The 4th Quarter and Beyond!
To learn what’s going on in today’s world with the economy and financial markets, in plain English, and too see where stocks and bonds are headed be sure to watch this brief video update.
Hi. I want to give you a brief economic market update, what’s going on in the world. I like to write a few a couple of times a month. I like to do the conference calls, and make sure you’re listening to the conference calls, and a video now and again just to sort of keep you informed of what’s happening. Everyone’s looking at the stock market of course. A lot of people are waiting for the next shoe to drop so to speak. We’re in the middle of what we call, or what I like to call, the earnings nap, the post earnings nap, or [inaudible] nap. This is a period where before earnings come out, there’s nothing for investors or the market to focus on. So, what do they do? They focus on the headlines. The focus on Ukraine, worry about Russia. Well, all Russia’s trying to do is keep tensions high in order to keep oil prices high. Above 90 bucks a barrel, they make money. Below 90 bucks a barrel, they lose money and a lot of money. Of course, the President’s speech about ISIS, are we going to war again? Of course not, but no one likes to see uncertainty militarily of course. There are a number of hotspots around the world. But, typically, when earnings come out, investors focus on earnings. That’s what drives stocks one way or the other.
Earnings are going to come out in about three weeks, around the second week of October. I expect them to be better than expected. Again, we’ve had a series over the last number of years, earnings have been better than expected. Earnings will continue probably to be better, which will make the stock market rise. It doesn’t mean throw caution to the wind. That’s not what I’m saying. However, I do see a positive trend in the market. The economy is stronger than what a lot of people think. Corporate America is in the best shape it’s been in decades. Corporate balance sheets are very strong. I understand there’s a lot of unemployed people. But, essentially, it’s the tale of two worlds right now. If you have a job, and you’re doing well, you’re making lots of money, it’s a good time. If you’re out of a job, it’s very tough. If you’re on a shoestring budget and you’re retired, the government likes to tell you there’s no inflation or 1% or 2%. Of course, you know it’s higher if you — maybe the government doesn’t buy milk, or groceries, or drive, or turn on the heat.
But, nonetheless, it’s about getting the right portfolio and being invested properly. I do think a correction, maybe a serious one, is going to come next year. I hope to be prepared for that. So, the key is always invest for need, not for greed. Make sure your portfolio is getting the best returns, but with the least risk possible. If you don’t need all the risk in the market, you don’t take it. The key is just to find out what kind of returns you need to get, invest appropriately. We always invest our portfolios tactically. Never buy and hold. And always be sure that you’re getting the right portfolio with the right amount of risk because you want the least amount of risk possible. That’s the key.
So, in the short term, I see the market in the next couple of weeks floundering up and down a little bit. I think earnings will be a little better than expected and I do see a stronger stock market through the end of the fourth quarter. And then maybe around the middle of the first quarter or the end of the first quarter, if we start to see interest rates rise, then we’re probably due for a correction. We haven’t had a 10% correction in over two years. We haven’t had a typical bear market. Remember, bear markets are just normal. I’m not trying to be un-American or scare you. They’re just normal and they can drop. A bear market is a minimum of 20% and it could be as much as 35% or 40%. I’m not looking for a 2008 crash; however, I do think we are due for, at some point, a bear market — not for the next several months. But the idea is to have your portfolio prepared so you’re getting the best returns on the upside, but preparing for the downside, and that’s what we want to do each and every day.
So, I hope this helps. I hope you’re learning a lot from these and enjoying them. Of course, if you have any questions whatsoever, give me a call. I’ll be happy to talk to you. Thank you.