Just in case anybody's keeping score, Monday marked the eighth straight day of losses for the Dow Jones Industrial Average. Only the buoyant NASDAQ finished with gains, a sign that there are still plenty of speculative players plying "animal spirits" despite evidence to the contrary, i.e., the VIX spiked above 13, stocks cannot maintain momentum. The eight straight losing sessions is the longest for the Dow since August 2011.
Primary drivers for the recent about face from all-time highs are politicians in Washington, now about to erupt into all-out war between the two parties over everything from the fake "Russians hacked the election" story, to blocking the confirmation of Trump's nominee for the Supreme Court, Neil Gorsuch, to walking back and away from House Intelligence Committee Chairman Devin Nunes (R). Claiming he is unfit for the job, Democrats are calling for him to step down, amid accusations that he met secretly with President Trump over concerns that the incoming president was bugged by outgoing president Barack Obama's administration in November, December and January.
The Kafkaesque nature of recent developments in congress can only help make Wall Street even more jittery than it already is. Democrats have been bolstered by the stumbling attempt by Republicans in the House to overturn Obamacare, as Speak of the House, Paul Ryan, cancelled a vote on the proposed measure, which was hastily prepared and loaded with amendments and proposals that left the bill dead on arrival.
It has become crystal clear that Democrats in congress are still upset of losing the presidential election last November and trying to obstruct and delay any attempts by the current administration to fix what is wrong with the country. The new delaying tactics are designed to extend to the next recess, on April 7, at which point the Democrats can return to their districts and/or devise new tactics to thwart the smooth operation of government over a two-week span. Congress won't reconvene until the 25th of April once the recess is called.
The obvious battle being waged in Washington is not good for anyone investing in anything (except safe havens: bonds silver, gold), until one side emerges victorious and a path forward can be envisioned. Since there's little to no chance of either side claiming a decisive victory, investors should be aware and prepared for a long period of indecision and therefore, wild swings in markets and individual stocks. Nothing is safe within an environment of stealth, obfuscation, denial, lies, and feigned surprise as exists in the halls of congress leading the political sphere.
A well-defined move of funds to cash, bonds, and precious metals will offer a signal that a bear market is dead ahead, something which should be expected to occur in any case, as the current bull run is overextended and built upon mountains of debt and stock buybacks.
Developments to come - both from Washington and Wall Street - may prove deadly to bullish sentiment and frightening to anyone who still has a memory of what "normal" should look like.
CAVEAT EMPTOR
At The Close 3.27.17:
Dow: 20,550.98, -45.74 (-0.22%)
NASDAQ: 5,840.37, +11.64 (0.20%)
S&P 500: 2,341.59, -2.39 (-0.10%)
NYSE Composite: 11,414.33, -4.56 (-0.04%)
Showing posts with label investment. Show all posts
Showing posts with label investment. Show all posts
Tuesday, March 28, 2017
Thursday, December 1, 2016
Is The Economy Changing? What To Buy Now
Since Donald Trump won the presidential election roughly a month ago, the reaction on Wall Street has been, in a word, enthusiastic.
The investing class is betting that Trump will have a positive impact on corporate bottom lines and all indications are that he will try to slash US corporation tax rates and repatriate corporate money from abroad to pump back into the US economy.
But, it's not at all that simple. Stocks are at record highs already, so, if you're invested in a 401k or other plan at work, sit tight. If you're one of the three dozen or so active individual investors out there still standing after years of mauling and manipulation, you have to notice that p/e ratios are at pretty high atmospheric levels.
Stocks are great if you have the patience and appetite for the ups and downs of active markets, but buying at these levels would seem a bit on the foolhardy side. There's likely to be a pullback if the business cycle still has any tethers to reality. Besides, the FOMC is going to raise interest rates, making bonds, gold and silver and other fixed investments appear more palatable.
Who knows? Banks might actually be offering 4-5% interest on savings in a few years, though it's a dubious call. A return to normalcy in markets and credit would cause the national debt to skyrocket immediately, as in "overnight," and that's not something a president Trump (or any other president for that matter) wants on his historical resume.
So, what's a bargain? As usual, the central banks and their cronies (yes, despite the Donald, there's still plenty of crony capitalism to go around. One is not going to destroy Rome in a day or even one term.) put the kibosh on the precious metals just after the election and they don't seem to be relenting at this point.
The world has changed, but it's probably too early to tell what effects those changes are going to have on businesses or investing or sectors or bonds or anything. Give it a little time, but bear in mind that the FOMC is meeting on the 13th and 14th of December and the odds are very, very good that they're going to hike the federal funds rate another 25 besis points or 0.25%, bringing the effective rate to 0.50-0.75.
Now, there's nothing special about those rates except that they're still historically low. The world is still recovering from the devastation from the crimes of 2008 that were never reconciled. It's unclear whether the Trump administration is going to get tougher on Wall Street shenanigans or allow them free reign, but either way, there's still a price ot be paid for recklessness. The trick is to know when the piper shows up and nobody is that good.
Until then, silver still looks like the bargain of the century, though leaning towards outright purchases of solar panels and the associated technology is still a viable plan.
At the bottom of it all, Americans should be investing in their own businesses. Run from home or a storefront or on a shoestring, we may be entering a time of unfettered capitalism from the ground up.
Go for it.
Closing Prices for Thursday, 12/01/16:
DOW: 19,191.93, +68.35 (0.36%)
NASDAQ: 5,251.11, -72.57 (-1.36%)
S&P 500: 2,191.08, -7.73 (-0.35%)
NYSE Composite: 10,821.85, -16.61 (-0.15%)
The investing class is betting that Trump will have a positive impact on corporate bottom lines and all indications are that he will try to slash US corporation tax rates and repatriate corporate money from abroad to pump back into the US economy.
But, it's not at all that simple. Stocks are at record highs already, so, if you're invested in a 401k or other plan at work, sit tight. If you're one of the three dozen or so active individual investors out there still standing after years of mauling and manipulation, you have to notice that p/e ratios are at pretty high atmospheric levels.
Stocks are great if you have the patience and appetite for the ups and downs of active markets, but buying at these levels would seem a bit on the foolhardy side. There's likely to be a pullback if the business cycle still has any tethers to reality. Besides, the FOMC is going to raise interest rates, making bonds, gold and silver and other fixed investments appear more palatable.
Who knows? Banks might actually be offering 4-5% interest on savings in a few years, though it's a dubious call. A return to normalcy in markets and credit would cause the national debt to skyrocket immediately, as in "overnight," and that's not something a president Trump (or any other president for that matter) wants on his historical resume.
So, what's a bargain? As usual, the central banks and their cronies (yes, despite the Donald, there's still plenty of crony capitalism to go around. One is not going to destroy Rome in a day or even one term.) put the kibosh on the precious metals just after the election and they don't seem to be relenting at this point.
The world has changed, but it's probably too early to tell what effects those changes are going to have on businesses or investing or sectors or bonds or anything. Give it a little time, but bear in mind that the FOMC is meeting on the 13th and 14th of December and the odds are very, very good that they're going to hike the federal funds rate another 25 besis points or 0.25%, bringing the effective rate to 0.50-0.75.
Now, there's nothing special about those rates except that they're still historically low. The world is still recovering from the devastation from the crimes of 2008 that were never reconciled. It's unclear whether the Trump administration is going to get tougher on Wall Street shenanigans or allow them free reign, but either way, there's still a price ot be paid for recklessness. The trick is to know when the piper shows up and nobody is that good.
Until then, silver still looks like the bargain of the century, though leaning towards outright purchases of solar panels and the associated technology is still a viable plan.
At the bottom of it all, Americans should be investing in their own businesses. Run from home or a storefront or on a shoestring, we may be entering a time of unfettered capitalism from the ground up.
Go for it.
Closing Prices for Thursday, 12/01/16:
DOW: 19,191.93, +68.35 (0.36%)
NASDAQ: 5,251.11, -72.57 (-1.36%)
S&P 500: 2,191.08, -7.73 (-0.35%)
NYSE Composite: 10,821.85, -16.61 (-0.15%)
Tuesday, December 29, 2015
End-of-Year Santa Rally: Is It Real or the Ultimate Head-Fake?
Stocks took off like proverbial holiday bottle rockets on Tuesday, as 2015 winds down and investors (or HFT algos) scramble for the last bits of profit for the year.
All three of the major US indices were up handsomely with just two more trading days left in the year. Equity and bond markets will be open for business as usual on Thursday, the 31st, and closed for New Year's Day on Friday, January 1.
The boost today came right at the open, with all the indices shooting up roughly one percent promptly at 9:30 am ET. The remainder of the session was somewhat on the dull side with low volume, but the speculators didn't seem to mind booking one-day gains.
What little economic data there was turned out to be positive, the Case-Shiller 20-city Index showing a 5.5% gain for October and the Conference Board's measure of consumer confidence came in at 96.5, well above consensus estimates of 92.9. It seems that consumers were sharing in the holiday spirit. MasterCard yesterday reported robust holiday spending, at a pace 7.9% better than last year. the gains were attributed in part to lower gasoline prices making more income disposable for holiday spending sprees.
With data darting in and out from positive to negative over the past few weeks, the question arises whether the end-of-year rally on Wall Street is the real thing or whether it's a Grinch-y fake-out which will all be taken away come the new year.
That's a tough call, though most analysts will gladly opine that the bull market is here to stay, since the Fed's rate increase has gone off without a hitch, consumer spending (which accounts for as much as 70% of the economy, so it is said) is awesome and roaring, and funds are all in on equities.
The other side of the coin, from Main Street, is seeing heavier use of credit for everyday purchases, a job market that on the surface says full employment but at the core is made up of statistics, lies and low-paying jobs, and a middle class that continues to be eviscerated by taxes and inflation.
The glue to either side of the story is oil, the one commodity upon which the global economy spins, which is as cheap as it has been since the crisis of 08-09, and doesn't seem to be going anywhere, despite the outsize gains today (WTI closed up, at 37.35/barrel). Low oil and gas prices are boons to consumers and to business, driving input costs lower and profits higher. The only people not happy with the price of oil are the producers, especially the frackers, who have had to lay off thousands as the price of crude has declined.
What the low price of oil does beyond the gas pumps is provide margins for business production, and there's little downside to that. So, other than stocks approaching nosebleed levels, the US economy is in a strange spot. GDP may actually begin to ramp up to levels the Fed can feel more comfortable about raising rates though stocks will be hard-pressed to continue much higher. The rally is going on seven years, already the second-longest in market history since WWII and earnings have slowed for many companies, though the price of their stock remains high.
That's an unsustainable condition, one which will be worked out by the markets over time, and the general rule at these levels would be to fade any rallies, even ones which come in holiday wrappings with candy canes and sugar plums.
It's what's inside that counts, and market internals like breath and volume are pointing in the wrong direction.
Stocks are likely to rally for the remainder of the week and the year, but all-time highs are looming, and on the Dow and S&P haven't been overcome since May. It's tough to see how these indices can go much higher without significant improvement in the bottom lines of many companies.
Besides, it's never smart to buy high, and these markets have been at extremes for more than six months. There's been plenty of time to switch out of equities, but seriously, where else can money go?
All three of the major US indices were up handsomely with just two more trading days left in the year. Equity and bond markets will be open for business as usual on Thursday, the 31st, and closed for New Year's Day on Friday, January 1.
The boost today came right at the open, with all the indices shooting up roughly one percent promptly at 9:30 am ET. The remainder of the session was somewhat on the dull side with low volume, but the speculators didn't seem to mind booking one-day gains.
What little economic data there was turned out to be positive, the Case-Shiller 20-city Index showing a 5.5% gain for October and the Conference Board's measure of consumer confidence came in at 96.5, well above consensus estimates of 92.9. It seems that consumers were sharing in the holiday spirit. MasterCard yesterday reported robust holiday spending, at a pace 7.9% better than last year. the gains were attributed in part to lower gasoline prices making more income disposable for holiday spending sprees.
With data darting in and out from positive to negative over the past few weeks, the question arises whether the end-of-year rally on Wall Street is the real thing or whether it's a Grinch-y fake-out which will all be taken away come the new year.
That's a tough call, though most analysts will gladly opine that the bull market is here to stay, since the Fed's rate increase has gone off without a hitch, consumer spending (which accounts for as much as 70% of the economy, so it is said) is awesome and roaring, and funds are all in on equities.
The other side of the coin, from Main Street, is seeing heavier use of credit for everyday purchases, a job market that on the surface says full employment but at the core is made up of statistics, lies and low-paying jobs, and a middle class that continues to be eviscerated by taxes and inflation.
The glue to either side of the story is oil, the one commodity upon which the global economy spins, which is as cheap as it has been since the crisis of 08-09, and doesn't seem to be going anywhere, despite the outsize gains today (WTI closed up, at 37.35/barrel). Low oil and gas prices are boons to consumers and to business, driving input costs lower and profits higher. The only people not happy with the price of oil are the producers, especially the frackers, who have had to lay off thousands as the price of crude has declined.
What the low price of oil does beyond the gas pumps is provide margins for business production, and there's little downside to that. So, other than stocks approaching nosebleed levels, the US economy is in a strange spot. GDP may actually begin to ramp up to levels the Fed can feel more comfortable about raising rates though stocks will be hard-pressed to continue much higher. The rally is going on seven years, already the second-longest in market history since WWII and earnings have slowed for many companies, though the price of their stock remains high.
That's an unsustainable condition, one which will be worked out by the markets over time, and the general rule at these levels would be to fade any rallies, even ones which come in holiday wrappings with candy canes and sugar plums.
It's what's inside that counts, and market internals like breath and volume are pointing in the wrong direction.
Stocks are likely to rally for the remainder of the week and the year, but all-time highs are looming, and on the Dow and S&P haven't been overcome since May. It's tough to see how these indices can go much higher without significant improvement in the bottom lines of many companies.
Besides, it's never smart to buy high, and these markets have been at extremes for more than six months. There's been plenty of time to switch out of equities, but seriously, where else can money go?
Wednesday, October 26, 2011
Are Penny Stocks Key to the Investment Future?
It's well known that small businesses produce the bulk of new jobs in America, year in and year out, but that thesis may be more prescient in a "muddle through" or stagnant economy, such as the one that has prevailed the past three to five years. While the general stock market has seen significant gains since the '08-09 meltdown, smaller companies, despite lack of adequate access to capital for many, have been flourishing.
Most big, corporate stock advisors or brokers will tell you that small caps are the way to go if you're looking for growth, but only nimble advisors outside the mainstream with great research, like Timothy Sykes, can offer you the next top penny stock.
Penny stocks come in all manner of varieties, from small restaurant chain concepts to high-tech startups to the popular "green" companies which don't generally get the press or the credit for their risk-taking mindset. Finding these companies requires a lot of time and research, something the average home investor doesn't have and that's the exact reason why scouring the web for information on particular companies may not be the best approach.
In addition to some of these companies having little time nor money to spend on press releases and public relations, by the time big breakthroughs occur, it's often too late, the stock having already made a significant move.
That is why it's useful to follow Sykes and maybe a few other experts in the penny stock universe, as gains on some of these top picks have produced extraordinary gains in a relatively short period of time.
Small business is the driver of growth in America, and penny stocks are the instrument by which the average investor can keep pace or exceed the ultra-insiders of Wall Street. Think about it. Wouldn't it be better to be in on the ground floor of a little-known company with a load of upside, than a run-of-the-mill S&P 500 company whose every move is telegraphed over CNBC and more than likely previously dished out to the big brokerages? Why pin one's hopes on the big Wall Street-connected companies, many of which are responsible for the high unemployment and tight banking policies that have slowed US productivity to a crawl, when you can invest in some of the most exciting, albeit risky, ventures on the planet.
If you're looking for an edge and don't mind high risk, Timothy Sykes and his website are probably worth the time to investigate.
Most big, corporate stock advisors or brokers will tell you that small caps are the way to go if you're looking for growth, but only nimble advisors outside the mainstream with great research, like Timothy Sykes, can offer you the next top penny stock.
Penny stocks come in all manner of varieties, from small restaurant chain concepts to high-tech startups to the popular "green" companies which don't generally get the press or the credit for their risk-taking mindset. Finding these companies requires a lot of time and research, something the average home investor doesn't have and that's the exact reason why scouring the web for information on particular companies may not be the best approach.
In addition to some of these companies having little time nor money to spend on press releases and public relations, by the time big breakthroughs occur, it's often too late, the stock having already made a significant move.
That is why it's useful to follow Sykes and maybe a few other experts in the penny stock universe, as gains on some of these top picks have produced extraordinary gains in a relatively short period of time.
Small business is the driver of growth in America, and penny stocks are the instrument by which the average investor can keep pace or exceed the ultra-insiders of Wall Street. Think about it. Wouldn't it be better to be in on the ground floor of a little-known company with a load of upside, than a run-of-the-mill S&P 500 company whose every move is telegraphed over CNBC and more than likely previously dished out to the big brokerages? Why pin one's hopes on the big Wall Street-connected companies, many of which are responsible for the high unemployment and tight banking policies that have slowed US productivity to a crawl, when you can invest in some of the most exciting, albeit risky, ventures on the planet.
If you're looking for an edge and don't mind high risk, Timothy Sykes and his website are probably worth the time to investigate.
Friday, December 29, 2006
2007 Predictions (part 2)
Management will be key in 2007. Those companies which can outperform their rivals and adjust to changing economic and market conditions will appreciate dramatically in 2007, while the bulk of publicly-traded companies will skirmish with health care, distribution and marketing issues.
Stocks in general will perform poorly, however, and some will fail outright. A correction is fairly due in the near term, most likely in the first two quarters of 2007, though either sharply rising prices or range-bound fluctuations are equally possible. There has not been a 10-15% correction in the Dow for the entire length of the current bull market, which has now extended to 51 months.
The Dow has just completed its 4th consecutive year of positive returns and 2006 was the best year in the past three. It's not surprising that stocks have accomplished such sparkling gains considering the healthy profit scenarios and rather loose policy guidelines over recent years.
What is surprising is how the markets have behaved with rigid resolution during a time of high deficit spending, a poor balance of trade and the general malaise associated with the conflict in Iraq and the poor US foreign relations policy. Falling currency values must have contributed to higher share prices over this period. Foreigners have, in relation to dollar-denominated assets, more money to boost stock prices, and they certainly have. One could assert that stocks must rise just to stay even with the falling value of the US dollar.
Continued loose policy on many fronts, including the Fed's rate policy could lead to a hyperinflationary environment, but that's all about to change. The shifting politics in Washington should foment positive movements on fiscal policy, foreign relations and spending. A conclusion in Iraq is overdue and calls for an end to US military involvement in the Middle East will only grow louder if the conditions remain the same or worsen.
It's going to be a year of transition in which strong internal management will not only profit but lead into a more balanced and dynamic market. With that in mind, a 15% rise on the Dow would put the average at 16,675, a number that not only seems unrealistic, and probably is. Don't expect the Dow to cross much higher than 16,000 at some point in 2007, but be reminded that a pull-back in the first half will make such a move all the more daunting.
To say that every rally climbs a wall of worry is to speak loudly of this current bull. Sustaining the edge during a transition will not be easy for traders or investors. Expect a cyclical change in sector leadership, and small emerging technology companies in computing, agriculture, medicine and energy will perform very well and many will be takeover targets.
Large value companies, like those comprising the Dow, will continue to diversify to meet changing demands and become even more entrenched in their respective business sectors. That's all positive news for US stocks and 2007 will present quality buying opportunities. The underground, or unseen, economy will continue to thrive and feed into the mainstream at an unprecedented rate. Cash and credit are circulating and growing remarkedly; a condition that must be approached and understood to be cautionary.
2007 will experience political disruptions more often than economic ones. The world's currency exchange system, precarious as it is, has now interpreted globalization effects and accommodated. While areas of fragility will persist, no cataclysmic events can be seen looming and those problem areas such as inflation and disparities in markets will be met with policy action. Areas outside the US will almost certainly afford better returns, though with the associated higher risk. Established foreign firms based in stable nations should be given a hard look.
Expected gains are 7% on the Dow, 12% on the Nasdaq and 5% on the S&P 500 at year end, though the range, especially the lows, could be dramatic.
Stocks in general will perform poorly, however, and some will fail outright. A correction is fairly due in the near term, most likely in the first two quarters of 2007, though either sharply rising prices or range-bound fluctuations are equally possible. There has not been a 10-15% correction in the Dow for the entire length of the current bull market, which has now extended to 51 months.
The Dow has just completed its 4th consecutive year of positive returns and 2006 was the best year in the past three. It's not surprising that stocks have accomplished such sparkling gains considering the healthy profit scenarios and rather loose policy guidelines over recent years.
What is surprising is how the markets have behaved with rigid resolution during a time of high deficit spending, a poor balance of trade and the general malaise associated with the conflict in Iraq and the poor US foreign relations policy. Falling currency values must have contributed to higher share prices over this period. Foreigners have, in relation to dollar-denominated assets, more money to boost stock prices, and they certainly have. One could assert that stocks must rise just to stay even with the falling value of the US dollar.
Continued loose policy on many fronts, including the Fed's rate policy could lead to a hyperinflationary environment, but that's all about to change. The shifting politics in Washington should foment positive movements on fiscal policy, foreign relations and spending. A conclusion in Iraq is overdue and calls for an end to US military involvement in the Middle East will only grow louder if the conditions remain the same or worsen.
It's going to be a year of transition in which strong internal management will not only profit but lead into a more balanced and dynamic market. With that in mind, a 15% rise on the Dow would put the average at 16,675, a number that not only seems unrealistic, and probably is. Don't expect the Dow to cross much higher than 16,000 at some point in 2007, but be reminded that a pull-back in the first half will make such a move all the more daunting.
To say that every rally climbs a wall of worry is to speak loudly of this current bull. Sustaining the edge during a transition will not be easy for traders or investors. Expect a cyclical change in sector leadership, and small emerging technology companies in computing, agriculture, medicine and energy will perform very well and many will be takeover targets.
Large value companies, like those comprising the Dow, will continue to diversify to meet changing demands and become even more entrenched in their respective business sectors. That's all positive news for US stocks and 2007 will present quality buying opportunities. The underground, or unseen, economy will continue to thrive and feed into the mainstream at an unprecedented rate. Cash and credit are circulating and growing remarkedly; a condition that must be approached and understood to be cautionary.
2007 will experience political disruptions more often than economic ones. The world's currency exchange system, precarious as it is, has now interpreted globalization effects and accommodated. While areas of fragility will persist, no cataclysmic events can be seen looming and those problem areas such as inflation and disparities in markets will be met with policy action. Areas outside the US will almost certainly afford better returns, though with the associated higher risk. Established foreign firms based in stable nations should be given a hard look.
Expected gains are 7% on the Dow, 12% on the Nasdaq and 5% on the S&P 500 at year end, though the range, especially the lows, could be dramatic.
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