April Showers

Yesterday we had the first conference call for Secure Planning. We had quite a few individuals listening in as I discussed “Managing Investments in a Turbulent Economy”. Hopefully, those of you who listened now have a better idea of how Portfolio Insurance is created with the use of short-duration investments, with lower risk, coupled with longer-term investments with higher levels of risk. This can be very helpful in managing the downside of investing. In looking at interest rates, I’ve noted that overall rates have been decreasing during the month but in the past few days, rates have started to edge back up again. To me this is not a good sign. This is a patient with a temperature who seems to be doing okay. In addition, the stock market still seems to be marred by an overabundance of sellers, with buying occurring sporadically. It would seem with this combination that we are likely still in an overall upward pattern within a bear market. The good news is that most investments are up for the month to date. The bad news is that they could slip back down very easily. I would describe this as a jumpy stock market. In stocks and bonds, we have repeatedly seen this market react rather quickly to both good and bad news. This reaction can actually take place during a single day! At the end of March, the S&P 500 was standing at 797.87. As of yesterday’s close it was at 843.59. It is certainly good to see the market moving in a general upward direction. As I mentioned in my last newsletter, the S&P 500 opened the year at 902.29, so it still has a way to go to get back to where it was at the beginning of the year. The question of course is, will it? My personal concern is that we have not seen the last of the reaction to the current economic situation and will likely see a retrenchment back toward or below the lows of March 9th at some point in the future. The answer for now is to enjoy present sunshine and be prepared for those April showers that will bring us a bull market. Ed

Anticipating Earnings Reports

The initial earnings reports for the first quarter were nothing to write home about and did not impact the stock market. A positive report from Wells Fargo last week, indicating much higher earnings than expected, moved the stock market up. It is possible that reported earnings for the quarter might not be as bad as expected. Bad news and good news appear to set the stock market off very quickly. Today the market started in a down position, seemingly because of weekend news indicating the government’s willingness to let GM go into bankruptcy. While volume remained light for the day the S&P 500 finished in an up position. Thus far we have had five weeks of the market being up. Since earnings expectations are very low, it is possible that the actual earnings figures will come in somewhat better and continue this market rally. We continue to see a disproportionate number of sellers to buyers, which leaves me believing that we are in a correction within a Bear Market and not at the beginning of a new Bull Market. No matter what is causing this upturn in stock prices and lowing of interest rates I am happy to see it and would be even happier if it continues! Ed