The markets have weathered the recent storm of selling and have sprung back fairly quickly this week. There may still be a squall or two ahead, but it appears the worst is over for now.

We still have not tested my target of 1,709, the 200-day moving average (DMA) on the S&P 500 Index, but we were close. We fell to 1,739 intraday on that average, which was just 1.7 percent shy of my target. That's close but no cigar for me. Still, from the peak of the market to this week's low, the S&P 500 declined 6 percent. That was a reasonable decline.

It was enough to reduce the overbought conditions of the market and to reduce the overwhelmingly bullish sentiment of investors that had kept me cautious for most of the first month of the year. The question that remains is whether the markets have a larger drop in store for us sometime in the future.

In the meantime, I suspect we are on our way back to the highs, around 1,850 on the S&P 500. Once the averages regain those levels, we may climb even higher. Exactly how we get there will be important.

If the rally is fast and furious, while investor sentiment becomes increasingly complacent, then once again that exuberance will set us up for another implosion. The next time around, however, the pullback could be in the double digit range. So what will I be looking for in gauging the future risk of a sharp downturn?

I want to see a broad-based rally; one with increasing volume with all sectors performing well. On the other hand, a rising market, where advancers have a hard time outnumbering declines, and where valuations remain stretched with fewer and fewer stocks participating will turn me cautious once again. Under those conditions, I would expect renewed weakness and a deteriorating technical picture of the markets.

However, those are future concerns, which could or could not develop in the months ahead. For right now, the pullback is essentially over. What lessons readers should take away from this experience are two-fold. Number one, the markets will have these kind of sell-offs 3 or 4 times a year. Although it is easier to spot a potential short-term decline, it is practically impossible to call a short-term bottom. That's why I advised you to do nothing.

Number two, attempting to avoid these sell offs by trading out and then buying back into the market is extremely difficult, if not impossible, on a consistent basis. Let's say you did not follow my advice, but instead sold out a few weeks ago when I first advised readers that a pull back was in the offing. So far, so good. Congratulations, you saved some money but when do you get back in?

My target for a potential bottom was the 200 DMA on the S&P 500 Index, which we never reached. Remember this forecasting stuff is an art, not a science. Instead, it was the Dow Jones Industrial Average that hit and broke its 200 DMA on Monday into Tuesday and then bounced. The rest of the indexes took heart and followed the Dow higher.

No harm done for those who took my advice and stayed fully invested. Your paper losses are rapidly dwindling as the markets gain traction. But for those short-term traders who are still waiting for the S&P to breach its 200 DMA, well, that's my point.

Do you hope the markets' bounce will fail and go lower from here, what if it doesn't?

Will you be forced to chase stocks higher? As I've said, getting back in is a lot more difficult than you may think. While you ponder your next move, the rest of us can be grateful that this correction is over.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

If you still have your money invested in your former employer's retirement plan, you may want to rethink the wisdom of that decision. Time and again, retirees, or those saving toward retirement, take the easy way out and do nothing. That could be a big mistake.

Invariably I meet prospective clients who have one, two and even three 401(k) or 403(b) retirement plans from former employers that just sit at the old companies, untouched and ignored. In the vast majority of cases, these plans should be rolled over into a tax-deferred Individual Retirement Account (IRA).

"I left it at my old company because it's free and I don't have to manage it," explained one recent prospective client, who now works at a consumer magazine. Nothing could be further from the truth.

Company retirement plans charge you anywhere from 1.5-2.5 percent annually for the privilege of investing and tax-deferred saving. It is their dirty little secret. The Department of Labor now requires companies to be upfront with the fees they are charging employees. Some studies estimate that employees pay 33 percent or more of their entire retirement savings in fees over the average life of their employer plan. Those fees continue if you leave and your plan stays and may actually go higher if the ex-employee is no longer contributing to the plan.

Many investors mistakenly believe that their company actively manages their portfolio as if it were a pension plan. Not true. The responsibility for managing that money is in your hands. You may not know what to do with it, but by abdicating your responsibility, you open yourself up to potential losses or missed opportunities while continuing to pay a stiff fee.

Most employer-sponsored plans offer a limited number of investment choices. I have seen plans that have ten or twenty fund choices while others have no more than four or five. Many times the performance of these offered funds are mediocre at best.

At the very least, having retirement savings in several locations adds confusion and makes tracking your investments and returns far more complicated. The older or busier one becomes, the less complexity one needs in life — especially when it comes to your money. Trust me; it is much easier to monitor your investments in one IRA rather than in several 401(k) s.

The same advice applies to rolling over you old 401(k) or 403(b) into a new one at your present company. Do not do it. The same set of conditions exists within your existing company’s plan.  Better to roll over those funds into a lower-cost IRA.

So how hard is it to rollover your retirement savings? All you need do is open an IRA at any broker, bank or money management firm. It costs nothing and they do the paperwork. Once you have your new account number, you simply call your old plan sponsor (the number is on the statement) and inform them that you want to rollover your dormant employer-sponsored plan to your new IRA and give them the account number.

Depending on the company, they can either send you an application to facilitate your request or simply transfer the funds based on your phone call. Some companies insist on sending you the check. If so, you have sixty days to deposit it into your rollover IRA or you will pay a tax penalty. Most companies simply transfer your money directly into your new IRA. The entire process can take a few weeks to a month or so. It costs you nothing to do it.

You will immediately enjoy a cost savings, since you are no longer paying those high plan fees each year. Your menu of investment choices will be vastly larger offering you the very best funds at the lowest costs available. If you have little or no knowledge of investments, you can hire an investment adviser. The fees will most likely be lower than the fees you are paying now. If money managers are not your thing, hire a broker to do the job. Just make sure you find a good one who is willing to listen, to charge you a reasonable commission and keep your investment choices to the lowest cost funds with the smallest sales charges.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

This week the markets lost some ground. In the scheme of things, it wasn't much, less than 3 percent on the S&P 500 Index. By the number of concerned calls I received, you would think we were back in the financial crisis. Investors need to chill out.

Let's look at things with a longer perspective than just the first three weeks of January. In the fourth quarter of 2013, the S&P was up 12 percent. For the year, it was up almost 30 percent and the other averages did as well and some did better. A 10 percent decline after a runup like that would not be out of the ordinary. I have been expecting a pullback to at least the 50-day moving average, which is around 1,800 and possibly below that.

Readers, we need some sort of consolidation and selling is a perfectly normal and predictable event in the historical life of the stock market. The alternative would be a market that continues to go up, up and away until it was so extended it snapped like a rubber band. It would only end in disaster and a 20-30 percent collapse in prices. You don’t want that and neither do I.

At the same time, over in the bond market, you may have noticed that interest rates have taken a breather on their march higher, while gold, which has experienced a 50 percent retracement over the last year, seems to be gaining ground. That is as it should be.

Nothing goes straight up or straight down. The 10-Year U.S. Treasury note in the space of less than eight months has seen its rate rise from 1.67 percent to a high of over 3 percent. It is presently hovering around 2.73 percent. It could easily trade in a range of 2.50 percent to 2.75 percent for several months as it consolidates.

Gold, on the other hand, has also had a very bad year and a bounce back of $200/ounce or more would be entirely normal. Make no mistake: both gold and bonds have entered a bear market that will last several years while the stock market, in my opinion, has entered a multi-year bull market. But nothing goes straight down or up.

I do recognize that many investors have had a hard time moving beyond the losses they sustained during the financial crisis and subsequent stock market meltdown. No one wants to see that happen again. Yet, I believe that was a once in a generation occurrence. It is over four years since those events occurred; the time has come to get beyond it.

If you are still so traumatized that every down draft in the market keeps you up at night reliving the past, then you should not be invested in stocks or bonds, commodities or anything but cash for that matter. Every investment holds risk (and reward). There is no such thing as a free ride where you can earn a good return on your money without risking some loss.

My bet is the market will likely bounce off these levels, if not a bit lower, make a lower high and then come down to a level below where we are today. It's the cost of doing business in the stock market. Over the course of the next several months any losses will be made up, so I'm content to lick my wounds, take a few paper losses and allow the markets to go through this healthy consolidation period. You should do the same.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Income inequality has suddenly become a hot topic. Think tanks worldwide are releasing studies on the issue. In this country, the president has made it a political issue in the mid-term elections. This week in Davos, the World Economic Forum will take up the gauntlet as well. It's about time.

Two years ago, readers may recall my four-part series on the growing inequality here at home and throughout the world. You were shocked to learn that America ranks last among all developed countries in income equality. As a nation, our income inequality is about equal to that of the Third World sandwiched between Uruguay and Cote d'Ivoire. States such as Massachusetts ranks about equal with Mexico, Connecticut with Venezuela, New York with Costa Rico and New Hampshire with Cambodia.

This week Oxfam, a non-profit confederation of 17 organizations in 90 countries, released a study that indicates that 85 of the richest people in the world own as much as the poorest 50 percent of humanity. Think of it, a double-decker busload of one percenters control $1.7 trillion, equivalent to the combined wealth of 3.5 billion people. Seventy percent of the world's population lives in a country where inequality has increased over the past 30 years.

In the United States, the gap between the have and have not's has grown at a faster pace than in any other developed country. The top 1 percent captured 95 percent of all the post-recession growth since 2009, while 90 percent of us became poorer, Oxfam's report mirrors several other studies including a University of California, Berkeley study, the Pew Research Center's findings and the IMF. The results are essentially the same.

At the tiny Swiss town of Davos, 2,500 participants from almost 100 countries will be flying in on their private jets and limousines. In years past, attendees were largely billionaire tycoons, business executives, the rich and famous, in essence a genteel gathering of the world's one percent. Supposedly, this year, they will be joined by some of the rabble. Representatives from international non-profit organizations, members of civil society and spiritual leaders, academia and the media have been invited.

This will allow for a larger cross-section of political, cultural and societal views but, excuse my cynicism; it is still essentially a rich man's club. As such, how serious will its members address income inequality when it is they who have profited the most from the trend? Granted, the fox may express its concern and sympathy over events in the hen house, but do we really think he will stop eating the hens?

In our own country, politicians on both sides of the aisle are honing their stump speeches. The Republicans will be preaching how free markets are the answer to income inequality while conveniently ignoring the failure of 30 years of "trickle down" economics. The Democrats will argue that the nation needs more social programs and even greater redistribution of income in order to level the playing field. Of course, they will dodge the fact that three decades of government-sponsored social initiatives have failed to even slow the growth rate of inequality in this nation. Could it have something to do with the fact that the average elected official in this country is a millionaire and thus part of the 1 percent?

Riddle me this reader, what happens to societies when inequality reaches a critical mass? The think tanks use words like "explosive," "serious damage" and "instability" in explaining the outcome. They are all code words for revolution, armed conflict and massive upheaval. Usually, a leader appears to lead the revolt, maybe a Robespierre or a Hitler or someone worse.

It surprises me why more people fail to see the connection between the growing income inequality and recent global uprisings in the Middle East, Asia and other places. I'm hoping this recent concern is more than a passing fad or a sop for the masses because the stakes are high, ladies and gentleman, and getting higher every day.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Markets usually need something to move them. Good news or bad, the markets want an excuse to go up or down. Now that the government, the debt ceiling, the budget and the Fed are temporarily out of the picture, investors are finally focusing on something meaningful — earnings.

Actually, that is a good thing. It may indicate that the financial sector is at last returning to its historical roots after years of government bail-outs, monetary control and political drama. There was a time, some of you may remember, when earnings could make or break the markets. I don't think we are there yet, but company earnings this week have given the market cause to pause.

The sampling of company data thus far in this earnings season has been lackluster at best. Companies in the financial, health care, retail and several other sectors have disappointed. The Christmas season, for example, was evidently a disappointment for many traditional, non-internet retailers. Consumer shopping behavior is clearly changing as more and more people shop the web and shun the malls.

To tell you the truth, I am one of those who have abandoned the store for the ease, convenience and competitive prices offered through my computer. Just about all of my holiday shopping was done that way, including the gift certificate I purchased for my wife at a local clothing store.

In the financial sector, banks and brokers are struggling with the new curbs on proprietary trading as well as regulations that require them to amass more capital to offset the risks they are taking in their businesses. Bond trading, which had been a big profit center for financial institutions, also did poorly thanks to rising interest rates.

Granted, it is still early days in the earnings season. I am sure that there will be some absolute gems in upside earnings surprises. The trick is to identify those companies that shine and avoid those that won't. Wow! Could we really be at that point in the recovery where the fundamentals of individual companies have once again become important to their stock price?

As readers are aware, I believe the economy is accelerating and employment rising. All is well in the world right now.  Markets over the last few years have climbed a wall of worry but it appears that those worries have faded. We have yet to replace them with new ones or maybe the new worry is that there isn’t anything to worry about it?

So what are the negatives?

We are in the second year of a four-year presidential cycle. If one looks back through the post-World War II period, we find that these "second years" have been the absolute worst performance years in the stock market. To make matters worse, stock market returns have been even lower than normal when the president has been a Democrat.

Valuation also bears watching. Markets are not yet expensive, but could become so if enough companies fail to live up to expectations. What is now simply a pause in the market's advance could become a rout, if too many companies disappoint. But what continues to bother me the most is the sentiment indicators. There are just too many bulls out there for my taste. As a contrarian, I like the markets most when no one else does. However, none of the potential negatives tempt me to bail on stocks. Stay the course.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.