Don’t forget that the San Fransisco Money Show is coming up in August, Doug will be presenting and we are very excited about our favorite money show of the year.
There is a Federal Reserve open market committee meeting this week. This means some volatility, but we are hoping for clarity and direction for the future of Quantitative Easing and other Federal Reserve policies.
Abroad, watch these international headlines in the days/weeks to come (none of which are affecting the markets in a severe way as of now, but important to keep in mind):
NSA and Snowden
Conflict in Syria
Unrest in Turkey
Weak emerging market currencies, equities and bonds
Weakness in Chinese market
Usually, in normal times, all of the financial markets around the world go up or down at the same time. As we all know, however, these are not normal times and there’s a lot of unusual market action out there. Emerging markets, China and other seemingly distant markets do matter for our portfolios, and we need to pay attention to them.
This is a podcast summary. For the full broadcast, click here.
The Asian markets are in the process of resetting, as geo-political and economic forces effect those markets. As we look at the next three quarters of 2013, as long as the world doesn’t enter a global recession, we’ll likely get great buying opportunities in Asia in the months to come.
In contrast, the U.S. market has not reset itself. It’s not in a good position for buyers, because volatility and risk is very high, and we think that a reset is on its way – and that will be a great opportunity to inject capital into the market.
Doug will be speaking live on May 9 in Santa Barbara for the American Association of Individual Investors. For ticket information and more details, please call our offices at 800-391-1118.
Also, Doug will be presenting at the Money Show on May 14-15 in Las Vegas. See the Money Show website for ticket information – we look forward to seeing you at one of these events!
We’re also working on three new reports for High Monthly Income, and new newsletter for Successful Investing subscribers. We’ve got a lot of stuff going on here at Fabian Wealth Strategies, so stay informed and up-to-date with us and the markets. That said, now is the time to pay close attention to the markets. So much going on, we’re are going into a new phase of volatility. For example:
We are seeing the first signs of a potential correction in U.S. stock markets, and we’re also seeing global markets showing weakness. There’s talk about a financial disaster in Japan, because of unprecedented Quantitative Easing and crumbling demographics (one in three Japanese citizens is over 60 years old), so despite the current stock market party there, we need to be aware of what’s coming. In addition, the U.S. stock market is overvalued and risky. Treasury bonds are going up this week, and bonds are still performing pretty well.
If you’d like to find out more about how we can help you and your money face upcoming challenges, act now by listening to the Monday Morning Market Outlook podcast, and then by giving us a call at 800-391-1118.
As always, email any investment questions or concerns to askdoug(at)dougfabian(dot)com. We want to help you make the best possible decision for your portfolio. This is a podcast summary. For more information, please listen to the entire broadcast here.
The stock market is impressive right now, and we understand that investors are afraid of being left out. Better opportunities to enter the market are coming, and now is not the time to put capital to work – in our opinion.
Market crashes are once-in-a-generation events – good for headlines, but not typical. Remember that markets are psychological, not logical. You can live with lost opportunity much easier than you can live with lost capital. We think that you should be more concerned about lost capital than anything else right now. Have a sell plan and protect yourself against changes in the market.
The Stock Market correction we’ve been expecting is here, in our opinion. There’s a lot of concern out there about the sequester, European crisis and China’s stock market. The news is going to get louder and worse over the coming months, and even though 10% correction is a fairly regular occurrence, but in this instance investors are emotional and likely to panic over what is really a normal correction.
Do not give in to panic. We think that the opportunities are in front of us, and we encourage you to be conservative and ready for investment action.
As always, email any investment questions or concerns to askdoug(at)dougfabian(dot)com. We want to help you make the best possible decision for your portfolio.
This is a recap of our recent (Tuesday, January 15, 2013) teleconference titled: Opportunities and Risks for Investors in 2013. If you missed the presentation, we encourage you to listen to the audio recording and download the handout, as well as read this blog for more information.
The purpose of this teleseminar is to help you with a thoughtful investment process. This is for general information and education, not personal investment advice.
Investor psychology – setting up for success in 2013
Don’t let news and fear dictate your investments. When opportunities come, be prepared to act, don’t wait. Many people are worried about their money, and they delay investment decisions because of this. There are trillions of dollars sitting on the sideline because of this. Worry is a negative emotion – nothing positive comes from it. Worry can cause bad decisions.
These are our four themes for 2013 (and the charts for them, below):
Global economy (agricultural commodities will be important because of an increasingly global economy and rising international middle class)
Precious metals. Money printing by central banks is a reason to own gold. Gold doesn’t need inflation to move higher, and will present opportunities.
(Click on any chart to enlarge)
Opportunities for growth
Download our ETF report here. See all of our available ETFs, categorized by type and themes. We think that ETFs are the easiest way to invest in these sectors.
Asia: China and Japan have both been under performing for many years, but may be emerging into a new bull market soon. Japan has significantly lowered their currency value via their central bank, which is good for their exports and equities. We believe that Asia will present some very nice opportunities in the year to come. Ticker symbols to watch: FXI, HAO, FCA, EWJ, SJC
Agriculture: If you were looking for a country that has the best, most productive agriculture abilities, you would look at the U.S. The U.S. has abundant farmland, water, and technology. Businesses are way ahead of commodities, so commodities are a better short-term opportunity, but businesses could be a great opportunity later in the year as well. Ticker symbols to watch: DBA, RJA, CORN, SOYB, CANE, WHET, MOO, PAGG, CROP
Precious Metals: We know that there is strong support for gold, because every time it gets down to $1500, people buy it. It can certainly fall below that, but it wouldn’t surprise us if it did test that support by falling briefly below $1500, then shooting straight up. Central bank and money printing make gold attractive for many people. Ticker symbols to watch: GLD, IAU, SLV, GDX, GDXJ, SIL
Energy: There are huge natural gas reserves here in the U.S., which is a good thing. Energy companies and master limited partnerships are not currently at a good price point, but this is a great sector to be watching for corrections and opportunities. Ticker symbols to watch: AMLP, IEZ, XOP, FRAK
Dividend Equities: Companies that are paying dividends are on very solid footing, have been around a long time, which makes them a good investment. Dividends are still taxed at a favorable rate for most Americans. We think it needs a sharp correction to really be a good value for investors, but keep an eye on it. Ticker symbols to watch: DDY, SPLV, XLU, IYR, DEM
(Click on any chart to enlarge)
Opportunities for income
We think that there are still a lot of reasons to own bonds around the world. We think that bonds are still a good investment and we are not concerned about a bond bubble right now.
Star Bond Fund Managers: Such as Vanguard, PIMCO, Double Line Funds, Really like using these top fund managers. They know what they’re doing and are performing very well for investors. Ticker symbols to watch: DLTNX, BOND
Short Term Bonds: Don’t have huge yields, but can be a good solution. These are easy to use and great for high-cash or income portfolios. Great for holding money short-term while you wait for opportunities.
Municipal Bonds: Cuts or shutdowns with debt ceiling could give buying opportunity for municipal bonds. If you have a lot of income right now and want good tax-free income, this is especially good to keep on your watch list.
Emerging Markets: Bonds of emerging market countries and companies are great opportunities for this next year. Remember that this is not necessarily an option today, because we’d like to see correction before buying, but a great sector to watch.
Dividend Equities: Telecommunications, utilities, etc. Nice yields right now, and might present us with opportunities as the year continues, but again, not today. Good to watch and on your buy list when you see weakness in the market.
Risks for investors in 2013
Today, we purposefully decided to talk about risks after we discussed opportunities. You need to stay positive and think opportunity first, so that you are ready for it. Manage risk, but don’t be a slave to it. Don’t obsess about politics and their outcomes, we aren’t in charge and we’re just going to have to watch and see what happens. Remember that the following risks are not predictions, just possibilities.
U.S. – higher taxes, slowing economy, recession
European sovereign debt crisis
Strategies to manage risk:
Asset allocation – know where your investments are and how much risk you have
Sell discipline – have a goal and a designated sell point
Entry point – buy wisely and watch for opportunities, not worry
Put volatility to work for you!
Vigilance in monitoring – know what you have and why, and have a watch list
Finally, let’s make an action plan:
Have a written goal for your investments – income or growth – whatever you decide on is valid, but you have to write it down and create a plan to make it happen
Invest based on what you and your family needs
Take inventory of your allocations and overall portfolio – decide what to do about risk and how to plan for this year.
Reallocate – look at some starter positions and some new ideas – maybe some of the ideas we discussed today.
Prepare for corrections, opportunities and sell points
As a thank you for participating in our seminar we would like to offer you a free consultation to discuss your portfolio and strategies to achieve your financial goals. This includes an in-depth analysis of all the holdings in your portfolio. We will share with you the unique strategies we are using for our clients right now and how active portfolio management can be of benefit to you.
This offer is available for goal-oriented investors with more than $250,000 in their investment portfolios. Contact us for a brief introduction and to schedule an appointment to review your accounts.
To schedule your free Portfolio Assessment, call us at 800-391-1118.
We’ve been asked to outline our top three favorite Exchange Traded Funds for investing in 2013. Over the next couple of weeks we’ll give you all three, and today we’ll talk about the first one: FXI.
FXI is an ETF made up of the China 25 ETF. It’s made up of the top 25 companies in China, and we picked FXI because the Chinese stock market has been underperforming for the last two years, and is likely to present some great investment opportunities soon.
If you’d like to find out about the opportunities, and perhaps more importantly, the risks you are likely to confront in the year ahead, then we invite you to join us this coming Tuesday, January 15, at 1:00 p.m. Pacific Standard Time, for our first live teleconference of 2013.
This teleconference, aptly titled, “Opportunities and Risks for Investors in 2013,” will give you our latest outlook on the equity markets as we embark on another year of uncertainty, and unknowns. Register here.
We are highlighting the “Fabian Five” because we think it’s very important for investors to monitor these five indices every week, and ask yourselves, are they changing for or against your portfolio? Here are the five indices that we are watching and that we encourage you to monitor as you make investing decisions:
We think that one of the best ticker symbols to watch for global stocks is VT, the Vanguard Total World Stock Market ETF. It comprises almost all stocks in the world and gives a complete picture of the whole world, not just emerging markets or the U.S. We think it’s a very interesting ETF to pay attention to. It has 3,880 stocks in the index, and gives a great, balanced, global macro view.
VT is made up of 50% North America (U.S., Canada and Mexico), 24% Europe, 12% Pacific countries and 14% Emerging Markets. It gives a nice broad view of the world stock market, although it is still dominated by the United States, at 48%.
We really encourage you to take a look at VT and consider its implications to your portfolio. As always, if you have questions or concerns about the role of global stocks in your investing, please email askdoug(at)dougfabian(dot)com.
(If you read this blog and enjoyed it, listen to Doug’s podcast this week for even more details on this topic, and please share this information with others who might benefit from our perspective.)
The markets are anticipating a deal on the Fiscal Cliff. It looks like any deal will mean higher taxes next year, so it’ll be interesting to see how much that affects our economy.
Central Banks around the world are using the Federal Reserve’s playbook and implementing their own versions of Quantitative Easing (printing money and buying bonds with it). These strategies are unprecedented, and so far they seem to be working. Our concern is that things can unravel quickly if confidence starts to wane, and with the lack of good economic growth, this could get unsteady.
You’d think that gold prices would be soaring with all this money-printing going on in the world, but, surprisingly, it’s not. We are watching it closely to see if it turns around, as it could be an opportunity in the weeks to come. We encourage you to have it on your investment radar as well.
No video next week, but we hope that you have a very Merry Christmas and wonderful holiday season. We will be recording a podcast as usual on Christmas Eve, so you can check in there and we will see you here on the blog and via video in the New Year.