The stock market’s fall last Thursday and Friday totaling
1,100 points on the Dow Jones raised a few eyebrows – for the second time this year.
The early February cliff-dive from the then-highs was met with a quick rebound in prices. In two weeks, the market gained back 2/3rd of the decline from the low of February 8th. Financial and Technology stocks – leaders for quite some time now, fell faster in price those two days. They both fell Friday 2-1/2 to 3%.
Will this latest fall of about 7% in the Dow Jones act as a floor or a celling? Or perhaps the start of another round of selling to lower prices?
We advocate watching your investments while you discuss them with your financial advisor. What is your plan for selling if (when) prices continue falling?
The early February cliff-dive from the then-highs was met with a quick rebound in prices. In two weeks, the market gained back 2/3rd of the decline from the low of February 8th. Financial and Technology stocks – leaders for quite some time now, fell faster in price those two days. They both fell Friday 2-1/2 to 3%.
Will this latest fall of about 7% in the Dow Jones act as a floor or a celling? Or perhaps the start of another round of selling to lower prices?
We advocate watching your investments while you discuss them with your financial advisor. What is your plan for selling if (when) prices continue falling?
We recommend, as I have said in this space before – to watch
your allocations: how much you have invested in stocks, bonds, and alternative investments - and make adjustments in necessary to keep them in line with your
risk tollerance. Less stock usually = less risk. More bonds and gold mean less
risk and volatility of falling portfolio values. In the late January / early February
turn down, an equal mix (1/3rd ,1/3rd ,1/3rd )
of stocks, bonds, and gold – fell 3% overall vs. a 9% decline in stocks only.
That’s diversification!
Interestingly, besides gold acting as a hedge against falling stock prices; it has returned some nice numbers on its own. It has averaged a +8% gain each year since late, 2004 (see gold investment recommendation below). Not too shabby, eh?
Interestingly, besides gold acting as a hedge against falling stock prices; it has returned some nice numbers on its own. It has averaged a +8% gain each year since late, 2004 (see gold investment recommendation below). Not too shabby, eh?
We don’t forecast of this and that happening in the markets. But we do look at trends and get ready for what ‘could’ happen to affect our client’s investments, so we’re ready in advance.
Our thoughts on Gold
Gold had a very good week – most of it capped off by Friday’s $17 gain to close at $1,347 per ounce. For the week, gold gained $37 or +2.8%. Not many stock-watchers probably know that. The financial media TV station, CNBC was asleep at the switch also. The reporters and guests on the Closing Bell - Friday’s wrap up of the days trading, offered little insight and ideas into where to shield your money from falling stock prices. Not one comment was made on Gold, even as the price was blinking with green arrows on the bottom of their quote feed. Unbelievable!
They must want you to think – and believe – that stocks, and stock-like investments (mutual funds and exchange-traded funds) are the only game in town. And that you are too dumb to look elsewhere for investments that can aid your money in a stock market downturn.
If you wish to get some exposure to the shiny metal, as our client's do - we
recommend using the SPDR gold exchange-traded fund. The symbol is GLD. It trades like a stock, and holds exclusively
gold bars in their London vaults – 27 million ounces of gold. You own a
fraction of that gold, and the share price you pay reflects the daily trading price
of the gold bullion on the world markets.
For more information on this, please visit their web site at: http://www.spdrgoldshares.com/
For more information on this, please visit their web site at: http://www.spdrgoldshares.com/
For more information on my services, please contact me.
Thanks for reading.
~Barry Unterbrink
(954) 719 1151
Unterbrink@usa.net
(954) 719 1151
Unterbrink@usa.net
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