BIG SURPRISES AWAIT SOME IN THE MARKET
by Mark Scheinbaum
American Reporter Correspondent
Lake Worth, Fla.
LAKE WORTH, Fla., Nov. 28 -- It's that time of the year again -- time to=
try to figure out where the whole shebang is going, and how you can get th= ere first.
Forthwith, then, here are some of my homegrown stock market and investme= nt predictions for the last month of the year, all of which can easily be s= uddenly pushed onto the back burner by more urgent news.
Interest Rates: By March or April of next year, 30-year fixed mo= rtgages will be back near 8%. This is your last chance to refinance. Unles= s you and your CPA can prove otherwise, go for a 15-year-fixed rate and zer= o points, even if your rate is a bit higher. We probably bottomed out on r= ates three weeks ago.
Year-End Rally: We've already had the post Sept. 11th market re= covery. It was a large cap or Blue Chip rally which recovered 20 per cent f= rom this year's lows. Expect a narrow trading range and some big down days = for year's end. Nasdaq stocks, on the other hand, have been propped up arti= ficially with the rising tide of the NYSE. Most four-letter stocks are sti= ll grossly overpriced.
S&P Ratings Play: Buy the November Standard & Poor's Stock Guide= . Highlight any company with an up arrow showing a rare upgrade in credit= ratings to A-minus, A, or A-plus. Any company which can improve its balanc= e sheet in this economy is worth a long-term hold and should be considered = for a core holding.
Good-Bye Funds: For many Americans this will be the second strai= ght year of mutual fund losses, but 1099 tax bills for those funds. Buy the= same portfolios through a flexible premium, tax-deferred, variable annuity= , and stop paying taxes on money you don't use.
Human Bond-age: As Gomer Pyle once said, it's going to be "Surpr= ise, Surrrrpriiiiise!" for holders of some bonds, bond mutual funds,= and listed closed-end bond funds. Unless you have hedged your bond positio= ns with sophisticated derivatives, as interest rates go up, your bond value= will get clobbered. Better some investment grade stocks paying two percent= dividend than throwing more money at fixed coupon bonds. Rule of thumb: a= 12 percent decline in long-term bond portfolio value, for every one percen= t increase in long-term mortgage or interest rates.
Client Gifts: Forget the bottles of booze and butter cookies. Se= nd a check to local -- yes, local -- charities in the name of your clients,= and help the thousands of folks who are suffering a world of hurt this yea= r.
The Anthrax Factor: Someone other than Sen. Ted Kennedy will c= all for a total overhaul of U.S. universal health care. Conservatives will = call it socialism and Liberals will call it a safety net for the nation's f= uture. The huge disparity over anthrax treatment, prophylactic care, invest= igation, monitoring, etc., between elected officials, postal workers, old = ladies, newspaper editors, etc., will highlight the farce of public healthc= are in America.
Consolidation: Look for a record number of combinations, mergers= , acquisitions, and reorganizations in insurance, airlines, oil, gas, fores= t products, retail department stores, and grocery store chains in the next = few months. Only the lean, mean, money machines will survive.
And finally, a media note: Fox News will have to medevac Geraldo Rivera= out of Afghanistan after he is diagnosed with terminal irrelevance. AR Correspondent Mark Scheinbaum parks his crystal ball at Kaplan & Co. = Securities, Boston Stock Exchange, NASD, SIPC in Boca Raton, Fla. where is = chief investment strategist.