In this week’s edition of the Sterling Weekly we take a look at what has been weighing on the mood of the US economy as the stock market pushes towards it historic all time highs.
Weekly Newsletter
Sterling Investment Services publishes the Sterling Weekly newsletter providing our opinion and commentary on market related items of importance’s, the upcoming week’s economic calendar, and our opinion of the major market indices.
Sterling Weekly for the Week of January 28th, 2013
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This week’s edition of the Sterling Weekly includes our 2012 index performance review where take a look at the top performing indices of 2012 as well as those that did not perform as well.
Sterling Weekly for the Week of December 12th, 2012
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Sterling Investment Services looks at the recent market moves since the October 5th high and the possibility of some election based year end tax planning as explaining the recent moves. We have also included our weekly economic calendar.
Sterling Weekly for the Week of October 1st, 2012 – 3rd Quarter Performance Report
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Since the previous edition of the Sterling Weekly, the Dow Jones Industrial Average rose 237.58 points or approximately 1.8% to close at 13,437.13 It has been a busy 6 months since I last published the Sterling Weekly, I am very happy to announce that during the last 6 months, my wife and I saw the birth of our 1st child, a very healthy baby boy that we are very excited to have in our lives. Over the course of that period of time the market has moved slightly higher. However the continued bond buying and quantitative easing policies of the Fed continues to cause me a great deal of concern; specifically that the Fed is creating a financial bubble unlike the world has ever seen before. I have concerns that when this bubble finally bursts there will be negative consequences that are devastating for the world economy.
We saw the end of the 3rd quarter last week. As usual, I like to take a look at the performance of the various sector indices I track and see what the market is telling us. I usually find these results somewhat interesting. I have published the results below for your review as well.
Searching for a Micro-Cap Biotechnology Fund
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We are very pleased to announce that Erik Nelson, President of Sterling Investment Services had the following artilce, ‘Searching for a Micro-Cap Biotechnology Fund’ published in the 2nd Quarter edition of Micro-Cap Review Magazine. We have reprinted the article below for your reading, and a printer friendly copy of is available here.
Sterling Weekly for the Week of April 2nd, 2012 – A Look at 1st Quarter Index Performance Results
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We saw the end of the 1st quarter of the year last week. As usual I like to take a look at the performance of the various sector indices I track and see what the market is telling us. I usually find these results to be somewhat interesting. I have published the results below for your review as well……………..In looking at the results of the 1st quarter 2012, the average index gained 12.21%. Overall a very good performance, but one that we should not expect to be repeated for each of the remaining 3 quarters as that would equate to a 48% plus annualized return. As far as the major market indices are concerned, the Dow Jones Industrial Average was up by 994.48 points or approximately 8.14%, the S&P 500 was higher by 150.87 points or approximately 12%, and the NASDAQ 100, obviously benefiting from the effect of Apple, was higher by 477.44 points or approximately 20.96%………………………..i have stated many times that I believe that Bull Markets are primarily the result of 2 things; the first being new technology, and the second being changes in government regulation. The results of the 1st quarter are pretty well explained by that thesis. The top performing indices were either the result of new technologies, such as the Amex Biotech Index and the various technology indices that were heavily influenced by Apple, Inc. ‘APPL.’ The second set of indices, those influenced by government regulation were the interest rate indices, the TYX, TNX, and FVX. The poor performing indices reflect the same results, rising interest rates is a negative for the Utility industry, and precious metals such as gold and silver. Additionally the beginning of the implementation of Obamacare and its massive amounts of regulation is a negative for the Healthcare related indices.
Sterling Weekly for the Week of March 5th, 2012 – A Look at Bond Prices and Higher Rates
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Regular readers of the Sterling Weekly will recall that I have been voicing my concerns about the Fed’s manipulation of interest rates to abnormally low levels for quite some time. I have expressed my concerns that this is inflationary in nature, and that as a result we could see interest rates rise to levels not seen since the mid to late 1990’s when the 30-Year Bond yielded approximately 7.5%. (Sterling Weekly for September 26th, 2011) I thought it would be a good idea to take a look how an increase in interest rates would affect the price of current government bonds.
As of last Friday March 2nd, the US Government 5-Year Bonds was yielding approximately 0.85%, the 10-Year Bond was yielding approximately 1.99%, and 30-Year Bond was yielding approximately 3.14%. I have said for a very long time that I believe these bond yields are artificially low due to their manipulation by the Federal Reserve. I think that this is causing a bubble in the bond market that could have very disastrous consequence when it finally bursts, as all bubble ultimately do.
I think that it is very realistic to expect that we will see the price of US Government bonds return to their pre-2008 levels at some point in the reasonable future, by this I mean interest rate levels seen…..
Sterling Weekly for February 27th, 2012 – A Look at the Price of Oil
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The price of oil reached a short term high of $113.92 per barrel on April 29th, 2011, and then declined to $76.78 on October 4th, 2011. What is very important about this chart is that if the price of oil closed above $113.92 per barrel, then it will have completed a “cup pattern” with a measured move to $151.06 per barrel. I consider cup patterns to be very highly reliable, and very predictable. On Friday the price of wholesale gasoline closed at $3.15 per gallon. This is a ratio of just under 35 to 1 between the price of oil and gasoline. Applying that ratio to $150 per barrel oil and you get an estimated wholesale gasoline of approximately $4.28 per gallon. That would most likely put the price at the pump close to….
Sterling Weekly for the Week of February 13th, 2012 – 2011 Index Performance Results
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I was fairly surprised when I looked at the performance results of the various indices I track. Sterling Investment Services tracks roughly 39 various sector indices. Of these indices, 3 are interest rate indices that track the movement of interest rates, and the other 36 indices are stock based indices that either track the broad market or are designed to track specific market sectors.
The 3 interest rate indices I track obviously did well as the Fed manipulated interest lower, sending bond prices higher in the process. It is tough to get any message from a manipulated market. However, what I do see is a bubble forming that I am very concerned will be far more damaging to the US and world economy when it bursts than the housing bubble was when it burst. Of the 36 stock indices I track, 13 managed to show positive gains for 2011, however it should be noted that
Sterling Weekly for the Week of October 17th, 2011 – Time to Start the Inflation Watch
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Time to Start the Inflation Watch: The economy continues to be a major topic of conversation for most of the country. The European Debt Crisis continues to be a major talking point and news item. However, I have serious concerns that the European Crisis while very severe in nature is also distracting us from our own economic problems here in the United States. Our economy has stagnated as a businesses adopt a defensive posture over concerns about rising regulatory costs and general uncertainty. Additonally you do not need to talk to anyone in business for too long before they start to voice concerns about rising inflation as a result of the sky-high budget deficits being run by the Federal government……In case you think I am barking at moon or crying wolf, I took a look at our current expenses and compared them to five years ago. In our household we have seen a 40% increse in our….