Today's Market
by Dr Invest

I'm thinking the next month is going to be painful. I made an investment in stocks with a yet undetermined outcome. My view is that my positions in stocks will sell at a loss after hitting my stop-sell. I will feel the pain when my stocks sell, but I still hope that the promise of a fiscal cliff compromise will move my stocks upward.  Instead of sitting on gains, I find myself about even. The bond ETFs have continued upward, gold has climbed some but still remains in the red, stocks are now in the red. For the short-term, I feel the pain. And though twisted like a contortionist, I patient hold my position waiting for the uptick.

Outcomes

There really is nothing positive at this moment. If you were planning to buy something, stay away from the market right now. The Fed stimulus will likely prop up the market after the fiscal cliff. WMT and RTH will likely regain their footing if they don't fall enough to trip my stop-sell. YTD gains for WMT is still at 10% and WMT will continue their profits in 2013.

We could only hope for a good old fashion recession and 2013 could be the year for it, but remember Bernanke is committed to keeping the stimulus pumping regardless the cost. So we can expect a stimulus led bull market or an uncontrollable bear market that will tear at the core of your investments.

So, Merry Christmas and Happy New Year. I continue to wait for a new burst of gains and hope it comes soon.

Dr Invest

(note: the above article is for entertainment purposes only and not to be used as investment advice.)


 

Today's Market
by Dr Invest

Ho, Ho, just like a yo yo! That is just what the market has been doing, the yo yo! One day my investments are screaming upward, the next day my investments are in free fall. Although the market climbed in 2012, the entire year has been... well, like a yo yo.

Though the S&P has risen a little over 13%, all the gains were nearly erased once in this year, and a second time slid toward all the gains being erased a second time. Bernanke on the ball, quickly promised zero interest and on-going stimulus until either unemployment returned to normal levels or inflation began affecting the economy.

So here we sit in one of the world's most volatile markets, wondering when the next axe will fall. Nothing is predictable; the market is growing too quickly to stay-out and falling too quickly to say in. If you don't invest, you lose 12%; if you do invest, you could lose 30%. And worst of all, nothing is predictable. Expected market cycles are almost non-existent.

Today's Gains

Today, I saw gains across the board. Everything was green, excepting my investment in IAU (a gold trust). There is really nothing to report. With the on-going political wrangling, the market remains vacillating and volatile.

I remain hopeful that financial winds will blow in a new direction, bringing eventual gains. I don't believe that central banks can keep pumping the market indefinitely and that there will be a "payday someday".

If you are to stay invesed in the market, protect your investments with a stop-loss and be prepared to get out of the market in a serious downturn.

(note: the above article is for entertainment purposes only and not to be used as investment advice.)

Today's Market
by Dr Invest

I hate carping on my government, but today my dentist was telling me about the affordable health care tax of 2.3% on all dental devices. (all medical devices as well) So when you need that dental crown, your dentist pays a tax into Obama care and that tax, whether you are rich or poor, is passed on to YOU! Some how, I am not liking this new government plan.

FSA or Flexible Savings Accounts, to be used for heath care, permitted a total contribution of $5,000 annually that was tax deductible. Now that tax deduction will be capped at $2,500 and on the remaining $2,500 YOU WILL PAY THE TAX. Geeze, we need to get that money out of the hands of the extraordinarily wealthy. Listen, the wealthy don't need FSA, nor do they need insurance. When you make a million a year, do you really need an FSA? If your employer pays for your FSA or Health Savings Account, you will be taxed for $2,500 of that whether you are rich or poor.

In the past, you could take-off a deduction for large medical expenses you paid during the year. In 2013, the threshold for medical deduction rise from 7.5% to 10% of your total salary....whether you are rich or poor you will pay the additional taxes. What is worse, you will pay the extra taxes while you are sick and at the most vulnerable financially. If you are a senator or congressman, and your are reading this, you should do more than hang your head in shame, you should sponsor a bill tomorrow morning to rescind this tax on the sick.

All of these taxes amount to billions of dollars to the government to pay for what will be one of the poorest health care systems in the world. Two of my friends, who are medical doctors, have already shared with me just a few of the rules and restrictions facing them as the implement the new obamacare plan. And the paperwork..... OMG. There are reasons government is inefficient and those who have longed for a new America are going to get their CHANGE THEY CAN COUNT ON..... while the government gets their dollars.

BACK TO THE INVESTMENTS

In my experimental portfolio of $10K, my total gains increased today, eventhough my overall loss for WMT was not erased. WMT started strong, but slid lower as the day continued... but still keeping .65% of its gains.

As long as the fiscal cliff remains, the opportunity for significant gains for WMT remains slim. If agreement is reached on the fiscal cliff, WMT could climb 3% to 6% before the end of the year. RTH gained 1.25% as the retail sector climbed in hopes of a political conclusion to the fiscal cliff.

Conclusion

Sadly, there is really no real change in our economy. The government keeps stimulating the economy; the market moves unpredictably and erratically; and the ever increasing rise in the market makes it almost impossible for investors to stay out of the market.

So moving cautiously and keeping a stop-sell nearby is almost a must whether investing in BONDS or STOCKS. My gold position in IAU is down 4.45% but the gold position  was entered with an expectation of a rise in gold prices over the next nine months. The present portfolio position should produce decent returns before May of 2013, but being alert is important at this time. In spite of government intervention, the markets could collapse at ANY MOMENT. I definitely would not lose more than 6% on any stock or bond and would consider the 6% loss a gain if the market fell 30%.

What I am saying is if you lost 6% and the market fell another 24%, you would follow the falling stock with a stop-buy until it once again began to climb. This would put you in an excellent position to regain your 6% loss and add another 24% in gains as the market recovered. Don't be scared, be prepared.

(Note: the above article is for entertainment purposes only and not to be used as investment advice.)




 

Today's Market
by Dr Invest

Today a headline read, "Don’t Be Fooled by the Fed: Stimulus Is a Sign of Dysfunction, Not Opportunity". Stimulus is the course we have taken for a number of years because our economy needed to be propped-up. Listen, you don't have to have a doctorate to understand that if you need support beyond yourself, you aren't making it economically. This is the sign-of-the-times that many 40 year-olds are moving their families back-in with their parents because they can't make it any longer financially. Where will the U.S. government move when they can't make it any longer?

I really have no favorites between Republicans and Democrats, both seem equally inadequate in their governance; but if you only knew how the Obama administration is scheming at this moment to raise everyone's taxes and increase the debt ceiling, it would make you pale. Eliminating mortgage interest as a tax deduction is on the table... now who does that affect? Anyone who owns a house. Taxing company provided insurance as a benefit is another idea floated. A bevy of other taxes are being considered and all of them fall not only on the backs of the wealthy, but you too. Discussion of a capital gains tax seem logical, until you discover that the same capital gains would affect everyone with a 401K and an IRA, including the middle class trying to save for retirement. And then there is the consideration of Inheritance Taxes. Yes, the rich would pay their fair share, but many loopholes would have to be plugged. The middle class can't afford the tax lawyers to ferret out the loopholes and would pay the inheritance taxes, while the wealthy pass their wealth on to their families via trusts, limited partnerships, and other tax avoidance instruments.

On of the reasons corporations have moved abroad is to shelter their companies from one of the highest corporate taxes in the world. The U.S. is second, only behind Japan in the corporate tax rate. So why do business in the U.S.? The Progressives or New Socialists are excited about all the taxes they are going to raise so equitable programs can be implemented to pull the poor from their despair. Sadly, the middle class business men will be saddled with the new burdensome taxes to pay for the raised debt cap so the U.S. can continue to do business.

The Realities of the Fiscal Cliff

Boehner has made the first step toward eliminating the fiscal cliff by offering to raise taxes on those making over 1 million annually. Though it is not the deal the President wanted, it opens the way to tax the super rich. 241,000 people make over 1 million annually. This initially seems like a lot of people, but only represents a little less than 1%. Total tax projected to be gained is $3.6 billion.

What is not projected the is will of the wealthy to take advantage of the myriad of tax loopholes before 2013. To understand this, you have to think about the super-wealthy utilizing their profits to find new opportunities for generating new income streams (PROFIT). So they might redirect their profit to build an new company and hiring new employees or taking over another failing company they believe they could make profitable. To keep from paying Obama's new tax realities, the super-wealthy has to place their profits into investments that will shelter their income. Most, though, will likely move their income else where, so they can keep their money working for them.

Walmart is presently looking at purchasing an 80% stake of Turkish retailer Migros Ticaret AS, another rumor is that Walmart was looking at purchasing Hostess Brands Inc. The Chinese believe that Hostess will have a significant market in China and Indo-china, so does Walmart. Corporations and individuals are considering how to shelter their money and as usual, the governments plan to outsmart business men will result in them collecting less taxes and moving more jobs outside the U.S.

Investment Positions

The fiscal cliff has affected my conservative investment position. Care must be taken at this time to insure the best outcome. As mentioned in a past blog, I suggested placing a stop-sell 1 1/2% to 2% below the closing price of WMT and RTH.

If you didn't follow this advice, you are in the negative right now because both WMT and RTH have fallen. I have set my own personal stop-sell at 5% below the closing price and after falling nearly 4%, I have to ask myself if I want to take a 3% loss or move my stop-sell back to 5% below the purchase price. This is where judgment comes into play. For sure, I will be watching closely how the market responds to Boehner's offer to raise taxes on the rich.



With good news, WMT can quickly recover along with RTH. Even though gains have been recorded by retailers, questions remain on whether the fiscal cliff will dampen spending by the consumers, sending the economy into oblivion. To insure a viable economy, the FED has begun QE-3 with the warning that if the politicians fail to come to a timely agreement even the 40 billion a month may fail to keep markets viable. It is almost certain the politicians will find compromise and the stimulus will spur the economy and a rise in the market valuations. NOTE: MY BLOG on APRIL 22, 2012

In my blog, I show how underlying inflation increases costs of doing business, how businesses raise prices to the consumer, and how increased profits increase valuations. We are seeing a rising S&P, when we should be seeing the collapse of the S&P. No one doubts that if the FED's stimulus stopped, the economy would immediately fall into a recession.

While the safest strategy would be to say out of the stock market, the FED is punishing anyone buy stocks (because they are buying stocks and competing with the investors), and rewarding anyone buying stocks. Now it is doubtful that they can continue this stimulus forever, but 14 economies are presently stimulating their markets. It seems that world banks have agreed to all stimulate their economies together until all their debts are erased.  The problem is that if debt is not eliminated by governments, the stimulus would have to continue forever.

For the moment, it seems that central bank stimulus will keep stocks climbing and bonds weak. My guess is that at some point, the economy will weaken and slip into a recession. I would see that happening the first part of 2013, but it could happen at anytime.

For now, I am cautiously watching the fiscal cliff. If the market likes the political outcome, we will see the market revived at least temporarily.

Now all of these are only guesses on my part and the better part of wisdom is guard your investment. I am hoping that you have already sold WMT and RTH, but don't lose more than 5% on these stocks, you can always repurchase in January if the market appears to be improving.

(Note: the above information is for entertainment purposes only and not to be used a investment advice.)