Hagen Financial Network, Inc.

Monday, January 08, 2018

Wahoo! Yipee! Ausgezeichnet!

PEEK OF THE WEEK

January 8, 2018

Leif Hagen & Donna Roberts

The Markets

Whoosh! Bang! Flash! Fizz! Whistle!

U.S. stock markets delivered their own version of fireworks to celebrate the New Year. During the first week of 2018, the Dow Jones Industrial Average hit a new all-time high, moving above 25,000 for the first time ever. The NASDAQ Composite and Standard & Poor’s 500 Indices also rose to new highs.

2018 is off to an impressive start, but let’s pause for a moment and take a look back at 2017. It was a memorable year for global markets, but there are other reasons it was interesting, too. Here are the highlights of a few of The Economist’s most popular articles during the year:

· The world’s most valuable resource is no longer oil, but data (May 6). One-half of the most valuable companies in the world are American technology firms. Some, including The Economist, are concerned about tech companies’ market power and dominance of consumer data.

· The world’s most dangerous cities (March 31). Despite a declining murder rate, San Salvador remained the world’s most dangerous city, as measured by homicides per 100,000 during 2016 (the latest figure available). Acapulco ranked second. Several cities in the United States made the list including St. Louis, Baltimore, Detroit, and New Orleans.

· Governments may be big backers of the blockchain (June 1). Blockchain may seem complicated and difficult to understand, but it may become a part of everyday life. “…a blockchain expert at the Massachusetts Institute of Technology argues that governments will drive its adoption – an ironic twist for something that began as a libertarian counter model to centralized authority. Backers say it can be used for land registries, identity-management systems, health-care records, and even elections.”

· The death of the internal combustion engine (August 12). Rapidly changing battery technology and electric motors, in tandem with self-driving systems and ride sharing, may mark the beginning of the end for the internal combustion engine. It’s a change that is likely to disrupt markets and industries. The silver lining may prove to be less traffic and improved air quality.

· How to keep cool without costing the earth (February 11). Scientists at the University of Colorado in Boulder have “…invented a film that can cool buildings without the use of refrigerants and, remarkably, without drawing any power to do so. Better yet, this film can be made using standard roll-to-roll manufacturing methods at a cost of around 50 cents a square meter.”

There is a theme that appears to run through many of these articles. They explore new ways of doing things, such as cooling buildings and transporting people. The articles discuss the growing value of consumer data, which many people provide to companies for free, as well as technologies that may allow people to protect and monetize their data in the future (blockchain).

These new developments may be part of a process called creative destruction, which is a process of innovation that includes the introduction of new products and services that may eclipse existing ones. You don’t have to look far to find examples. Just think about the evolution of movie rentals, photography, or phones during the past couple decades.

Creative destruction was introduced in 1942 in Joseph Schumpeter’s book, Capitalism, Socialism and Democracy. He believed it was the essential fact about capitalism. More recently, MIT Professor Ricardo Caballero wrote, “Over the long run, the process of creative destruction accounts for over 50 percent of productivity growth.”

It seems, as Schumpeter suggested, we live in a gale of creative destruction.

Data as of 1/5/17	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	2.6%	2.6%	20.9%	10.7%	13.4%	6.8%
Dow Jones Global ex-U.S.	2.8	2.8	25.4	7.8	5.0	0.4
10-year Treasury Note (Yield Only)	2.5	NA	2.4	2.0	1.9	3.8
Gold (per ounce)	1.6	1.6	11.9	3.2	-4.4	4.4
Bloomberg Commodity Index	-0.3	-0.3	0.5	-5.4	-8.6	-7.3
DJ Equity All REIT Total Return Index	-2.1	-2.1	4.2	5.4	9.0	8.3

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.

did you forget your 401(k) account? Leaving one job and starting another is often exciting. As a new hire, you may be inundated with meeting new co-workers, figuring out the coffee situation, understanding expectations, demonstrating your value, and completing form after form.

Often, people who are starting new jobs forget about the workplace retirement plan accounts they’ve left behind with a previous employer. If you’re one of them, it’s a good idea to give that account some thought. Generally, there are four ways to manage workplace retirement savings. You can:

1. Leave the money in the former employer’s plan. If you leave the money behind, any growth will continue to be tax-deferred or tax-free, depending on whether you made Traditional or Roth plan contributions. However, if the plan has a minimum balance requirement, accounts with less than $5,000 may be transferred to an IRA and accounts with less than $1,000 may be cashed out, creating a tax consequence.

2. Roll the money into your new employer’s retirement plan. It may be helpful to have all of your qualified retirement savings in one place. If your new employer’s plan accepts rollovers without too long a wait, this may be an option. Many people fail to take this option because completing the paperwork and coordinating the process can be challenging.

3. Roll plan assets into an IRA. Former plan participants may choose to rollover their 401(k) plan savings to a Traditional or Roth IRA. Typically, they can move Traditional plan assets to Traditional IRAs, Roth plan assets to Roth IRAs, or Traditional plan assets to Roth IRAs. If they choose the latter, there will be tax consequences. It’s important to understand IRA assets are typically only protected in the case of bankruptcy, while 401(k) plan assets are protected from all creditors, in general.

4. Take a cash distribution. You also can choose to have the savings you’ve accumulated distributed as cash. While this gives you immediate access to the money, Traditional contributions and Roth earnings are taxable, and 20 percent may be withheld for tax purposes. Also, participants typically owe a 10 percent penalty tax, if they are younger than age 59½. Roth contributions may be exempted if certain criteria are met.*

If you are changing jobs, or you’ve left retirement savings behind with a former employer, and would like to discuss how to manage those assets, please give us a call. 401(k) plan savings are an important part of many retirement plans. Both qualified retirement plans and IRAs typically involve fees, expenses, and services that should be compared when considering a qualified plan rollover.

* Generally, Roth IRA contributions are exempt after the account is at least five years old and the account owner is age 59½.

Weekly Focus – Think About It

“I offered a definition of bubble that I thought represents the term’s best use: A situation in which news of price increases spurs investor enthusiasm which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increase and bringing in a larger and larger class of investors, who, despite doubts about the real value of the investment, are drawn to it partly through envy of others’ successes and partly through a gambler’s excitement.”

–Robert Shiller, American Nobel Laureate and Professor of Economics [14]

Best Regards,

Leif M. Hagen

Leif M. Hagen, CLU, ChFC

LP Financial Advisor

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

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* 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.barrons.com/articles/dow-25-000-how-high-can-it-go-1515213968 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-08-18_Barrons-Dow_25000-How_High_Can_It_Go-Footnote_1.pdf)

https://www.economist.com/news/top-ten-articles-2017 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-08-18_TheEconomist-The_Economists_Ten_Most_Popular_Articles_of_2017-Footnote_2.pdf)

https://www.economist.com/news/business/21722869-anti-establishment-technology-faces-ironic-turn-fortune-governments-may-be-big-backers (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-08-18_TheEconomist-Governments_May_Be_Big_Backers_of_the_Blockchain-Footnote_3.pdf)

https://www.economist.com/news/science-and-technology/21716599-film-worth-watching-how-keep-cool-without-costing-earth (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-08-18_TheEconomist-How_to_Keep_Cool_Without_Costing_the_Earth-Footnote_4.pdf)

https://www.forbes.com/sites/joshlinkner/2012/11/16/palm-kodak-blockbuster-sears-rim-borders-circuit-city-compaq-and-the-only-thing-you-can-do-to-avoid-being-next/

https://books.google.com/books?id=ytrqJswoRCoC&printsec=frontcover&dq=schumpeter+creative+destruction&hl=en&sa=X&ved=0ahUKEwjI3vzTj8TYAhXn34MKHflSA6MQ6AEINjAD#v=onepage&q=essential%20fact&f=false (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-08-18_Schumpeter-Excerpt_from_Capitalism_Socialism_and_Democracy-Footnote_6.pdf)

https://economics.mit.edu/files/1785

https://books.google.com/books?id=ytrqJswoRCoC&printsec=frontcover&dq=schumpeter+creative+destruction&hl=en&sa=X&ved=0ahUKEwjI3vzTj8TYAhXn34MKHflSA6MQ6AEINjAD#v=onepage&q=gale&f=false (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-08-18_Schumpeter-Excerpt_from_Capitalism_Socialism_and_Democracy-Footnote_8.pdf)

http://www.prudential.com/media/managed/Small_Cashout_Rollovers_PruPA.pdf

https://www.dol.gov/sites/default/files/ebsa/about-ebsa/about-us/erisa-advisory-council/2016-participant-plan-transfers-and-account-consolidation-for-the-advancement-of-lifetime-plan-participation.pdf

http://www.finra.org/investors/401k-rollovers

https://www.kiplinger.com/article/retirement/T032-C000-S002-pros-and-cons-of-rolling-your-401-k-into-an-ira.html

https://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/rollover_ira/401k_rollover_options

https://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2013/shiller-lecture.pdf (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-08-18_RobertShiller-Speculative_Asset_Prices-Footnote_11.pdf)

Tuesday, January 02, 2018

Big positive news for 2017!

PEEK OF THE WEEK

January 2, 2018

Leif Hagen & Donna Roberts

The Markets

How good was 2017?

It was so good, the Standard & Poor’s (S&P) 500 Index finished in positive territory every month for the first time ever (on a total return basis), reported Barron’s. All major U.S. indices finished the year with double-digit gains.

As we enter 2018, keep an eye on investor sentiment. “History has shown us that the crowd can be right during trends, but it also tends to be wrong at extremes. This is why sentiment can be an important contrarian indicator, because if everyone who might become bearish has already sold, only buyers are left. The reverse also applies,” reported ValueWalk.

Toward the end of 2017, sentiment shifted, but not everyone shared the same outlook. Surveys and indices that track market indicators and institutional advice became less bullish, while newsletter writers and investors became more bullish.

• The CNN Fear & Greed Index dropped from Greedy territory into the Neutral range. The Index measures seven indicators including stock price strength and breadth, market momentum, high-yield bond demand, and market volatility to determine the emotion that may be driving markets.

• The TIM Group Market Sentiment fell from 47.3 percent to 43 percent, becoming more bearish. TIM tracks actionable ideas sent from the sell-side (e.g., investment and commercial banks; stock brokers; market makers) to buy-side clients (e.g., asset managers; institutional and retail investors). A score of zero is the most bearish and 100 is the most bullish.

• The AAII Investor Sentiment Survey indicated individual investors are becoming more bullish and less bearish. Some believe the survey is a contrarian indicator:

o Bullish sentiment was up 2.1 percent to 52.6 percent. The long-term average is 38.5 percent.
o Neutral sentiment was up 2.8 percent to 26.7 percent. The long-term average is 31.0 percent.
o Bearish sentiment was down 5 percent to 20.6 percent. The long-term average is 30.5 percent.

During 2017, U.S. markets appeared to be Teflon-coated. Geopolitical events, natural disasters, and other shocks had little impact on investor optimism or share prices, and expectations for volatility remained historically low. That may continue during 2018, or it may not.

SOME OF THE BEST AND WORST OF 2017. It may have seemed longer but 2017 had 365 days, just like every other year. It was a year of firsts, worsts, and bests, although not everyone agrees about which were which. Here are a few memorable pop culture moments from 2017:

• Making a mistake. “At February’s Oscars, some [person] hands presenters Warren Beatty and Faye Dunaway the wrong envelope, leading to an incorrect announcement of Best Picture. The actual winner turns out to be whatever other accounting companies are vying for the academy’s business,” reported New York Post.

• Seeing and hearing the children. An interview with South Korea expert, Professor Robert Kelly, was interrupted by his toddlers and became a viral sensation. One Twitter post read, “Live your life like you just burst through the door of your dad’s super important live broadcast Skype call,” reported The Independent.

• Empowering women. “Wonder Woman became the best-reviewed DC Universe film and a box-office hero when it hit theaters in May…[It] had the biggest opening ever for a movie directed by a woman with a $100.5 million debut and presented a turning point for female representation on the big screen,” wrote USA Today.

• Selling stuff. Arguably the world’s most eligible royal bachelor, Prince Harry announced he’s engaged to Meghan Markle. Prepare for the glut of commemorative items. About £222 million was spent on memorabilia related to the 2011 royal wedding of the Duke and Duchess of Cambridge, reported The Telegraph.

• Beknighting another Beatle. That’s right. The Beatles’ former drummer Ringo Starr is on the list to receive knighthood during Queen Elizabeth's annual New Year's Honours ceremony, announced Rolling Stone.

What were the best and worst moments of 2017 in your opinion?

Weekly Focus – Think About It

“Your success and happiness lies in you. Resolve to keep happy, and your joy and you shall form an invincible host against difficulties.”
–Helen Keller, American author, lecturer, and activist

Best Regards,