Schwartz
Financial Weekly Commentary
November
11, 2013
The Markets
After last week’s surprisingly strong employment
report, it’s almost possible to picture Ben Bernanke slapping trail dust from
his leg, ducking his head, and saying, “Just doin’ my job.”
After all, running the economy is as laden with
complications and unexpected events as a cattle drive. Richard Graboyes, an
economist who was once the Director of Education for the Federal Reserve Bank
of Richmond, wrote that driving cattle seems “arduous, but simple – walk some
cattle from point A to point B. But, the endeavor is fraught with natural and
human risks for both rancher and driver.”
Clearly, the head of the Fed and the head of a cattle
drive face different challenges. According to The Federal Reserve System: Purposes and Functions publication:
“The Federal
Reserve sets the nation's monetary policy to promote the objectives of maximum
employment, stable prices, and moderate long-term interest rates. The challenge
for policymakers is that tensions among the goals can arise in the short run
and that information about the economy becomes available only with a lag and
may be imperfect.”
Last week, the employment numbers seemed to support the
idea the economy is gaining steam. According to Forbes, employers added more
than 200,000 jobs in October, which was far more than economists had
anticipated. The government continued to employ fewer people (employees
furloughed during the government shutdown were still counted as being
employed). There were 12,000 fewer government jobs in October, and 94,000 fewer
for the year. The biggest employment gains were in the hospitality, retail,
technical services, manufacturing, and health care sectors.
It’s not time to whoop and holler, though. The New York Times reported the labor force
participation rate fell to 62.8 percent, which is a 35-year low. More than
700,000 jobs disappeared during October which was the largest monthly drop
since the end of 2009. A smaller labor force can make overall unemployment rate
appear to be lower than it is. Let’s hope the labor force isn’t like a herd of cattle
that moves too fast and arrives at market a lot skinnier and worth a lot less.
Data as of 11/8/13
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard
& Poor's 500 (Domestic Stocks)
|
0.5%
|
24.2%
|
28.5%
|
13.1%
|
14.0%
|
5.4%
|
|
10-year
Treasury Note (Yield Only)
|
2.8
|
NA
|
1.6
|
2.6
|
3.8
|
4.5
|
|
Gold
(per ounce)
|
-1.6
|
-24.1
|
-25.1
|
-2.5
|
11.3
|
12.9
|
|
DJ-UBS
Commodity Index
|
-0.5
|
-11.4
|
-12.9
|
-7.1
|
-1.2
|
-0.3
|
|
DJ
Equity All REIT TR Index
|
-3.9
|
3.6
|
8.1
|
9.4
|
18.4
|
9.3
|
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.
if you were asked to compare teachers’ social status
to that of other
professions, how would it compare? Are teachers like
doctors? Librarians? Social workers? Nurses? Local government officials? Web
designers? Lawyers? Policemen? Engineers? Accountants?
Education
and training have a profound effect on economies and individuals. In the United
States, people who have graduated from college tend to earn more than those who
have graduated from high school. Earning an MBA, JD, or MD can translate into
significantly higher earnings over a lifetime. Clearly, becoming educated has a
significant economic value.
What
value, then, do we place on those who provide education? How much respect do we
have for the people who teach and train us? As it turns out, the answer varies
widely from country to country. According to the Varkey GEMS Foundation’s
Global Teacher Status Index survey, which surveyed 21 countries to determine
the status of teachers, people in China, Greece, and Turkey have the highest
level of respect for teachers and their social standing.
So,
how does the teaching profession compare to other professions? In the Czech
Republic, Egypt, Switzerland, and many other countries, survey respondents said
teachers have the status of social workers. In Brazil, France, Turkey, and the
United States, people think teachers are roughly on par with librarians. The
Japanese think teachers have the same status as local government managers. More
than one-third of Chinese participants said teachers had the same status as
doctors. According to the report:
“The U.S. ranked in the middle of the
Teacher Status Index with a score of 68.0. Notably, the ranking of primary
school teachers is at the higher end of the table and above all the European
countries. U.S. respondents scored consistently across the different variables
in the study, demonstrating moderate to positive respect for their teachers.”
As
you might expect, the more respect a country had for teachers, the more likely
people in that country were to encourage their children to enter the
profession. Parents in China, South Korea, Turkey, and Egypt were most likely
to encourage kids to become teachers.
Weekly Focus – Think
About It
“Education is the key to success in life, and
teachers make a lasting impact in the lives of their students.”
-- Solomon Ortiz, Former U.S.
Representative from Texas
Value
vs. Growth Investing (11/1/12)
|
0.40
|
26.94
|
6.65
|
4.83
|
32.32
|
15.80
|
17.10
|
||
|
0.56
|
25.86
|
7.23
|
4.87
|
30.53
|
15.51
|
15.64
|
||
|
0.86
|
30.39
|
7.32
|
4.50
|
35.17
|
17.87
|
16.63
|
||
|
-0.47
|
24.19
|
6.96
|
7.28
|
29.34
|
14.89
|
17.95
|
||
|
1.37
|
23.63
|
7.44
|
2.81
|
27.66
|
13.80
|
12.48
|
||
|
-0.13
|
29.60
|
5.10
|
4.56
|
36.70
|
16.51
|
20.94
|
||
|
-0.54
|
26.52
|
5.60
|
4.85
|
33.29
|
17.09
|
21.90
|
||
|
-0.33
|
26.37
|
3.06
|
3.47
|
32.95
|
14.95
|
20.11
|
||
|
0.48
|
36.14
|
6.70
|
5.41
|
44.15
|
17.43
|
20.66
|
||
|
0.32
|
30.59
|
5.31
|
5.22
|
39.02
|
16.37
|
20.93
|
||
|
0.14
|
29.03
|
5.16
|
4.75
|
37.81
|
15.18
|
20.38
|
||
|
0.58
|
34.94
|
4.91
|
7.19
|
43.42
|
17.85
|
21.38
|
||
|
0.21
|
27.95
|
5.90
|
3.76
|
35.95
|
16.08
|
20.99
|
||
|
0.52
|
29.43
|
6.81
|
4.58
|
34.90
|
17.55
|
17.97
|
||
|
-0.36
|
25.28
|
6.00
|
6.48
|
30.91
|
15.16
|
18.66
|
||
|
1.10
|
26.43
|
7.17
|
3.42
|
31.48
|
14.70
|
14.69
|
||
©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:
Are You Prepared
for the Unthinkable?
I think it’s safe to say that most of us can’t imagine the pain and
burden that is placed on a surviving spouse in the event of the untimely death
of their mate. Not only do people not
think that far in advance, but because it’s such an unpleasant thought, most
people try to avoid addressing the issue at all cost – until, of course, it is
forced upon them. But, imagine for a
moment –what would happen if the death of your spouse ended a monthly income
that you had come to depend upon?
It’s not at all uncommon for us to encounter situations where a spouse
who held an investment with another company passes away, but because a
beneficiary was not specified, it causes that income source to be held up for
months, significantly impacting the surviving spouse.
Surviving spouses will likely have to deal with a number of issues, such
as estate settlement, tax issues and changes in social security income – not to
mention investments and health care coverage, etc. It is also possible that the surviving spouse
will encounter pressure from children and/or friends to make changes (such as
relocation). All of this, combined with the emotional loss, can be very
overwhelming. I will address in more
detail a few of these situations in upcoming newsletters.
By planning ahead, our office can help you lessen the impact or minimize
and work through the burdens of losing a spouse. I encourage you to read my upcoming articles
on this topic, but also to contact our office now in the event you have found
yourself in this situation and don’t know where to turn. Although planning ahead won’t lessen your
loss, it can ease the financial burden that is left for you or your loved ones
later on.
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 and advisory services
through Independent Financial Group, LLC., A Registered Broker/Dealer,
Member FINRA-SIPC.
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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