Special Note: The
horrible tragedy at Sandy Hook Elementary School tugs at the heart of all of
us. In the midst of a joyous season, we have another example of the fragility
of life. We pray for the innocent victims and their families and hope they may
find some measure of comfort and healing in their time of great pain.
The Markets
There they go again.
Doing its part to keep the economy afloat, the Federal
Reserve announced last week, “that it would enter 2013 with a plan to purchase
$85 billion a month of mortgage-backed securities and Treasury securities, part
of a continuing attempt to drive down long-term interest rates to encourage
borrowing, spending, and investing,” according to The Wall Street Journal.
In other words, the money printing not only continues, but
expands.
Prior to the financial crisis, the Federal Reserve’s balance
sheet stood at about $900 billion. Now, after previous rounds of securities
purchases, it weighs in at about $2.9 trillion. With last week’s announcement,
it’s on track to reach about $4 trillion by December 2013. And, based on the
Fed’s guidance last week, it could hit $6 trillion before the Fed rests.
There are two schools of thought on the wisdom of this
balance sheet expansion policy. One school says it will lead to massive
inflation and destroy the value of the dollar. The other school says it’s
necessary to keep the economy stimulated while giving fiscal policymakers time
to fix the structural issues with the economy.
For its part, the Fed says it can manage its balance sheet without
causing unwanted inflation.
So far, inflation is calm, the financial markets have
stabilized, and the unemployment rate has dropped steadily over the past two
years. By those measures, the Fed’s policy has been reasonably effective. Yet,
as The Wall Street Journal points
out, “Many critics of the central bank believe it has already gone too far in
its quest to boost economic growth, and say it might be exposing the financial
system to new risks of inflation or a financial bubble by pumping so much money
into banks.”
We are concerned about the potential long-term consequences
of the Fed’s unprecedented money-printing actions and we’ll continue to keep a
close eye for any sign of the market “rejecting” it.
Data as of 12/14/12
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard
& Poor's 500 (Domestic Stocks)
|
-0.3%
|
12.4%
|
16.7%
|
8.3%
|
-0.8%
|
4.5%
|
DJ
Global ex US (Foreign Stocks)
|
1.3
|
12.3
|
15.7
|
1.3
|
-5.3
|
7.4
|
10-year
Treasury Note (Yield Only)
|
1.7
|
N/A
|
1.9
|
3.6
|
4.2
|
4.1
|
Gold
(per ounce)
|
-0.3
|
7.7
|
5.8
|
14.7
|
16.5
|
17.7
|
DJ-UBS
Commodity Index
|
-0.7
|
-0.1
|
2.9
|
1.5
|
-4.9
|
2.4
|
DJ
Equity All REIT TR Index
|
-0.6
|
16.2
|
23.8
|
17.6
|
5.1
|
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 BEST PERFORMING STOCKS BETWEEN ELECTION DAY 2008 AND ELECTION
DAY 2012 in the
S&P 500 index are quite a varied group. It’s interesting to see what
companies performed well during this time because it encompassed a good chunk
of the Great Recession and the stock market recovery that ensued. Without
naming names, here are the industries represented by the top 12 performing
stocks, according to a list from MarketWatch:
1) Leisure
2) Grocery Stores
3) Auto Dealers
4) Leisure
5) Lodging
6) Computer Systems
7) Restaurants
8) Auto Manufacturers
9) Footwear and Accessories
10) Software
11) Residential Construction
12) Data Storage
The cumulative
return during the 4-year period for these companies ranged from 373 percent for
company #12 to 1,107 percent for company #1. By contrast, the S&P 500 index
rose 47 percent during the period, according to data from Yahoo! Finance.
Notice that only
one industry – leisure – is represented by two different companies on the list.
This suggests the top performers were indeed a diversified group.
Are you ready for a
quiz? See if you can name three companies on the list given the following
hints:
Company #1 on the list: Their
spokesperson has gone “where no man has gone before.”
Company #2 on the list: It’s
sometimes referred to as “whole paycheck.”
Company #6 on the list: Their
commercial, which aired only once on TV in 1984, was rated the 12th best
ad campaign of the 20th century by Advertising Age.
Stumped? See below
for the answers. Let us know how many you got right!
Weekly Focus – Think About It…
“(Holiday) gift
suggestions:
To your enemy, forgiveness.
To an opponent, tolerance.
To a friend, your heart.
To a customer, service.
To all, charity.
To every child, a good example.
To yourself, respect.”
--Oren Arnold, novelist,
journalist, and humorist
Answers to quiz:
Company #1 is Priceline.com
Company #2 is Whole Foods Market
Company #6 is Apple
-0.24
|
14.93
|
4.75
|
-2.94
|
19.54
|
11.07
|
2.02
|
|
-0.34
|
15.02
|
4.44
|
-3.14
|
19.38
|
10.21
|
1.28
|
|
0.03
|
17.11
|
4.77
|
-0.81
|
21.43
|
10.96
|
2.51
|
|
-0.95
|
16.46
|
3.96
|
-5.56
|
20.03
|
10.67
|
2.36
|
|
-0.07
|
11.92
|
4.61
|
-2.80
|
17.08
|
8.98
|
-1.25
|
|
0.06
|
15.13
|
5.42
|
-1.84
|
20.26
|
13.16
|
3.50
|
|
-0.25
|
16.29
|
5.43
|
-0.40
|
22.04
|
15.22
|
5.05
|
|
0.06
|
13.66
|
4.79
|
-3.96
|
17.54
|
13.35
|
1.89
|
|
0.35
|
15.57
|
6.07
|
-0.91
|
21.32
|
10.87
|
3.45
|
|
0.04
|
13.42
|
6.25
|
-3.90
|
19.22
|
13.23
|
4.84
|
|
0.07
|
13.47
|
6.22
|
-3.36
|
20.16
|
12.15
|
4.47
|
|
0.05
|
11.15
|
5.56
|
-5.87
|
15.63
|
14.25
|
3.19
|
|
0.01
|
15.71
|
6.97
|
-2.42
|
21.86
|
13.30
|
6.90
|
|
-0.02
|
16.72
|
5.00
|
-0.92
|
21.45
|
12.00
|
3.26
|
|
-0.68
|
15.51
|
4.23
|
-5.26
|
19.19
|
11.55
|
2.38
|
|
0.02
|
12.91
|
5.07
|
-2.40
|
18.26
|
9.66
|
0.24
|
©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:
Naming a Trust as Your IRA Beneficiary
If you are thinking about naming a trust
as your IRA beneficiary here is a video with all the facts.
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.
* This newsletter was prepared by Peak
Advisor Alliance. Peak Advisor Alliance is not affiliated with the named
broker/dealer.
* 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.
* To unsubscribe from our “market commentary” please reply to this e-mail
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