January’s Trifecta of Bad News Crushes Stocks – Published in Noozhawk on Monday, February 3. 2014

A combination of weak earnings, deflation across the Eurozone and panic selling throughout emerging markets led to the worst January performance for U.S. equities since 2010. To say I am pleased I sold a substantial portion of stock portfolios for clients on Jan. 2 is a gross understatement. Last month we witnessed a dramatic reversal in the positive trend stock markets have enjoyed for the better part of the past…

Stocks Continue Slide

All three major indices fell today, following Friday’s sizable rout.  The Dow lost 41, the NASDAQ lost 44, and the S&P 500 dropped 8.  Although the NASDAQ’s drop was significantly larger in percentage terms than the declines of the other two indexes, the S&P 500’s losses over the past few trading days are far more significant.  First, the S&P 500 penetrated its 50-day moving average on Friday.  It also fell…

Is This a Buying Opportunity or the Start of a Major Correction? – Published in Noozhawk on Monday, January 27, 2014

Friday’s 2 percent fall for the three major U.S. indices was followed by significant declines in Asian markets, with Japan and Hong Kong down well more than 2 percent early in Monday’s trading session. The Standard & Poor’s 500 lost 2.65 percent last week and is down 3.1 percent year-to-date. The Dow Jones Industrial Average lost 3.5 percent last week and is down 4.2 percent year-to-date. The Nasdaq Composite has performed slightly better, although it lost…

Stock Market Valuations Could Suggest Further Gains – Published in Noozhawk on Monday, December 29, 2013

The Standard & Poor’s 500 index began 2013 at 1,426 and ended last week at 1,841, which represents a 415-point or 29 percent gain for the year so far. This is the best performance for the S&P 500 in a decade. Looking ahead, what can we expect for stocks? One way to gauge the probability of a strong follow-up year for stocks is to look at current valuations. World gross-domestic product for 2013 was…

What Investors Should Expect in 2014 – Published in Noozhawk on Monday, December 22, 2013

With the Dow Jones Industrial Average and the Standard & Poor’s 500 at all-time highs, and the Nasdaq Composite Index at highs not seen for more than a decade, stock investors have enjoyed the best year for performance since 2003. As we look to 2014, investors will be challenged with some of the most complex economic conditions in history. Surprisingly, stocks tend to perform quite well in the year following a year with double-digit gains. Going…

Fed’s Bait and Switch a Brilliant Move by Bernanke & Company

Yesterday’s surprise move by the Fed to announce a $10 billion reduction in their monthly bond buying program, from $85 billion to $75 billion, was accompanied by a commitment to maintain 0% short rates indefinitely.  This was a significant policy shift from the previously stated target of 6.5% unemployment, after which rates were to begin to rise.  This added announcement on short-term interest rates served to offset (and then some)…

All Eyes Are On the Federal Reserve – Published in Noozhawk on Monday, December 16, 2013

Economists, portfolio managers and investors are all watching for any indications from the Federal Reserve’s December meeting, which spans Tuesday and Wednesday of this week, that it may begin the tapering process sooner than March. Stock and bond market activity for the balance of 2013 and into 2014 will largely reflect the Fed’s stance regarding tapering. Last week, three Fed governors indicated that they believe that tapering should begin sooner rather than…

Better Than Expected Jobs Report Pressures Fed

The Commerce Department reported that the U.S. economy added 203,000 new jobs last month, which was better than expectations.  Also the unemployment rate fell to 7% from 7.2%.  While this is a positive report, and the jobs added were broad-based, spanning most industries across the economy, a 7% unemployment rate is still too high, and is below the target rate of 6.5% the Fed has set.  Still, this report does…

Are Stocks Overpriced? We May Find Out This Week – Published in Noozhawk on 12-2-13

With the Federal Reserve scheduled to meet Dec. 17-18, investors will be keeping a close eye on this week’s heavy assortment of economic reports. Will these reports be enough to spur the Fed to begin tapering before the end of 2013, and will that spark a major market sell-off? We will soon find out! The Standard & Poor’s 500 Index gained 0.1 percent last week, setting another record close Wednesday and achieving its eighth-straight…

Three Reasons to Expect Home Prices to Fall – Published in Noozhawk on Monday, November 18, 2013

Property owners in coastal California have enjoyed some of the most impressive gains in value, historically speaking. Locally, we saw home prices fall to a low of $296,590 in March 2009 from a peak of $878,124 in July 2007, a drop of more than 66 percent (California Association of Realtors; median home prices for Santa Barbara County). This low coincided with the low of the stock market following the implosion…