Wednesday, October 01, 2014 08:20am
North Adams, MA now: 57 °   
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: 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.


0 Comments
     
News Headlines
Williamstown Public Safety Committee Opts to Study Former Bank, Grand Union
North Adams Committee Hears Update on Infrastructure
Clarksburg Officials Frustrated by Financial Blunders
Gift Sculpture Installed in Williams' Restored Reading Room
Mohawk Trail Centennial Dedication Set for Saturday
Uncertainty Surrounds Dunkin' Donation of Pittsfield Church
Clarksburg Golf Course Work in Danger of Shutdown
Pittsfield Board Revokes Unused Liquor License
Letters: Thank You, Thank You, Thank You
Adams Board of Health Raises Permitting Fees
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 (145)
Independent Investor (197)
Archives:
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 (7)
December 2013 (8)
November 2013 (7)
October 2013 (6)
Tags:
Currency Greece Jobs Pullback Selloff Crisis Europe Stocks Deficit Stimulus Metals Recession Fiscal Cliff Rally Debt Ceiling Interest Rates Congress Commodities Fed Banks Bailout Stock Market Japan Federal Reserve Taxes Markets Economy Europe Election Debt Euro Housing Retirement Energy Oil
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:
@theMarket: Wash, Rinse and Repeat
The Independent Investor: Is Wall Street Responsible for Climate Change?
@theMarket: Waiting on the Fed
The Independent Investor: The United States of Scotland?
The Independent Investor: Europe Follows the U.S. lead
@theMarket: What's Up With Bonds?
The Independent Investor: Baby Boomers and Retirement
@theMarket: Labor on Their Mind
The Independent Investor: Financing ISIS
@theMarket: Geopolitical Risk Trumps Economic Growth


View All
Girls Soccer: Wahconah vs...
Monday afternoon girls soccer game between Wahconah and...
Golf: Drury vs Pittsfield
Nick Boulger carded a 40 to lead the Drury High School golf...
Bike Night 2014
Motorcycles packed into the Visitor Center parking lot...
Girls Soccer: Pittsfield vs...
Trinity Cookis tallied three of Pittsfield’s seven goals...
Soccer: PHS vs Taconic
Pittsfield boys, top Taconic 5-0
Football: Smith Voc vs McCann...
McCann over Smith Voc. 53-0.
Soccer: St. Joe's vs Taconic
St. Joe 1, Taconic 1: 1st half: Tac - Ryan Abel (Colin...
McCann Tech Golf
The McCann Tech golf team dropped a 19-5 decision to...
Girls Soccer: Hoosac vs Mt....
Rand made two of her six saves in the last six minutes, and...
Berkshire Works Career Fair...
The annual Berkshire Works Career Fair connected hundreds...
Soccer: Mount Everett vs...
Bradley Lupiani scored twice to lead the Mount Everett boys...
Cross Country at Wahconah
Boys:Wahconah beat Hoosac Valley 28-31; Lenox beat Hoosac...
Soccer: Commerce vs McCann
McCann Tech's Fuller Closing in on Hundredth Point. Nico...
UCP Annual Meeting 2014
United Cerebral Palsy of Berkshire County dedicated its...
Volleyball: St. Joe s vs...
Saint Joseph's 18 13 13 0 Wahconah 25 25 25 3
Girls Soccer: Mt Greylock vs...
The Wahconah girls soccer team earned its fifth straight...
Girls Soccer: Wahconah vs...
Monday afternoon girls soccer game between Wahconah and...
Golf: Drury vs Pittsfield
Nick Boulger carded a 40 to lead the Drury High School golf...
Bike Night 2014
Motorcycles packed into the Visitor Center parking lot...
Girls Soccer: Pittsfield vs...
Trinity Cookis tallied three of Pittsfield’s seven goals...
Soccer: PHS vs Taconic
Pittsfield boys, top Taconic 5-0
| 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