Saturday, October 30, 2010

Announcing the new GWM website

We have revamped the Gerritz Wealth Management website. It will go live shortly. I will highlight the features in the November issue of The Gerritz Letter.

Wednesday, October 20, 2010

Market Comment 10 20 10

With earnings season I was expecting increased volatility, and we certainly got it on Tuesday. Fortunately, volatility in the bond/debt/income funds in which we are primarily invested tends to be a fraction of what it is in the stock market.

Our relatively small equity positions are subject to this volatility. At this point the market is still in an uptrend. I will be watching closely for a character change in the market, especially if  the dollar continues to rally. If a down trend develops we will exit the positions.

Friday, October 15, 2010

Long Term Treasury Prices Have Peaked

Long-term US Treasury bond prices as represented by the ETF TLT have peaked. TLT has broken both its trendline and support. Long term treasuries are one of the victims of the expected rising inflation that will come with quantitative easing.  Investing in the inverse ETF TBT is a way to profit from the coming potential decline in Long Treasury bonds.

Thursday, October 14, 2010

The Dollar - Gold Correlation

The US dollar and gold has a negative correlation. As the dollar declines - gold goes up.
The Federal will be forcing the decline in the dollar as a consequence of "Quatitative Easy".
Commodities and stock can be expected to also rise. Volatility should be expected as well.

Wednesday, October 13, 2010

Market Comment 10 13 10

The minutes of the last Federal Open Market Committee (FMOC) have been released. The minutes reveal that growth is lower than previously expected and deflation is an increasing concern.  Accordingly, the liquidity added to the economy by QE-2 beginning in November should be significant. This gives both the bond market and the stock market a positive bias short term.

Wednesday, October 6, 2010

Equity Positions Added to Model Portfolios

The chart below clearly illustrates the volatility of the stock market this year. Most of the year we have enjoyed the low volatility uptrend in our bond/income fund positions.  I added a couple small equity positions to our model portfolios on Wednesday. While I have turned bullish on stocks near-term, we need to realize that these equity positions are going to be subject to larger day to day swings. It is the beginning of earnings season; Alcoa will be the first to report on Thursday.  As each major company reports either better than or worse than expected earning we will see the overall market react. I will have protective stops in place, but I need to give these investments enough room to breath.

Monday, October 4, 2010

QE-2 Quantitative Easing and the Market

Helicopter Ben Bernanke is adopting a new round of economic backstopping called "Quantitative Easing". He will sprinkle money around via Treasury bond open market purchases. This activity is the equivalent of printing money out of thin air.

While this is inflationary long-term, intermediate-term it bodes well for the stock market.

I have highlighted QE's effect on the market in the chart below.

(Click on chart to enlarge it for easier viewing)

The Gerritz Letter

The October 1, 2010 issue of The Gerritz Letter has been published. It should be in your email inbox now. If you do not see it, check your junk or spam mail folder and mark it as not junk mail.

If you want to have a copy of The Gerritz Letter delivered to your email inbox monthly click on the link below. It is provided at no charge.