"You sold silver too soon," grumbled a client. "Look, it's almost $50 an ounce."

That was just one of the conversations I had with disgruntled investors only one week ago. There is no question I felt bad since I had advised readers to sell at least half their silver investments between $36 to $37 an ounce a few weeks ago. Beginning Monday, silver began to drop as the CME hiked margin requirements. By Friday, silver had dropped over 25 percent to as low as $33.05 and ounce.

Parabolic moves such as the kind we have had in silver, and to a lesser extent gold, always revert to the mean. I learned that lesson many times over 30 years of investing in commodities. My strategy is to pick a price level and stick with it, regardless of whether the commodity overshoots my target.

Oil was another commodity where I suggested investors take profits at $100 a barrel. It has subsequently climbed higher, overshooting my target by almost $14 a barrel before it, too, plummeted this week to $99 a barrel. I remain a seller until oil breaks $85 barrel on the downside.

Of course, now that precious metals are in free fall, the knee-jerk reaction from the uninitiated is "at what price do we get back in?"

The easy answer is: whenever investors stop asking that question. When the talking heads and strategists throw in the towel, when precious metals commercials disappear from the airwaves and nobody wants to be bothered with silver, only then will I be willing to reenter the precious metals.

Unfortunately, the sharp correction in silver as well as a bounce in the dollar has impacted the equity markets overall. That is unfortunate and yet for those with steady nerves and grim resolve it is an opportunity.

Most commodities have dropped along with gold and silver. That is understandable given that the majority of traders had purchased commodities on margin (borrowed money). When prices decline substantially (as they have this week) margin calls escalate and notices from lenders flow out through Wall Street like floodwaters through the Mississippi Delta. Margin lenders demand more collateral to maintain their loans to these silver speculators and they want this money immediately.

Speculators, caught with owing huge sums of margin money, did what they always do — sell other investments, usually their winners, to meet the margin call. Oil, gas, base metals, soft commodities — whatever they can sell — which increases the selling pressure on everything and the ripple effect soon reaches high flying stocks and finally equities in general. Welcome to today's markets.

For those of us with cooler heads and steadier nerves, treat this sell off as simply another gift horse in the making. And I'm not about to examine its mouth. I would be buying instead. You see, lower energy as well as other commodity prices are good for the global economy. At some point investors will wake up to that fact. In the meantime, expect more volatility.

"How low can we go?" asked several clients ranging from a doctor in Salisbury, Conn.,  to a retired engineer in Williamstown.

We're almost there, in my opinion. Let's call the low somewhere between 1,305 and 1,325 on the S&P 500 Index (and I may be too negative in my guess). If we dropped as low as 1,300, it would still only be a 5 percent correction from the top. Our last decline was about 7 percent. Since then we have powered as high as 1,370 on the S&P (the intraday high reached on May 2). Remember, you should expect at least three pullbacks a year in the stock market of up to 5 percent. This is simply one of them and the cost of doing business in the stock market.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.

Given that the stock market has almost doubled since its low in March 2009, one would expect that an entirely new crop of youngsters would be clamoring to become the next generation of America's stock brokers. So far the evidence points to the opposite conclusion.

Last month The Wall Street Journal featured an article titled "Dangerous Stockbroker Shortage Threatens America." The gist of the story was that less than 25 percent of all financial advisers are under 40 years of age while 5.6 percent are under 30. The writer quoted research from a Boston-based research firm, Cerullie Associates, that claimed the average age of a financial adviser is just under 49 years old with 14 percent of them over 60.

What I fail to understand is why this supposed shortage is dangerous?

I was a stock broker once upon a time. My clients, however, were not individual investors. My customers were the large institutions with multibillions of dollars that invested worldwide and their famed fund managers who you see quoted on television or in the top-tier investment periodicals. It was a lucrative business.

In exchange for stock ideas and access I provided to company managements, my clients paid handsomely in commission dollars. I often ferried my investors to various countries and regions where I arranged private meetings between them and company officials, finance ministers and even presidents. All-in-all it was a gentleman's business. But things have changed.

Institutions discovered the Internet. Electronic trading evolved and became so cost effective that paying commissions for the services of people like me made no economic sense. Besides, what I could do, so could my clients. A phone call or email from the chief investment officer of a huge U.S. pension fund to company X could accomplish the same objective as in my efforts.

In addition, the commoditization of equities overwhelmed all other methods of investment. The sheer weight of money under institutional management forced large institutions to abandon investing in individual equities. Instead, millions every day are bought and sold in baskets of stocks representing sectors, styles, regional and country indexes. It made stock picking superfluous and brokers like me a dying breed.

The same trend that convinced me to jump ship, abandon the brokerage business and manage money has been steadily chipping away at the retail broker's business over the last decade. The advent of discount brokers, automation, passive investing and instantaneous information via the internet has evened out the playing field for individual investors. Investors are now capable of doing for themselves what brokers have traditionally charged them to do.

Today, you and I receive the same information our brokers do and we get it faster. The popularity of mutual funds and exchange traded funds as preferred investment tools have also impaired the utility of brokers and stock picking.

The big brokers realized this years ago and stopped recruiting and training new brokers. At one time, Merrill Lynch, for example, operated a huge campus in Southern New Jersey for the training of their retail brokers, complete with classrooms, dorms and cafeteria. As commissions declined and profits were squeezed, the brokers cut back on hiring and instead gave more and more accounts to the top producers. These producers are now retiring.

Remember that stock broking is a "people" business. Traditionally, you needed to trust and rely on your broker and if you couldn't, you switched. However, 2008-2009 changed that. During the financial crisis, many brokers, young and old, advised their clients to remain invested only to panic and sell out their clients at the bottom. Lawsuits followed, animosity built and trust declined across the industry. 

As an example, two individual investors were recently awarded $54 million in a securities arbitration case against Smith Barney. The case was over the sale of conservative municipal bond investments that turned out to be less than safe, losing between half and three quarters of their value during the financial crisis.

Given the performance and reputation of brokers and the financial services sector in general over the last few years, is it any wonder that the last thing the new crop of college grads wants to do is become stock brokers?

Even the name "broker" no longer exists. Thanks to millions spent in marketing, the brokerage houses have successfully confused the investing public in exactly who they are dealing with. The broker has gone the way of the ticker tape, the typewriter and the transistor radio. New names such as "wealth manager," "financial consultant" and "financial adviser" have replaced the old title and I for one am not so sure the change is for the better. 

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.

This week's pivotal event was Fed Chairman Ben Bernanke's first press conference with the media. Judging from the price action in the stock market, Ben passed with flying colors.

The chairman provided a bit of clarity, reassuring the market that in June, when QE II expires, it will be a gradual process of monetary tightening as opposed to a sharp spike in interest rates. Clearly, he gave little comfort to the dollar bulls as the greenback continues its decline (down 8 percent year-to-date) while dashing the hopes of bears in the precious metals markets as gold and silver raced ever higher on a wave of speculative fever and inflation expectations.

Although both Bernanke and U.S. Treasury Secretary Timothy Geithner have expressed their support of a strong dollar policy, neither are doing anything to stem its fall, nor should they, in my opinion. Two years ago I predicted that the U.S. would attempt to export its way out of recession, as would the rest of the world. Judging from the recent spate of quarterly earnings results, U.S. corporations, especially multinations, are making big bucks on the back of the weakening dollar. Profits among corporations are up 26 percent from last year. This will be the seventh quarter in a row where corporations posted double-digit earnings growth.

In Europe, Germany is also benefiting from an upsurge in exports that is helping that country reduce unemployment, propel economic growth and improve corporate profits. At the same time, traditional weak currency, high exporting emerging market countries are feeling the opposite effect as their currencies strengthen, exports slow and imports climb.

Friday's revelation that GDP only grew by 1.8 percent should not have disappointed investors since just about every economist in the nation was predicting as much. Bad weather and the high prices of energy and food were blamed for the less than stellar performance. Most consider it a blip in the forecasts and growth will improve next quarter.

Despite the on-going outrage by commentators (and everyone else who has to eat and drive) about the rising prices of those two commodities, the overall core inflation rate in this country continues to remain below the Fed's targets.

"How can they just ignore gas prices or what I'm paying for meat, milk and even cereal?" demands a client and mother of three, who commutes from South Egremont to Albany every day.

The Fed argues that it cannot control the prices of food and oil, which are set on world markets and represent the totality of demand from around the globe. The central bankers contend that the recent spike in oil, for example, is transitory and will subside over time.

They have a point. Consider food and energy prices in the summer of 2008. They were at record highs only to plummet in the second half of the year. If the Fed had tightened monetary policy (by raising interest rates) in say, June 2008 at the height of the price climb for food and energy, it would have taken six to eight months before those higher rates impacted the economy. By then we were sliding into recession. Tightening would have transformed a serious recession into another Great Depression.

As for the markets, it's steady as she goes, mate, with strong earnings propelling markets closer to my first objective, S&P 500 level of 1,400. I believe we are seeing a little sector rotation going on with consumer discretionary, semiconductors and technology sectors taking a back set this week to industrials, consumer durables and precious metals. Along the way, expect pullbacks but don't be spooked by downdrafts. Take them in stride, stay invested and prosper.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.

Over the last few years, the Federal Reserve has practically given money away to any entity that calls itself a bank. Individual states are also trying, but so far the banks have just been hoarding this growing pile of cash instead of loaning it out. Why?

Two reasons come to mind: Banks are afraid of taking on lending risk. Burnt by the subprime mortgage debacle, they are now overly cautious on who they lend to in an economic recovery they are not sure is here to stay. Two, interest rates are at historical lows. If rates start to rise, loans made today could turn to losses fairly quickly.

Recently, state Treasurer Steven Grossman of Massachusetts announced a plan to give banks $100 million to deposit into local community banks for the express purpose of lending to small businesses. The money is part of a statewide effort called the Small Business Banking Partnership. The announcement has been met with some resistance within the banking community. Bankers claim it's not needed because small businesses aren't interested in borrowing due to the poor economy.

That's bad news because small businesses employ the vast majority of workers in this country and pay the most taxes. They are the backbone of this country's economy. Over the last year, small business lending has become a political football since the establishment of the $1.5 billion State Small Business Credit Initiative by the Obama Administration. The plan calls for the banking community to pony up $10 in new loans for every $1 of loans by the state government. Since then, banks and their lobbyists have gone out of their way to show how much lending they are doing to small businesses.

For example, in Massachusetts, as in other states, community banks account for as much as 80 percent of small business lending and that trend has increased through the recession, according to the state's banking association. They claim the amount of lending has also almost doubled in the last six years.

What they don't mention is a lot of that recent growth was in picking up old loans that out of state and money center banks had dumped or would not renew due to the recession and heightened credit risk. A recent survey of members of the International Franchise Association contradicts some of the data coming out of the financial lending sector. The survey revealed that 39 percent of the franchisors report that more than half of their franchisees and prospects are unable to obtain needed financing, which is up 33 percent from a survey taken last year.

"There are several businessmen right here in the county who want to open franchises with me but can't get loans from local banks," says a successful fast-food chain entrepreneur in Berkshire County. "The banks sent them packing to the SBA for help."

The bankers' argument that businesses are not growing and aren't applying for new loans is disputed by the small-business owners I talk to.

"What they aren't telling you is the hoops a small-business owner has to jump through in order to get that new loan," says the head of a large excavating company in the region.

"They want collateral and a lot of it. They want you to sign your life away, and none of that matters unless you are making tons of income as well. And once I pass all their risk criteria, I get the privilege of borrowing short term from them at 8-9 percent when the prime rate is 3.25 percent."

Given that most banks are paying under 1 percent for money to loan, one would think that a 7-8 percent spread should bring in plenty of profits. That is one of the main reasons that the Federal Reserve has been keeping interest rates at historical lows for so long. So far it hasn’t worked.

And speaking of the Fed and the end of QE II in June, most everyone (including the banks), are expecting interest rates to rise in the second half of this year. Few bankers have the appetite to lend money to a small business when they expect rates to rise. And if they do, they only want to lend for a short period of time.

"That's also difficult for a small business to handle," explains the excavator, "if I have to go back to the bank in three years, I can't do long range planning. I can't even be sure I'll get a new loan and if so, at what price. It makes being a small business owner that much more uncertain."

Grossman plans to come to Pittsfield sometime in May to discuss the state's funding initiative with local bankers. I think it would be a good idea to meet with small-business owners as well. That way he would be able to hear their side of the story before leaving town.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.

It appears Monday's low in the stock market averages concluded this last little sell off. The decline occurred, courtesy of Standard and Poor's credit agency. It reduced its outlook for U.S. Treasury bonds from neutral to negative. Since then the markets have climbed back and are now preparing to test the next level of resistance.

We can credit some stellar earnings announcements, especially in the technology sector, for the turnaround in investor sentiment. Most investors were worried that the Japanese earthquake disruptions — especially in semiconductors — would hurt high-tech companies this quarter. But the strength in demand from around the world, especially in the manufacturing sector, has more than made up for any Japanese-generated short falls.

None of this should come as a surprise to readers since I have been expecting (and writing) that global economic growth would gain momentum this year. It is one fundamental reason why I think equity markets will experience upward momentum into the summer.

"But what about the deficit, the declining dollar, inflation, oil prices?" wrote an exasperated reader, who has disagreed with my bullish calls of late.

"How can the market keep going up and up when all these negatives are out there?" he moaned, while still sitting in cash.

All of those concerns are quite real and I am not discounting any of them. See, for example, my recent column "A Shot Across Our Bow" on Standard & Poor's debt warning. It is obvious that the market is choosing to ignore these negatives for now. I'm sure investors will re-visit these worries when the time is right, but remember Maynard Keynes once said that markets can stay irrational about certain things far longer than you or I can stay solvent.

I contend that as long as the Federal Reserve continues to supply cheap money to the markets in the form of its quantitative easing operations, the markets will go up. The historical low short term interest rates that are now a fact of life are forcing more and more investors to take on riskier assets in order to get a decent return for their money.

I'm looking for a quite sizable "melt-up" in global stock markets over the next few weeks or months. I'm also expecting some new moves by China to allow their currency to strengthen in an effort to combat their soaring inflation rate. That would add further impetus to a declining dollar, which would boost our exports and add more growth to the U.S. economy. It might also turn investor's focus back on China, which has lagged world markets for some time. Stay tuned.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.