“Peek of the Week”
Market Commentary
October 28, 2019
The Markets
More
money managers are feeling less bullish, but you sure couldn’t tell by the
performance of U.S. stock markets last week.
So
far, 2019 has been a tremendous year for U.S. stocks. Through the end of last
week, the Standard & Poor’s 500 Index had gained more than 20 percent
year-to-date, the Dow Jones Industrial Index was up more than 15 percent, and
the Nasdaq Composite had risen more than 24 percent.
All
three indices finished last week in positive territory. Lawrence Strauss of Barron’s reported signs that global
markets are stabilizing supported investors’ optimism. In addition, yields on 10-year
U.S. Treasury notes increased, which suggested “investors are more optimistic
about growth and overall economic prospects.”
Despite
strength in U.S. markets year-to-date, Barron’s
most recent Big Money Poll found fewer
money managers are bullish than just one year ago when 56 percent anticipated
gains in the months ahead. When 134 money managers across the United States
were asked about their outlook for the next 12 months:
·
27 percent were
bullish
·
42 percent were
neutral
·
31 percent were
bearish
That’s
the lowest level of bullishness in 20 years and the highest level of bearishness
since the mid-1990s.
Barron’s reported there could be a variety of reasons for the
change in attitude, including high valuations, an uncertain economic outlook,
or the divisive political environment.
One
money manager commented, “There are so many different headlines to watch right
now…Brexit, trade, the economy, elections. Trying to predict them all correctly
is like trying to predict what the weather will be like in November 2020. We
might get things directionally correct, but getting them exactly right is a matter
of luck more than skill.”
Data as of
10/25/19
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
1.2%
|
20.6%
|
11.7%
|
12.1%
|
9.0%
|
11.0%
|
|
Dow Jones Global ex-U.S.
|
1.2
|
12.1
|
9.3
|
4.9
|
1.9
|
2.3
|
|
10-year Treasury Note (Yield Only)
|
1.8
|
NA
|
3.1
|
1.8
|
2.3
|
3.6
|
|
Gold (per ounce)
|
1.6
|
18.1
|
23.0
|
6.0
|
4.3
|
3.7
|
|
Bloomberg Commodity Index
|
1.1
|
3.6
|
-6.1
|
-2.6
|
-7.4
|
-5.2
|
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; 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.
how
much is too much? In 1986, Fortune
magazine asked Warren Buffett his thoughts on inheritance. He responded
children should receive, “…enough money so that they
would feel they could do anything, but not so much that they could do nothing.”
It’s
an important question, even though relatively few Americans may need to grapple
with it. According to the Federal Reserve:
·
55 percent of
inheritances are less than $50,000
·
85 percent of
inheritances are less than $250,000
·
93 percent of
inheritances are less than $500,000
·
98 percent of
inheritances are less than $1 million
·
2 percent of
inheritances are more than $1 million
A
2015 survey conducted by Merrill Lynch’s
Private Banking and Investment Group found, “a majority (91 percent) of
people plan to leave the lion’s share of their wealth to family members,
motivated by a desire to positively influence the lives of loved ones. Yet the
results indicate that many see significant risk in passing on wealth without
context, conversation, guidance, or accountability.”
So,
how much is too much? Is there an amount of inheritance that will sap your
children’s motivation and undermine their work ethic? The answer may depend on
the source of the wealth, reported The
Atlantic:
“Perspectives on what constitutes ‘too much’ seem to
vary depending in part on whether parents inherited their wealth or earned the
majority of it themselves. When significant wealth gets passed down through
multiple generations, inheritors can get the sense that ‘they’re just the
caretakers of it’, which means they might be more
inclined to keep up the family tradition and will it to their own children…Self-made
rich people can have a different relationship to their fortune, because they
have firsthand knowledge of what was required to amass it. As such, they might
be more interested in bequeathing not just money to their children, but a good
work ethic as well.”
If
you would like to discuss your legacy and its potential impact on your heirs,
give us a call.
Weekly Focus – Think About It
“We should
not forget that it will be just as important to our descendants to be
prosperous in their time as it is to us to be prosperous in our time.”
--Theodore Roosevelt, 26th President
of the United States
Best regards,
Leif M.
Hagen
Leif M. Hagen, CLU, ChFC
LPL Financial Advisor
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Securities
offered through LPL Financial, Member FINRA/SIPC.
*
These views are those of Carson Coaching, and not the presenting
Representative, the Representative’s Broker/Dealer, or Registered Investment
Advisor, and should not be construed as investment advice.
*
This newsletter was prepared by Carson Coaching. Carson Coaching is not
affiliated with the named firm.
*
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. The volatility of indexes could be
materially different from that of a client’s portfolio. Unmanaged index returns
do not reflect fees, expenses, or sales charges. Index performance is not
indicative of the performance of any investment. You cannot invest directly in
an index.
*
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.
* 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.
*
Consult your financial professional before making any investment decision.
*
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Sources:
Photo by Austin Distel on Unsplash
