Monument Wealth Management's "Off the Wall" Blog!

I took a two week break from blogging as I attended a great industry conference on the west coast and then had knee surgery to reconstruct a torn ACL in my knee. I was making such good progress on my golf game and then that happened.  Summer is now over, my knee has more colors than a Jackson Pollock painting and the next thing you know we’ll be setting the clocks back and driving in the dark at 4:30pm. 

The markets were up for 6 straight weeks heading into last week, which was the 7^th.  It took a breather… along with a lot of people who are taking a vacation.  However, one person who did NOT rest last week was Monument Wealth Management’s Tim Lee and his wife Carolyn.  At 8:02pm on Friday, Aug 9^th, they gave birth to 7 pound, 8 ounce Abigail Frances Lee.  We are all very happy for them – mother and baby are both doing well. 

July was a good month for the markets, especially for the summer.  The Dow Jones Industrial Average (DJIA), the Standard & Poor’s 500 (S&P 500) and the NASDAQ were all up 4.0%, 4.95% and 6.6% respectively for the entire month.  In fact, the DJIA and the S&P 500 both hit new all-time highs and July was their second best month of 2013.  The NASDAQ posted its best month of the year in July.  The S&P 500 traded above 1700 for the first time but what is really significant is that 1700 is well above the two previous highs that were recorded in 2000 and 2007.

Ahh – some of the famous words from Mr. Hoover in Animal House that relate to earnings season, more on that later.

There is no shortage of advice out there on what to do next in the market – present writer included – but I was recently reminded of the famous quote, “Don’t underestimate the value of doing nothing, of just going along.”  Who said it?  Winnie the Pooh.  Of course he also said “I am a bear of very little brain and long words bother me.”

Since we are discussing bears, they are all running for cover as the markets have hit new highs once again.  On Thursday, the Standard & Poor’s 500 (S&P 500) hit a new all-time high and is now up almost 150% from the lowest posted on March 9, 2009. Viewed another way, the S&P 500 has gone 1,592 days without a correction of 20%, which is the classic definition of a bear market. The record was set between 1987 and 2000 where the index went 4,494 days without a 20% decline. Email me if you’d like the exact technical spec of what defines a bull and bear market.

I’m not sure that the start of earnings season is going to change the fact that it seems like investors still hate stocks.  Over the past month, bond funds have suffered huge outflows totaling more than $60 billion.  According to Investment Company Institute data, last week may have been the worst of the past four weeks with $28 billion vanishing from bond funds.  The unfortunate part is that none of it has found its way to U.S. stocks since domestic equity funds have also suffered outflows in each of the past four weeks.

As a reminder, the markets and Monument Wealth Management will be closed on Thursday, July 4^th. We will also have a 1 p.m. EDT closure Wednesday since it is a half day for the exchanges. 

This song was made famous to Gen X by Murph and the Magictones in the movie The Blues Brothers and is a cover of an Englebert Humperdinck performance from 1969.  Investors this week were asking the same question (translation: when, when, when) as Murph, Englebert, and others who have covered the original.  However, rather than asking about a girl, investors were asking about tapering.  I’m beginning to hate that word…along with ointment. 

The Federal Open Market Committee (FOMC), the policy-making arm of the Federal Reserve, will conclude its two-day meeting on Wednesday, which will be followed up by a press conference from Fed Chairman Ben Bernanke. There has been a lot of talk of the Fed “tapering” their stimulus back but there are several reasons why we don’t believe there will be any changes this year.  Right now, labor markets are still not strong enough, the financial markets have reacted poorly to Bernanke’s tapering suggestion from a few weeks back, (especially the emerging markets), and inflation is still below the Fed’s desired level and slowing.

Given that May is historically a notoriously bad month in the market, we were happy to see the Standard & Poor’s 500 (S&P 500) index return up over 2% for the month, even with the 40-minute, 1% sell-off on Friday.  In fact, all U.S. equity indices are up solidly year-to-date, all posting a +10% return.