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.
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 got a letter this week from a client of ours, and we wanted to share a piece of it with you and our reaction, because this is a common fear and question for investors.
“I believe that U.S. cannot continue with its current debt load – no one country is big enough to bail the U.S. out once dollar is no longer the gold standard, and we’re concerned that the dollar is not strong. We are concerned about a sharply falling US dollar, and wondering if we need investment advice outside of the dollar or a safety net outside of the U.S.? ”
-A concerned client of Fabian Wealth Strategies
First off, it’s great that our clients are watching the markets and the international stage so closely. As money managers, we’re watching currency markets each and every day, and the big currencies to look at are the U.S. Dollar, Euro and Japanese Yen. Right now, the U.S. Dollar is enjoying a nice uptrend in value. There just aren’t great alternatives out there to the U.S. Dollar right now, and we have no evidence that the U.S. Dollar is declining at this time. We agree that the Federal Reserve’s bond buying actions are problematic, but it’s not adversely affecting the dollar right now. Seeing that the Japanese Yen and Euro are both engaging in similar Quantitative Easing strategies to a much greater extent than we are, and remembering that the global economy is very intertwined is helpful. There is a lot of economic stress in these areas of the world, and in order for the dollar to go down, other currencies would have to come up in value, and we don’t see that happening.
As a side note, we aren’t seeing a rapid rise in gold prices, either, which is its own form of currency. Since all currencies can’t go down at the same time, the U.S. dollar is in good shape. These are good questions and legitimate concerns, but right now we don’t see a reason to worry about the U.S. dollar.
This is a podcast summary. For more information, please listen to the entire broadcast here.
We like to pick growth Exchange Traded Funds that are tied to some long-term cyclical positives around the world. We think that the following ETFs are either good investments or good ticker symbols to put on your watch list as you manage your portfolio.
Here are our five favorite ETFs for growth:
FRAK – small, focused on natural gas infrastructure
PBW – clean energy
VEGI – global food companies
DXJ – Japanese stocks
EEMV – conservative stocks in the emerging markets
As always, if you have questions about the state of your portfolio, how to use ETFs or market action, 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.
See Doug live this week and next, in Santa Barbara and Las Vegas, respectively. Please get more information here.
We heard a new acronym this week: TINA, which stands for “There Is No Alternative” (to equities). CNBC and other media outlets are touting the wisdom of TINA, and refusing to see any bad news for equities.
It’s interesting to note that, for the first time in 17 years, the market has not had a 5% correction from January to May. This is an incredible grind higher, but we have not seen any real opportunities to enter this market, and the fundamental instability concerns us.
The economy is not doing all that well, but, as we just mentioned, the media and the markets see negative news as a positive these days, because it means that the Federal Reserve will continue its Quantitative Easing policies. There’s a tremendous amount of faith in the central banks out there, and we all know that this is going to end in an ugly way.
Risk is very high right now. We are seeing unprecedented heights, particularly with the fundamental economic weakening around the world. Remember, fads (tech stocks and real estate, to jog your memory) do not always serve individual investors well, so be very cautious with your investments and know where your risk is.
This is a podcast summary. For more information, please listen to the entire broadcast here.
Even with the backdrop of weak economic news, nothing seems to bring the market down. This is because of massive central bank influence, and it’s incredible to watch these organizations around the world as they buy bonds and continue various methods of quantitative easing.
“Sell in May” strategies are in effect right now, and it’s a fascinating phenomenon to watch, so keep your eyes open for that.
Commodities have all been selling off lately, and this signals a slowdown in the global economy. Gold particularly is a commodity that shows us what people are feeling emotionally. With all of the Quantitative Easing and national budget deficits, many national economies are engaging in unsustainable practices. Remember that gold is essentially “real” money, and will probably be a good investment once again in the weeks and months to come.
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.
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.
