The
Markets
Stocks delivered mixed performance
last week. The Dow Jones Industrials and NASDAQ Indices moved lower while
the Standard & Poor’s 500 and Russell 2000 Indices moved higher for the week.
Stocks were helped by positive economic news in the United States, including
modestly positive retail sales for January, improved consumer sentiment, and a
decline in initial jobless claims. However, these positives were offset to some
extent by concerns about weakness overseas. Germany reported that its economy
contracted during the fourth quarter of 2012. It’s the country’s worst economic
performance since 2009.
Overall, the major stock indices
remain in positive territory for the year. They’ve been buoyed, in part, by
better than expected fourth quarter earnings. On January 1, 2013, analysts
expected profitability of companies in the S&P 500 Index would increase by
about 2.9 percent year-to-year. As 2012 fourth quarter’s earnings season headed
toward the finish line last week, that estimate had almost doubled to 5.6
percent. About 70 percent of companies have exceeded analysts’ expectations so
far. On average, over the long term, about 62 percent of companies beat
expectations.
The yield on benchmark 10-year
Treasury bonds continued to hover around 2 percent during the week. Reports of
weaker than expected economic growth in Europe during the last quarter of 2012
may have increased demand for Treasuries. When demand increases, prices often
go up and yields go down. Bond yields also have been affected by the Federal
Reserve’s quantitative easing program. The Fed has been buying Treasury bonds in
an effort to help support the economy. In general, these purchases are believed
to be keeping bond yields lower than they might be otherwise. Quantitative
easing will not continue indefinitely which may be the reason the Financial
Industry Regulatory Authority issued a statement last week that said, “Many
economists believe that interest rates are not likely to get much lower and
will eventually rise. If that is true, then outstanding bonds, particularly
those with a low interest rate and high duration may experience significant
price drops as interest rates rise along the way.”
Data as of 2/15/13
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
0.1%
|
6.6%
|
13.1%
|
11.6%
|
2.4%
|
6.0%
|
|
10-year Treasury Note (Yield Only)
|
2.0
|
N/A
|
1.9
|
3.7
|
3.8
|
4.0
|
|
Gold (per ounce)
|
-3.4
|
-4.8
|
-7.0
|
13.7
|
12.1
|
16.6
|
|
DJ-UBS Commodity Index
|
-1.4
|
0.1
|
-3.8
|
1.2
|
-7.0
|
1.5
|
|
DJ Equity All REIT TR Index
|
0.4
|
5.0
|
18.2
|
22.5
|
7.6
|
12.7
|
Notes:
S&P 500, 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, 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.
children are targeted for identity theft far MORE
OFTEN than you might think. That’s
right. A 2012 report from Carnegie Mellon CyLab found children are targeted for
identity theft 35 times more frequently than adults. That’s because the unused
social security numbers assigned to children for tax purposes are uniquely valuable
to identity thieves. These numbers can be paired with any name and address and used
for many years. Often the theft isn’t discovered until a child applies for a student
loan or a job, or tries to buy a mobile phone or a car.
The report is based on 42,000 identity
protection scans of children, ages 18 and under, that were completed during
2009 and 2010. Researchers found social security numbers for more than 4,300
children – 10.2 percent of those scanned – were being used by someone else (a
stranger, a parent, or another family member) to:
·
Buy homes and automobiles
·
Establish credit card accounts
·
Secure employment and get driver’s licenses
Source: Child Identity Theft, Richard Power,
Carnegie Mellon CyLab
The
youngest victim was five months old. The victim of the largest fraud (about
three-quarters of a million dollars) was a 16-year-old girl.
The first step in protecting your child’s social
security number is to check with credit bureaus and find out whether a file has
been opened using your child’s social security number. In many cases, even if
the number is being used, your child’s full identity has not been stolen. In
addition to contacting credit bureaus, watch for warning signs your child’s
social security number may be in play. These include receiving:
·
Pre-approved
credit card offers in your child’s name
·
Notices from the
IRS indicating your child didn’t pay income taxes
·
Calls from
collection agencies asking for your child
Source: Child
Identity Theft, Richard Power, Carnegie Mellon CyLab; Federal Trade Commission Consumer
Information, Child Identity Theft,
August 2012
If you would like to learn more about how to protect
your child from identity theft, visit the Federal Trade Commission’s web site
at www.ftc.gov,
and click on Privacy and Identity, Repairing Identity Theft, and then Child
Identity Theft.
Weekly
Focus – Think About It
“The greatest pleasure in life is doing what people
say you cannot do.”
--Walter
Bagehot, British economist and journalist
Value vs. Growth Investing (2/15/13)
|
0.23
|
7.22
|
3.58
|
13.83
|
15.68
|
15.12
|
5.33
|
|
|
0.08
|
6.44
|
3.08
|
12.31
|
15.56
|
14.18
|
4.44
|
|
|
0.46
|
8.02
|
4.12
|
13.71
|
18.79
|
14.93
|
5.81
|
|
|
-0.42
|
4.55
|
2.16
|
10.22
|
11.92
|
14.16
|
5.80
|
|
|
0.27
|
7.00
|
3.09
|
13.25
|
16.43
|
13.51
|
1.55
|
|
|
0.50
|
9.23
|
4.83
|
17.40
|
15.83
|
17.44
|
7.09
|
|
|
0.96
|
9.50
|
5.18
|
17.34
|
16.79
|
19.41
|
8.71
|
|
|
0.04
|
8.03
|
3.93
|
15.78
|
11.47
|
17.09
|
5.66
|
|
|
0.51
|
10.22
|
5.43
|
19.13
|
19.41
|
15.76
|
6.75
|
|
|
0.97
|
9.53
|
5.15
|
19.93
|
16.23
|
17.48
|
8.80
|
|
|
0.99
|
9.19
|
4.90
|
19.79
|
15.39
|
16.32
|
8.27
|
|
|
0.55
|
8.63
|
4.14
|
18.65
|
13.27
|
18.35
|
7.94
|
|
|
1.33
|
10.75
|
6.39
|
21.29
|
20.14
|
17.76
|
10.08
|
|
|
0.61
|
8.43
|
4.41
|
14.87
|
18.28
|
16.03
|
6.69
|
|
|
-0.27
|
5.49
|
2.64
|
11.83
|
11.86
|
15.12
|
5.97
|
|
|
0.39
|
7.90
|
3.79
|
14.96
|
17.25
|
14.25
|
3.17
|
©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:
The Ant and the Grasshopper
When I ask
people what their number one financial goal is, many of them say things like
this:
“Pay off my house.”
“Buy a better car.”
“Go on vacation.”
“Pay off my credit card debt.”
Those are
all really good goals to have. But there’s
one I think that’s just as important as all the rest: preparing for retirement.
Now, just about everyone would agree that preparing for retirement is
important. But thinking something and
actually doing it are two completely different things. It can be hard to prepare for retirement,
because when you retire, you’re not actually buying something with a price tag
on it, like a car. And you’re not
getting monthly bills to pay, like you do with a mortgage or a credit
card. Because retirement is often far
off, and because it’s a state of being more than just a single event, preparing
for it sometimes takes a back seat to other financial concerns.
But it
shouldn’t. Retirement plays as big a
part of our lives as anything else, and it costs as much, too. The biggest thing to remember is that our
expenses don’t go down after we retire.
In fact, sometimes they go up.
Our income, on the other hand, does
go down. And if our income goes
down, while our expenses stay the same, well … that’s not a fun equation to
solve. You also have to consider your
discretionary spending, like travel, presents for the grandkids, and the
like. Because more than anything else,
retirement should be enjoyable.
Another
thing to remember about retirement: the average lifespan is longer than ever
before. If we take reasonable care of
ourselves, most of us can expect to live well into our seventies or
beyond. So retirement is not only expensive, but long. It’s crucial that our
money lasts as long as we do.
So how do
we prepare for retirement? The best
thing to do is to start setting money aside, and to start now. Here’s what the
legendary fabler Aesop has to say about it, in his story The Ant and the Grasshopper.
The Ant and the Grasshopper
In
a field one summer’s day, a Grasshopper was hopping about, chirping and singing
to its heart’s content. An Ant passed
by, bearing along with great toil an ear of corn he was taking to the
nest.
“Why
not come and chat with me,” said the Grasshopper, “instead of toiling and
moiling in that way?”
“I
am helping to lay up food for the winter,” said the Ant, “and recommend you to
do the same.”
“Why
bother about winter?” said the Grasshopper.
“We have got plenty of food at present.”
But the Ant went on its way and continued its toil. When the winter came the Grasshopper had no
food and found itself dying of hunger, while it saw the ants distributing every
ear of corn and grain from the stores they had collected in the summer. Then the Grasshopper knew:
It is best to prepare for the days
of necessity.
To be like
the ant instead of the grasshopper, start setting aside money for your own days
of necessity. There are many ways to do
it, from prudent investing to simply setting aside a little bit of your
paycheck every month in a special savings account. But whatever you choose, do it soon and do it
consistently. It’s the best way to make
retirement a long and fruitful summer, rather than a cold and bitter winter.
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.
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