Money Management & Retirement Planning Advice by Barry Unterbrink, Chartered Retirement Planning Counselor

Wednesday, April 12, 2006

The 5% Dilemma

It's been about one month since my last blog post. Since mid-March, stocks have risen generally, but not by much. The smaller, technology-laden Nasdaq is ahead 2.3%, the Dow Industrials and S&P 500 are up about 1/2% each. My worries last month were that interest rates could rise further and put a lid on stock price gains. Stocks and interest rates both rose in March, with respectable gains of 1.1% in the Dow and S&P 500. April has not been so kind. After a trend up, stocks have given back 2-3% in the past 4-5 sessions. Treasury note and bonds hover near 5% now, adding about a quarter point the last 30 days. Bond prices have fallen to adjust to the increased rates. Will the Fed raise rates for the 16th time next month and signal a top for stocks? I dont' know. But...the action of the leading stocks shows that mutual funds and big investors who do most of the buying and selling are taking a pause at their trading desks. Still, even with the increased competition that fixed rates offer, there are fast growing small and large companies to consider. Recent purchases doing well include 3M Company, JLG Industries and First Cash Financial. The craft store operator, Michael's Stores gained 15% after management said it was exploring options to sell the company.
Client reports for the first quarter ended March 31st will go into more detail on a portfolio level for each managed account.
I wish all clients and friends a happy, blessed Easter and Passover holiday.
-Barry

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