Thursday, November 27, 2014 06:08pm
North Adams, MA now: 27 °   
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: Two Steps Forward, One Step Back
By Bill Schmick On: 04:00PM / Friday April 05, 2013
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

This week, for the first time all year the S&P 500 Index has sustained more than a 1 percent pullback. It needs to correct somewhat more, and despite the short term pain, this sell-off is a good thing.

Have you ever asked yourself why a tea kettle has a spout? It allows steam to escape so that the water within does not boil over. That's what periodic sell-offs accomplish in the stock market. Daily new highs, weeks of successive gains, chasing stocks — all of those indicators were out there. As I have written over the last month, it was just a matter of time before market discipline exerted itself. I'm hoping the decline will continue for a few more days and purge some of the excess exuberance out of the markets. So why not sell now and try to catch the bottom later?

If you can do that successfully, you're a better man than I, Gunga Din. But in the past, readers may recall, I have done just that. I have successfully told readers when to sell and when to buy back in 2007, 2008, 2010, 2011 and 2012, so why not now? The difference this time is the extent of the decline I am looking for.

In the past, each of my sell recommendations encompassed a correction in stocks of at least 10 percent. This time I don't see that. We may experience a decline that approaches the 10 percent level but, in my opinion, a decline of that magnitude is not warranted.

You see, unlike the last few years, I don't see the kind of market risk that precipitated big declines. The EU, Greece, Washington, U.S. debt downgrades, as well as fiscal and monetary uncertainty has been replaced with what — Cypress? Bumpy unemployment numbers? North Korea sabre rattling?

None of the above has the power to crater this market. The present concern over the last few weeks' jobs numbers should be put in context. Remember that a lot of construction jobs were created by Super Storm Sandy, however, those repairs are winding down. At the same time we are starting to feel some of the ill-advised (in my opinion) sequester cuts starting to show up in the data.

Clearly those cuts will do little good for the economy but they won't sink it. As long as the Fed keeps pumping dollars ad infinitum into this economy we are all sitting pretty. On the plus side, the recent decision by the Japanese monetary authorities to follow our central bank's lead and stimulate their economy to the tune of 7.5 trillion yen is truly unprecedented.

I was talking to a 30-year veteran of Japanese investing, Michael Longthorne, a managing director of Mizuho Securities, who described the move as "strapping a rocket onto a go cart." We concluded that after over 20 years of economic stagnation, there is the potential that the world's third largest economy (after the U.S. and China) could become a real factor once again in global economic growth in the years to come.

Bottom line, markets will use just about anything as an excuse when a pullback is overdue. My advice is to ignore the jibber jabber, ignore your short-term paper losses and look forward to a good year of double digit gains in your investment accounts.

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
Guest Column: Keeping Your Pet Safe This Holiday
Thanksgiving Greetings
North Adams Church Welcomes New Pastor & Music Director
Lanesborough Outlines 250th Celebration Calendar
'Dumb and Dumber To': It Sure Is
Williamstown Chamber Executive Director Departing
Selectmen May Seek Peer Review of Dollar General Traffic Study
Oh Be Thankful Pie Auction Raises Funds for Charities
Pittsfield Council Accepts School Budget Law, Denies Hiring Authority Plan
Holiday Hours: Thanksgiving

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 (151)
Independent Investor (205)
Archives:
November 2014 (4)
November 2013 (2)
October 2014 (9)
September 2014 (5)
August 2014 (7)
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
January 2014 (8)
December 2013 (8)
Tags:
Euro Markets Currency Crisis Rally Europe Bailout Banks Greece Recession Fed Pullback Oil Selloff Japan Housing Stimulus Election Interest Rates Europe Stock Market Debt Federal Reserve Congress Energy Fiscal Cliff Jobs Commodities Stocks Debt Ceiling Deficit Metals Economy Taxes Retirement
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
@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: 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: Is There a Doctor in the House?
The Independent Investor: The Pipeline Made Simple
@theMarket: Markets Are in Half Time
The Independent Investor: U.S. and China Square Off
The Independent Investor: Workers Get to Save More in 2015
@theMarket: All Clear
The Independent Investor: The Elephant in the Room
@theMarket: So far, So Good
The Independent Investor: OPEC's Oil Ploy
@theMarket: Are We There Yet?


View All
Abbott School Pie Auction...
Gabriel Abbott Memorial School's annual Oh Be Thankful Pie...
Wahconah Football Reaches...
Salvatore grabbed the ball out of the air and sprinted 95...
Proud Pittsfield Fights to...
Pittsfield’s run in the postseason came to end on Westfield...
McCann Football's Run Ends in...
The McCann Tech Hornets road to Gillette Stadium and a...
Berkshire Chamber Showcase...
The Berkshire Chamber of Commerce held its Business 2...
Berkshire Grown Holiday...
Berkshire Grown held its Holiday Market in Williamstown on...
Wizards at Hoosac Valley
The Harlem Wizards faced off against Hoosac Valley staff...
St. Mary's Church Tour in...
Residents, business people, elected officials and Friends...
Williamstown's Mather House...
Traffic came to halt for several hours Wednesday morning as...
Girls Soccer: Nipmuc vs...
Although the Wahconah girls' season ended on Tuesday, its...
Boys Soccer: Belchertown vs...
Belchertown Downs Mount Greylock Boys in PKs
Football: Pittsfield vs...
Shade himself ended up taking it in from the 1 on third and...
Football: Turners Falls vs...
After completing the first-ever undefeated regular season...
Festival of Trees 2014
The Berkshire Museum kicked off its Festival of Trees...
Farmers' & Artisans' Harvest...
organic and handcrafted goods were sold at the special...
Football: Agawam vs Wahconah
The Wahconah football team was down eight points heading...
Abbott School Pie Auction...
Gabriel Abbott Memorial School's annual Oh Be Thankful Pie...
Wahconah Football Reaches...
Salvatore grabbed the ball out of the air and sprinted 95...
Proud Pittsfield Fights to...
Pittsfield’s run in the postseason came to end on Westfield...
McCann Football's Run Ends in...
The McCann Tech Hornets road to Gillette Stadium and a...
Berkshire Chamber Showcase...
The Berkshire Chamber of Commerce held its Business 2...
| 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