March 5, 2014 Perspective
Equity markets here in the States have recently reached all-time highs once again. The time for the naysayers has begun again with predictions of another major decline in stock values. The analysts we follow and communicate with do not see a significant drop in the near future. In fact, the next few years look quite positive to the majority that we talk to. No one ever knows for certain what short term gyrations will occur. The following excerpt taken from one of the greatest investors of our period is very timely. We hope you enjoy the comments.
As another year ends, we look back and reflect on a year that many thought would be tough for the markets. Equities started off the year moving higher and except for a slight pullback in June due to the Federal Reserve’s comments about stopping their quantitative easing program, continued to make new highs right into this year’s end. Declines due to worries over inflation, Syria, Iran and the various political scandals never materialized leaving the majority of investors sitting on the sidelines missing the year’s gains.
October 17, 2013 Perspective
History once again repeats itself. Just like the previous 17 times that the government went down to the wire on a monetary shutdown this time was no different. Just before midnight on Wednesday the President signed the bill to re-open the federal government and increase the debt limit. At least for 90 days. After grandstanding in front of the television cameras for the past two weeks, Congress miraculously comes to a weak agreement to again kick the proverbial can down the road. The American people have seen this movie too many times and appear to be signaling that just maybe they’ve had enough.
September 6, 2013 Perspective
As we come into the month of September there is continued reason for caution in the short term. From the high of 1,700 on the S & P 500 index on August 1st, we have seen a decline of about 4% down to 1,632 on August 30th. Trading has been listless with fewer trades even on the days where values are up.
Our last e-mail just a little over a month ago commented on the fairly quick rise to new highs in the stock market. It is looking like our Federal Reserve Chairman, Ben Bernanke, began to feel like the rise to new highs was a little too quick. We have heard that the timing of last week’s Fed meeting comments suggesting that he may soon taper off the buying of bonds, which has kept interest rates low, was meant to bring market levels down a bit. Obviously with China’s economy slowing and ours just barely chugging along, there is zero chance that the Fed will actually stop pouring money into our economy any time soon.
June 13, 2013 Memo
Equity markets are in the news daily again since they have reached new highs. All of the attention is bringing comments of caution from investors who have been burned after seeing major corrections from previous market highs. For reasons that we have mentioned in previous communications and also in this letter, there is strong evidence that prices can move much higher. This optimism though, does not keep us from continuing to explore new ideas for investing and diversifying to help reduce volatility looking forward.
May 8, 2013 Perspective
On Tuesday, the Dow Jones Industrials eclipsed the 15,000 level for the very first time. It has been 1,044 trading days since the market bottomed at 7,000 in March of 2009. This four year climb was accomplished much quicker than the last climb from Dow 7,000 to 14,000 which occurred over 2,621 trading days from 1997 to 2007.
April 11, 2013 Perspective
It is inevitable that when prices in any investment market make new all-time highs that talk from the so-called investment experts turns pessimistic. While it is prudent to take a good look during these times at the market metrics and valuations regarding risk, turning gloomy is not always warranted.
History Déjà vu?
Today the Dow Jones Industrial average made a new all-time high at 14,253. To many technical analysts, this was the last hurdle that needed to be reached to confirm a new bull market. Lucky for us, that this is now official. The four year run from Dow value 6,547 in March 2009 producing a gain of 120% must have been just a warm-up we assume.
Maybe, just maybe we are emerging from the “lost decade” in which equity markets have struggled as investors have held onto their cash. This long period of stagnation benefitted bondholders as the Federal Reserve reduced interest rates to practically zero in the attempt to get buyers back into real estate with low interest loans.