Monthly Stock Market Report – April 30, 2015

Stocks Trapped in Trading Range. Buy GE with 3.2% Yield

Stock Market ReportIn April we were pleased that all three major stock market indices hit record highs during the month, spurred by slightly better earnings reports. However, as more earnings reports trickled in at the end of the month, all major stock market indices retreated from their all-time highs with a significant sell-off on April 30th.

And with no major economic catalyst pushing stocks higher coupled with the following significant headwinds: (1) pending Federal Reserve action to raise interest rates, (2) a strong dollar adversely affecting export profits, and (3) lower U.S. Gross Domestic Product (GDP) projections, stocks will be trapped in a narrow trading range, which could test the year’s lows. Until these headwinds are resolved, stocks will pause from their 6-year bull run. As the trading in the first few days of May has already resulted in vigorous moves in both directions, stock market volatility will likely be with us through the 2nd quarter.

Rather than avoid stocks under these market conditions, investors should take advantage of any dips to continue to add to their stock portfolios by accumulating shares of quality companies, equity mutual funds, and stock ETFs (such as the stocks, mutual funds, and ETFs we have recommended in this and earlier blog posts). Consequently, we see no need to make any changes in our TSOA Retirement Account Allocation models.

Buy “New” GE

For many years prior to the “Crash of 2008,” General Electric (GE) was considered the safest of safe stocks. Analysts called it a “widows and orphans stock” (meaning widows and orphans should own lots of it). Unfortunately, GE was not what many believed it to be – a strong industrial company. Instead, it was more like a financial conglomerate (a bank), and it got caught up in the financial debacle that involved most banks in 2008/2009.

With the mild recovery, especially in the financial sector, GE has also rebounded. However, GE recently announced that it will divest most, if not all, of its financial holdings and return to being a simpler, and hopefully, more profitable industrial company. Recent earnings show this to be the case.  Therefore, we eagerly welcome this new development and will look to accumulate GE shares at prices below $28.00/share or better. Its current 3.2% yield also supports a long-term positive outlook.

Good investing,

Jim Tso

Note: Jim Tso and his clients own shares of GE in their portfolios.

 

Monthly Stock Market Report – March 31, 2015

A Loss Month…A Ho-Hum Quarter. Buy “Fun Stock” Six Flags (SIX) for Growth and Income (4.3% Yield) The U. S. stock market for March could best be described as a “yo-yo” market! Unlike a “roller coaster” market with somewhat smoother ups and downs, March was up strong one day and vigorously down the next day. […]

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Monthly Stock Market Report – February 28, 2015

A Big Rebound but Proceed with Caution; PLUS Our Fun Stocks Index Is Changing A big 5.5% rebound sparked by better-than-expected corporate earnings in the S&P 500 Index in February wiped out its 3.1% loss in January. As such, the S&P 500 is up 2.2% year-to-date. Investors, who maintained their asset allocations in stocks benefited […]

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Monthly Stock Market Report – January 31, 2015

Stock Market Volatility Not for the Faint-Hearted U.S. stock market action during January 2015 was very volatile, with 14 of out 20 trading days resulting in up or down moves of around 1% in the S&P 500 Index. In fact, January 2015 marked the most volatile month in the last 5 years. Investors could not […]

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Forced IRA Rollovers: Are You a Foolish Ex-Employee?

Is your head in the sand?

How many jobs have you had in the last 5, 10, 20 or so years? Did you have a vested 401k or 403b with each job? (A 403b is a retirement account with a non-profit employer.) Did you roll over ALL your 401k/403b accounts from ALL your former employers into a rollover IRA account (or […]

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Monthly Stock Market Report – December 31, 2014

2015 Outlook Positive with Cautions The U.S. stock market action in December 2014 was nothing to write home about. In fact, it was a small month-to-month loss due to usual low-volume stock trading losses just prior to New Year’s Day. While the 2% loss from December’s final days of volatility may not be too scary, […]

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Monthly Stock Market Report – November 30, 2014

November Rallies with a Warning about Energy  5 Reasons to Buy Royal Caribbean (RCL), Carnival Cruise Lines (CCL), Norwegian Cruise Line (NCLH), and Disney (DIS)! The November stock market was most unusual in that 14 of 19 days of trading (or 74%) resulted in gains. As positive U.S. economic data and pledges of continuing stimulus from Europe […]

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Monthly Stock Market Report – October 31, 2014

A Month of Corrections and a Big Rebound. Buy cruise lines! The “bumpiness” we predicted came true when the month of October began with days of scary “downs” followed by days of hopeful rallies. For the month, we experienced a 9.5% correction on October 15th (intraday low of 1,820 on the S&P 500 Index)  followed […]

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Monthly Stock Market Report – September 30, 2014

Some Bumpy Rides Ahead…Buy the Dips  If September’s stock market action (down 1.6%) and the volatility of the first few days of October (down 1.32% on Oct. 1 and up 1.12% on Oct 3) are any indication, the next few months to the end of the year will be a very bumpy ride. Investors can […]

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