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  • Some Scary Bumps in the Road Just Ahead

    The major stock indexes moved lower after setting new record highs in early August, although prices have recovered somewhat in the last few days. So was the weakness in August just an overdue correction before moving even higher? Maybe, but there are a number of things coming up in the next month or so that could rattle the markets even more, including whether or not we go to war with Syria.

    Clearly, the stock and bond markets continue to be nervous about the Fed cutting back on its QE bond and mortgage purchases, perhaps as soon as the Fed’s next policy meeting that ends on September 18. There is also some anxiety about who will be the next Fed chairman (or woman).

    Yet there are other upcoming concerns that the markets seem to be worried about, as well they should. Certainly, the continued rise in interest rates is a serious issue for the markets and the economy. The yield on 10-year Treasury notes has soared from 1.6% back in May to near 3%. Long bond yields are nearing 4%. Investors don’t know what lies ahead.

    The markets are also starting to factor in the looming battle in Washington over the federal budget for FY2014, which begins on October 1. President Obama vows he won’t negotiate this time around. Also, there is another battle over the debt ceiling coming by mid-October and yet another threat of a government shutdown.

    We'll look into all of these issues today and how they may affect the markets.

    But before we get into those issues, let’s examine last Friday’s jobs report for August. The White House and the media hailed it as a success since the headline unemployment rate fell from 7.4% to 7.3%. What they failed to point out was the decline occurred because a lot more folks dropped out of the labor market. Truth is, the report was once again a disappointment.

  • Stock Market Lingers At A Precarious Place

    The Dow Jones Industrial Average has flirted with its all-time of 14,198 twice in February as the Dow managed to rise above the 14,000 mark but then fell back. The S&P 500 Index is not quite as close to its all-time high, but it is within striking distance. There is widespread optimism that both indexes can break-out to new record highs, which would likely spark a new buying surge.

    On the other hand, if the Dow and S&P fail to break out, the result could be a nasty selloff. The stock markets shrugged off the fiscal cliff melodrama at the end of last year and then rallied strongly. But there are reasons to believe that the upcoming "sequester" fight could unsettle the markets and derail the attempt to make new highs. We'll talk about that possibility today.

    Before we go there, we take a look at the latest economic reports. There's good news and bad news - no surprise there. We'll also look at the latest surge in gasoline prices and why that is more bad news for consumers and the economy. And I will summarize the latest economic forecasts from the Congressional Budget Office. Finally, I will give you my thoughts on the issue of raising the minimum wage.

  • Will Baby Boomers Wreck the Market? (The Sequel)

    Almost six years ago, I wrote an article about whether the Baby Boomers would crash the stock market when they retired. That dated article is still among the most viewed by visitors on our website even though a lot has happened in the financial world since it was written.

    The premise is that as Baby Boomers retire, they will cash in stocks in favor of lower-risk investments, thus tanking the stock markets. In my earlier E-Letter, I analyzed this claim and concluded that retiring Baby Boomers were not likely to negatively affect the stock markets in a major way for a variety of reasons.

    However, since writing that article in August of 2006 we've experienced a global financial crisis and major bear market in stocks. Would my advice be the same today?

    Because of the popularity of this topic, I am going to revisit the idea that retiring Baby Boomers may crash the stock market. Now that the oldest Boomers are actually retiring, it will be interesting to see if the answer is any clearer now than in 2006.

  • 12 Market-Beating Investment Strategies

    From time to time, I like to share with readers what I do in my "real job" at Halbert Wealth Management. We are an Investment Advisory firm in Austin, Texas and we specialize in identifying successful independent money managers. However, these are not just any money managers, they all employ active management strategies in an effort to lessen the risks of being in the market.

    At the end of 2011, we ran our performance numbers on our AdvisorLink® programs and saw that ALL of our recommended managers beat the S&P 500 Index since the inception dates of each program. Not only were returns higher, but losing periods (drawdowns) were also significantly less. Higher returns with lower risk - that's the Holy Grail of investing.

    In this week's E-Letter, I'm going to review the performance of our active money managers as well as discuss how you can become one of our clients, if you are not already. Even more importantly, I'll tell you why NOW may be the best time to diversify your portfolio to include active strategies.

  • Uncertainty is Fertile Ground for Scam Artists

    Over the years, there are subjects that I repeat periodically in my weekly E-letters due to their importance. One such is the subject of investment scams and what investors can do to recognize and avoid them. Unfortunately, even though I and many other writers continue to warn investors about these scams, thousands of people lose millions of dollars each year to such schemes.

    In this week's E-Letter, I'm going to discuss how you can avoid being a victim of scam artists and others intent on separating you from your money. I'll also discuss a few "new" scams that have been more prevalent now that fixed income investments have such low returns and stock market risk is high.

    Even if you are confident that you won't be the victim of an investment fraud, it might be a good idea to forward this issue along to friends and relatives who may not be as experienced and may not know that if it sounds too good to be true, it probably is.

  • Should You Abandon the Market?

    A recent article in the Wall Street Journal documented how more and more investors are choosing to opt out of the stock market, vowing never to return. With the market's direction lately being more of a function of what's going on in Greece than on Wall Street, it's understandable that investors are getting tired of up and down swings of over 200 points in the Dow.

    The most troubling aspect of the article, however, is that many of the Baby Boomers who are bailing out of the stock market have not saved enough for retirement. With yields at all-time lows in most fixed-rate investments, it's going to be hard to obtain much growth outside of the equity market. The result could be a retirement crisis in the making.

    It's a tough choice - stay in the market for growth and risk fierce bear markets, or remain on the sidelines and pare back your plans for retirement. Fortunately, there's an answer to this dilemma in the form of the Metropolitan Capital Strategies managed accounts. Metropolitan stays in the safety of a money market account until it's proprietary system signals a 90% confidence level of a near-term gain. Best of all, it places the decision of when to enter and exit the market in the hands of experienced professionals. This week, I'll explain why Metropolitan is definitely a money manager you should look into.

  • European Debt Crisis Revisited - Implications For the US

    Today we take a fresh look at the European debt crisis which is worsening. Just over a month ago, EU leaders agreed on a second bailout loan for Greece to keep it from defaulting. That bailout loan had to be approved by all EU member nations, and several have refused to do so unless Greece can put up collateral. This has caused the bailout agreement to unravel and Germany's Chancellor Andrea Merkel is frantically trying to put it back together. If she fails, we could get another serious shock to the equity markets in the US.

    Meanwhile, the European Central Bank began buying huge chunks of government bonds from Italy and Spain to keep their credit markets functioning. Some argue that the ECB is not authorized to make such purchases but it is doing so anyway. It remains to be seen just how long the ECB can continue this large-scale quantitative easing. In any event, the European debt crisis is worsening, and I continue to believe that it will have more negative consequences for our markets here.

    A new CNN poll found that Americans' confidence in Congress is at a new low. For the first time ever, a majority of Americans want the bums in Washington voted out of office -- including their own Representatives in Congress. In past polls a majority wanted some members of Congress kicked out, but not their own Representatives. You'll find this story very interesting. Finally, I leave you today with a very good article written by Tony Blankley who offers President Obama some advice for his major speech on Thursday night.

  • Passive Vs. Active Investing, a New Perspective

    Since the bear market low in early March 2009, US stocks have come roaring back, the last few days not withstanding. In fact, the Dow Jones and the S&P 500 are within striking distance of their all-time highs. It is not surprising, then, that advocates for passive buy-and-hold strategies are once again singing their praises: See we told you, the market always comes back!

    What they fail to mention, however, is that hundreds of thousands (if not millions) of investors bailed out of the stock markets in late 2008 and early 2009 and never got back in. The S&P 500 Index plunged almost 51% from its October 2007 high to the low in early March 2009. Not many investors had the stomach for that kind of collapse. Yet the buy-and-hold crowd would now have you believe that everyone held onto their stocks and mutual funds during that period. Not so!

    Today, we will take a fresh, objective look at buy-and-hold versus the actively-managed programs we recommend at Halbert Wealth Management that aim to make at least market rates of return during up cycles, and hold downside losses to a minimum. I will give you the pros and cons of both strategies and show you how you can get these professionally-managed programs in your portfolio (if you don't have them already).