Tapering talk, disbelief in rally leads big move out of equities
Domestic stock funds
last week suffered their worst week since before the
financial crisis as
investors' fears over the
Federal Reserve's plan
to
cut its asset- purchasing program spread
to stocks.
More than $14 billion
was
pulled out of U.S.
stock funds this
week,
the most in
a single
week since June 2008,
according to Bank of America Merrill Lynch.
“The retail public still doesn't trust this rally,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates Inc.
“They think you need a feel-good
environment to
get
a secular
rally but the reality is
when it's a feel-good environment,
you're usually late to the game.”
The S&P 500 is down almost 3% since the
beginning of August, although it's still up
more
than
15% year-to-date.
The pullback gained
steam, ironically,
after a report that initial jobless claims had fallen to
their lowest level since
before the financial crisis. That fit in
perfectly with the consensus opinion that the Fed
would begin to
taper its asset purchases at its September meeting.
The uncertainty surrounding tapering, both
how it would work and
when it would start, sent the interest rate of the
10-year U.S. Treasury to 2.89%, its highest level since August 2011.
The rise in interest rates sent bond investors rushing to
the
exits, pulling out more than $30 billion
month-to-date
through
Aug. 19.
Greg Sarian,
managing director at Sarian
Group, a private wealth
team at HighTower Advisors LLC, started
talking to
his clients
about moving into cash in
late July.
“When the
market hit new highs in July, we
thought it was time
to pick the fruit while
it's ripe,”
he said. “It's
been a good year.
Clients are
much more aware
of
protecting profits than
ever before.”
Strategists
agree
there may
not be a lot of good
news coming from the
stock market in the short
term.
With earnings
season
over, sequestration starting to take
a bite out of economic statistics, a jump in
interest rates,
and concerns coming from the emerging markets, there's not a lot to drive
the
market forward anytime soon.
“There is a dearth of catalysts right now,” Mr. Saut said.
“The fact of the matter is,
the market's internal energy is gone
near-term.”Scott Wren, a
senior equity strategist at Wells Fargo
Advisors
LLC, agrees there's
not a
lot to get excited about over the next few
months.“We'd
argue
the gains are in for the year,”
he said.
Want to grab the
attention of prospects and clients
alike? Make
big
sales by moving
money currently held in
CDs
and Money Markets? Ask prospects if you
could show them:
• A way to protect your principal 100%
• Yet, participate in the
upside of the market
• That would pay you
a GUARANTEED income for the rest of your life
• Would Create a Legacy for your children
• Would pay you
extra
money if you
became confined to
a hospital, hospice,
or Nursing Home
• Would give you
a high
level of liquidity
Would that be something we should
discuss?
With all this
money sitting on the sidelines and fleeing the market NOW
might be the
best time to
be selling Fixed
Indexed Annuities.
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