Schwartz Financial Weekly Commentary 9/29/14

Schwartz Financial Weekly Commentary

September 29, 2014

 

The Markets

 

Last week offered some lessons in career management, economics, and investor impulse, among other things. Derek Jeter, the well-loved Yankees shortstop, finished the final home game of his career by smacking a game-winning hit. Throughout his last season, ticket prices for Yankees games soared on the secondary market with $16 bleacher seats selling for more than $200. By the end of the season, ticket vendors were asking as much as $11,000 a seat.

 

On the other coast, Bill Gross, renowned bond guru, did not retire. Gross left the firm he helped found for a smaller money manager. Shares of stock in his new company rose about 43 percent as investors anticipated the potential inflow of new assets. They also anticipated an outflow of assets from his old firm, according to Barron’s, which caused yields on Treasuries and corporate bonds to move higher on Friday, pushing prices south.

 

Gross’s shifting alliance wasn’t the only thing churning bond markets last week, however. Trepidation about global economic growth and geopolitical matters (e.g., Russia vs. Ukraine, etc.) had investors fleeing to “safe assets” earlier in the week. That pushed Treasury yields lower and prices higher. Barron’s reported:

 

“Thursday’s markets were all about a flight from risk, in part because of reports of a Russian draft law to confiscate foreign-owned assets in retaliation for Ukraine sanctions. More important is the message from “Dr. Copper,” suggesting weakness globally, whether in faltering Europe or slowing China. All of which suggests it will be an even more “considerable time” until the Federal Reserve raises interest rates.”

 

Volatility may be the name of the game for a while. Bloomberg suggested looking backward for guidance about the future. In 2013, Fed Chairman Ben Bernanke suggested tapering could begin sooner than expected. Treasury yields leapt by 1 percent as the market threw a “taper tantrum.” Just last week, Chairwoman Janet Yellen warned markets the Federal Open Market Committee statement was not a promise about the timing of rate hikes. Bloomberg said investors remained complacent. Apparently, they weren’t concerned unexpected economic strength in the United States could move the timetable forward.

 

At the end of the week, the Commerce Department reported economic growth was more robust than originally thought during the second quarter. The economy grew at the fastest rate in more than two years.

 

Data as of 9/26/14	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-1.4%	7.3%	16.7%	19.5%	13.3%	6.0%
10-year Treasury Note (Yield Only)	2.5	NA	2.6	1.9	3.3	4.0
Gold (per ounce)	-0.5	1.0	-9.0	-8.8	4.1	11.5
Bloomberg Commodity Index	-0.3	-5.2	-6.7	-6.0	-0.8	-2.3
DJ Equity All REIT Total Return Index	-1.0	14.0	12.2	16.1	15.4	8.7

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.

 

do you have what it takes? If you’re about 74 inches tall, have a deep voice, and have run a marathon, you may. The Economist’s recent article, Look of a Leader, found, “It is remarkable, in this supposed age of diversity, how many bosses still conform to the stereotype.” The article included a mixture of studies describing the characteristics of chief executive officers (CEOs) and other leaders:

 

·         30 percent of Fortune 500 companies’ CEOs are 74 inches or taller (less than 4 percent of Americans are that tall).

·         Voice quality was more important than content when people were asked to evaluate executive speeches.

·         Male CEOs with the deepest voices earn $187,000 more each year, on average.

·         Companies with CEOs who had finished marathons were worth about 5 percent more, on average, than those with CEOs that had not.

 

Don’t worry. All is not lost. Those who have not been gifted with height, athleticism, and lower voice registers can give themselves a leg up by adopting power poses. Amy Cuddy, a Harvard professor (who delivered an exceptionally popular TED talk in 2012), has found non-verbal expressions of power dominance (body language) can influence other people’s perceptions and our own well-being:

 

“There’s one very important thing everyone should do before heading into a job interview, giving a big speech, or attempting an athletic feat... Everyone should spend two minutes power posing. What, you ask, is power posing? It is adopting the stances associated with confidence, power, and achievement – chest lifted, head held high, arms either up or propped on the hips.”

 

These poses can change body chemistry. High-power poses increase levels of testosterone and decrease levels of cortisol (a stress hormone), helping people feel more confident. Low-power poses, on the other hand, increase cortisol levels, causing people to feel more stressed. If you’re after an executive-level position competing with equally qualified candidates, power poses could give you an edge.

 

Weekly Focus – Think About It

 

“Your image isn’t your character. Character is what you are as a person.”

--Derek Jeter, New York Yankee’s recently retired shortstop

Value vs. Growth Investing (9/26/14)

Name	1-Week	YTD	4-Week	13-Week	1-Year	3-Year	5-Year
US Market	-1.50	8.00	-1.17	1.13	17.83	22.10	16.33
Large Cap	-1.29	8.98	-0.56	2.03	19.26	21.97	15.79
Large Core	-1.35	9.24	0.45	2.13	17.99	23.77	16.54
Large Growth	-0.84	10.14	-1.29	3.15	22.18	21.93	17.11
Large Value	-1.71	7.59	-0.81	0.79	17.58	20.50	13.83
Mid Cap	-1.93	7.13	-2.38	-0.38	15.89	22.65	18.05
Mid Core	-1.49	9.52	-1.83	0.45	18.92	23.91	19.16
Mid Growth	-2.04	4.99	-2.74	0.25	12.04	18.95	17.30
Mid Value	-2.28	7.16	-2.59	-1.87	17.08	25.22	17.69
Small Cap	-2.45	0.17	-4.27	-4.07	8.58	21.55	16.45
Small Core	-2.56	1.89	-4.16	-3.89	10.73	21.68	15.96
Small Growth	-1.88	-3.40	-4.02	-4.13	3.04	19.72	16.41
Small Value	-2.90	1.97	-4.64	-4.20	12.16	23.24	16.93
US Core	-1.46	8.76	-0.34	1.36	17.65	23.64	17.08
US Growth	-1.14	8.19	-1.75	2.10	18.73	21.18	17.15
US Value	-1.90	7.13	-1.42	-0.08	17.12	21.66	14.84

 ©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:

 

***MEDIA ALERT***

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SCHWARTZ FINANCIAL SERVICES OFFERS THE “ICE KEY” TO THEIR CLIENT SERVICES

September 25, 2014, Jenkintown, PA – SCHWARTZ FINANCIAL SERVICES is pleased to announce the ICE Key (In Case of Emergency) as part of their client services.  The ICE Key is a key-shaped USB that easily attaches to your key chain.  The ICE Key is meant to help prevent the third leading cause of death in Emergency Rooms, which is mixing medications or giving a patient a medication they’re allergic to.  If a patient is unable to communicate with first responders they simply take the USB key attached to their key ring, place in a USB drive in any computer and have access to the patient’s complete medical history including their Advanced Care Directive or Living Will.  Michael Schwartz, founder of Schwartz Financial Services says “the ICE Key is “the key to who you are” allowing First Responders to give you quality care based on your medical history.  Whether a scheduled health care appointment or emergency situation, the ICE Key is something every adult and child should have; which is why I’m offering it as a complimentary product for my clients as well as personally inputting the information on the fillable pdf file on the key.” 

For more than 30 years, Schwartz Financial Services has been successfully growing, managing and preserving, the wealth of his clients. Michael’s approach to the ICE Key, compliments his old-fashioned style of caring for his clients in this fast-paced, every changing economy and world of technology.

Michael L. Schwartz, RFC®, CWS®, CFS, a registered principal offering securities and advisory services through Independent Financial Group, LLC., A Registered Broker/Dealer and Registered Investment Advisor,  Member FINRA-SIPC  Schwartz Financial and Independent Financial Group are unaffiliated entities

 

www.schwartzfinancial.com

                                        * * *                                   

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, 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.

 

* To unsubscribe from our “market commentary” please reply to this e-mail with    “Unsubscribe” in the subject line, or write us at “mike@schwartzfinancial.com”.