Thursday, December 31, 2009

Happy New Year!

Tonight we say goodbye to 2009 and hello to 2010. Time to close out another year and look forward to the new year ahead. For most investors, this year has ended on a high note, as the stock markets have recovered nicely from the market lows in March. Most people could have never expected such a good recovery from the disappointment of the markets in 2008 and early 2009. One again, the market shows that no one can predict exactly what the market will do. There are just too many variables. Sure some smart folks seem to put together a formula for success that works for a while, but inevitably, it falls apart. To be sure, if there was one sound and perfect investment strategy that worked all the time and for all people, then don't you think we all would be doing it? And who ever wrote that book would be a multi-millionaire! But then again, that is what makes investing challenging and rewarding. Accepting that there is no one right strategy. Every person has to develop a plan for him or herself and constantly monitor it and make changes when necessary. Everyone has a stock they wish they would have bought, or a stock or fund they wish they would have sold way before they did. Forget it and move on! Don't let your emotions get in your way and spoil the virtues of investing in the stock markets. Know your limitations and don't be afraid to ask for help when you need it. Let's finish the year on a high note and look forward to the bull continuing to lead the way in 2010.

Tuesday, December 29, 2009

Tax Deductions

With this being the last week of the year, some people may be looking for some last minute, year end tax deductions. For people who itemize their deductions on their income taxes, making last minute charitable contributions could help and make some needy organizations just a little bit happier during this season of giving. Check with the organization to make sure your contribution will be counted for this year before you make that donation! For those who may be expecting to make more money next year, you can pay some of your January expenses early and write them off your taxes for 2009. A good example is paying your January home mortgage payment early. That could help raise your mortgage interest deduction. Just remember that next year you will only make 11 payments unless you keep the strategy up and make an extra payment or two next year.
For those concerned with last minute IRA and HSA deductions, don't worry. You have until April 15th to make contributions for 2009. As always, please consult your tax advisor for specific tax ideas or questions relating to your own unique situation.

Wednesday, December 23, 2009

Merry Christmas

The staff and writers of "Thoughts from Scott", would like to take time to wish all of our loyal blog readers a very, Merry Christmas, this holiday season. This year has been a very interesting one in the stock markets as we have been on a roller coaster ride from the beginning of the year as we watched the market trend down to the lows in March, only to rebound and recover gains that most people would have never thought possible. Investors and market watchers breathed a sigh of relief as they saw their portfolios and retirement accounts recover much of the losses from 2008 and early 2009. Most are optimistic of a continued bull market into 2010, although one should not expect the same percentage gains next year. The one downside for some is the continued low interest rate environment which continues to plague CD buyers and money market savers across the nation. Those expecting inflation to push the Fed to begin to raise rates, have been frustrated as they renew their CD's into lower and lower rates. Some have decided to try bonds for higher yields, or dip their toes back into the equity markets for high quality, dividend paying stocks. So let the Santa Claus rally continue and let's enjoy the fruits of the season!

Sunday, December 20, 2009

Tax Harvesting

This is the time of year when people may be looking over their portfolios for possible changes looking ahead to next year. Some people might be re-balancing by selling some of their stock positions and buying bonds. Others may be selling corporate bonds and buying real estate investments. For those looking ahead to tax time, one strategy is to sell some of your losers to take advantage of the tax loss you are allowed to deduct off your taxes. You are generally allowed to deduct up to $3000 in losses against your income. Any amount over this can be carried forward to future years if needed. As always, consult a tax professional to see what the best strategy is for you. Once you have identified an investment position to sell, you can look for new positions to buy so you can stay invested in the market. One thing to keep in mind is this, you cannot repurchase the same investment you just sold, for 30 days. This is known as the wash rule. Once 30 days has passed you can repurchase it if you want, but most people just find a similar stock or fund to do the job. Take advantage of the tax laws and rules to help you make some lemonade out of your lemons. It also helps to not get too emotionally attached to your investments. Remember, you want to build an investment portfolio that has a strategy, not a scrapbook of stock names that are blast's from the past! The more emotion you can take out of investing, the better off you'll be in the long run!

Tuesday, December 15, 2009

Buy low, buy now

ExxonMobil's purchase of XTO Energy, a leading US natural gas producer, could signal a good time to buy in to natural gas at the lows. Unlike most other stocks, natural gas stocks have not had a good year. Clean energy proponents and alternative fuel cheerleaders see natural gas as a big part of the equation going forward, but not too many people have bought into the idea as an investment strategy yet. So if you agree with the age old adage of "buy low, sell high" when it comes to investments, now might be the time to take a look at natural gas. Not sure what company to buy? Take a look at ETF's. One way to buy natural gas is with the UNG exchange traded fund. It's currently trading just below $10/share, but is up over 8% in the past month, from a low of $8.50/share. If there was ever something out there to prove the "buy low, sell high" strategy, this could be your chance! Just don't bet the (wind) farm!

Saturday, December 12, 2009

Santa Claus rally

This is the time of the year when people are preparing for the Christmas holidays and for the end of the year. For stock market watchers, it's a time to reflect on where the market has been and where some think it is going in the future. Many people want to know if this is a good time to be invested in the market or if it's time to get out. One interesting thing about this time of year, is the notion of the "Santa Claus rally". It is a widely held truism that the stock markets out-perform during the last two weeks of December. Over the years the time frame has varied from a two week period to the whole month of December, and some even let it overlap into January. As with any statistics, there are times when it performs well and times when it does not, but the Santa Claus rally, does seem to exist most of the time. Consider this tidbit from Steven Halpern's website article:

"Whatever the reason, in the last 40 years Santa has rarely missed a beat. By looking at the performance of the S&P 500 from November 20 through January 31 each year, we note that...

  • Excluding bear markets, only four years resulted in a loss for the period. The biggest decline was in 2002-2003, when a retest of the major bear market bottom caused the Index to drop 6.4%.
  • Considering the entire 80 years of S&P 500 data, only two years saw a decline of greater than 10%. That occurred in the middle of major bear markets in 1931 and 1969.
  • Conversely, a number of years have seen exceptional gains. Ten Santa Claus Rallies out of the past 80 years have produced gains in excess of 10%. Five of those hefty rallies occurred during the dismal stock market decade of the the 1970s.

Now, if you are a long term or "buy and hold" investor, the Santa Claus rally effect doesn't really matter, although most people will be happy when the markets go up. And one wouldn't think that there are too many people who only invest during this time of the year. For most people, the Santa Claus rally is a nice anecdote and provides some interesting small talk at holiday parties and happy hours. My general advice is, the best time to invest is when you have the money.

Monday, December 7, 2009

Goodbye Yellowbrick Road?

After a strong run which surprised even the gold bugs and so-called, "experts", gold prices have finally retreated. With the dollar getting stronger, the price of gold has fallen from a record $1227.50 per oz. to $1143.50 per oz. in just a few days. That's a pretty big drop in a short time and could lead the latecomers to the gold party to think that the party is over. On the other hand, for those who never got into the game, this correction could be a second chance to get in and wait for gold to resume it's upward trend. For those who did get in early, this could also be a good time to take some profits and protect some of their gains. Either way, it should be interesting to watch gold this week as investors decide if the tide is turning against them.

Thursday, December 3, 2009

Twitter Twursday

Lots of stuff in the news, and we don't mean Tiger Woods. GE sells NBC, Bank of America is ready to pay back their bailout money, gold continues to climb, Ben Bernanke is in the hot seat, etc, etc. How will these stories affect the stock market today? Stock futures point to an early bounce. Follow me on Twitter @scottjwheeler as I note trends in the stock markets. Getting ready to buy gold or sell gold? Is oil dead? What's up with those coffee companies? Can Harley Davidson continue to outperform gold this year? Read my 5 most recent tweets below in the right-hand column or go to: and follow me.