POCKETBOOK: Week ending March 26, 2016

• It’s a bunny market. Really.

Jim Paulsen, chief market strategist at Wells Capital Management, went on record last week referring to current market conditions as neither bearish nor  bullish but bunny-like. You know, hopping up and down in place.

“Unlike an enthusiastic bull or a scary bear, a bunny market hops about a bit but really doesn’t go anywhere, and bunnies have often dominated the stock market during the latter stages of past economic recoveries,” Paulsen wrote in a letter to his clients.

Okay…

 

• Market Quick Glance

-Indices:

There were only four trading days last week as the markets were closed on Good Friday.

Below are year-to-date performance figures for the major indices through March 24, 2016, according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

–Dow Jones +1.22% YTD

1yr Rtn -0.20%

-S&P 500 +0.15% YTD

1yr Rtn +0.92%

–NASDAQ -4.34%YTD

1yr Rtn -1.12%

-Russell 2000 -4.66% YTD

1yr Rtn -11.75%

-Mutual funds

Through Thursday, March 24, 2016 the average U.S.Diversified Equity Fund was down 2.03 percent year-to-date, according to Lipper. That’s 50 basis points worse than the previous week’s performance improvement.

Small-Cap Growth Funds were last week’s worst performing category again, down on average 7.93 percent.

Precious Metals Funds lost ground  too but continue to be the high scorer under the Sector Equity Funds heading. They were up on average 38.43 percent y-t-d.

Health and biotech funds are that category’s worst performers. There are 95 Health/Biotechnology Funds that Lipper tracks with an average y-t-d performance of -15.74 percent. The y-t-d average performance of the 42 Global Health/Biotechnology Funds was -12.99 percent.

Visit www.allaboutfunds.com for weekly updates to see how equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

Lipper’s weekly performance figures for stock and fixed-income funds are at www.allaboutfunds.com in the left column on the home page.

 

• There’s more junk in today’s corporate debt issuance
  

While we’ve seen positive upward trends within the housing market, the number of people with jobs  and stock prices have made up for a lot of their losses that were a result of The Great Depression, the ratings on corporate bonds haven’t been as fortunate.

According to CNNMoney.com, since 2012, 75 percent of the companies seeking a rating from S&P on their debt securities have walked away with a single-B rating. That’s only “one notch up form the triple-C, a rating given to companies with a high probability of default.”

Throw that into the mix of all things corporate and debt related and the result is that the average rating on U.S. corporate debt has not seen lows like this in nearly 15 years.

Investors looking for the juicy yields found on lower rated bonds need to look further than a company’s bond yields and into how sound the company actually is before investing.

 

• Boat lovers have short attention spans

Who hasn’t dreamed about owning a boat—any sized boat from dingy to a sailboat to a yacht? Getting out on the open seas whenever you’d like conjures up all sorts of  magical images.

But even if you can afford the purchase price, upkeep and cost of fuel, here’s the sad reality: Boat owners only spend an average of 10 to 14 days a year on their vessels, according to a study from the Delta Protection Commission, a California-based state organization.

Now that’s sad.

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It’s financially tough being a single female

 

 

 

Once upon a time, way back in the last century when I was growing up, the underlying reason many moms wanted their daughters to go to college was to get an Mrs. degree. It was assumed that becoming the wife of an educated man meant the lady of the house would be well provided for.

No one really said it out loud, but everyone knew that finding a mate who was a good provider meant the guy already had dough and/or the ability to make a lot of it sometime in the future. So much for love and marriage. Getting a Mrs. had way more to do with earning potential than it did love.

But a lot has changed in the last half century regarding good providers.

While women today are going to college in record numbers, and moms continue to hope for a good provider marriage for their daughters, relationships aren’t what they used to be. They have gotten more complicated; divorces have become more common, same sex marriages more popular and the number of women choosing to never marry growing. As a result, a “good provider” now could be a Ms., Mrs., Mr., or include a combination of those salutations.

We know that the earning power between a Ms., Mrs., and Mr. is far from equal, although the pay gap appears to be closing a bit. And yes, there are even professions where women do earn more than men—trouble is, those are typically in lower paying careers.

According to a Glassdoor study, some careers in which women earn more than men, relative to every dollar earned, include social worker ($1.08); merchandiser ($1.08); research assistant (4.107); and purchasing specialist.

On the other hand, female computer programmers, chefs and dentists earn about 72 pennies for every $1 a guy earns in that same career.

Then there’s Amazon.

Recently, Jeff Bezon, its CEO and founder, announced that there is no gender gap in pay at his company and that men and women are paid fairly. That’s pretty close to true.

From The Huffington Post: “Women at Amazon make 99.9 cents for every dollar that men earn in the same jobs, and minorities earn 100.1 cents for every dollar that white employees earn.”

That’s good to learn. But when it comes to women in high places, only about 24 percent of women at Amazon hold managerial positions.

Even though strides are being made in the equal pay for equal work arena, it’s single women who face the biggest financial challenges.

A recent 2016 Retirement Confidence Survey by EBRI found about 40 percent of unmarried women have saved less than $1,000 for retirement.

From that survey: “Single women “lack the financial security of a dual-earner household to support their retirement savings, along with the added income associated with dual Social Security and a spouse’s retirement benefits,” said Kim Mustin, co-head of global distribution at BNY Mellon Investment Management. “

“They might also be carrying housing costs with a rental or home mortgage. If they are single mothers, they might have the sole financial responsibility of the cost of raising children,” she said.

I’ve been a Ms. all of my life and know first-hand the multitude of financial challenges single women can face. Looking only at the money-side of things, going it alone means accumulating a boat load of money to pay for a life that’s probably going to last longer than you ever expected and will cost more to fund than you ever imagined.

Save all you can, my female friends. You’ll need it.

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POCKETBOOK

For the week ending March 19, 2016

• Feeling financially well?

Lots of talk these days about financial wellness. It’s a term used in relation to retirement and how well—or stressed, ill or sick to your stomach—you feel about the money accumulated that you’re hoping will be there to use during retirement.

(I made up that part about being sick to your stomach about the success of your retirement savings plan but sure do know people who feel that way.)

Anyhow, according to a recent Fidelity focus group study of 483 individuals, one-third had never head the term “financial wellness”.

Of those interviewed, 83 percent did agree that being financially well helped them feel physically well. There’s definitely  a lot of truth to that.

Leaving the study behind, consider yourself to be financially well if you’re a solid saver, have actively and aggreesively  contributed to any number of qualified retirement plans along with personal savings accounts, married well or inherited a bundle.  If that’s you, congrats. You are clearly in the minority.

The financially unwell include those living paycheck to paycheck who have little left over to put into a retirement plan or rainy day savings piggy bank.

From where I sit– and given America’s huge income divide– the financially unwell outnumber the financially well by a large percentage.

Anyone who doesn’t see this as posing a future financial problem of avalanche proportions is wearing rose-colored financially unwell glasses.

 

• Market Quick Glance

-Indices:

Below are year-to-date performance figures for the major indices through March 18, 2016 according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

–Dow Jones +1.72% YTD

1yr Rtn -0.35 %

-S&P 500 +0.80% YTD

1yr Rtn -0.66%

–NASDAQ -3.90%YTD

1yr Rtn -3.33%

-Russell 2000 -2.72% YTD

1yr Rtn -11.75%

 

By the end of the week, both the DJIA and S&P500 had turned positive.

A closer look showed that 45 of the S&P 500 stocks had reached new 52-week highs and 2 new lows, according to Reuters. NASDAQ scored 84 new 52-week highs and 42 new lows.

 

-Mutual funds

Through Thursday, March 17, 2016 the average U.S.Diversified Equity Fund was down only 1.57 percent year-to-date, according to Lipper. That’s 2 percent better than the previous week’s performance.

Small-Cap Growth Funds were last week’s worst performing category under that heading and down on average 7.32 percent.

Precious Metals Funds continue to be the high scorer under the Sector Equity Funds heading, up over 3 percent better than the previous week, and up 45.97 percent, on average, y-t-d.

Visit www.allaboutfunds.com for weekly updates to see how equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

Lipper’s weekly performance figures for stock and fixed-income funds are at www.allaboutfunds.com in the left column on the home page.

 

• Mutual fund expense ratios

Yahoo. Mutual funds expenses, those pesky fees every fund shareholder pays for the privilege of investing into a basket of securities referred to as mutual fund, are the lowest they’ve been in 20 years.

The average expense ratio on stock funds was 0.68 percent last year, down from 0.70 percent a year before and 1.04 percent in 1996, according to TheStreet.com.

Translate that into real world dollars and cents  and, according to that same source, $1,000 invested into a stock fund with a 0.68 percent ratio means $6.80 dollars would be taken out that year to cover the fund’s expenses; $7 in the previous year; and $10.40 two decades ago.

Don’t forget, mutual fund expenses are an annual on-going cost to fund shareholders each and every year they own fund shares. That includes funds held in retirement accounts, such as IRA, ROTH, and 401k’s, and personal portfolios. Another don’t forget is a fund’s annual expense charges are not the same as a fund’s sales charge—it is a a 1-time fee.

 

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POCKETBOOK

For the week ending March 12, 2016

•The power of stock buybacks
Analysts at HSBC report that it has not been investors who have caused the surge in stock prices ever since the market tanked in 2008-2009, but companies buying their own stocks back.

According to BusinessInsider.com, companies in the S&P500 have bought back nearly $50 billion of their own stock for a total of $2.1 trillion since 2010. The  result has played a part  in  the seven year  bull market.

But what happens when corporations stop buying their stocks back? Will the economy and/or investor interest be enough to carry the market higher,  or,  will time reveal that  buybacks weren’t all that big a deal?  Stay tuned.

•Market Quick Glance
-Indices:
Below are year-to-date performance figures for the major indices through March 11, 2016  according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

-Dow Jones -0.53% YTD
1-yr Rtn -0.470 %
-S&P 500 -0.56% YTD
1-yr Rtn +0.62%
-NASDAQ -4.86%YTD
1-yr Rtn -1.25%
-Russell 2000 -3.99% YTD
1-yr Rtn -10.47%

By the end of the week, all four indices mentioned above had seen improvements in their year-to-date performance figures. In fact, the DJIA and S&P500 were both off less than 1 percent. And best of all,  a + symbol has surfaced: The 1-yr return of the S&P500 was up 0..62 percent.

-Mutual funds
Through Thursday, March 10, 2016  the average U.S.Diversified Equity Fund was down 3.83 percent year-to-date, according to Lipper. That’s a tad worse than the previous week’s  performance improvement.

Precious Metals Funds continue to be the hot diggity dog performer under the Sector Equity Funds heading, up 42.42 percent, on average, y-t-d. Latin American Funds, up 11.41 percent, on average, where the winning fund World Equity Fund type.

Of the 25 largest equity funds around, only 5 have plus-side year-to-date performance figures.  The best performer in that group is Vanguard’s Total Bond ll fund, up 1.79 percent so far this year. That’s kinda sorta shocking given that a number of those funds are stock funds.

Visit http://www.allaboutfunds.com for weekly updates to see how equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and  monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

Lipper’s weekly performance figures for stock and fixed-income funds are at http://www.allaboutfunds.com in the left column on the home page.

-Oh those millennials
Expect to keep hearing more and more about this huger than baby boomer crowd, the millennials. Those kids, born between 1982 and 2000, now number 83.1 million and represent more than one-quarter of our nation’s population, according to the U.S. Census Bureau. Baby boomers total 75.4 million.

Given that people are living longer and that the cost of living a life continues to increase, one of the biggest challenges this group faces is saving for retirement.

While studies have shown millennials aren’t so sure Social Security is going to be around when they reach retirement age, the group has its own way of spending/saving.

A Sallie Mae survey found 77 percent pay their bills on time, prefer debit to credit cards, use mobile wallets and check their bank balances frequently.

They also like going out: A study conducted by Personal Capital found millennials spend about 60 percent of their food budget on dining at restaurants.

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Do businessmen make good Presidents?

Dear Dian,
Since you write about all things money and business-related, one individual who wants to be America’s next commander in chief is a successful billionaire businessman. Does being successful in business automatically translate into the making of a good president?
Trump or Dump

Dear Trump or Dump,
Nope. History has shown that past presidents who were businessmen before being elected to our nation’s highest office don’t necessarily make great presidents.

But before going there, let me say that I, like you, live in the United States of America. Not, the United States of America, Inc.

There’s a huge difference in how one manages a country versus how one manages a business. The goal of the president of a corporation is to make money for that company’s shareholders. Period.

The role of the President of the United States begins with keeping all of us safe as he/she is commander-in-chief of the Army and the Navy. Presidential duties and responsibilities are clearly outlined in our Constitution and   include carrying out legislation, setting foreign policy, and presenting a State of the Union address.

Making money isn’t now, nor has it ever been, one of the roles or goals a U.S. president.

Going back to your question, there have been seven previous men who have been president and were businessmen prior to being elected to our nation’s highest office.

They include: Warren Harding, newspaper publisher; Calvin Coolidge, banker; Herbert Hoover, mining; Harry Truman, haberdasher; Jimmy Carter, farmer; George H.W. Bush, oilman; George W. Bush, oilman, major league baseball team co-owner. That all according to a MarketWatch.com story titled, “Opinion: Sorry, Trump: Past businessmen did poorly as presidents” . Paul Brandus wrote the piece published  September 9, 2015.

Brandus writes: “History suggests that there is no link between success in the business world and success in the White House. In fact—and surprisingly—the opposite appears to be true. Presidents with business backgrounds rank poorly among historians and voters, who have turned several of them out of office for poor performance. In fact, since 1900, the only president who is today considered great—Harry Truman—was a failed businessman. “

Research in that piece, conducted by Siena College Research Institute and the American Political Science Association, concluded, “That in the aggregate, presidents who first worked in the business world before entering politics, tend to rank in the bottom third of all presidents. “

My advice: Be careful not to get caught believing everything you hear about our current crop of presidential candidates.

That means assuming one candidate would be better than any other simply because they are portrayed as a  successful businessman will, as the word “assume” spells out, make an ass out of you and me. (ass u me).

So before deciding anything, research each candidate. Then think for yourself. And vote accordingly.
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POCKETBOOK

For the week ending March 5, 2016

• 2015s best collectible? Think “Zoom”.

Classic cars were last year’s best performing collectible roaring up 17 percent, according to the Wealth Report.

In second and third place were coins, gaining 13 percent, and wine at 5 percent.

The collectible car brand enjoying the highest returns was Ferrari.

Furniture was last year’s worst-performing collectible.

 

• Market Quick Glance

-Indices:

Below are year-to-date performance figures for the major indices through March 4, 2016 according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

–Dow Jones -1.84% YTD

1yr Rtn -2.30 %

-S&P 500 -1.72% YTD

1yr Rtn -1.36%

–NASDAQ -5.52%YTD

1yr Rtn -3.02%

-Russell 2000 -4.54% YTD

1yr Rtn -9.87%

Last week  I wrote if “ year-to-date performances are any indication of a trend, all four market indices are doing better. “

This past week that upward movement in stock indices continued. The index performance winner, however, changed from the DJIA to the S&P500.

But investors beware: Even though the jobs report brought cheers, according to Friday’s Wall Street Journal, “The “U.S. economy experienced one of its worst productivity drops in over two decades at the end of 2015.”

Productivity is really important. Without it…well, you know.

-Winning Stocks so far

According to the Bespoke Investment Group, here are the five top performing stocks in the Russell 1000 Index year-to-date (through February): Groupon (NASDAQ:GRPN) was the top performing stock in February, and it’s also the top performing stock year-to-date with a gain of 55.7%; J.C. Penney (NYSE:JCP) ranks second up 53.15%; followed by Newmont Mining (NYSE:NEM) ahead 43.58%; Michael Kors (NYSE:KORS) up 41.41%; and Alere (NYSE:ALR), up 36.35%

 

-Mutual funds

Through Thursday, March 3, 2016 the average U.S.Diversified Equity Fund had gained ground and was down 3.41 percent year-to-date, according to Lipper. That’s a performance improvement of over 3 percent.

Although Dedicated Short Bias Funds continue to be the top performing fund type under the General Equity Funds heading, they  lost serious ground last week—-as one would expect when market directions change. They were up on average 1.29 percent vs. up 8.18 percent during the week ending Feb. 26.

Fund investors looking for action continued to find it in Precious Metal Funds— up on average  37 percent. That figure is about 4 percent higher than it was the previous  week.

Commodities Precious Metals Funds ended the week up 11.83 percent.

Visit www.allaboutfunds.com for weekly updates to see how equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

Lipper’s weekly performance figures for stock and fixed-income funds are at www.allaboutfunds.com in the left column on the home page.

-About those negative interest rates

From last week’s Jonathan Clements Money Guide Newsletter comes this: “TEN-YEAR TREASURY NOTES are currently yielding 1.9%. That means today’s buyers will likely lose money, once inflation and taxes are figured in—and yet demand remains robust, as evidenced by 2016’s rise in Treasury bond prices. The healthy appetite for Treasurys partly reflects the vast amount of excess capital sloshing around the global financial markets, as well as the tiny payouts on alternatives such as money-market funds and savings accounts. But it also reflects the current fear engendered by both stocks and lower-quality bonds.”

Then again,  there is an upside to negative interest rates: Borrowing money wins in a negative or low interest rate environment.

So don’t overlook the opportunities low rates can provide. I mean, who can hate the availability of cheap money if you’re purchasing a home, refinancing, financing a car, etc…

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