Central banks around the world are holding interest rates down and hoping that easy money policies will grow the economy. Unfortunately, most of the growth is happening in the U.S. and China, and other central banks are starting to question some of this action.
The emerging markets are not participating in this, and it’s an interesting sector of the world to watch as our markets depend largely on political central bank action.
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.
TINA stands for “There Is No Alternative” and it means that there’s no alternative to equities. This is a popular sentiment right now, and we’re sure that you are hearing about TINA a lot these days. What we want to remind you is that there are always alternatives. Don’t get caught up in the frenzy of TINA and the crazy thinking that these relentless prices tend to create. Just when you hear things like this it reminds us of how everyone said that “real estate never goes down” just before the 2008 crash, so keep that in mind.
The Japanese stock market had a mini-crash last week as well, and we should keep an eye on that market as we invest globally. Global risk is something to be mindful of right now – it is your entry point that will determine your investing success.
People tend to think that the most recent past will continue into the future, but we want to caution investors against rushing in with peer pressure. New bull markets are emerging, such as Japan, clean energy and natural gas, and we think that it’s really wise to look at the new trends rather than old news.
As always, education is very important to us, and we encourage you to send any questions or concerns to askdoug(at)dougfabian(dot)com and we’ll do our best to answer them on the podcast or here on the video update.
At the Vegas Money Show, we thought that attendance was probably 30% higher than in the past. The event was packed! It was a great time and wonderful education opportunities for investors. If you didn’t make it out to Vegas, we’ll also be at the Money Show in San Fransisco later this year, so we look forward to seeing you there.
Let’s look at the news this week: the U.S. stock market has gone straight up for the last four weeks. On average, the stock market grows 10% per year, so far in the last few months we’ve seen 15% growth. We believe that the market is euphoric and dangerously ahead of itself. For 18 Tuesdays in a row the stock market has been up, and consumer confidence is surging. There is a wealth effect going on out there, even though the economy is not truly changing for the better.
Domestically, the Obama Administration’s recent scandals: Benghazi, AP wiretapping and the IRS targeting conservative groups, have been labeled the worst week in President Obama’s five years in office. Whatever your political opinions are on these matters, it’s good practice to see how these news items affect the stock markets. So far, President Obama’s approval rating is untouched, but it’s important to keep track of these kinds of trends and news stories.
In other economic news, Wal-Mart is having a disappointing year for sales, producer prices are going down and manufacturing looks rather dim right now in the U.S. However, with the Federal Reserve’s involvement in the markets, bad news is good news, and good news is good news, so it seems as though the stock market will just keep climbing for the foreseeable future. That said, risk is high, although we do have some investment ideas for you that we’ll talking about in the days to come.
This is a podcast summary. For more information, please listen to the entire broadcast here.
A lot of people are rushing into stocks right now, but patience is the ultimate virtue. We think that this unusual market will still pull back eventually, so don’t be fooled by the rush higher.
New bull markets are good markets to invest in right now, such as Japan, clean energy and natural gas. Getting into a new bull market is a much better place to enter the market than an old bull market (such as the U.S. right now).
We also want to encourage you to sign up for the Making Money Alert as you think about investing, and check out our five ETFs for income here.
When you think about your portfolio, it can be easy to lose focus on what’s important and your goals. Just because there are some scary trends out there doesn’t mean that you can’t succeed and have the life you want. As you think about your portfolio, here are some important steps to remember as you invest:
Don’t approach your long-term goals with fear – stay positive and continue to be smart, consistent and motivated as you work toward your financial goals.
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.
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:
The good news:
The bad news:
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.
Pay close attention to the following things:
As always, if you have questions about the state of your portfolio 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.