Stocks Roughed up in 3rd Quarter; Bonds Offset Losses

Wall Street produced some tricks, in that the 3^rd quarterly period (July-September) ended lower for stock prices and most lower-quality bonds, with greatly increased volatility in prices. Starting in late August, stock prices fell sharply, and were down over 10% from their summer peaks at one point. In fact, there was just a short two-week span after Independence Day that served as the calm before the storm. The popular, broad-based stock indices – the Dow and S&P 500, fell over 7% for the three months (details below).

With a backdrop of that, it was difficult to make money as stock prices were hammered 7% to 9% on the popular averages*. There was just a two week stretch of time after Independence Day to feel good about the state of affairs, and then the wheels started to wiggle off the wagon. Through the trough or low in stock prices near the end of September, the Dow Industrials and S&P 500 indexes had fallen 10% each during the quarter.

With the threat of interest rates bring raised last month by the Federal Reserve, bonds first fell, then had a good jump up in price for the three months. Gold ended down 4% for the quarter, but did offset the panicky risks intra-period; i.e. August’s super volatile month for stock prices – where stocks fell 9%, saw gold rally 4%. Our goal here is to provide some gains without big drawdowns in bad markets in stocks. Gold has proven to provide a cushion to falling stock prices dating back to 1973.

For our managed accounts, we made some sales of equities in August at higher prices, which were prudent given the poor technical health of the stock market leading up to the late August free-fall and ensuing volatility. Those monies were used for short term bonds and mutual funds and ETFs, as we like to capture these monthly dividends paid on the exchange-traded funds we own between investment. 
We just recently – this month – have started to nibble on our favorite ETF’s as they have proven technically they can be “trusted” and the market averages have recovered a good deal of the lost ground. To that end, we favor utilities and the consumer staples sectors.

Economic-wise, the U.S. economy is faring pretty well vs. the rest of the developed world. Both inflation and jobs are in favorable territory; just 5.1% of our workforce is unemployed and the inflation rate is near 0% the past 12 months. But to be a skeptic also, if conditions can’t really improve much from here, can stocks, bonds and corporate profits move higher still?

Thanks for reading.
~Barry

Barry L. Unterbrink
Chartered Retirement Planning Counselor
(954) 719-1151
Fort Lauderdale, Florida  
* 3Q-2015; S&P 500 down 6.9%, Dow Jones Industrials -7.5%

Gold and Bonds Assist a Diversified Portfolio

                                                                                         1 Sept 2015
Dear friends and clients:

September is not starting out very well for the stock market, with prices today down about 3% for stocks, while Gold and Bonds up about 1/3 of one percent.

For the month of August, a diversified portfolio (25% each) of stocks (S&P 500), bonds (20 yr. Treasury), and Gold and Cash (money market) resulted in a loss of about 1%. Stocks fell 6%, the bonds and cash were essentially break-even, while Gold rose 3.7%.

More importantly, maximum drawdown of the portfolio (the lowest return during the month on a daily close), was just -2.6% on the diversified portfolio, vs. -11.2% for the stocks. That's important and represents the volatility of an all-stock portfolio in a falling market for stocks.

Stay diversified my friends!

Barry Unterbrink, C.R.P.C.
www.stetsonwealthmanagement.com

Stocks Fall Again, Reach 10% Loss in August

Stock prices felt the pain of more sellers today, as equity prices fell around 4%.

Many stock were halted for trading only a few minutes after they opened at 9:30 a.m.  then after they did open later in the morning prices zoomed upward with the demand, creating some wide price swings.

For instance,  Facebook shares traded at 72 early on and closed at 82.  Apple was traded at 92 just after 9:30, and ended the session at 103. Verizon at was on sale at 38, to close at 44.  These are big,  institutionally traded, household name companies, and a lot of investors are upset  that they did not have a chance to buy or sell at these prices. Welcome to the imperfect world of Wall Street.
I came across an interesting statistic on markets from a year ago blog. In the past 10 years, there is a one in 20 chance that stock prices will fall 5% in any given month. If they do, the average decline to the bottom of that cycle is a 12% loss. Stocks have fallen 10% so far in August as measured by the S&P 500 index. So on an average historical basis, the selling might be over. That's just the average (mean) of the fall, however. This 6 year bull market in stock prices we knew would end sometime. We were perhaps surprised that it would take only a week or so to play out (hopefully).

In the six trading days ended today, bonds and gold did help immensely in mitigating stock price declines - the box score: stocks -9%, bonds +2% and Gold +3.4%. Funny but you only hear the doom and gloom on the news reports on stocks (including CNBC, and the talking heads who want to instill fear into the masses).

There's a lot to contemplate the rest of this weekend beyond concerning interest rates, the economic outlook for the third quarter: wait - I'll think of other worried tomorrow. 

Stay tuned, stay calm and don't let fear and greed drive your investment actions.

~Barry Unterbrink

Gold, Bonds Helping Balance the Scales, Protect Assets

                                                                                                                             20-August-15

Gold and Bonds are protecting diversified portfolios that include stocks

Since the market's top in Mid-May near Dow 18,300 - Gold and Long Term Bonds (UST) have offset each other: Gold down 6%, Bonds +6%. However, the tide has turned greatly thus far in August, as Gold has gained about $60 an ounce, or 5%, Silver, up 5%, and Bonds +2%.
Thru mid-day, stocks are lower by about 3% this month. Can this rally in the precious metals continue? Stay tuned for more thoughts on that.

Gold, Bonds Holding Up Portfolios in August

With stocks down about 1% this month (thru Tuesday), bonds and Gold are providing a nice offset, rising 1.7% and 1.3% respectively.

Could this latest equity price swoon be the end of the current rally? Time will tell. I can only preach the value of diversification for all but the most risk-averse investors at this time.

~Barry Unterbrink, C.R.P.C.