There are a lot of scandals in Washington D.C. right now: Benghazi, AP, IRS and NSA. The environment when we look at Washington right now is pretty ugly, but President Obama still has a 48% approval rating. There is a definite correlation between stock market trends and the President’s approval rating, and that will be interesting to watch in the months ahead.
When we look at Washington, we are looking at the President’s approval rating, Treasury bonds, commodity prices, economic conditions and the U.S. dollar. So far there’s nothing here that is a red flag for investors. These scandals are troubling, but they are not spilling into the bond, stock, currency markets or economy at this time.
In the months to come, we believe that we will see significant drags on the economy from higher taxes and higher health insurance rates because of Obamacare. This is something significant to watch, although we don’t see it as a serious problem today.
This is a podcast summary. For more information, please listen to the entire broadcast here.
Over the past few weeks, we’ve gotten a lot of emails asking our opinions on the bond market. We’ve recently a large change in treasury bonds, BOND (one of the bond ETFs that we recommend) has been down, and high-yield and emerging market bonds are also down right now.
We are reducing exposure to bonds in general for most of our clients. We’re raising cash and looking for opportunity as the bond market changes. Managing risk is very important to us, and we want to be prepared for volatility and opportunities.
Here are our rules of thumb for analyzing your bond exposure:
Reduce risk
Look closely at portfolio and analyze it for security, allocation
Maintain exposure to short-duration bond funds
Exercise patience
For more information on how we see these changing markets, or to become a Fabian Wealth Strategies investment client, please call our offices at 800-391-1118.
This is a podcast summary. For more information, please listen to the entire broadcast here.
See Doug present live August 14-17 at the San Fransisco Money Show. It’s located at the Market Street Marriot in San Fransisco, and Doug will be teaching a workshop on “Income investing and Exchange Traded Funds”, so look for more information on that in the weeks to come.
Last week in the markets: the domestic economic news was a mixed bag, with weaker economic data and nervousness about the Federal Reserve’s potential slowing of Quantitative Easing. However, we did see a bright jobs report, and so far it looks like we’re in a sideways pattern in the markets. High-yield continues to be weak, and what’s really unusual is how poorly the emerging markets are performing.
Opportunities to keep on your investment radar: Japan looks like the best equity opportunity out there with a nice correction happening right now. The U.S. markets have not corrected enough for us to get excited about them as an opportunity yet, but we are watching closely. We are seeing corrections in high-yield bonds, which we are keeping an eye on – and we might get some opportunities in dividend plays as well, depending on what happens with interest rates in the weeks to come.
Stay tuned to our podcast, blog and video update for more information as we watch the markets for investment opportunities, warning signs and new options for your portfolio.
We need to watch what is happening very closely out there, as the stock market drops. We are expecting a significant correction, and we might be seeing that now.
Interest rates are going up a bit, and this means that we need to watch the bond market very closely. We also need to keep tabs on the employment, housing and other economic numbers that may tell us more about what the markets will do going forward.
We haven’t had much reaction in high-yield bonds until last week, and it looks like there is some risk there. We don’t usually own long-term bonds, but the most recent volatility makes it even more clear that investors need to be ready to make adjustments.
For your portfolios, look closely at what you own in the bond market, and get ready to move on those if necessary. Don’t get complacent or allow yourself to panic, but make smart investing choices based on good information.
As we’ve said before, entry point reveals whether your investments are safe or not – so watch these trends and be alert to opportunities and warning signs. We might be seeing a “reset” in the financial markets right now, so keep an eye on these numbers.
Last week in the U.S., we saw that consumer confidence is strong, housing prices are up; we saw more evidence of good economic news and higher interest rates. Amazingly enough, the margin debt (people who are borrowing money to buy stocks) is at an all-time high in the U.S. as well.
But later in the week, markets got nervous about the correction in the Japanese market and Central Bank policies (Quantitative Easing) and so we saw a correction. Some of the stronger, safer sectors of the market (energy, healthcare) got sold off so that was interesting to see. International markets were down much more than the U.S. market, so it’s clear that the U.S. is somewhere that global investors are buying as well. Remember that ETFs enable investors from all over the world to invest anywhere in the world, and are a great tool as you watch the global markets.
We saw some stress in the bond market as well – good economic news equate to higher interest rates, which tends to move investors back to stocks.
There’s no bigger experiment in the central banks then Japan‘s monetary policy and aggressive Quantitative Easing program. When interest rates go up, everyone gets nervous, because investors start to wonder if Japan can continue to suppress their currency and keep interest rates low. This doesn’t mean that these central bank policies are failing, but it is definitely something to watch as we invest in the global market.
We’re viewing the correction in Japanese equities as a potential opportunity, and we think that this could be a great place for investors. Remember that markets are not logical, they are psychological, and we are seeing an emotional moment right now in the Japanese market – not necessarily a foundational market problem.
For more information on how we see these changing markets, or to become a Fabian Wealth Strategies investment client, please call our offices at 800-391-1118.
This is a podcast summary. For more information, please listen to the entire broadcast here.
We keep hearing about bubbles in the stock market, and we want to address some of those concerns today. Three items we learned recently from Jeffrey Gundlach:
Quantitative easing not ending without negative consequences that force it to do so
Countries are debasing their currencies around the world
Global growth is slowing
Now, three items we got from Bill Gross recently:
Money is chasing risk
Bond bull market is coming to an end
Bubbles in stocks, bonds and real estate
Are there bubbles and risk out there, thanks to central bank action? Absolutely, but we think that our investors are well-prepared for the changing tides of the markets. For more information on how to become a Fabian Wealth Strategies investment client, please call our offices at 800-391-1118.
This is a podcast summary. For more information, please listen to the entire broadcast here.
Last week we discussed five good ETFs to watch for growth, and as promised, today we’ll offer five ETFs to look at for income investors.
BOND – low volatility in the bond market, manages risk well
IYLD – 50% exposed to fixed income, 5% yeild
AMLP – good to watch, but not a good investment right now
SDIV – international dividend ETF
EEMV – low volatility stocks in the emerging markets
We’ll be discussing these in depth at the Money Show, and we look forward to seeing you in Las Vegas this week, or having you join us on the live webcast.
As always, if you have questions about the state of your portfolio or how to use ETFs, email questions or concerns to askdoug(at)dougfabian(dot)com.
This is a podcast summary. For more information, please listen to the entire broadcast here.
We saw a positive week overall in the U.S. markets, although not internationally. We are seeing some volatility and we see elevated risk levels in the world right now. This market is being driven by factors that are outside the normal realm of the markets.
It seems to us that investors are nervous right now because of all the unusual market activity. The most important thing to remember is that entry point is everything, so it’s wise to be cautious and watch for the right time to enter the markets. Markets correct and reset regularly, and when they do it’s wise to be prepared and on the lookout for opportunities.
As always, if you have questions about the state of the markets, email your concerns to askdoug(at)dougfabian(dot)com and we’ll do our best to answer them either individually or on the podcast.
This is a podcast summary. For more information, please listen to the entire broadcast here.
Right now, the Federal Reserve is in the market because the economy would not be able to grow without its involvement. We have a situation where interest rates are artificially low and so people are wondering what to do with their savings accounts and CDs – how do you make money on your savings without interest?
We continue to believe in the bond market for investors, but we know that it’s tempting to get into stocks because of dividend yields. Many investors are afraid of a bond market bubble and so hesitate to invest in bonds. However, we will say it again – we believe that bonds are the place to be for the majority of your portfolio.
Even if bonds do decline, you’re still getting an income stream and you are not exposed to risk and losses like in the (right now, very volatile) stock market. There are decent income streams available in the bond market, you have to be wise about what you buy and why. Also, you don’t have the downside risk in bonds that you have in the stock market.
For more information, please check out this excellent article and presentation by Jeff Gundlach. We think that he makes some excellent points and we encourage you to take this advice seriously. If you have questions about how to use bonds in your portfolio, please call our offices at 800-391-1118.
This is a podcast summary. For more information, please listen to the entire broadcast here.
