Schwartz Financial Weekly Market Commentary 4/22/13

 

The Markets

 

It was a wild, wild week.

 

Last Monday, bombs exploded near the finish of the Boston Marathon. Not long after, media outlets let the public know letters to President Obama and a senator from Mississippi contained the poison ricin. On Wednesday, the town of West, Texas was flattened by an explosion at a fertilizer plant. By the end of the week, a man had been arrested for sending the ricin letters, the city of Boston had been locked down, the bombing suspects had been captured, and folks were returning to their homes in West, Texas.

 

The week’s economic news wasn’t all that encouraging. The pace of economic growth in China slowed unexpectedly, the International Monetary Fund reduced its 2013 growth forecast for the United States for the fourth time, earnings results were mixed, and an index of leading economic indicators in the Unites States unexpectedly moved lower. On the plus side, new home construction hit a five-year high. All three major indices – the Dow Jones Industrials Index, The Standard & Poor’s 500, and the NASDAQ – finished the week down more than 2 percent.

 

The most significant move of the week took place in the gold market which lost about 9 percent on Monday. That was the biggest one day fall in 30 years. The market recovered some value later in the week, finishing down about 8.5 percent. According to The Economist, “The usual explanation for sharp price movements, when an economic rationale seems lacking, is that someone is selling off their holdings at any price. Some have pointed at Cyprus which may have to sell gold in response to its debt crisis. Although Cyprus’ gold holdings are small, the fear is that other troubled eurozone nations may follow suit.”

 

Will this week be calmer? It’s possible, but economic news will include the first estimate of U.S. GDP growth for first quarter. According to Reuters, GDP growth is forecast at 3 percent annualized even though fourth quarter’s GDP growth was 0.4 percent annualized.

 

Data as of 4/19/13	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-2.1%	9.1%	13.0%	9.1%	2.3%	5.7%
10-year Treasury Note (Yield Only)	1.7	N/A	2.0	3.8	3.7	4.0
Gold (per ounce)	-8.5	-17.0	-14.8	7.4	8.9	15.4
DJ-UBS Commodity Index	-1.8	-5.4	-4.4	-0.4	-9.1	1.3
DJ Equity All REIT TR Index	-0.3	12.5	22.6	18.3	6.7	12.4

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.

 

Are you responsible for your loved one’s unpaid debt? It’s never easy when someone dies. Grief is a powerful, and sometimes debilitating, experience that often leaves next of kin vulnerable. Unfortunately, there is a group that sometimes tries to take advantage of family members in mourning. No, they’re not scammers or confidence men. They’re debt collectors who try to persuade family members to accept responsibility for hospital bills, credit card balances, auto loans, and other debts incurred by the deceased even though family members have no legal obligation to pay.

 

People don’t always know when someone dies, their debts die with them. There are exceptions to this, particularly for spouses. If you live in a community property state, typically, spouses share property and debts equally. Non-spouse family members, however, have no obligation to pay outstanding debts of the deceased unless they have co-signed a debt agreement.

 

Regardless of these facts, debt collectors may contact you after the death of a loved one. The AARP Bulletin reported “debt collection agencies frequently employ specially trained representatives who make sympathetic calls to husbands, wives, children, and other family members to urge them ever-so-gently to pay what the loved one owed.” The Bulletin advised family members who receive these calls to hang up. There is an established procedure for collecting debts from a deceased person. It’s called probate, and it is the appropriate way for debt collectors to pursue collections after death.

 

After receiving numerous complaints about death-collections practices, the Federal Trade Commission (FTC) investigated the situation by listening to recordings of calls between collectors and mourners. The FTC determined that some debt collectors misled relatives into believing they had to pay the deceased’s debts. As government agencies are apt to do, the FTC issued new guidelines. Debt collectors should discuss a dead person's debt only with the spouse or someone chosen by the estate to discuss the matter.

 

The next time you revise your will, you may want to designate someone to discuss any outstanding debts after your death. It could save your spouse some unnecessary heartache.

 

Weekly Focus – Think About It

 

“Everything has beauty, but not everyone sees it.”

--Confucius

Value vs. Growth Investing (4/19/13)

Name	1-Week	YTD	4-Week	13-Week	1-Year	3-Year	5-Year
US Market	-2.18	9.78	0.30	5.14	15.56	11.70	5.12
Large Cap	-1.99	9.69	0.91	5.37	15.31	11.36	4.37
Large Core	-0.82	14.34	3.15	9.26	21.90	13.23	6.45
Large Growth	-2.98	5.47	-0.21	2.05	7.69	10.72	4.85
Large Value	-2.07	9.91	-0.02	5.28	17.35	10.31	1.65
Mid Cap	-2.43	10.57	-0.67	5.04	16.44	12.83	6.57
Mid Core	-2.67	10.20	-0.99	4.52	16.98	14.82	7.68
Mid Growth	-2.50	8.11	-0.80	3.43	10.31	12.08	4.72
Mid Value	-2.14	13.52	-0.23	7.22	22.38	11.48	7.23
Small Cap	-3.39	8.44	-3.19	3.03	15.60	11.34	7.95
Small Core	-3.36	8.79	-2.83	3.53	15.58	10.33	7.24
Small Growth	-3.52	6.20	-3.74	0.88	11.05	12.01	7.13
Small Value	-3.30	10.19	-3.07	4.51	20.17	11.65	9.36
US Core	-1.40	13.04	1.81	7.81	20.43	13.41	6.87
US Growth	-2.92	6.04	-0.55	2.26	8.41	11.17	5.03
US Value	-2.17	10.65	-0.28	5.62	18.53	10.64	3.30

©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:

 

Ask a Child: “What If You Were Elected President?”

 

When it comes to political matters, we frequently hear the thoughts and views of prominent figures in society, or our spouse’s opinions, or sometimes a colleague’s beliefs. But, ever wonder what a child thinks about politics? I know we’re not in an election season, but with all the buzz around Washington, I thought this topic would be interesting. Here’s an article from NewsUSA that I thought I’d pass along with their permission.

 

On the heels of the presidential election in the U.S., more than 6,200 children

from 47 countries are weighing in with their own set of presidential priorities.

 

The third annual Small Voices, Big Dreams global survey, commissioned by

ChildFund International and compiled by GfK Roper, asked children around the

world, “If you were president or leader of your country, what would you do to

improve the lives of children in your country?”

 

Overwhelmingly, children answered that improving education would be a top

priority under their leadership. One in two (50 percent) respondents in

developing countries said they would improve education or provide greater

enrichment opportunities.

 

Ibrahima, a 12-year-old from Guinea, where an overwhelming 77 percent of

children would improve education, said, “If I was the president, I would

encourage education for every child and would multiply school infrastructures

in every village where there are maximum numbers of children of school age.”

(Talk about a smart kid! – Me)

 

The Small Voices, Big Dreams survey allows children like Ibrahima to share

their hopes and dreams and for ChildFund to improve its programs by listening

to children to better address their needs, fears, and hopes for the future.

While most children believe that getting an education is the key to a brighter

future, providing basic needs such as food, clothing and shelter was a concern

for children from both developing and developed nations. Approximately 23

percent of all children surveyed acknowledged that affording these basic items

would improve the lives of children in their countries.

 

Creating jobs is also a top concern for children living in developed countries.

While unemployment rates are declining in the U.S., children still recognize

that country leadership should create employment opportunities and address

inequality. Of all developed countries, 17 percent answered that addressing

poverty and creating jobs are important compared to 13 percent of children in

developing countries.

 

Health care remains a hot topic in the U.S., but only five percent of children

living in developed countries felt that health care needed improvement if they

were president. Surprisingly, only nine percent of children living in developing

countries felt that health care needed improvement in their respective countries.

Despite the differences in priorities, children are hopeful about their futures and

the change they can bring to the world, and that’s good news.

 

There’s a lot of noise and argument in the world, so it can be hard at times to know what’s really important, or who to listen to. If you ever feel that way, consider asking a child what he or she thinks ... the answer might surprise you. At the very least, by listening to children’s opinions, we can learn what’s really important in the world. Because who’s opinion matters more than our future’s?

 

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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