President of Springer Financial Advisors, Keith Springer, and radio host of Smart Money with Keith Springer, is interviewed by Fox Business News – “We are in a Sea of Liquidity,” there are warning signs of a market top, Unless Ben Bernanke can come in and save the day… “Invest for need, not for greed,” to get the best possible returns with the least amount of risk

Europe continues to create problems for US investors according to Keith Springer, president, Springer Financial Advisors. He tells Larry Kofsky a quantitative easing program will come, and will help stocks.

Listen to the interview

Original article on WSJ MarketWatch here.

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916 925-8900 | keithspringer.com | keith@keithspringer.com
CA Ins. Lic. #0G11958 | NMLS #255209 | CA Dept. of Real Estate Lic. #01478678

Written by Keith Springer
May 11, 2012

On top of all the bad news from Europe, we find out that JP Morgan’s announcement that it got its butt handed to it with over $2 billion in trading losses is eerily reminiscent of what happened about 6 months before the last national election, when Bear Stearns shocked the world with a similar announcement. This time it is the Fed’s stimulus that is being used to gamble to generate earnings to offset loan losses and lack of new loan revenues.Is this an isolated instance or a major cyclical turn? No matter what you believe, the warning bells are a ringing. Overall, I still believe the market will stay strong through the election. The system is still awash with liquidity, rates will be staying low until the calves of the cows come home and Bernanke and company stand ready with another QE program.However, the warning signs that a market top are ever present.

• The bull market is 40 months old – the average age of a bull market is usually 39 months
• The market usually peaks in the 4th year of a presidential cycle, then turns down in the first year bottoming in October of the 2nd year, 2014.
• Banks have millions of homes to foreclose on and flood the market, so housing still has another 20-30% to drop
• And that by the end of this year every baby-boomer will be over 50 and past their peak spending years,

Is JP Morgan’s announcement an anomaly? I wouldn’t bet the farm on it!

Investor Strategy

A QE3 is all but a certainty and will push stocks to new highs, where as if we do not get additional stimulus we are likely in a topping pattern.  We must remember that nearly half of the stock markets return for over a hundred years has come from dividends, so focus on income investments. Most importantly, stand ready with an exit strategy.

Regards – Keith

916-925-8900

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916 925-8900  |  keithspringer.com | keith@keithspringer.com
CA Ins. Lic. #0G11958  |  NMLS #255209  |  CA Dept. of Real Estate Lic. #01478678     

 -My weekend at the Dent conference

I had the pleasure of attending the HS Dent conference in Scottsdale this past weekend as an HS Dent charter member, with some of the smartest guys in Finance, true Rock stars of Wall Street.

We were joined by legendary Hedge Fund Trader John Thomas, world renowned economist Dr. Lacy Hunt and of course, Harry Dent.

Here’s a recap of what they see in the economy and the markets and where we are heading.

John Thomas sees the economy slowing again and is currently bearish stocks, and says “sell in May and go away” for the fourth year in a row. As an active trader, he is selling on rallies. However he believes longer term investors may want to look past “the valley” (stock decline) and try to ignore a summer correction of 5-15%, which will be followed by a new high into the run up to the presidential election. (It makes no difference who wins.) However, he does believe that Ben Bernanke and the Federal Reserve will come in with another Stimulus program, a QE3 at some point, but more as a protective measure every time the Dow drops to about 10k or the S&P 500 1100. He calls it the “Bernanke Put”.
For the longer term, he is much more bearish and believes the market have substantial declines in 2013 due to: Long term structural issues and that corporate profits will reach diminishing returns, the expiration of the Bush tax cuts expire plus sequestration cuts will hurt GDP by -3.5%, the huge demographic headwinds, falling home prices will bring another banking crisis, continued gridlock in Washington prevents any real solution and that unemployment remains stuck at 8-9% and then soars to 15%.

Dr. Lacy Hunt is a true economist and bond trader, managing a portfolio of over $6B in U.S. Treasury Securities. He is very concerned with the massive debt the US and European countries have accumulated and that this debt will outstrip any available capital for investment. “Once you let debt to GDP increase dramatically, it takes control of all finances and when you try to resolve the debt crises with more debt, it lays the foundation for the next crises”. Lacy sees the economy remaining sluggish with interest rates falling even further, until the US reaches the “Bang point”, the point lenders stop lending you money, i.e. Greece, in 1-2 years.

Harry Dent is a Harvard trained economist, market tactician and demographic expert. He believes the economy will continue to slow no matter how much stimulus is thrown at this economy, as the spending patterns of the 92 million baby boomers slow down as they age. Once the stimulus programs are abandoned due to ineffectiveness and the US reaching its Bang point, massive deflation, not inflation, will take over the economy. He believes stocks will crash sometime in the first half of 2013.

My take, it is clear that some of the smartest folks on Wall Street, not just at this conference, feel that the slow growth and rapidly rising budget deficit are creating an insurmountable challenge for the economy and the markets. As I mention in Facing Goliath – How to Triumph in the Dangerous Market Ahead: “The stock market continues to rise from government stimulus programs which are simply delaying the natural deleveraging process that needs to happen. All we are doing is creating another bubble…and we all know what happens to bubbles…”

Given that the current bull market is 40 months old and that they last 39 months on average, that the market usually peaks in the 4^th year of a presidential cycle, housing still has another 20-30% to drop and that by the end of this year every baby-boomer will be over 50 and past their peak spending years, stocks should peak sometime this year. The current correction will likely continue for several more weeks, followed by new highs around election time. At that point, we will look to rotate into more defensive positions and gravitate towards investments that provide stability, income and a guarantee of principle where possible.

Managing money, especially your own, is a daunting task. There are plenty of ways to make money in this market and in the dangerous market ahead, but the key is to do it without all the risk. …And that’s where we can help. Our “Invest for need, not for greed” approach combined with our hands-on proprietary Top-Down Tactical™ investment management strategy can help you manage risk and deliver returns. If you would like to learn more and/or get a free second opinion on your portfolio, simply reply to this email, click our Appointment Request Form or call for a no-cost no-obligation consultation today at (916) 925-8900.

 - Slog through the mud economy leaves both sides with desires

The economy is a lot like the fabled stuck between a rock and a hard place Push me pull you, neither hot enough to sustain a true recovery nor cold enough for Ben Bernanke to pull the trigger on another round of quantitative easing.

The bulls hang their hat on “not terrible” economic data along with the meteoric, albeit narrow, rise the last few months and say the stock market is predicting an improving economy.  The bears point to the continued printing of money by practically anybody with the power to do so as the life preserver keeping the patient afloat.

What is the average person to believe? Many see their rising 401k statements and some friends driving a new car, and the recovery seems a reality. After all, our beloved government Federal Reserve would never lie to us, now would they?

However, Beneath the surface another story stays subdued, for now, but looms ever larger. The fact that the economy, and thus the market, is addicted to continued stimulus is so blatant to me; it screams my name in the middle of the night when I sleep. $15 Trillion newly printed dollars has to go somewhere, and it ain’t going into a bank saving account at 2/10 of 1%!

Robert Shiller recently said it best:

“In the U.S., major new fiscal stimulus is on hold, and monetary policy is impotent. State and local spending, housing, inventory investment, capital equipment investment and commercial construction are likely to remain subdued. U.S. exports are curtailed by sluggish foreign economies. So U.S. growth in 2012 will be decided by consumer spending, 71% of GDP. With declining real wages and incomes and low confidence, continuing strength in outlays is unlikely. A 2012 U.S. recession is probable, but milder than the 2007-2009 nosedive, unless another financial crisis unfolds”.

Not mentioned are increasing payroll and capital gains taxes, the expiration of the Bush tax cuts and the simple fact that the majority of the US population and developed world is not only over-indebted but now well past their peak spending years, all of which is discussed in Facing Goliath – How to triumph in the dangerous market ahead. Add in the simple fact that the administration will have little incentive to print more money after the election and it seems obvious that without a QE3, we’re a not so colorful creek without a paddle.

Investor Strategy

A QE3 will push stocks to new highs where as if we do not get additional stimulus we are likely in a topping pattern.  We must remember that nearly half of the stock markets return for over a hundred years has come from dividends. If you just own a bunch of stocks or mutual funds without a real plan or exit strategy, you’re just gambling, and I wouldn’t be gambling with my family’s security in this market, that’s for sure!

Naturally you can’t just “sit in cash” at 2/10’s of 1%, so the key is to be “Tactical” and avoid buy-and-hold (buy-and-hope) at all costs. Be the expert or hire one with a focus on the market’s “sweet spot”, which is, currently, higher yielding investments such as preferreds, corporate and tax-free bonds, and MLP’s, many yielding 8-10%. This way you can get the best of both worlds of appreciation along with a healthy dividend, but with less risk.

If your portfolio does not need the risk then don’t take it and concentrate on investment vehicles with a guarantee of principle. Many do exist if you know where to look, and come with very generous yields, upside potential based on the market but with no risk of loss and/or a guaranteed income for life. If your portfolio can live with this option, take advantage of it. Why lose sleep the next time the market crashes?

…And that’s where we can help. Our “Invest for need, not for greed” approach combined with our hands-on proprietary Top-Down Tactical™ investment management strategy can help you manage risk and deliver returns. If you would like to learn more and/or get a free second opinion on your portfolio; simply reply to this email, click our Appointment Request Form or call for a no-cost no-obligation consultation today at (916) 925-8900.

-Earning surprises no surprise in NBA market

Apple’s earnings along with many others continue to surprise to the upside, driving this NBA (Nothing but Apple) market higher. As I have referenced for several years now, the market has had a continuing trend of dipping in between earnings season and surging once earnings come up due to better than expected numbers. Strong earnings is a rising tide that lifts all boats. The worrisome aspect is that this infatuation with Apple eerily reminds me of 1999 when the Nasdaq was up 85%, most of it coming from just a small handful of companies. History tells us that as the market is driven by fewer and fewer stocks, a top is not far behind.

The trend remains up for some fundamental reasons:

• Don’t fight the Fed – Rates will stay until the cows come home
• Economic #’s are still fairly strong – Although let’s see how they look after QE2 and QE Mini-Me wear off this summer
• Its an election year – anybody think Obama wants to make the economy look good going into the fall?
• Economic #’s are still fairly strong – Although let’s see how they look after QE2 and Bernanke stands ready with QE3 – which is the trump card that will make all other things irrelevant. Think the market isn’t addicted to stimulus? Watch as stocks rise as the economy gets worse in anticipation

What makes this market so dangerous is that the dire global economic condition is being masked by the coordinated efforts of the world’s central banks through so called “stimulus”, which is creating yet another bubble by the free printing of money out of thin air. The world’s demographic and debt problem is only going to get worse as the rapidly aging populations spend less but demand more in services.

First was Greece, now Spain which has a greater real estate bubble and a subprime housing crisis than the US, and more will follow until it hits our shores in the coming months. These critical issues are easily explained – in plain English – in Facing Goliath: How to Triumph in the Dangerous Market Ahead, the must read book of the year for every investor.
The greatest challenge is recognizing a major market top while it is still in the making. Evidence is difficult to see as the slow erosion of market strength that always precedes major market tops occurs in obscure stocks that nobody watches, and recent market action is raising a warning flag. When we hit new bull market highs in April 2010, only about 9% of stocks were down in price by 20% or more. At the new high in April 2011, that number had increased to about 15%. At the last high reached on April 2nd, 2012, the number reached 29%, essentially 3 out of every 10 domestic common stocks listed on the NYSE had already declined by at least 20%. Eventually, this process expands until just a few of the big-caps remain strong enough to peak the stock market indexes. As market breadth gradually thins, the market becomes more fragile. This will coincide well with a top sometime this year, which I explained last week in What’s next for stocks, bonds, real estate and the economy…

Investor Strategy

Managing money, especially your own, is a daunting task. There are plenty of ways to make money in this market and the dangerous market ahead, but the key is to do it without all the risk. Most certainly avoid Buy-and-hold (“buy-and-hope” – hope is not a strategy) and focus on an actively managed, tactical approach for your finances which takes advantage of what the market gives you and focusing on the sweet spot in the market which is income oriented investments such as corporate bonds, dividend stocks and preferreds. Of course, If your portfolio does not need the risk then don’t take it and concentrate on investment vehicles with a guarantee of principle and income.

…And that’s where we can help. Our “Invest for need, not for greed” approach combined with our hands-on proprietary Top-Down Tactical™ investment management strategy can help you manage risk and deliver returns. If you would like to learn more and/or get a free second opinion on your portfolio, simply reply to this email, click our Appointment Request Form or call for a no-cost no-obligation consultation today at (916) 925-8900.

 -What’s next for Stocks, Bonds, Real Estate and the Economy

 Stocks:

Stocks continue to trade based on the possibility of further Federal reserve easing and a full blown QE3. When Bernanke hints at more easing, stocks soar and when he suggests the economy is strong enough to not need it, stocks sink. Of course it should be the other way around. I expect the economy to weaken in a few months as the effects of QE2 wear off and as QE3 slowly turns from fantasy to reality. Plus, this is an election year – and do not underestimate the power of an incumbent president seeking reelection.

Investors should prepare for a market peak later this year or early next year due to:

• Bull markets typically average 39 months, and we are in month 38
• The 4^th year of a presidential cycle is typically strong
• QE3 will boost inflation too high for further easing, and after the election, there will be little political will to increase the deficit for more

Real Estate

Home prices continue to edge downward slowly, even though the economy is as strong as it has been for years and mortgage rates have been at historic lows. Now that the robo-signing scandal is resolved, the massive backlog of 1.6 million potential foreclosures will accelerate again this year. This will keep home prices flat, to down, for years to come. If banks start to sense that holding back foreclosures is a losing game with no sign of a rise in home prices, they will rush to start dumping them onto the market, and the vicious cycle continues.

Starter homes will do the best as the echo-boomers, the baby boomer’s kids, enter their initial home buying stage in large numbers around 2015. Mid and upper level homes will remain under pressure. It’s a good time to buy a home to live in, but not for investment purposes. If you need a home loan or to refinance, let me know. We do mortgages for our clients.

Economy

An economy needs more spenders to grow. People spend the most in their 30’s and 40’s, with peak spending occurring around 48 years old. The populations of the entire developed world are aging fast, and by year end all baby boomers will be past 50. Add this demographic challenge to an already massively over-indebted population with no spending power, and we have a colossal headwind for our economy for several more years. That’s why unemployment remains stubbornly high. We just don’t need as much stuff produced as we used to.

Economic stimulus can mask it for a while, but eventually the government will be forced to stop borrowing to print new money and the weight of the debt service becomes too great for the economy to bear. These very issues as well as investors strategies, are at the heart of what Facing Goliath: How to Triumph in the Dangerous Market Ahead is all about.

Investor Strategy

Managing money, especially your own, is a daunting task. There are plenty of ways to make money in this market and the dangerous market ahead, but the key is to do it without all the risk. Most certainly avoid Buy-and-hold (“buy-and-hope” – hope is not a strategy) and focus on an actively managed, tactical approach for your finances which takes advantage of what the market gives you and focusing on the sweet spot in the market which is income oriented investments such as corporate bonds, dividend stocks and preferreds. Of course, If your portfolio does not need the risk then don’t take it and concentrate on investment vehicles with a guarantee of principle and income.

…And that’s where we can help. Our “Invest for need, not for greed” approach combined with our hands-on proprietary Top-Down Tactical™ investment management strategy can help you manage risk and deliver returns. If you would like to learn more and/or get a free second opinion on your portfolio, simply reply to this email, click our Appointment Request Form or call for a no-cost no-obligation consultation today at (916) 925-8900.

President of Springer Financial Advisors, Keith Springer, and radio host of Smart Money with Keith Springer, gives his predictions for the stock market. He discusses QE3, “The Fed is just waiting on inflation” and why you should “Invest for need, not for greed,” to get the best possible returns with the least amount of risk

I was able to get away with Josh and my dad during school break last week for a quick diving trip to Bonaire. 3 generations diving together, what a thrill!

-European Crisis Threatens US Recovery

One of my favorite vacations was a trip from the French Riviera, along the Spanish Coast ending at the Italian Riviera. It is absolutely stunning and everybody seemed to live so well. They wouldn’t even let me enter the casino in Monaco without a James Bond type jacket. Now I know why…they were all living on borrowed money and well past their means. Now they’re all broke and if the market is right, Spain and Italy are heading on the same path as Greece, which will most certainly send shockwaves back to the US.

The US appears to be holding up better than most of the world due to the unprecedented stimulus from the Federal Reserve. There is no real demand in an economy where the baby boomers, the bulk of the population, are well past their peak spending years as well as being indebted out the wazoo. The QE programs have been keeping our economy on life support, but QE2 is due to start to wear off by the summer. This will most certainly bring about a QE3, which will probably be the last. It will help stocks initially, but likely will lead to a top in the stock market which is set to peak sometime this year. At some point, everyone will realize that the ECB (European Central Bank) and US stimulus plans are not going to work to create a sustainable recovery, and government bond rates will rise, choking off the Fed’s fuel for the printing Presses fire.

The economy may give the impression that a true recovery is underway, but without the massive stimulus, we’d be sunk. The truth is that the workforce has dropped by 10 million jobs since July 2008 and has gained only 4 million jobs back. The percentage of people of working age in the workforce  has been falling for the last several years, from 63.3% in January 2008 to as low as 58.1% in May 2011 and is at 58.6% currently.

Percent of Those of Working Age That Are Employed

At worst, over 7 million people have disappeared from the workforce! That is why Fed Chairman Ben Bernanke warned recently that the job market may not be as strong as recent job reports indicate, suggesting more free money was on its way. Unfortunately these problems are not going away anytime soon as the massive global de-leveraging process accompanied with and demographic challenges discussed in Facing Goliath: How to Triumph in the Dangerous Market Ahead, have a firm grip on world economies, and won’t let go for several more years.

If your portfolio does not need the risk then don’t take it and concentrate on investment vehicles with a guarantee of principle. Many do exist if you know where to look, and come with decent yields, upside potential based on the market but with no risk of loss and/or a guaranteed income for life. If your portfolio can live with this option, take advantage of it.

We are all aware that the answer to the problem of too much debt is NOT more debt, and at some point the Fed’s printing of money will stop. That day will be quite a wake-up call and come without warning, and investors who are unprepared will be devastated. Be the expert or hire one.

Managing money, especially your own, is a daunting task. There are plenty of ways to make money in this market but the key is to do it without all the risk. Most certainly avoid Buy-and-hold (“buy-and-hope” – hope is not a strategy) and focus on an actively managed, tactical approach for your finances which takes advantage of what the market gives you and focusing on the sweet spot in the market.

…And that’s where we can help. Our “Invest for need, not for greed” approach combined with our hands-on proprietary Top-Down Tactical™ investment management strategy can help you manage risk and deliver returns. If you would like to learn more and/or get a free second opinion on your portfolio, simply reply to this email, click our Appointment Request Form or call for a no-cost no-obligation consultation today at (916) 925-8900.