Market Update

[i_am_the_swammi]

he also specializes in finanical planning:

 

Nothing major in the offing today and I don’t expect anything huge until April’s earnings season is underway but I did want to comment on today’s ADP job report. According to ADP, 23,000 jobs were lost in March; that number is particularly sobering when compared to the 40,000 jobs that were expected to be gained in March. To be sure, February’s weather had a hand in these figures but the numbers are sobering nonetheless – estimates take into account such things as seasonality and weather.

 

Over the past few months, you’ve heard me say many times that I am not particularly enthralled with stocks at this point – I’m still not. Managed portfolio clients continue to be more heavily invested in bonds and very select dividend paying equities and there we’ll stay until we see real job growth. With money market funds paying basically zero, certain bonds are a very sweet alternative to equities and cash. You’ll also notice an increase in dividend paying ETF’s; they’re a safer way to play in the sandbox for now.

 

To be sure, there are still some compelling values in equities, but selectivity is the key with stocks. Equities are still trading below 2007 valuations and at some point they will rebound – I just don’t think it will be until we see people working at real jobs paying solid wages. Think about it – stock prices are driven by earnings and earnings are driven by sales. If people are not working and earning solid, reliable wages, who will buy the products to increase company sales and drive earnings? Therein lies the equity conundrum. This market wants to move higher…it’s looking for reasons to move higher… but I just don’t see it as sustainable until we see that jobs number move steadily in the right direction.

 

A word about Municipal Bonds – several states are having huge budget issues. This is a real opportunity for the keen but I cannot stress enough that even municipalities default so look closely at any municipal offerings – don’t be driven by yield alone here.

[SEC=UGA]

Well, if he had of put you in an indes fund two years ago you'd be doing pretty well right now...

 

Another thing that is attracting a great deal of capital right now are some of the major REITS.

 

good read:

 

http://money.cnn.com/2010/03/30/markets/thebuzz/index.htm

Edited March 31, 2010 by SEC=UGA

[i_am_the_swammi]

Another thing that is attracting a great deal of capital right now are some of the major REITS.

 

Based on the low value of real estate, they may appear to be good values....but based on the amount of foreclosures that are coming, the entry points of some of their legacy stuff.....I'll not be going near anything real estate until the other shoe drops.

[SEC=UGA]

Based on the low value of real estate, they may appear to be good values....but based on the amount of foreclosures that are coming, the entry points of some of their legacy stuff.....I'll not be going near anything real estate until the other shoe drops.

 

Well managed REITS, as you probably are aware, aren't in quite the quandry that the RE market as a whole is. Plus, as is stted in the article, the dividends that are spun off blow the bond market out of the freaking water.

 

And you wouldn't exactly want to be in munis right now either if you are concerned about default risk. Many communities have lost a large share of their revenue bas and are in quite a bind right now, as well.

[Ursa Majoris]

All fine and dandy but those of us in for the long haul (5+ years) and went balls to the wall at the bottom of the market in January '09 are doing very well in mutuals already. If there's more to come, great.

[CaP'N GRuNGe]

So you're saying that my 401K mix of 100% equities and 0% bonds is a bad thing?

[muck]

Observation:

 

Earlier today I heard an interview with the CEO of the economic firm that compiles the ADP data, and he said that due to the data compilation approach that ADP uses, that the ADP data didn't have a big "blizzard" drop last month or a big "blizzard" bump this month ... whereas the FedGov data will have a big drop and spike ... the economist/CEO said he wouldn't be surprised to see a +200,000 number from FedGov on Friday.

 

FWIW.

[MikesVikes]

I got back into the market in March of last year. I made 40% more than what I lost the year before.

[CaP'N GRuNGe]

I got back into the market in March of last year. I made 40% more than what I lost the year before.

 

You suck.

 

:jealous:

[Jimmy Neutron]

I got back into the market in March of last year. I made 40% more than what I lost the year before.

 

I didn't do quite that well, but I made up all of my losses and then some.

 

Recently moved most of my balance to health care and commodity heavy funds. :crossesfingers:

[bpwallace49]

This is useless without a evaluation by an Elliot Wave theory subscriber . . . or something.

[Perchoutofwater]

Met with my money manager last Thursday. My portfolio has gone up 37.9% in the last year and 11.6% YTD. That is pretty amazing when you consider that 30% of my portfolio is sitting in cash.

[i_am_the_swammi]

Met with my money manager last Thursday. My portfolio has gone up 37.9% in the last year and 11.6% YTD. That is pretty amazing when you consider that 30% of my portfolio is sitting in cash.

 

To what do you attribute the rise?

[SEC=UGA]

To what do you attribute the rise?

 

 

http://images.google.com/imgres?imgurl=htt...%26tbs%3Disch:1

[MikesVikes]

To what do you attribute the rise?

 

Maybe it is this. March of last year was a low point. March of this year is much better than March of last year.

 

http://moneycentral.msn.com/investor/chart...p;CP=0&PT=8

 

Edited for I like SEC's explanation much better.

Edited April 5, 2010 by MikesVikes

[Perchoutofwater]

Maybe it is this. March of last year was a low point. March of this year is much better than March of last year.

 

http://moneycentral.msn.com/investor/chart...p;CP=0&PT=8

 

Edited for I like SEC's explanation much better.

 

Pretty much.

[Brentastic]

he also specializes in finanical planning:

 

Nothing major in the offing today and I don’t expect anything huge until April’s earnings season is underway but I did want to comment on today’s ADP job report. According to ADP, 23,000 jobs were lost in March; that number is particularly sobering when compared to the 40,000 jobs that were expected to be gained in March. To be sure, February’s weather had a hand in these figures but the numbers are sobering nonetheless – estimates take into account such things as seasonality and weather.

 

Over the past few months, you’ve heard me say many times that I am not particularly enthralled with stocks at this point – I’m still not. Managed portfolio clients continue to be more heavily invested in bonds and very select dividend paying equities and there we’ll stay until we see real job growth. With money market funds paying basically zero, certain bonds are a very sweet alternative to equities and cash. You’ll also notice an increase in dividend paying ETF’s; they’re a safer way to play in the sandbox for now.

 

To be sure, there are still some compelling values in equities, but selectivity is the key with stocks. Equities are still trading below 2007 valuations and at some point they will rebound – I just don’t think it will be until we see people working at real jobs paying solid wages. Think about it – stock prices are driven by earnings and earnings are driven by sales. If people are not working and earning solid, reliable wages, who will buy the products to increase company sales and drive earnings? Therein lies the equity conundrum. This market wants to move higher…it’s looking for reasons to move higher… but I just don’t see it as sustainable until we see that jobs number move steadily in the right direction.

 

A word about Municipal Bonds – several states are having huge budget issues. This is a real opportunity for the keen but I cannot stress enough that even municipalities default so look closely at any municipal offerings – don’t be driven by yield alone here.

I agree with your accountants thoughts for the most part. However, I wonder what type of bonds he is referring to? I wouldn't touch munis right now and any corporate bonds are risky too. Investors are searching for yield but it may prove a risky search.

 

The one thing I don't agree with is his assesment of how stock prices are driven. Stock prices are only driven by perception, nothing else. You can find a million stocks that move inverse to earnings - they just don't mean didley in the real world of investing.

 

I will re-iterate one last time. For those who made their losses back in the last year, congratulations. The last year has been a great bear market rally and right now the market is allowing a very generous exit point. The top is very near. I'm not going to predict when or what price but let's just say I will be shocked if the DJIA reaches 12,000 in the next 3 years. And like I said all along, when the market does eventually reverse, you will witness the greatest drop in our lives. By the time you believe it is real, it will most certainly be too late. This next phase will be fast and deep, it might tread slowly at first but when it decides to drop you better hope you're short or on the sidelines.

 

Good luck investors - I truly wish all of you the best this year. If 2010 doesn't prove to be a disasterous year financially and economically, free hand jobs on the house

Edited April 6, 2010 by Brentastic

[MikesVikes]

Wow that was a negative prediction if I ever saw one. And it could be closer to the truth than any prediction I could possibly ever make.

 

When and if the market drops, it provides an opportunity even if you have money invested. If you had invested money the day before the biggest percentage market drop ever, you would have still made money on your investment in the long run. I don't believe that the market will ever fall off a cliff. There is just too much money pumped into the market on a daily basis with retirement accounts. Of course that doesn't take into account the possibility of an astroid hitting earth or the polar caps melting and the entire country becoming an ocean. Beyond that, I think the markets will always go up and always go down.

[Brentastic]

Wow that was a negative prediction if I ever saw one. And it could be closer to the truth than any prediction I could possibly ever make.

 

When and if the market drops, it provides an opportunity even if you have money invested. If you had invested money the day before the biggest percentage market drop ever, you would have still made money on your investment in the long run. I don't believe that the market will ever fall off a cliff. There is just too much money pumped into the market on a daily basis with retirement accounts. Of course that doesn't take into account the possibility of an astroid hitting earth or the polar caps melting and the entire country becoming an ocean. Beyond that, I think the markets will always go up and always go down.

You're right, during normal market corrections, the market offers you to buy stocks at a discount. And you're also right that in the long run, the market will always progress because humans progress. However, this bear market is of a hugh degree and is not a normal correction - what we are in the midst of has been in the making for several decades. The signs are all there too but economists keep finding way to spin optimism. Everything from enormous credit IOUs to strategic defaults (people voluntarily defaulting on mortgages) to sovereign government bailouts to bonds being issued that consist of toxic assets to consistent 10% unemployment - all the signs are there for an unfolding depression but yet everyone is trying to hype a 'recovery'. Sure.

 

So while your thoughts are accurate throughout our lives up to this point, we are in a different economice position this time and it's not good.

[Perchoutofwater]

You're right, during normal market corrections, the market offers you to buy stocks at a discount. And you're also right that in the long run, the market will always progress because humans progress. However, this bear market is of a hugh degree and is not a normal correction - what we are in the midst of has been in the making for several decades. The signs are all there too but economists keep finding way to spin optimism. Everything from enormous credit IOUs to strategic defaults (people voluntarily defaulting on mortgages) to sovereign government bailouts to bonds being issued that consist of toxic assets to consistent 10% unemployment - all the signs are there for an unfolding depression but yet everyone is trying to hype a 'recovery'. Sure.

 

So while your thoughts are accurate throughout our lives up to this point, we are in a different economice position this time and it's not good.

 

You make a good point when you consider the unfunded liabilities we have via social security and medicare, and now Obamacare. When you look at not just cities, but possibly states defaulting with out government intervention, and you look the ever increasing size of our governments spending things to look glum.