Investing Guide at Deep Blue Group Publications LLC: Jakarta Tops League Table of Emerging World Cities

Jakarta. New York and London remain the world’s most global cities, while select emerging-market cities led by Jakarta, Manila and Addis Ababa strengthened their ability to challenge global leaders in the next 10 to 20 years, according to this year’s Global Cities Index issued by management consulting firm A.T. Kearney.

The 2014 edition of the Global Cities Index also includes the Emerging Cities Outlook 2014, a forward-looking measurement of emerging cities with the potential to improve their global standing in the next few decades. Jakarta ranked first among 35 cities most likely to move up the rankings.

John Kurtz, A.T. Kearney’s head of Asia Pacific and president director of A.T. Kearney Indonesia, explained that “the study now confirms what so many Jakarta residents know; the city has its share of challenges but has become truly global in a variety of ways and is now attracting talent from both the Indonesian and global business and cultural communities. Recent leadership by Governor Joko Widodo and Deputy Governor Basuki Tjahaja Purnama has lent further credibility and optimism to the picture and it is very clear that Jakarta is on the rise.”

The Jakarta governor is running for president this year and polls suggest he will emerge victorious, being more popular than other serious contenders like the Great Indonesia Movement Party’s (Gerindra) Prabowo Subianto and the Golkar Party’s Aburizal Bakrie. Joko’s party, the Indonesian Democratic Party of Struggle (PDI-P), appears to have won Wednesday’s legislative election convincingly, although not by as big a margin as some expected.

The Global Cities Index, conducted every two years since 2008, measures global engagement for 84 cities on every continent, examining how globally engaged each city is across 26 metrics in five dimensions — business activity, human capital, information exchange, cultural experience and political engagement. This provides a holistic look at what differentiates cities in generating, attracting and retaining global capital, people and ideas.

Mike Hales, A.T. Kearney partner and study co-leader, said that “corporate executives use the information in the Global Cities Index to help them choose the most suitable locations for regional headquarters, research centers and operation hubs. City mayors and urban economic development planners will find insights to inform their improvement plans and investment decisions to better compete in the global economy and against other global cities.”

The Emerging Cities Outlook measures the likelihood that a city will improve its global standing over the next 10 to 20 years. It focuses on the leading indicators of business activity, human capital and innovation.

According to Andres Mendoza Pena, A.T. Kearney principal and co-author of the report, “as physical distances become less relevant and global competition intensifies, cities in low- and middle-income countries will increasingly jockey for position with one another and with cities in higher-income countries.”

Jakarta’s strong showing on the ECO signals that select cities in numerous countries throughout eastern Asia are laying solid groundwork to become global cities and eventually raise their ranking in the Global Cities Index.

Kurtz said that Jakarta was the most likely city worldwide to advance its global position, driven by significant increases across the leading indicators. In 2014, Jakarta showed the greatest improvement in information exchange. The city is an increasingly conducive setting for doing business, anchored by a high GDP growth rate. Human capital, especially in the health care evolution metric, presents a major opportunity for Jakarta to exploit, he said.

In order to capitalize on this potential, according to Kurtz, Jakarta must provide greater transparency in doing business, revamp the regulations in setting up businesses, and be more open to the new global business environment.

Tangible examples that would favorably impact Jakarta could include acceleration of MRT development, better public transportation to support workers to commute between Jakarta and satellite cities, development of the new port to increase throughput of export and import, as well as integration of the infrastructure with central business districts and industrial parks.

Jakarta would also need to improve the presence of international education, an aspect where it still lags behind other cities.

Consistent with previous editions of the Global Cities Index, New York, London, Paris and Tokyo lead the ranking. Among the top 20 cities, seven are in the Asia-Pacific region (Tokyo, Hong Kong, Beijing, Singapore, Seoul, Sydney and Shanghai), seven are in Europe (London, Paris, Brussels, Madrid, Vienna, Moscow and Berlin), and six are in the Americas (New York, Los Angeles, Chicago, Washington D.C., Toronto and Buenos Aires).

The above article is a repost from Jakarta Globe.


Osaka City Plans Subway Operator Initial Offering to Chase Tokyo

Osaka, Japan’s third-biggest metropolis, plans to sell the city’s 81-year-old subway operator in an initial public offering to lure private investment after ceding ground to Tokyo.

Osaka plans to privatize the operations, which could be valued at more than 600 billion yen ($5.9 billion), in the next few years as part of efforts to become a global metropolis, prefectural Governor Ichiro Matsui said in an April 8 interview. It may also weigh a sale to private investors, he said.

Local governments in Osaka prefecture, near the ancient capital of Kyoto and home to electronics makers Panasonic Corp. and Sharp Corp., are stepping up sales of public assets to cut debt. Osaka is privatizing state-run companies and talking to potential investors including Caesars Entertainment Corp. on a planned $4.9 billion casino resort as it seeks to overcome a declining population.

“I am ready for the subway sale any time,” said Matsui, 50, who also is secretary-general of the Japan Restoration Party. “Osaka city assembly members should all have a sense of urgency to move this economic stimulus forward, as Osaka needs to bring in economic revival.”

A proposal to privatize the metro, which carries 2.24 million passengers daily, was submitted to the city assembly in February 2013, according to documents posted on the Osaka government’s website. The proposal, which is under discussion, would have Osaka transfer the subway operations to a separate government-owned entity and then fully privatize them, the documents show. It didn’t elaborate on the sale method or valuation.

Shrinking Population

The Osaka subway, which started operations in 1933, has nine lines running in the city and totaling 138 kilometers (86 miles). The privatization proposal will need endorsement by two-thirds of the assembly to be passed.

Osaka prefecture’s economic output dropped 6.2 percent to 36.6 trillion yen in the year through March 2012 from a decade earlier, according to the latest data compiled by the Cabinet Office. That compares with a 0.4 percent decline in Tokyo’s output, to 92.4 trillion yen.

The population of Osaka prefecture fell to 8.85 million as of March 1, down 0.1 percent from a year earlier. It’s forecast to shrink another 5 percent by 2025, according to a report compiled last year by the National Institute of Population & Social Security Research. Tokyo’s population, which rose 0.5 percent to 13.3 million in the year to March 1, is projected to decrease to 13.2 million by 2025.

“Osaka’s economic revival is vital to helping Japan avert a default or economic crisis, as Tokyo’s growth alone won’t be enough to bring momentum to the country’s overall economy,” said Matsui. “Other prefectures should follow suit.”

Selling Assets

Osaka joins the nation’s capital in seeking to sell transportation infrastructure. The Tokyo metropolitan government has been studying a sale of its 46.6 stake in the city’s subway operator, Governor Yoichi Masuzoe said March 19.

Matsui said in January his government has been holding talks with global casino operators including Caesars Entertainment, Genting Singapore Plc and MGM Resorts International on a plan to build a resort complex in the Osaka Bay area that would cost at least 500 billion yen.

In February, Matsui said the prefectural government plans to sell Osaka Prefectural Urban Development Co., a commuter rail operator, to Nankai Electric Railway Co. for 75 billion yen. State-owned New Kansai International Airport Co. is working with Sumitomo Mitsui Financial Group Inc. to sell rights to operate two of Japan’s biggest airports, people familiar with the situation said last month.

“By turning to a small government from a big one, Osaka is shifting to companies those things that can be left to the private sector,” Matsui said. “The casino-resort project, airport privatization and subway sale have great potential to lure private money into Osaka and its surrounding areas.”

The above article is a repost from Bloomberg


Deep Blue Group Publications LLC: The slumps that shaped modern finance

What is mankind’s greatest invention? Ask people this question and they are likely to pick familiar technologies such as printing or electricity. They are unlikely to suggest an innovation that is just as significant: the financial contract. Widely disliked and often considered grubby, it has nonetheless played an indispensable role in human development for at least 7,000 years.

At its core, finance does just two simple things. It can act as an economic time machine, helping savers transport today’s surplus income into the future, or giving borrowers access to future earnings now. It can also act as a safety net, insuring against floods, fires or illness. By providing these two kinds of service, a well-tuned financial system smooths away life’s sharpest ups and downs, making an uncertain world more predictable. In addition, as investors seek out people and companies with the best ideas, finance acts as an engine of growth.

Yet finance can also terrorise. When bubbles burst and markets crash, plans paved years into the future can be destroyed. As the impact of the crisis of 2008 subsides, leaving its legacy of unemployment and debt, it is worth asking if the right things are being done to support what is good about finance, and to remove what is poisonous.

History is a good place to look for answers. Five devastating slumps—starting with America’s first crash, in 1792, and ending with the world’s biggest, in 1929—highlight two big trends in financial evolution. The first is that institutions that enhance people’s economic lives, such as central banks, deposit insurance and stock exchanges, are not the products of careful design in calm times, but are cobbled together at the bottom of financial cliffs. Often what starts out as a post-crisis sticking plaster becomes a permanent feature of the system. If history is any guide, decisions taken now will reverberate for decades.

This makes the second trend more troubling. The response to a crisis follows a familiar pattern. It starts with blame. New parts of the financial system are vilified: a new type of bank, investor or asset is identified as the culprit and is then banned or regulated out of existence. It ends by entrenching public backing for private markets: other parts of finance deemed essential are given more state support. It is an approach that seems sensible and reassuring

But it is corrosive. Walter Bagehot, editor of this newspaper between 1860 and 1877, argued that financial panics occur when the “blind capital” of the public floods into unwise speculative investments. Yet well-intentioned reforms have made this problem worse. The sight of Britons stuffing Icelandic banks with sterling, safe in the knowledge that £35,000 of deposits were insured by the state, would have made Bagehot nervous. The fact that professional investors can lean on the state would have made him angry.

These five crises reveal where the titans of modern finance—the New York Stock Exchange, the Federal Reserve, Britain’s giant banks—come from. But they also highlight the way in which successive reforms have tended to insulate investors from risk, and thus offer lessons to regulators in the current post-crisis era. Read more

Online publication of latest news, stock market investing principles and tips, personal planning guide that will give you statistical analysis of latest financial market here at Deep Blue Publications Group LLC


Investing Guide at Deep Blue Group Publications LLC

Madrid Q1 office investment quadruples year-on-year

According to Savills, approximately €200 million of transactions were carried out in the Madrid office investment market during the first quarter of 2014, against a volume of €50 million recorded in Q1 2013. The international real estate advisor highlights that this figure represents almost 53% of the total office investment volume recorded in Spain in this period, which reached approximately €350 million.

The firm attributes this partly to increased activity from international investors with its research showing that overseas buyers have increased their market share in Q1 2014 accounting for 66% of the Madrid office transaction volume in this period, against 54% in Q1 2013.

Luis Espadas, head of capital markets at Savills Spain, comments: “The improved economic outlook has caused international investors to turn their attention to Spain, and particularly Madrid, and take advantage of low capital values, high yields and potential rental growth in the short to medium term. In fact, due to a lack of product on the market, the increased turnover in Q1 does not fully reflect the extremely high demand we are seeing. This demand is making the sales process highly competitive.”

In terms of yields, Savills records prime CBD office yields at 5.5% and predicts that going forward these may contract to 5% for prime product in prime locations.

On the occupier side, the firm notes that total office take-up in Madrid reached approximately 105,000 sq m in the first three months of the year, representing a 35% year-on-year decrease. The research shows that this is due to a particularly strong first quarter in 2013 with several very large deals, including a 50,000 sq m letting by Vodafone. However, in terms of the number of deals Q1 2014 recorded an 8% increase and the firm predicts that going forward take up should total more than 400,000 sq m by year end, exceeding 2013 levels.

Gema de la Fuente, head of research at Savills Spain, comments: “We expect Madrid office take-up to pick up going into Q2 14 with occupiers looking to benefit from low rental levels. These have reached the bottom of the cycle in a number of areas and tenants will want to take advantage of this before they return to growth once again.”

Savills research shows that average vacancy rates on Madrid’s office market remain stable at 14%, in line with Q4 2013, and top CBD rents in the city remaining unchanged quarter-on-quarter, at €24.75 per sq/month.

If you have not invested in the stock market investing but just now planning on doing so, you can see what it is all about, what you can derive from it and find out what it takes to make proper decisions on your own without risking any money: follow Deep Blue Publications Group LLC without having to constantly check for updates as you will be notified by email whenever new content is uploaded.

The above article is a repost from Property Magazine.


Investing Guide at Deep Blue Group Publications LLC on Last-minute tax-filing advice

Today I'll answer some tax questions-but first some tips for people who can't file their returns by Tuesday.

For federal taxes: If you can't file your return by Tuesday, request a six-month extension by filing Form 4868 electronically or by mail. See the form for instructions. If you file this form by April 15 and your tax return by Oct. 15, you will avoid a late-filing penalty.

However, if you owe additional federal tax for 2013, you must pay it with this form by April 15 to avoid interest and possibly a late-payment penalty.

You can avoid this late-payment penalty (but not interest) if at least 90 percent of your total 2013 tax liability is paid by April 15 through payroll withholding, estimated tax payments or payments made with Form 4868.

If you haven't completed your return, "the best thing is to pay in about 10 percent more" than you expect to owe, says Michael Gray, a San Jose certified public accountant.

For California taxes: There is no need to request an extension; you automatically get one until Oct. 15. However, as with federal taxes, you must pay at least 90 percent of what you owe by April 15 to avoid a late-payment penalty.

You can make this payment online from your bank or savings account without a fee using the Franchise Tax Board's Webpay system-or with a fee by using your credit card. Or you can mail a check with Form FTB 3519. (Certain high-income taxpayers must make this payment electronically.)

Q: Don M. asks, "We sold our income property in 2013. Now we owe a substantial sum for the 3.8 percent Obscure tax! We are learning that since we were active owners, materially participating in managing the property, we may not have to pay the tax. We have checked IRS publication 925 and get mixed messages. We find that the hours needed to qualify for ' active, material participation ' range from 100 + hours to 500 hours. Can you enlighten us? "

A: Don is asking about the new 3.8 percent tax on net investment income that took effect Jan. 1, 2013.

It applies to people who have net investment income and adjusted gross income over a certain limit ($250, 000 married filing jointly and $200, 000 for singles). It is also known as the Medicare surtax or the Obscure tax because it was part of the Affordable Care Act.

The tax applies to income from investments such as interest, dividends, capital gains, rents and royalties. The 3.8 percent tax is applied to either net investment income or the amount that a taxpayer's modified adjusted gross income exceeds the thresholds stated above for their filing status-whichever is less.

The tax generally applies to income and capital gains from rental property, with a few limited exceptions. Don "would probably have some pretty significant hurdles to overcome to avoid the 3.8 percent tax on net investment income for the sale of the rental property," says Mark Luscombe, principal analyst with CCH Tax and Accounting.

He would have to meet two separate tests.

First, he would have to qualify as a real estate professional under the passive activity loss rules (spelled out in Publication 925.) To qualify, more than half of the personal services he performs in a year would have to be in a real estate trade or business in which he materially participates. And, the hours engaged in such services would have to total more than 750 per year. He could group various real estate activities together to meet this test, but it seems this might be his only real estate activity, Luscombe says.

Second, he would have to meet a 500-hour test under the net investment income tax rules (spelled out in the instructions for Form 8960). Under these rules, he must participate in rental real estate activities for more than 500 hours per year (or more than 500 hours per year in five of the last 10 years).


Investing Guide at Deep Blue Group Publications LLC: How to tap into your small pension pots

There will be a short wait – a year, to be precise – before savers are finally able to dip into all of their pensions for however much they require, whenever they please.

That dramatic relaxation of government rules, which ends the compulsion to turn a pension fund into small monthly payments during retirement, was the highlight of the Budget 11 days ago. The Government will now give pension providers time to adjust their systems and practices.

However, many of the 320,000 people preparing to retire over the next 12 months need not delay their plans. Last Thursday a number of temporary measures were introduced that will give pensions freedom to tens of thousands of people.

These new rules are particularly beneficial to those with small subsidiary pensions of less than £10,000 which were saved alongside a final salary pension. The over-60s can now cash in up to three pensions of this size, taking a quarter of each tax-free.

Several other measures, detailed below, also give savers greater choice over how to use money reserved for later years. They will enable some to clear mortgage debts or fund activities or gifts to children that were previously thought to be out of financial reach.

The Budget changes also represent a call to action for workers in their 50s. Many pension plans are designed specifically to be converted into an annuity when the saver retires.

In addition, the City watchdog will this summer initiate an inquiry into old pension plans and other investments sold before the turn of the millennium, which could offer an escape route to those trapped in high-charging policies. However, some older policies contain perks such as guaranteed payout rates that turn each £100,000 into as much as £11,000 a year.

David Smith of investment firm Bestinvest said: “Don’t make a snap decision on the back of the Budget. To get the most from your savings while paying the least amount in, you’ll need to weigh up how much you will withdraw in retirement and when – then adjust your investment strategy accordingly.”

In short, now is the time for a financial spring clean: so dig out old policy documents and follow the rough guide on this page.

The Telegraph was inundated with pension queries in the aftermath of the Budget. We have endeavoured to answer many of them, which will be published online tomorrow, with the aim of providing a reference for all readers.

To tide over savers until the pension unshackling next year, the Government has tinkered with the existing rules.

Those with less than £30,000 in total pension savings can take the entirety as cash, subject to income tax at marginal rates on three quarters of the money. Previously the limit was £18,000.

Many will still find that a small amount of final salary benefit is enough to breach the limits. Around £1,500 of annual income from one of these pensions, also known as “defined benefit” schemes, is worth £30,000 in the Government’s eyes, according to Hargreaves Lansdown.

In 2011 rules were introduced to unfetter the smallest subsidiary pensions. But they were restrictive, allowing only two pensions of no more than £2,000 to be taken as cash lump sums. Savers with slightly larger funds were asked to buy an annuity paying as little as £10 a week.

On Thursday the Government increased the limits so savers can take three pensions worth no more than £10,000 as cash, subject to tax on three quarters of the fund. The Treasury estimates that 32,000 people will benefit as a result.

Another development is rules around “flexible drawdown”, where a pensioner leaves their fund invested in the stock market or other assets and takes an income. Savers with £12,000 a year of secure pension income from other sources (such as a final salary or state pension) have entire freedom to access their money.

However, this does incur charges, typically of around £300 or more, as pension providers are loath to spend money setting up a plan only for the money to disappear shortly afterwards.

An estimated 150,000 people have already started the process of buying an annuity. Last week, savers on the verge of retirement were hit by chaos across the pensions industry, which is scrambling to adjust to the radical shake-up announced in the Budget.

PLANS FOR 2015...
If you can afford to wait to retire – or have other money to see you through – leave your pension untapped until 2015.

There are alternatives to annuities if you need the income. Most pension providers allow customers to use “capped drawdown”. Here the pension stays invested and income of around £7,000 can be taken from each £100,000 in a fund at age 65.

On Thursday this cap was raised to nearly £9,000 per £100,000. The impediment to taking this route is charges, which can be as much as £700 a year.

Some providers, such as LV=, Just Retirement and Aviva, provide “fixed-term” annuities. Billy Burrows of Annuity Line, the advisers, said: “At the moment the minimum term is three years. Insurers should offer a one-year option – this would bridge the gap until everyone had total flexibility. I think this is bound to happen soon.”

Savers with more than a year to retirement must urgently check their investment strategy. Company pension savings, in particular, are usually fed into “lifestyle” funds. An estimated £165bn is in these funds, which are designed to reduce risk as a customer closes in on retirement by selling shares and buying bonds.
However, bond prices rocketed in the wake of the financial crisis as investors sought safe havens. Money in bond funds is on a “cliff edge” – if markets swing back the pensions of savers five, 10 or 15 years from retirement could suffer.

Laith Khalaf, a pensions analyst at Hargreaves Lansdown, said: “Absolutely everyone who is invested in a default fund in their company pension scheme should dust it off and take a close look. The fund may no longer be fit for purpose now you don’t have to buy an annuity. This also applies to pension plans set up with previous employers.”

Gather together any old pensions too. The City regulator is concerned that these plans are neglected and charges are too high. This summer it will initiate an inquiry into pensions sold before the turn of the millennium.

Run old policies with anachronisms in the terms and conditions under the eyes of an expert adviser listed on Look for a “chartered financial planner”. Some antiquated policies contain valuable guarantees or “bonus” payments that kick in at age 60 or 65. Others penalise customers for switching to cheaper providers. Work out whether – and where – you can obtain a better deal.


The Most Important Thing to Learn From the Man In Charge of $150 Billion

Investing Guide at Deep Blue Group Publications LLC - Many individuals and investors know of the richest men in finance like Warren Buffett, George Soros, and Carl Icahn, who have a combined fortune of more than $110 billion. But there is something everyone can learn from the man who runs a hedge fund with over $150 billion, and who is worth $14 billion himself.

The man
Ray Dalio sits atop Bridgewater Associates, which is the Connecticut hedge fund he founded in 1975. It is now the biggest fund in the world, and manages money for pensions, university endowments, and sovereign wealth funds for countries. In all likelihood, many readers unknowingly have had their finances in one way or another tied to Dalio at one point in their life.

Yet unlike many of those in corporate finance, Dalio is a naturalist and a man who was once described as "Steve Jobs with a business school degree." He enjoys meditation, and seeks to tear down the standard walls of corporate culture, which often characterize firms in the financial industry, by employing a call for an open atmosphere.

In 2011 Dalio released a 123 page paper simply entitled Principles where he outlines not only what his own principles are, but also why he believes they are important. This followed his remarkable success during the financial crisis -- he predicted the collapse of the housing market in 2007 -- where many began to learn of his astounding success.

In fact in 2008, a year in which the S&P 500 plummeted by almost 40%, his firm had a return of 9.5%. In 2010 the return of his firm reportedly topped 45% and delivered $3 billion directly to Dalio himself.

And while the firm is notoriously tight lipped about the moves it makes when it comes to managing money and where it allocates its resources, Dalio is happy to share the broader principals which guide his investing and his life, and he suggests "there are five things that you have to do to get what you want out of life."

The five critical things
Dalio goes on to say "The Process," he outlines consists of five critical and unique steps:

1. Have clear goals.
2. Identify and don't tolerate the problems that stand in the way of achieving your goals.
3. Accurately diagnose these problems
4. Design plans that explicitly lay out tasks that will get you around your problems and on to your goals.
5. Implement these plans—i.e., do these tasks.
He then highlights that all five of these steps are unique, meaning the goals must be identified apart from the problems, each step requires different "talents and disciplines," and the process must be though through rationally instead of emotionally.

Dalio notes setting goals is often the hardest part of the process, but it's actually the most important, as "in order to get what you want, the first step is to really know what you want." From that point forward, the rest of the steps will in turn allow individuals to operate in a way ensuring the goals are realized.

The most important point
There is much to learn from Dalio -- after all the document is 123 pages -- but his first point is a critical one. All too often problems can be identified and diagnosed, plans can be designed, and steps can be taken all without a clear goal in mind.

In investing it is easy to see the stock market is falling, which is often viewed as a problem, and in turn seek to cut losses by selling out of the market entirely. But when the goal is financial security for retirement, which could still be decades away, it may in fact provide more reason to put money into the market.

At the height of the financial crisis in 2008, Warren Buffett said: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful." This statement is a powerful example of how he and why he has been so successful, because his decision was ultimately guided by the goals he had set.

While the need to approach life with clear goals in mind likely isn't groundbreaking news, it is something everyone needs to be reminded of.


Market May Have Found a Bottom

NEW YORK (Investing Guide at Deep Blue Group Publications LLC) -- On Thursday, the market was searching for a bottom. Friday saw that bottom made.

All the indexes ripped higher out of the gate. The oversold condition, mentioned Thursday, in the Nasdaq and the Russell 2000 paved the way for the move higher.

The S&P 500 daily trading range is the setup for the algorithm machines and the hedge fund community. The S&P came within 10 points of its sell range on Friday and within 10 points of its buy range. Volatility on a daily basis is the theme.

The DJIA was up triple digits at one point and the other indexes were also up huge. A late-day selloff paired those gains. The Nasdaq and Russell 2000 went red again before closing slightly higher.

The DJIA closed at 1623.06, up 58.83 points. The S&P 500 closed up 8.57 points, at 1857.62. Even though the Nasdaq and Russell 2000 closed slightly green, those indexes were still well into oversold territory, according to certain internal indicators. We should expect a continued move higher next week in the indexes, based on these conditions.

This market is not for the faint of heart. This is a trader's market, pure and simple. Just when the bears were out in force this week, calling for market tops, we are nowhere near that type of signal after Friday's market rebound.

Based on internal signals, the trend remains bullish. As I have stated on different occasions, the trend is a three month or more month time frame.

The S&P 500 is not close to that bearish signal.  At one point Friday, the S&P 500 index came within 12 points of its all-time closing high. That is certainly not a bearish sign.

Until this market breaks the necessary technical levels to become a bearish trend, traders and investors alike need to play this market from the bullish perspective. If not, money will be lost and many long opportunities will be missed.

Next Tuesday, the markets begin the month of April with a clean slate. There will be no more quarterly squaring up of the books.

This has been a flat stock market for the first three months of 2014. Gold and utilities have been the leaders. The dollar and interest rates are burning. The consumer is feeling the inflationary pinch. This is not a good recipe for continued stock-market growth. At some point, the markets will reflect this negative headwind. Until then, let the markets be your guide, as the trend is still higher.

Two positions that I mentioned in Thursday column that were purchased and sold on Friday were Las Vegas Sands (LVS_) and Hologic (HOLX_). Both were sold for nice gains.

On Friday, Orbitz (OWW_) and Safeway (SWY_) were added as long purchases. Currently, both companies are extraordinarily oversold, according to internal indicators.

At the time of publication, the author held positions in OWW and SWY, but positions may change at any time.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


Are Stocks in for Tough Sledding?

Investing Guide at Deep Blue Group Publications LLC - After posting scorching returns in 2013, stocks' flat performance in this year's first quarter seems anticlimactic. Many investors were no doubt expecting the good times to keep on rolling, while valuation-conscious types might have expected an even bigger performance drop-off.

With the first quarter receding in the rearview mirror, we decided to get Morningstar readers' takes on the action. What has been the biggest surprise thus far in 2014, and (cue the crystal balls) what do they expect will happen during the rest of the year?

Some investors said the first-quarter uptick in stock market volatility was indeed jarring. Others said they were surprised to see decent performance from their bond holdings so far in 2014, given the widespread pessimism that has hung over the fixed-income market for several years running.

Looking forward, many posters said they don't have high hopes for stocks for the rest of the year; a frequent refrain was that a still-sluggish U.S. economy will make it difficult to justify higher stock prices when they're already on the lofty side.

To read the complete thread or share your biggest investment surprise so far in 2014's early days--or your expectation of what lies ahead--click here.

'Bonds Have Behaved Better Than I Expected'

Stocks' herky-jerky pattern--up big one day, down big the next--has come as an unwelcome development for homebrewer in 2014's early innings. "My biggest surprise is how volatile the market has been; I expected some but not this much. I think fear is driving this market more than reason. The fear of being in the market when bad news hits causes selling and the fear of not being in the market when it goes up is causes buying."

Dawgie, meanwhile, has been surprised by the continued poor performance of emerging-markets stocks and bonds and the continued relatively poor performance of foreign stocks in general compared with domestic [stocks].

Meanwhile, several posters said they expected fixed income to be their portfolios' major pocket of weakness in 2014, but bonds have actually done quite well.

"I was surprised by interest rates, not because they fell, but how far down they went," said Darwinian.

BMWLover observed, "I'm surprised that the weather has sapped as much out of the economy as it has, especially since the west was actually warmer and dryer than average. The result was that bonds have behaved better than I expected. I was expecting to see the 10-year Treasury bond [yielding more than] 3% at this point in time." (The 10-year Treasury is currently yielding about 2.75 %.)

Ditto for artsdoc, who wrote, "I'm a bit surprised that my fixed-income side of my portfolio has returned more than my equity side."

But even as some posters were bracing themselves for poor fixed-income performance and better returns from their equity portfolios, other respondents said stocks' meh performance didn't surprise them at all. "The biggest first-quarter surprise for me is that the correction didn't arrive yet, and some nice gains have been made," wrote sportsden.

On the same page is atomiccab: "I am surprised that I am even with my end-of-year numbers. I expected the markets to go down after such a large runup last year."

Several posters pointed to REITs as being a pocket of unexpected strength thus far in 2014.

Dawgie was one of the respondents who had been expecting to see REITs revert to the mean. "Although they were off in 2013," this poster wrote, "their five-year returns are still very high."
Rathgar hoped to add to the asset class as valuations improved, but that hasn't panned out. "I bought REITs (Vanguard REIT Index ETF (VNQ)) low in December and planned to add monthly, expecting lower prices. With REITs up 10% I might have to add to another asset class."

Audreyh1 thinks she can explain REITs' late 2013 downturn--and subsequent bounceback. "Things that come under a lot of selling pressure late in the year--such as REITs and municipal bonds in 2013--seem to pop early the next year because the tax-loss selling is over," she said.

'Going Forward Will Be a Bit of a Slog'

Looking forward, many investors who posted predictions said they're not expecting a lot from either the stock or bond market for the rest of the year.

"I suspect that going forward will be a bit of a slog," wrote artsdoc. "Valuations are a lot higher than last year at this time, and I'm not expecting much more than treading water from my fixed-income investments."

On the same page, FidlStix quipped, "This bull's running low on testosterone. Having said that, I don't think the trap door is going to drop out from under the market in 2014--unless we have a world crisis that makes Ukraine look like a romp through the playground. We'll end the year about where we started. It'll be a bouncy year, though. Investors with strong stomachs who can ignore the greater volatility will do OK. Those who can't are likely to sell at the wrong time and shrink their nest eggs."

Bnorthrop believes that the rest of the year will feature a continued push-pull between stocks and bonds. "I expect 2014 to remain in a relatively flat dynamic tension between stocks and bonds. Continued suppression of interest rates lead to risk-on investments; Fed rumblings/expectations of rate increases lead to risk-off maneuvers. Slow-cook economic improvement gives the nod to equities."

Jomil agreed that the markets will muddle along, nothing more. "I expect more of the same because we are in a trader-controlled market with their ability to create and use volatility to an advantage in finding fleeting pockets of value to buy and sell in milliseconds before the trend changes. To beat them at this game, one has to buy and hold at lower cost, be lucky, or have their resources."
Homebrewer offered a host of macroeconomic and market predictions, including this: "If the total U.S. market ends at or above zero, I will be surprised."

'There Will Be No Buyers Left'

Yet other investors said they're even more pessimistic about stocks' prospects.

Sportsden foresees a correction later in the year. "I expect a strong correction by October, since the market seems to be ahead of itself--but, of course, nobody really knows."

Also expecting a big stock drop--not imminently but eventually--is Darwinian. "I anticipate more drops, probably of increasing depth, followed by partial or full recoveries. The market is overpriced, but it can't plummet yet, because there is still too much money on the sidelines. Once this has been sucked in, through 'buy-on-the-dips' strategies, then the big dive can begin, because there will be no buyers left."

Homebrewer advised that investors coming late to the party (and asset-flows data indicate there are many of them) could get burned. "People entering the bull late will drive P/E ratios up and get burned when the bear takes hold."

Meanwhile, BMWLover anticipates that a correction could be right around the corner. "Stocks, I keep waiting for them to correct," this investor wrote. "I think we'll see that in the second quarter with the first quarter's earnings reports giving sellers a reason to pull back and buyers pause."

So what will perform decently? Rathgar thinks that unloved inflation hedges may do all right. "I think inflation hedges will have a good year since most investors aren't thinking about inflation and these investments were cheap coming into 2014--REITs, commodities, Treasury Inflation-Protected Securities, and global bonds.

'No Idea'

Finally, it wouldn't be a "make your predictions" thread without at least a few investors commenting on the folly of trying to predict the market's direction.

Dawgie wrote, "What do I expect for the remainder of the year? No idea. I don't put much credence in market forecasts, and I certainly lack the insight to make any."

And Chief K joked, "My expectation for the market: About half of the people who buy shares of stock in a particular company will get 'the better end of the deal.' About half of the people who sell shares of stock in a particular company will get'the better end of the deal.' I won't know which is which until after it's all over."

This investor's takeaway? "Index, repeat Index."

Asset-allocation parameters, not market prognostications, guide the way for Audreyh1. "Fortunately my investment strategy doesn't require me to guess which asset class will outperform. Whatever happens, I'll rebalance next January if my AA is sufficiently out of whack by then. What really surprises me is that the first quarter is almost over! Time flies!"