Hagen Financial Network, Inc.: May 2016

Tuesday, May 31, 2016

Everyone makes mistakes. Some people learn from them. PEEK OF THE WEEK Financial News from Leif Hagen, Hagen Financial Network

PEEK OF THE WEEK FINANCIAL NEWS from HAGEN FINANCIAL NETWORK

Peek of the Week

May 31, 2016

The Markets

Everyone makes mistakes. Some people learn from them.

In GMO’s March 2016 white paper, James Montier and Philip Pilkington continued to explore the Federal Reserve’s influence on the stock market. It was a process they’d begun in 2015 as they sought “…to understand why our forecast for the S&P 500 had been too pessimistic over the last two decades or so.” Inspired by research done at the New York Federal Reserve, they found:

“…sometime around 1985 the market really started to react to FOMC [Federal Open Market Committee] days. Like the Fed economists, we found that for the past 30 or so years these announcement days have had a major, and increasing, impact on the stock market…In fact, FOMC days account for 25 percent of the total real returns we have witnessed since 1984!”

Upon further examination, they realized the Fed’s influence on the Standard & Poor’s 500 Index (S&P 500) wasn’t caused by monetary policy decisions. Markets moved just because the committee was meeting. Investor sentiment was driving market action.

Last week, Federal Reserve Chair Janet Yellen commented, “It's appropriate, and I've said this in the past, I think for the Fed to gradually and cautiously increase our overnight interest rate over time and probably in the coming months, such a move would be appropriate.” Her comments did not inspire ‘animal spirits,’ which is how economist John Maynard Keynes described the emotions that motivate people to act.

At the end of the week, the Dow Jones Industrial Average and the S&P 500 were higher on solid economic data that included an upward revision of first quarter’s gross domestic product (GDP) growth rate. GDP is the value of all goods and services produced in the United States during a given period.

The next FOMC meeting is June 14-15.

Data as of 5/27/16	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	2.3%	2.7%	-1.2%	8.1%	9.5%	5.2%
Dow Jones Global ex-U.S.	2.1	-0.7	-13.8	-1.7	-1.6	-0.3
10-year Treasury Note (Yield Only)	1.9	NA	2.1	2.1	3.1	5.1
Gold (per ounce)	-3.0	14.5	2.6	-4.0	-4.5	6.3
Bloomberg Commodity Index	0.7	8.8	-14.5	-14.0	-12.4	-7.1
DJ Equity All REIT Total Return Index	2.0	6.6	10.0	8.4	10.7	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.

chief executive officer compensation is down. no, it’s up. You better judge for yourself. The New York Times reported the 200 most-highly-paid CEOs in the United States collectively experienced a pay cut last year! CEOs’ average compensation – all CEOs compensation added together and then divided by 200 – fell by 15 percent from 2014 to 2015.

Of course, you know what they say about lies and statistics.

Equilar, the company responsible for the study, reported CEO pay grew modestly in 2015. They looked at median CEO pay – the number in the middle. It was $16.6 million for fiscal 2015. That’s up 5 percent from the previous year.

No matter how you interpret the results, not one CEO earned more than $100 million. CEOs in the technology industry had the highest median pay while those in basic materials (which includes oil and gas companies) had the lowest, according to Equilar.

Many people have argued company performance should inform CEO pay, but there wasn’t much evidence this was the case. Although there may have been a basis for CEO pay changes, there was no clear correlation to shareholder returns or company revenues. For instance:

· A 702 percent increase in pay was awarded when total shareholder return was down 5 percent, and company revenues were down 1 percent.

· A 286 percent increase in pay was awarded when total shareholder return was up 16 percent, and company revenues were up 9 percent.

· A 48 percent reduction in pay occurred when total shareholder return was up 25 percent, and company revenues were up 4 percent.

The portion of 2015 corporate budgets allotted to pay hikes for employees increased by 2.8 percent, on average, according to Mercer. The report said, “…the highest-performing employees received average base pay increases of 4.8 percent in 2015 compared to 2.7 percent for average performers and 0.2 percent for the lowest performers…”

Weekly Focus – Think About It

“Mistakes are a part of being human. Appreciate your mistakes for what they are: precious life lessons that can only be learned the hard way. Unless it's a fatal mistake, which, at least, others can learn from.”

--Al Franken, U.S. Senator and comedian

Best regards,

Leif M. Hagen

Leif M. Hagen, CLU, ChFC

LP Financial Advisor

Securities offered through LPL Financial Inc., Member FINRA/SIPC.

www.FINRA.com

www.SIPC.com

P.S. Please feel free to forward this commentary to family, friends, or colleagues.

P.S.S. Also, please remind your friends and family members becoming Medicare eligible that we offer Medicare insurance and Part D options with NO COST to work with Leif as their agent

For more information and resources visit our website at www.HagenFN.com

For Medicare supplement and part D information and resources, please visit MEDICAREforSENIORS.info

https://www.bluecrossmn.com/distribution/shopping/anonymous.html?producerToken=-z67o5fzk3mu4nb2solwzb34c0i15u6shro4wuum8cpns3rj50cqjqj8pznw2g&profile=ifp#welcome

Please FOLLOW and “LIKE US” on FACEBOOK.com/HagenFN

Please Read our Blog @ http://HagenFinancialNetwork.blogspot.com

Please Follow our Tweets on Twitter.com/SafeLeif

Check out this: http://www.MedicareForSeniors.info

* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.

* 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 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.

* To unsubscribe from the “Peek of the Week”, please reply to this email with “Unsubscribe” in the subject line, or write us at: Hagen Financial Network, Inc. 4640 Nicols Road, Suite 203; Eagan, MN 55122.

Sources:

https://www.gmo.com/docs/default-source/research-and-commentary/strategies/asset-allocation/the-stock-market-as-monetary-policy-junkie-quantifying-the-fed's-impact-on-the-s-p-500.pdf?sfvrsn=3 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-31-16_GMO-The_Stock_Market_as_Monetary_Policy_Junkie_Quantifying_the_Feds_Impact_on_the_S_and_P_500-Footnote_1.pdf)

http://www.cnbc.com/2016/05/27/yellen-rate-hike-probably-appropriate-in-the-coming-months.html

http://www.investopedia.com/terms/a/animal-spirits.asp?layout=infini&v=5D&orig=1&adtest=5D

http://www.barrons.com/articles/stocks-surge-over-2-on-strong-economic-data-1464409117?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-31-16_Barrons-Stocks_Surge_Over_2_Percent_on_Strong_Economic_Data-Footnote_4.pdf)

http://www.reuters.com/article/us-usa-economy-idUSKCN0YI1JQ

http://www.nytimes.com/2016/05/29/business/top-ceo-pay-fell-yes-fell-in-2015.html?ref=business&_r=0

http://www.equilar.com/reports/38-new-york-times-200-highest-paid-ceos-2016.html?version=meter+at+0&module=meter-Links&pgtype=article&contentId=&mediaId=&referrer=http%3A%2F%2Fwww.nytimes.com%2Fpages%2Fbusiness%2Findex.html%3Faction%3Dclick%26pgtype%3DHomepage%26region%3DTopBar%26module%3DHPMiniNav%26contentCollection%3DBusiness%26WT.nav%3Dpage&priority=true&action=click&contentCollection=meter-links-click

http://www.economist.com/blogs/graphicdetail/2012/02/focus-0 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-31-16_TheEconomist-Executive_Pay_and_Performance-Footnote_8.pdf)

http://www.equilar.com/reports/38-2-new-york-times-200-highest-paid-ceos-2016.html

http://www.mercer.com/newsroom/us-salary-increase-budgets-remain-flat-despite-upswing-in-the-economy-and-job-market-mercer-survey-finds.html

http://www.brainyquote.com/quotes/quotes/a/alfranken167012.html?src=t_mistakes

#financialadvisorEaganMN #financialplannerEaganMN #wealthmanagementEaganMN

#hagenfinancialnetwork

Monday, May 23, 2016

How likely is a stock market swoon during the next six months? That and more in today's PEEK of the WEEK financial news from Hagen Financial Network, Inc.

PEEK OF THE WEEK - FINANCIAL NEWS FROM
HAGEN FINANCIAL NETWORK, INC.

May 23, 2016

The Markets

A mobile trivia game maker recently assessed the playing habits of Americans and identified the most popular topics by state. As it turns out, Alabamians like college football questions, Alaskans like queries about U.S. states, Rhode Island natives prefer inquiries about the human body, and Wisconsinites love their Green Bay Packers.We think markets, finance, and economics offer fine fodder for quiz trivia. Test your knowledge with these questions about recent and pending market events:

· What is ‘Brexit?’ The United Kingdom will hold a referendum in June to decide whether it should remain in the European Union. According to the BBC, opinion polls say the public is pretty evenly divided on the issue. ‘Brexit’ stands for ‘British exit.’

· How likely is a stock market swoon during the next six months? A lot less likely than most investors think, according to a three-decade study conducted by the National Bureau of Economic Research and cited by Barron’s. The study asked participants how likely it was the market would lose significant value – as much as it did during the worst one-day drops in history (down 22.6 percent and down 12.8 percent) – during the next six months:

“On average over the last three decades, respondents believed there to be a 19 percent risk of such a daily plunge in the subsequent six months…Given that there have been more than 32,000 trading sessions since then, the judgment of at least this swath of history is that in any given six-month period there is a 0.79 percent chance of a daily crash that severe.”

· Which country is the biggest foreign buyer of U.S. residential real estate? Here’s a hint: It starts with the letter ‘C.’ If you guessed Canada, you are incorrect. Barron’s reported China surpassed Canada as the biggest buyer of U.S. residential real estate in 2015. U.S. commercial real estate is pretty popular with the Chinese, too.

Here’s another question analysts and economists have been pondering: Will the Federal Open Market Committee raise rates in June? The probability jumped from 4 percent two weeks ago to 30 percent last week, according to CNBC.

Data as of 5/20/16	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	0.3%	0.4%	-3.5%	7.2%	9.0%	5.0%
Dow Jones Global ex-U.S.	-0.1	-2.7	-16.6	-3.4	-2.0	-0.4
10-year Treasury Note (Yield Only)	1.9	NA	2.3	2.0	3.2	5.0
Gold (per ounce)	-0.9	18.1	3.6	-2.5	-3.5	6.8
Bloomberg Commodity Index	0.5	8.0	-17.6	-13.8	-12.2	-7.0
DJ Equity All REIT Total Return Index	-2.5	4.5	7.6	6.1	10.6	7.2

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.

as you approach three score years and ten, don’t forget about required minimum distributions. Upon the occasion of his 70^th birthday party, Mark Twain (a.k.a. Samuel Clemens) commented, “We have no permanent habits until we are forty. Then they begin to harden, presently they petrify…”

Whether Twain was right or not, the federal government demands most IRA owners develop a new habit at age 70. They must begin taking required minimum distributions, or RMDs, which are the minimum amount that must be withdrawn from most types of IRAs the year the owner reaches age 70½, and every year thereafter. Account owners can take more than the minimum, if they choose. Regardless of how much is distributed, the amount usually will be treated as ordinary income for tax purposes.

According to Kiplinger’s, “…you have until April 1 of the year after you turn age 70½ for the first withdrawal, then you must take required withdrawals by December 31 every year after that.”

The exception to the rule is the Roth IRA. RMDs are not required with Roth IRAs; however, designated Roth accounts, which hold Roth contributions made to 401(k), 403(b), and 457(b) plans, are subject to RMDs.

It’s important to calculate RMDs carefully. There are several variables to consider, including the age of your beneficiaries. The consequences of a miscalculation can be expensive. Failing to take an RMD, or taking too small an RMD, can result in a 50 percent penalty tax.

If you would like assistance determining the amount of your RMD, please contact your financial professional.

Weekly Focus – Think About It

“Let us never forget that government is ourselves and not an alien power over us. The ultimate rulers of our democracy are not a President and senators and congressmen and government officials, but the voters of this country.”

--Franklin D. Roosevelt, U.S. President