Fagan Associates Commentary

U.S. Equities look to open somewhat lower this morning in response to voting results in Greece and France in which voters decididly pulled the levers for those candidates favoring policies of taxing and spending at a greater pace (stimulus) rather than the existing path of austerity.  Stock investors are envisioning an unwinding of the European Union, contagaion, as well as inflationary tendencies from devalution in Europe.  Time will tell.  However, it appears as if the voters in these two countries would rather let Germany pay for their excesses rather than stand on their own two feet.

We think that U.S. Equities will remain choppy at least through Q2 and Q3, but do not see more than a few percentage points of additional downside at this point.  After a couple days of selling, perhaps global investors will put some money to work in the United States as it appears to be the best house in an otherwise so-so neighborhood.  Stay on your toes.  Keep some powder dry.

Sargeant Schultz from Hogan’s Heroes was priceless. He saw nothing, knew nothing and heard nothing. Sometimes in the investment world it pays to hear and see nothing. Knowing nothing now that’s another story altogether.

Guest after guest appear on CNBC and rarely do hosts qualify their knowledge level. They are left to make recommendations in a vacuum. “ I like this, sell that, “schnitzel” that company” are frequently part of the conversation. If they are friends of the show, perhaps they will get a pat on the back for some former CALL. Business shows dole out compliments (but never criticism) like Oprah hosting Tom Cruise.
Apple (before today) had been under attack. The stock declined some 90 points quicker than you can pull up an ap on their new IPhone (assuming that you have Verizon service anyway). Analysts lined up to pontiificate on the demise of Apple and they were WRONG.
It’s easy to be wrong in this business -there’s nothing criminal about it - it happens to us.  What is wrong is to create for readers, listeners and vieweres the facade that you are never wrong. Viewers assume guests’ recommendations are infallible until they choose to implement one of those “calls”.
A reminder - do your own research and evaluate your own situation - tax, investement objectives and goals before using anyones’  stock or bond ideas (and that includes Fagan Assocaites)

Good afternoon.  After a rough day and indeed a rough few sessions in the stock market, investors may be asking themselves if this fabulous bull run off the early March 2009 lows is over.  To that we say, most likely not.  With interest rates at or near multi-decade lows, an accommodative monetary policy, reasonable valuations, earnings growth and VERY tame inflation, we think THIS IS A PAUSE TO REFRESH rather than the beginning of something more than a 5%-8% pullback.

However, it is arrogant to believe you KNOW what is going to happen.  Things may change.  There is a good chance that Presidential Politics may get very ugly over the next few months and should stocks pay too much heed to the rhetoric, we could be in for a very choppy market.

Therefore, the “weather” market forecast for now is clouds giving way to sun over the next few days (meaning this correction should bottom over the next week or two and no more than a few more percentage point drop) at best and at worst some additional lasting choppiness.  We would be inclined to use this pullback to add to long-term secular growth stories.

Good morning.  After the spectacular first quarter investors in the U.S. stock market have experienced, we would expect a bit of profit taking at the beginning of the second quarter as investors will begin to worry about a slowing corporate earnings outlook as well as the upcoming Payroll Report to be released by the U.S. Labor Department on Friday, April 6th.  However, at this time we believe that any selloff will be shallow (five percent or less) and therefore buyable.

Regarding fixed income, keep your average maturities less than ten years and look for opportunities in corporates, government agencies and high yielding corporates.  It is late in the game in the bond bull market and thus, caution is the better part of valor.

For the time being Dow 13,000 and NASDAQ 3,000 are providing important points of resistance (ceilings) to stocks as investors turn  their attention from the potential RETURN of their portfolios to the RISK they are assuming.  At this point in time, we see this pullback as a shallow pause to refresh.  We can point to several different risks around the globe as the catalyst for this pullback, including the possibility of an economic slowdown in China, the potential for military conflagration between Israel and Iran, continued problems with Greek debt, rising gas prices and the near-certain in the ratcheting-up of the  political rhetoric as we close in on our Presidential Elections in November.

Farmland in various MidWestern states was 22% more expensive at the end of 2011 than it was at the end of the 2010.
Frequently, we view the American economy as bi-coastal with the focus on New York, California and Florida. Most of the “really” good things happening in the US are in the mddile of the country, Farming, mining, energy and even auto manufacturers have been at worst stable and mostly thriving. For this reason, investors should consider companies in these sectos. Names such as Monsanto, Deere, Emerson Electric, Ford, Conoco all make sense for the long term. As with all investments, investors should measure how these companies might fit into their overall investment game plan.

Not so fast.
Doesn’t it seem like days (not months) that we were mired in the frenzied days of August. The market plunging, Europe crumbling and optimism nowhere to be found. The market was significantly lower and it was a GREAT time to buy. Or as we encouraged numerous clients “not a great time to sell”.
In 6 short weeks of 2012, the S&P 500 is up more than 7%. We encourage investors to stay the course with their assets allocated appropriately. We believe that stocks are the best avenue for growth over the coming 5 years but as we have frequently stated short-term movement is anyone’s guess.

Good Morning and congratulations to the New York Football Giants, Winners of Super Bowl XLVI!

On a business note and regarding the situation with Greek debt, a heard a commentator on a business network state (and I’m paraphrasing) that when an issue is around for awhile, it tends to be priced into the markets.  We agree completely.  Furthermore, at this time we believe that there will be more “knowns” than “unknowns” impacting stocks and bonds during 2012 as compared to 2011.  These knowns should lead to higher returns this year, as again compared to the prior.  At this time we will hold to our earlier forecast of upper single-digit total returns this year.  That said, the stock market has run more than 20% over the past five months or so and is due a warranted and beneficial breather. 

Regarding fixed income (bonds), stay with corporates and stay with intermediate bonds.

Good Morning!  Stocks moved higher last week, thus adding to gains already recorded during January and look to open higher this morning.  After the robust gains recorded during the fourth quarter of 2011, one would think that they would pull back during January.  This did not happen and that would be considered bullish.  All that said, we are entering earnings season.  We will see if the stock market can hold these gains through this period.  If so, then the balance of Q1 should be positive. 

Hard to find value on the fixed income (bond) side.  Rather than using all conventional bonds, we would prefer, adding some high dividend paying common and preferred stocks along with bonds.

By the way, wiht all the snow, sleet and freezing rain out there, at least here in the Capital District, drive safely.  Can’t believe it’s January 17th already.  Winter will be over before we know it.

Good morning.  Stocks shot higher this past week as investors focused on the good economic news that was released pertaining to the United States while ignoring the longer-term problems faced by the European Community and even somewhat here in the U.S.  We believe, although ripe for a pullback, stocks should retain their mid-term upward bias as indeed the economic news is getting better for U.S. citizens and we are continuing to work through weakness in the labor and housing markets.  Look to buy on weakness.

Regarding fixed income (bonds), we continue to like high-grade corporate bonds and U.S. government agency bonds with a 5-10 year maturity.

Happy New Year!