PEEK OF THE WEEK
December 28, 2016
Leif Hagen & Donna Roberts
The
Markets
Missed it by that much…
The Dow Jones Industrial Average
(DJIA) got within 13 points of 20,000 last Tuesday. It finished the week about
90 points below the vaunted milestone. “The Dow has gained nearly 10 percent
since the end of October, more than double its 4.1 percent rise during the
first nine months of the year, spurred in part by Donald J. Trump’s victory in
the 2016 U.S. presidential election,” Barron’s
reported.
The major U.S. indices have been
strong performers since early November. Many people are wondering whether they
will continue to do well in 2017. The
Economist suggested 2017 could hold a surprise that will negatively affect
investors’ expectations:
“By definition, a surprise is
something the consensus does not expect…investors are expecting above-trend
economic growth, higher inflation, and stronger profits…So it is not too
difficult to see how the first surprise might play out. Expectations for the
effectiveness of Mr. Trump’s fiscal policies are extraordinarily high. But it
takes time for such policies to be implemented, and they may be diluted by
Congress along the way (especially on public spending). Indeed, it may well be
that demography and sluggish productivity make it very hard to push economic
growth up to the 3-4 percent hoped for by the new administration.”
On the other hand, profitability
has improved. American companies have seen earnings rebound, and many companies
are positioned to benefit from the corporate tax cuts promised by the new
administration. However, this good news may already be reflected in current
share prices. Robert Shiller’s cyclically adjusted price-earnings (CAPE) ratio,
a measure of valuation based on average inflation-adjusted earnings of
companies in the Standard & Poor’s 500 index from the previous 10 years,
was at 27.99 on December 23. That’s almost 70 percent above its long-term
average of 16.05 and indicates markets may be overvalued.
Regardless of potential negative
surprises and current market valuation, many analysts expect a positive
performance from U.S. stock markets next year. MarketWatch reported, “Most house projections from the big
investment banks and brokers converge around the S&P closing the year at
2350 – a scant 5 percent above current levels. Only one strategist…dares to
suggest that 2017's gains could be as much as 20 percent.”
Data as of 12/23/16
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500
(Domestic Stocks)
|
0.2%
|
10.8%
|
9.7%
|
7.4%
|
12.3%
|
4.8%
|
Dow Jones Global ex-U.S.
|
-1.2
|
0.8
|
0.4
|
-3.3
|
2.8
|
-1.1
|
10-year Treasury Note (Yield
Only)
|
2.5
|
NA
|
2.3
|
2.9
|
2.0
|
4.6
|
Gold (per ounce)
|
-2.8
|
6.5
|
5.9
|
-1.9
|
-6.8
|
6.1
|
Bloomberg Commodity Index
|
-2.1
|
9.8
|
10.5
|
-12.2
|
-9.4
|
-6.3
|
DJ Equity All REIT Total
Return Index
|
-0.5
|
7.1
|
7.3
|
12.2
|
11.5
|
5.1
|
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.
america’s most
wanted… Don’t worry. Robots have not yet replaced human workers. In
fact, according to The World In 2017 (published by The Economist):
“…automation seems to be pushing people from routine jobs, such as
factory work, into non-routine ones, particularly those that require cognitive
and social skills. Technological progress will cause a shift in the nature of
jobs available and the skills they require. It is impossible to know for sure
what these new jobs will be – the Luddites who campaigned against the
mechanization of weaving in the early 19th century could not have
imagined that new fields such as railways, telegraphy, and electrification were
coming. But two tools can help us take a stab at identifying the jobs of the
near future: hard-nosed statistics and predictive intuition.”
So, what do statistics tell us about the new jobs young people and career
changers should be preparing to do? The U.S.
Bureau of Labor Statistics looked at current trends and projected the
fastest growing jobs from 2014 to 2024 would be:
1.
Wind
turbine service technician (up 108 percent)
2.
Occupational
therapy assistants (up 43 percent)
3.
Physical
therapy assistants (up 41 percent)
4.
Home
health aides (up 38 percent)
5.
Commercial
drivers (up 37 percent)
6.
Nurse
practitioners (up 35 percent)
7.
Physical
therapists (up 34 percent)
8.
Statisticians
(up 34 percent)
9.
Ambulance
drivers (up 33 percent)
10.
Physician
assistants (up 30 percent)
Predictive intuition suggested quite a different set of careers. The World In 2017 suggested
there could be demand for drone technicians and support staff as the use of
autonomous vehicles increases. There may also be demand for bot wranglers, such
as ‘chatbot’ specialists, who help bots provide customer service through speech
and text. Indoor farming may prove to be a growth industry as urban populations
increase. Other career possibilities included virtual fashion designers,
robo-psychologists, and synthetic tissue engineers. Clearly, there is a world
of opportunity.
Weekly
Focus – Think About It
“So, I'm going to challenge all
of you. I want you to true your wheels: be honest about the praise that you
need to hear. What do you need to hear? Go home to your wife – go ask her, what
does she need? Go home to your husband – what does he need? Go home and ask
those questions, and then help the people around you.”
--Dr. Laura Trice, Therapist and life coach
Warm regards from Eagan,
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
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Sources:
http://www.barrons.com/articles/can-low-rates-keep-lifting-the-stock-market-1468037259?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-11-16_Barrons-Can_Low_Rates_Keep_Lifting_the_Stock_Market-Footnote_1.pdf)
http://www.wsj.com/articles/u-s-government-bond-yields-rise-on-healthy-jobs-report-1467982581
(or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-11-16_WSJ-US_10-Year_Treasury_Yield_Settles_at_Record_Low-Footnote_3.pdf)
http://www.barrons.com/articles/dont-get-too-comfortable-with-stocks-1468037247?mod=BOL_hp_we_columns
(or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-11-16_Barrons-Dont_Get_Too_Comfortable_with_Stocks-Footnote_5.pdf)
http://www.economist.com/blogs/graphicdetail/2016/07/daily-chart (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-11-16_TheEconomist-Interest_in_Moving_to_Canada_is_at_an_All-Time_High-Footnote_9.pdf)
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