Join Daniel Gramza LIVE at 2019 Uniworld Cruise!

Join Daniel Gramza LIVE at 2019 Uniworld Cruise!

Can Stocks Maintain These Lofty Levels?

02/28/2014 6:00 am EST


Daniel Gramza

President, Gramza Capital Management, Inc.

As stocks make new highs every week, Dan Gramza shares his current analysis of the stock market and what he thinks may happen in early 2014.

TIM:  My guest today is Dan Gramza.  We're talking about the stock market as we end 2013 and come into 2014.  Dan, stock market hitting all time highs here as we talked today.  What do you think as we come into the end of the year, is that going to continue, and what about early next year? 

DAN:  I have to tell you, I'm bullish on stocks, as I have been for the last few years.  I put my portfolio together in March of 2009 and I've been adding to it and I've still done that, so Tim, I'm not trying to talk a position, but I think it makes sense.  I think, if you look at where can people put their money, and stocks right now are one of the places you can put your money and get a return.  The other aspect of that I think, when we look at it getting near 16,000, is let's step back and say what has been going on?  We've just seen this reporting season finish up, and if you look, are getting close to being finished, over 483 companies have reported, over 70% of those companies have beat analyst's estimates, over 60% of them have beaten the sales estimates.  I think that's something that you and I should pay attention to.  Plus, many companies in the United States are cash rich.  They have a lot of money in the treasuries, they have not implemented that money yet.  In some estimates it's over $8 trillion, so that hasn't even been put into the marketplace yet, so we have a lot of reserve that's being done, but you know, Tim, I think something that you and I should be aware of as we go into next year, because that cash is sitting there, stock holders are going to say, hey, do something with that money, right, I want a return on it. 

My feeling is what we're going to see more of are mergers and acquisitions.  That's a way for a company to utilize that cash to take out the pieces of that acquisition that they want without going through all the capital expenditures necessarily for expanding their business. 

TIM:  What kind of things would you be looking at that might show cracks that you would be concerned about and to take a look at stocks closely that might affect it? 

DAN:  Well, I think like that question.  From my point of view it would take quite a bit because we have a foundation I believe that's been in place that's fairly solid.  What would really do it though would be price.  To see a 10% correction or see something like that, so many people are anticipating that kind of move, even if we had that, we've got to look at what's behind it.  If it's behind the possibility of tapering, which is the movement that we've had over the last quarter or market softened a bit, it's been surrounding that.  That's not a reason for the market to go a lot lower.  To move off of it, yes, but it's not going to have follow through kind of capabilities.  Politically globally that could be an issue for us. 

TIM:  All right. 

DAN:  We still have that potential out. 

TIM:  Anything on the horizon for next year in 2014 first quarter that you're looking at politically or otherwise that would affect stocks as well? 

DAN:  Well, I've got to tell you, I think we still need to pay attention to what's happening in Syria, that it may be bleeding beyond that area, and we should look at that with respect to crude, with respect to the US dollar, the impact that we could see there, and with respect to gold, how that market reacts to it, and let's pray to God that it doesn't get in a worst situation, there's some kind of resolution to it.  The situation with Iran has quieted down but it's by no means solved, and that's one also that could be explosive in terms of what we need to be sensitive to for this coming quarter or this coming year, so I think those are a couple of the areas that I want to pay some attention to that could directly have an impact of uncertainty.  Not that I think our stock market is weaker, I should clarify that.  It's the market reacting to uncertainty and we both know, Tim, market doesn't like uncertainty. 

TIM:  Right. 

DAN:  So that's the kind of thing that could happen out there that I want to be aware of that creates that uncertainty. 

TIM:  Dan, thanks very much for your time. 

DAN:  It's always good to be with you, Tim. 

TIM:  You're watching the video network.

Related Articles on STOCKS

Keyword Image
S&P 500: No Pain No Gain
1 hour ago

The E-mini S&P 500 needs to fall below 2800 before the bulls will buy again. It might test the J...

Keyword Image
Prepare For Market Storms
08/16/2019 6:00 am EST

Too many traders appeared unprepared by the recent, relatively mild equity market correction warns L...