POCKETBOOK: Week ending May 28, 2016

• Memorial Day

Since our country first began, more than 1.1 MILLION Americans have perished in wars and conflicts fighting for and upholding the freedoms we all are fortunate enough to enjoy in this gorgeous, diversified, ever-changing and enduring country that we call home.

Do pause, honor and celebrate them.

• Market Quick Glance

-Indices:

Here are the year-to-date performance figures for the major indices through May 27, 2016, according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

All four of the indices below showed significant performance improvements from the previous week’s returns. Clearly that is something to cheer about. But the big question remains: Is this a positive performance trend that will continue or merely a short-term spike? As always, time will tell.

-Dow Jones +3.85% YTD  (almost double from last week)

1yr Rtn +1.85 % (up from -1.44%)

-S&P 500 +3.66%YTD (more than doubled from previous week of 1.32% YTD)

1yr Rtn +1.80% (up almost 50 basis points)

–NASDAQ -0.85% YTD (a significant improvement from last weeks -4.18%)

1yr Rtn -1.37% (also a big move upward from last week’s -5.03%)

–Russell 2000 +1.88 YTD (a delightful upside move from last week’s -1.53%)

1yr Rtn -6.34 % (a much improved return from last week’s -9.8 %)

 

-Mutual funds

Through Thursday, May 26, 2016 the average U.S.Diversified Equity Fund gained a smidge from the previous week ending this week down only 1.29 percent year-to-date, according to Lipper.

You’ve got to look back 3 years, 2/28/13 through 5/26/16, to find a lip-smacking average return for this broad category of fund types. The average fund in that period of time was + 9.02 percent.

As an aside, following the Rule of 72, a 9 percent annual rate of return means  money doubles in value in 8 years. So $10,000 invested at a 9 percent rate of return would be worth $20,000 in 8 years. On the other hand, an investment earning a 1.39 percent rate of return would take about 55.8 years to double in value.

Back to mutual fund performances, of the 25 largest mutual funds around, the top three performing funds year-to-date through May 26, 2016 were all from the American Funds  Fund Family: American Fund ICA, +5.72 percent; American Funds CIB, +5.30 percent; and +American Funds Inc., 4.60 percent.

The worst performing fund over that same time frame was the Dodge & Cox Intl Stock fund, -1.29 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.

• Donald Trump says…

From where I sit, Donald Trump appears to have a lot of issues—- personally and professionally. In addition to his bullying behavior, the one that bothers me the most professionally has to do with money.

That five-letter little word means an awful lot to this presidential hopeful who boasts about his wealth but at the same time won’t disclose any real figures regarding his income, or, reveal his tax returns. Transparency, it seems, isn’t a part of the art of his deal.

That raises a red flag for me from an honestly and integrity level. It makes me wonder what kind of player this Commander-in-Chief wannabe would be for America and in the world arena.

In North Dakota last week, at a rally of his supporters, Mr. Trump told his audience that “you have to be wealthy in order to be great.”

Don’t believe that. It’s total hogwash.

America is a great country. Right now. Even as it is today.

Is there room for improvement in our country on a number of fronts ? Absolutely. But as many of us already know, throwing money at a problem doesn’t necesssarily solve it or make things better. We also know that rich leaders aren’t necessarily better leaders than those of lessor or minimal fortunes. And more importantly, that money doesn’t make a country great, rather it is the people who live in and govern the country that do.

So don’t let anyone try to tell you that what it takes to be great —or for America to be a great country— is money. That is both a lie and a cheap shot.

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POCKETBOOK: Week ending May 21, 2016

• Hey, the TSA is hiring.

Okay, word is out that the Transportation Security Administration (TSA), which is an agency of the U.S. Department of Homeland Security, is on a spending and hiring binge. Two reasons for the move to spend around $8 million to hire 768 full-time screeners and $26 million to increase overtime pay are: In the past three yeas the numbers of officers has dropped by 10 percent, according to CNN.MONEY. And then, the number of people flying and needing to go through airport checkpoints has increased by 15 percent.

All of that is good news for someone who wants to work for the government. To apply for a job visit USAJobs.gov. Or click on: http://tinyurl.com/jaaqbf8 . Or, https://www.usajobs.gov/Search/?Keyword=tsa&Location=&homeRadPublic=public&search=Search&AutoCompleteSelected=False&CanSeekStatusJobs=False .

One of those links ought to get you there.

Once on the page, you might be as surprised as I was to see the pay range of these Uncle Sam jobs. The list begins with the highest paying job openings, that of a “Transportation Security Specialist”,  with a pay range of $61,719.- $116,626. per year.

The airport screener jobs that flyers are all familiar with—and of which there are many positions available at airports around the country—require scrolling down until you see job listings for “Transportation Security Administration.” The pay ranges for these jobs is from $15.13 to $21.61 per hour. Figure there is no cost for uniforms, but the job does have its risks.

Good luck.

• Market Quick Glance

-Indices:

Here are the year-to-date performance figures for the major indices through May 20, 2016, according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

Based on the results, there is little to jump up and down about on Wall Street unless it’s a bear market you’re hoping for.

-Dow Jones +1.62% YTD

1yr Rtn -1.44%

-S&P 500 +1.32% YTD

1yr Rtn +1.34%

–NASDAQ -4.18% YTDimproved about 1 %

1yr Rtn -5.03%

–Russell 2000 -1.53% YTD

1yr Rtn -9.86 %

 

-Mutual funds

Through Thursday, May 19, 2016 the average U.S.Diversified Equity Fund has lost 1.35 percent year-to-date, according to Lipper.

Look back further and over the past 4 weeks, 4/20/16 through 5/19/16, and the average fund under that heading was down over 3 percent. Look at the past 13 weeks, (2/17/16-5/19/16), the average performance was a + 6.66 percent, then over the past 52 weeks, down 7.54 percent.

Clearly, following short-term investing results is not for the faint of heart. Or, those without a stomach of steel.

It was a repeat of winners when looking at the three top performing funds over the past week under the US Diversified Equity Fund heading, although their order has changed. The biggest performance winner was: Equity Income Funds, up 2.38 percent last week vs. the plus 3.66 percent return the week before; nipping at its heals were Mid-Cap Value Funds, up 2.226 percent (up 3.28 percent the week before); and then Equity Leveraged Funds that have pretty much lost the lion’s share of their gains, up now 1.09 percent vs their previous week’s 4.66 percent year-to-date average return.

On the income side, even the average World Income Fund lost ground. It is now up 4.85 percent year-to-date, down from up over 6 percent.

If you were expecting Precious Metals Funds to really be soaring, well, even they have lost some of their luster. As of Thursday’s close the average fund here was up 71.89 percent —that’s down from the previous week’s showing of 75.64 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.

• And then there is debt

 I don’t want to say that debt is one of life’s little necessities, but if you ever want to get a loan, you’d better have some kind of official record showing that yes indeedy, you do pay your debts in a timely fashion.

Without that, there will be no debt burden coming your way. Which on the one hand is a very good thing but on the other can make life difficult.

That said, in America debt plays a big part in our lives, the country and its many corporations.

It’s also a four-letter word that doesn’t get talked about in really full-disclosure very often. It’s much easier to lie, mumble or just brush money and debt talk under the rug than shake it out and talk about it.

And to that point, last week S&P Global Ratings reported the following in a May 20, 2016 press release: “Cash is on the decline and debt is decidedly on the rise for 99% of rated U.S. corporations.”

The report titled “U.S. Nonfinancial Corporates’ Record $1.84 Trillion Cash Holdings Mask A Massive $6.6 Trillion Debt Burden” does also point out corporate America’s cash-to-debt ratio is huge but the debt is growing. And the downside of more debt could translate to an increase in corporate defaults especially if the growth in debt outstanding becomes much higher than the growth in cash. “ In 2015 alone, total debt outstanding grew by about $850 billion, or about 50 times that of the cash growth.”

Looks as though corporate America is beginning to feel what millions of American households have known for a long time: Too much debt with not enough money coming in to cover it.

That’s not good for anybody.

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POCKETBOOK: Week ending May 14, 2016

• 
• If you’re 30 today…..

Making money takes time. Sometimes plenty of time. And even though today’s 30-year old doesn’t really deeply understand time’s real value, research from McKinsey & Co. showed that—thanks to the market’s skimpy returns of late—people that age will have to work seven years longer and/or save twice as much to have a next egg equal in size to that of someone a generation older.

• And if you’re between the ages 18 and 29…

Consider this a “But wait. There’s more” addition to the above paragraph. Turns out, young people between the ages of 18 and 29 aren’t really big fans of capitalism.

According to a Harvard University survey, 51 percent of those polled don’t support America’s money-making system. Which, from my point of view, is likely to make making money to support them during their senior years more challenging.

Then again, maybe not. After all, capitalism’s meaning has changed a lot over the years.

“The word ‘capitalism’ doesn’t mean what it used to,” said Zach Lustbader, a senior at Harvard involved in conducting the poll, which was published in The Washington Post (4/26/16). “For those who grew up during the Cold War, capitalism meant freedom from the Soviet Union and other totalitarian regimes. For those who grew up more recently, capitalism has meant a financial crisis from which the global economy still hasn’t completely recovered.”

According to John Della Volpe, a polling director at Harvard, who  interviewed another group of young people  found that they weren’t “rejecting the concept” of capitalism. What turned them off was the way  capitalism practiced today. “In the minds of young people — that’s what they’re rejecting.”

• Market Quick Glance

-Indices:

Here are the year-to-date performance figures for the major indices through May 13, 2016, according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

-Dow Jones +1.66% YTD

1yr Rtn -1.55% (last week’s 1-yr return: + 0.04%)

-S&P 500 +0.97% YTD

1yr Rtn -1.47 % (last week’s 1-ry return: -0.67%

–NASDAQ -5.28% YTD

1yr Rtn -5.31 (last week’s 1-yr return: -4.09%)

–Russell 2000 -2.42 % YTD

1yr Rtn -10.06 % (last week’s 1-year return: -8.40%

-Mutual funds

Through Thursday, May 12, 2016 the average U.S.Diversified Equity Fund continues to loose ground ending the second week of May down –but not as much as the previous week. The average was down 0.37 percent year-to-date, according to Lipper.

The three top performing funds over the past week under this colossal heading of U.S.Diversified Equity Funds were: Equity Leveraged Funds that maintained their plus-side run, now up 4.66 percent year-to-date on average. Behind them came Equity Income Funds, up 3.66 percent, and then Mid-Cap Value Funds up 3.28 percent.

On the income side, The average World Income Fund was up over 6 percent, year-to-date.

But stil rocking the Sector Equity Funds word were Precious Metals Funds, up on average 75.64 percent as of Thursday’s close. That’s 4 percent more than the previou week’s close.

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.

• Traveling and tipping

For many, vacation time is right around the corner. If you’re like most of us, organizing a trip is one thing but figuring out who—and how much to tip—is quite another.

To help you out, below are some very reasonable tipping pointers from the world famous travel maven Peter Greenberg as presented in his Friday post at petergreenberg.com : “Common sense dictates rewarding someone for a job well done, as opposed to rewarding them simply because a tip is expected.

“Think first of the people who really do the work: housekeepers at hotels, the guy who busses your table, the rental car shuttle bus driver, the airport wheel chair attendant, etc. These are the unsung heroes—not just hotel concierges and maître d’s. They can make the most positive difference in your travel experience.

“As a rule of thumb, or at least my thumb, tip your hotel maids $5 to $10 a day—they work so hard.

“What about the shuttle bus driver? Generally, $1 is appropriate. Or, give him $2 if he’s hauling your bags on and off the bus.

“If you need a wheelchair attendant, you’re not just paying him to get you to the gate, but he’s also there waiting with you. Time is money—thank him with a $10 or $20 tip.”

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Are store bought Wills any good?

Prince died without one. Snoop Dogg doesn’t have one either. Turns out, estimates reveal that over 60 percent of us die without a Will. If you’re one of the 60+ percent, change that. Dying intestate, i.e., without a Will, can cause a lot of stress for the loved ones—and not so loved ones– you leave behind. That means, don’t take the still living Snoop Dogg’s intestate’s approach.

In a recent interview with BusinessInsider.com, when asked why he hasn’t prepared a Will, Dogg said, “”I don’t give a f— when I’m dead. What am I gonna give a f— about?” The lanky rapper and actor expects to be reincarnated and will be able to “observe the ruckus over his estate from the next life. “

Unlike The Dogg, I don’t have a clue what’s going to happen to me after I die. But I do know that  I find no joy in the notion of  watching those I leave behind squabble over my estate— tiny as it currently is.

I also know that just thinking about a Will, what I’d include in it and who would get what is super stressful. And that formally creating one can be costly. Which is why the first Will I prepared was one of those Office Depot cookie cutter store bought ones that came with a Power of Attorney and Living Will forms included.

It’s been years since I completed that Will’s paperwork and had it all notarized. And yes, my goal this year is to update it and spend a few hundred bucks to create a proper grown-up one. (BTW, even though they focus on life after death, Wills are living documents that need to be updated and changed as your life’s circumstances change.)

But until that happens, store bought Wills aren’t all that horrible. Plus, they could serve as a good temporary beginning point for anyone who currently is sans a Will if, for no other reason, than to get you thinking about all that end-of-life stuff you’d rather ignore but know will one day will be coming your way.

Susan T. Peterson is an attorney with the firm of Henningson & Snoxell, Ltd., in Maple Grove, Minnesota and Chair of her firm’s Estate Planning Department.

In an email exchange, I asked for her opinion on store-bought Will forms.

Her response: “A template/form Will may work.  These are multijurisdictional forms, though, that can create more problems than no Will at all in some cases.  Also, most people who use the forms don’t get the forms filled out just right, and, don’t get them signed just right.  Again, more complications/problems/expense. Plus, the template Will doesn’t always end up matching the testator’s wishes.”

Although there is no comparing the cost of a template/form Will (typically under 40 bucks) with that of one drawn up with your attorney (ranging from a few hundred dollars on up), what matters more than the money is that all the  i’s are dotted and t’s crossed.

“The cost of creating a valid Will done right is miniscule when  compared to the benefits it provides, “ said Peterson

Sound advice for the here and now.

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POCKETBOOK: Week ending May 7, 2016

      •How you doin?

According to Transamerica Center for Retirement Studies, the average retirees nest egg  now totals $119,000; for those married, it is $224,000; and for singles, it is $40,000.

• Market Quick Glance

-Indices:

Here are the year-to-date performance figures for the major indices through May 6, 2016, according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

Stocks continued to have another tough week with all indices losing ground this first week of May, dragging their 1-year returns right down with them.

Warren Buffett told his groupies that if interest rates remained at 0 for 50 years the DJIA would hit 100,000. That’s a “Doh!” When fixed-income products yield nothing there is no other place for investors who believe in corporate America to go but to invest in stocks.

-Dow Jones +2.73% YTD

1yr Rtn + 0.04% (last week’s 1-yr return: + 1.21%)

-S&P 500 +1.40% YTD

1yr Rtn -0.67 % (last week’s 1-ry return: +0.10%

–NASDAQ -4.94% YTD

1yr Rtn -4.09 (last week’s 1-yr return: -3.35%)

–Russell 2000 -1.38 % YTD

1yr Rtn -8.40 % (last week’s 1-year return: -6.57%

-Mutual funds

Through Thursday, May 5, 2016 the average U.S.Diversified Equity Fund lost ground again and ended the first week of May down nearly 1 percent year-to-date, 0.80 to be exact, according to Lipper.

Equity Leveraged Funds, there are 202 of them, lost ground as well although still maintained plus-side returns, up 3.12 percent year-to-date on average. Behind them were Mid-Cap Value Funds up 3.01 percent.

Still rocking under the Sector Equity Funds heading were Precious Metals Funds, up on average 71.62 percent as of Thursday’s close. That’s a couple of percent less than the previous week’s close. Even gold is having a hard time shining in this market.

The average Sector Equity Fund was up 5.10 percent y-t-d. Also down from the previous week.

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.

 •Time to lower your expectations

While there’s no calling the market, there are indications that our US markets, right along with those in the developed nations around the globe, are in a world of economic hurt.

Last month the McKinsey Global Institute published a report “Why investors may need to lower their sights” pointing out past market performances.

They write: “Total returns on equities and bonds in the United States and Western Europe from 1985 to 2014 were significantly higher than the long-term average.”

Using that time frame, their report showed that during that 30-year period, US equities returned on average 7.9 percent—the average for the past 100 years was 6.5 percent. For European equities the 30-year average return was also 7.9 percent but 4.9 percent for the past 100 years.

US government bonds averaged 5 percent for the past 30 years and 1.7 percent over the past 100. And European government bonds averaged 1.6 percent returns over the past 100 years and 5.9 percent during the past 30 years.

Going forward, McKinsey’s report estimates annual returns for equities to be about 1.5 to 4 percent lower than the 30-year average and 3 to 5 percent lower for fixed-income.

Whether their past long-term returns are spot on or not, lowering your expectations for this year is worth doing.

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Pocketbook: Week ending April 30, 2016

• More bang for your buck

Thanks to the exchange rate, spend 1 US dollar in Canada and you’ll get about $1.20 worth of their goods and services. Or, one more good reason to visit our neighbors to the North.

• Market Quick Glance

-Indices:

Here are the year-to-date performance figures for the major indices through April 29, 2016, according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

Stocks had a tough week with the indices all registering poorer performance at the end of this week than the previous one.

Looks as though a good dividend paying stock, or stocks, could be this year’s most rewarding picks.

–Dow Jones +2,83% YTD

1yr Rtn +1.21%

-S&P 500 +1.74% YTD

1yr Rtn +0.10%

–NASDAQ -4.23% YTD

1yr Rtn -3.35%

-Russell 2000 +0.02% YTD

1yr Rtn -6.57%

-Mutual funds

Through Thursday, April 28, 2016 the average U.S.Diversified Equity Fund lost ground during the past seven days. While still up modestly for the year, the average fund under this heading that includes 8401 funds was up 1.00 percent year-to-date, according to Lipper.

Equity Leveraged Funds, Lipper tracks 202 of them, have year-to-date returns of 8.2 percent, on average. Behind them were Small- and Mid-Cap Value Funds with year-to-date returns up 5.16 and 5.03 percent respectively.

Dedicated Short-Bias Funds gained some strength, down now only -9.94 percent y-t-d instead of -11.15 percent from the 4/21 weekly report.

As always, it’s Sector Equity Funds where investors will find the best performing fund groups. Thanks to the Precious Metals Funds, up on average 73.83 percent as of Thursday’s close (that’s 8 percent higher than the week previous), the average Sector Equity Fund was up 6.35 percent y-t-d.

Health/Biotech fund types continue losing ground this year.

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.

• The economy, Buffett, Icahn and me

No two ways about it, the economy is not moving along at a robust pace. And there’s a yellow cautionary flag waving with respect to the near  and not-so-near term future.

So what’s an investor to do? Buffett admits that the economy is not booming, nor is it falling apart.  Carl Icahn says there is big trouble ahead.I say, mind your p’s and q’s.

That means, review your “p”ortfolio and “q”uestion all of your holdings. Then decide again, if the risks you’ve taken to make a buck are as valid today as they were the day you decided to take them.

And don’t forget: no one ever went broke taking a profit.

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