Schwartz
Financial Weekly Commentary
April
27, 2015
The Markets
Remember
the dot-com bubble?
If
so, you’ll appreciate this week’s notable event: The NASDAQ Composite Index,
which includes a fair number of technology stocks, transcended its previous
high (set in March 2000). Share values in the tech sector gained 4 percent last
week, according to Barron’s, as major
players in the space delivered better-than-expected earnings results.
The performance of
technology stocks has some wondering whether this tech boom will be like the
last one. In the go-go 90s, technology start-ups attracted hundreds of millions
in venture capital funding. Some, like not-very-memorable fashion retailer
Boo.com, burned through $135 million of venture capital and went belly up the
year after it launched. Others, like TheGlobe.com, a social network service
with no earnings, went public in 1998 with a target share price of $9. Investors
paid as much as $97 a share during the first day of trading. By the end of
2000, the stock price was worth less than a dollar a share.
Things are
different this time around, according to Financial
Times, largely because a lot more economic activity takes place online today.
About $50 billion is spent on online advertising in the United States (compared
to $8 billion 15 years ago) to reach an audience of three billion people
(compared to 400 million in 2000). The business paradigm has changed, too,
according to Financial Times:
“This time around,
many [companies] are being built to be sold to one of a handful of cash-rich
acquirers… in the consumer internet markets, or… in enterprise software. In
fast growing fields such as artificial intelligence, backers of more mature
start-ups complain about the excess of early-stage venture capital flooding in,
from investors hoping to sell out quickly to one of the giants.”
The Dow Jones
Industrial Average and the Standard & Poor’s 500 Indices showed gains last
week, too.
Data as
of 4/24/15
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard
& Poor's 500 (Domestic Stocks)
|
1.8%
|
2.9%
|
12.7%
|
15.6%
|
11.8%
|
6.2%
|
|
Dow
Jones Global ex-U.S.
|
1.7
|
8.8
|
1.8
|
7.3
|
3.3
|
3.7
|
|
10-year
Treasury Note (Yield Only)
|
1.9
|
NA
|
2.7
|
2.0
|
3.8
|
4.3
|
|
Gold
(per ounce)
|
-1.7
|
-1.4
|
-8.4
|
-10.5
|
0.5
|
10.6
|
|
Bloomberg
Commodity Index
|
-0.2
|
-2.6
|
-26.5
|
-9.7
|
-5.6
|
-4.3
|
|
DJ Equity
All REIT Total Return Index
|
0.9
|
2.3
|
18.0
|
13.0
|
13.0
|
9.0
|
S&P 500, Dow
Jones Global ex-US, 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.
how do you define investment success? The Natixis
2014 Global Survey
of Individual Investors offered some interesting insight into the mindsets of investors in Asia, Europe, Latin America, the Middle East, the United Kingdom, and the United States who participated in the study. There was some good news and some bad news. First, the bad news:
of Individual Investors offered some interesting insight into the mindsets of investors in Asia, Europe, Latin America, the Middle East, the United Kingdom, and the United States who participated in the study. There was some good news and some bad news. First, the bad news:
“Investors around the world say they’ll
need average returns of 9 percent a year, above inflation, to meet their
financial goals, a figure well above the average annual return of the markets
over most rolling periods during the past century.”
This
is a remarkable expectation. Second, it’s not achievable without taking
considerable risk and the vast majority of investors surveyed said, if they had
to choose, they would opt for safety of principal over performance potential.
In other words, they wouldn’t take the risk necessary to earn such a high
potential return. It’s important to set realistic expectations for portfolio
returns; expectations that reflect risk tolerance and long-term financial
goals.
The
good news, at least for U.S. investors, was found when participants were asked
to describe the way they defined investment success. Answers overlapped in many
regions but only the highest percentage of any region is shown for each
statement below:
·
Outperforming my friends/family/colleagues 9 percent Middle East
·
Achieving my short-term investment goals 21 percent Latin America
·
Outperforming the market 22 percent Asia
·
Being on track to achieving my long-term
investment goals 37 percent United States
·
Not losing principal 30 percent Europe
·
Only making gains and no losses 30 percent Europe
U.S.
investors were more likely to have financial plans than investors in other
regions. However, slightly more than one-half of Americans said they had clear
financial goals.
Weekly Focus – Think About It
“There is nothing
worse than a sharp image of a fuzzy concept.”
--Ansel Adams, American photographer
Value
vs. Growth Investing (4/24/15)
|
1.68
|
4.09
|
1.28
|
4.27
|
15.00
|
18.25
|
14.24
|
|
|
1.88
|
3.55
|
1.49
|
3.67
|
15.17
|
17.80
|
14.03
|
|
|
2.00
|
1.09
|
1.25
|
1.36
|
15.11
|
19.35
|
14.84
|
|
|
2.61
|
8.00
|
0.88
|
6.82
|
22.48
|
19.25
|
15.72
|
|
|
0.92
|
1.34
|
2.48
|
2.69
|
7.83
|
14.85
|
11.55
|
|
|
1.18
|
5.78
|
1.01
|
5.87
|
15.40
|
19.80
|
15.15
|
|
|
1.15
|
4.91
|
0.42
|
5.16
|
17.02
|
19.88
|
16.31
|
|
|
1.47
|
9.27
|
1.51
|
8.40
|
19.13
|
18.81
|
15.15
|
|
|
0.91
|
3.16
|
1.15
|
4.04
|
10.08
|
20.74
|
13.93
|
|
|
1.04
|
4.95
|
-0.10
|
6.03
|
11.78
|
18.29
|
13.53
|
|
|
1.39
|
4.67
|
-0.31
|
5.72
|
11.11
|
18.05
|
12.76
|
|
|
0.96
|
7.90
|
0.33
|
7.94
|
14.72
|
18.30
|
14.91
|
|
|
0.78
|
2.45
|
-0.30
|
4.53
|
9.68
|
18.53
|
12.95
|
|
|
1.78
|
2.11
|
0.97
|
2.42
|
15.23
|
19.37
|
15.01
|
|
|
2.28
|
8.24
|
0.97
|
7.20
|
21.29
|
19.09
|
15.60
|
|
|
0.90
|
1.79
|
1.99
|
3.10
|
8.44
|
16.30
|
12.13
|
©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 Happenings
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”.
