PEEK OF THE WEEK
May 7, 2018
Leif Hagen & Donna Roberts
The Markets
What in the
world?
A lot happened last week. Some
of the notable events included:
·
Trade
talks between the United States and China. The talks were described as
“frank, efficient, and constructive,” although significant issues have yet to
be resolved.
·
A Federal
Open Market Committee meeting. The Federal Reserve indicated it expects to
raise rates during 2018, but did not do so last week.
·
Low
unemployment in the United States. U.S. unemployment fell to 3.9 percent,
which is the lowest it has been since 2000. Typically, low employment is a sign
of a strong economy.
·
Sky-high
rates in Argentina. In an effort to shore up the nation’s currency,
Argentina’s central bank “…hiked rates to 40 percent from 33.25 percent, a day
after they were raised from 30.25 percent.”
·
Katy
Perry roasted Warren Buffett. Katy Perry revealed the ‘Left Shark’ – a
backup dancer famous for being out of sync during Perry’s 2015 Super Bowl performance
– was Warren Buffet.*
What do asset managers and
researchers make of the current state of world economies and markets? A
portfolio manager cited by Barron’s
said, “…until proved otherwise, we remain in a long bull market, and there is
an absence of indicators outside of the equity market itself (most notably in
credit markets or financial conditions) to suggest this has ended.”
Michael Wilson, Chief U.S.
Equity Strategist at Morgan Stanley
has a different opinion. “Even strong earnings results haven’t been able to
boost most stocks into positive territory. Why? Because rising interest rates
have reached a point at which they have become a constraint on valuations.”
Some researchers are concerned
about growth outside the United States. Alvise Marino, an FX strategist for Credit Suisse told The Wall Street Journal, “This is really a Goldilocks [U.S.
employment] report…But investors are worried that global growth is not as
strong as some had thought.”
We’re
tracking events and their potential impact on markets, and we’ll keep you
informed.
* Warren Buffet wasn’t really
the Left Shark. Her comments were part of a humorous video.
Data as of 5/4/18
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
-0.2%
|
-0.4%
|
11.5%
|
8.0%
|
10.5%
|
6.6%
|
|
Dow Jones Global ex-U.S.
|
-0.9
|
-1.2
|
11.6
|
2.7
|
3.2
|
0.0
|
|
10-year Treasury Note (Yield
Only)
|
2.9
|
NA
|
2.4
|
2.1
|
1.8
|
3.9
|
|
Gold (per ounce)
|
-0.9
|
1.0
|
6.6
|
3.0
|
-1.9
|
4.1
|
|
Bloomberg Commodity Index
|
0.7
|
2.1
|
9.5
|
-4.6
|
-7.6
|
-8.2
|
|
DJ Equity All REIT Total Return
Index
|
1.2
|
-4.8
|
1.7
|
5.2
|
5.7
|
6.2
|
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.
Myth Busted! Founders of new companies
aren’t who many people think they are. Sure, you’ve
read stories about entrepreneurs who leave college to found companies that
become behemoths. In fact, The Thiel Fellowship encourages young people to skip
college and, “Pursue ideas that matter instead of mandatory tests. Take on big
risks instead of big debt.”
While helping young people
pursue new ideas is admirable, research from the Massachusetts Institute of
Technology (MIT) and the National Bureau of Economic Research (NBER) suggest a
different age group is more likely to found successful fast-growth companies:
“Our primary finding is that successful
entrepreneurs are middle-aged, not young. Taking numerous measures to identify
potentially high-growth firms as well as studying ex-post growth of each firm,
we find no evidence to suggest that founders in their 20s are especially likely
to succeed. Rather, all evidence points to founders being especially successful
when starting businesses in middle age or beyond…Across the 2.7 million
founders in the U.S. between 2007-2014 who started companies that go on to hire
at least one employee, the mean age for the entrepreneurs at founding is 41.9. The
mean founder age for the 1 in 1,000 highest growth new ventures is 45.0. The
most successful entrepreneurs in high technology sectors are of similar ages.
So, too, are the most successful founders in the entrepreneurial regions of the
U.S.”
Almost one-fourth of new
entrepreneurs are ages 55 to 64, reports Entrepreneur.com.
They often have financial stability, professional support networks, and
experience – all things The Thiel Fellowship tries to provide to younger
founders.
What’s the point of this story?
Age is just a number. People of all ages have great ideas and great potential.
Weekly
Focus – Think About It
“The critical ingredient is
getting off your butt and doing something. It's as simple as that. A lot of
people have ideas, but there are few who decide to do something about them now.
Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a
dreamer.”
--Nolan Bushnell, Entrepreneur
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:
