The Markets
Really?!
Okay. Okay. If
you’ve been trekking through Siberia or Patagonia for about a year, then maybe
it surprised you to hear the minutes from the Federal Reserve Open Market Committee
meeting showed it expects to begin tapering Quantitative Easing (QE) in the coming
months.
However, since the
Fed has been telling anyone who will listen – telling them over and over and
over again – that its intent is to slow the pace at which it buys bonds as the
U.S. economy strengthens (and since most people haven’t been exploring the hinterlands
where the convenience of modern communications may not be readily available),
it’s difficult to understand why that information was so surprising that it
pushed stock and bond markets significantly lower.
It might have been
easier to understand market declines if they had occurred on Tuesday after the
Organization for Economic Cooperation and Development (OECD) released its
revised economic outlook. In his speech, OECD Secretary-General Angel Gurría
said:
“The recovery of
the global economy is progressing at a moderate and uneven pace. World GDP growth,
which averaged about 4 percent per year in the decade up to the onset of the
global crisis, is expected to reach only 2.7% in 2013, the lowest rate since
2009. While we expect global growth rates to move again towards 4 percent in
2015, the world will continue to be affected by the harsh social legacy of the
crisis… The recovery itself is exposed to potential downside risks, including
fiscal brinkmanship in the United States, unresolved banking problems in the
euro area, the high debt burden in Japan, and financial vulnerabilities in some
large emerging-market economies.”
Gurría also said, in
the OECD’s long-term view, economic weakness was the result of investment
remaining anemic, credit growth remaining subdued, trade
growth gaining sluggishly, and growth in emerging economies faltering.
Regardless, the
markets’ downward foray was short-lived. On Friday, the Standard & Poor’s
500 Index closed above 1800 for the very first time. Other U.S. markets moved
higher as well.
Data as of 11/22/13
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard
& Poor's 500 (Domestic Stocks)
|
0.4%
|
26.5%
|
28.1%
|
14.6%
|
16.2%
|
5.6%
|
|
10-year
Treasury Note (Yield Only)
|
2.8
|
NA
|
1.7
|
2.8
|
3.3
|
4.2
|
|
Gold
(per ounce)
|
-3.2
|
-26.4
|
-28.0
|
-2.8
|
8.7
|
12.3
|
|
DJ-UBS
Commodity Index
|
0.5
|
-11.0
|
-14.1
|
-5.1
|
0.0
|
-0.1
|
|
DJ
Equity All REIT TR Index
|
-2.1
|
2.8
|
6.9
|
11.5
|
21.3
|
9.2
|
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.
an oh-so-brief
brief on digital money… If you read or
watched the news during the past few months, you may already know this, but
there has been an explosion of interest in digital money. That’s the reason you
may be hearing and reading about dozens of companies that are rushing to coin
virtual currency that has real value. It just seems so 21st Century,
doesn’t it?
Odds are you’ve
already used digital money. For example, you used it the last time you purchased
something online. Digital money is what we use when we pay or are paid
electronically. Think smart phones and credit cards. Digital money is not
tangible; however, it is possible to convert digital money that is part of a
large centralized banking system into paper money by making a withdrawal from
an ATM.
In the United
States, the Federal Reserve is responsible for maintaining the integrity of U.S.
bills and coins by setting monetary policy. Digital currency companies offer a
parallel currency universe; a means of transferring electronic money from one
person to another without using traditional banking or money-transfer systems.
Digital money
companies appear to be delivering American economist Milton Friedman’s dream,
according to The Economist. Years
ago, Friedman suggested the Federal Reserve be abolished and replaced by an
automated system that would increase money supply at a steady, pre-set rate. He
believed such a system would better control inflation, making spending and
investment decisions more certain. The
Economist article said:
“In theory, then,
the system ought to keep a lid on inflation – making it attractive to critics
of interventionist monetary policy of the sort practiced since 2008 by America's
Federal Reserve under the label quantitative easing… It offers other apparent
benefits, too. The currency can be used by anyone (unlike credit cards, for
instance), anywhere. Transaction costs are also likely to be lower than those
for traditional payment systems, though these are not in fact zero…”
The Economist goes on to point out a key difference
between central-bank-controlled currencies (which often offer both bills and
coins and digital currencies) and digital currency companies is the former are backed
by a country’s regulations and laws; the latter are answerable to online
communities using the currencies.
Weekly Focus – Think
About It
“A business that makes nothing
but money is a poor business.”
--Henry Ford, American Industrialist
Value
vs. Growth Investing (11/22/12)
|
0.31
|
29.50
|
2.59
|
9.29
|
33.56
|
17.25
|
21.36
|
|
|
0.43
|
28.42
|
3.03
|
9.61
|
31.73
|
17.10
|
19.48
|
|
|
0.35
|
32.76
|
3.54
|
9.40
|
36.22
|
19.14
|
19.89
|
|
|
0.21
|
27.03
|
2.01
|
11.03
|
29.12
|
16.70
|
22.43
|
|
|
0.76
|
26.07
|
3.62
|
8.36
|
30.55
|
15.51
|
16.42
|
|
|
-0.14
|
31.99
|
1.47
|
8.34
|
37.77
|
17.54
|
26.40
|
|
|
-0.16
|
28.80
|
1.86
|
8.76
|
34.05
|
18.31
|
27.50
|
|
|
-0.25
|
29.02
|
0.58
|
7.12
|
33.85
|
15.26
|
25.77
|
|
|
-0.03
|
38.39
|
1.98
|
9.20
|
45.75
|
18.97
|
25.81
|
|
|
0.38
|
33.60
|
1.46
|
8.80
|
41.17
|
17.66
|
26.89
|
|
|
0.59
|
32.27
|
1.76
|
8.83
|
39.87
|
16.56
|
26.66
|
|
|
-0.21
|
37.84
|
0.82
|
9.55
|
45.39
|
18.79
|
27.24
|
|
|
0.81
|
30.83
|
1.85
|
8.06
|
38.36
|
17.64
|
26.74
|
|
|
0.27
|
31.85
|
3.07
|
9.23
|
35.96
|
18.82
|
21.76
|
|
|
0.09
|
28.09
|
1.63
|
10.11
|
31.03
|
16.59
|
23.46
|
|
|
0.59
|
28.87
|
3.14
|
8.52
|
34.10
|
16.36
|
18.98
|
©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:
Keep Your Fork
. . .
There
was a woman who had been diagnosed with a terminal illness and had been given
three months to live. So as she was
getting her things “in order,” she contacted her pastor and had him come to her
house to discuss certain aspects of her final wishes.
She
told him which songs she wanted sung at the service, what scriptures she would
like read, and what outfit she wanted to be buried in. The woman also requested to be buried with
her favorite Bible. Everything was in
order and the pastor was preparing to leave when the woman suddenly remembered
something very important to her.
“There’s
one more thing,” she said excitedly.
“What’s
that?” came the pastor’s reply.
“This
is very important,” the woman continued, “I want to be buried with a fork in my
right hand.”
The
pastor stood looking at the woman, not knowing quite what to say.
“That
surprises you, doesn’t it?” the woman asked.
“Well
to be honest, I’m puzzled by the request,” said the pastor.
The
woman explained. “In all my years of
attending church socials and potluck dinners, I always remember that when the
dishes of the main course were being cleared, someone would inevitably lean
over and say, “Keep your fork.” It was
my favorite part because I knew that something better was coming
. . .like velvety chocolate cake or deep-dish apple pie. Something wonderful, and with substance! So, I just want people to see me there in
that casket with a fork in my hand and I want them to wonder, ‘What’s with the
fork?’ Then I want you to tell
them: ‘Keep your fork. The best is yet to come.’”
The
pastor’s eyes welled up with tears of joy as he hugged the woman good-bye. He knew this would be one of the last times
he would see her before her death. But
he also knew that the woman had a better grasp of heaven than he did. She knew that something better was
coming.
At
the funeral, people were walking by the woman’s casket and they saw the pretty
dress she was wearing and her favorite Bible and the fork placed in her right
hand. Over and over the pastor heard the
question: “What’s with the fork?” and over and over he smiled.
During
his message, the pastor told the people of the conversation he had with the
woman shortly before she died. He also
told them about the fork and about what it symbolized to her. The pastor told the people how he could not
stop thinking about the fork and told them that they probably would not be able
to stop thinking about it either. He was
right.
So
the next time you reach down for your fork, let it remind you, oh so gently,
that the best is yet to come.
PLEASE THIS YEAR, HAVE A VERY HAPPY THANKSGIVING!
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
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