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All posts tagged market commentary

Written by: Michael E. Harter, CPA/PFSCFP®

Making consistent money in the financial markets has been challenging to say the least since the 2008 meltdown.

Interest rates returns continue to plummet as rates remain at historical lows in an effort to revive the economy.    New money from maturing CD’s and bonds are met with nearly non-existent returns.    The stock market looks to build momentum as companies are showing stronger balance sheets, amble cash and leaner cost structures.   However events such as the European debt crisis and our own debt ceiling showdown this past summer keep pushing the markets down.    Now the gas prices have taken center stage to wear down consumer confidence.

Instead of becoming outraged about current events, we accept what is given to us and say “Well at least I did not lose any money”?     Since when did we become so passive or accepting of mediocrity?

We should be engaged in dialogue with policy makers and regulators to get out of the way and stop putting in gimmicks and artificial barriers that prolong the natural process.    We have fiddled with the fundamentals of our capitalistic systems to the point that they can not operate properly and efficiently.    Sure, maybe the intentions had merit, but the unintended consequences need to be examined as in many cases they outweigh the short term benefits.

Too many cooks spoil the broth!  

What say you?


Liz Ann Sonders, Senior Vice President, Chief Investment Strategist with Charles Schwab & Co., Inc. has written a nice commentary article regarding the recent announcement by the fed of “Operation Twist”.

Please click here to read this commentary.


Mark Riepe, CFA
Senior Vice Prsident, Schwab Center for Financial Research
President, Charles Schwab Investment Advisory

 

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve.

Diversification does not eliminate the risk of investment losses.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors.

International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, political instability, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.

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As we have seen during the debt ceiling debate, the stock market experienced losses and volatility. Conversely, bond prices have steadily risen during this time. Late Friday, Standard & Poors downgraded the credit rating of the United States. This will most likely add additional pressure on the equity markets in the short term. The impact on the long term is unknown at this time. However, this downgrading may actually be a benefit because it will force the politicians to take this situation more seriously and be more vigilant about our debt. We need them to face this problem head on with conviction.

Investing in equities takes patience and, in some cases, a strong will. While these times are trying, removing your investments in a down market can result in losses and also can accelerate the downward direction of the market. On the plus side, a down market can provide opportunities for gains. It can be challenging to resist the temptation to sell low and buy high.

We do not want our clients to worry about their money. We have tried to assist our clients in knowing their risk tolerance and have structured individual portfolios to match that.

At this point, we are not advising clients to sell their equities. We expect additional short term volatility, but feel that stocks play an important long term role in a mixed and risk managed portfolio.

Please do not hesitate to contact us with any questions you may have.

Thanks you.