Anyone Involved with Your Companies 401k Is Personally Liable.

January 26, 2016 by  
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Are you aware that new regulations mandate that your 401k be validated for best practices regularly?

An Important Message From One Of Our ERISA Fiduciary Service Provider, Victory Fiduciary Consultants:

Your Employees can have a Fortune 500 Style 401k with Fiduciary Over Site for the Same or Less Costs as Your Present Plan.

Contact us for free side by side comparison of your 401k today. Call 978-232-9990.

2016 Stock Market & Investment Outlook

January 7, 2016 by  
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Be Honest. Are You A Day Trader or An Investor with a Long-Term Strategy?
December, 2015
“No one ever made a dime panicking” – (Jim Cramer, popular television stock analyst/trader)
“Preserve gains with a proper strategy” – (Richard St-Laurent, seasoned investment advisor)

Dear client –
The stock market had a difficult stretch in 2015, and some measurable damage was done in the process. But this decline remains relatively modest by historical standards, particularly for a market that is still within the range of all-time highs. As a result, it is important to maintain calm even if the declines continue into the coming weeks. Stock prices do not fall in a straight line, and the market is filled with enough bulls and generous policy makers to help insure that we have a long trip through any future bear market. We are likely due for more volatility in the near future.

Keep things in perspective!
With all of this in mind, let’s not ignore the fact that stock markets all over the world took a beating the last month. The first point to emphasize following these challenges is the importance of staying calm and putting the market in which we are operating today into perspective. Today’s stock market is currently in the seventh year of what has been the third longest bull market in history. The S&P 500 reached a new all-time high in late May, plunged over 10% in September, and then set new highs in November. In other words, although the pullback in September certainly was dramatic, it only sent the stock market back to levels that were being celebrated as a new all-time high as just one year ago.

What can we expect from here if you are a “Day Trader”?
Things could get turned a bit upside down from here on. If I’m bullish, I want this sharp correction to continue, and if I’m bearish, I want the correction to end as soon as possible. How can this make any sense? Stock prices are driven by momentum which is difficult to control. In other words, if stock markets go down sharply, they have a tendency to bounce back with a comparatively strong force. One has only to look no further than the most recent pullbacks in both in September, as well as October 2014, to see these forces at work. Stocks fell sharply to the downside, but ended up bouncing back with an even greater force that propelled them to new highs. This is one of the reasons why it is so troublesome for asset classes when the bounce from a precipitous fall is weak, for it more often than not will foretell the potential for further declines ahead, just as we are seeing with oil and energy prices today.

But as all of this relates to stocks; there is certainly no shortage of stock market bulls that will see this recent pullback as the buying opportunity for which they have been desperately waiting. To paraphrase Warren Buffet: ” When the stock market has a sale, few take advantage of lower prices, and most run away”

So, as we have been writing, the much-anticipated correction in stocks seems to have come and gone. That stated, we don’t know if this is the start of a bear market or continued volatility. Yet, as we also have touting, this could foretell the beginning of a change in how markets move and are analyzed. Short term bear markets can be healthy for the market, and we haven’t experienced one since 2008 – and that was the results of the financial crisis fueled by outside influences upon the markets. We encourage our investors to keep things in perspective. As long term investors, we advocate using this volatility to add to (or open new) positions. Pullbacks like this are truly a gift for long-term investors looking to put new money to work. This is the best time to buy great stocks on sale. Yet, as we note, this keep in mind that it is important to have a strategy in place to ensure most gains are not lost due to market volatility.

Back To The Original Question, “Are you a Trader or Investor?”
If you are a veteran to the stock market you have seen this all before. Markets go up and markets go down but general they go up and all is good. Really? In general, maybe that line of thinking was true before 2000; refer to the enclosed chart, “This No Longer Your Fathers Stock Market, Everything Has Changed”. As you know from our previous meetings and writings, we feel that the paradigm of investing is changing because the variables are changing compared to the past. Therefore, advice and strategies must change in order to address changing market conditions or investors that use old data and strategies will be at risk.

Those that are ready to start taking income from saving and investments should be even more concerned about using old advice and strategies – designed for “trading” stocks – to make “investment” decisions. Why? Because, as we saw last quarter, investors, got skittish (due to many unsettling factors, we will gladly address at another time or when we meet to review) which lead to severe market declines. As is the case with such over-reaction, we expected a short-term recovery, evidenced by the subsequent rally as well as the outlook of the futures. The initial thrust for the bounce could have been the scheduled Federal Reserve talks, increased GDP numbers then released, steps taken by China to stabilize markets, or simply that there is no other place to make a decent return right now – and, paradoxically, prices are cheaper due the recent sell off.

Regardless these are all short-term influences only. They do nothing to change our longer-term opinion – that a major paradigm shift in the markets is developing, with more volatility, concern (and opportunity if you have the proper, new strategies in place) ahead.

Actions To Take Now                                                                                                                                                                            If you have not taken us up on our many requests to meet or talk to initiate your new strategy for the changing paradigm in investments and market research, we strongly encourage you to do so.

Happy New Year.

2015 Year End Review

January 7, 2016 by  
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Many are familiar with my view that the stock, and most of the bond markets, have been artificially inflated by many factors since the “Tech Crash” in 2000. The main funding source for these unhealthy market manipulations has been the Federal Reserve’s “cheap money” policies – or as I call it, the Fed’s “money printing” policies.

What some may not know is that we pay close attention to as many analysis and opinions as possible, included those not usually disclosed by the main stream investment and advisory world. Among the less conventional analysis I study there is consensus that the securities markets and, by extension, the economy (not the other way around, as many in the main-stream want you to think) are likely to see tough times ahead.

So why is it that the more conventional investment analysis and advisors are less inclined to tout bear market predictions? Most likely because they fear that money will be taken out of securities and parked into cash, precious metals or other guaranteed contracts. All of which might lower the fees and commissions of Wall Street traders and their reps on “Main Street”, who typically utilize more conventional strategies. It reminds me of the proverbial owners of a recreational water park during the summer who would rather the weather forecast read partly sunny, instead of partly cloudy.

Please continue to read on and let us know your thoughts. Call or email us at RST@StLaurent if we do not have your email address.

History tells us that every bull market eventually ends. After nearly seven years in a bull run, it seems the market is starting to run out of steam. The average bull market run is eight years.

In October, the Dow Jones Industrial Average gained 8.5% but not before losing all the gains for the year in September. The Dow has shown volatility since then. It has gone as high as 17,977 and as low as 17,210. It’s back to being positive, though still slightly negative for the year.
The major stock market indexes closed 2015 with a loss. We think a bear market may be in store for 2016, if not more volatility, mostly the result of many years of government and Federal Reserve policies prolonging the market corrections necessary for a healthy, free market economy.

Evidence of the unhealthy stock market can be seen in the limited breathe of strong companies in the major indexes. The Dow Jones Industrial index, for example, hit its 52-
week high on May 19. Since then, 12 companies – Walt Disney Co. (NYSE: DIS), Nike (NYSE: NKE), Home Depot (NYSE: HD), Visa (NYSE: V), McDonald’s (NYSE: MCD), UnitedHealth (NYSE: UNH), Microsoft (Nasdaq: MSFT), Travelers (NYSE: TRV) General Electric (NYSE: GE), JPMorgan (NYSE: JPM), Pfizer (NYSE: PFE) and Goldman Sachs (NYSE: GS) – have set new highs themselves.”

Most of these companies stocks are the Dow index’s best performers for this year. So what’s the problem?

Of the remaining 18 index components, the last new 52-week high was set on May 4 by IBM (NYSE: IBM) – the Dow’s biggest dog of the year. Nine of these companies had 52-week highs set over a year ago.

This means the 12 companies that hit highs after May 19 are carrying the index despite the performance of the remaining 60% of the index.

Ultimately, 40% of the companies in the Dow are driving the index.
Many may not be aware that heavily weighted, high-performing stock (or, in this case, group of stocks) can push an index higher while everything else drops.

This demonstrates how widespread weakness is hidden by the better performance of a small group of stocks – or even a single stock. This allows the main stream talking heads to tell us that the market is moving higher and setting new highs long after the majority of its components have topped out.

Case in point: Apple stock. The single strength and weights of Apple shares was able to offset the declines seen elsewhere. But once Apple got tired and faded in September, the Dow plummeted.

As I have written before, we maybe okay for the remainder of this year in most sectors. However, this is a good to time to regroup and play defense if you have not met with us to do so already. Then more strategic and/or tactical methods should be considered.
Why not stay the course because any market losses will be recouped based on historical experience – just as those conventional, main stream advisor would like you to think? If we have not yet met to discuss the answer to this important question please contact us soon.

Richard St-Laurent, cwpp