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.
Wealth taxes are taxes on successful people. In the U.S., the only stated wealth tax is estate taxes. However, we think that there are some disturbing trends on the horizon for the wealthy or those who wish to be wealthy.
For example, here in California, we have a wealth tax, Proposition 30, which was voted in November. This was a retroactive tax on anyone whom the state of California deems as wealthy, and it was a significant amount. Also, as we saw in the country of Cyprus recently, depositors of banks were taxed - which is a significant wealth tax.
We are also hearing that annual asset taxes are currently being considered in Europe, meaning that you would have to round up all of your assets and be taxed on the value of those every year. In the U.S., an IRA tax was proposed by President Obama recently, on anyone who has an IRA in excess of three million dollars. That is a serious wealth tax and something that investors need to be aware of.
These wealth tax trends are disturbing to us, and this is something that high-net-worth investors must start strategizing about in the months and years to come, unfortunately.
This is a podcast summary. For more information, please listen to the entire broadcast here.
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’re feeling left out of the stock market, don’t fret. This is an expensive and risky time to jump into the stock market, and we think that better investment opportunities are still to come.
The market is still being fueled by the actions of the Federal Reserve, and we believe that an amount of patience and knowledge will pay off for investors. There’s an important editorial by Ron Paul about the “Great Cyprus Bank Robbery” that sheds some light on what’s going on in Europe and what we need to be aware of here in the U.S. We are not trying to be alarmist, but we do think that learning from the issues in the banking system in Europe is wise for investors.
To answer that question, we tend to agree with value investors like John Hussman, who says that the U.S. stock market is overbought, overvalued and overbullish on a short-term basis. We expect to see a correction sometime soon, and any geopolitical news or economic instability will make those corrections stronger.
Speculation is what’s driving this market, and it’s at a very high level right now. Investors often get sucked into this, and need to be careful about being pulled into a risky environment. Risk is something that people often assess after the fact, unfortunately, but we think that right now there’s a risk factor of at least -10, maybe more if world news gets more negative.
This is a podcast summary. For more information, please listen to the entire broadcast here.
We want to stress the importance of saving for retirement. Look at your IRAs, 401ks, etc. and make a plan for your future. We mentioned last week that Americans aren’t saving enough in general, and this is a serious problem. Don’t be one of those who are left without options in retirement.
In the markets, emerging markets are not doing as well as developed countries. We think that the emerging markets will be an opportunity in the months to come, so we’ll be watching that closely. As you know, we believe that opportunities are coming, and now is not the time to get in too deep in the markets.
For the most part, we advise you to stick with your bond holdings and stay tuned for more information on investing.
There’s a lot of news out there about what’s happening in the world markets and here in the U.S., so here’s a round-up of news and views on what’s going on out there:
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.
This is a scary topic, but it needs to be discussed. Widely, most people are not saving enough for retirement and it has become a difficult trend to deal with. We suggest that you save for retirement ahead of your kids college education or other desires, because when the time comes, that money will be what you will live on.
In Cyprus, in Europe, there’s a proposed tax on depositors, and it is causing a lot of tension and upheaval over there. Europe is not fixed and we need to not be lulled into false confidence because the EU has been largely quiet of late. We are also still advising caution in the U.S. stock market, even though it is performing well this year.
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.
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.
Amazingly, the highs in the Dow are seen as the big story around the world. These new highs come at a price, however, and that’s what we need to talk about today.
Most investors believe inflation will be a big problem because of the Federal Reserve’s tampering in the market through Quantitative Easing. They are worried about the value of US dollar, commodities, healthcare, higher taxes, etc.
On the other hand, we could see deflation, which, frankly, we are more concerned about. If all of this money printing doesnt result in economic growth, than the economy will contract. Stocks usually advance ahead of economic growth so everyone is hopeful, but you need to be prepared for both inflation and deflation at the same time in your portfolio. Both could harm investors, and we don’t know, at this point, which way the economy is going to go.
Deflationary consequences:
Job losses
Assets deflate
Debt defaults
Inflationary consequences:
Devaluing of US dollar
Expensive gas, commodities, food, healthcare etc.
Sovreign debt defaults are going to come at some point and restarting economic growth is going to be very difficult if that happens, particularly in Europe. Our advice is this: prepare for an uncertain global economy, and ready your portfolio for both inflationary and deflationary action.
If you’d like more information or guidance on how to do that in your personal portfolio, please email us at askdoug(at)dougfabian(dot)com.
This is a podcast summary. For more information, please listen to the entire broadcast here.
