@theMarket: A Wall of Worry

By Bill SchmickiBerkshires Columnist
12:14PM / Saturday, June 06, 2009Print Story | Email Story

Bill Schmick

There are any number of market watchers who are warning investors not to believe in this market's move higher. They have been sounding alarms ever since we reached a bottom back in March. They are still cautious. As long as that attitude remains among investors you can bet the averages will move even higher.

The old adage that stock markets climb a wall of worry certainly applies in this latest market rally. Those who analyze fundamental variables such as company earnings, sales and management forecasts cannot find much to justify this market advance. On the macroeconomic side the economy continues to decline, unemployment increase and retail sales continue to disappoint. The most one can say about the economy is that it is falling at a decreased rate.

What many of these fundamentalists fail to understand is that the markets have already discounted these ominous statistics back in the first quarter of the year. It is what drove the S&P 500 to its year's low of 666 in March. That's why the market didn't swoon when the government announced a 9.4 percent unemployment rate on Friday, the highest number in 25 years. Instead investors focused on the decreasing number of layoffs. This week "only" 345,000 jobs were lost, which marked the fourth straight month that the rate of layoffs has decreased.

Take my loving wife, for example. She has been going on interviews and sending resumes out ever since she lost her job in Troy last June. She accepted her present condition but focused on the future. She never gave up hope. Thanks to her job search, she now knows Greene, Columbia, Berkshire, Litchfield, Rensselaer and Albany counties backward and forwards. The good news is that she landed a job last week in Pittsfield. She is a statistic come to life and, hopefully, there will be more stories like hers as the economy begins to turnaround.

Now that doesn't mean we are out of the woods quite yet. The economic turnaround will take time as will the employment numbers. As far as the markets are concerned, I do agree that they have had a great run and might even need to pause here (or even pull back 10 to 15 percent) before continuing their advance. We could easily spend the next two months or so churning back and forth in a trading range but one thing is sure. As long as the majority of investors continue to focus on the present rather than the future, the markets will advance.

Like you, I have been waiting for over a month for the S&P 500 to break the 945 level. Every time it gets within a couple of points of that magic number sellers appear. On Friday it reached as high as 951 for a second or two before falling back as traders sold stock at what technicians call "a strong resistance area." I believe the bulls will continue to test and at some point decisively break through that level. If that occurs, many investors still waiting on the sidelines will go back into the markets.

That does not mean that I am sounding an all clear to jump back into the markets with both feet. Take a gradual approach. If you have been following my advice you already have a substantial amount invested. Invest some more if the markets pull back or simply churn around this level for a week or two. And remember don't get too comfortable. I still maintain that we are in a "buy and sell" kind of market rather than a "buy and hold" environment. Nonetheless, there is money to be made. You should be prepared to participate in the coming advance. So what do you buy?

Commodity and basic material stocks, ETFs, and mutual funds should do well. I have also been recommending gold and silver for several months. I believe they will continue to advance. Technology and consumer oriented sectors will also remain a "hot" area. I think the easy money has already been made in the financial sector so investors should be a bit more discerning in what they buy among the banks and brokers.

On a personal note, I will be starting a new job in a week or two, which I will describe in further detail upon my return. Next week my wife, our 7-month old Lab, Titus, and I will be taking a week's vacation in Maine.

Bill Schmick is a licensed investment adviser representative as well as a registered financial consultant. All views and opinions expressed by Bill in his columns are strictly his own. Direct your inquiries to him at

1-518-610-1553 or wschmick@fairpoint.net. You can also visit www.afewdollarsmore.com for more of Bill's insight.

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Your Comments

iBerkshires.com welcomes critical, respectful dialogue. Name-calling, personal attacks, libel, slander or foul language is not allowed. All comments are reviewed before posting and will be deleted or edited as necessary.

Hi Bill, I am sorry to say it but you are late again. If anyone has been reading your articles for the past few months they now the truth. The fact is you were telling everyone this was a bear market rally and that they should remain on the sidelines. It was only after the market had risen 30%+ before you became bullish. Now you are telling people to buy commodities after the price of oil has already risen 100% from its low and Gold rose to $1000 an ounce. If anything investors should be lightening up on these holdings. By the way, what happened to your Dion tag line. Has your advice been so bad that Dion does not want to be associated with you any longer? If anyone is reading Bill's articles for advice please use caution. He can not predict the future no matter how much he says he can.
from: Late Again	on: 06-08-2009 12:00AM I Agree (0) - I Disagree (0)

"Late Again" obviously has an agenda. Please allow me to show just how wrong "Late Again" is in throwing personal darts at the wrong target. I read Mr. Schmick's columns religiously, and he had been saying in 2008 that he expected the S&P 500 to hit 680 points. It hit 666 points in March (pretty darn close) before it bounced up. Mr. Schmick did absolutely say that the market would bounce up from that point. He did caution that he had concerns that it may simply be a rally within a bear market (one that you could participate in), but that he would inspect the news as the rally occurred. As the rally he predicted did indeed occur, the more positive economic news Mr. Schmick also expected actually came to fruition. So now, because the information has changed, he has tilted more from "just" a bear market rally (that you should participate in, but be cautious) to possibly something more sustainable. "When the facts change, I change my mind. What do you do, sir?" - Sir John Maynard Keynes.
from: Erian	on: 06-09-2009 12:00AM I Agree (0) - I Disagree (0)

My only agenda is to let people reading his column know that he can NOT predict where the market is heading. Just go to his website and read his previous commentary. Saying the market could go up but then calling it a "Bear Trap". What kind of advice is that? The kind of advice that he can be right no matter what the market does. Isn't there some law against that. The bottom line is I think Bill is an intelligent person but I would think after his many years in the business he would stop forecasting where the market will be in the short term. The best way to make money is to buy good companies when they are really cheap and be patient. The only way to buy them really cheap is when everyone is scared like the market was back in early March. To all readers, go to Bill's website and read his commentary from March. You will see for yourself his commentary was off base.
from: Late Again	on: 06-09-2009 12:00AM I Agree (0) - I Disagree (0)

"The best way to make money is to buy good companies when they are really cheap and be patient." - Late Again ...And then lose 60% in 2008, 50% in 2002, 25% in 1998, or just make zero in the last ten years. I'd love to know what you really did from 1966-1982, Mr. Buy-and-Hold. Or did you suddenly find religion over those periods and go to cash? We psychologists call that retroactive prescience.
from: Ray James	on: 06-09-2009 12:00AM I Agree (0) - I Disagree (0)

Yeah, "Late Again" clearly has an agenda. In October 2008 Warren Buffet wrote an article in the NY Times titled "Buy American. I am." The Dow was at 8,450 points then. Now the Dow is only 8,750 points, a mere 3.5% higher with nine additional months of economic recovery. Maybe Bill is "late again", but even using "Late Again" made-up commentary, Bill is still getting in at levels similar to Warren Buffet. It seems to me that when it comes to invesment comparisons, one could do worse than to do as well as Warren Buffet. Bill Schmick - 1 "Late Again" - 0
from: Grahamm Dodd	on: 06-09-2009 12:00AM I Agree (0) - I Disagree (0)

Bill Schmick - 1 Warren Buffett - 0 How funny is that. Warren Buffett - World's richest man Bill Schmick - Writing free advice on IBerkshires.com What a joke! If Bill could predict the future of the stock market he would not need to work especially at his age.
from: Late Again	on: 06-10-2009 12:00AM I Agree (0) - I Disagree (0)

Dear Graham & Dodd, You obviously did not read Securities Analysis or The Intelligent Investor. Both books are based on the principle of buying assets for less than they are worth. They are NOT about guessing where the market will be in 3 weeks or 3 months. Bill seems to focus his decision on whether to buy or sell on what the market it doing and not on the value of what he is buying. As for Warren Buffett he clearly states that he can't tell you where the market it heading over the next few months. The fact that the market is within a few points of Warren's comments is pure coincidence.
from: Late Again	on: 06-10-2009 12:00AM I Agree (0) - I Disagree (0)

Dear Ray, If you did not make money over the past 10 years then you did not follow my advice. If you were buying the S&P 500 in 1999 when the P/E was over 30 then you did not follow my advice. I said buy a good company at a cheap price. Clearly prices of large cap companies between 1999-2002 were not cheap. If you bought small cap value stocks in 1999 when everyone was saying small caps are dead and that technology stocks are the future then you did pretty well. Let me be very clear. I, nor can anyone else tell you in advance when stocks are going to sell at a discount. Again you just have to be patient and wait for your opportunities.
from: Late Again	on: 06-10-2009 12:00AM I Agree (0) - I Disagree (0)

"you just have to be patient and wait for your opportunities." - Late Again. Yes. Let's be patient as the stock market crashes. You obviously are not that bright, Late Again, so please allow me to point out the sarcasm. Stocks are not meant to purchased because they are "good values". The are meant to purchase to make you money. Who cares if a company is a good value if the stock price is collapsing? Maybe, like me, you are brilliant at reading income statements and balance sheets and can pick out a good value that is "rational" to buy. So what!?! The stock market can remain irrational longer than you can remain solvent. As Bill Gross of Pimco often says, it's not about what "should" happen, it's about what is or is likely to happen. These "bottom-up" comments you make (the same spoken by active mutual fund managers who lost 50% their clients' money) are lunacy and drivel. And to correct you (again), Mr. Schmick had predicted a bottom to the market at 680 points on the S&P 500 (he missed it by a mere 14 points). Your made up commentary that only now Mr. Schmick is getting bullish is just stuff that you made up. It is not reality based. Even so, if we accept your lies and deceit and accept your warped sense of reality, your dissmissing of Mr. Schmick's buying in at the same levels as Warren Buffet but after 9-months of economic healing as mere "coincidence" is obvious jealousy at your lack of own investing prowress.
from: Graham & Dodd	on: 06-11-2009 12:00AM I Agree (0) - I Disagree (0)

Dear Graham & Dodd, Clearly your are a "Trader/Speculator" and not a value investor. What I think is funny is you call yourself Graham & Dodd yet you argue with me about the principles of what they preach. I have no problem with people that choose to follow trends and use those trends to make investment decisions. That's fine. My problem is telling readers that the market is going to rise to X and then fall 2-3%. Or that the market could goes as low as 500 like Schmick preached in his March articles. He has no clue where the market is heading. That fact that one of his calls happened to be right does not take away from the fact that most others were wrong. Like I said before, if readers want to see for themselves how wrong Bill's forecasts have been then they can just visit Bill's website and read for themselves. Good Luck.
from: Late Again	on: 06-11-2009 12:00AM I Agree (0) - I Disagree (0)

"Late Again", you are so silly. Investing in what is actually going up is not "speculating" - it's investing coupled with risk management. You can get involved with any investment in the world so long as you have an exit strategy, as opposed to your practice of holding onto stocks as the go down 50%. However, buying something at some sort of arbitrary price (like you do) that is simply lower than previous levels (as you suggest) is nothing more than a "hope & pray" method. Sure, valuation is important. But something cheap can get cheaper. If you want to increase your probability of success then you can 1) call the bottom of the stock market like Bill, and/or 2) buy things that are going up in price. Indeed, "Late Again", check out Bill's website - www.AFewDollarsMore.com. Not only did he call the bear market (instead of riding it down, like you), but he predicted a stock market bottom at 680 points on the S&P 500 - a perfect call. "Late Again", cupcake, you are trying so hard to cast dispersion on two absolutely perfect stock market calls, calling them - and I quote - coincidence. You are going to have to face it at some point. Some people (obviously not you) just know how to make money in the market. Signed: Yamada & Worth & Acampora & Birinyi & Desmond & Dudack & Farrell & McAvity & Murphy & Prechter & Raschke & Shaw & Tabel & Weinstein & Soros & Rogers & El-Erian & Cashin &.......
from: Yamada & Worth &...	on: 06-11-2009 12:00AM I Agree (0) - I Disagree (0)

Dear Speculator, You keep suggesting I lost 50% when you have no clue what my performance has been. I suppose you and Bill come from the same camp, you just make stuff up to suit your needs. I never said buy something just because it dropped in price. I said buy a dollars worth of assets for 50 cents. What's wrong with that advice. I guess if your a rock head you might. You also keep saying Bill picked the bottom, when 85 forecasts ago? Give me a break. I can read for myself and Bill's forecasts have not worked no matter what you say. If anyone has an agenda it's you. Later Fruitcake Sincerely, The Honest Investor
from: Late Again	on: 06-11-2009 12:00AM I Agree (0) - I Disagree (0)

Late Again is right, but he is also wrong. Late Again is absolutely correct that the methodology of investing as made popular by Messrs. Graham, Dodd, & Buffet is far superior to the more speculative assessment of Mr Schmick. Why is Late Again's methodology? Certainly credit is due for being able to so correctly call both the top and the bottom of the recent market cycle as it was certainly more than a mere "coincidence". However, it is impossible to both accurately and consistently predict the market's swings. Mr. Schmick has been spot-on for the last couple years, but he is bound to be either slow or early at some point. The better method is to buy, hold, and never ever sell.
from: Ethan Berg	on: 06-11-2009 12:00AM I Agree (0) - I Disagree (0)

"I said buy a dollars worth of assets for 50 cents. What's wrong with that advice." - Late Again Let's list what is wrong with that advice: 1) You have human error in assesing what is the value of 50 cents. 2) You have human error in assessing what is the value of $1.00 3) You have valuation/market risk of 50 cents becoming 25 cents. 4) You have valuation/market risk of 50 cents never going to $1.00 5) Even if you properly value the company at 50 cents, you have non-systemic risk the company becoming worth 25 cents. 6) Company mismanagement came deem a compay to never become worth $1. 7) You might need the money in 5 years, not 50 years. 8) You subject yourself to significant opportunity risk as you find your 50 cent dollar and thousands of other investments are moving up. 9) Valuation is not a timing tool. 10) Your homework can be absolutely perfect but the stock can go nowhere as the market goes sideways for a long time(1996-2009). 11) Like in the 1990s you can find a company that is worth a dollar that is going to $2. 12) Often times you can find a stock worth a dollar, trading at $2, and going to $3 13) Your homework can be absolutely perfect but the stock can go down for over a decade during a secular bear market (1966-1982). 14) Your homework can be absolutely perfect but the stock can go down during a stock market crash (2002,2008). How do you solve all of these problems: Buy stocks that are going up, and sell those that are going down. It's called investing, as opposed to your method of hoping & praying. Why buy something if it is not going up in value? I mean unless your cult says to remain close-minded and to ignore rationale, logic, and - most importantly - the probabilities?
from: Probabilities, not Speculation	on: 06-12-2009 12:00AM I Agree (0) - I Disagree (0)

July 31, 2008 Bill Said â€œIf all else fails, think of them this way: without corrections, markets cannot go higher so hang in there for this too shall pass.â€ What Happened Three months later the market was down 22% July 31, 2008 Bill Said â€œPump Prices Will Move Higher So Get Used To Itâ€ What Happened Price of Regular Gas $4.10 on 7/31/08 Price of Regular Gas $1.69 on 12/31/08 August 16, 2008 Bill Said â€œAt this point, I believe the commodity decline is old news.â€ What Happened Oil $110 on August 15, 2008 Oil $36 on December 31, 2008 September 18, 2008 Bill Said â€œYet, nothing Iâ€™ve seen thus far indicates to me that we are in anything more than the last stages of a global stock market correctionâ€ Bill Said â€œIn the thirty-plus corrections I have seen in my career each one has been different. Yet time and again investors caught up in the frenzy of the moment declare that this one is â€œthe Big Oneâ€ meaning a crash in the proportions of the 1929 sell -off which ushered in the Great Depression. Unfortunately I hate to disappoint the doomsayers. This is not the crash you are looking for.â€ What Happened By November 19th market is down more than 33% October 8, 2008 Bill Said â€œClearly the markets are oversold. They are stretched to the downside like a long thin rubber band. Not in the last 50 years has the markets been this oversold.â€ What Happened Market falls another 24% over the next five weeks October 10, 2008 If you have been unfortunate enough to be still fully invested stay there. I have to believe that we are more than 75% through this mess. If you are waiting for an entry point, let the market be your guide. Donâ€™t be a hero. I expect once the market stops falling there will be a long flat line period. Picture an L shape recovery that could last until the second or third quarter of 2009 What Happened Market fell 24% then rose 24% then fell 28% then rose 40% I could go on with the facts but this is not what I call spot-on. I can't say it enough. Don't believe these other posters then are Go to Bill's website and read his commentary. Listen to Bill's Commentary for entertainment purposes only. HE CAN NOT PREDICT WHERE THE MARKET IS HEADING!!!! No investment decision is perfect and some will lose money but if you follow my advice you chance of success will be much greater.
from: Late Again	on: 06-12-2009 12:00AM I Agree (0) - I Disagree (0)

Boy, "Late Again", talk about taking comments out of context by omitting imporant counter-points and assessmets of probabilities! You've proven yourself a liar and thus have lost what little credibility you may have had in this discussion. I bid you good-day and await another the opportunity to debate an honest and intelligent investor - which, madam, you clearly are not.
from: Ethan Berg	on: 06-13-2009 12:00AM I Agree (0) - I Disagree (0)

Those are the facts. Anyone can go to Bill's website and see for themselves. Give me one example of what was written that was not taken directly from Bill's commentary? Give me one example of what was written about what happened next that is not accurate? Everything can be proven. Nothing is made up. What evidence have you provided? None
from: Late Again	on: 06-14-2009 12:00AM I Agree (0) - I Disagree (0)

Well, well, well, it appears my columns have stirred a bit of debate among my readers while I was on vacation. As a columnist, it brings joy to my heart to read such a heated discussion over my opinions and forecasts. In this world where most readers cannot even remember the subject matter of a column after a week or so, I find both my detractors and defenders quoting my blog and past columns with vigor (if somewhat out of context). I do agree that it is practically impossible to predict the future course of the stock markets with any certainty over an extended period of time. The shorter the time frame the more difficult the job becomes. Yet, I have the courage to try. I do not claim to be right all the time but if only 51% of my forecasts prove accurate then I feel that I have made a contribution. I believe my average has been quite a bit higher than that. I remind those who find my column offensive that no one is forcing you to read it. And yet you obviously must enjoy something about it because you continue to read and comment. What I believe you fail to understand is that most people value someone who has an opinion and is willing to state it. My readers understand that I reserve the right to change my mind if circumstances change. And change has been the key word over the last 18 months. I expect that to continue. So in parting, I want to thank you all for your comments and please keep them coming. It is the greatest reward a writer can receive.
from: Bill Schmick	on: 06-18-2009 12:00AM I Agree (0) - I Disagree (0)

Lanesborough Town Meeting to Vote Budget, Bylaws & Vehicle Purchases

By Breanna SteeleiBerkshires Staff
04:21PM / Monday, June 08, 2026

LANESBOROUGH, Mass. — Tuesday's annual town meeting includes a $14 million operating budget, new short-term rentals, accessory dwelling units and sign bylaws, and free cash article appropriations.

Voters will gather at Lanesborough Elementary School on June 9 at 6 p.m. to decide on 20 warrant articles.

The fiscal 2027 budget is up a little over 10 percent. Some of the main increases are the Mount Greylock Regional School District and McCann Technical School: the McCann assessment is up more than 30 percent based on factors including enrollment and the school renovation project, and Mount Greylock's is up 11 percent.

Article 11 is for the town to vote to approve from free cash the sum of $16,298.48 for the McCann Technical School roof and window replacement project so as not to impact the budget. Article 3 is appropriate $7,586,284 for Mount Greylock Regional School assessment.

Another notable increase was in life and health insurance, showing an increase of about 26 percent.

Ambulance Director Jen Weber is planning 24-hour coverage, which means more staff and a hike in her budget. One of the articles asks the town to appropriate $234,100 to operate the Ambulance Enterprise Fund for salaries and expenses.

Many town departments are looking for new vehicles. The Fire Department is looking to replace its outdated 1996 fire engine. There are two articles related to the truck at a total of $813,366. Article 12 would transfer $225,000 from free cash into the Fire Truck Stabilization Fund; Article 13 would transfer $605,000 from the fund and authorize the borrowing of $208,366.08.

The total includes a $100,000 contingency cost to cover any additional costs if a 2026 model-year chassis cannot be secured before new emissions standards go into effect in 2027.

The board at its last meeting moved the $225,000 transfer to come before the borrowing article, changing the stabilization number. If the $225,000 is not voted on, then they will amend the next article's number on the floor, subtracting the $225,000. This shows the borrowing number significantly lower.

Article 17 asks for the transfer of $80,000 from free cash to replace a police cruiser.

Police Chief Rob Derksen's aim is to replace one vehicle every other year, meaning the oldest vehicle gets replaced about every 10 years.

He stressed that if delayed this year, the town may have to double up in a future year to get back on schedule, and that paying later usually costs more. The article will ask for $80,000 from free cash, the vehicles used to be funded by the BHRD.

Lastly, the Highway Department is looking to replace a 2014 International dump truck that will be a total of $330,000 and will take two to three years to receive.

Money will be used from last year's approval of $250,000 from free cash for the replacement of a 2012 highway front-end loader that was underspent $49,261. Town meeting is being asked to approve a transfer of $53,274.85 from free cash and the use of $227,464 from funds from the Sale of Town Real Estate to fund the balance.

Other free cash proposals include $1,200 to purchase software to support tracking and ongoing maintenance schedules of town-owned vehicles; $42,000 for the replacement of the Highway Department's storage shed roof, $200,000 to reduce the tax levy.

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