stock market

Oil Drops Below $50 Again – Now What?

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oil prices fall below 50

Not long ago, I posted about how oil prices would never see anything near $100 a barrel again, because as soon as prices started climbing above $50 or $60, U.S. producers would crank up previously idled oil fields, and that is just what happened. With OPEC’s oil production cut earlier this year, prices indeed did start rising, and U.S. producers turned the pumps back on. Prices have made it back up in to the fifties. Today, however, prices slipped back below $50 per barrel ahead of a report on U.S. oil rig count that most analysts predict will show even more U.S. production coming online. Couple that with uncertainty about whether OPEC — and Russia — will extend their supply cuts, and you have investors nervous that prices have nowhere to go but down. Oil Prices and U.S. Stock Prices The reality is that, for America, $50 per barrel is a pretty happy medium spot. At $50 per barrel, oil value is high enough for most U.S. producers to make a profit, and for banks to continue feeling good about credit backed by oil reserves. Together, this keeps the stocks of S&P 500 companies like Exxon and Shell and so …

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Is The Stock Market Really Overvalued?

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stock market pop coming

  Hang around the world of finance very long, and you’ll see history repeating itself, especially when it comes to financial news articles. When it comes to a stock market in the middle of an extended rally, all manner of financial and investment analysts turn into Professor Trelawney, seeing the Grim in every cup of tea. The longer the rally goes on, the more pundits who join in predicting a stunning market collapse. The reason is that doing so, is a low-risk way to get your name in the papers, and, if you get lucky, to be labeled a guru based on “predicting” the inevitable stock market crash. Remember the analyst who predicted the muni bond crash that never happened? No? Neither does anyone else, but she built up quite a lot of business based on that publicity before everyone forgot all about her. (And, before she changed her story.) Of course, you can make a name for yourself the other way. Back during the internet bubble, one analyst earned a reputation for “always being right” about the market going higher. She predicted it would go higher quarter after quarter, right on through the top… and after the top… and …

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Market Review

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Another up week for stocks in the week that ended February 10th. The Dow is still up over 20,000, and the S&P 500 and Nasdaq all finished up nicely as well. One big stock in the news was Sears, which has yet another restructuring plan, but having sold off most of its best assets, is it just delaying the inevitable? With little news scheduled on tap for the coming week, stocks will likely drift along with whatever the headline of the day is. Time to start thinking about taxes.

Dow 20,000

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This post will not be long, and there won’t be much analysis. Why? Because, the Dow hitting 20,000, or Dow 20K, as some like to say, is not that important. The reality is that Dow 19,823 is not really any different than Dow 20,107. Round numbers are not magic. So, what’s the big deal? Why Does Dow 20K Matter? I’ve noticed an increasing number of financial publications describing the Dow Jones Industrial Average hitting 20,000 as a “psychologically important” milestone. In other words, it matters for really cool newspaper headlines and not much else. Remember, the Dow is just 30 stocks. Those 30 stocks are all large, U.S. companies, and they change them from time to time for numerous reasons, including when that stock just isn’t very good anymore. In other words, it isn’t really representative of much of anything. But, like a fake credit score from Credit Karma or the like, it is a useful way of getting a general idea of whether stocks are going up or down, and to a lesser extent, by how much. This is why the news often states, “The Dow was up 50 points today…” It’s a quick, no effort, way to say …

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Retail Stocks and 2017

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retail stocks 2017

Wheee! Well, looks like 2017 is going to be a lot of fun, and by fun, I mean volatile and sketchy all the way through. First up, are announcements by retail stocks such as Macy’s and Sears, both of whom announced that they would be cutting staff and closing stores. Kohls also announced sluggish holiday sales. That means that the 2016 holiday shopping season was not strong enough for a lot of traditional retailers. Look for earnings on the low side, that disappoint Wall Street for most retail stocks. This is a big deal, because this was supposed to be the “up” year for the economy. The stock market is up, closing in on 20,000. Job reports show that unemployment is as low as it’s been since before the Great Recession. The Fed even finally got to raise interest rates in December. If this holiday season wasn’t good, then things maybe aren’t going as well as everyone might have hoped. Of course, it is possible that there was still plenty of consumer spending and it just went different places like online retailers, or specialty stores, but so far, no one is pushing that theory. Trump, The Fed, Inflation and a …

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2017 Finances and Money Issues

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investing in hsa account calculator

Welcome to 2017! Relax. Take a deep breath. There. Feel better? Good. Then let’s jump in. Finances Updated in 2017 With a new year, come some new numbers. There will be updates to the maximum 401k contributions, income limits for Roth IRAs, and others. Plus, there will be adjustments to the 2017 income tax brackets, the 2017 standard tax deduction, and more. And, of course, there is a new IRS mileage rate for 2017 as well. What about 529 plans? There aren’t a lot of updates to those numbers each year, primarily because most facets of 529 college savings plans are administered through the states, who aren’t always as keen on changing and updating everything. You’ll want to re-evaluate your financial plan for the new year, and you’ll want to review how your financial plan did in 2016. Plus, you’ll want to rebalance your portfolio, if you didn’t do it at the end of 2016. Retirement Plans 2017 A big part of most retirement plans are tax-advantaged savings accounts like your 401k plan, IRA accounts, and, for some of you, 457 plans, 403(b) plans, and various differed compensation plans. All of those need adjusted and reviewed for 2017 as well. …

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OPEC Deal and the U.S. Stock Market

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opec deal stocks

For the past few years, the strategy of OPEC has been to do nothing while Saudi Arabia pumps oil as fast as it can into the market. The idea was to cripple, or drive out of business, various U.S. oil businesses that depend on more expensive extraction methods such as fracking. With prices low, many of those businesses did indeed go into hibernation and most new drilling was curtailed. However, that still leaves tons of capacity sitting idle, waiting for higher prices before flipping the switch back on. OPEC Deal It has become apparent that overproduction will not drive out U.S. oil businesses. It seems a strong U.S. economy, plus a more disciplined approach to lending and spending has left most American producers able to hold out for higher prices for longer than the cartel may have hoped. As a result, the cheap oil is actually causing more trouble for oil producing countries like Saudi Arabia that depend on oil production to fund their government. So, for the first time in over 7 years, the 14 OPEC countries have reached a deal to reduce production. The new deal calls for a reduction of 1.2 million barrels of oil per day, with …

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Is There a Market Bubble?

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stock market bubble

Recently, an increasing number of pundits (and a smaller number of actual stock market analysts) have begun using the word, “bubble,” to describe the U.S. stock market. That chatter has picked up even more lately, when Donald Trump began saying that the stock market is a bubble propped up by the Federal Reserve keeping interest rates low. But, is the stock market really in a bubble? What is a stock market bubble, anyway? How can you tell if there is a stock market bubble? What Is a Stock Market Bubble Really? Let’s start with the fact that you should NEVER listen to a politician (including candidates) when they talk about the stock market or the economy. They are always campaigning, even in off years, and getting people to think the right thing outweighs any allegiance to the truth. In the case of Donald Trump, he is campaigning on the economy being bad, but a rising stock market is shooting holes in that claim. By saying it’s a bubble, he’s trying to imply that it isn’t a REAL sign of economic growth, and that the economy actually is bad. But, beyond politicians, how can we tell if a bubble is real? …

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Calling a Market Top

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As a financial planner a few years back, I noticed that my clients’ attitudes about stock market investing changed along with the tenor of media reports. That isn’t surprising. Many of our ideas are influenced by various media. But, if you look closer, you can see that it isn’t really the media, it’s the same mindset that occurs in the general population about any phenomenon in live. Trendy Stock Market Opinions Think about a recent trend. Not some edge trend that never was mainstream, but some big trend that “everyone” got into at one point in time. It doesn’t really matter what the trend was, whether it was a new band, a fashion trend, or something else. How about we use Pokemon Go as an example? These trends follow a familiar pattern. First, the initial wave of popularity gets going. These people love whatever it is, and tell everyone they know about it: friends, family, co-workers, you name it. Your friends ask you to download the app. The news is all about how there is this great new thing. Their motivation is just that they like something and want to spread the word. The next phase are the people who …

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Sell In May and Go Away 2016

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sell in may and go away 2016

There are all manner of investing sayings and “wisdom” out there. One of the most common is a little rhyme that goes: Sell in May and go away. Don’t come back ’til Labor Day. This saying comes from older days when traders actually needed to be in New York City. So, when they ran for the cooler pastures of their summer homes, the volume of trading would decrease, and the volatility would ramp up. Of course, these days, you can trade from anywhere at any time, and a great deal of the market’s volume is actually made up of computers that don’t care how hot it is outside. Does Sell in May and Go Away Actually Work? Pretty much everything works sometimes if it is a Yes/No question. If you go to Vegas and bet on black, you’ll win eventually. Same thing with betting whether it will or will not rain. For 2016, the sell in May and go away strategy isn’t officially over, so it might still end up being correct. But, today, the S&P 500 hit an all time hight, making the strategy a loser, so far at least. In fact, very little of this summer has been …

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