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Happy New Year! As the dust settles on
1998, let’s look ahead toward 1999 and beyond. First, the Y2K problem. If you use a computer at home or work, test it to see if it will operate correctly on January 1, 2000, especially if you use a checkbook program or bookkeeping software! We test our nine computers and found that five could not past this test. You will also notice a lot of press coverage from the IRS and other governmental agencies and private companies, (such as banks, brokers, etc.) saying that they are getting Y2K compliant now. It is estimated that businesses, federal, state and local governments will spend up to $1 trillion dollars on correcting this problem. The Securities and Exchange commission has already been to our offices to inspect us to see if we are compliant and what steps we have taken to see what compliance steps our outside vendors, i.e., broker/dealers, mutual fund companies, etc. have taken. Internet and technology stocks are hot! NASDAQ and the Dow Jones Industrial Average have set new highs and will be volatile. Earning at larger companies are slowing as our economy slows, so speculation in smaller companies of the internet are attracting a lot of buyers. Be Careful! It can be a scary ride down. We are not recommending big positions in speculative companies or funds, however speculating with smaller amounts of money may be okay if your taken care of other financial planning prerequisites. Roth IRA’s are not dead. Conversion from regular IRA’s to Roth IRA’s still make since, even without the special tax treatment on the conversion. Calculate your conversion on this website. Chris Cooper |
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Index of Earlier Articles |
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The financial problems of Asia and the political and financial problems of Russia, conbined with concerns that these developments will impact the rest of the world, have contributed greatly to the decline in many financial markets. The US market, as measured by the Dow Jones Industrial Average has dropped 23.9% from its intraday high, which technically signals the beginning of a bear market. The US economy remains strong, with GDP expected at 2.5% this year and next. Inflation is dormant, interest rates are declining further and unemployment is historically low. Both Yeltsin and Clinton are deeply wounded in their respective countries, although for different reasons, yet the summit is an important psychological boost for Russia to remain on a path to capitalism. Over the short term, stocks will remain nervous, yet we will have positive economic news on earnings, housing, and unemployment. These are the primary reasons why we are NOT IN A BEAR MARKET. Thus investors should remain fully invested and be patient. Do not panic. I still see the Dow reaching back above 9300 towards the 10,000 level over the next six months. Buy stocks now if you have the money as this sale will not come again. - C.C. |
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Correction or Recession? What Happened? China is in deflation - profits in Chinese companies are down 50%. Japan is in a recession and has been for some time. The rest of Southeast Asia is in a funk. Russia has currency problems. Has this hurt the USA? In many ways NO! It may have helped our economy to not overheat and cause the FED to raise short term interest rates and caused a bear market in stocks. Instead, we have a slowly rolling economy with a minor pause in a bull market for all stocks and plenty of money to go into the markets. High Tech companies have too much in inventory, with personal computers saturating the market now in 43% of all homes. The last time this happened to a sector of the economy was in the 1950's when Television sets saturated the market at 41%. The gap between prices and wages has created a profit squeeze for US companies. Prices are hard to push up because of global competition. Wages are up due to labor shortages. And for many companies in the S&P 500 there is little or no growth in earnings per share. So where do we put money now? Right where we've been putting money, in good quality US and Foreign stocks and bonds. They're on sale, and prices won't look this good ever again. Low inflation, low interest rates, lower capital gains tax rates and Holding Periods along with reasonable valuations make this a great time to go long. The Dow will break the 9300 barrier again this year and interest rates will fall further. Go For It! - Chris 8/12/98 |
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Chris Cooper Offers Market Assessment and Tax Law Update Stock Performance has been a mixed bag this past
quarter, yet the Standard & Poor's 500 set a new high on June 29th. The S & P 500
index is a broader based index of 500 large cap stocks compared to the Dow Jones 30
Industrials and ofiten is considered a better measure of the stock market. But hurt by the
Asian economic crisis, not all stocks have participated - despite help from lower interest
rates and a strong bond market. Asset allocation pays off in times like these, and that's
why we don't bet the farm in any one sector. |
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Capital Gain Issues, Our Market Outlook & El Nino Capital gain rules have become much more complex since enactment of last year’s major tax reform legislation. But as we slog through a very tough tax season, I hate to complain about it. Capital gains tax problems are good problems. With roaring stock market gains for the past three years, more of you have more capital gain planning issues. The lower capital gains rates and holding periods, while complex, could not have come along at a better time. Fortunately, we recommended some tax planning moves late last year to take advantage of the new rules, which worked out well for many of you. Meanwhile, the outlook is good. While a financial advisor with a crystal ball is liable to end up eating glass, I’ll give you my two-sentence assessment and predictions for the market. Low unemployment, higher wages and increased consumer spending are fueling our economy. Lower interest rates will steer savings into stocks and stock mutual funds, and the Dow Jones Industrials could see 9,300 before year’s end. Come to our upcoming IRS Small Business Tax Workshops: Wednesdays, June 10, July 15, September 23 and October 28. All are at the Federal Building, 234 Summit Street, Room 318, from 9 a.m. until 4:30 p.m. Let’s hope El Niño stays off Wall Street! Chris |
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With ’97 Behind Us, Here’s My View On The Markets Happy New Year, including but not limited to all corporate, calendar and fiscal years! With 1997 behind us, it's time to review all the goings-on of the past year. Stocks have had one of their best years ever, yet many of us concentrate only on the fact that we’re not hitting a new record high in stock indexes. Relax, it's a good market and a good economy. Interest rates on long-term bonds are near the lowest point they’ve been in 24 years. The curve on the graph of interest rates is now flatter, with short-term rate at 5.5% and long rates near 5.9%. This flattening of the yield curve usually indicates a recession is near, yet little evidence of that may appear for a long time, if at all. Corporate earnings may slow their robust growth, with trading partners in Southeast Asia having troubles, but look for continued full employment, which aids growth in consumer spending. Retailers may not have had a Merry Christmas, but competition from mail order, specialty stores and changes in consumer preferences may be the culprits. We are moresophisticated, and retailers, including car dealers are needing to change with the times. Tax season, and with it the changes in the tax laws are upon us. Do make your appointment early for your tax return preparation, as there will be a lot to talk about. |
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