The Market at a Glance

 

  The markets this year have not given many investors much confidence in the overall direction for stocks as a whole.  Stocks have been plain lackluster for the past several months.  

     Looking over the month April we see a start, or semblance, of strength early on and then  begin to see a few dips near the end of the month.  Stocks started the month with a fairly smooth ride up through the 15th.  There was a little turbulence right after the mid point of the month and seemed they would recover well until those final telling days of April.  While the trajectory at the end of the month was indeed down, the S&P 500 was was still able to finish up about 1% for the month overall.

     In the chart below, notice April does not have any steep drop offs taking it into negative returns but it certainly has some decline after the first of the month though it never passes below the red line.  Sadly, April was simply more of the same for stocks in terms of what we have seen for the last 5 months really.  There has not been real overall strength but then again overall weakness for stocks has not played a significant role so far either.  We have seen dips in some of the data both here in the U.S. and across the globe as well.
 

     Performances like this naturally give us a bit more hope for a strong market in the coming months but we have not seen any real strength in many of the daily numbers we watch.   We also have not seen a great deal of weakness although some of the metrics we use did become measurably weaker in April. One month's decent effort, while relevant, will not overly sway our  models/quantitative decisions moving forward.  There are a number of other large scale/macro factors we are watching closely like the rise in value of the dollar, China's slowing economy, Japan's long struggling economy, Europe's woes and sales in most industries globally are either flat or in decline overall.
 

A Longer Term View
 
   There are always global influences which will impact the U.S. markets.  The number 2 economy on the planet, China, is a slowing economy which means the country with one of the largest disposable incomes is not buying as much as it has been. Based on the most recent data, China will likely be buying even less going forward than they are today.  Not a good omen for stocks in general.

     Coupling this slowing China reality with the rising value of the dollar against most other currencies around the globe makes sales and most any spending decrease significantly.  The rising dollar makes US goods and services harder to sell since they become more expensive when the US dollar goes up against other currencies.  It is up nearly 30% from last year. With the decline of the Euro and rise of the dollar, Germans and many others are having to now pay top dollar plus 30% for the same US products they bought a year ago.  This is an odd happening when there is global deflation but it is where we find ourselves.
 

Mortgages- Time to refinance again?

Time to consider a refi on your home again?  Contact several mortgage companies for what seem like great rates.
 

 

 

 

Getting in the Game
 

Recently, the publication, "Business Insider", came out with a very telling set of statistics concerning who has benefited the most from rising stock prices over the last 7 years since the "Great Recession" of 2008 ended.  

Some might quickly assume the "wealthy" have benefited the most from rising share prices.  While they have in some ways, the data really doesn't show they are the primary beneficiaries of rising stock prices.  Big corporate takeovers, commonly call "M&A" (mergers and acquisitions) tycoons, while benefiting some haven't made the list either.

Oddly enough the biggest benefactors of rising stock prices (after they fell 52% top to bottom), is the corporations themselves who have seem themselves as running great businesses!  They have chosen to take much of the money they have been making and buy back their own shares and thereby they are taking those share they buy back and pulling them out of the stock market.  In fact, share buybacks have accounted for more than 95% of ALL the new money flooding into stocks since 2006!  The article went on to point out that the average investor has only put in about 3% of ALL the new money which has gone into stocks since 2006!  The differences here are truly STAGGERING.  

These numbers work out to actually be some huge amounts of approximately 

$  100,000,000,000-Billion versus $4,000,000,000,000-Trillion....

This chart below shows the annual differences in corporate share buybacks vs the average investor putting money into stock mutual funds and ETFs.

 

While we certainly want everyone to be "in the game" as much as is prudently possible, we often find that right after the average investor has had their account devastated the most due to a "market correction", they are very highly reluctant to put money into stocks/stock funds.  In actuality, this is likely an appropriate time for the average investor to consider their situation more seriously, put some of their emotions aside and see if they should allocate more dollars to stocks/stock funds.

This is why we manage risk in the accounts which we have for clients, we do this to attempt to aid the investor as markets are rising and conversely aid in taking actions to pull back on risk when our analysis will show clients would likely be more prudent to move away from risk which may have moved into or become present in markets.

 

 

All the information in our newsletter is believed to be reliable and much of it is based on the proprietary research of Capital Research Advisors, LLC itself. However, because of the volume of information we review and the frequency with which it changes the information can only be provided as is on a best efforts basis. The information is not intended to be actionable investment research and therefore should not be used as such. Sources for this information include, but are not limited to, CBS MarketWatch, Big Charts, Bloomberg, Streetscape, Money/CNN, Futuresource, Stock Chart, Yahoo Finance, AmiBroker and http://www.newyorkfed.org/  *This information was obtained from Anchor Capital and it's research team.

This report/summary is to be considered general in nature, reflects our opinions and is based on our best judgment at the time of writing. All information is deemed to be from reliable sources but we cannot guarantee its accuracy. No warranties are given or implied as to their promise of occurrence in the future or their accuracy. It is the readers’ responsibility to decide if any of our opinions are suitable for their own individual situation, and in what manner to use the information. No specific decisions should be made based on this report. These opinions should not be construed as a solicitation for any service.
 

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