Research & Advice

There is, historically speaking, a one-in-four chance the market drops another ten(ish) percentage points.
There is, historically speaking, almost certainty that the market will surge after mid-term elections.
History aside, we think the most likely scenario is a bit more pain followed by a rally.

  First, some housekeeping. For my much-less-lengthy and much-more-frequent commentary, connect with me, Allen Harris, on LinkedIn. For a long, long time I’ve been “predicting” a recession in 2020-2022, if only to have an anchor in my investment hypotheses. I am hoping I am wrong, but looking at it objectively if a recession were to happen then you could look back (i.e. now) and see how all the dots could have been connected. We’ve been favoring a slight tilt toward Growth stocks for a long time, but we can see a case building to consider a neutral position in the…

Berkshire Money Management Hosted Celebration for BMC Nurses After a long series of strikes, negotiations, BMC nurses celebrate agreement signing After nearly two years of strikes and negotiations, the some 800 registered nurses of Berkshire Medical Center will celebrate the signing of a tentative agreement that promises to alleviate a staffing shortage that has long been a concern to nurses. A celebration BBQ for the nurses was held on Sunday, July 8 at Berkshire Money Management’s (BMM) headquarters at 161 Main Street — the Model Farm — in Dalton. “These negotiations weren’t about unions. And if you ask the nurses themselves,…

In our 2018 Outlook, we made the case for gains and growth, but highlighted our concern for what we expected to be the biggest correction we had seen in a couple of years.  We weren’t afraid of deteriorating fundamentals, but the contrarians in us were not comfortable with extremely high levels of optimism built on the back of the longest rally on record without a 3% correction.  Those overbought conditions have been relieved somewhat, though not enough for us to ignore other concerns. Click here to read pdf Since we came out of the financial crisis investor optimism has climbed…

I stumbled up a statistic yesterday that I found interesting, over the last 90-years there has been a 3% stock market correction, on average, every 21 days.  Consider that prior to the start of this recent correction the stock market went 300 days without a 3% drop.  As I write, the S&P 500 is off its recent highs by about 5%.  Although the first thirteen days of the correction were scary (and unfamiliar), it appears as if we’re back to something where volatility looks more normal.  Now we wait to see if the stock market breaks up, or breaks down. …

There is Nothing to Fear, but… Virtually every sentiment measure we look at is telling us to sell. But they have been whispering the same for over a year. The difference between market optimism and pessimism is at its largest level since April 1986, a year-and-a-half before Black Monday. This tells us that the stock market is at potentially dangerous overbought levels. Many investors are waiting for that one special moment to get invested into the market; that’s a bad strategy. The first stock market pullback we get is going to be quick and impossible to time with any precision…

Winter Results from the Berkshire Business Confidence Index, sponsored by Berkshire Money Management Download PDF Version The Berkshire Business Confidence Index (BCI), sponsored and analyzed by Berkshire Money Management, indicates that there is a cautious level of optimism among Berkshire County businesses, as well as non-profit organizations that must make business decisions. We mailed out 5,000 surveys countywide, and received responses from the full spectrum of Berkshire industries—non-profits, retail, manufacturing, finance, lodging, real estate. Each brings their own voice to this survey. What we have gleaned from this month’s results: From last survey (September 2017) to this survey, overall confidence…

Gains for the stock market will be capped next year due EPS growth being, in part, tax cut induced, thus demanding a lower P/E multiple. The market should go up about 4.7% next year (give or take a half dozen months of starting and finishing dates, as the market could experience double digit growth before sharp weakness at the end of the year as it prices in a moderation of earnings growth). About half of the Tax Cuts and Jobs Act of 2017 is priced into the stock market. Real US GDP will approach 3% in 2018. CPI inflation will…