Marc's Notes:
Since the Federal Reserve held fast on rates and decided again not to increase their base rate, the markets have reacted violently, up one day and down the next.
The moves have been pronounced and investors looking for some calm after the Fed meeting and the fact they did not raise rates were sorely disappointed.
Off the lows of about 15,300 on the Dow a few weeks back, it has gained about a 1000 points or so only to oscillate back and forth, giving investors hope one day then trashing them again as gains evaporate the next.
One would think the lack of movement on interest rates by the Fed would have led to a prolonged rally and although we did get a rally, it was indeed short lived and quite bi-polar.
Now investors are left wondering what is next, both in the markets and with the Federal Reserve.
The Feds next interest rate meeting is in October, about a month away, and with the same uncertainty we had prior to the last meeting, one could argue little has changed.
Wanting to provide market stability and avoid a possible sell off by keeping interest rates where they were, the Feds have apparently just prolonged the uncertainty.
Round and round we go with the Feds and we are again left wondering if they will raise rates next month, a familiar theme it seems.
With the budget limit once again in the news and China still struggling, uncertainty is about the only thing that IS certain and these radical market movements are reflecting that uncertainty.
Technical analysts point to the historical precedent that hints the Dow may have to test its recent low again and dip down into the mid 15,000’s again, and only then will it be cleared for lift off. This is only one view of course, while others believe a sustained upward movement is fast approaching.
As usual, market prognosticators never agree, much like our politicians with each having a distinct opinion of what should and will happen.
To be sure, with the Chinese economy convulsing and the US debt limit up for grabs, add in the recent implosion of the Brazilian currency and some large Brazilian corporations (www.zerohedge.com) and one could argue economic conditions are far from ideal for the markets to run upwards and instead possibly search for new lows or at least revisit the recent low during last month’s trouncing.
Some analysts are going so far as to hint that more QE might be in the cards for the US but with threats of increasing interest rates on the front burner, it would be a far stretch of the imagination to believe the US Fed Reserve will do an abrupt about face, and not only hold rates where they are but double barrel the problem with another round of QE.
More QE is ongoing in Europe and in Japan as we speak, and China also has a seat at the QE table initiating its own version of save the markets bacon with the printing presses.
With so many cross currents, it’s no wonder investors don’t know which way to turn.
Until some of these questions get answered and some issues resolved, a sustained movement in any direction is probably not in the cards but then again, I, like the rest of the world, cannot call market movements for certain one way or another.
Much like a stopped clock being twice a day, I CAN say the markets will go up, down or sideways in the days and weeks to come and it’s truly anyone’s guess in this most difficult market environment.
If you’re wondering just what to do with your investing portfolio, in times of uncertainty, a well-diversified portfolio with some cash reserves can at least reduce some risk. After all, the cash portion won’t go up in an up market but it won’t go down in a down one either.
When in doubt, cash is often thought to be the safest place to be.
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In this happy, feel good world where everybody gets a trophy, we find out some people don’t believe in such things.
The proverbial participation trophy is given to kids and adults alike for taking part in sports programs, school projects and other worthwhile endeavors. It is recently a fairly new concept in the world of such things, with the concept becoming more prevalent in just the last few decades or so, a byproduct of the world of political correctness.
You know the drill, your child joins a little league team or participates in a school competition, or maybe you enter some contest of skill or knowledge and at the conclusion of such an event, everybody that entered gets some sort of award.
These awards go by fancy names but most know them as participation awards. Indeed my own kids have shelves of glistening trophies which to the naked eye attest to excellence by my children in the things they have participated in. A quick glance at the trophy cases in my house would lead one to believe my kids are the best at everything they try, but in reality, few trophies we have point to an exceptional performance over their peers.
Don’t get me wrong, I love my kids dearly and in my mind they are all champions but the best baseball players? The best academics? The best in the spelling bees?
Hardly.
Our trophy case is full of participation awards, of which all the other kids that participated have the same trophies on their shelves at their house.
Is the practice of handing out trophies carte blanche teaching our kids the valuable lessons that the trophies of old used to signify?
One prominent NFL player for the Pittsburg Steelers doesn’t seem to think so.
The super aggressive and one of the NFL’s best linebackers, and 2008’s defensive player of the year, James Harrison, believes participation trophies do more harm than good.
Each of his two sons received a “Best of the Batch” student activities trophy and upon returning home and seeing them, he promptly returned both trophies. Taking it a step farther, Harrison explained in detail just why he did it saying:
I came home to find out that my boys received two trophies for nothing. Participation trophies. While I am very proud of my boys for everything they do and will encourage them until the day I die, these trophies will be given back until they EARN a real trophy.
Harrison then went on explaining:
“I am sorry I am not sorry for believing everything in life should be earned, and I am not about to raise two boys to men by making them believe they are entitled to something just because they did their best, because sometimes your best is not enough, and that should drive you to want to do better, not cry and whine until somebody gives you something to shut you up and make you happy”
Harrison seems to be ranting against the culture of entitlement, where everyone is entitled to whatever it is they think their entitled to.
Taking it a step farther, I hasten back to JF Kennedys famous quote:
“My fellow Americans, ask not what your country can do for you, ask what you can do for your country”
And as Brad Hoppman of Uncommon Wisdom Daily puts it:
“Yet too often these days, there is a culture of entitlement that effectively praises someone for who they are and not for what they achieved. This is a problem in society that starts with things like participation trophies that morph into things like not keeping score at baseball games so as to not offend the losing team, or abolishing grades so as not to offend kids who weren’t able to get A’s.
The biggest problem here is that this kind of collectivist-style child rearing where everyone is a winner, and there are no real losers and no one child’s accomplishments are better than another’s, is not commensurate with how the real world works”
As for my family, my kids bust their butts as I do to encourage them, to get only straight A’s in school, and b’s and c’s are not good enough. As a result my kids have attended 24 collective years of school and received only one B between the three of them.
They have put in the work, sacrificed much while their other friends are out playing, and I will be darned if I think my kids should get the same trophy as all the other kids who perhaps are not studying as hard or working so diligently and then fail to get such exemplary grades as my kids have.
No dear reader, on this one I side with Linebacker James Harrison and the thousands of others who supported his media blast on his son’s participation trophies, whom, as a result of Mr. Harrisons actions, no longer have them.
In my world, and apparently also in Mr. Harrisons, achievement deserves reward, excellence deserves recognition, and only a few will ever attain such stature or deserve it.
In my world, and apparently also in Mr. Harrisons, you don’t get an award simply for showing up.
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What stock sectors react to what macro economic events?
Although common sense might lead one to think one way or another, the truth lies between both common sense and market sense, in other words how markets react with each other and the world around them.
When interest rates rise, you might think financials perform worse, common sense pointing you to the increasing cost of their money they have to lend out.
But banks can charge more interest on the back side, and since they make a percentage on the amount they loan, higher interest rates can increase the total amount they lend out, so their percentage goes up, making them more profits, or so the story goes.
Higher interest rates can put pressure on highly leverage companies, those that borrowed a lot to finance their activities, but it might take out some of their competitors as well, increasing market dominance for the surviving companies.
A stronger US dollar can make US exports more expensive but companies that sell mostly to US consumers might sell even more, making their financials even better.
Higher rates could hurt companies selling or mining gold as gold pays no interest and if rates rise the cost of holding gold becomes more expensive to investors, but higher rates could signal inflation is materializing and many investors buy gold to guard against inflation.
No matter what an investor’s belief on what does what to company sales, many underlying currents and cross currents of what happens down the line could have an opposite effect of what common sense might tell you might happen.
Although no one can say for sure what exactly will happen to prices of company stocks when certain things happen, we can never say never and also never say for certain what will happen because something else does. There is always two side of a story and in the world of investing, for every investor betting a cause will cause an effect, there is always another investor willing to take the other side of that bet at the right price, simply because he believes in something else.
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Money Management Radio (Money Matters) host and financial columnist Marc Cuniberti has joined MKB Financial in Auburn as Investment Advisor Representative offering a full range of advisory services, retirement planning and asset management.
Dear fans,
For years people have listened to my show and read my columns. Because many thought I made sense and agreed with my economic views, they requested I manage their funds and for years I have refused. I simply had too much work in the radio/ media business. But after so many requests and having given it serious consideration, I have joined a very dear friend at his firm MKB Financial Services in Auburn. Matt Baltz and I think alike. We are like family. We strive to provide the best service, with integrity, straight forward analysis with detailed and concise communication. We offer a full range of money management, retirement planning, income planning, family planning, investment recommendations and more. We have developed 3 portfolios to help meet the needs of our clients. The cost will be a simple fee commensurate with the industry on the amount invested.
I will talk with you quarterly to review your investments and more often if you require it.
Annually we meet and you and I will update your financial information to keep us on track and make sure you and I are up to date on your situation and your expectations.
We will handle the transfer paperwork for you. I will sit down with you and gather your individual situation and your needs, basically getting to know your financial picture so together we can decide what is best for you and your family.
I am excited to be able to offer you this opportunity to go “Money Matters”!
Call me today at my personal number (530) 559-1214 (private cell- do not give out ) to talk with me about meeting with you or just to get more information. I expect to be busy with this announcement so give me a call to beat the expected rush! Or send me an email at mcuniberti@cambridgesecure.com
Thank you again and I look forward to meeting of all of you!
Website news:
The website moneymanagementradio.com is being overhauled to reflect this new opportunity.
You will start receiving newsletters again shortly! Thanks again for your patience and I look forward to speaking with you on and off air!
All the best and I am so excited to hear from all of you on my new role in managing your finances if you would like me to fill that role!
Marc
Who we are:
Marc is an Investment Advisor Representative. Financial services, retirement planning, portfolio management and more are now available with portfolio management overseen by Marc himself.
Moneymanagementradio.com offers contact information to speak with Marc and learn about what we offer so keep reading!
Marc Cuniberti, award winning host of Money Matters and Money Management Radio, welcomes you to his updated website. Money Matters articles grace the pages of many newspapers and financial media. On this website, you can download any of his radio shows by subscribing on any website page. Sign up for his newsletter or learn about his opinions about the economic world around you by clicking around the site. Of course, the radio shows are the main reason the site is here, so look through the SHOW TITLES page to hear a variety of topics,one or more are certain to peek your interest and perhaps find a show(s) that apply to your particular interest or question.
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