Newsletters - Past Issues

Market Upheaval June 22,2022

The S&P reached official bear market territory last week, albeit closing just above the down 20% benchmark of a bear on Friday. Records are being set in many securities as the ongoing market carnage continues. The Dow is on track to have its longer losing streak in over a century.

The major stock indexes continue to erode, the key word here being “erode” in lieu of an all-out fast crash.

Erode means a continuing disintegration over time. As painful as that is for investors, the next event could be even more so.

As mentioned before in Money Matters, historically, when markets experience a continuing erosion over a prolonged period of time, a capitulation event may need to occur before the fall in stocks comes to an end.

Capitulation is a throw-your-hands-up, toss–out-the-baby kind of sell-off which signals investors as a whole have reached a breaking point where they just sell, regardless of any rhyme or reason.

In light of the brutal daily declines we have seen in the Dow in the last few months which have included more than a 1,000 point drop on May 5^th, a capitulation event could be in the order of a several thousand point drop in the Dow if and when it occurs.

Keep in mind no one can forecast market direction at any time and markets may not necessarily repeat past movements. It is concerning however that an event such as a sell-off of that magnitude is possible.

Prudent money managers and option traders utilize stop loss strategies to limit losses and it is in my opinion that retail mom and pop investors should emulate such methodologies. This is done by lightening up on holdings along the path of a sell off event. In speaking with many investors of late however, many are just painfully sitting on holdings and hoping things get better.

It is true over time, the market has recovered from every set back, although some setbacks hurt balances so bad, it took a long time to recover losses.

No doubt, selling some stocks on the way down raises cash so when the bottom does materialize, there is dry powder to buy stocks at much lower levels. The more severe the crash, the better the prices on stocks will be at the bottom and the higher the yields on dividend paying stocks will go.

Selling also gives the investor at least some peace of mind that something proactive is taking place. Buying stocks at lower prices with raised cash from previous sales also helps recover losses quicker than just riding out the crash fully invested.

Those with cash from selling during the plunge might look back years later and think “thank heaven I had some cash and picked up some great buys in the midst of the carnage”.

Having a plan goes a long way in helping calm nerves during time of market duress. It also can be prudent money management and installs some loss-control machinery and provides a blueprint for how to maneuver during crashes before the event occurs.

Concluding, the time to have a plan is before the markets correct. Calmer heads will then prevail during times of market upset knowing a plan is in place. Like a fire evacuation plan, the time to formulate such plans are not in the midst of crisis.

Voted Best Financial Advisor in Nevada County for a reason. Call me (530) 559 1214

Crash ! Update May 1 2022

CRASH

Friday, April 22, the Dow lost almost 1000 points. We had not seen that bad of a day since 2020 when CoVid hit.

Keep in mind, after that similar day in 2020, the Dow screamed back even higher soon thereafter, so hope springs eternal.

Investors might take heart knowing that bad sell-offs can be followed by equally eye-popping rallies. Not to say the pain is over, as there usually are reasons for massive routs, and this crash is no exception.

The NASDAQ actually started its slow motion crash late in 2021. In my opinion, the sector represented by the NASDAQ simply got too frothy, and it finally reversed as investors took profits.

That was followed by investors finally taking notice, at the start of 2022, of the inflationary forces that had been accelerating for about a year. Consumers likely knew prices were jumping more than usual. You would have had to live on the moon not to notice. But in the market, fear tends to surface all at once, and can come to a head in a horrific crash on any particular but obscure day that no one can predict.

Detailed in numerous Money Matters shows and articles, and shouted from the roof tops on many news media outlets, inflation had been getting worse for months, and it was only a matter of time before the Federal Reserve (FEDS) decided to do something about it. Originally believing it was “transitory” (in their own words), inflation was actually just getting started, and similar to other times in history, the FEDS were late in correctly assessing the severity of the crisis.

FED speak soon hit the newswires, and they warned a reduction in Quantities Easing (Q.E. for short and basically is money printing) was coming. They also revealed an increase in interest rates was to be undertaken. The news prompted the first sell off beginning in January. The market anticipated the usual 1/4% increase we had often seen in the past.

Once that bitter pill was swallowed, the markets somewhat stabilized, only to be rocked again when the FEDS upped the ante and starting talking about 1/2% increases. Investors appeared to shake that off after another market set back, and then the Ukraine problem hit the wires.

The first few weeks of late March and early April offered up some hope with some green numbers bouncing the markets and indeed, many key metrics signaled the worst might be over. The market looked like it had somewhat stabilized until the FEDS once again raised the stakes and mentioned possible 3/4% increases were on the table.

Subsequently, and hence therefore, Friday turned more than ugly. Investors likely saw red in their portfolio balances and probably more red then they have seen in a long, long time.

Keeping in mind no one can predict market movements at any time, we can only guess as to what will happen next. Will we once again wash the bad news down with the elixir of time, and see the markets rebound? Or will the carnage continue and test the March lows once again, which would be another 900 or so Dow points? Could it even go lower?

We won’t know the answer until it is well in the rear view mirror.

One thing is certain. Inflation is bad and getting worse. Ditto for the FEDS interest rate forecasts. Keep in mind, the FEDs haven’t even done anything yet. So goes the effect of interest rate announcements on the market. Sometime the anticipation of the event causes more damage than the event itself.

The key to the whole thing will be how inflation responds to the FEDS actions and whether the FED’s current plan of interest rates increase does the trick, or if even stronger medicine may be needed.

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, SDSU, and California Insurance License #0L34249. His website is moneymanagementradio.com, and was recently voted Best Financial Advisor in Nevada County. (530) 559-1214

Want risk free participation in the markets?

Call me!

(530)559-1214

Update April 30 2022

Greetings

The markets hammered down today in a brutal across the board sell off Friday April 29th. Simply put, there were more sellers than buyers. Investors worldwide fell backwards. Interestingly enough, the hardest hit here was a Wall Street darling: AMAZON.

They posted higher expenses and a reduction in activity, likely a hangover from the huge mail order business they received during the shutdowns. Also hit was Apple, Microsoft, Abbvie (A drug company valued at ¼ of a trillion dollars) and Johnson & Johnson, among a others.

It was not as bad as it looked as had it not been for Amazon, the red we saw would not have been so blood red. Amazon may have a little more bloodletting before I think it will stabilize. It’s coming share split should bode well for some support hopefully.

Little green was to be seen anywhere. All the indexes this month got hammered badly, the worst since 2008 I am told. Many are glad April is over. It was a brutal month for investors globally.

We can thank mostly Washington. Our elected officials think money is free to print up and hand out. What they don’t realize is that spawns complacency, dependence, apathy, and the worst of all it, inflation. Washington got away with money printing for decades without horrible inflation. But in the last year, the money supply (M1) has exploded. (See graph)

Congress and various administrations didn’t believe basic economic theory the money creation causes inflation. But see the huge spike starting in 2020? It started at 4 trillion. Today is 21 trillion. That works out to 17 trillion printed up in a little more than 2 years. I don’t care what economist you talk to. The amount is off the charts by, well, TRILLIONS. If Washington thought they could print up that much and not have inflation, then they are dumber than any of us thought. Even the Federal Reserve, as recently as last year said inflation was “transitory”. Frankly both bodies haven’t a clue.

Well they finally changed their tune a few months back as inflation figures exploded, and continued to worsen. Now they are in a box. They must tighten the money supply this time around (the first time in I don’t know how long) by withdrawing Quantitative Easing (QE) and initiating Quantitative Tightening (QT). This means slowing down (not stopping mind you) printing copious amounts of more free money. They also have to raise interest rates, what I have been warning about for over year. And now with inflation hotter than half a century, they must raise rates A LOT.

Therein lies many problems:

1- Crashing the stock market

2- Crushing the consumers access to cheap borrowed money

3- Crushing housing affordability

4- Making existing revolving debt more expensive (uh oh)

5- And finally, making the debt payments by the U.S. government increase by billions.

Remember, the U.S. owes close to 30 trillion. More if you count debt that is not due today but still due at some point in the future. Increase interest rates not only cost the consumer more in debt payments, it costs the government more as well, and a lot more.

So how do they pay the hundreds of billions in increased interest on trillions of dollars’ worth of debt held worldwide?

Good question.

If they don’t have it (which they don’t), they have to borrow it (and increase even more what they owe to just pay the interest). They could tax it from you and I (which, with massive inflation, few could afford more money out the door) or print it, which is the problem in the first place.

So here we find ourselves today.

In the box the FED made.

So now to the markets: The markets realize some severe increases in the interest rate is coming. Repeated and egregious. The tightening of money spigot shuts off the feeding tube to Wall Street banks, investors, consumers and businesses alike. This tanks the market and hammers the consumer’s ability to spend. A double whammy.

The FED’s will then resort back to the only tool they have. They will give in, lower rates again (a cycle that they have repeated many times before) and then round and round we go. They will go back to more printing due to public pressure, and the whole thing starts over again.

I don’t believe the FEDS have the guts to do what needs to be done, which is reset the `system` and allow a horrendous depression to accomplish that. It’s the medicine we need, but it will taste more than awful and one quarter of the way thru, the public outcry would be ear shattering.

Finally, tying it all in to you and I, inflation is here to stay. It may back off as the economy spirals into recession (we got our first negative reading yesterday. U.S. GDP actually FELL 1.4 %), but long term it is here to stay.

Two quarters of negative readings is a definition of recession. Just saying.

Since right now the markets are digesting the coming drastic interest rate increases (courtesy of the Federal Reserve for not seeing it earlier like some us did and wrote about and therefore waiting until inflation got out of control), the selling continues.

That said, with bad inflation, I mean real bad inflation, which is what is coming, historically the place to be is in stocks.

Not necessarily high multiple (expensive growth stocks) but more like solid companies that pay investors to hold them (dividends) and that increase them every year. (See notes at end of email).

Certainly the bank pays us little to nothing. Real estate is ok, but with recession, people stop paying rent and taxes and maintenance skyrockets. Additionally, as rates increase, home mortgages become more expensive and then you can’t sell it even if you wanted to. (Think the foreclosure environment of 2008/09).

Today, with the selloff of Amazon, and other growth stocks (stocks that traditionally don’t pay dividends but instead use their profits to grow), means the market may be more and more turning to the value of dividend payers.

Like a house rental, you get your rent checks (in the form of dividends) without the tenant, the maintenance, the illiquidity, selling commissions, taxes and whatever else makes up being a landlord. Not to mention the possibility of another RENT MORATORIUM! There is not a divided moratorium!

And like a rental home, sometimes they drop in value, but as long as you’re getting your rent (dividends), you don’t look up the value of the rental every day and say “geez, I lost money today”. Keep that mindset when holding dividend stocks. Balances may move but we will get our checks if the companies keep true to their track records. And if so, we get more every year.

Concluding, the selling may not be over. No one knows. And yes, I feel your pain. I know it all too well as I have been doing this 40 something years. But it is what it is. Right now, many investors have not sold thing and have given back 5 years or more of gains and still going down.

Not us. Know that we have been selling for weeks, even months, and may continue to do so should we see more erosion.

At some point this will end. But I cannot promise you when and how much farther it will go.

That said, please re-read the annuity mentioned again at the end of this email.

This is what I have been recommending for months now, and more so in the last month. It is because I do not know (nor does anyone) know if it stops tomorrow or goes down similar to what the March 2020 CoVid crash did (down 38% in 15 trading days), or like 2008/19 (down 50%) or similar to the dot com crash (down 80%).

Hey, it can happen.

Those that went to into an annuity already have made safe that portion of their nest egg. They are already out of stocks. More are doing it now and I am selling stocks for those funds as well in their accounts. One less worry for them.

Annuity equals: No more red, no falling balances, PARTIAL participation in market rallies possible, and principal protected. Then we take the remainder and aim for an aggressive stance to attempt to make that portion act as if the entire portion is in the market. With less at risk, we can go for higher returns as we have reduced risk in entire portfolio. And remember, this annuity allows you to take out 10% a year, so we can take money OUT if the markets eventually look healthy and long term reasonable. The ability to withdraw 10% every year and go BACK into the market is a great feature and also spreads our risk by buying in over time.

For me, I continue to hold my rental (my dividend payers) knowing my “rent” will increase every year (see notes below), and although I hate seeing my balances go down, I have seen many, many crashes, and lived and prospered through all of them.

Bad crashes have their good in them. Rot is cleared. Novice investors learn lessons (sometimes very harsh and very costly ones), and weak companies are done away with. Best of all, bad crashes are can be followed with stunning and prolonged uptrends. Like plants, once the forest is burned away, new growth explodes into the new light that the destruction brought.

That’s all. Those wanting to move to more cash, I would never go against a client’s wishes, so just message me. I do however, recommend the strategies detailed instead in this letter for a more balanced and conservative approach based on the markets.

Now go enjoy yourself this weekend. Let me worry about the markets. (And unfortunately, I do, a lot!)

“Watching the markets so you don’t have to”

Marc

Disclaimer: This is not a recommendation to buy or sell any securities. May include forward looking statements. Past performance is not a guarantee of future results. No one can predict market movements at any time. Investing involves risk. You can lose money, including total loss of principal. Consult your tax advisor for all income tax related questions. Stop-loss strategies utilize stop orders which turn into market orders, so they may not limit losses. Dividends are not guaranteed and may be cut or eliminated at any time and may not prevent losses. Annuities are not FDIC insured and are insured and guaranteed by the underlying insurance company only. Early withdrawal penalties may apply. Management fees are not allowed once funds are moved to an annuity. Annuities may or may not be suitable for all investors. Indexed funds attempt to track the underlying index but are only a proxy for that index and may or may not track the index exactly.

Special note: For those wishing principal guarantees and possible market upside participation, you may consider a fixed indexed annuity. Purchased annuities have no management fees and are 100% principal protected. These I have found are desired by those that cannot tolerate any losses whatsoever, or are extremely sensitive to any kind of loss. They also will participate (rise in value) if the market (S&P 500) rises between the applicable time periods as set forth in the contract, so they have a minimum guaranteed interest of 7.2% over the life of contract OR you get a portion of the increase in the market. The greater amount of the two is what they guarantee and always 100% guaranteed to get at LEAST all your principal back and a MINIMUM of 7.2% on the entire balance OR the market upside, whichever is GREATER. The best of both worlds. Contact me for details.

(530)559-1214

Marc Cuniberti

Update 4 24 2022

Oh Gosh, another horrible day in the market! Why and when will it end?

Greetings

Friday, April 22, the Dow lost almost 1000 points. We had not seen that bad of a day since 2020 when CoVid hit. It was ugly for sure but these fast rallies and scary falls happen when the world is in turmoil, both economically (inflation) and politically (Ukraine). It is to be expected. Storms tear things up. Yes they do.

Keep in mind, after that similar day in 2020, the Dow screamed back even higher soon thereafter, so hope springs eternal.

The NASDAQ actually started its slow motion crash late in 2021. In my opinion, the sector represented by the NASDAQ simply got too frothy, and it finally reversed as investors took profits.

Subsequently, and hence therefore, Friday turned more than ugly. Investors likely saw red in their portfolio balances and probably more red then they have seen in a long, long time.

We won’t know the answer until it is well in the rear view mirror.

Keep in mind, the FEDs haven’t even done anything yet. So goes the effect of interest rate announcements on the market. Sometime the anticipation of the event causes more damage than the event itself. Buy the rumor, sell the news, or sometimes its sell the rumor, buy the news.

That said, the majority of what we hold are “Aristocratic” dividend payers, which have increased dividends every year for at least 25 years. Some more than 50 years. These tend to be more stable and pay us to hold them. We also hold some select index funds. Roth accounts do hold more “growth stocks” so Roth accounts will likely move more than other accounts. My account holds the same stuff and I am not worried since I have a long term view and know I will earn more every year if their track records are kept intact. As for the growth stocks, most are NASDAQ type stocks whose prices were already obliterated when we bought them. Yes, they could to lower, but we bought them up to 85% off from their previous highs.

I will reiterate again however. Fixed Indexed annuities have a nice window to acquire them and it is when markets sell off. Remember, they cannot go down, only up. If markets go down, you don’t. If markets go UP, your balance rises. So right now I am writing a lot of these as investors, nervous from seeing red, scoop up the opportunity. I highly recommend a select FIA that offer interest guaranteed, and principal guaranteed. The participation in market rallies is another feature. I think of them like a CD that can track market direction instead of just sit there. Now could be the time to acquire some of these.

Concluding, if the markets look to move farther down in concert, we will off an index fund(s) in a stop loss move to look to preserve capital and dry powder for lower prices should they occur. Meanwhile note the payments to you in the form of dividends in your statements as they should be increasing more and more as we have been slowing adding these companies.

Market routs are never fun. But lower prices mean higher yields, and better prices, hence better opportunities. Remember, the interest rates increases are meant to cool an economy that is too hot. Too hot means moving too fast. There are other things causing inflation as well, but consumer demand for goods and services is part of it. Interest rate increases are meant to help an economy get healthy. So in the long run, these increases are good for the markets. But like medicine, sometimes it tastes bad going down.

“Watching the markets so you don’t have to”

Marc

ARTICLE FROM YAHOO

(Why you need an active trader as an advisor in these markets)

Forget the FAANGs. It’s a stock picker’s market now

Investors who have been blindly buying Big Tech stocks got a rude awakening last week after Netflix imploded. But the good news from Tesla proves that some top momentum stocks can still thrive in this rocky market.

The latest results from Tesla (TSLA) and Netflix (NFLX) show how silly it is for investors to buy into themes and memes like the FAANGs, or MT. FAANG, if you want to add Microsoft and Tesla (TSLA) to the quintet of Facebook, Amazon, Apple, Netflix (NFLX) and Google.

This is a stock picker’s market, my CNN Business colleague Paul R. La Monica reports.

“This environment will create an important backdrop for active investing,” said Ken McAtamney, head of William Blair’s global equity team, in a report.

One of the biggest mistakes that an investor can make is assuming that all stocks in a certain sector should rise and fall in tandem. That’s an overly simplistic, binary view of the world.

Instead, investors need to do their homework and find companies with strong business models and healthy fundamentals.

“Not all businesses are created equally,” said Paul Moroz, chief investment officer with Mawer Investment Management.

The Big Tech leaders of the Nasdaq are a broad and diverse group. That’s why investors shouldn’t assume that Netflix’s problems are bad for the rest of the tech sector, or that Tesla’s good news gives traders the all clear sign to buy every surging stock in sight.

“First quarter results so far highlight our view that investors need to be selective,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a report last week.

By Anneken Tappe, CNN Business

Published 7:44 AM EDT, Sun April 24, 2022

Special note: For those wishing principal guarantees and possible market upside participation, you may consider a fixed indexed annuity. Purchased annuities have no management fees and are 100% principal protected. These I have found are desired by those that cannot tolerate any losses whatsoever, or are extremely sensitive to any kind of loss. They also will participate (rise in value) if the market (S&P 500) rises between the applicable time periods as set forth in the contract, so they have a minimum guaranteed interest of 7.2% over the life of contract OR you get a portion of the increase in the market. The greater amount of the two is what they guarantee and always 100% guaranteed to get at LEAST all your principal back and a MINIMUM of 7.2% on the entire balance OR the market upside, whichever is GREATER. The best of both worlds. Contact me for details.

Inflation conflagration ! Update April 18 2022

Are you kidding me?

Hello Money Matters fans,

The government measures many versions of inflation. Some argue that the different versions exist so the administration of the day can then dig up whenever version propagates the desired political spin at the time. I am not picking on the current administration mind you, as they all do it, and seemingly, a new version is dug up every week to better fit the problems of the day.

The different types of inflation consist of various looks and adjustments, and I have covered many examples in the past here on Money Matters, both in print and on the radio show. The latest statistics on inflation that has made me more than concerned is the Producer Price Index (known as the PPI).

Whereas as the Consumer Price Index (CPI) measures major changes in price on a variety of goods and services as it pertains to the consumer, the PPI takes a look at prices further up the food chain, which are the price changes experienced by those producing the goods we use.

As such, inflationary increases at the producer level tells us not only what prices are increasing and at what rate, but what prices will do in the future as well. Since an increase in producer prices will have to be passed on to the consumer in the form of higher prices when goods hit store shelves, a persistent and severe PPI reading means things are getting worse not better, and will continue to worsen.

The latest configures measuring year over year, March 2021 to March 2022, reflect the worst increase on record, likely dating back some 250 years or more (records are spotty the further back we go).

The inflation rate at the PPI level came in an eye-popping 11.2%. Producer price index figures started accelerating about a year ago, and are getting worse with each subsequent month, with March 2022 being the worst yet.

The causes are many, including but not limited to egregious money printing by central banks everywhere to address the CoVid shutdowns, a reduction in oil drilling due to pressure from environmentalists, the war in Ukraine, and a shortage of available workers, all of which are affecting supply chains and commodity costs.

Since monetary inflation (government deficit spending) is the most potent contributor to rising prices, and with even more spending proposals working their way through Washington, this analyst once again warns inflation is about to get a whole lot worse.

No doubt, the American consumer is about to get a dose of inflation unparalleled in modern history, and the Feds (U.S. Federal Reserve) is going to have to take some pretty drastic steps to quell it.

Since the inflationary fires are already lit and the inflationary inferno I and many other analysts have been warning about is about to explode, unfortunately for us, the Feds, as usual, are already well behind the eight ball.

Since their track record has and continues to be woefully lacking in foresight, by the time they realize what is coming and how severe it will be, it will be a full-fledged inflationary conflagration, with dire circumstances for markets and our economy.

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1997, SDSU, and California Insurance License #0L34249. His website is moneymanagementradio.com, and was recently voted Best Financial Advisor in Nevada County. (530) 559-1214

Referrals Welcome and appreciated

Have them call me at (530) 559 -1214

Fire Insurance

Medicare

Life Insurance

Guaranteed Annuities and more

more...