| MARKET ROUNDUP | |
| Dow | 111.61 to 17,055.42 |
| S&P 500 | +9.53 to 1,977.10 |
| Nasdaq | +24.93 to 4440.42 |
| 10-YR Yield | +.029 to 2.549% |
| Gold | -$28.90 to $1,308.50 |
| Crude Oil | +$.29 to $101.12 |
Throughout the early and middle stages of the stock market’s post-2009 rally, one thing was consistently M.I.A.
Buying power. Real, authentic, robust buying from corporations and individuals. Executives and average Americans simply didn’t want to commit to buying up companies, stocks or equity funds, so they kept most of their money stashed in cash or low-yielding bonds.
But now that’s changing … in a big way! Buyers are dog-piling into stocks, snapping up competitors, and otherwise validating the rally by throwing their hard-earned dollars at it.
Just get a load of all these transactions we learned about in the past 24 hours:
 AbbVie (ABBV, Weiss Ratings: B) jacked up its offer for Shire PLC (SHPG, Weiss Ratings: B-) to a whopping 31.4 billion pounds, or approximately $54 billion. The deal is just the latest one prompted, in part, by tax considerations. U.S. companies are snapping up foreign competitors and assets to slash their U.S. tax bills.
A major reason for the move? You guessed it … taxes! Mylan is going to domicile in the Netherlands after closing on the deal, slashing its tax bill to around 20 percent.
 |
| Inflows of investor cash could be the thing that drives markets forward despite the inevitable rise in interest rates. |
Meanwhile, new figures from Bloomberg and the Investment Company Institute show that investors have poured $100 billion into stock mutual funds and Exchange Traded Funds in the past year.
That’s a whopping 10 times the amount they invested in equity funds in the year prior to that. And back in 2012, they actually withdrew $300 billion from equity funds, despite the fact the stock market bottomed three years earlier.
Bottom line: Neither corporate nor individual investors trusted and bought into this market for a long time. But that is clearly changing.
So what does this trend mean for the future? Well, there are two main schools of thought:
The pessimistic interpretation is that individuals are often “late to the party.” Many make the mistake of buying tons of stocks at market peaks, not early on in rallies. If that pattern holds, it means the post-2009 bull market could be on its last legs.
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“Neither corporate nor individual investors trusted and bought into this market for a long time. But that is clearly changing.” |
The optimistic interpretation is that all this new buying power will drive shares even higher. After all, if the first phase of the rally was driven by cheap Fed money … and that’s starting to dry up due to the death of QE and the eventual raising of interest rates … something else has to step in to fill the breach. New investor inflows would be just the thing, giving the bull market fresh momentum.
So where do you stand on this debate? Do you think the pessimists are right, and that it’s time to batten down the hatches? Or do you think this bull run will get fresh legs from all those investor dollars?
Also, what are you doing with your money? Putting more into stocks over other assets (like bonds, gold, or real estate)? Or selling stocks and raising cash? Let me know at the Money and Markets comments section here.
| OUR READERS SPEAK |
My last piece on homeownership sparked quite a bit of discussion on the website. You generally saw strength in your local housing markets. You also said that most Americans fundamentally do still want to own rather than rent. But you were more widely split on whether the good times would last.
Reader Arve said: “We know several Millennial-age people that took advantage of the fire-sale housing prices during the late Bush years meltdown. Followed by no-interest, long-term financing, they’re happy as kids that hit the lottery. History might show that those that bought at the bottom made the best investment of their lifetimes.”
And Reader Angel said: “My family still believes in homeownership. It is difficult for me to understand why anyone would think that paying for someone else’s property is preferable to paying for your own.
Even if one ends up losing the property, at least one has the chance of being able to build up some equity, and if unable to continue to make payments, at least has a chance to possibly be able to regain some of the investment.”
Reader Ben E. added his two cents from California, saying: “I am a homeowner in an area (Palo Alto, CA) that has seen explosive appreciation due mainly to Chinese buyers. This was predicted at a real estate seminar I attended a couple of years ago. It’s bizarre – I live in a $1.5 million, 1,200 square foot tract house on a slab on a 6,000 square foot lot.”
But Reader Jean warned that the future will likely look less rosy than the recent past. The comments: “Thanks to the Fed’s inflationary policies of printing $$ out of nothing, all asset prices are inflated, including housing, and investment returns are likewise at an all-time low. There is too much debt in the system along with falling demographic growth. All of this will eventually correct to match the diluted disposable income of Americans of all ages.”
Please do continue to share your thoughts on housing and other related topics. You can do so by clicking here.
| OTHER DEVELOPMENTS OF THE DAY |
The stock came out of the gate strong anyway though. The reason? Adjusted earnings per share of $1.24 topped the average estimate of $1.05. Second-quarter adjusted revenue also came in above estimates at $19.4 billion.
Reminder: You can let me know what you think by putting your comments here.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
{ 36 comments }
This is a tough time for decision making in the stock market. We’ve had a very god few years, but every time I begin to think about cashing in, and I have sold some stocks, the market takes another step up, like today going back over 17K. IMHO I believe the Stock Market is fairly safe for the next 18 months at best, but I’m keeping my optons open and I’m ready to cash in at the first sign of real weakness…
Its a very confusing time. My neighbor invests in the market. One day there is a BMW in his driveway and two weeks later its gone. Other than IRAs. I can’t afford to invest. I drive an old Ford (paid for) and try to keep food on the able for 3 kids. I’m realizing my house (biggest investment) will not provide appreciation for retirement and ‘m depending on Social Security and IRAs for retirement. It is a bleak picture, I have no hope for a better future and providing for my kids education. But I live as cheaply as I can and keep a little money for emergencies. My biggest worries are for my kids, how are they going to make with no good paying jobs and never own a home.
I think the level of debt both Government and private will continue to weigh down on economic growth. I think everybody knows its only a matter of time before interest rates explode. Then EU economies will be back to square one with increased cost of borrowing and interest payments and flat income .
How long before it happens will depend on a number of factors. However it will happen !!
.
I have often thought of taking the contrarian position and getting some physical precious medals. I am just converting some qualified funds(app 1/2 of my retirement) and going to purchase both gold/silver as a defensive posture as well as feeling these medals, esp silver can be moving up a good amount, all things considered!
I think gold and gold mining shares can be bought now. I think housing is a bad idea. The war cycles will push up interest rates. Energy prices will rise and slow down the malinvestment.
Stocks are the only game in town and current prices do not seem to reflect the negative underlying fundamentals. This has been a rising P/E ratio driven market, and I’m in the bearish camp with trailing stops just under the market. There are oodles of potential “black swans” out there which could reverse this market in an instant.
I think the market will continue to go up as did last 5 years.When you look at last five years there was much more economic problems in the world than now and the market go up anyway.So I think the market will go up definitely.
DO NOT FIGHT THE FED!
THE TREND IS YOUR FRIEND!
I’m buying gold, silver, mining shares, precious metals ETFs, and I am selling covered calls. I have also bought some 2015 SLV calls.
Me too
I’m very confused….I don’t understand, the mks. Are way up, the price of realestate , in Fl., in particular, is falling, the boat sellers can’t sell a boat without discounting the price, real inflation….. .food, gas, med ins., etc. Is up and nobody seems to get it…..lncluding me.
I mean the national debt is 17 trillion, the big investment houses get fined in the billions for illegal market manipulation , the little guy is loosing his shirt, nobody goes to jail and nobody seems to give a darn. Am I wrong ?
.
Real estate , hard assets, 50% international, 50% Big/ small
Caps !!!! and great dividends paying companies that will help you reach your goals
God Bless America
Sometimes you get lucky to win the big prize !
Till next world cup
At near retirement, have been sitting on cash waiting for the crash to come…..and waiting…. Thank you Ben for eliminating any income investments that would have been available if it weren’t for your heroic efforts to save your partners in crime. I have been converting some cash to gold & silver and I don’t care if it goes up or down, just feels good to have it. I have made small investments in miners for speculation. My farm ground has gone up about 35% in two years. Reminds me of the 70’s prior to inflation skyrocketing. Economy is tap dancing on a razor wire at 300 ft in a heavy wind, but I guess the US is the least sickest horse in the race for now.
I am doing many things. Selling weak domestics, no bonds for the moment, buying on dips strong companies, looking carefully at EU stocks and ETFs such as HEDJ MDLZ, UL,
Russia: YNDX and RLX, Asia: Indonesia, Vietnam, Thailand, Vietnam and the Middle E: Egypt. Hopefully this will keep my head above water.
I am a “Dutchie” so for Holland “hip, hip hooray”!!! as they say .
For Germany: “Goaaallll:.
With the average investor jumping into the market watch for the S&P to go hyperbolic. When it does, it is time to get out and leave the last 10 percent to those who will ride the market down. Still an opportunity for good gains but stay awake.
You always do a good job, keep it going with more INFO. Thanks
I’m buying this market. I heard the same rhetoric in the mid-nineties about how the market was about to crash, when it actually had a few more years to go. And why must the market crash? Why can’t it flat-line, which is pretty much what the S&P500 did for much of the first half of this year? Even the bond king Bill Gross has publicly taken the position that we are in a multi-year low interest rate environment.
Guardedly pessimistic..already had 8% of portfolio in gold and silver…now 12.3% guided by Larry Edelson et all. Lead me to the slaughter. Like a retreat in any battle line, you don’t pull an entire division out in front of your enemy. You do so slyly and slowly, one regiment at a time. I am in conflict. We have only four months for market to collapse until we reach the four year buy cycle point in November of this year, on the Presidential cycle.
I see nothing but havoc and worldwide lack of leadership, which would make me sooo bearish, but not in total selling mode yet. 2-3 stock issues a week for now…bye bye.
Thanks for asking for input. Webb
Hi!, Mr. Larson & Staff:
The only legal money that should be allowed to circulate in the US, according to Article 1; Section 10 of the US Constitution, is gold and silver (specie) coins. Paper money has been outlawed by OUR Constitution period! The main force keeping the people of the US continuing to use paper money is the duress of starvation that would occur from not being able to buy food without it! The Constitutional civil war o words now embroiling the US is the results of paper money dependencies created to paper over the US’s deficits etc. Just look no further then the proposed lawsuit proposed by John Bonner against Mr. Obama, to see what Mr. Bonner thinks of Mr. Obama overstepping his Constitutional executive authority to run the US the way that Mr. Obama wants without Congressional approvals all along the way! The days of dueling pistols is long gone but the days of Supreme Court rulings on such matters needs to immediately begin post haste! The Bible tells us we reap what we sew and it looks to me that Mr. Obama is attempting to sew the destruction of OUR Nation but Mr. Bonner doesn’t want to let him get away with it anymore! Stocks denominated in fiat money are phony don’t you think? How can today’s US $ escape the destiny that awaited the Continental $, due to the $’s breach of
Article 1; Section 10 of the US Constitution sense 1913? Did you ever see the first chart published by The American Institute For Economic Research out of Great Barrington, Mass. in their Chart Book selling for around $10; (888)528-1216? How long can a 2 cent $ last in foreign exchange trading, before it deteriorates to sub zero buying power Mr. Larson? What exactly are you doing to reconstruct the disappeared American Middle Class which use to keep this Country of OURs afloat instead of today’s printing press economy? A good read to potentially see where we as a Nation are heading is to read Nesta Webster’s book World Revolution, The Plot Against Civilization from off the internet ASAP.
RUSS SMITH, CA. (One Of Our Broke Fiat Money States)
resmith1942@gmail.com
P. S.: Please do no send me on of the usual stock in trade, put off automated responses huh?
Who’s Bonner anyways, never heard of him? If you’re going to talk about someone, at least get their name right. The constitution was written in the 1700’s, don’t you think things have changed since then. Maybe you belong in that era, but I don’t. I do see, just like any country, eventually and probably not that far down the road there won’t be a middle class. There will be the rich and the poor, while the 90% of us will barely tread water and call it the middle class. The one thing still great about this country, is there’s always a chance to come from nothing and achieve great financial success. I know it’s getting tougher, but it happens everyday. The problem is not blaming our government for our failures, but look closely at ourselves. Take one area, car sales. How do we go from one minute repo’s, unemployment, the country in near financial ruins to all of a sudden car sales booming. Do you think the banks are creating another bubble. Where did all the people come that can now afford big car and insurance payments, that probably lost their jobs and ruined their credit 5 years ago. The banks always looking to forgive. The real estate bubble was created the same way. Lending people money to buy houses they couldn’t afford. Probably started the same way, a young person buys a car, makes the payments, then buys a house (he can’t afford), then needs charge cards to buy the things to make the house the way you want it. I see nothings been learned from the past. It’s our own keeping up with the Jone’s that bog us down. It really doesn’t matter how much money you make or have, if you spend more then you make, you’ll fail. If you want to blame the government for anything, blame them for teaching us how to keep ourselves in debt, by leading by example. If you want to create wealth, then have a plan. After all having no plan, is a plan for failure
I want some of your leftovers–Fedex to me here in CA.
I’m retired, so when I invest, I look for small companies with strong revenue growth, management and value. I have the majority of my wealth in the hands of the pros to protect my nest egg. I invest on my own, mainly for the fun and it’s always fun to make money. It’s always rewarding to have returns that beat the market, which I’ve been doing handily for the past 6 years. Before that it was more like gambling, having a 60 hour work week, raising kids and of course a wife, finding time to dissect companies wasn’t doable. I probably lost more then I ever made. The thrill was once in awhile hitting a biotech stock that shoots up 1000% in a day. It’s the gambler in me. Now with all the time in the world, no more kids, job or wife(thank you very much), I have the time to study every single company before I invest. I look for a product or service I believe in. Then I look at revenue, profit, sec. filing’s, cash, who else is buying and management. I find if you look for companies that the people running the company are buying their own stocks at market price, that’s usually a good sign. After all who knows best where a company is going better then the people running it. Look at OPK, DR. Frost is buying shares almost everyday. So I bought some when at $7.50. I think he knows things we don’t. If I’m wrong it won’t be the 1st time. That’s my big gamble that might someday hit the jack pot or fizzle. But who am I to not to believe in a billionaire known for taking small companies and creating giants. I’m gambling on him and his investments. I even bought DVA at $60.16 just because Warren Buffet and his partner each added over a million shares at about the same price I did right before. So if he’s buying that was good enough for me. I sold yesterday at $73.60. I still look for the stock that will give me that 1000% profit, but now it won’t be in one day or week, or I take the word “gamble” out and replaced it with “investing”. I’m not looking for that 20 yr investment, won’t be around that long, but my target is usually 12-24 months. I have found some real winners, like ALQA, which I bought before they jumped to the NASDAQ and got out with a 400% profit in 4 months. I invested in MSLP at $6.30 in April and has almost doubled since. I haven’t sold and have no intentions to, because everything I see about this company makes me believe it’s not even close to where it should be now. At $11.93 today a share and a market cap of 127 million, bringing in 50 million in sales last quarter and a .23 profit, in all my calculations makes this companies value at about $20 a share today. Not even counting where it should be by the end of the year, if they keep delivering the numbers. I wish I had an insider to tell me what the hold up to getting to the NASDAQ is. Take a look, a lot more to this company then what I’ve said. What do you think of MSLP? Or do you have any other small, unnoticed companies quietly building a real business. I invested in gold stocks at the end of May, thinking more for next year, like NEM, ABX, HMY, IAG and ASM. All beaten down, with little downside risk to me and a lot of potential next year. Even with the markets at all time highs there’s many areas that haven’t participated in the rally. I like financials, invested in LTS at $2.65, doing good. Bought some C a week ago, because to me they are the best buy in the big bank, making a lot of money, little downside risk, and I’m again thinking more about next year.. They are still down to lows from 20 yrs. ago. They are probably going to make more money then BAC, but their market cap is 20 billion less then theirs. With interest rates going to rise, just makes them more money, so I’m looking for next year to be a good year for financials. I like OTC stocks, for the hopes of an up listing, because that’s usually the big winners for me. Not every stock I pick does well, but I’ve learned, as long as you have more winners then losers, you’re doing good and I’m doing good. In the last 6 yrs. combined I have a 32% gain. Not bad, but I want more!!! Send me some more ideas. I like to research companies
everyone and michael rosenglick please lets chat email me at cristinaperkel@gmail.com
I’m not buying Bonds or Real Estate, a bank wouldn’t give me a loan, I’m unemployed. I bought Gold, Silver, other metals & Mining. I’m also looking into gold coins and learning Options. If I’m going to buy more stocks I would have to sell the stocks that I have. My question to you is should I sell and take what profit I have and then put it into your new suggestions, which may be stocks that profit in late 2014 & 2015 or just hang on to my stocks that are rated A through B.
I HAVE MADE A MINT IN TRN AND YOUR ENERGY PICKS. I HAVE ALSO BOUGHT THE METALS BUT I SEE DANGEROUS SIGNS WHEN EVERYONE WANTS TO BUY AT HIGH LEVELS. I SOLD MY TRN AND NIKE TODAY FOR A LARGE PROFIT. I LOOK FORWARD TO YOUR ADVICE ON THURSDAY AS TO THE ENERGY PICKS AND METALS.
I’m heavily invested in stocks and buy when I have cash and see an opportunity. We’re not buying “the Market,” but companies. Lately I’ve been putting a little into precious metals, as both a sound investment and less, as a hedge.
Well, I lost 58% in equities in 2009, went into cash (sold in May and went away) and missed the rally. I don’t know what to believe but it sure looks like we are giong to hell in a handbasket. So maybe being close to 70 and retired should 70% in cash and 30% in dividend paying high quality stock be safe?
I am getting sick of market wanna be “guru’s! One week Gold, Silver and commodities are going up and stocks are going down and the next week the reverse is being pushed!
Meanwhile back on Wall Street hedge funds and brokers are making millions either way !
Sickening isn’t it? RCW
Dear Mike: In my humble opinion, we are in the eighth inning of this bull market. I am taking profits. It is better to be a little too soon than too late! I am buying gold and silver stocks and coins. What are your thoughts about reducing the Fed balance sheet? Thankyou for all you do. I have lerned a lot from you. Regards, Robert Calabro.
The trend in stocks is powerful but fundamentals eventually will catch up,
the crazy policies of super low interest rates will also eventually have to end causing havoc.
Treasuries will always be supported and the interest will be paid by more printing making the dollar fall in half! Gold eventually will soar beyond 2000. The bernake experiment must be continued or this pyramid scheme we call the US and European governments will crash.
So the new normal capitalism is now a socialistic form of capatilism!
I believe the market is due for a correction – by how much remains to be seen but I believe a pullback is coming. Stocks are just too overvalued right now. I subscribe to the Warren Buffet mantra – sell when everyone is euphoric and buy when everyone panics. Works for Warren – why not me? da!! I am mostly on the side lines right now but watching Gold & Silver closely and getting ready to jump in i.e. mining shares, ETF’s & bullion. I am also active in the currency market.
I’m staying about 90% invested, and 80% of that is in stocks, 5% of which is gold related.
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