Peek of the Week
Sept. 21, 2015
The Markets
As Tom Petty
often sang, “The waiting is the hardest part.”
Whether it’s
waiting for college acceptance letters, medical test results, employment
offers, or Federal Reserve monetary policy changes, waiting can produce a lot
of anxiety. A 2012 research paper written by Associate Professor Kate Sweeney
and Graduate Fellow Sara Andrews of the University of California, Riverside,
explained it like this:
“…Although waiting for inevitable events such
as the arrival of a bus or one’s turn in line may be irritating…the combination
of uncertainty about the outcome and waiting for that outcome can be
particularly excruciating. In fact, waiting may be more anxiety provoking than
actually facing the worst case scenario…”
That may go a
ways toward explaining why markets didn’t rally when the Federal Reserve
decided to leave rates unchanged last week. The Federal Open Market Committee’s
statement indicated they were concerned, “Recent global economic and financial
developments may restrain economic activity somewhat and are likely to put
further downward pressure on inflation in the near term.”
On the face
of it, continued low rates should have been good news for assets like stocks,
according to Barron’s. However, any
positive aspects to the news were mitigated by the fact everyone expects the
Fed to begin raising rates soon. Investors are waiting for it to happen, and they’re
uncertain how economies and markets will react when it does.
Heightened anxiety
may be one of the reasons investors responded the way they did last week. On
Friday, after mulling the Fed’s decision, national stock market indices around
the world – in the United States, England, Germany, France, and Japan – fell
significantly, according to Yahoo!
Finance.
Now, we’re
back to waiting.
If anxiety
remains high, markets may be volatile.
Data as of 9/18/15
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
-0.2%
|
-4.9%
|
-2.7%
|
10.3%
|
11.4%
|
4.8%
|
Dow Jones Global ex-U.S.
|
1.3
|
-6.0
|
-13.0
|
1.3
|
0.9
|
1.3
|
10-year Treasury Note (Yield Only)
|
2.1
|
NA
|
2.6
|
1.8
|
2.7
|
4.3
|
Gold (per ounce)
|
3.8
|
-4.8
|
-6.5
|
-13.6
|
-2.3
|
9.4
|
Bloomberg
Commodity Index
|
-1.4
|
-15.9
|
-27.2
|
-15.9
|
-8.7
|
-6.6
|
DJ Equity
All REIT Total Return Index
|
2.8
|
-4.4
|
6.5
|
7.9
|
10.8
|
6.8
|
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.
It’s official. the IGs are in. Ignoble is a word rarely heard in everyday
conversation. Merriam-Webster defines it as meaning, “of low birth or common
origin, or characterized by baseness, lowness, or meanness.”
The
25th First Annual Ig® Nobel Prize Ceremony was held last
week at Harvard University. Improbable.com
reported, “Winners traveled to the ceremony, at their own expense, from around
the world to receive their prizes from a group of genuine, genuinely bemused
Nobel Laureates…” Winners completed research that made people laugh and then
caused them to think.
·
The Management Prize went to Gennaro Bernile, Vineet Bhagwat, and P. Raghavendra Rau,
authors of ‘What Doesn't Kill You Will Only Make You More Risk-Loving: Early-Life
Disasters and CEO Behavior.’ They examined the link between CEOs’ early-life
exposure to major fatal disasters and the financial and investment policies
adopted by their companies. They found, “CEOs who experience fatal disasters
without extremely negative consequences lead firms that behave more
aggressively, whereas CEOs who witness the extreme downside of disasters behave
more conservatively.”
·
The Economics Prize was awarded to the Bangkok Metropolitan Police, which implemented a new
policy in an effort to reduce bribery. They pay a bonus to police officers who
refuse to accept bribes, even though the officers are required by law not to
accept bribes. (It’s a concept that may resonate with parents.)
·
The Literature Prize went to Mark Dingemanse, Francisco Torreira, and Nick
J. Enfield, who presented evidence and arguments supporting the idea that ‘huh?’
is a word, and that it “is found in roughly the same form and function in spoken
languages across the globe.”
If
you’re interested in learning about the ignoble undertakings of other winners
(who documented chicken walking like dinosaurs, created bee sting pain indices,
and completed other thought-provoking experiments), visit www.Improbable.com.
Weekly Focus – Think About It
“A day without sunshine is like, you know,
night.”
--Steve Martin, American comedian
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.
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Sources:
http://www.katesweeny.com/uploads/2/6/9/4/26944848/sweeny__andrews_2014_jpsp.pdf (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/09-21-15_AmerPsychologicalAssn-Mapping_Individual_Differences_in_the_Experience_of_a_Waiting_Period-Footnote_2.pdf)
http://www.barrons.com/articles/for-markets-its-the-treacherous-season-1442637816?mod=BOL_hp_we_columns (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/09-21-15_Barrons-For_Markets_Its_the_Treacherous_Season-Footnote_4.pdf)
http://finance.yahoo.com/;_ylt=AhD.Uke2qEIR0jVXyNZxv5d.FJF4 (or
go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/09-21-15_YahooFinance-National_Stock_Market_Indices-Footnote_6.pdf)
