Home About Archives RSS Feed

@theMarket: No Spring in the Stock Market

By Bill Schmick
iBerkshires Columnist

As spring finally arrives throughout the country, you would think the stock market would celebrate, but not this year. The indexes were slammed again this week and we can expect more of the same in the months ahead.

By now, if you have been following my advice, you have already raised some cash by selling your most aggressive equity holdings. How much cash you hold is up to you. However, before you sell more, remember, that this sell-off is only a temporary state of affairs. By the fall, you want to be fully invested once again.

In the meantime, don't expect the stock market to simply drop like a stone. What I expect is a series of lower highs and lower lows. That process is beginning to unfold right now. So far this week, we have about a 3 percent decline in the S&P 500 Index. The tech-heavy NASDAQ has had a far greater decline, dropping that much in a day.

Momentum and biotech stocks have been the name of the game since the beginning of the year. While the overall markets simply vacillated up and down over the last three months, those stocks were winners with some names gaining 30-50 percent. Most of those companies are traded on the NASDAQ. Now that the markets are pulling back, it is those same stocks which are leading us lower.

When I first warned investors of a coming sell-off, I mentioned the over-heated initial public offering market (IPO) as one clear early-warning sign that the markets had risk. I noticed that this week, which was billed as the busiest public offering week since 2007, actually flopped.

Only three out of seven new companies actually made it to market, while the others postponed due to market conditions.

By now, most of my readers (and clients) have become accustomed to volatile markets.

Many of you lived through the devastating declines in 2008-2009. We endured together several major declines together since then. We suffered through periods when the markets were going up and down 1 percent or more per day, so what we face this spring and summer should be small potatoes to you.

Those trials and tribulations have seasoned you. As veteran investors, you can live through this decline. You realize that this too shall pass. The key in the months ahead is to maintain your composure, resist making emotional decisions and, if you still have not raised some cash, I want you to do so as the market once again climbs to (and possibly breaks) the old highs.

My suggestions would be to sell small or mid-cap stocks or funds. Large cap growth funds are also a good idea, but resist the urge to just sell everything. Markets can be a quirky lot. The past has taught us that stocks can turn on a dime and if you don’t have skin in the game when they turn, you stand to lose quite a bit.

Sure, I'm looking for a 10-15 percent  decline, but what if stocks reverse and go higher before that? In October  2011, the stock market gained 9 percent in just seven business days. By the time some investors got the courage to get back in the markets had erased almost half their decline.

That's why you play the percentages when investing.

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
Pittsfield Fire Department Says Lenco Has Too Many Vehicles On Site
Berkshire Healthcare Communities Earn 19 National Awards
Southwestern Vermont Health Care Employees Donate 170 Backpacks to Local Students
MCLA Announces Diverse Incoming Class of 2020
Williamstown's Beloved K9 Blue Dies at Age 12
'Playing With Fire' Merges Music, Mystery With Flair
Make the Most of Gifts to Grandchildren
Holiday Hours: Labor Day
Democratic Senate Candidate Participate in Pittsfield Gazette Debate
Cheshire Reservoir Cleanup to Resume

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 (208)
Independent Investor (289)
Archives:
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 (6)
November 2015 (6)
October 2015 (9)
September 2015 (7)
Tags:
Pullback Currency Fiscal Cliff Europe Recession Retirement Election Stocks Europe Wall Street Deficit Taxes Debt Banks Stock Market Bailout Euro Markets Energy Greece Commodities Selloff Metals Japan Debt Ceiling Oil Rally Economy Stimulus Housing Crisis Congress Jobs Interest Rates Federal Reserve
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:
The Independent Investor: The More You Look, The More You Lose
@theMarket: Fedspeak Occupies A Dull Market
The Independent Investor: Health Savings Accounts a Good Idea
@theMarket: Three in One
The Independent Investor: Why the Nation's Productivity Matters
@theMarket: Markets Need to Digest Recent Gains
The Independent Investor: Candidates & the Economy
@theMarket: Markets Make Hay
The Independent Investor: Tax Breaks For College Savings
@theMarket: Historical Low-Interest Rates Prop Up Equities