The market stalls at record highs

  Stock market averages made another batch of new highs this week only to fall back in what may be buyer exhaustion. If the trend continues, investors may be looking at a 4-5% decline from here. It is too early to tell, because one day does not make a trend. We could easily experience a rebound next week, but I would still consider the present levels of most indexes ripe for a fall. My column last week pointed out that we are now in a “danger zone.” Sure, the markets could continue to grind higher but every additional point just sets us up for an overdue correction. Since all eyes and ears are on Washington, progress on President Trump’s agenda is dictating where the markets will trade. Every television appearance and tweet by President Trump simply adds to investor expectations. At this point, investors expect that tax cuts, a wholesale revamp of rules and regulations, plus a multi-trillion dollar infrastructure spending plan is just around the corner. It is not. For those of us who understand the pace of reform in the nation’s capital, it would be best to take a longer-term approach to Trump’s agenda. It appears, for example, that health care will be the first area our legislatures will be addressing this year. That does not mean that one day soon Congress will vote on a soup-to-nuts replacement of the Affordable Care Act. Instead, expect to see a flurry of piece meal changes over the course of many months. Lawmakers will attempt to address the failings of the present health system without disrupting those who are already...

What happens to your pet after your death?

If you are one of the 70% of the population that considers their pet a member of the family, you should review your estate planning documents. Otherwise, there is a good chance your pet will either end up in the pound, or worse. This hits close to home for many of us. If my wife and I were to die, for example, who would take care of our chocolate lab, Titus? There are few people who we would trust to take care of him. Compounding the problem is the fact that he is eight years old and suffers from arthritis. I discovered that simply putting some instructions in a will was neither legally binding nor particularly useful. Unless we do something different, Titus could be condemned to imprisonment and a life without love. You must understand that legally a dog, cat, horse or any other kind of pet is not considered a human being. They are considered your property. As such, Titus is our “property” and the law states that you can’t leave property to a piece of property. Therefore (until recently and only in some states) your pet can’t be a beneficiary in a will. Your instructions within a will are not enforceable. I might state that Bri (our dog whisperer) gets Titus in the event we pass, but a will cannot instruct Bri to care for the dog, take him to the vets, etc.  Don’t forget, too, that your will is not enacted immediately. All wills have a waiting period, sometimes months, even longer if it is contested.  Who is going to care for your pet in...

Danger Zone

  “Highway to the danger zone Gonna take you Right into the danger zone” Something new is happening to the stock market, it has actually had two negative days in a row. That doesn’t mean much after weeks of gains, but it just may signal a temporary halt to the Trump Rally. My short-term target in this Trump-inspired rally was achieved this week. The benchmark index, the S&P 500, not only reached 2,330 (my target) this week, but went beyond it. The S&P 500 kept on climbing, reaching an intra-day, record-setting high of 2,351.31 on both Wednesday and Thursday. The index has subsequently fallen back but not by much. The Dow, NASDAQ, the small-cap Russell 2000 Index, plus a slew of other averages also reached record highs. Make no mistake, that’s a good thing. Hence forth, any further gains will put us on a highway to what I call the danger zone. Like the movie, “Top Gun,” we can cruise into the danger zone (where most accidents occur), but as Goose and Maverick discovered, one wrong move can send us into a tailspin. Let me make something clear, however, when (not if) this tailspin occurs, your portfolio will come out of this intact and reach even higher highs over the coming months. That is the reason I have been counseling readers to expect a decline–but not try to play it. In this Teflon market, little can dent theses gains. There were rumors, for example, that a $4 billion hedge fund was in trouble. The markets barely moved. Then there was Fed Chairwoman Janet Yellen’s annual Humphrey Hawkins testimony before...

“Watch the gap please”

If you haven’t realized it by now, Medicare has a lot of “gaps” in its coverage. In order to close that gap, various private insurance companies offer plans that cover a lot of out-of-pocket costs—for a price. Bare-bones Medicare coverage can leave you with some steep medical bills. As we discussed in our last column, if you are admitted to the hospital, for example, your first bill will tally $1,216 or more, which is the deductible you pay just for being admitted. After that, you pay 20% of the fee for every doctor visit, lab test, MRI, X-Ray and on and on. Remember, too, that there is no yearly limit for what you may have to pay beyond your basic Medicare Part A and B coverage. Depending on which plan you choose, a Medigap plan will pay some or all of these expenses. Some plans will pay the coinsurance for hospital stays; others could pay for the coinsurance expense for outpatient care. Other plans pay for additional costs like Part A and B deductibles, coinsurance for nursing care, and even emergency care outside of the U.S. As you might expect, the most comprehensive plans have the highest monthly premiums, although once you pay that premium, your insurance company pays everything else. That means you pay nothing for that quarterly medical checkup, that emergency room visit, or admission to the hospital. Here in Massachusetts, you have a guaranteed right to buy any Medigap policy sold in your area, beginning on the first day of the month after turning the age of 65. You do have to be enrolled in Medicare...

Stock markets at historical highs

The bears headed for cover this week as all three U.S. indexes made new, all-time highs. That’s a good sign and augers well for even more upside ahead. Credit goes to President Trump and his tweets once again. This time, his promises to address tax reform within the next few weeks had the Algos (algorithmic computer software traders) hitting the “buy” buttons on their machines. Investors (if there is still such a thing) had been worried that Trump and the GOP would get bogged down in Obamacare repeal and immigration issues. If so, that would be a major distraction and might mean that tax reform and fiscal spending would be pushed back to next year or even later. The tweet seemed to put that story to bed, and the rest was history. Good quarterly earnings have been supporting the over-all market. Expectations have been for a 6% increase in corporate earnings, but that number proved low. Companies have been reporting better than that (7%-plus), but forward guidance has been better than expected. Whether it is Trump or the gathering strength of the economy, business executives are more optimistic about the U.S. economy and their fortunes than they have been in years. Technically speaking, the Dow and the S&P 500 Indexes have established a new trading floor at 20,000 and 2,300. Readers may recall that I am looking at 2,330 as a short-term top in the S&P 500 Index, with the other indexes following suit. The downside, if it occurs, could be in the 5-7% range. Be aware that tagging a short-term top or bottom is notoriously difficult, especially in...