First Things First…..The Election – This will be the last newsletter before the Presidential election. I hear almost every day someone state that they don’t like either candidate and will probably not vote in protest. Although I respect their right to do that, it is in my opinion, tantamount to the child stomping his feet when he doesn’t get his way. I have stated that neither candidate for President was my first choice. However, make no mistake about it, one of them will be sworn in on January 20th, 2013. These two candidates are the most diametrically opposed on the issues of any Presidential race I’ve ever seen. Surely, one of them MUST be closer to your view on the issues of the day and how they would lead America. Remember this…. If you don’t vote, then you are in fact casting a vote for the “other” candidate, the one who is further away from you politically. I remember all those people in Iraq who defied the terrorists and dipped their fingers in ink to signify their vote for freedom for the first time in their lives. Please go to the polls and vote. It is a treasured liberty we are fortunate to have.
Women’s ONLY Investing Seminar…Update… – Due to the untimely death of the husband of a long time friend, I must cancel the Women’s Investment Seminar I had scheduled for this Thursday, the 18th at the New Boston Library. I thank those of you who RSVP’d me with your intention to attend. However, I can put together another seminar at my will; but the funeral services for my friend’s husband on that date will only occur once. I trust you will understand why I must prioritize my attendance there on that day. I will more than likely do something in the Spring when weather will not be an issue. Thanks again for your understanding on this matter.
Trivia Question….Who said this? – “The definition of insanity is doing something over and over again and expecting a different result.” Answer at the end of this posting.
Facebook Shares… What gives?… - Well, the FB shares have been on the free market now for a while. And no matter what the experts had said about the true value of Facebook in the market prior to the IPO, as of today, the market (the stock holders who have bought after the IPO and the institutional guys) have placed the value at close to HALF what the original underwriters said it was worth. Let that be a lesson to all of the people who love Facebook and use it every day (not me!) and who thought it was a slam dunk, can’t miss stock. Where that stock is now (under $20) may be the bottom. It may not. Be very careful about calling the “bottom.” Bottoms have been known to be breached. I had a friend who came into my office one day in 2008 and declared Citigroup stock “at the bottom” when it dipped under $20 after falling from around $58 per share. He said he had just bought 1000 shares and suggested that I do the same. A short while later it was selling under $1. By the way, I didn’t buy it then and don’t own it now. Whew!
What’s the deal with eggs? – Shopping for eggs is not as simple as it once was. Did you know that you should consider how the hen “feels” when it lays the egg? I was at the market lately and noticed that a dozen of the store brand eggs (brown, local of course!) was $1.49. The “cage free” eggs were $2.99 a dozen. I asked the dairy employee why the difference? She told me that the cage free birds felt better when they laid the eggs and therefore produced a much better tasting egg with a much harder and thicker shell. I asked her if the hens were concerned about how I felt when I had to pay double the price. She gave me one of those looks. The reason I mentioned this is because in the investment world it is the same. People’s perception of the value of a company and therefore its stock is what drives the price quite often. If you believe in the hard shell theory of eggs, you could by Cal Maine Foods, symbol CALM. They sell the “Egglands Best” brand of eggs. That’s just one example. Had you bought CALM at the market bottom in March of 2008, you would have more than doubled your investment. I suspect, although I don’t know, that would make the hens feel even better, especially if they get stock options.
When I become President someday….. Another of my Presidential directives or executive orders will be… (effective immediately) all the “10 item or less” checkouts at that grocery store will have trap doors in the floor that the cashiers will activate and deposit the item-limit offenders at the very end of the longest checkout line (behind the customer who has the wallet full of coupons most of which are out of date and won’t scan precipitating endless arguments and calls “for the manager”) when anyone with more than ten items is found in line. No exceptions!
Inflation…..what’s the future look like? – I have mentioned before that I believe the “table is being set” for a return to inflation, maybe even double digit inflation. But when will it occur? That is the $64,000 question. As previously stated, the largest contributor to inflation is rising wages. You have to ask yourself….Does the situation exist now where employers have to raise wages to attract or keep employees? Ah,……no. However, if you still feel that inflation is both imminent and close, there are things you can buy to take advantage of that. TIPS, or Treasury Inflation Protected Securities is one common strategy. These products available in ETF’s and mutual funds for example are NOT “guaranteed” to rise in value when inflation hits. They “tend” to rise with inflation just like bonds “tend” to rise when interest rates fall or the market gets spooked and investors go to traditional “safe haven” securities. As we all saw in 2008, even bonds sold off when the market was tanking. Why? Simple… people needed “liquidity” and had to sell anything they owned of value often to cover margin calls (stock bought on credit). The sell off produced a situation of more sellers trying to attract a limited number of buyers. That was classic supply and demand. Please remember that whatever you own, it is never worth what you think it’s worth…. But ONLY what a buyer thinks it’s worth. That’s the market.
Gold…Where is it headed? And what about Real Estate as an investment … – Gold seems to be teasing us waiting for some catastrophic event. That may be. But the one year chart on the GLD shows that it very close to where it was a year ago but with much volatility. I’m comfortable with up to 10% exposure for some people. Anything over that I believe, could be too risky for most and would cause a constant fear factor. I don’t know about you but I like to sleep at night. As for real estate, I had a client who sold his income property a few years back and invested in a dividend paying mutual fund portfolio instead. I’m guessing he and his wife are glad they did. There are some “deals” out there. No question about that. But always remember that a deal is a relative term. Ask yourself is the price of property X on the market a “deal” compared to what it used to sell for five years ago ( a known quantity) or is a “deal” because of what you’re “sure” it’s going to be worth in three years? If I can make a 5% return on assets with dividends for three years ( a completely plausible goal), will the real estate likely do better than 5% per year? How many of you think that real estate is likely to appreciate 5% per year after expenses of ownership the next three years? And will it be a liquid market if I need to sell before that? Real estate is REAL easy to buy now. But have you tried to sell any lately?
From the Harry Truman file…. – Harry Truman, once caught complaining about the fact that he could never get a straight answer out of his economists once said, “All my economist friends say, ‘on the one hand…. But then again on the other.’ Someone find me a one handed economist!”
What’s going on at the Fed?.... – QE3 is in full swing as I suspected months ago that it would be. The FED wants us to think everything is moving in the right direction, albeit slowly. If we were out of the woods with regard to slipping back into a recession, the Fed would not still be priming the pump with more bond buying. We’re not out of the woods; and Fed Chairman Bernanke would like to stay on in his job. I believe Romney has already said he will replace him if he wins. Stay tuned.
Do you offer a “Stock Only” Managed account? – Yes! For those who prefer to invest in stocks, bonds and ETF’s on an individual basis as opposed to mutual funds, etc., I do have stock portfolio accounts that are co-managed with the Investment Policy Committee at Westminster Financial. These accounts are strictly fee based accounts and therefore, commission free. They utilize option strategies along with both technical and fundamental analysis. They are set up and maintained based on your risk tolerance, time horizon and income needs. Careful consideration is given to tax deferred accounts like IRA’s and taxable accounts. If you would like more info on these types of accounts, please contact me so we can discuss them.
Answer to the trivia question…. – Albert Einstein
Referrals of Friends or Family – I prioritize the growth of my practice through people referred to me from existing clients’ family members and friends first. If you have a friend or family member you believe would benefit by working with me, please feel free to give them my contact information. Also, feel free to forward any of my monthly market commentaries to them. I would welcome their business.
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Emergency Trading – I travel and meet clients outside of the office frequently. In the unlikely event that you need to make a trade during market business hours (9:30 AM – 4:00 PM weekdays) and I’m unavailable, please call my home office @ 1-800-235-7526 and tell the operator you need to make a trade. Try to avoid trading near the market open or close.
*The opinions and forecasts expressed may not actually come to pass. This information is subject to change at any time, based on market and other conditions. This newsletter is not to be construed as an offer to sell or the solicitation of an offer to buy any securities and should not be construed as a recommendation of any specific security. Information provided is obtained from sources deemed to be reliable, but Westminster Financial Securities, Inc. (WFS) does not guarantee the accuracy or completeness of the information or make any warranties with regard to the results to be obtained from its use. WFS shall not be liable for any claims or losses of any nature, including, but not limited to, lost profits, punitive or consequential damages. Past performance does not guarantee future results.
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