PEEK OF THE WEEK
March 19, 2018
Leif Hagen & Donna Roberts
The Markets
It’s a good
time for a gut check.
Last week, after sliding lower
for four days, the Standard & Poor’s 500 Index recouped some of its losses
on Friday. The reasons behind the week’s poor showing were diverse. Barron’s reported:
“The market is so discombobulated
right now that it can’t even decide what it’s afraid of. What do we mean? When
the Standard & Poor’s 500 index suffered its first correction since the
beginning of 2016 last month, the cause was easily identified – a good
old-fashioned inflation scare caused by a larger-than-expected increase in
wages and a rapidly rising 10-year Treasury yield, which almost hit 3
percent…Fast-forward more than a month and those fears seem almost quaint.”
Those fears included:
·
Special Counsel Robert Mueller’s subpoena of the
Trump Organization.
·
The effects of recent tariffs and the
possibility of trade wars.
·
The departure of Secretary of State Rex
Tillerson.
·
The Atlanta
Fed revised its GDPNow Forecast
downward for the first quarter of 2018. Weakness in consumer spending, net
exports, and inventory investment offset gains in private fixed-investment
growth.
·
The Commerce
Department reported weak retail sales for the third month in a row.
Economists had expected sales to rise.
Here’s the thing: During 2017,
volatility settled at historically low levels and stock markets charged ahead.
As a result, it was relatively easy for investors to become sanguine about
risk. You could say 2017 made investing seem as mundane as driving across the
flatlands of the Plains states. It’s possible 2018 will be more like traveling
icy switchbacks through the Rocky Mountains.
No matter what happens in the
months to come, it’s a good time to reassess your risk tolerance and make sure
it aligns with your financial goals and asset allocation.
Data as of 3/16/18
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500
(Domestic Stocks)
|
-1.2%
|
2.9%
|
15.6%
|
9.8%
|
12.1%
|
8.0%
|
Dow Jones Global ex-U.S.
|
0.2
|
0.7
|
16.6
|
5.5
|
4.2
|
1.3
|
10-year Treasury Note (Yield
Only)
|
2.9
|
NA
|
2.5
|
2.1
|
2.0
|
3.3
|
Gold (per ounce)
|
-0.8
|
1.1
|
6.6
|
4.4
|
-4.0
|
2.6
|
Bloomberg Commodity Index
|
-0.7
|
-0.9
|
2.9
|
-3.5
|
-8.7
|
-8.2
|
DJ Equity All REIT Total
Return Index
|
1.3
|
-6.2
|
1.2
|
3.7
|
7.2
|
7.5
|
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.
how much do you spend on healthcare? Healthcare
costs have been going up for a long time. The Centers for Medicare & Medicaid Services reported annual health
spending – healthcare paid for through private health insurance, Medicare,
Medicaid, or out-of-pocket spending by businesses, households and governments –
in the United States averaged $3.3 trillion in 2016.
That’s about $10,348 per person.
It’s a significant amount even before you consider the median income in the
United States was about $57,600 that year.
Here’s another perspective:
Healthcare spending was equal to almost one-fifth (17.9 percent of GDP) of
everything the United States economy produced during 2016 (Gross Domestic
Product – GDP – measures the value of all goods and services produced in a
country). That’s more than U.S. manufacturing produced (11.7 percent of GDP)
during 2016. Add in retail (5.9 percent of GDP) and the total is just shy of
spending on healthcare.
The cost of healthcare is
important not just because it’s high, but because it’s a critical aspect of
retirement planning. A retirement plan is built around a horizon, which is the
number of years you expect retirement to last. It’s a difficult number to think
about because it’s a reflection of how long you expect to live.
In general, the planning horizon
for women should be longer than the planning horizon for men. Women tend to
live longer, and that means their healthcare costs may be considerably higher.
About $79,000 higher, according to one estimate that found a healthy
55-year-old woman could pay almost $523,000 in healthcare expenses (Medicare
Parts A, B, D, a supplemental policy F, dental, and all out-of-pocket expenses)
during retirement.
There are a variety of
approaches that may help cover the expense – even if you’re closing in on
retirement. A retirement planning strategy that factors in healthcare expenses
with an appropriate planning horizon can help improve financial stability in
your later years.
Weekly
Focus – Think About It
“We're optimistic about
ourselves, we're optimistic about our kids, we're optimistic about our
families, but we're not so optimistic about the guy sitting next to us, and
we're somewhat pessimistic about the fate of our fellow citizens and the fate
of our country. But private optimism about our own personal future remains
persistent. And it doesn't mean that we think things will magically turn out
okay, but rather that we have the unique ability to make it so."
--Tali Sharot, Associate Professor of
Cognitive Neuroscience, University College London
Best Regards,
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
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P.S.S. Also,
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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:
https://www.barrons.com/articles/whipsawed-by-events-the-dow-drops-389-points-1521249865 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-19-18_Barrons-Whipsawed_by_Events_the_Dow_Drops_389_Points-Footnote_2.pdf)
https://www.bea.gov/iTable/iTable.cfm?reqid=56&step=2&isuri=1#reqid=56&step=51&isuri=1&5602=5 (Click on Value Added By Industry, then select U.
Value Added by Industry as Percentage of Gross Domestic Product) (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-19-18_BureauOfEconomics-U_Value_Added_by_Industry_as_a_Percentage_of+GDP-Footnote_8.pdf)
