Tuesday, JUNE 29, 2010
Looks like the market will drop 250 points today!
… a continuation of my last news-letter (June 4th) "Road is getting BUMPIER"
At the recent G 20 Summit in Toronto, most of the member countries were advocating “austerity & fiscal restraint”. Our President, however, was in the minority…stressing that we (the G20 Countries) need to continue stimulus.
Here’s the issue:
a) European countries are so closely linked to the near-collapse of Greece, that they have been “scared straight”. THEY now realize that they can’t continue to spend money they don’t have.
b) Even though we have California to look at as a poster child … our government is still willing to SPEND to prop-up our economy…because consumers AREN’T spending. (We American Consumers have been “scared straight” too).
c) Without continued stimulus…the economy is in jeopardy of stalling again. That’s a real problem … NO STIMULUS=NO GROWTH … OR MORE LIKELY… NO STIMULUS=RECESSION.
Something eventually has to give! It just makes sense.
Either we deal with the problem now, or we continue to “throw money at the problem” (continuing stimulus)… that weakens our dollar, and future hopes for recovery. No one (including a government as big as the US) can “kick a problem down the road” forever.
From a Financial Planning point of view… here’s what we investors should be looking at.
1) We must seek opportunities around the world. We do this by using Mutual Fund Managers who comb the entire globe for good investments ... instead of focusing only on the US market. This goes for Stocks and Bonds. We want to avoid countries with financial problems (Greece, Portugal, Spain, Italy, the UK, Japan, and the US.)
2) We should "play defense"(install “shock absorbers”) and plan for the bumps so we can make up some ground (compared to most) as we go down this rough road. Some defensive ideas include:
Gold
Agriculture
Short-duration Foreign Bonds
Contrarian type funds
Yield producing equities
3) In addition, we need to stay broadly diversified with a bias toward slightly less equity and slightly more alternative assets.
4) We should try to lessen taxes. (Cutting your tax bill is just like making more on your investment!) In a difficult investment climate, saving tax dollars may be you best immediate investment.
The Road is going to continue to be bumpy… we need strong “shock absorbers”.
Please feel free to pass this along to others who may be interested in its content.
As always, I look forward to your comments and questions.
The opinions expressed in this news letter are those of TBROOKS Financial Services and are current only through June 29, 2010. These views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. Past performance is no guarantee of future results.
Tuesday, June 29, 2010
"Road is getting BUMPIER"
Friday, JUNE 4, 2010
Hi,
With all the ups & downs in the US Stock market, I want to pass on information to help you keep it in perspective, and most importantly, remind you what we are doing to manage your nest eggs through these times.
Here my Perspective … Friday 6/4/2010 3:09 PM
This past week was again very bumpy. Up 200 points one day, down 277 another (as I write this).
We are still in the midst of a slow ... very slow recovery. (Keep in mind... this is a recovery from a near collapse.)
We will experience many "Bumps in the road." (Temporary ups ... and temporary downs). Some of these will be big.
The past 2 weeks we have hit some big bumps. (-350 on the Dow, +250, & today [Friday] - 277)
Other countries are recovering much faster... (Canada, Mexico, Brazil) to name a few.
Our government will have to continue "incentives" to pull us along. Incentives cost money (that we don't have.)
This is likely to put pressure on our currency ... in the long-term. (Not right now, but in coming years.)
This is likely to put pressure on taxes rising. (Sooner ... rather than later.)
...OK... but what should we do about it?
Five major things...
1) Don't panic. Your portfolio is built with these possibilities in mind. Most of this is nothing new to our dialog.
2) We must continue to seek opportunities around the world. We do this by using Mutual Fund Managers who comb the entire globe for good investments ... instead of focusing only on the US market. This goes for Stocks and Bonds. We want to avoid countries with financial problems (Greece, Portugal, Spain, Italy, the UK, Japan, and the US.)
3) We should try to lessen taxes. (Cutting your tax bill is just like making more on your investment!)
4) We should continue to "play defense" and plan for the bumps so we can make up some ground (compared to most) as we go down this rough road.
5) Pass this onto friends and like-minded people you know. Perhaps this approach could help them too.
Please also read the two articles attached.
A) Forget the grandkids … the U.S. debt could hurt YOU! From: CNN Money.com Thur. June 3, 2010
B) U.S. Payrolls Trail Forecasts. Growth May Cool. From: Bloomberg Fri June 4, 2010
Please contact me with any questions, observations. I greatly appreciate your feedback.
Best regards,
Hi,
With all the ups & downs in the US Stock market, I want to pass on information to help you keep it in perspective, and most importantly, remind you what we are doing to manage your nest eggs through these times.
Here my Perspective … Friday 6/4/2010 3:09 PM
This past week was again very bumpy. Up 200 points one day, down 277 another (as I write this).
We are still in the midst of a slow ... very slow recovery. (Keep in mind... this is a recovery from a near collapse.)
We will experience many "Bumps in the road." (Temporary ups ... and temporary downs). Some of these will be big.
The past 2 weeks we have hit some big bumps. (-350 on the Dow, +250, & today [Friday] - 277)
Other countries are recovering much faster... (Canada, Mexico, Brazil) to name a few.
Our government will have to continue "incentives" to pull us along. Incentives cost money (that we don't have.)
This is likely to put pressure on our currency ... in the long-term. (Not right now, but in coming years.)
This is likely to put pressure on taxes rising. (Sooner ... rather than later.)
...OK... but what should we do about it?
Five major things...
1) Don't panic. Your portfolio is built with these possibilities in mind. Most of this is nothing new to our dialog.
2) We must continue to seek opportunities around the world. We do this by using Mutual Fund Managers who comb the entire globe for good investments ... instead of focusing only on the US market. This goes for Stocks and Bonds. We want to avoid countries with financial problems (Greece, Portugal, Spain, Italy, the UK, Japan, and the US.)
3) We should try to lessen taxes. (Cutting your tax bill is just like making more on your investment!)
4) We should continue to "play defense" and plan for the bumps so we can make up some ground (compared to most) as we go down this rough road.
5) Pass this onto friends and like-minded people you know. Perhaps this approach could help them too.
Please also read the two articles attached.
A) Forget the grandkids … the U.S. debt could hurt YOU! From: CNN Money.com Thur. June 3, 2010
B) U.S. Payrolls Trail Forecasts. Growth May Cool. From: Bloomberg Fri June 4, 2010
Please contact me with any questions, observations. I greatly appreciate your feedback.
Best regards,
Time to SHORT the S&P?
FRIDAY May 28, 2010
As you probably already know, the market rallied today…the S&P picking up 35+ points…3.29% … closing at 1103.
That’s good for obvious reasons, but also creates an opportunity because we might be able to take another short “ride” on the S&P 500…(like we did last Summer). However, this time I suggest we get on and hope to ride it down.
I’m sure you remember we made approx 9% in a relatively short time last summer … riding the S&P up.
The playing field looks to me much like it did last year…except inverted. There is a good chance we might see a short rally up to 1120-1130…but I have a strong feeling that we are going to revert lower … and test a bottom at 990 or so. The spread between 1130 & 990 is 140 points or 12.4%. My feeling is that we will probably trend lower over the next couple of months & test that low.
Therefore, I’m suggesting that you consider going SHORT the S&P 500 … once it reaches 1120, and plan to sell out if & when it reaches the low of 1020. That would yield a return of 8.9%...minus any commissions.
Like anything else, this is a bit of a gamble, but could work out in your favor. I think the conditions are right to consider it
As you probably already know, the market rallied today…the S&P picking up 35+ points…3.29% … closing at 1103.
That’s good for obvious reasons, but also creates an opportunity because we might be able to take another short “ride” on the S&P 500…(like we did last Summer). However, this time I suggest we get on and hope to ride it down.
I’m sure you remember we made approx 9% in a relatively short time last summer … riding the S&P up.
The playing field looks to me much like it did last year…except inverted. There is a good chance we might see a short rally up to 1120-1130…but I have a strong feeling that we are going to revert lower … and test a bottom at 990 or so. The spread between 1130 & 990 is 140 points or 12.4%. My feeling is that we will probably trend lower over the next couple of months & test that low.
Therefore, I’m suggesting that you consider going SHORT the S&P 500 … once it reaches 1120, and plan to sell out if & when it reaches the low of 1020. That would yield a return of 8.9%...minus any commissions.
Like anything else, this is a bit of a gamble, but could work out in your favor. I think the conditions are right to consider it
Insights on Today’s Market
THURSDAY, May 6, 2010
I’m sure you already heard the news. The Dow Jones Index dropped by close to 1000 points before closing down only 347 points (3.47%). Let that sink in – 1000+ points down .
Here are some of my thoughts:
What is Happening?
As you know, Greece (and more broadly the European Union), has been in the news a lot lately. This is due to Greece needing a lifeline from other European countries to handle their overload of debt. They are so overloaded they cannot service the debt and if they default, they take European Banks and potentially other European Gov’t Bonds with them. The EU has rules for staying financially sound in order to be in the union. Greece cooked their books in order to get in, in the first place. They continued spending more than they brought in, with money borrowed from European banks, and now the clock is striking midnight.
Furthermore, data suggests other European countries will be coming into a similar situation as Greece. Therefore, as Europe tries to ‘solve’ Greece … it isn’t over. The question is: Is Greece’s problem enough to topple the worlds equity markets? Answer: Not alone, but then again, they are part of the EU and there are consequences to others.
What else is going on?
On the other hand, stats say that we are in an economic recovery. The US Stock Market has recovered over 75% from the low of March 9, 2009. But surveys are showing, and clients and friends are telling me, that something just doesn’t feel right. I have said to many of you, that after such a quick recovery in the last year, I do think we will have a market pullback this year. But I’m not sure it is because of Greece alone. But the fact is, Greece and Europe are affecting investor sentiment across the globe in a negative way.
What to do?
For most of you, we have been taking a very conservative approach for quite a while. Its times like today, that a conservative approach certainly makes us feel better. However, we need to be planning for the longer term (I certainly am) and there are still bumps in the road ahead.
I think a conservative slant generally speaking is still in order. No need for panic or major changes. However, I want to remain cautious. In addition, I think we should continue preparing for a likely bout of inflation in our future. It won’t happen this year for certain, but when it comes, it will be very painful. So, we should continue to overweight investments that will hedge against inflation… (TIPS, Commodities, Gold, short-duration bonds, & emerging market bonds and equities).
And one final thought.
Today was very choppy. The recent weeks have grown more choppy (volatile) too. These are different times. Traditional investment strategies are not likely to give us the returns we’ve seen in the past. But remember… I have been working with you to make sure your “eggs are not in any one basket”. We need to be open to investment ideas the will allow us (you and me) to take advantage of opportunities … wherever they may be.
Please feel free to call with any thoughts or concerns.
Best regards,
I’m sure you already heard the news. The Dow Jones Index dropped by close to 1000 points before closing down only 347 points (3.47%). Let that sink in – 1000+ points down .
Here are some of my thoughts:
What is Happening?
As you know, Greece (and more broadly the European Union), has been in the news a lot lately. This is due to Greece needing a lifeline from other European countries to handle their overload of debt. They are so overloaded they cannot service the debt and if they default, they take European Banks and potentially other European Gov’t Bonds with them. The EU has rules for staying financially sound in order to be in the union. Greece cooked their books in order to get in, in the first place. They continued spending more than they brought in, with money borrowed from European banks, and now the clock is striking midnight.
Furthermore, data suggests other European countries will be coming into a similar situation as Greece. Therefore, as Europe tries to ‘solve’ Greece … it isn’t over. The question is: Is Greece’s problem enough to topple the worlds equity markets? Answer: Not alone, but then again, they are part of the EU and there are consequences to others.
What else is going on?
On the other hand, stats say that we are in an economic recovery. The US Stock Market has recovered over 75% from the low of March 9, 2009. But surveys are showing, and clients and friends are telling me, that something just doesn’t feel right. I have said to many of you, that after such a quick recovery in the last year, I do think we will have a market pullback this year. But I’m not sure it is because of Greece alone. But the fact is, Greece and Europe are affecting investor sentiment across the globe in a negative way.
What to do?
For most of you, we have been taking a very conservative approach for quite a while. Its times like today, that a conservative approach certainly makes us feel better. However, we need to be planning for the longer term (I certainly am) and there are still bumps in the road ahead.
I think a conservative slant generally speaking is still in order. No need for panic or major changes. However, I want to remain cautious. In addition, I think we should continue preparing for a likely bout of inflation in our future. It won’t happen this year for certain, but when it comes, it will be very painful. So, we should continue to overweight investments that will hedge against inflation… (TIPS, Commodities, Gold, short-duration bonds, & emerging market bonds and equities).
And one final thought.
Today was very choppy. The recent weeks have grown more choppy (volatile) too. These are different times. Traditional investment strategies are not likely to give us the returns we’ve seen in the past. But remember… I have been working with you to make sure your “eggs are not in any one basket”. We need to be open to investment ideas the will allow us (you and me) to take advantage of opportunities … wherever they may be.
Please feel free to call with any thoughts or concerns.
Best regards,
Friday, September 12, 2008
The economy... a crisis ... or an accident waiting to happen?
As I've said before ... this feels like a financial crisis ... in slow motion.
There's no rush on the Banks. There's been no panic. Our economy is not crumbling. We're not going into a depression as we did in the 30's. There's no need to put your money under your mattress. But ... it feels like we're about to have some sort of accident ... doesn't it?
Consider these facts:
As I've said before ... this feels like a financial crisis ... in slow motion.
There's no rush on the Banks. There's been no panic. Our economy is not crumbling. We're not going into a depression as we did in the 30's. There's no need to put your money under your mattress. But ... it feels like we're about to have some sort of accident ... doesn't it?
Consider these facts:
- Bear Sterns failed... who'd of thunk it? The Government stepped in & took all their bad debt in trade for US Treasuries...
- Fannie Mae & Freddie Mac failed ... the Government stepped in to keep the wheels on.
- Lehman Brothers (in business for 158 years) is near failing. Treas Scty. Paulson says he is "adament" that no govt. $ be used in any deal .
So ...
If you had your choice would you...
A) Survive the accident, or
B) Would you avoid the accident all together?
There ARE ways to avoid the accident. Experts like Dan Fuss, Bill Gross & Mohammed El-Erian have experienced these "accidents" before ... and they have learned how to avoid them. Here are some of their ideas:
- Focus on "Quality"
- Utilize "Emerging Market" equity and debt
- Look for "Absolute Return"
- Consider "Hard Assets"
Integrated with typical asset allocation & diversification, these ideas can help you avoid the on-coming traffic.
Contact me if this makes sense to you.
Thursday, August 14, 2008
When you have a complex problem, & it's an important topic ... who do you pick to help you solve it?
Most popular person? Most likable person? Most attractive person? Most articulate person? Most experienced person? Most knowledgable person?
If you're like most of us, you'd pick the most experienced, most knowledgable person to help.
In the world of investment portfolios those people would be the managers of the Harvard, Yale, and Princeton Endowments. Together, these 3 portfolios exceed $130 Billion ... (that's 130,000 million)!!! 3 portfolios worth 130,000 million dollars!! WITH THAT AMOUNT OF MONEY AT STAKE ... THE PORTFOLIO MANAGERS ARE EXPERIENCED & KNOWLEDGABLE.
Oh ... did I mention that their performance is outstanding??
So, when I have a complex portfolio management question... who should I look to?
Well guess what... portfolio management is getting more complex. (Emerging economies, devaluation of the US dollar, trade defecits, complicated monitary policy, inflation, energy costs, mortgage melt-downs, banks treading on thin ice, etc.)
We can learn a lot by studying the big endowments. At Harvard, Yale & Princeton, they know what they're doing.
When you follow a leader (who is experienced & knowledgable) you want to walk in their foot-prints.
Most popular person? Most likable person? Most attractive person? Most articulate person? Most experienced person? Most knowledgable person?
If you're like most of us, you'd pick the most experienced, most knowledgable person to help.
In the world of investment portfolios those people would be the managers of the Harvard, Yale, and Princeton Endowments. Together, these 3 portfolios exceed $130 Billion ... (that's 130,000 million)!!! 3 portfolios worth 130,000 million dollars!! WITH THAT AMOUNT OF MONEY AT STAKE ... THE PORTFOLIO MANAGERS ARE EXPERIENCED & KNOWLEDGABLE.
Oh ... did I mention that their performance is outstanding??
So, when I have a complex portfolio management question... who should I look to?
Well guess what... portfolio management is getting more complex. (Emerging economies, devaluation of the US dollar, trade defecits, complicated monitary policy, inflation, energy costs, mortgage melt-downs, banks treading on thin ice, etc.)
We can learn a lot by studying the big endowments. At Harvard, Yale & Princeton, they know what they're doing.
When you follow a leader (who is experienced & knowledgable) you want to walk in their foot-prints.
Inflation ... it looks like it is here ... NOW.
Consumer Price Index #s (CPI) just came out for July & they show double the increase that was expected. DOUBLE! Inflation is now running at its highest rate in 17 years. (Can you even remember 1991?) HIGHEST IN 17 YEARS!
That's a problem. The CPI reflects the cost of goods. If we are paying more for the "stuff we gotta' have" (gasoline, food, clothing, etc...) we don't have money for the "stuff we want." If we can't afford the stuff we want (like eating out, going on vacation, going to the movies) the economy is bound to suffer. Can you say "recession?" I know you can.
And in a recession, chances are your investments could take a "hit" too. UGH!
So what can you do??
Here are some ideas to consider:
Consumer Price Index #s (CPI) just came out for July & they show double the increase that was expected. DOUBLE! Inflation is now running at its highest rate in 17 years. (Can you even remember 1991?) HIGHEST IN 17 YEARS!
That's a problem. The CPI reflects the cost of goods. If we are paying more for the "stuff we gotta' have" (gasoline, food, clothing, etc...) we don't have money for the "stuff we want." If we can't afford the stuff we want (like eating out, going on vacation, going to the movies) the economy is bound to suffer. Can you say "recession?" I know you can.
And in a recession, chances are your investments could take a "hit" too. UGH!
So what can you do??
Here are some ideas to consider:
- Increase the Foreign (emerging) portion of your holdings.
- Look into TIPS (Treasury Inflation-Protected Securities).
- Don't give up on Real Estate... all real estate is not the same.
- Consider owning "hard asset" securities in your accounts.
If inflation is really here, fasten your seat belts ... it is bound to be a bumpy ride.
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