What fiscal cliff?
Stock prices rose last week to their best weekly gain in
five months as investors cheered the start of the holiday shopping season,
encouraging economic data from Germany and China, improved housing data, and
confidence from President Obama and Congressional leaders that the fiscal cliff
will be avoided.
Is this the beginning of a “Santa Claus rally?”
Jordan Kotick, global head of technical strategy at Barclays,
told CNBC, “We are about to head into the best seasonal time for the equity
market.” Despite this seasonal tailwind, the market’s near-term direction may
still depend on how Washington handles the pending budget and tax cliff. So
far, the market seems to be pricing in a compromise that will avoid the
worst-case scenario.
Beyond the fiscal cliff and a potential Santa Claus rally,
what’s in store for the U.S. economy? Well, here’s a not-so optimistic take
from famed money manager Jeremy Grantham:
The
U.S. GDP growth rate that we have become accustomed to for over a hundred years
– in excess of 3% a year – is not just hiding behind temporary setbacks. It is
gone forever. Yet, most business people (and the Fed) assume that economic
growth will recover to its old rates.
In his view, our economy will grow at a snail’s pace of
about 1 percent per year after inflation for the next several decades. Without getting bogged down in details, his gloomy
case rests on population and productivity changes.
However, there are some potential bright spots on the
horizon. Please read the second half of this commentary to learn about one
important part of our economy that could turn Grantham’s pessimistic view
upside down.
Data as of 11/23/12
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard
& Poor's 500 (Domestic Stocks)
|
3.6%
|
12.1%
|
21.3%
|
8.4%
|
-0.4%
|
4.2%
|
DJ
Global ex US (Foreign Stocks)
|
4.0
|
8.6
|
14.1
|
0.1
|
-5.8
|
6.9
|
10-year
Treasury Note (Yield Only)
|
1.7
|
N/A
|
1.9
|
3.4
|
4.0
|
4.2
|
Gold
(per ounce)
|
1.2
|
10.2
|
3.2
|
14.0
|
16.3
|
18.5
|
DJ-UBS
Commodity Index
|
2.2
|
2.4
|
1.2
|
2.1
|
-4.8
|
3.2
|
DJ
Equity All REIT TR Index
|
2.6
|
15.0
|
29.4
|
19.1
|
4.2
|
11.5
|
Notes: S&P 500, DJ Global ex US,
Gold, DJ-UBS 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 TR 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, 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.
THE YEARS 2020, 2030, AND 2035 could turn out to be pivotal years for the United
States and the geopolitics of global energy. Here’s why. The International
Energy Agency (IEA) predicts the following will happen by those years:
·
2020
– The U.S. will overtake Saudi Arabia as the world’s largest producer of crude
oil.
·
2030
– The U.S. will become a net exporter of crude oil.
·
2035
– The U.S. will become effectively self-sufficient in meeting its total energy
needs through domestic sources.
Source:
International Energy Agency World Energy Outlook 2012
Today, the U.S.
imports about 20 percent of its total energy needs. Can you imagine a world in
which the U.S. is energy self-sufficient and not beholden to foreign energy
sources? This could deliver a huge boost to our economy.
Five years ago, the
IEA predicted the U.S. would pump 10.1 million barrels of oil per day by 2020. In
this year’s report, the IEA’s new estimate is 11.1 million barrels per day by
2020. This projected increase in production is, “driven by the
faster-than-expected development of hydrocarbon resources locked in shale and
other tight rock that have just started to be unlocked by a new combination of
technologies called hydraulic fracturing,” according to MarketWatch.
So, we have Jeremy
Grantham stating the bear case for the U.S. economy then we have the IEA
publishing a report that puts the U.S. in the driver’s seat for the world
energy market in the next couple decades.
Now, here’s the thing.
Both Grantham and the IEA are making long-range forecasts based on data available
today. Yet, we know things can change just as the IEA raised its oil production
estimate from 10.1 million barrels of oil per day to 11.1 million.
Trends take time to
develop and then, all of a sudden, they could change due to some new technology
– as in the case of “fracking.” We do
keep an eye on these long-term trends, but we also understand that investment
decisions to buy and sell have to be made based on what’s happening now. This
“bi-focal” approach is one of the many tools we use to manage your assets.
Weekly Focus – Really?
“Whoever said money
can't buy happiness simply didn't know where to go shopping.”
--Bo Derek, American actress
Value vs. Growth Investing (11/23/12)
3.67
|
14.18
|
0.08
|
1.19
|
23.82
|
11.27
|
2.29
|
|
3.70
|
14.60
|
-0.10
|
0.88
|
24.38
|
10.24
|
1.62
|
|
3.51
|
16.19
|
0.80
|
2.23
|
26.22
|
10.94
|
2.82
|
|
4.35
|
17.59
|
0.94
|
-0.42
|
24.65
|
11.43
|
2.82
|
|
3.19
|
10.40
|
-2.10
|
0.97
|
22.78
|
8.33
|
-1.02
|
|
3.47
|
13.50
|
0.86
|
2.37
|
22.21
|
13.85
|
3.68
|
|
3.67
|
14.77
|
2.16
|
3.21
|
24.90
|
15.97
|
5.16
|
|
3.55
|
12.85
|
0.68
|
0.79
|
18.06
|
14.19
|
2.57
|
|
3.18
|
13.00
|
-0.15
|
3.28
|
23.80
|
11.33
|
3.13
|
|
3.89
|
11.55
|
-0.26
|
1.17
|
22.29
|
13.74
|
4.51
|
|
4.22
|
11.73
|
0.86
|
1.38
|
23.07
|
12.58
|
3.79
|
|
3.60
|
9.81
|
-1.08
|
-0.65
|
18.92
|
14.68
|
3.35
|
|
3.83
|
13.18
|
-0.56
|
2.82
|
24.90
|
13.96
|
6.35
|
|
3.59
|
15.63
|
1.06
|
2.35
|
25.76
|
12.17
|
3.48
|
|
4.15
|
16.08
|
0.76
|
-0.20
|
22.91
|
12.32
|
2.87
|
|
3.23
|
11.11
|
-1.61
|
1.55
|
23.12
|
9.33
|
0.32
|
©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:
LOCAL ADVISOR MICHAEL L. SCHWARTZ, RFC, CWS, CFS ATTENDS
EXCLUSIVE RETIREMENT PLANNING WORKSHOP WITH AMERICA’S IRA EXPERT ED SLOTT
Jenkintown, Pa 11/15/12 –Michael L. Schwartz completed
expert-level IRA distribution training at Ed Slott’s recent Elite IRA Advisor
GroupSM Workshop on November 2 – 4, 2012 in Phoenix, Ariz. Schwartz spent several days with Ed Slott and
Company, America’s IRA Experts, drilling deep into the complicated issues of IRA
distribution planning and studying most recent IRS rulings.
Covering recent updates such as the Health
Care Law’s tax consequences and year-end conversion planning, Schwartz joined
over 200 of the nation’s top financial professionals who are dedicated to
solving the country’s biggest and most complex financial problem — effectively
managing the distribution of assets from Individual Retirement Arrangements
(IRAs). Attendees were educated on Roth conversion planning, estate planning and
leveraging current tax law in an effort to ensure their clients’ retirement
accounts are set-up and maintained correctly.
“Some people think the crux of retirement
saving is just building wealth and playing by the rules, but they face sudden
shock when they see how much money they can lose to taxes,” says Ed Slott, a
nationally recognized IRA-distribution expert who was named “The Best Source
for IRA Advice” by The Wall Street
Journal.
Slott continues, “An educated advisor can
protect your money from high taxes, keep more of your money and secure your
retirement. By joining the Ed Slott
Elite IRA Advisor group, Schwartz has committed his time, money and effort into
an educational membership group so he can have the knowledge to truly impact
his clients’ futures and families.”
ABOUT ED SLOTT & COMPANY, LLC: Ed Slott & Company, LLC is the nation’s
leading provider of IRA training for financial advisors. Mr. Slott is the author of several leading
books on retirement distribution planning. He is a nationally recognized IRA-distribution
expert, a professional speaker, and the creator of several public television
specials, including Ed Slott’s Retirement Rescue!
Ed Slott has been quoted in The New York Times, Newsday, The Wall Street Journal, The Washington Post, Money Magazine,
and Forbes. He has appeared on NBC,
ABC, CBS, CNBC, CNN, FOX, PBS, Public Television, NPR, and Bloomberg TV and
radio.
ABOUT MICHAEL L. SCHWARTZ, RFC, CWS,
CFS: Mr. Schwartz is a Wealth Manager
who’s practice has been in Jenkintown, Pa since 1991. Mr. Schwartz has been in practice since
1984. Mr. Schwartz has published
numerous articles on Investment Planning in publications such as the
Philadelphia Jewish Exponent. Mr.
Schwartz advises affluent clients on matters dealing with Retirement Distribution
Planning, IRA Rollover, Retirement Accumulation and other Investment, Insurance
and Tax matters.
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 permission to be added.
Michael
L. Schwartz, RFC®, CWS®, CFS, offers securities through First Allied
Securities, Inc., A Registered Broker/Dealer, Member FINRA-SIPC. Advisory Services offered through First
Allied Advisory Services, A Registered Investment Advisor.
Schwartz Financial Service is not an
affiliate of First Allied Securities, Inc.
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.
