Archive Monthly Archives: July 2016

Weekly Market Commentary July 25, 2016

Like a cool breeze on a hot day, the post-Brexit market rally has soothed investors.

The CBOE Volatility Index (VIX), also known as the fear gauge, fell significantly during the past few weeks, according to CNBC.com. The VIX measures investors’ concerns about future volatility. The lower the Index is; the calmer investors are about the future. In late June, the VIX rose as high as 25.76. Last week, it hovered around 12.

Barron’s reported the latest advisory sentiment readings from Investors Intelligence showed bullishness at 54.4 percent, up two percentage points from last week. That’s the highest reading since April 2015 (just before the S&P 500 hit its previous record).

The relative serenity of investors has been good for markets. By the middle of last week, the Dow Jones Industrial Average (Dow) and the Standard & Poor’s 500 Index (S&P 500) were at record highs. Not everyone is convinced investor positivity is a good sign, however. Barron’s explained:

“After nearly two years of sideways trading, albeit with some large swings, the indexes finally gave what should be an important buy signal. But is it really? ...I am not talking about the simple divergence between price and volume during the June-July rally, although that certainly does not help the bulls. Nor am I considering the seasonal cycle, which teaches us to ‘Sell in May’ and sit out the usually weaker summer months. And I am not talking about any news from politics to Brexit to terrorism…What really bothers me is the lack of dissent in the bullish chorus.”

Contrarians, investors who use popular opinion as a gauge of what not to do, may find themselves leaning toward pessimism.


Data as of 7/22/16
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 0.6% 6.4% 2.9% 8.7% 10.1% 5.6%
Dow Jones Global ex-U.S. 0.0 0.4 -8.9 -1.4 -1.6 0.2
10-year Treasury Note (Yield Only) 1.6 NA 2.3 2.5 3.0 5.0
Gold (per ounce) -0.5 24.3 21.3 -0.2 -3.8 8.1
Bloomberg Commodity Index -2.4 7.7 -11.2 -13.3 -12.5 -6.9
DJ Equity All REIT Total Return Index 1.7 17.9 22.7 12.7 12.2 7.6

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.

Fake charities are on the list. Groups masquerading as charitable organizations to solicit donations from generous-minded individuals are among the twelve cons named in the Internal Revenue Service’s (IRS) ‘Dirty Dozen,’ a list of common scams targeting taxpayers.

Americans tend to be a generous bunch. During 2015, they gave more than $373 billion to charities, setting a record for the second year in a row, according to GivingUSA.org. People gave to all sorts of organizations including:

  • Religion ($119.30 billion)
  • Education ($57.48 billion)
  • Human Services ($45.21 billion)
  • Foundations ($42.26 billion)
  • Health ($29.81 billion)
  • Public-Society Benefit ($26.95 billion)
  • Arts/Culture/Humanities ($17.07 billion)
  • International Affairs ($15.75 billion)
  • Environment/Animals ($10.68 billion)

Millions more may have gone to groups pretending to be charities. The IRS offered some recommendations for avoiding scams. Before you give, get the exact name of the charity. Many fake charities use names that sound similar to those of legitimate charities.

Also, request the charity’s employer identification number and use the IRS’s Exempt Organizations Select Check search tool to review the organization’s tax status and filings. (While you’re at it, you may want to review how much the charity spends on fundraising versus programs to confirm it is spending donations judiciously.)

Once you’ve done your homework, don’t give cash. Making your donation by check or credit card provides a record for tax purposes and is more secure.

Finally, no matter how kind a charity’s representative seems on the phone or in person, do not give him or her personal financial information or other important identification data, like your Social Security number.

Think About It

“You are never too old to set another goal or to dream a new dream.”

-- C. S. Lewis, British novelist

Need some Personalized Advice?

Contact us and we will be happy to point you in the right direction.  No bull.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* 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 afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg 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 Total Return 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.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Stock investing involves risk including loss of principal.

Sources:

[1] http://www.cnbc.com/2016/07/19/no-fear-heres-why-the-vix-

[2] http://www.cboe.com/micro/vix/historical.aspx

[3] http://www.barrons.com/articles/as-investors-sing-a-happy-tune-smart-money-wonders-if-its-time-to-sell-stocks-1469120253

[4] http://www.barrons.com/articles/3-reasons-to-worry-that-stock-rallys-end-is-near-1469050014

[5] https://www.irs.gov/uac/Newsroom/Fake-Charities-Are-a-Problem-and-on-the-IRS-Dirty-Dozen-List-of-Tax-Scams-for-2016-1

[6] http://givingusa.org/giving-usa-2016/

[7] http://www.consumerreports.org/charitable-donations/best-and-worst-charities-for-your-donations/

[8] http://www.brainyquote.com/quotes/quotes/c/cslewis119176.html?src=t_motivational

Weekly Market Commentary July 18, 2016

“Start your engines,” was not in the Department of Labor (DOL)’s June Employment Report Summary, but it may as well have been. A positive jobs report revved investor optimism and sent U.S. stock markets sprinting higher last week.

Job growth was strong in June with 287,000 new jobs created. That helped soothe worries raised by a less than stellar May jobs report. The Wall Street Journal wrote:

“A powerful rebound in hiring last month eased fears about an economic downturn as the U.S. expansion enters its eighth year, putting the nation on solid footing to absorb global shocks and market turbulence.”

Investors appeared to agree the U.S. economic growth would continue apace. The American Association of Individual Investors (AAII)’s Investor Sentiment Survey reported bullish sentiment – the expectation stock prices will rise over the next six months – increased by 5.8 percentage points last week to 36.9 percent. That’s just the second time since November 2015 bullishness has stayed above 30 percent for two weeks in a row.

Money managers didn’t sit in the stands. The National Association of Active Investment Managers reported active managers increased their stock market exposure to 97 percent last week, which is the highest since the group began calculating the measure, according to Bloomberg.

Investors’ enthusiasm was fortified by positive earnings reports and helped some markets reach new highs. The Dow Jones Industrial Average finished Friday at a record high, according to Reuters, and Bloomberg said, “...the S&P 500 Index closed at record highs on four consecutive days, something that hadn’t happened since November 2014.”

The coup in Turkey on Friday threw a wrench into the works. Demand for safe haven assets increased, according to Bloomberg. It wouldn’t be a surprise if markets pulled back to assess.


Data as of 7/15/16
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 1.5% 5.8% 2.6% 8.7% 10.4% 5.8%
Dow Jones Global ex-U.S. 3.7 0.4 -9.5 -0.9 -1.0 0.4
10-year Treasury Note (Yield Only) 1.6 NA 2.4 2.7 2.9 5.1
Gold (per ounce) -2.0 24.9 15.6 1.1 -3.5 7.4
Bloomberg Commodity Index 0.4 10.4 -12.0 -12.3 -12.0 -6.8
DJ Equity All REIT Total Return Index 0.4 15.9 221.4 12.6 12.5 7.7

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.

Look into the crystal ball… Sure, the world has changed during the last decade or two. We’ve gained about 1.6 billion people. (There are now 7.2 billion of us, globally.) There is an app for almost everything. (Just try to ‘catch ‘em all!’) We even job hunt in cyberspace. (Make sure you customize your communications.)

Here are a few other changes that may be coming our way soon:

  • Saltwater crops. One-fifth of the world’s irrigated farmland has been swamped by seawater, and rising sea levels mean more acreage may be at risk. Phys.org reports scientists around the world have been studying how to grow salt-tolerant crops, including potatoes, strawberries, carrots, onions, and lettuce.

  • Custom-engineered bones. “For the first time, pieces of living bone have been grown from the cells of…miniature pigs – and sculpted to replace…a pig's lower jaw, one of the strongest and most complex jaws in the face,” according to LiveScience.com.

  • Smart refrigerators. Someday soon, you may replace your old refrigerator with a smart fridge. The latest models have cameras that connect to your smart phone via Wi-Fi, so you can see what’s inside while you’re shopping at the grocery store.

  • Food-sharing apps. Don’t have time to cook? Log in to a food-sharing app to “connect with people in the same area who have leftover food to give away, allowing surplus to be shared and not wasted.”

  • Dragon silk armor. Genetically modified silkworms – they now share DNA with spiders – are spinning one of the toughest fibers ever made. If it performs well in ballistic tests, the U.S. Army may soon be wearing silk.

Our parents and grandparents saw the arrival of countless innovations – the telegraph, radio, television, automobiles, space travel, and much more. We’re likely to witness some pretty amazing things, too!

Think About It

“It is important for all of us to appreciate where we come from and how that history has really shaped us in ways that we might not understand.”

--Sonia Sotomayor, Supreme Court Justice

Need some Personalized Advice?

Contact us and we will be happy to point you in the right direction.  No bull.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* 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 afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg 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 Total Return 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.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Stock investing involves risk including loss of principal.

Sources:

http://www.wsj.com/articles/u-s-added-287-000-jobs-in-june-1467981259

http://www.aaii.com/sentimentsurvey?a=subnavHome

http://www.bloomberg.com/news/articles/2016-07-15/s-p-500-record-setting-week-lures-cash-before-ending-with-a-thud

http://www.reuters.com/article/us-usa-stocks-idUSKCN0ZV1C2

http://www.unfpa.org/news/how-has-world-changed-last-20-years

http://www.vox.com/2016/7/13/12161974/pokemon-go-holocaust-museum-remove-pokestop

http://www.job-hunt.org/jobsearchmistakes.shtml

http://phys.org/news/2015-04-dutch-saltwater-potatoes-world-hungry.html

http://www.livescience.com/55225-living-bones-grown-in-lab.html

https://www.theguardian.com/business/2016/jul/14/tech-innovations-that-could-reduce-food-waste

http://www.livescience.com/55423-spider-silkworm-silk-protects-army-soldiers.html

http://www.brainyquote.com/quotes/quotes/s/soniasotom564458.html

Weekly Market Commentary July 11, 2016

When the yield on 10-year Treasuries finished last week at 1.37 percent, a record closing low, Barron’s called it a Kübler-Ross rally.

Elizabeth Kübler-Ross was a Swiss psychiatrist whose research identified the five stages of grief: denial, anger, bargaining, depression, and acceptance. According to Barron’s, institutional money managers have reached the final stage of grief and accepted that bond yields may remain low for some time:

“Far from irrational exuberance, many institutional investors voice resignation (or worse) to the fact that they are forced to put money to work at record low yields – 1.366 percent for the benchmark 10-year Treasury note – since that’s better than nothing, which literally is what they earn on the estimated $11.7 trillion of global debt securities with negative yields.”

The Wall Street Journal attributed record low 10-year Treasury rates to investors’ concerns about the health of the global economy, as well as “expectations that central banks in Japan and Europe will take further steps to bolster their economies, doubling down on ultra-loose monetary policies that have already helped create a record amount of negative-yielding government bonds.”

U.S. stock markets closed near record highs last week after the June employment report showed far more jobs had been created than expected. Once again, this raised questions about whether stocks are pricey in the current environment.

Barron’s explained the equity risk premium, which is the potential return investing in the stock market provides over investing in a low risk option such as a Treasury bond, is 4.6 percentage points. That’s almost the highest it has been in the past 15 years (excluding the financial crisis and the European debt crisis). However, if earnings don’t meet expectations, stocks may prove to be more expensive than they appear.


Data as of 7/8/16
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 1.3% 4.2% 4.1% 9.1% 9.7% 5.3%
Dow Jones Global ex-U.S. -1.5 -3.2 -8.4 -0.9 -2.2 -0.5
10-year Treasury Note (Yield Only) 1.4 NA 2.2 2.7 3.0 5.1
Gold (per ounce) 1.1 27.5 16.9 3.1 -2.6 8.0
Bloomberg Commodity Index -3.7 10.0 -11.7 -12.0 -11.7 -6.8
DJ Equity All REIT Total Return Index 1.1 15.4 22.0 13.8 11.9 7.4

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.

Canada, EH? If there were a beauty contest among nations, Canada would probably be crowned Miss Congeniality. The second largest country in the world – known for breathtaking temperatures (-40 degrees Fahrenheit), magnificent scenery, open spaces, and friendly natives – has captured the interest of both Brits and Americans during 2016.

Canada was the top theoretical relocation choice among Brits following the Brexit vote. According to Citylab.com, ‘move to Canada’ was one of the two most popular ‘move to…’ searches in British cities. The second was Scotland, which took first among folks living in Manchester, Birmingham, Leeds, Liverpool, and Bristol.

It’s interesting to note the top search among residents of Edinburgh and Glasgow in Scotland was ‘move to Gibraltar.’ CityLab.com opined:

“It seems unlikely that these major cities are genuinely thinking about squeezing onto a tiny rock, but Gibraltar has been on people’s minds, I suspect, because it was first to declare a referendum result (for Remain) early this morning and is now finding itself under high-profile pressure for power-sharing from Spain.”

U.S. Internet searches for the phrase ‘how to move to Canada’ were quite popular this year, too, according to The Economist. The search reached its 2016 crescendo to-date after the Super Tuesday primaries in March. Donald Trump won seven states and Hillary Clinton won seven states and American Samoa.

It wasn’t the first time American presidential election choices inspired such angst among its citizens. ‘Move to Canada’ was a popular search phrase in 2004 after George W. Bush defeated John Kerry.

Regardless of the popularity of the search phrase, the number of American and British people who have migrated to Canada remains quite low. During each of the last 10 years, just 15,000 people from both nations together have sallied forth into the Great White North to become Canadian citizens.

Think About It

“Aaah, summer – that long anticipated stretch of lazy, lingering days, free of responsibility and rife with possibility. It's a time to hunt for insects, master handstands, practice swimming strokes, conquer trees, explore nooks and crannies, and make new friends.

--Darell Hammond, Founder and CEO of KaBOOM

Need some Personalized Advice?

Contact us and we will be happy to point you in the right direction.  No bull.

*International debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards. These risks are often heightened for investments in emerging markets.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* 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 afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg 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 Total Return 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.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Stock investing involves risk including loss of principal.

Sources:

http://www.barrons.com/articles/can-low-rates-keep-lifting-the-stock-market-1468037259?mod=BOL_hp_we_columns

http://www.ekrfoundation.org/five-stages-of-grief/

http://www.wsj.com/articles/u-s-government-bond-yields-rise-on-healthy-jobs-report-1467982581

http://www.cbsnews.com/news/employment-report-u-s-added-287k-jobs-in-june/

http://www.barrons.com/articles/dont-get-too-comfortable-with-stocks-1468037247?mod=BOL_hp_we_columns

http://www.bbc.com/news/world-us-canada-36730174

http://www.citylab.com/tech/2016/06/whats-the-british-equivalent-of-threatening-to-move-to-canada/488672/?utm_source=nextdraft&utm_medium=email

http://www.nytimes.com/interactive/2016/us/elections/primary-calendar-and-results.html

http://www.economist.com/blogs/graphicdetail/2016/07/daily-chart

http://www.brainyquote.com/quotes/quotes/d/darellhamm522873.html

Weekly Market Commentary July 5, 2016

Second quarter ended with a spectacular finale of Brexit-inspired market volatility.

Investors typically welcome sharp market movements with about the same level of enthusiasm that canines show for fireworks. However, recent market agitations highlighted a key tenet of investing: Volatility often creates opportunity. Following an initial Brexit sell-off, global markets rebounded. Last Friday, Financial Times reported:

“Global equity indices continued their stunning post-Brexit vote recovery, “core” government bond yields hovered near record lows, and sterling stayed in sight of a three-decade trough against the dollar as a tumultuous week in the markets drew to a close. The dollar finished the week on a broadly softer note, helping gold stay in sight of the two-year high it struck five days earlier. Oil prices were volatile but Brent regained the $50 a barrel mark in late trade.”

During the first half of 2016, opportunities weren’t always where investors might have expected to find them. Barron’s reported stocks have become income providers and bonds have been delivering capital gains. “With dividends included, the Standard & Poor’s 500 index returned 3.84 percent in the year’s first six months, according to Bianco Research. Meanwhile, the Treasury’s benchmark 10-year note returned roughly twice that, 7.97 percent...”

Some of the strongest stock market performance was found in emerging markets. On July 1, MarketWatch reported the best and worst (in italics) performing indices for the first half of 2016:

  • Argentina (Merval) 25.77 percent

  • Russia (RTS Index) 22.95 percent

  • Brazil (Bovespa) 18.86 percent

  • Pakistan (KSE 100) 15.14 percent

  • Canada (S&P/TSX) 8.11 percent

  • China (Shenzhen A Shares) -14.49 percent

  • China (Shanghai A Shares) -17.22 percent

  • China (SSE Composite) -17.22 percent

  • Japan (Nikkei 225) -18.17 percent

  • Italy (FTSE MIB) -24.37 percent

The three major Chinese indices on the list serve as a reminder that, not too long ago, concerns about the health of the global economy and the world’s financial markets focused on China. Today, the stethoscope is pressed to the heart of the European Union.

Predictions of higher interest rates in the United States have become a perennial that never blooms. Coming into 2016, the Federal Reserve was expected to increase the fed funds rate four times, making bonds appear an unwise investment choice. As mentioned, the 10-year Treasury note did just fine. However, the likelihood of the Fed raising rates fell during the quarter. Barron’s reported, “Based on Eurodollar futures prices, the U.S. central bank is likely to keep its federal-funds target steady well into next year and perhaps until 2018.”

During the last week of June, the Dow Jones Industrial Average and the Standard & Poor’s 500 Index each experienced their best performance since November 2015, according to MarketWatch.


Data as of 7/1/16
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 3.2% 2.9% 1.2% 9.2% 9.4% 5.1%
Dow Jones Global ex-U.S. 3.4 -1.7 -11.5 -0.7 -1.9 -0.4
10-year Treasury Note (Yield Only) 1.5 NA 2.4 2.5 3.2 5.2
Gold (per ounce) 1.9 26.2 14.7 2.5 -2.0 8.0
Bloomberg Commodity Index 3.1 14.2 -11.7 -10.6 -10.6 -6.4
DJ Equity All REIT Total Return Index 4.8 14.1 22.6 13.6 12.1 7.3

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.

Where did your wealth come from? The 2016 U.S. Trust Insights on Wealth and Worth Survey® asked wealthy Americans about their financial success. They found a majority of wealthy Americans did not inherit their wealth:(Page 4)

  • 52 percent earned their wealth through work or entrepreneurial efforts

  • 32 percent gained affluence through investing

  • 10 percent inherited their money

  • 6 percent relied on other means of accumulating wealth

The wealthy reported their parents emphasized the importance of academic achievement (76 percent), financial discipline (68 percent), and hard work (63 percent).(Page 4)

In addition, they said it’s important to find ways to have a positive impact on the world around them by volunteering their time (61 percent), giving money (74 percent), serving on boards (47 percent), and working for non-profit organizations (16 percent).(Pages 5 & 16)

In fact, the popularity of impact investing is growing. Wealthy Americans said investing for positive social impact is important because:(Pages 16-17)

  • It’s the right thing to do (54 percent)

  • Corporate America should be accountable for its actions (53 percent)

  • I want to have a positive impact on the world (49 percent)

  • Companies that are good corporate citizens are less susceptible to business risk (40 percent)

  • Companies that are good corporate citizens have better financial performance (38 percent)

The issues that were of greatest concern included: environmental protection and sustainability; healthcare quality and access; disease prevention, treatment, or cure; and education.(Page 15)

Think About It

“Afoot and light-hearted I take to the open road,

Healthy, free, the world before me,

The long brown path before me leading wherever I choose.

Henceforth I ask not good-fortune, I myself am good-fortune,

Henceforth I whimper no more, postpone no more, need nothing,

Done with indoor complaints, libraries, querulous criticisms,

Strong and content I travel the open road…”

--Walt Whitman, American poet

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* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

*The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* 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 afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg 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 Total Return 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.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Stock investing involves risk including loss of principal.

Sources:

http://www.ft.com/cms/s/0/695db2b6-3f3a-11e6-9f2c-36b487ebd80a.html#axzz4DGMPWq66

http://www.barrons.com/articles/markets-confound-in-years-first-half-1467433715?mod=BOL_hp_we_columns

http://www.marketwatch.com/story/these-stock-markets-left-the-rest-of-the-world-in-their-wake-so-far-this-year-2016-07-01

http://www.marketwatch.com/story/us-stocks-struggle-to-hold-on-after-3-day-rally-2016-07-01

http://www.ustrust.com/publish/content/application/pdf/GWMOL/USTp_ARWCS8LX_Transcript_2017-05.pdf

http://www.poetryfoundation.org/poems-and-poets/poems/detail/48859