PEEK OF THE WEEK
November 21, 2016
Leif Hagen & Donna Roberts
The Markets
This time
it’s the end. Really. Possibly.
It seems like experts have been
forecasting the end of the bull market in bonds for years – and they have been
doing so. In July 2010, bond guru Bill Gross predicted the 28-year bull market
in bonds was near an end and, as interest rates moved higher, bond values would
move lower. The Federal Reserve’s first round of quantitative easing had ended
in March 2010, and he couldn’t know a second round, which would keep interest
rates low, would begin in November 2010.
Since the U.S. election,
investors have begun to favor stocks over bonds. Barron’s explained:
“BofA ML [Bank of America Merrill
Lynch] said the weekly influx was the biggest into equities since December
2014. The outflows from bonds, meanwhile, was the largest since the taper
tantrum of June 2013...The flight from bonds made for the biggest two-week loss
in more than a quarter-century in the Bloomberg Barclays Global Aggregate Index,
which fell some 4 percent, Bloomberg reports. The outflows from municipal and
emerging market bond funds were especially acute, about $3 billion and $6.6
billion, respectively.”
The Wall Street
Journal reported the yield on 10-year
U.S. Treasuries finished last week at a 12-month high, after recording the
biggest two-week gain in 15 years.
Will investors’ enthusiasm for U.S. stocks persist? Will
this prove to be the end of the 35-year bull market in bonds? Stay tuned.
Data as of 11/18/16
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500
(Domestic Stocks)
|
0.8%
|
6.8%
|
4.7%
|
6.8%
|
12.4%
|
4.5%
|
Dow Jones Global ex-U.S.
|
-1.0
|
-1.7
|
-3.1
|
-4.4
|
2.2
|
-1.0
|
10-year Treasury Note (Yield
Only)
|
2.3
|
NA
|
2.3
|
2.7
|
2.0
|
4.6
|
Gold (per ounce)
|
-2.1
|
14.0
|
13.4
|
-1.9
|
-6.8
|
6.8
|
Bloomberg Commodity Index
|
-0.4
|
5.7
|
1.8
|
-12.1
|
-10.5
|
-6.8
|
DJ Equity All REIT Total
Return Index
|
0.7
|
2.7
|
5.7
|
10.0
|
11.9
|
4.5
|
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.
looking for a
great gift? If you have friends or relations with young children, consider
starting or contributing to a 529 College Savings Plan. It’s a great way to
fund a future education and, let’s face it, really young children often enjoy
the box and wrapping more than the gift.
So, if you want to give a child
something they’ll always remember, starting a college fund may fit the bill.
It’s a gift that may also benefit the parents. The College Board reported the average cost of tuition, fees, room,
and board for in-state students attending a public four-year university is
expected to be about $20,000 for the 2016-17 school year. At that rate, the
average cost for four years of college would be about $80,000. Since two-thirds
of students received financial aid during the 2014-15 school year, the following
example estimates out-of-pocket college costs at $60,000.
Consider the cost of each option
for this fictional family:
·
Borrowing
to pay for college: The Smiths borrow $60,000 to pay for 18-year-old Joe
Smith’s college tuition. The interest owed is 5 percent per year. Over the next
10 years, they repay the principal, plus about $16,400 in interest. By the time
Joe is 28, and the loan is repaid, his undergraduate degree will have cost
about $76,400.
·
Saving to
pay for college: Alternatively, the Smiths could open a 529 Plan account for
Joe Smith when he was born. If his family contributed $2,100 a year to the
account and earned 5 percent each year, at age 18, Joe would have about $62,000
for college. His family would have contributed about $37,800 and earnings in
the account would have contributed about $24,200.
The difference
in the amount this fictional family would spend on college is about $38,600.
529 plans offer other advantages,
too. Any earnings plan accounts grow federally tax-free, and distributions are
tax-free as long as the money is used for qualified college expenses. Many
states offer tax deductions or tax credits for 529 plan contributions, as well.
Any adult can open a 529 plan
and fund it on behalf of a child. Once the account has been established,
parents, grandparents, relatives, and friends can contribute. If you would like
to learn more, contact your financial professional.
Weekly Focus – Think About It
“Every great dream begins with a
dreamer. Always remember, you have within you the strength, the patience, and
the passion to reach for the stars to change the world.”
--Harriet Tubman, Civil
rights activist
Warm regards from Eagan,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
LP Financial Advisor
Securities offered through LPL Financial Inc., Member FINRA/SIPC.
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 more information and resources visit our website at www.HagenFN.com
For Medicare supplement and part D information and
resources, please visit MEDICAREforSENIORS.info
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:
http://www.economist.com/news/business-and-finance/21621340-our-coverage-pimcos-ill-fated-decision-bet-bond-markets-bull-run-was-end-bill
(or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/11-21-16_TheEconomist-Bill_Gross_Last_Gambit-Footnote_1.pdf)
http://www.barrons.com/articles/has-the-trump-rally-gone-too-far-1479537624?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/11-21-16_Barrons-Has_the_Trump_Rally_Gone_Too_Far-Footnote_3.pdf)
http://www.wsj.com/articles/treasury-yields-retreat-from-11-month-high-1479483648?ru=yahoo?mod=yahoo_itp&yptr=yahoo (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/11-21-16_WSJ-Rout_in_US_Government_Bonds_Deepens-Footnote_4.pdf)
http://www.finaid.org/calculators/loanpayments.phtml (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/11-21-16_FinAid-College_Loan_Calculator-Footnote_7.pdf)
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
(or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/11-21-16_Moneychimp-Compound_Interest_Calculator-Footnote_8.pdf)
#financialadvisorEaganMN
#financialplannerEaganMN #wealthmanagementEaganMN
#hagenfinancialnetwork
