Schwartz
Financial Weekly Commentary
November
24, 2014
The Markets
Pioneer.
Trendsetter. Trailblazer. Whatever term you decide to use, there’s no debate
about the fact central banks around the world are taking a page or two from the
U.S. Federal Reserve’s playbook. The Fed may have ended quantitative easing
(QE) – its program of buying government bonds to keep interest rates low and
increase money supply – in October, but that doesn’t mean QE hasn’t become
popular elsewhere. Barron’s reported:
“…virtually every
other major central bank is maintaining or stepping up its pace of money
printing – even where the success in spurring growth is questionable. On
October 31, Japanese authorities doubled down on asset purchases by the Bank of
Japan, and the nation’s pension fund, to spur flagging growth… In a surprise move
on Friday, China cut interest rates for the first time in two years in an
effort to spur slowing growth… That was followed by European Central Bank
President Mario Draghi’s signal the ECB would expand its stimulus plan, leading
observers to expect large-scale, Fed-style purchases of government debt.”
Although some
Americans remain skeptical about the health of the U.S. economy, growth in the
United States stands in sharp contrast to growth elsewhere. The U.S. Department
of Commerce reported real gross domestic product (GDP) – the value of goods and
services produced in the United States – increased by 3.5 percent during the
third quarter of 2014 after growing by 4.6 percent in the second quarter. For
the same period, the Eurozone’s GDP grew by 0.6 percent, which is well below its 2 percent pre-crisis growth rate, and
Japan’s GDP declined by 1.6 percent during the third quarter after a 7.3
percent drop in the second quarter.
While Japan has
been mired in economic stagnation for some time, it’s a relatively new
experience for the Eurozone where unemployment hovers around 11.3 percent – a
record high. Aggression in Ukraine is complicating matters in Europe. An expert
cited by The New York Times explained,
“We are at most one or two rounds of sanctions and countersanctions away from
pushing Russia into a deep recession, and Europe into a recession.”
While concerns
remain about the health of the global economy, markets generally were pleased
about central banks’ easy money policies and most global stock markets finished
the week higher.
Data as
of 11/21/14
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard
& Poor's 500 (Domestic Stocks)
|
1.2%
|
11.6%
|
14.9%
|
20.0%
|
13.3%
|
5.8%
|
|
10-year
Treasury Note (Yield Only)
|
2.3
|
NA
|
2.8
|
2.0
|
3.4
|
4.2
|
|
Gold
(per ounce)
|
3.0
|
0.2
|
-2.9
|
-10.9
|
0.6
|
10.4
|
|
Bloomberg
Commodity Index
|
1.1
|
-6.1
|
-4.2
|
-6.2
|
-2.7
|
-2.5
|
|
DJ Equity
All REIT Total Return Index
|
1.1
|
24.2
|
23.5
|
18.3
|
17.5
|
8.7
|
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.
looking for some money for college? Then you may want
to stop limiting the time your children spend playing video games, or you may
want to focus their efforts. Robert
Morris University (RMU) in Chicago, Illinois, has a new scholarship program – $500,000
for 30 scholarships that will go to League
of Legends (LOL) players. The chosen few receive up to 50 percent of
tuition and 50 percent of room and board.
Where do the Robert
Morris Eagles find candidates? As it turns out, more than 750 schools in the
United States and Canada participate in the League of Legends High School
Starleague. At the collegiate level, the LOL league boasts more than 100
colleges and universities, including Carleton, Texas A&M, George Washington,
University of Minnesota, Northwestern, University of Michigan, and Harvard. E-athletes
participating in the college Starleague vie for $100,000 in scholarship money
offered by the company that publishes League of Legends.
According to WNYC’s
New Tech City, LOL is a complex and difficult-to-master game.
Players choose one of more than 120 characters, each with various magical
powers that must be memorized. “Teams of five take on other teams of five
and basically try to destroy each other. It’s called a ‘multiplayer online
battle arena game’ or MOBA for short.”
So, what’s in it for the school? E-sports are not
covered by the NCAA, “so the school's team can compete for cash prizes and, if
it wins, the school keeps the take.” You may recall, from a late-July
commentary, the League of Legends (LOL) championship is an international video
game competition with $1 million in prize money.
If you’re amazed there
are scholarships for video game play, you’re not alone. One of the Robert
Morris Eagles’ players told NPR, “I told my mom about [the RMU
scholarship]. She didn't believe me. She's like, you're crazy and there's no
way… She thought I was like, making it up 'cause she personally doesn't even
like me playing the game, but when she realized I was going to get a
scholarship for it, she accepted it, you know? She tells all of her friends.”
Parental support is
probably pretty important. E-athletes at RMU practice five hours a day in their
‘arena,’ which is a room decked out with sponsored gear. They play tournaments
on weekends. Critics worry that encouraging intensive play is a poor idea when
countries, like Korea (where the game is exceptionally popular), have begun screening
children for gaming and Internet addiction.
In mid-November, the RMU
Eagles were undefeated in LOL collegiate play.
Weekly Focus – Think About It
“Empathy
is really the opposite of spiritual meanness. It's the capacity to understand
that every war is both won and lost. And that someone else's pain is as meaningful
as your own.”
--Barbara
Kingsolver, American novelist
Value
vs. Growth Investing (11/21/14)
|
1.15
|
12.73
|
6.35
|
3.64
|
16.47
|
22.56
|
16.36
|
|
|
1.13
|
13.62
|
6.47
|
4.08
|
17.23
|
22.50
|
15.54
|
|
|
1.27
|
16.14
|
7.65
|
6.94
|
18.34
|
24.91
|
16.91
|
|
|
0.90
|
14.85
|
5.92
|
3.65
|
20.58
|
22.95
|
16.43
|
|
|
1.24
|
9.89
|
5.82
|
1.68
|
12.71
|
19.93
|
13.35
|
|
|
1.48
|
12.11
|
6.19
|
2.71
|
16.28
|
23.14
|
18.65
|
|
|
1.54
|
14.90
|
6.48
|
3.38
|
18.98
|
23.88
|
19.84
|
|
|
1.20
|
10.80
|
6.67
|
3.70
|
15.61
|
20.38
|
18.04
|
|
|
1.71
|
10.85
|
5.38
|
1.00
|
14.43
|
25.25
|
18.04
|
|
|
0.40
|
5.16
|
5.58
|
1.60
|
8.93
|
21.28
|
17.70
|
|
|
0.50
|
6.82
|
5.64
|
1.15
|
10.63
|
21.59
|
17.10
|
|
|
0.08
|
0.67
|
5.14
|
2.09
|
3.73
|
19.56
|
17.89
|
|
|
0.60
|
7.94
|
5.95
|
1.59
|
12.47
|
22.62
|
18.05
|
|
|
1.27
|
15.22
|
7.28
|
5.81
|
17.92
|
24.47
|
17.57
|
|
|
0.91
|
13.08
|
6.02
|
3.56
|
18.41
|
22.20
|
16.93
|
|
|
1.28
|
9.95
|
5.75
|
1.54
|
13.06
|
21.20
|
14.63
|
©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.
|
Every year, I
attend a number of continuing education classes and subscribe to a variety
of tax-related publications to gather information to enrich my
clients. In the fall, I pour through these resources and combine
them with my best tax strategies to prepare my “Year-End Tax Moves
Report”. I have now published this
report and am happy to make it available to those who would find it
useful. Please contact my office either
by phone or email and we would be happy to forward a copy. I hope you find it valuable and
informative!
|
Office Happenings
Keep Your Fork . . .
There
was a woman who had been diagnosed with a terminal illness and had been given
three months to live. So as she was
getting her things “in order,” she contacted her pastor and had him come to her
house to discuss certain aspects of her final wishes.
She
told him which songs she wanted sung at the service, what scriptures she would
like read, and what outfit she wanted to be buried in. The woman also requested to be buried with
her favorite Bible. Everything was in
order and the pastor was preparing to leave when the woman suddenly remembered
something very important to her.
“There’s
one more thing,” she said excitedly.
“What’s
that?” came the pastor’s reply.
“This
is very important,” the woman continued, “I want to be buried with a fork in my
right hand.”
The
pastor stood looking at the woman, not knowing quite what to say.
“That
surprises you, doesn’t it?” the woman asked.
“Well
to be honest, I’m puzzled by the request,” said the pastor.
The
woman explained. “In all my years of
attending church socials and potluck dinners, I always remember that when the
dishes of the main course were being cleared, someone would inevitably lean
over and say, “Keep your fork.” It was
my favorite part because I knew that something better was coming
. . .like velvety chocolate cake or deep-dish apple pie. Something wonderful, and with substance! So, I just want people to see me there in
that casket with a fork in my hand and I want them to wonder, ‘What’s with the
fork?’ Then I want you to tell them: ‘Keep your fork. The best is yet to come.’”
The
pastor’s eyes welled up with tears of joy as he hugged the woman good-bye. He knew this would be one of the last times
he would see her before her death. But
he also knew that the woman had a better grasp of heaven than he did. She knew that something better was
coming.
At
the funeral, people were walking by the woman’s casket and they saw the pretty
dress she was wearing and her favorite Bible and the fork placed in her right
hand. Over and over the pastor heard the
question: “What’s with the fork?” and over and over he smiled.
During
his message, the pastor told the people of the conversation he had with the
woman shortly before she died. He also
told them about the fork and about what it symbolized to her. The pastor told the people how he could not
stop thinking about the fork and told them that they probably would not be able
to stop thinking about it either. He was
right.
So
the next time you reach down for your fork, let it remind you, oh so gently,
that the best is yet to come.
FOR
ALL THOSE THAT HAVE ALLOWED MY OFFICE TO TAKE TIME ON THEIR MONDAY’S WITH MY
WEEKLY COMMENTARY, HAVE A VERY HAPPY THANKSGIVING!
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,
please reply to this email with their email address and we will ask for their
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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.
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