Schwartz
Financial Weekly Commentary
August
25, 2014
The Markets
What do Harry S.
Truman and Hindu goddesses have in common? Both were invoked to describe Federal
Reserve Chairwoman Janet Yellen’s speech at the Jackson Hole Economic Policy Symposium last week.
In her opening
comments, Yellen confirmed the economy had improved and suggested more data was
needed before the Fed could determine its path. She said:
“…our understanding
of labor market developments and their potential implications for inflation
will remain far from perfect. As a consequence, monetary policy ultimately must
be conducted in a pragmatic manner that relies not on any particular indicator
or model, but instead reflects an ongoing assessment of a wide range of
information in the context of our ever-evolving understanding of the economy.”
Afterward, some
Wall Street professionals empathized with Truman, the 33rd President
of the United States and a native of the ‘Show Me’ state, who once lamented the
lack of resolute economic advice available. Truman pined for a ‘one-handed
economist’ who wouldn’t hedge by saying, “On the one hand… on the other hand…”
Barron’s reported on the speech saying, “In discussing the labor market… Yellen introduced so
many qualifications that, instead of the proverbial two-handed economist, she
more resembled a Hindu goddess with a half-dozen or more appendages.”
No
matter what anyone made of Yellen’s remarks, she was in the catbird seat
compared to European Central Bank (ECB) President Mario Draghi who spoke after
her. Unemployment in the Eurozone stands at 11.5 percent compared to 6.2 percent
in the United States. The range of unemployment across the region is quite
significant, from 5 percent in Germany to 25 percent in Spain.
Investors
and analysts may not have received the insights they’d hoped to gain about U.S.
monetary policy, but it’s important to remember that one person’s hedging may
be another person’s careful analysis.
Data as
of 8/22/14
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard
& Poor's 500 (Domestic Stocks)
|
1.7%
|
7.6%
|
20.0%
|
21.0%
|
14.2%
|
6.1%
|
|
10-year
Treasury Note (Yield Only)
|
2.4
|
NA
|
2.9
|
2.1
|
3.5
|
4.3
|
|
Gold
(per ounce)
|
-1.5
|
6.3
|
-7.1
|
-12.1
|
6.1
|
12.0
|
|
Bloomberg
Commodity Index
|
-0.2
|
-0.3
|
-2.8
|
-7.8
|
-0.5
|
-1.6
|
|
DJ Equity
All REIT Total Return Index
|
0.8
|
19.6
|
22.6
|
17.7
|
19.0
|
9.4
|
S&P 500,
Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does
not pay a dividend) and the three-, five-, and 10-year returns are annualized;
the DJ Equity All REIT Total Return Index does include reinvested dividends and
the three-, five-, and 10-year returns are annualized; and the 10-year Treasury
Note is simply the yield at the close of the day on each of the historical time
periods.
Sources: Yahoo!
Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance
is no guarantee of future results. Indices are unmanaged and cannot be invested
into directly. N/A means not applicable.
mind the gap. Here in America, some of the most
important gaps that need to be filled are in estate plans. It’s not enough to
have a plan. You also need to make sure all of the components of your plan – from
retirement accounts to investments to property – are properly coordinated. Often
the gaps in estate plans are related to:
·
Beneficiary designations: Many financial
assets – such as bank accounts, life insurance policies, brokerage accounts, annuities,
and retirement accounts – give you the opportunity to name a beneficiary. Typically,
assets pass directly to the named beneficiary regardless of instructions in a
will. Consequently, it’s important to review beneficiary designations and make
sure they align with the intent of your estate plan.
It’s
also important to know the rules guiding investment distributions to
beneficiaries. Generally, there are two possibilities:
o
Per stirpes distribution
indicates if a beneficiary dies before the account owner does, the
beneficiary’s share will go to his or her heirs.
o
Per capita distribution indicates
each beneficiary receives the same amount. If a beneficiary predeceases the
account owner, his or her share goes to the other named beneficiaries.
·
Joint ownership of
assets:
While joint ownership is common for spouses, joint ownership with children and
other relatives has the potential to create some estate planning headaches.
Forbes.com suggests estate plans should include “a will, revocable living trust
(for most people), and financial and health care powers of attorney – which can
accomplish all of the same goals as joint ownership, without the risks and complications.”
A
2013 survey of wealthy investors found nearly 72 percent of participants did not
have complete estate plans. If you feel you fall into this category, you may
want to schedule a meeting with your financial advisor to assess your estate
tax liability, determine your most important goals, and structure a plan that
fits your needs. Once in place, you may want to review your estate plan
regularly to ensure it is in line with current laws and regulations and that it
still expresses your goals.
Weekly Focus – Think About It
“No matter what
people tell you, words and ideas can change the world.”
--Robin Williams, actor and comedian
Value
vs. Growth Investing (8/22/14)
|
1.78
|
8.60
|
0.58
|
5.59
|
22.03
|
23.77
|
16.96
|
|
|
1.73
|
8.96
|
0.41
|
5.56
|
22.58
|
23.40
|
16.18
|
|
|
1.54
|
8.29
|
0.08
|
4.34
|
20.01
|
24.88
|
16.85
|
|
|
2.15
|
10.90
|
2.14
|
8.06
|
28.39
|
24.65
|
17.85
|
|
|
1.47
|
7.67
|
-1.01
|
4.26
|
19.31
|
20.82
|
13.96
|
|
|
1.95
|
9.11
|
1.17
|
6.00
|
22.06
|
25.00
|
19.24
|
|
|
1.90
|
11.03
|
0.62
|
6.04
|
24.50
|
26.00
|
20.17
|
|
|
2.29
|
7.09
|
2.60
|
6.98
|
19.20
|
21.96
|
18.59
|
|
|
1.65
|
9.49
|
0.31
|
4.94
|
22.84
|
27.17
|
18.94
|
|
|
1.83
|
3.43
|
0.66
|
4.76
|
16.17
|
24.00
|
18.07
|
|
|
2.06
|
5.44
|
0.33
|
5.00
|
18.26
|
23.50
|
17.66
|
|
|
1.49
|
-1.33
|
0.68
|
4.57
|
11.25
|
22.70
|
17.59
|
|
|
1.94
|
6.16
|
0.98
|
4.74
|
19.00
|
25.83
|
18.89
|
|
|
1.65
|
8.63
|
0.21
|
4.73
|
20.78
|
24.99
|
17.63
|
|
|
2.14
|
9.31
|
2.14
|
7.62
|
25.30
|
23.97
|
18.04
|
|
|
1.54
|
7.93
|
-0.62
|
4.43
|
20.01
|
22.45
|
15.31
|
©2004 Morningstar, Inc. All Rights Reserved.
The information contained herein: (1) is proprietary to Morningstar; (2) is not
warranted to be accurate, complete or timely. Morningstar is not responsible
for any damages or losses arising from any use of this information and has not
granted its consent to be considered or deemed an “expert” under the Securities
Act of 1933. Past performance is no guarantee of future results. Indices are unmanaged and while these indices
can be invested in directly, this is neither a recommendation nor an offer to
purchase. This can only be done by
prospectus and should be on the recommendation of a licensed professional.
Office Notes:
Have An Aging Parent, You May Be Responsible
Please take a few minutes and read the article
at the link below. Caregivers are able
to hold adult children responsible for payment not available from the
parent: http://www.fa-mag.com/news/providers-pursue-kids-for-parents--ltc-costs-18763.html?issue=231
Regards,
,
Michael L. Schwartz, RFC®, CWS®, CFS
P.S. Please feel
free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list,
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Michael
L. Schwartz, RFC, CWS, CFS, a registered principal offering securities and
advisory services through Independent Financial Group, LLC., a registered
broker-dealer and investment advisor.
Member FINRA-SIPC. Schwartz Financial and Independent Financial Group
are unaffiliated entities.
This
information is provided for informational purposes only and is not a
solicitation or recommendation that any particular investor should purchase or
sell any security. The information contained herein is obtained from sources
believed to be reliable but its accuracy or completeness is not guaranteed. Any opinions expressed herein are subject to
change without notice. An Index is a
composite of securities that provides a performance benchmark. Returns are presented for illustrative
purposes only and are not intended to project the performance of any specific
investment. Indexes are unmanaged, do
not incur management fees, costs and expenses and cannot be invested in
directly. Past performance is not a guarantee of future results.
* The Standard &
Poor's 500 (S&P 500) is an unmanaged group of securities considered to be
representative of the stock market in general.
* The DJ Global ex US
is an unmanaged group of non-U.S. securities designed to reflect the
performance of the global equity securities that have readily available
prices.
* The 10-year Treasury
Note represents debt owed by the United States Treasury to the public. Since
the U.S. Government is seen as a risk-free borrower, investors use the 10-year
Treasury Note as a benchmark for the long-term bond market.
* Gold represents the
London afternoon gold price fix as reported by the London Bullion Market
Association.
* The DJ Commodity
Index is designed to be a highly liquid and diversified benchmark for the
commodity futures market. The Index is composed of futures contracts on 19
physical commodities and was launched on July 14, 1998.
* The DJ Equity All
REIT TR Index measures the total return performance of the equity subcategory
of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the
source for any reference to the performance of an index between two specific
periods.
* Opinions expressed
are subject to change without notice and are not intended as investment advice
or to predict future performance.
* Past performance does
not guarantee future results.
* You cannot invest
directly in an index.
* Consult your
financial professional before making any investment decision.
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