Schwartz
Financial Weekly Commentary
September
15, 2014
The Markets
If you’re familiar
with fairy tales, you’ve probably encountered a story or two that involves the
granting of wishes. Usually, these are cautionary tales. Well, there was some
wishing going on around the globe last week and, if the wishes come true, the
outcomes may be less beneficial than anticipated.
In the United
States, some folks wish Chairwoman Janet Yellen and her peers at the Federal
Reserve would set a timetable for rate hikes. Barron’s offered the opinion that abandoning a data-driven process
in favor of a calendar-driven one would be a mistake. Recent improvements
including a slight spike in consumer confidence, somewhat stronger consumer
spending, and a generally improving job market remain mired in residue of the
Great Recession. For instance:
“Housing remains in
the doldrums as potential buyers cite insufficient savings, excess debt, poor
credit scores, and, yes, their incomes as stumbling blocks on the road to home
ownership. Higher rates won't fix any of those problems, and even setting a
schedule for rate hikes could create head winds if it causes loans to become
harder to get in anticipation of the change.”
Across the pond, the
United Kingdom of Great Britain and Northern Ireland (U.K.) may cover a lot
less territory if Scotland wins independence in next week’s referendum. Until
recently, few thought the measure had enough support to pass, but the latest
polls say that it may happen. While independence may seem like a reasonable
objective, there are economic and other challenges attached that could
profoundly affect the new country. These include:
·
What
currency will the Scots adopt? (U.K. leaders have said Scotland cannot keep the
Pound.)
·
How
will the U.K.’s national debt be divided? (By population? By gross domestic
product?)
·
How
will markets respond to Scottish independence? (Will Scotland establish its own
stock market? Will companies relocate to England?)
·
How
will the remainder of the United Kingdom be affected?
There is an adage
that may prove appropriate here: Be careful what you wish for because you just
might get it.
Data as
of 9/12/14
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard
& Poor's 500 (Domestic Stocks)
|
-1.1%
|
7.4%
|
18.0%
|
19.5%
|
13.6%
|
5.8%
|
|
10-year
Treasury Note (Yield Only)
|
2.6
|
NA
|
2.9
|
1.9
|
3.4
|
4.2
|
|
Gold
(per ounce)
|
-2.7
|
2.5
|
-7.3
|
-12.4
|
4.3
|
11.9
|
|
Bloomberg
Commodity Index
|
-2.8
|
-3.5
|
-6.6
|
-8.8
|
-0.5
|
-1.7
|
|
DJ Equity
All REIT Total Return Index
|
-5.0
|
15.3
|
16.1
|
14.9
|
16.6
|
8.8
|
S&P 500,
Gold, Bloomberg 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 Total Return 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.
Beware unpaid internships! For
decades, internships have offered opportunities to learn new skills and find
gainful employment. However, a rise in of lawsuits involving unpaid interns and
the companies where they worked has focused new attention on the subject. In an
article on the topic, The Economist offered some
information worth pondering:
“Banks and accountancy firms now hire more
than half of their recruits through their internship programs; careers in
politics, medicine, the media, and many other fields nearly always begin with
an internship. Two-thirds of American students have at least one internship
under their belts before they leave college. But they are often badly
compensated: nearly half the internships in America are completely unpaid. How
do unpaid internships exist in countries that have minimum-wage laws?”
It’s
an interesting question and one that’s answered in Fact Sheet #71 from the U.S. Department of Labor. The sheet sets
forth six criteria that must be met for interns to work without pay. In broad
terms, unpaid internships:
1. Must be similar to
training provided in an educational environment
2. Must benefit the
intern
3. Must not displace
regular employees
4. Must not provide
immediate advantage to the employer
5. Do not necessarily
end in employment
6. Are clearly
understood to be unpaid by both employer and intern
So,
which internships, paid or unpaid, are most likely to help someone land a job?
A recent study from LinkedIn examined
the availability of internships by field as well as the likelihood of an
internship leading to a full-time position. The best bets for prospective
interns were accounting, computer networking, semiconductors, aviation and aerospace,
investment banking, design, and consumer goods.
Weekly Focus – Think About It
“Individual
commitment to a group effort – that is what makes a team work, a company work,
a society work, a civilization work.”
--Vince Lombardi, Coach of the Green Bay Packers (1959-1967)
Value
vs. Growth Investing (9/12/14)
|
-1.05
|
8.61
|
2.97
|
3.23
|
19.90
|
22.23
|
16.50
|
|
|
-0.99
|
8.94
|
2.91
|
3.44
|
20.40
|
22.02
|
15.81
|
|
|
-0.30
|
9.13
|
3.46
|
3.42
|
18.90
|
24.10
|
16.58
|
|
|
-1.07
|
10.18
|
3.16
|
4.83
|
24.53
|
22.06
|
17.07
|
|
|
-1.57
|
7.54
|
2.11
|
2.09
|
17.73
|
20.09
|
13.90
|
|
|
-1.32
|
9.12
|
3.27
|
3.27
|
19.77
|
22.98
|
18.52
|
|
|
-1.54
|
11.09
|
2.98
|
3.55
|
22.45
|
24.14
|
19.42
|
|
|
-1.03
|
7.13
|
3.89
|
4.02
|
15.72
|
19.31
|
17.84
|
|
|
-1.38
|
9.42
|
2.95
|
2.21
|
21.56
|
25.66
|
18.31
|
|
|
-0.91
|
3.57
|
2.80
|
0.85
|
15.06
|
22.05
|
17.31
|
|
|
-0.87
|
5.40
|
2.76
|
0.88
|
17.30
|
21.65
|
16.84
|
|
|
-0.54
|
-0.46
|
3.12
|
1.17
|
8.89
|
20.60
|
17.13
|
|
|
-1.32
|
5.74
|
2.53
|
0.56
|
19.23
|
23.93
|
17.91
|
|
|
-0.60
|
9.24
|
3.31
|
3.27
|
19.49
|
23.94
|
17.23
|
|
|
-1.03
|
8.85
|
3.30
|
4.42
|
21.60
|
21.40
|
17.28
|
|
|
-1.51
|
7.79
|
2.30
|
2.01
|
18.62
|
21.48
|
15.07
|
©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 Difference Between The Two Kinds Of 529
Plans
Let me start off
by saying, we all know that one of the most important parts of being a parent
is making sure that your child is well provided for. A large part of providing
for your child is making sure that they get a good education. Which brings me
to the topic of this letter: funding your child’s education.
In today’s world,
it’s becoming harder and harder to afford a good college education. The last
thing you want is your 35 year old son or daughter sitting on your couch,
flipping through different TV channels all day, eating all your food, and
sucking the life out of your bank account. So, it’s very important that you
plan things out in a way that won’t bankrupt you, but will still allow you to
provide the best quality of education to your children, so they may be
successful. Just like you!
Most parents,
when they think of helping their child out with school, they think of writing a
check to help pay for tuition, books, etc. Well, rather than doing that, why
not consider a 529 plan or some other kind of education-funding account?
A 529 plan allows
you to put your money, specifically, toward your child’s education. Not only is
it being put solely toward that purpose, but it will also grow. On top of that
… it’s tax-free!
The most common
form of a 529 plan is called a college savings plan. This plan is an investment
that covers tuition, room & board, any fees, and on top of that, books,
computers, and other related materials.
Another nice
thing about these plans is that there are no age limits. This means that you
can not only open one for a child, but for an adult as well.
529 plans can
provide some great tax benefits. They are tax-free, meaning they are exempt
from federal tax, as well as state taxes. At least, so long as the funds are
used solely to pay for college expenses.
The other form of
a 529 plan is called a prepaid tuition plan. These are a little different.
College savings
plans have no state guarantee, but they can grow. A prepaid tuition plan, on
the other hand, is generally guaranteed by the state, but cannot grow.
A prepaid tuition
plan mainly covers tuition and mandatory fees, and in some cases room &
board.
Unlike the
college savings plan, prepaid tuition plans do have age limits for the
beneficiaries, and on top of that, has a limited enrollment period.
So, now you know
some of the differences between the two types of 529 plans.
Regardless of
which type of plan you choose, there are many benefits of helping your child
pay for their education is that you will be proactively making a difference in
their life. You’re helping them understand the importance of getting a good
education, all the while helping them pay for it. They will be grateful to you
for both of those reasons.
Another
monumental benefit is the fact that helping them could help you. More often
than not, children that don’t get financial aid will end up dropping out or
getting themselves deep into debt. If you do a good job at making sure that
doesn’t happen, you’re also making sure that you aren’t paying their way once
you enter retirement. On top of that, they may end up having to take care of
you someday, so this ensures that they’ll be able to do so comfortably.
So, what have we
learned today?
Being the
catalyst in making sure that your child gets a good education ensures that you
aren’t paying their way when they’re well into their adult life, and ensures
that when you retire, your money stays where it should: in your pocket!
If you have any
questions regarding 529 plans, just give me a call and I’d be happy to talk to
you about it.
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
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Michael
L. Schwartz, RFC, CWS, CFS, a registered principal offering securities and
advisory services through Independent Financial Group, LLC., a registered
broker-dealer and investment advisor.
Member FINRA-SIPC. Schwartz Financial and Independent Financial Group
are unaffiliated entities.
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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