The Philadelphia Fed Index for July showed an unexpected decline in orders for that region’s manufacturing base.  Their “orders gauge” fell to a negative number and the overall economic index fell to 5.1 from a measure of 8 in June, which is the lowest level reported since August of 2009 (last August).  This news took the DOW (DJ-30) down approx. -100 points, but by the end of the afternoon the DOW closed down just -7 points for the day.

Here’s a statistic from today’s Philly Fed information that will probably be skipped over on the evening news –

The prices paid index rose, and the prices received index declined.  That’s confirmation of what we have been discussing here at the SMC concerning the overall deflationary environment in which we are finding ourselves.  Even when production costs are increasing, there is currently no pricing power to increase end-user prices.  It’s like pushing on a rope.  Margins are getting squeezed.

BP (British Petroleum) has bounced strongly off its July lows and held strong today on news that their temporary cap of the Deep Horizon well was holding and preventing any oil from emerging into the Gulf.  This was great news, which took energy stocks higher for the day.

There is a lot of fear out there.  We have seen plenty of articles telling people that now is the time to get out of the market.

At the SMC, we believe that now more than ever is the time for people to take responsibility for their own investments and to avoid blindly buying or blindly holding mutual funds.  It’s time for people to learn how to approach the market very selectively, with a “high-powered rifle”.  The Stock Market Companion is their indispensable hunting guide that shows people how, where, what, and when to hunt  and faithfully attempts to keep them from getting lost or hurt in the storm.  With the help of the SMC, they can learn to trust themselves to manage a portion of their own money and increase that portion over time as their confidence increases.

If you are a mutual fund holder, we would suggest that you ask yourself – “Is the market likely to go significantly higher from here, such that it is wise for me to continue to leave my money at risk to the broader market?”   If you believe that the markets are going to go higher, what would be the catalysts?  If you believe that the markets are going lower, what are the catalysts?

Dr. David Swensen, who was in charge of Yale University’s endowment and grew it significantly has written, “The mutual fund industry is not a investment management industry, it is a marketing industry.”  He writes that there is a irreconcilable conflict in the mutual fund industry between the profit motive and fiduciary responsibility. 

At the SMC, we’ve known this a very long time and have focused on learning how to successfully grow our money on our own.  That’s where our +640% return from 1995 through to the inception of the SMC came from.  Since inception, the SMC is up +51% on it’s publicized investments (for compliance purposes, we must add that past results is no guarantee of future performance).  We believe that you can do it too.

If Dr. Swensen is correct, then investors need to ask themselves if they want their financial future to rest in the hands of marketing organizations.

A close friend and wise investor long, long ago gave us this piece of sage advice concerning investments – “If you didn’t sell it today, then the act of holding onto it means that – by omission – you purchased it today.”

You must weigh the risks against your own personal risk profile, age, and investment objectives. 

At the SMC we do not and cannot give personal investment advice.

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Please remember – at the Stock Market Companion we do not and cannot give individual investment advice. According to the State of Washington RCW 21.20.005 the Stock Market Companion is not a Registered Financial Advisor and we do not render any advice on the basis of the specific investment situation of a particular individual. This information is for a wide readership and is not intended for any particular individual,  and under no circumstances should our SMC Intraday Update, SMC 15MinuteStocks Market Update or Watchlist be considered an investment recommendation or plan for any specific individual.  By accessing this material, you agree that the Stock Market Companion will not be held liable for any actions taken by a subscriber or other parties.  Please seek the council of a broker or other licensed investment professional for accurate pricing and concerning the suitability of all investments that you may be considering. Disclosure : Please understand that the Stock Market Companion may hold positions in the above mentioned securities.  Based on market related or personal events these positions may change without notice.

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