Market Commentary
April 22, 2019
The Markets
And
the answer is…
A
Jeopardy! contestant captured the nation’s attention last week by setting multiple
records for the most money earned in a single episode. The Standard &
Poor’s 500 Index has been setting some records, too.
Michael
Mackenzie of Financial Times
explained:
“Less than four months through the year, the S&P 500
including the reinvestment of dividends has returned to record territory, along
with the technology sector…Around the world, many benchmarks enjoy double-digit
gains, led by China’s CSI 300 index, having risen more than a third already
during 2019.”
Pessimism about economic growth prospects has kept institutional
investors – including professional money managers whose performance is
typically evaluated quarterly – on the sidelines. As a result, despite a
“market-friendly shift by central banks and an expansion in China’s credit
growth that laid the ground for a rebound in activity,” they have missed out on
some significant gains.
Financial Times suggested when institutional investors begin
moving money into stock markets, we could see the market ‘melt up.’ A melt up occurs
when valuations surge for reasons that have little to do with improving
fundamentals and a lot to do with investors rushing into a market because they
fear missing out on gains.
Investors seeking safe havens could temper any gains from
institutional investors entering the market. Jack Hough of Barron’s suggested investors ignore safe havens, even though stock
valuations remain high. He wrote, “…elevated prices don’t rule out more gains.
The S&P 500 was this expensive at the end of 2016. It has returned 36
percent since.”
Some
will take those words as encouragement, others as a warning. No matter which
camp you are in, it may be a good time to have a carefully diversified
portfolio.
Data as of
4/19/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
-0.1%
|
15.9%
|
7.3%
|
11.5%
|
9.2%
|
13.3%
|
Dow Jones Global ex-U.S.
|
0.3
|
12.2
|
-6.9
|
5.6
|
0.9
|
6.0
|
10-year Treasury Note (Yield Only)
|
2.6
|
NA
|
2.9
|
1.8
|
2.7
|
2.8
|
Gold (per ounce)
|
-1.4
|
-0.5
|
-5.6
|
1.1
|
-0.2
|
3.8
|
Bloomberg
Commodity Index
|
-1.2
|
6.5
|
-9.7
|
0.4
|
-9.8
|
-2.9
|
DJ
Equity All REIT Total Return Index
|
-3.0
|
15.2
|
18.0
|
7.1
|
9.2
|
17.0
|
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, MarketWatch, 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.
what do you think? A special item went up for sale on a popular online
market, last week. It’s a 15-foot, 68 million-year-old skeleton of a juvenile
Tyrannosaurus rex, according to The Washington
Post. The ‘buy it now’ price is $2,950,000, which puts it beyond the
budgets of most people, as well as many museums and universities.
The
listing sparked lively debate.
The
Society of Vertebrate Paleontology responded
to the sale with a letter stating:
“The
Society of Vertebrate Paleontology is concerned because the fossil, which
represents a unique part of life’s past, may be lost from the public trust, and
because its owner used the specimen’s scientific importance, including its
exhibition status at [Kansas University], as part of his advertising strategy.
These events undermine the scientific process for studying past life as well as
the prospect for future generations to share the natural heritage of our
planet.”
It’s
a bit of a conundrum since many museums and universities rely on fossil hunters
for specimens.
A
paper in The Journal of Paleontological
Sciences explained:
“The
commercial fossil business has led to an abundance of paleontological
discoveries and has resulted in that industry becoming a leader in museum
fossil preparation, restoration, and mounts. This, in turn, has motivated many
museum directors and trustees to turn to the fossil industry to acquire
noteworthy and exciting specimens. This is often frugal and necessary
especially when many museums do not have the staff or ability to mount
collecting expeditions, create and house a preparation facility, or hire a
fully trained and educated staff.”
The Washington Post interviewed the fossil hunter, who indicated, “…he has
given scientists and the public ample access to the T. rex these past two
years. Now, he contends, he deserves to be compensated. [The owner of the T-rex
skeleton] has yet to receive an offer but says that he’s heard from prospects
all over the world and that some people have even asked about shipping costs.”
Weekly Focus – Think About
It
“It
is better to debate a question without settling it than to settle a question
without debating it.”
--Joseph
Joubert, French philosopher and essayist
Best regards,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
Leif M. Hagen, CLU, ChFC
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Securities
offered through LPL Financial, Member FINRA/SIPC.
*
These views are those of Carson Coaching, and not the presenting Representative
or the Representative’s Broker/Dealer, and should not be construed as
investment advice.
*
This newsletter was prepared by Carson Coaching. Carson Coaching is not
affiliated with the named broker/dealer.
*
Government bonds and Treasury Bills are guaranteed by the U.S. government as to
the timely payment of principal and interest and, if held to maturity, offer a
fixed rate of return and fixed principal value.
However, the value of fund shares is not guaranteed and will fluctuate.
*
Corporate bonds are considered higher risk than government bonds but normally
offer a higher yield and are subject to market, interest rate and credit risk
as well as additional risks based on the quality of issuer coupon rate, price,
yield, maturity, and redemption features.
*
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.
*
All indexes referenced are unmanaged. Unmanaged index returns do not reflect
fees, expenses, or sales charges. Index performance is not indicative of the
performance of any investment.
*
The Dow Jones Global ex-U.S. Index covers approximately 95% of the market
capitalization of the 45 developed and emerging countries included in the
Index.
*
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.
*
The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an
index representing 30 stock of companies maintained and reviewed by the editors
of The Wall Street Journal.
*
The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
*
International investing involves special risks such as currency fluctuation and
political instability and may not be suitable for all investors. These risks
are often heightened for investments in emerging markets.
*
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.
*
Stock investing involves risk including loss of principal.
* The foregoing information has
been obtained from sources considered to be reliable, but we do not guarantee
it is accurate or complete.
*
There is no guarantee a diversified portfolio will enhance overall returns or
outperform a non-diversified portfolio. Diversification does not protect
against market risk.
*
Asset allocation does not ensure a profit or protect against a loss.
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Consult your financial professional before making any investment decision.
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Sources:
https://www.ft.com/content/6670a2b8-6113-11e9-b285-3acd5d43599e (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-22-19_FinancialTimes-Lure_of_Melt-Up_Trade_Leaves_Holdouts_in_Tough_Spot-Footnote_3.pdf)
https://www.barrons.com/articles/stocks-near-highs-defensive-havens-risk-missing-out-51555706775?mod=hp_DAY_2 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-22-19_Barrons-As_Stocks_Near_Their_Highs_Resist_the_Call_of_These_Safe_Havens-Footnote_5.pdf)
https://www.washingtonpost.com/business/2019/04/19/you-can-buy-baby-t-rex-skeleton-ebay-million-scientists-would-rather-you-didnt/?utm_term=.6be279736124 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-22-19_TheWashingtonPost-You_Can_Buy_a_Baby_T_Rex_Skeleton_for_3_Million_Dollars-Footnote_6.pdf)
