A Good Time To Invest
Is now a good time to invest? Ed Butowsky has some thoughts about that...
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Is now a good time to invest? Ed Butowsky has some thoughts about that...
Read More »
When your looking for a forum to learn and talk about various topics dealing with financial and investments look no further – Money Talk with Ed Butowsky. Ed Butowsky is an internationally recognized expert in the investment wealth management industry. Butowsky has been in the financial services industry for over 25 years. Ed started his career with Morgan Stanley and was a Senior Vice President in private wealth management. In his 18 years at Morgan Stanley, he was the firm’s top producer nationally as well as the first advisor to surpass one billion dollars in assets under management. He was also recognized as a member of both the Chairman’s Club and the Equity Club, a distinction reserved for only the top advisors at the Morgan Stanley.
Through his work with professional athletes, Butowsky was recently featured in the Sports Illustrated article, “How (and Why) Athletes Go Broke.” This article to date is the most popular article in Sports Illustrated history. He is also a frequent guest on CNN, ABC, CBS, NBC, Fox Business News, FOX News Channel, and Bloomberg TV. Butowsky is often seen on “Varney and Co.”, “Willis Report”, “America’s News HQ” as well as “Taking Stock” with Pimm Fox. Ed can be regularly heard on Fox Radio as a Fox radio network analyst, as well as around the country on such shows as “Mad Dog Radio” and “Bloomberg Radio” discussing wealth management, economics and other subjects that are of interest and timely related to the finance/investments world. Most recently, Ed is featured as one of seven financial coaches/experts in the first of its kind online reality series, “The Invested Life”, a nine month series featuring real people facing today’s most common money concerns and their journey to taking control of their finances.
You can learn more about Ed Butowsky by clicking here to go to www.edbutowsky.com.
Earnings and earnings expectation have driven and always will drive stock prices.
First-quarter earnings are now being released. This is a crucial period because companies often give earnings guidance for the full year.
Surprisingly, with about a quarter of the Standard & Poor’s 500 companies reporting, earnings are tracking 6 percent higher than the consensus estimates.
This is impressive, but a deeper look reveals that the majority of the earnings growth comes from one sector – financials. The remaining sectors have accounted for less than 40 percent of the upside.
Although earnings forecasts are ticking higher, investors should be cautious. Analysts are typically too optimistic this time of year in full-year estimates.
There are potential headwinds coming from around the world, such as the European debt crisis, tensions in the Middle East and an economic slowdown in China. Investors should consider a gradual reduction in their stock holdings.
Although the major stock indexes have risen, much of this gain is driving by only a handful of stocks, such as IBM Corp, Google Inc. and Apple Inc. Be cautious right now. The risk-return ratio isn’t favorable.
Ed Butowsky is the managing partner of Chapwood Investment Management and is an internationally recognized expert in the investment wealth management industry for over 25 years. Check out Ed’s discussion topics for a quick tip or two for your own financial well-being in his Media Center or follow Ed Butowsky on Facebook.
Ed Butowsky joins Fox News to explain the claims and numbers released by the labor department and economic analysts.
via March Jobs Report Raises Questions Over Real Status Of Unemployment.
Many investors are unaware that they can sell their bonds before maturity and secure a profit today. Most financial advisers, however, typically avoid any conversation about selling bond investments.
Because of the sluggish economy over the last three years, interest rates have dropped to historically low levels. When rate drop, bond prices rise, which is why investors have large unrealized gains on their bond holdings.
Conversely, when interest rates rise, bond prices drop. Interest rates are starting to creep higher, and as they do investors will see these unrealized gains evaporate.
Most bonds are selling above the par value, which is the amount investors receive at maturity. for example, many $100 par value bonds are currently priced between $104 and $110. As the maturity date gets closer though, the value of these bonds will drop toward their par value.
Millions of dollars in profits are currently embedded in interest-rate-sensitive bonds. Savvy investors should consider selling some of their bond holdings and take the profit while they still can.
Ed Butowsky is the managing partner of Chapwood Investment Management and is an internationally recognized expert in the investment wealth management industry for over 25 years. Check out Ed’s discussion topics for a quick tip or two for your own financial well-being in his Media Center or follow Ed Butowsky on Facebook.
I would like to make a slight change to the famous song “Don’t Worry, Be Happy.”
How about “Do Worry, But Be Happy.” OK, I’ll admit my version doesn’t flow as well, but the point is this: Stock prices have risen to their highest level in years, based on a positive outlook for the U.S. economy and improving corporate earnings. That’s something to be happy about.
For months, I have been cautiously optimistic that stock prices would continue to rise, but I have never felt totally comfortable that the economy, the job market and home prices support that optimism. But stock prices are leading indicators of the economy, and many analysts believe the robust stock market is clearly signaling a strong economic recovery.
I am not convinced of this. Stocks prices rise for many reasons, and I’m not seeing that either the U.S. economy or the global economy support this year’s market gains yet.
Therefore, I suggest that investors secure some of their recent profits and put stop orders underneath most of their holdings to protect against a big sell-off.
I am as happy as the next person about the rising stock market, but I’m not oblivious to the potential dangers. I want to see much stronger economic growth.
Until I do, I will continue to be cautiously optimistic. Bottom line: Take some profits now but be happy.
Ed Butowsky is the managing partner of Chapwood Investment Management and is an internationally recognized expert in the investment wealth management industry for over 25 years. Check out Ed’s discussion topics for a quick tip or two for your own financial well-being in his Media Center or follow Ed Butowsky on Facebook.
Ed Butowsky is the managing partner of Chapwood Investment Management and is an internationally recognized expert in the investment wealth management industry for over 22 years. Check out Ed’s discussion topics for a quick tip or two for your own financial well-being in his Media Center or follow Ed Butowsky on Facebook.
Many investors are wondering why stocks continue to move higher even as the economic picture looks weak.
To understand this, investors need to understand the thinking of professional money managers, who account for 93 percent of the volume of the stock market.
They control the ups and downs of the market that we observe every day. Currently, the consensus among money managers is that stocks are 2.5 times more attractive than bonds.
This position is based on the assumption that, by their calculation, stocks are 15 percent undervalued based on expected earnings over the next year. Bonds, on the other hand, are 20 percent overvalued.
However, if interest rates start to rise and earnings growth slows , the undervaluation of stocks could quickly reverse, and we could see a major sell-off in the stock market.
So be happy that stocks are going higher today, but keep a close eye on earnings and interest rates. They’re your friend today, but tomorrow they might be your enemy.
Ed Butowsky is the managing partner of Chapwood Investment Management and is an internationally recognized expert in the investment wealth management industry for over 22 years. Check out Ed’s discussion topics for a quick tip or two for your own financial well-being in his Media Center or follow Ed Butowsky on Facebook.
The stock market has started 2012 in fine fashion, but investors shouldn’t become too complacent. There’s still plenty to worry about as U.S. companies face four major headwinds in coming months.
First, if Europe drops into a recession, it will seriously erode profits of U.S. companies. More than half of the growth in our top 100 companies comes from outside the United States.
Second, long-term interest rates might rise, which would hurt corporate earnings since corporations fund their operations by issuing bonds. If interest rates rise, that directly affects the bottom line.
Third, rising commodity prices could develop into a major headwind for U.S. manufacturers. Some of the higher costs of raw materials may be passed through to consumers, but not all of it can be. There comes a point where people just won’t pay more, and companies take the hit.
Finally, the ever-escalating tensions with Iran could be a wild card. We don’t import oil from Iran, but a lot of other countries do. A disruption in Iranian oil exports will dramatically push crude oil prices higher, which slows economic growth.
It’s difficult to gauge which, if any, of these events will occur, but savvy investors should at least consider the possibility. I recommend investing in some of the more defensive sectors, including utilities, large-cap dividend-paying companies and master limited partnerships. Avoid long-maturity bonds because their prices will drop if interest rates rise.
I have what I believe are some investment recommendations for the New Year.
These recommendations are for anybody with an investment horizon of two years or longer. Based on the current economic environment and historically low interest rates, investors should strongly favor stocks over bonds.
Stocks are currently 21 percent undervalued based on expected earnings next year. I recommend investing 30 percent of a portfolio in a large-cap stocks that pay dividends, 10 percent in large-cap growth stocks, 15 percent in utilities, 10 percent in emerging markets, 10 percent in small-cap value, 10 percent in gold and silver, and the rest in a other alternatives.
I would recommend selling any bond mutual funds that may be sensitive to rising interest rates. Investors holding fixed-income investments matruing in five years or longer are risking their principal.
Remember that when interest rates rise, longer-maturity bonds are hurt more than shorter-maturity bonds. It is only a matter of time before interest rates spike higher.
I think 2012 will be a good year for domestic stocks but a bad one for bonds. Those afraid of market volatility should remain in money market funds.
Ed Butowsky is the managing partner of Chapwood Investment Management and is an internationally recognized expert in the investment wealth management industry for over 22 years. Check out Ed’s discussion topics for a quick tip or two for your own financial well-being in his Media Center or follow Ed Butowsky on Facebook.
During uncertain economic times, investors typically rush toward U.S. bond funds.
When stock markets are falling, investing in bond funds seems like the safe and wise decision. But prudent investors should hold to a long term perspective.
In the short run, anything can happen, but I am virtually certain that my long-term prediction about inflation will prove correct. As I wrote four weeks ago and as we saw this week, six central banks are beginning to print money to inflate the European economies and save their banking system.
This is a risky strategy, and on thing is certain – printing money will create tremendous inflationary pressures around the world.
As inflation ignites, interest rates will rise and the value of bond funds could drop 10 percent to 15 percent. The exact timing for this is difficult to predict, by my advice for investors is to avoid bond funds.
Those who prefer no risk should defer to a money market in the short run. For long-term investors – as we all should be – I recommend buying both large company stocks that pay dividends and also utility stocks. I like Procter & Gamble Co. and McDonald’s Corp. For utilities, consider the Utilities Select Sector SPDR and Dominion Resources Inc.
Is there a silver lining in all this stock market chaos? In the midst of all this market destruction there is a realignment taking place that is not all that bad. In fact a lot of it is quite good. To the contrary there is nothing good about losing money in your 401k, but what is happening in the economy right now parallels the changes that are going on in politics. What appears to be happening is a decentralization of power, from the well connected insiders to the small independent outsider. The well connected corporate insiders, those that have been gorging themselves on bailouts and special deals, are losing power and capital, while the majority of the small unincorporated business are getting ready to take off.
In all of this, the Tea Party and Congress have pledged themselves to end the bailouts to the big guys while making life easier for the small entrepreneurs. While the small business are the ones that are doing most of the hiring in this country, life is still very tough for small businesses. However, the President appears to still favor his corporate fat cat friends who are hooked on the idea that corporate statism or state corporatism is the best way to manipulate the economy.
It is these ideas that will have to change and may be in the process of doing so. Particularly since Obama’s manipulations have failed to produce the jobs and growth that he promised. So as bad as things are in the economy and the stock markets around the world, could we be on the verge of an economic renascence of sorts in this country? Only time will tell.