Anchor: Project Economy News this morning, every investor knows it; the stock market kind of walked through a rough start here on 2014.
Anchor: Yeah, and to explain why this has happened is financial expert, Kurt Pearson. Kurt, thanks so much for being here this morning. So fill us in, what’s going on here?
Kurt: Well, the market has been focused on some different – a variety of different topics. One is the emerging market and you combine some of the struggles of the emerging market economies with the Fed tapering which impacts some of those currencies and it begins to give kind of unpleasant taste in the mouth to the stock market – and that’s why – that’s why things have dropped somewhere down about 5 percent for the year so far.
One of the issues that is interesting though is about 2/3 of the SMP 500 Companies are reporting earnings and those have been pretty decent. I think that’s already been baked in the market. I think that was part of the rally we had towards the tail-end of last year so the market is already looking ahead to what is coming and some of those companies that have reported positive earnings have also kind of curtailed some of their positive outlook for the remainder of the year. So there’s a bit of uncertainty.
Anchor: There are some sectors that are doing just fine though, right?
Kurt: Yeah, the healthcare area is still doing pretty well, just mainly because of all the changes related to the Affordable Care Act. Some of the Biotech areas are fine, and then some of the consumer-staples, and consumer-cyclical types of sectors are holding up pretty well. So just like anything, you really have to pay attention and kind of dissect it a little bit for your own portfolio.
Anchor: Any specific recommendations you would have for folks at this point then?
Kurt: Yeah, kind of what I talked about quite a bit last year capturing those profits, if the market gives you a gain, or a profit, make sure that you capture that, re-evaluate other asset classes that might be presenting opportunities. And then last, take a step back and say, “Hey, do I really want my serious money kind of based on the financial headlines of the day or is there a more stable way, you know, to fall back a little bit and end up more predictable, or reliable.” -talking about dividend-oriented place or some other conservative types of ideas.
Anchor: Ok, I hear a lot about emerging markets and the problem – the impact they are having on the global economy, and the US economy.
Kurt: Right. China, in particular has really released some disappointing economic data and so that’s being analyzed. In addition, Argentina’s currency’s had some real problems that at the start of the year here. So we’re looking at some of those markets and because their economies are a bit more fragile, and less developed than the US, and less diverse than the US, then that can be a kind of cracking point, if you will, in the global scheme of things. So that’s why it’s so much in the focus, and so much in the news right now.
Anchor: Very interesting, as always. Thanks so much, Kurt, for being here today. If you have a question for Kurt Pearson you can contact him at Compass Financial the number there; 515-327-1020.