Schwartz Financial Weekly Commentary 3/11/13

The Markets

During periods of strong market performance, like the one we’ve experienced since the end of last year, it’s important to remember that markets ebb and flow over time. Since December 31, 2012, the Dow Jones Industrial Index has gained 9.9 percent and the Standard & Poor’s 500 added 8.8 percent. Last week, the Dow reached highs last seen during 2007, and the S&P 500 ended the week less than one percent from its record high, which was also realized during 2007.

 

While the strong performance of U.S. stock markets has given investors reason to smile, significant economic challenges remain. The effect of sequester spending cuts on the American public and economic growth remains relatively unknown. Also, U.S. earnings growth appears to be slowing and that could affect stock prices. (Earnings are a measure of a company’s profitability and influence its share price.)

 

Global markets were largely up last week, too, as investors seemed to celebrate stronger U.S. and Chinese economic data, as well as the fact that Central banks in Europe, the United Kingdom, Australia, Japan, and Canada met and left their monetary policies unchanged.

 

In the Eurozone, economic growth remained relatively weak and inconsistent. While the European Central Bank has stepped up to help countries affected by poor demand for bonds, insufficient bank-to-business lending has negatively affected economic growth, especially in southern Europe, leaving some countries mired in recession.

 

In the United States, yields on 10-year Treasuries rose higher last week despite Federal Reserve assurances that it will continue to pursue its current monetary policy for some time.

 

Data as of 3/8/13	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	2.2%	8.8%	13.6%	10.9%	4.0%	6.7%
10-year Treasury Note (Yield Only)	2.1	N/A	2.5	3.7	3.4	3.6
Gold (per ounce)	0.0	-6.6	-6.4	12.0	10.3	16.1
DJ-UBS Commodity Index	1.1	-1.3	-4.8	0.7	-8.6	1.1
DJ Equity All REIT TR Index	0.8	6.2	20.3	18.5	8.7	12.8

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.

 

Is a wedding in your future? If so, prepare yourself. Between the planner, venue, food, flowers, cake, dress, drinks, photographer, videographer, invitations, programs, and all the rest, you’re likely to be hearing a lot of this: Ka-ching! Ka-ching!

 

More than $50 billion is spent on weddings in the United States each year. According to the 2012 Wedding Report, the average wedding has about 133 to 143 guests and costs more than $25,000, not including the honeymoon. The good news is the average cost of a wedding in 2011 was less than the average cost in 2007. The bad news is that, according to CostofWedding.com, the cost of any wedding could increase by 50 to 100 percent if the planners choose designer labels, popular event locations, custom products and services, or if they invite significantly more guests.

 

Here are a few tips that may help ensure wedding costs don’t spiral out of control:

 

·         Establish a budget. Set a budget for the wedding, but make sure you build in a cushion of 10 to 15 percent for cost overruns, just as you would if you were putting an addition on your house or remodeling.

 

·         Understand venue and reception costs. When negotiating the cost of your reception, it’s important to ask for the per person cost, all-inclusive. If you’re given an all-inclusive price and you find the words ‘additional costs may be incurred’ or ‘plus the cost of setup and delivery’ in your final contract, ask what those costs are, specifically, and be prepared to negotiate.

 

·         Make smart liquor choices. The drinks served at the reception often are a significant expense. Many venues charge for every bottle opened. To save on the cost, you could opt to serve beer, wine, and champagne for toasts. Alternatively, you could offer signature cocktails that require a single type of liquor, which can help limit the number of bottles opened.

 

After evaluating costs, you may decide that the best option is for the happy couple to elope, marry in an exotic locale, and celebrate with a big party when they return. If that’s not an option, make sure to take advantage of the plentiful online resources available.

 

Weekly Focus – Think About It

 

“The greatest happiness of life is the conviction that we are loved; loved for ourselves, or rather, loved in spite of ourselves.”

--Victor Hugo, French poet and novelist

Office Notes:

 

Happy St. Patrick’s Day!!!

 

St. Patrick’s Day has become a holiday far-removed from its roots.  Nowadays, many of us associate the day with wearing green, watching for leprechauns, eating corned beef, and the like.  Many of these traditions actually come from Irish immigrants, who after coming to America transplanted and adapted their customs for life in a new country.  

But the day itself is far older, as is the man for whom it’s named.  Who was Saint Patrick?  Why do we celebrate him?  And what is the significance of March 17^th? 

Much of what we know about St. Patrick was actually written long after his death, which means most of it should be taken with a grain of salt.  What we do know is that Patrick was born in Scotland, sometime in the late 4^th century.  Some sources claim he was born in the year 387, but since there were no birth certificates at the time, it’s impossible to say for certain. 

There are only two surviving documents that historians agree were written by the real Saint Patrick.  One is a letter called Confessio, which is Latin for Declaration.  In this letter Patrick wrote about his life.¹ 

When Patrick was 16, he was kidnapped by raiders and taken to Ireland.  There he was sold to an Irish chieftain, and for about six years worked as a slave.  During this time, he began to pray.  As Patrick himself told it, “In a single day, I have said as many as a hundred prayers, and in the night nearly the same.”

Strange as it may seem, his time as a slave was probably one of the best things that could have happened to him, as far as preparing him for his vocation in life.  Not only did he become deeply spiritual, but he mastered the Irish language and learned the culture of the island.² 

In his Confessio, Patrick wrote that an angel encouraged him to escape.  After traveling on foot for 200 miles, Patrick finally reached the coast and found a ship ready to sail.  Soon he was back home with a new-found dedication to serving God.  Over the next several years, Patrick attended various monasteries before being promoted to the priesthood.  At some point during his service, Patrick received a vision … a vision that would ultimately lead him back to Ireland.

 

“In a vision of the night, I saw a man whose name was Victoricus coming as if from Ireland with innumerable letters, and he gave me one of them, and I read the beginning of the letter: ‘The Voice of the Irish’; and as I was reading the beginning of the letter I seemed at that moment to hear the voice of those who were beside the forest of Foclut which is near the western sea, and they were crying as if with one voice: ‘We beg you, holy youth, that you shall come and walk again among us.’  And I was stung intensely in my heart so that I could read no more, and thus I awoke.”¹

Back in Ireland, Patrick worked tirelessly to convert the island’s people to Christianity.  It was no easy task.  Prior to his arrival, Druidism was Ireland’s main religion, and the Druids were understandably hostile.  Patrick was beaten, robbed, and even imprisoned, but still managed to baptize “thousands of people.”  He converted the sons of kings, which went a long way to legitimizing his religion.  And he fought against slavery, excommunicating other Christians who practiced it.

Patrick died on March 17^th, probably in the year 460.  So when we celebrate St. Patrick’s Day, we’re actually celebrating the anniversary of his death.  And while most of the day’s traditions are modern, a few stem from Patrick himself.  For example, Patrick is sometimes said to have used the three-leafed shamrock as a way to preach the Christian doctrine of the Holy Trinity.  Shamrocks, of course, are still associated with St. Patrick to this day. 

Patrick was an incredibly important figure in the history of Ireland, and much of the country’s religious and cultural history stems from him.  That’s why he was later given sainthood, and why the Irish continue to celebrate him to this day.  Over time, his name has become attached to more modern traditions, but this isn’t unusual.  Most holidays have evolved to reflect many different customs.  I think it’s only natural.  It is society’s way of wedding the past with the present; of keeping the past alive, long after the memory of it has faded away. 

So now you know a little bit about the history of St. Patrick’s Day … and maybe the man behind the myth will become a little more real. 

From all of us at Schwartz Financial, have a safe and happy St. Patrick’s Day!  

 

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.

 

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