The Market Confounds Bulls and Bears: Where Do We Go From Here?

David G. Dietze, JD, CFA, CFP™ Founder, President and Chief Investment Strategist Point View Wealth Management, Inc. Summit, NJ  

Stocks roared up 12% in 2012’s first quarter, catching the bears flat footed.  This performance was all the more remarkable in that it came after an 11.2% gain in the prior quarter.   Moreover, it capped a tremendous three year run, with the market up 108% from March 9, 2009.

Financials led the brigade.  Valuations started the year at very low levels, in many cases below book value; sentiment was negative amid a still-struggling housing market and a host of lawsuits stemming from the subprime debt crisis. 

A full 15% of the market’s strength was attributable to a single stock, Apple, which soared 48% in Q1.  Overseas stocks not only joined the party but in some cases exceeded it.  Japanese stocks soared 19%, and even European stocks chocked up double digit percentage gains.

Sign Up for E-News

Losers in Q1 were long dated Treasuries.  Investors got a taste of what rising interest rates can do to seemingly risk free bonds!

Stock Markets Remain Attractive

We believe stock investors will continue to be rewarded, although we also believe the market is susceptible to a correction, as it has recently shown.  We do not expect a continuation of double digit percentage rises on a quarterly basis!

Valuations remain attractive, although stock prices are up 30% since early October.  With the recovery from the 2008 financial crisis, corporate earnings have staged a remarkable rebound.  Now growth will be harder to come by, as comparisons with year ago tallies become more challenging. 

On the economic front, policy makers remain concerned that the recovery is fragile.  Consumer spending has strengthened since September, as confidence has improved.  Joblessness has declined, and weekly initial unemployment claims have retreated to levels last seen four years ago.

Housing, consumers’ biggest asset, remains in a funk.  However, analysts detect a leveling off in the pace of declines, and believe that record low mortgage rates, rapid rent increases, coupled with green shoots in the new home market, indicate improvement is at hand.

Policy makers worldwide remain committed to keeping interest rates low. 


The European sovereign debt crisis is the key “known unknown.”  The challenges of implementing austerity measures are severe. 

China intends to slow its economy to stamp out rampant property speculation.  The hope is to avoid overly impacting other aspects of the economy. 

Stateside, absent Congressional action, taxes will jump next year.  Presidential elections will be held in November.  Uncertainty prevails as to the outcome, and that’s not helpful.  Industries such as defense, healthcare, and utilities could be affected.

Dividend Paying Stocks

As investors strive for yield in this low interest rate environment, dividend paying stocks should prove profitable.  Dividends are a tangible sign of not only profitability but of willingness to share the free cash flow with investors.  No company is automatically a buy simply because it pays a dividend; a careful examination of underlying profitability is required.

Large Cap Tech

In the rush to invest in companies involving the “cloud,” “social media,” and “mobility” some legacy techs have been ignored.  Don’t overlook their strong balance sheets, cash flow generation, key divisions participating in the hot areas, dividends or dividend paying potential.

Euro Based But Globally Focused

Investors have sold off all companies based in Europe without analyzing if much of their business is outside of Europe.  Just as many U.S. based companies make most of their profits overseas, so do many European based companies.  They are poised to outperform.

Where Not to Invest

Long dated Treasuries got walloped in Q1. If rates move higher as the economy improves and central banks sell bonds to reduce their balance sheets, investors could take surprising losses.

Social media stocks like Facebook may prove treacherous: Valuations are preposterous, continued breakneck growth is unlikely, the trials/tribulations of being public will weigh, the history of internet stocks is not pretty, and the performance of last year’s social media IPO class ho-hum.


Note: David G. Dietze, JD, CFA, CFP™ is President and Chief Investment Strategist of Point View Wealth Management, Inc., a registered investment advisor at 382 Springfield Avenue, Summit.  The full-length version of this article is available at:




 The Guest Column is our readers' opportunity to write about a given issue or topic in an in-depth and educational manner.

The opinions expressed herein are the writer's alone, and do not reflect the opinions of or anyone who works for is not responsible for the accuracy of any of the information supplied by the writer.

TAP Into Another Town's News:

You May Also Be Interested In

Sign Up for E-News

Berkeley Heights

'Tired of cronyism? Yeah, us too'

July 21, 2018

The Union County Freeholders’ decision to appoint State Senator and newly-elected Union County Democratic Chairman, Nick Scutari’s chief of staff, Ed Oatman as County Manager smelled of corruption from the start. To place a political consultant like Oatman in the role of overseeing 2,800 employees and running the day-to-day operations of the $500 million county budget suggests ...

TAPinto Spotlight on Business Features New Providence Dentistry

July 17, 2018

NEW PROVIDENCE, NJ - TAPinto "Summer Spotlight on Business" features local businesses and their owners who are important to our communities. Follow this column to receive a fresh perspective on small business owners and their unique needs while shining a spotlight on their stories.

This edition features New Providence Dentistry, operated by Dr. Beth Herko and her staff of ...

Avoiding 10% Tax Penalty

Do you want access to money from your retirement accounts but aren't sure of the real costs involved?

Most retirement accounts have a set age requirement you must reach before making penalty-free income distributions, which is usually 59.5 but can sometimes be as early as age 50. If you decide to access your accounts earlier, you could face penalties ranging from 10%-25%, which is not ...

Summer is for Reading. Visit the Scholastic Book Fair at the Berkeley Heights YMCA

July 23, 2018

Summertime is the perfect time to unwind with a good book! Especially for children, reading or being read to during the summer months is a great way to keep language skills sharp while out of school and prevent the dreaded "Summer Slide. Coming this week, The Berkeley Heights YMCA will be hosting a Scholastic Book Fair featuring a large assortment of books for children ages ...

Drive for Autism Foundation to hold Seventeeth annual Drive for Autism Golf Event

NEW PROVIDENCE, NJ – The Drive for Autism Foundation is pleased to announce that its annual golf event Drive for Autism XVII will be held at Royce Brook Golf Club in Hillsborough, NJ on September 17, 2018.

The Drive for Autism Golf Outing which has been held since 2002 has raised and distributed over $700,000 to local school programs. Previous beneficiaries of grants were ...

Step Up and Build a Stronger Union County

Union County residents who are seeking a meaningful, high-impact way to volunteer in their community can sign up as a mentor with Big Brothers Big Sisters of Essex, Hudson and Union Counties.

The organization is currently seeking volunteer mentors for its best-known program, Community Based Mentoring. The program involves individual mentoring with a local child or teen, age 6 to 18, with a ...

Mayors Push for Law Permitting Driver's License for Immigrants

July 22, 2018

PERTH AMBOY, NJ - Five mayors from northern and central New Jersey today called for passage of a state law permitting immigrants to get driver's licenses even if they are undocumented, saying it boosts public safety as well as the economy.

"This is important for every resident for a better life and a better life for the state of New Jersey," said Perth Amboy Mayor Wilda ...

Upcoming Events


Tue, July 24, 3:00 PM

Grillestone Restaurant , Scotch Plains

Hear the Story of Amelia Earhart, America's Most ...

Arts & Entertainment Food & Drink


Tue, July 24, 5:30 PM

Summit YMCA, Summit

Summit Area YMCA Swim Team Tryouts July 24th

Health & Wellness


Tue, July 24, 5:30 PM

Summit YMCA, Summit

Summit Area YMCA Swim Team Tryouts July 24th

Health & Wellness


Wed, July 25, 1:30 PM

Trailside Nature & Science Center, MountainsidE

Trailside’s Annual Summer Wednesday Matinee ...

Arts & Entertainment Education

Wed, July 25, 7:30 PM

Chatham United Methodist Church, Chatham

Masterwork’s Summer Sings Conclude with Verdi ...

Arts & Entertainment


Wed, July 25, 7:30 PM

Memorial Park, Berkeley Heights

2018 Berkeley Heights Summer Concert Series

Arts & Entertainment

And Over Here is the Dining Hall 2

My very first job in admissions was while I was still an undergraduate myself as a tour guide.  Very early on they indoctrinated us with some tricks of the trade.  It’s a dining hall, not a cafeteria.  A residence hall, not a dorm.  If you have to divulge some negative bit of information, sandwich it between two positives.  There were instructions for glossing over ...

Women Have Special Financial Needs That Advisors Overlook

Women have special financial needs that advisors overlook in two ways: 1) advisors don’t always acknowledge the different planning needs women have and 2) advisors don’t always communicate well with female clients – especially if the client comes to a meeting with her husband. It’s very common for a male advisor to spend much or most of the face time in meetings talking to ...

Summer Storm Checklist

New Jersey gets its share of severe weather – and those closest to the coast are particularly vulnerable to hurricanes and high winds. Here are some things you can do to help improve the safety of your family and home before a storm hits:

·       Be informed. Find out where the nearest shelter is, and map out different routes you can take ...