Just Enough!Submitted by RetireWiseCFP on July 21st, 2015
For the past six months, we’ve had just enough economic bad news to make some people sell and head for the exits. At the same time, we’ve had just enough good news for others to keep on keeping on.
Where are we now?
Most, if not all, the headline distractions of the past months have been about Greece. Will it leave the European Common Market? What are the contagion effects? Meanwhile, the American economy vis-à-vis other nations continues to outperform and overcome. Companies continue to hire, more cars than ever are selling, and lower gas prices like a tax cut continue to put more disposable cash in the average American household.
Where do we go from here?
While some are preoccupied with the contagion of Greece or this or that bad news that might befall America, I continue to see huge opportunities in pharmaceutical companies. As a matter of fact, the biggest problem I have is that there so much innovation and opportunity in pharmaceuticals right now that I am forced to be disciplined and let some opportunities pass us by! I am concerned that clients’ portfolios may become overly concentrated in pharmaceuticals, so I am holding back.
On fixed income and alternatives:
I wrote in January that because the economic conditions in China and Europe are a bit shaky and the dollar remains strong, the Federal Reserve Bank will not raise interest rates early in 2015 ─ as some of the know-it-all talking heads in the media suggested. I am here to report that your humble advisor is right again!! What is my magic? There is really no magic. It is very simple ─ I actually listen to what Fed Chair Janet Yellen is saying. I am not trying to outsmart her, nor do I think that she does not know what she is saying or doing. My question to the talking heads is this: What part of Chair Janet Yellen’s N.O. is difficult to understand? I respect her views and judgment ─ thus, I act accordingly. Folks, it is that simple!!!
What should we look out for?
My two main concerns are (1) the Europeans will continue to be true to their nature and not get to clarity on the Greek exit question. There has been more than enough time for both sides to fish or cut bait. This situation’s dragging further into the 2nd half of 2015 and perhaps into 2016 means growth will not return to Europe or Greece. (2) The meltdown in China’s speculative financial markets may begin to have a more negative effect on the real brick and mortar economy. Therefore, we in America cannot enjoy more robust growth, and our investments in Chinese companies like Alibaba, JD, and Cheetah Mobile will be affected. For most of our clients with these stocks, we have prudently sold out of JD and Cheetah for now.
During times when there is just enough bad and good news, good judgment, disciplined action, and steadfastness are paramount. I am happy to report that I am on the job and up to the task. Thank you for your continued confidence.