This week, the markets’ reputation for anticipation will be put to the test.
Will the Federal Reserve begin scaling back its easy-money stimulus? The market seems to think so. Investors have been paring back bonds susceptible to rising interest rates, and the 10-year Treasury yield has already jumped this summer from 1.6% to nearly 3%, far faster than the pace of economic improvement. Last week, a Wall Street Journal survey of 47 economists found that two out of three think the Fed will begin tapering after Wednesday’s policy powwow.
Market observers are fond of saying things such as “the market feels like it is a little ahead of itself “or “you should sell now because the market is set for a pullback, before proceeding.” “The market is at all-time highs” is another reason suggested for selling. None of these, the myriad of charts or even dismal GDP growth, makes any difference or sense if you take a moment for serious analysis.
Anytime someone says the market “feels” like anything, you can go do something else. Feelings are the downfall of investors. Making money in the stock market is anti-intuitive; it takes the careful analysis of knowledge to make the right decisions. Charts are near meaningless in an environment where governments are unpredictable, sabers are rattled, wars are started, tax laws are changed and politicians declare war on segments of the economy.
August 6, 2008 – Beck Capital was 50% cash and Frank suggested avoiding banks. He said there would be choppy waters for 6-8 months while the adjustable-rate, subprime loans that were written from September thru December in 2006, would be adjusting from their 1% levels to 7% and the loans had grown while the home values shrank. The S&P 500 was at 1283 that day and exactly 7 months later it bottomed at 667. In March of 2008, while the government began a near trillion dollar stimulus, Frank wrote a Forbes article (see March Forbes) proclaiming the massive government spending would inflate all markets.
September 11, 2008 – Still liking cash, WMT, MCD, YUM (for growth in Asia) and avoiding the consumer
November 12, 2008 – “tip-toeing” back into the market, we are buying companies below book value or at very low price-to-book, with continuing strong earnings and buying very discounted bonds.
The following article is posted courtesy of AUSTIN WOMAN MAGAZINE and features Melanie Johnson of Beck Capital Management…
Managing money poses special challenges for women, but these 10 tips can help you get on the road to financial independence.
by S. Kay Bell
Everyone, regardless of gender, needs to have a financial plan. But women do have some special needs.
In most cases, women make less money than men in the same positions. Women tend to take more time from work to take care of family. That not only inhibits job promotion and the accompanying raises, but also reduces our contributions to pensions and Social Security. And less retirement savings are a big problem, since statistically, women live longer than men.
Louis Rukeyser – interview date Oct 16, 2008; publish date Oct 20, 2008. Top of page 2, I recommended avoiding financials (financial index is down over 34% since that day), buying gold (up over 65% since), and under “What to Buy Now” I suggested FCX (+200%), MCD (+49%), YUM (+%), and APL (+327%), all included dividends paid. During the same time frame, the S&P 500 is up 48%.
To read the article, click here: