Home About Archives RSS Feed

@theMarket: Markets Are Priced for Perfection

By Bill Schmick
iBerkshires Columnist

What a week for stock investors! All the main averages and most of the minor indexes registered historic highs. No question, Donald Trump has been good for the markets. The question is when will investors begin to take profits?

Calling a top (or a bottom) in the markets is notoriously difficult. Granted, over the years I have been lucky and managed to catch a turn or two once or thrice. As readers know, once we hit 2,330 on the S&P 500 Index, I expected and still do expect some profit-taking. That doesn't mean you should panic nor do anything more than raise a little cash.

My strategy is to re-employ that cash as we pull back. The timing of such a move is always more of an art than a science. Think of it as a process. Sell a little today, a little more tomorrow, and so on. I'm not looking for a big pullback, maybe 4-5 percent. After the market declines, use the same kind of technique to buy back stock. But don't go overboard because I believe the Trump Rally still has legs.

What, you might ask, has our new president accomplished in order to justify this ongoing rally? Well, aside from a flurry of executive orders that have reversed some of the prior president's executive orders, not very much. But it is what he has promised that has investors drinking the Kool-Aid.  

The litany of tax cuts, infrastructure spending, Obamacare overhaul and an end to onerous rules and regulations has given investors hope. Analysts and pundits are fueling those feelings by drawing up all sorts of "what-if" scenarios that promise good days ahead.

Material, building, construction and defense sectors have skyrocketed in price because of promises of increased defense and infrastructure spending. Forecasters see a big jump in corporate earnings if taxes are cut. As for the impact of less regulation, that is expected to have a beneficial impact on business spending and capital investments.

If the election was about "Making America Great Again" why are overseas markets going up as well? Wasn't President Trump going to launch devastating trade wars with the rest of the world, sending us all down the drain? Others were/are sure that World War III is right around the corner, now that there is a "wild man" in the White House. Yet, global stock markets are going up as well.

One explanation may be that overseas players believe Trump's bark is nowhere near his bite. So far that has proven to be the case. Others are taking heart, hoping that his example will lead to changes in their own countries. One could argue that Brexit began a populist movement worldwide that rejected the status quo, the rule of the few over the many and a revival of capitalism. A case in point is the rise of yet another Trump-like politician in France, where Jean-Marine Le Pen, the far-right candidate of the National Front, looks set to gain even more popularity.

While all of this movement may be intoxicating to market participants, we need to see a little more beef before justifying the present levels of stock prices. I have no doubt that the new administration will get much of what they want done, but it will take time. The market has just gotten a little ahead of itself right now.

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. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Write a comment - 0 Comments            

The Independent Investor: Pet Trusts Are the Way to Go

By Bill Schmick
iBerkshires Columnist

If you have been avoiding a visit to an estate planning lawyer, despite the pleading of your spouse, your kids or grandkids, consider this: your pet's future well-being could be in jeopardy without a legal safeguard.

As I wrote in my last column, new legislation is surfacing in a number of states that recognizes our concern for our pets. Even though we consider our pets part of the household, legally, your pet is not considered a human. Instead, they are considered tangible property and, generally speaking, tangible property cannot be named as a beneficiary of a trust.

Many states, however, are allowing legally enforceable documents that can guarantee a pet's continuing care. Forty-six states and the District of Columbia have passed statutes specific to pet trusts, according to the Animal Law Review. In Massachusetts, legislation was passed in 2011 to provide for pets' welfare after their owners' demise.

"The definition of tangible personal property hasn't changed," explained attorney Holly Rogers, an expert in the area, "but legislatures have recognized a compassionate exception when it comes to our pets."

The primary legal document required to safeguard your pet is a pet trust, according to Rogers:  "It can be as simple as 'I leave $20,000 to my sister, Betty, for the care of my cat, Fluffy.'"

The pet trust can be a stand-alone document, inserted into your will, or worked into your existing revocable trust. And, as we have written in the past, everyone should have a will or trust anyway. A trust is especially important if minors or adults who can't care for themselves are involved. A trust allows your beneficiaries and your pets to avoid probate which is time-consuming, public and expensive. Trusts also allow for tax-planning if you are leaving a substantial inheritance to your beneficiaries.

For those of us that want more than a simple directive, a pet trust can be drafted with any amount of complexity. Rogers who does estate planning for her Massachusetts clients, is the local "go-to" lawyer when it comes to pet planning.
 
"I have created trusts where there are multiple layers of contingencies," she says. "The trust can name trustees and caretakers both appointed within the document, in which the trustee insures that the pet is cared for and disburses money to the appointed caretaker, and provides specific provisions for the pet's care and the duties of the trustee and caretaker. Responsibilities can be broadly or narrowly defined depending upon the owner's wishes. "

How much can you expect to pay for a pet trust? It depends on who you go to and the level of complexity that you demand. Holly Rogers would be much more reasonable. She estimates a range of $250 for an amendment to add a simple pet trust to your existing will or trust to as much as $1,500 for a soup-to-nuts drafting of an estate plan for you and your family in which your pet trust is part of the package.

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. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Write a comment - 0 Comments            

@theMarket: Market Stalls at Record Highs

By Bill Schmick
iBerkshires Columnist

Stock market averages made another batch of new highs this week only to fall back in what may be buyer exhaustion. If the trend continues, investors may be looking at a 4-5 percent decline from here.

It is too early to tell, because one day does not make a trend. We could easily experience a rebound next week, but I would still consider the present levels of most indexes ripe for a fall. My column last week pointed out that we are now in a "danger zone." Sure, the markets could continue to grind higher but every additional point just sets us up for an overdue correction.

Since all eyes and ears are on Washington, progress on President Trump's agenda is dictating where the markets will trade. Every television appearance and tweet by President Trump simply adds to investor expectations. At this point, investors expect that tax cuts, a wholesale revamp of rules and regulations, plus a multitrillion-dollar infrastructure spending plan is just around the corner. It is not.

For those of us who understand the pace of reform in the nation's capital, it would be best to take a longer-term approach to Trump's agenda. It appears, for example, that health care will be the first area our legislatures will be addressing this year. That does not mean that one day soon Congress will vote on a soup-to-nuts replacement of the Affordable Care Act.

Instead, expect to see a flurry of piecemeal changes over the course of many months. Lawmakers will attempt to address the failings of the present health system without disrupting those who are already members of the Obamacare insurance scheme. That will not be an easy task.

Steve Mnuchin, the new secretary of the Treasury, tempered investors' expectations this week that tax reform would also be a done deal any day now. Instead, he promised "significant" tax reform before the congressional August recess. In my opinion, that is still a wildly optimistic deadline for something that has been talked about, but not acted upon, for many years. And yet, naïve investors were disappointed by the new time frame.

Prospects for infrastructure spending, another of the president's policy initiatives, appears to be fading into sometime next year. That is understandable, given the need to balance the desire to get Americans back to work again with the impact that spending will have on an already-bloated deficit.  

Of course, the problem with that kind of disappointing news is investors have already bid up material, commodity and building stocks to outrageous price levels over the past two months. Given that market participants today are notoriously short-term in outlook, there is a risk that speculators will dump these stocks now and revisit them later (hopefully at a lower price).

And if they do, what's to stop traders from taking down the entire market simply because there may be a time delay between investor expectations and the implementation of Trump's agenda? You can see the risk, and it is one reason that I have turned cautious in the short-term.

Do I believe, like some, that Donald Trump won't be able to pull off his program? No, I don't, but I am realistic about the time required to accomplish his goals. There may simply be a disconnect between what investors are expecting and what I believe can be accomplished in the short-term.

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. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Write a comment - 0 Comments            

The Independent Investor: What Happens to Your Pet After Your Death?

By Bill Schmick
iBerkshires Columnist

If you are one of the 70 percent of the population that considers their pet a member of the family, you should review your estate planning documents. Otherwise, there is a good chance your pet will either end up in the pound, or worse.

This hits close to home for many of us. If my wife and I were to die, for example, who would take care of our chocolate Lab, Titus?

There are few people who we would trust to take care of him. Compounding the problem is the fact that he is 8 years old and suffers from arthritis. I discovered that simply putting some instructions in a will was neither legally binding nor particularly useful. Unless we do something different, Titus could be condemned to imprisonment and a life without love.  

You must understand that legally a dog, cat, horse or any other kind of pet is not considered a human being. They are considered your property. As such, Titus is our "property" and the law states that you can't leave property to a piece of property.

Therefore (until recently and only in some states) your pet can't be a beneficiary in a will. Your instructions within a will are not enforceable. I might state that Bri (our dog whisperer) gets Titus in the event we pass, but a will cannot instruct Bri to care for the dog, take him to the vets, etc. Don't forget, too, that your will is not enacted immediately. All wills have a waiting period, sometimes months, even longer if it is contested.  Who is going to care for your pet in the meantime?

It is also difficult in a will to disburse money to someone for your pet's care over a pet's lifetime since a will is a static (as opposed to an on-going) document. And changes to a will are at the court's discretion. Do you really want some judge, who may or may not be an animal lover, deciding your pet's fate?

You may recall the now-famous case of Leona Helmsley, who left $12 million in trust to Trouble, her white Maltese, while giving nothing to two of her four grandchildren. In 2007, a year after she died, a judge reduced the dog's wealth by $10 million. Still, $2 million was enough for Trouble to live a life of luxury, until she died at age 12 in 2011.

In some cases, pet provisions in your will may only be "honorary." Fortunately, 40 states and the District of Columbia recognize statutory pet trusts, so that pet owners who direct someone to take care of their pet and bequest funds for its care could work through such a legal document. In the states without statutory pet protections, however, these provisions are "honorary." That means the person who receives the funds decides whether or not to use them for your pet's care. There is nothing to prevent that person from dumping your pet and taking a vacation with your $5,000.

The person to whom you entrusted your pet to could be a loving, caring person, but what if the person is allergic to your pet, or already has pets of their own and conflict develops between them? The person may live or move to a rental apartment or community that excludes pets. As you now realize, there is a lot to consider here.

But there are avenues you can pursue to protect your pets. There are legally enforceable documents that can guarantee an animal's continuing care. Some statues such as the Massachusetts General Laws chapter 203E, Section 408 are relatively new. We will be discussing pet trusts in our next column with an expert attorney on the subject, Holly Rodgers.

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. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
 

Write a comment - 0 Comments            

@theMarket: Danger Zone

By Bill Schmick
iBerkshires Columnist

"Highway to the danger zone
Gonna take you
Right into the danger zone"


Something new is happening to the stock market, it has actually had two negative days in a row. That doesn't mean much after weeks of gains, but it just may signal a temporary halt to the Trump Rally.

My short-term target in this Trump-inspired rally was achieved this week. The benchmark index, the S&P 500, not only reached 2,330 (my target) this week, but went beyond it. The S&P 500 kept on climbing, reaching an intra-day, record-setting high of 2,351.31 on both Wednesday and Thursday. The index has subsequently fallen back but not by much.

The Dow, NASDAQ, the small-cap Russell 2000 Index, plus a slew of other averages also reached record highs. Make no mistake, that's a good thing. Hence forth, any further gains will put us on a highway to what I call the danger zone.

Like the movie, "Top Gun," we can cruise into the danger zone (where most accidents occur), but as Goose and Maverick discovered, one wrong move can send us into a tailspin. Let me make something clear, however, when (not if) this tailspin occurs, your portfolio will come out of this intact and reach even higher highs over the coming months. That is the reason I have been counseling readers to expect a decline — but not try to play it.

In this Teflon market, little can dent theses gains. There were rumors, for example, that a $4 billion hedge fund was in trouble. The markets barely moved. Then there was Fed Chairwoman Janet Yellen's annual Humphrey Hawkins testimony before Congress. In the past, investors and traders would hang on to every word for clues of what the Fed would do next in the interest rate environment. Today, the Fed's spotlight has been stolen by the actions of our new president.

And speaking of our Top Gun, this week we witnessed some really crazy action coming out of Washington. True to form, "The Donald" in a press conference on Thursday performed another media-bashing episode that sent top network journalists screaming that the president has lost his mind. I found it amusing. Some of Trump's top cabinet choices backed out, another resigned, while the Democrats continued to erect as many barriers to progress that they can. Welcome to Washington.

On the foreign front, President Trump bashed Venezuela's leaders for facilitating drug running, met with Canada's and Israel's leaders, while telling Russians to give back Crimea to its people. None of these events moved the markets. Even the presence of a Russian spy ship, the SSV-175 Viktor Lenov, off our coast could do no more than produce a yawn from the high-frequency traders.

For the markets, it is all about waiting to see what "phenomenal" tax, economic and regulatory reforms will be forthcoming from the White House. To be fair, the Federal Reserve Bank still has a role to play in investors' psyches.  Bond traders are keeping a watchful eye on exactly when the Fed plans to raise interest rates again. Right now, March is off the table and June seems the month of highest probability for another quarter point rise in the Fed Funds rate.

I expect markets to do little until further economic news is released from Trump's team. The response from Congress will also be important. At any time, we could see a pullback because now we are in the danger zone.  But as I have written, it would be a dip that should be bought not sold. Stay invested.

Note: Several weeks of Mr. Schmick's columns in January & February disappeared into the ether on their way to iBerkshires. They are being back posted to the dates on which they should have appeared.

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. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Write a comment - 0 Comments            
Page 7 of 110... 2  3  4  5  6  7  8  9  10  11  12 ... 110  
News Headlines
Cultural Pittsfield This Week: Aug. 18-24
Adams Officials Questions Cable Company
Cheshire To Make Decision On Dam Removal
Pittsfield Wrapping Up Summer Recreation Programs, Looks to Fall
Shafer, Kierstead Lead Team to Torchia Title
NBCC Distributes Nearly 300 Backpacks Filled With School Supplies
Veterans Rucking Across The State For Suicide Awareness
SteepleCats' Whitney Honored as League's Top Starting Pitcher
Pittsfield Has Questions, But Optimistic About Educational Task Force Recommendation
Eclipse Mill Pottery Exhibit Offers Art You Can Hold In Your Hand

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 (235)
Independent Investor (320)
Archives:
July 2017 (2)
June 2017 (8)
May 2017 (7)
April 2017 (7)
March 2017 (8)
February 2017 (8)
January 2017 (6)
December 2016 (2)
October 2016 (1)
September 2016 (9)
August 2016 (2)
Tags:
Federal Reserve Europe Debt Deficit Stock Market Bailout Metals Markets Recession Retirement Japan Fiscal Cliff Wall Street Jobs Banks Greece Euro Taxes Pullback Stimulus Election Rally Stocks Housing Selloff Commodities Crisis Energy Debt Ceiling Economy Currency Interest Rates Oil Congress Europe
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
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: Why Are Interest Rates Rising?
The Independent Investor: Will the Municipal Bond Massacre Continue?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
@themarket: Global Interest Rates Rise, Global Stocks Fall
The Independent Investor: The Market's Half-Time Report
The Independent Investor: Small Business Linchpin of America's Success
The Independent Investor: A Tale of Two Charities
@theMarket: Markets in Pullback Mode
The Independent Investor: A Tale of Two Charities
@theMarket: FOMO Fuels the Markets
The Independent Investor: The Client Comes First
@theMarket: Markets Still on a Roll
The Independent Investor: Elder Care in an Age of Confusion