Some of you may have heard some noise in the media over the past week about the small dip in ...
Bull Market Trend Remains Intact for 2012
Bull Market Trend Remains Intact for 2012
May 3, 2012
A recent report from the Tillman Stock and Bond Hotline offers some promising data and statistics that bode well for the rest of 2012! Enjoy!
Reprinted with permission from the Tillman Stock and Bond Hotline
For: Wednesday, April 25, 2012
(800) 219-1333. vethotline@aol.com
A few weeks ago, some of the skeptics on Wall Street pointed at April 25 as a possible trigger point for a new bear market in U.S. stocks. That's because investors were due to digest both an earnings report from Apple (AAPL) and the post FOMC meeting statement. Not surprisingly, the bears expected both of those news events to go badly. Instead, Apple handily beat expectations and the stock gained nearly nine percent on the day - putting the shares only 4.1% below their recent lofty all-time closing high of $636.23. As for the latest news out of the Federal Reserve - the FOMC did not throw any curveballs at the market. Basically, the Fed said that the economy has been stronger than expected so far this year but acknowledged that conditions could become more challenging next year - once tax cuts expire at the end of 2012 (and certain spending cuts take place). As a result, Ben Bernanke and Company repeated the earlier pledge to keep interest rates low into 2014 or later and to offer the U.S. economy some new help if conditions call for it. With first quarter earnings running stronger than expected (so far), buying pressure overwhelmed the sellers today - sending the broad stock market up by 1.4%. The Nasdaq gained 2.3% on the day. The Wilshire 5000 is now down by only 2.1% from its April 2 multi-year high. That must be quite discouraging for the people that recently declared that a new correction is underway.
The stock market is already up by about 10 percent so far this year (basically matching our expectations for the entire year). As you know, there are plenty of people looking for the stock market to turn lower soon and enter full crash mode as problems in Europe spread to America and pull the rug out from beneath the market. The debt problems in Europe remain very much alive and well. However, what the overly enthusiastic bears seem to be doing (again) is to underestimate the ability of financial officials in Europe to handle the crisis in the near-term. The European Central Bank took steps earlier this year to provide ample liquidity to the system. Such measures have already helped to avert the kind of cash crunch that paralyzed much of the global financial system back in 2008. Here in America, the economy should do okay during 2012. Earlier today, the durable goods report came out much weaker than expected (with ex-transportation orders posting a decline of 1.1%). The headline number fell by a hefty 4.2%. It is going to take a lot more than one month of weakness in a notoriously volatile economic statistic to convince us that the economy is suddenly slipping into a new recession.
Tomorrow, we will get a look at the latest weekly jobless claims report. Many economists are looking for jobless claims to drop back by 10,000 or more from the previous week's total of 386,000. If jobless claims trend higher during the month ahead, it would be a troubling sign for the economy and the near-term outlook of the U.S. stock market. Many of the bears have been jumping the gun regarding such economic data. They have been celebrating the slightest signs of weakness and even making silly claims about how some of the recent data has been a disaster. Data regarding the housing market has been an especially popular topic of misinformation coming out of the bears' camp. The broad data on home sales and home prices have been showing stability and even some improvement. However, we have heard a number of commentators say that the recent reports on housing show that the sector is leading the economy back into recession. When analysts have to exaggerate in order to make their point, they are asking for trouble. Quite a few of the corporations that have already released their first quarter results have beaten expectations. Not so long ago, many analysts were looking for S&P 500 companies to come in with flat year-over-year earnings. With the results to date in hand though, there are indications that earnings could grow by five percent or more. That bodes well for the bull market trend remaining intact during 2012. The Wilshire 5000 closed today at 14,549.38, up by 77.08(0.5%) in the past week. The Volatility Index (VIX) closed at 16.82, down from 18.64 a week ago. The yield on the 10-year Treasury note closed at 1.98%, unchanged. More next week.
Just a Correction, Not a Catastrophe
April 24, 2012
Some of you may have heard some noise in the media over the past week about the small dip in the stock market. Is it a prolonged setback? Is a short dip? Should we expect more of this in the future?
Let me reassure you – nothing in the past week will amount to anything of consequence. The stock market has yo-yoed forever and will continue to do so into the future. No new domestic or foreign events are of any consequence.
It is all just noise.
What should we expect next? I wouldn’t be surprised if the market dropped another 5 to 10 percent. The reality is that 2012 will likely end with a handsome profit on Wall Street regardless of what happens in the next few weeks or months.
Long-term, common stocks have and always will outperform all other asset classes. Investors should take advantage when stocks are on sale and buy more.
What they shouldn’t do is panic. These corrections will continue to happen periodically for the rest of our lives.
Investor Optimism – Will it Ever Return?
April 6, 2012
Economic data has improved considerably over the past few months. The Dow Jones opened at approximately 13,000 the first trading day of 2008 and it closed above 13,000 on Feb. 28, 2012. The fact that we’re already back at 13,000 is probably mind-boggling to commentators who said it would take 10 years to get back.
Investors should be thrilled. So why are people still afraid?
The market mayhem of 2008 and early 2009 is lodged deep in their memories. The market dip in the summer of 2010 (oil spill in Gulf) and 2011 (Europe and U.S. Budget problems) did not help investor optimism either. This year, with the Presidential election, you can anticipate one party will tell us everything is still bad under the current administration and the other party will tell us everything is good. This back and forth will also not help the psyche of the average investor. Admittedly, there has been a shift among average investors toward dividend stocks, but they seem to be doing that more for yield rather than optimism.
Could we see another dip in the market?
In the short term, you bet! The market has been on a roll since October 2011. We’ve seen five months of upward movement as big investors have watched the good news about the U.S. economy. However, Europe and the Middle East still have a lot of problems to resolve. Any bad news from there could be an excuse for profit taking. That will only reinforce the existing wide-spread pessimism. But that’s okay, as general uneasiness bodes well for the future. Market pessimism is the bedrock upon which bull markets are built.
Look at the numbers!
February 22, 2012
Whenever you hear someone say we’re “in a recession”, just look at the numbers. “Maybe the best news is that investors are looking
deeper into economic data, not just trading on headlines.” This is good advice for all. Read this great analysis from our friends at First Trust Portfolios for a look into the state of things.
Risky Investments
February 19, 2012
Sound familiar? I’ve been saying this for 35 years!
http://finance.fortune.cnn.com/2012/02/09/warren-buffett-berkshire-shareholder-letter/
Dow at 15,000?
February 16, 2012
"Based on cyclical patterns of market history, the odds are better than two chances in three that the Dow Jones Industrial Average will reach 15,000 or higher over the next two years," – Barron’s magazine.
Here’s more evidence for what we’ve been telling you all along. Don’t pay attention to the news channels. They make money by making you scared.
http://www.moneynews.com/StreetTalk/Barrons-Dow-15-000/2012/02/13/id/429220?s=al&promo_code=E281-1
S&P 500 Valuation Slump Discounts Profit
January 31, 2012
My mentor, Sir John Templeton, once said, “Whenever you can buy a large amount of future earning power for a low price, you have made a good investment.” Pessimism has held stock prices down in relationship to corporate earnings. Please read and share this article from Bloomberg about the potential opportunity in the market.
-Roland
Five Reasons to Buy Equities
December 7, 2011
If your money is languishing away in some low-rate money market, now may be the time to become an owner.
http://www.lordabbett.com/advisor/commentary/economicinsights/120511/
The Economic Twilight Zone
October 12, 2011
Economic data show growth, but the Pouting Pundits of Pessimism on television, the internet, and in print say “recession” is here, or will be soon. Headlines and quotes from the punditry are nothing but dour. It’s like the “economic Twilight Zone.” Reality doesn’t seem to matter anymore.
It’s true that the economy is underperforming. Real GDP in the US has expanded at an average annual rate of just 2.5% in the past two years. The unemployment rate is 9.1% and everyone knows someone out of work. But, weak growth alone is not a recession; it’s still growth.
Corporate Profits Surge to Record High in Q2
September 8, 2011
Corporate profits in the second quarter (both nominal and inflation-adjusted using the business sector price deflator) reached all-time record highs during the April-May period of this year, according to today's BEA report on GDP and corporate profits for the second quarter (see chart above). Real GDP growth in the second quarter was revised down from the previous estimate of 1.3% to 1%, based on more complete data. While overall economic growth remains weak as measured by real GDP, the record level of corporate profits shows that American companies are financially healthy and strong, and can easily weather the current spring-summer "soft patch."
Read the rest here
