Thursday, July 31, 2014 01:23am
North Adams, MA now: 55 °   
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
Market Watch: Looking for an Excuse
By Bill Schmick On: 04:44PM / Friday March 22, 2013
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

You may be wondering how an island nation with an economy smaller than Vermont could set the world's stock markets on edge for most of the week. The short answer is the markets are looking for any excuse to take some profits.

That's not to say that I am ignoring events in Cyprus, a small island in the Mediterranean with a bit over a million inhabitants. The Cyprus problem is simple. Their banking system holds $176 billion in deposits — about eight times the nation's GDP — and some of these banks are in deep financial trouble. They need a bailout similar to the rescue packages given to Greece, Ireland and Portugal.

For the first time since the financial crisis began back in 2008, the EU has changed the rules for a bailout. In exchange for $13 billion in funds, the Cyprus government must raise $7.5 billion on their own. To do that, the EU wanted them to tax all their country's bank accounts of 100,000 euros or more (about $130,000). What would you do if that happened here?

Two words: Bank run. As soon as Cypriots got wind of this scheme they stormed the ATMs of all their nation's banks, but they weren't working. Then the government said they would take steps to prevent any money from leaving the country. Chaos ensued. Parliament convened and it only took until Tuesday before the Cypriot government rejected the scheme out of hand. That still leaves the question of how and under what terms the country will be able to receive a bailout.

What spooked investors was the possibility that what happens in Cyprus could happen in other parts of Europe. Was the EU signaling a new and potentially damaging approach to Europe's financial problems? Would bank depositors in Spain, Italy or elsewhere be next? This is serious stuff, since the only thing keeping a depositor's money in any particular bank is the belief and trust that their money is safe. If there was even a possibility that some government in financial distress might swoop in and "tax" 10 percent of your money, what would you do?

So the specter of a potential bank run throughout Europe was one of the "what if" scenarios making the rounds of Wall Street this week. It seems to me that every governmental financial institution around the world has gone to extreme lengths to convince depositors that their banks are safe. I can't see what anyone would have to gain by changing that policy.

It may simply be that since the lion's share of high net worth depositors in Cyprus happens to be Russian moguls, the EU may be trying to scare the Russian government into becoming a part of a Cyprus bailout plan. Who knows?

As for the U.S. market, you know my opinion. I'm bullish, but expecting a pull back. Investors used this obvious piece of negative fluff as an excuse to sell a little stock. If one looks hard enough, you can and will find something to worry about. This week it was Cyprus. Next week there will be something else. Stay invested.

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.



     
@theMarket: The Blame Game
By Bill Schmick On: 03:28PM / Friday March 01, 2013
Important
5
Interesting
5
Funny
4
Awesome
3
Infuriating
5
Ridiculous
3

Let's call out names, names, I hate you more

Let's call out names, names, for sure"

— 'Blame Game' by Kayne West



 

 

 

 

If it wasn't such a national embarrassment, the finger pointing going on among our so-called leaders would be comical. Nonetheless, it is March 1 and time is up. Bring on the Sequester.

Our congressional leaders made a big show today at the White House sequestration meeting. It was their first such meeting on the subject to date. I considered it a photo op at best. This week, rather than attempt a compromise, both Democrats and Republicans spent their time blaming each other for the Sequester.
 
From the GOP point of view, it is "the president's sequester" while the president is blaming the cuts on the Republican's failure to act responsibly. Since it was the Budget Control Act of 2011 that first authorized the Sequester, (if the bi-partisan "Super Committee" couldn't come up with a compromise solution to reducing the deficit), let's look at how the final vote panned out.

One hundred and seventy-four Republicans voted for the measure but only 95 Democrats. The final tally was 269-161 with just about all of today's GOP leadership voting yes. These are the same characters who now claim it was Obama's fault. All of this name calling is a smokescreen to hide an even more important deadline that occurs at the end of March.

On March 27, Congress will need to pass a "continuing resolution" (read short-term spending plan) or funding for the Federal government will expire. Yes, my long-suffering readers, without a deal between the two parties the government shuts down. Continuing resolutions are stop-gap measures that keep the lights on in Washington, absent a formal budget. We haven't had one of those in years because of political partisanship.

The threat of a shutdown actually will force Congress to act since, unlike the more subtle and slower-paced sequester cuts, a total shutdown of the government would be highly visible and extremely disruptive. It would not be pretty. Either congress will agree to keep the sequester cuts as is or it will have to come up with an alternative set of revenue increases and spending cuts.

In the meantime, both parties will have had almost a month of dealing with irate airline passengers, defense contractors, various agency heads, parents of Head Start children and the like. So this week's failure to compromise is simply setting the stage for a bigger cliffhanger, much more drama and, I suspect, heightened volatility in the stock market.

Readers may have noticed that over the last two weeks volatility has escalated among the averages. We will most likely see more one percent up and down days as March unfolds. Washington seems to be providing the justification for the pullback I have been expecting. So with headwinds strengthening, one wonders just how long the markets will be able to shrug them off. But let me be clear: I don't expect a market route, simply a nice pullback that stocks sorely need in order to advance further 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.
- See more at: http://www.iberkshires.com/blogs/Bill_Schmick#sthash.JrIiQUKK.dpuf
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.
- See more at: http://www.iberkshires.com/blogs/Bill_Schmick#sthash.JrIiQUKK.dpuf

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.



     
@theMarket: Inch by inch
By Bill Schmick On: 09:07AM / Saturday February 16, 2013
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

 

Markets continue to grind higher with several averages, like the small and mid-cap indexes, hitting record highs. What little profit-taking occurs is met by buyers anxious to get into the market. I suspect this stage will continue for a bit longer.
 
We are only 3 percent away from the historic highs of the S&P 500 Index at 1,565. That magic number is acting like a magnet to bullish investors who argue there is no reason we shouldn't at least reach that number before giving some back. Seasonally, the first quarter is also kind to the stock market. All in all, enjoy the run and stay invested.
 
This weekend, the G20 group of finance ministers and central bankers will meet in Moscow. There was a time not long ago when investors would be holding their breath in anticipation of some new pronouncement involving the EU and Greece in particular. It appears those days are behind us.
 
The press has been playing up the risk of a currency war erupting between some nations, specifically those who make up the G7 countries. Where have they been? The devaluation of currencies has been going on ever since 2009. The U.S. dollar has been dropping against most currencies now for well over a year. The yen has plummeted 20 percent since November while the Euro has also lost value on various occasions.
 
This week the G7 countries — the U.S., Japan, Germany, Great Britain, France, Canada and Italy — issued a joint communique stating that domestic economic policies must not be used to target currencies. But every central banker will argue that most, if not all, of their nation's currency moves have simply been a side effect of their domestic policy. They argue that their stimulus policies have been targeting domestic growth, not a weaker currency.
 
Take our own Federal Reserve; it is on its third such stimulus program. It is true that the Fed's main objective is reducing unemployment by growing the economy. And both the Fed and the U.S. Treasury have been careful to publically insist on a strong dollar policy. But the facts are that the dollar has weakened and continues to do so in the face of our latest quantitative easing strategy.
 
A weak dollar helps our exports by making our goods cheaper to buy for overseas consumers.  Strong exports equate to higher domestic growth. And over the last two years our economy needed those export gains badly.
 
In Japan, the same thing is happening. Its newly elected government has taken a page out of our book. After years of stagnation, Japan is attempting to stimulate their economy by easing monetary policy. That has driven the yen much lower, which will help grow Japanese exports. The Germans are miffed by that strategy and have been complaining. Yet, Germany has benefited for years by exporting their products in Euros. The worth of the Euro is a heck of a lot cheaper than Germany's original export currency, the Deutsch mark. As a result, Germany became an export powerhouse in Europe.
 
The simple truth is that we have been dealing with these currency issues for several years now. The declines have been gradual for the most part. That way no one rocks the boat too much and competitors can adjust to currency changes over time. The sharp devaluation of the yen, however, has inconvenienced some G7 players and they are making their views known. I suspect that Japan has gotten the message and the pace of the yens’ decline will likely moderate from here.
 
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.


     
@theMarket: Not If, But When
By Bill Schmick On: 04:47PM / Saturday February 02, 2013
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
1

On the technical front, more and more indicators are flashing warning signs. The markets look extended and investor sentiment points to extreme bullishness. Those are usually signals that we are due for a sell off.

That does not mean that the markets won't go higher but the higher the averages climb without a pullback, the sharper the decline will be when it does occur. Remember too that pullbacks are good for the markets. Two steps forward and one step back is the rhythm of just about everything and the markets are simply a reflection of that fact of life. We have had a good run over the last few weeks and the averages are close to historic highs for good reasons.

The traditional Christmas rally was postponed last year because of concerns over the Fiscal Cliff. Prior to that, in November, some investors vented their disappointment over the re-election of President Obama by selling the market. They were convinced that without Mitt Romney, the world would come to an end.

As a result, since the beginning of the year, many investors have been playing catchup. As predicted, once the Cassandras had been proven wrong on tax hikes, spending cuts, the growth of the economy, the debt limit and whatever else they were fretting about, the bears have been making up for lost time and have been throwing money at stocks hand over fist.

As I explained last week, we may also be seeing the beginnings of a shift out of U.S. Treasury bonds and into stocks over the last few weeks.

All of this good news has kept the markets propped up. I expect that enthusiasm will continue over the very short term, but somewhere up ahead lies the possibility of a correction of up to 10%. That might sound like a lot (and it is), but those kinds of corrections normally occur once or twice every 12 months or so. We are overdue for this one.

“Should I sell now?” asks a client.

My answer depends on your circumstances. If you know that at some point over the next few months you will need to raise cash for college tuition, a new roof, an auto or other big ticket purchase, then it probably makes sense to take some profits now and make sure you have the money available for when you will need it.

On the other hand, if it is simply fear and greed spurring your desire to sell, I would advise against it. I have never met anyone who can consistently sell at the highs and buy back at the lows. The majority of times, those who try lose more money than they make.

“So I'm supposed to just sit here and take a 10 percent hit?" the client asks.

My answer is yes. The next thing longtime readers will point out is that over the past few years I have taken action on many similar declines. Why not now?

If I thought that something serious was lurking out there in the bushes, something that could drive the market down a lot further than 10 percent, then I might advise you to step to the sidelines. But I don't see anything like that.

Europe is recovering, not failing. The Fed is easing and the government appears to be getting its act together. Globally, I see more growth ahead. No matter how much I beat the bushes, I just don’t see the kind of dangers that we have had to navigate over the last few years.

There is no way of telling when a correction will occur. We could easily gain another 4-5 percent before it occurs and there is no guarantee that if it does occur it will turn out to be 10 percent. It could be less, a lot less. In which case, selling now will be an exercise in futility. My advice for most investors is simply weather the decline if it occurs. I have a strong feeling that the markets will ultimately make back any losses they may incur and then some.

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.


     
@theMarket: A Rising Tide
By Bill Schmick On: 04:10PM / Friday January 25, 2013
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

That old saying, "a rising tide lifts all boats" certainly applies to the stock market this month. It appears that more and more investors are abandoning the bond market and finally embracing equities. That spells further upside.

Last week, U.S. investors moved a net $3.8 billion into equity mutual funds. The week before that $7.5 billion in new inflows were recorded along with over $10 billion invested in exchange traded funds. That's the best two-week inflow into equity in 13 years.

Over the last few years, I have kept tabs of the money flows in and out of the stock market. We have endured 22 consecutive months of outflows from the equity market. That money went into the bond market, CDs and checking accounts. Many of those investors did well by investing in U.S. Treasury and other bonds, since interest rates continued to fall while fixed income prices rose. They were convinced that equities were going to plummet at any moment. It didn't happen and now, thanks to the record low rates of return offered by these safe havens, investors may be embracing risk once again.

I have often said that as long as money was flowing out of the stock market, volatility would continue to increase while the probability of making new historical highs in the averages would be slim at best. The S&P 500 Index is up about 120 percent from the day I urged investors to re-enter the market back in March of 2009, and we are now within 5 percent of regaining the historical highs of 2007 in most of the averages

We need an expansion in volume and a wave of new buying in order to push us over the top. As I have said, a great many retail investors have sat on the sidelines through this four-year rally. It appears that they may now be moving out of their bond holdings and back into the stock market providing the fuel we need for further gains.

The contrarian in me worries, however, that if we do see the retail investor return to stocks, it may signal an approaching top to this four-year bull run. There have been times in the past, most notably the rush into technology stocks back in 2000, where the retail crowd has jumped in at the absolute worse time. I don't believe that the retail investor is always wrong. There have been plenty of times that the common sense approach of the individual has trumped the hedge fund mentality of most professionals.

The market's grind higher this week was that much more impressive given the earnings disaster of one tech company that, until recently, was the apple of most investors' eyes. I recall warning readers last summer of the high, in fact, impossible valuation that the market was awarding this company. Unfortunately, few readers took my advice to sell.

Stocks are overextended and could have a minor pullback at any moment, but overall I expect the markets will continue their winning streak through the end of the month and beyond. Underlying the averages, I have been seeing a lot of sector rotation where traders are selling the high flyers and buying the laggards. That is also happening overseas where emerging markets, for example, have been subject to profit-taking this month. I would use these pullbacks to add to positions.

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.


     
Page 9 of 28... 4  5  6  7  8  9  10  11  12  13  14 ... 28  
News Headlines
National Grid Meets With Local Officials Over Power Outages
Action Continues at YMCA Long Course Nationals
Murphy, Berkshire Force Win World Series Opener
Mount Greylock Invited to MSBA's Feasibility Stage
Images Cinema Hires New Executive Director
Classical Beat: Concerts Blossom Throughout the Region
Adams Panel Adds Development, Planning to Administrator Duties
Dark Matters; Williamstown Theatre Festival Gets Serious
Williamstown Public Safety Building Committee to Pursue RFP
Weather Service Reports Dalton Hit by Tornado
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 (140)
Independent Investor (190)
Archives:
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
January 2014 (7)
December 2013 (8)
November 2013 (7)
October 2013 (6)
September 2013 (6)
August 2013 (8)
Tags:
Housing Metals Congress Euro Rally Recession Deficit Retirement Europe Bailout Banks Stimulus Fiscal Cliff Japan Debt Ceiling Europe Crisis Stocks Fed Interest Rates Markets Selloff Economy Currency Stock Market Oil Taxes Pullback Jobs Energy Federal Reserve Greece Debt Commodities Election
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
The Independent Investor: Does Cash Mean Currencies?
@theMarket: QE II Supports the Markets
@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: How Much Is Too Much to Spend in Retirement?
The Independent Investor: The Fed Turns Off the Spigot
The Independent Investor: Should You Pay Off Mortgage Before Retiring?
The Independent Investor: Retirement should be a part-time job
The Independent Investor: Unhappily Ever After
@theMarket: June Swoon
@theMarket: Europe Is a Good Bet
The Independent Investor: A Road to the Future
The Independent Investor: Holy Cow
@theMarket: Flirting With Record Highs Again


View All
Williamstown Chamber @MadMacs
Attendees at Wednesday's Williamstown Chamber Nite at Mad...
Pittsfield Ethnic Fair 2014
North Street in Pittsfield had a double-dose of block...
LaFesta Baseball 2014
The LaFesta Baseball Exchange, celebrating 24 years, pits...
Adams Polish Picnic 2014
Adams residents enjoyed traditional Polish food and music...
Mingo's Sports Bar & Grill...
Over 50 cars packed into the Mingo's Sports Bar & Grill...
BYP Networking at Naumkeag
The Berkshire Young Professionals met at the historic...
Pittsfield Shakespeare...
Pittsfield's Shakespeare in the Park free performances at...
Lanesborough Kids Fire Camp...
Lanesborough Fire Department held its annual Kids Fire Camp...
Lanesborough Fire Drill
The Lanesborough Fire Department trains on basement fires...
Pittsfield Polish Picnic
Crowds lined up for golabki and kapusta at the annual...
North Adams Kids Emergency...
The North Adams 21st Century Community Learning Center...
Gather-in Festival 2014
The 42nd annual Gather-In festival was held at Pitt Park in...
BFAIR Mini-Golf Fundraiser
Berkshire Family and Individual Resources held its annual...
Lanesborough Seeds of Harmony...
Bradly Farm in...
Hinsdale Block Party
The Hinsdale Fire Department hosted its annual block party...
Arrowhead Country Craft Fair
Arrowhead, Herman Melville's home in Pittsfield, is hosting...
Williamstown Chamber @MadMacs
Attendees at Wednesday's Williamstown Chamber Nite at Mad...
Pittsfield Ethnic Fair 2014
North Street in Pittsfield had a double-dose of block...
LaFesta Baseball 2014
The LaFesta Baseball Exchange, celebrating 24 years, pits...
Adams Polish Picnic 2014
Adams residents enjoyed traditional Polish food and music...
Mingo's Sports Bar & Grill...
Over 50 cars packed into the Mingo's Sports Bar & Grill...
| 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