Smart Money with Keith Springer Saturdays at 1PM and Sundays at 6AM on NewsRadio KFBK 93.1 FM and 1530 AM

Warning Bells ‘A’ Ringing

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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Springer Financial Advisors ("Advisor") is a federally registered investment adviser located in Sacramento, California. Advisor and its representatives are in compliance with the current filing requirements imposed upon registered investment advisers by the Securities and Exchange Commission and the State of California. Advisor's web site and its emails of general distribution are limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of Advisor's web site on the Internet or dissemination of informational emails should not be construed by any consumer and/or prospective client as Advisor's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. A copy of Advisor's current written disclosure statement discussing Advisor's business operations, services, and fees is available from Advisor upon written request. You may also obtain publicly available information about Advisor through the SEC website as follows: http://www.adviserinfo.sec.gov/IAPD/Content/Search/iapd_OrgSearch.aspx. Advisor does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Advisor's web site or incorporated in an email, and takes no responsibility therefore. All such information is believed to be reliable and authoritative but does not constitute sufficient information to be the sole basis for sound investment decisions and all users thereof should be guided accordingly. Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended or undertaken by Advisor) made reference to directly or indirectly by Advisor in its web site, email, or indirectly via a link to an unaffiliated third party web site, will be profitable or equal the corresponding indicated performance level(s). Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client or prospective client's investment portfolio. Certain portions of Advisor's web site (i.e. articles, commentaries, etc.) may contain a discussion of, and/or provide access to, Advisor's (and those of other investment and non-investment professionals) positions and/or recommendations as of a specific prior date. Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s). Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from Advisor, or from any other investment professional. The information is of a general nature and should not be applied indiscriminately to particular situations wherein it may not be completely applicable. Advisor is neither an attorney nor an accountant, and no portion of the content should be interpreted as legal, accounting or tax advice.