Sunday, December 30, 2012
Yes, I do work on the Sunday before New Years Eve. The markets are already open in the Far East and it is not encouraging. The S&P 500 stands at 1385 within 10 points of a major support level of 1375, see above, I have written about the 1375 level on several occasions. The Dow Jones is of 225 points or about 1.75%. This continued sell off is because of the concern about the ability of the Congress to deal with the “Cliff” issue.
The markets could swing widely over night depending upon the outcome of any vote in the US Congress. The first hurdle is the Senate who may take up the house passed bill and make some amendments. The House will have to vote on Monday in favor of a compromise with the Senate.
If you wake up on Monday morning before the markets are open in the United States and you see the S&P 500 at 1385 or lower the congress failed.
We have cash, and as I was talking to a new client on Friday I said we might have a great buying opportunity. There is an old saying on Wall Street, “You buy when there is blood in the streets.” We will know how much blood will flow in the next few days.
Friday, December 28, 2012
I hope that you had a Blessed Christmas and you will have a safe and joyful New Year. I would normally be coming to you in video but I have a very bad cold and I know you wouldn’t understand me so I’m falling back on just writing to you. I’m writing to you on Friday the 28th of December.
It appears that we had no Santa Claus rally into year-end and unless the session of Congress on Sunday produces a Christmas Miracle we will go over the Cliff on Monday. There has been a great deal written about what could happen if we go over the cliff. I want to remind all of you about the fall of 2008 when everybody was sure that the Congress would pass legislations that would save the economy of the US and the world and when they didn’t those same people asked how could they fail to pass a bill to save the world?
I’m not saying the events, over the next few days is a bad as the fall of 2008 but it will be bad. I would like to remind all of the current clients that we came through the correction that followed in 2008 stronger than ever. The one thing you or I can’t control is the emotion in the markets. I have been reviewing all of our positions and at least for now I do not see any case where the dividends are in jeopardy of being cut or eliminated. In fact we have a substantial cash position and if we do get a significant sell off I will deploy cash at what I hope will be attractive current yields.
I realize that it will be un-nerving when the markets sell off but we will meet our income payments and add to our income. Be assured that I’m looking at your investments and possible opportunities to deploy your cash.
Happy New Year,
Wednesday, November 28, 2012
Thursday, November 15, 2012
First of all, let me apologize to all of you for the screw up in my technology. I was traveling and I tried to send to a written Blog using too much stuff. With that out of the way let me try and reconstruct what I said so elegantly last night that only I saw.
The markets have been falling since the day after the election. In some respects I feel like the young man who cried wolf so the towns people would come and rescue him. This past summer I told you that I felt that a significant correction was coming in the stock markets. I was convinced that it would come before the end of the year and I gave it some possibility of happening before the election.
The markets do not like uncertainty and the outcome of the election was a tossup. So, why did the markets start falling the next day when we knew who was going to be president? The reasons are many, but one for sure is the uncertainty of who was going to be president was taken off the table.
I said during the summer that I thought when the correction came it would be significant perhaps as much as 20% or more. People are speculating that all the current selling is to lock in capital gains at more favorable tax rates and I agree that perhaps some of the selling was for that reason early on, but now the markets, I think, are selling off because they believe we will go over the “Cliff”. If we go back in time to September 2008 do you remember when the Congress voted not to save the world, and the markets collapsed. Everybody and I mean everybody was convinced that the Congress would save the world, and when they didn’t everybody couldn’t believe that congress voted no.
I think the markets already believe that we are going over the “Cliff”, and I agree. Going over the “Cliff” might just be what we need to scare people into the reality that they refused to believe, so keep your parachute handy.
Now for the current state of the stock markets, we are down about 6% since the election. We have broken support for all three indexes. We, by some accounts are oversold and we should expect a reflex rally. I do not believe that the rally, if it comes will challenge the previous high. If I’m right the rally will be short lived and we are headed to at least 1125 on the S&P 500 and it could happen very quickly, not a flash crash but an accelerating movement to the down side, bigger chunk’s of declines on a daily basis.
If we reach the “Cliff” Monday December 31 and we haven’t resolved the issues then over we go and we will start 2013 on a serious down note. We have cash, which I have been sitting on and when I see an opportunity I will use it. I’m planning a video blog for Friday the 16th.
Again I’m sorry for the screw up.