt Pullback Euro Stimulus Fiscal Cliff Stocks Election Europe Debt Ceiling Congress Banks Selloff Commodities Jobs Greece Markets Japan Rally Deficit Bailout Housing Taxes Oil Currency Wall Street Recession Europe Retirement Economy Crisis Metals Energy Interest Rates
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
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Will the Municipal Bond Massacre Continue?
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
The Independent Investor: Should College Be Free?
The Independent Investor: Tense Times in Trumpland
@theMarket: Uncertainty Descends Upon the Markets
The Independent Investor: Don't Let Romance Blind You to Finances
@theMarket: New Quarter, New Market
Living together is not what it used to be
Independent Investor: Don't Worry, Be Happy
@theMarket: Fed Rate Hike Sets Stage For More
The Independent Investor: Trump's Budget
@theMarket: Mushy Markets in March