Tag Archives: interest rates impact all of us

POCKETBOOK: Week ending Dec.2, 2016

Money money and more money.

•Billionaire souls

I had lunch last week at a great little Greek restaurant in Boynton Beach. The place was/is so popular I wound up sharing the table with a Trump fan thrilled with the news that the makings of this president-elect’s Cabinet were all million-and-billionaires. To me that’s nothing to cheer about.

I recognize that there are tens of millions of people who automatically and absolutely think that if you’re rich you’re also smart, but my life experiences have taught me otherwise. What I’ve learned first-hand is that the only thing that being a millionaire or billionaire means is—drum roll please—that you’ve got money. And plenty of it. Period.

Being a billionaire doesn’t mean that you are smart, or compassionate or will make a good public servant. Or anything like that.

The honest bottom line is this: Brains and money don’t automatically go hand-in-hand.

In the case of this president-elect’s choice of Cabinet members, being a public servant –in whatever capacity–requires a different mindset than that of running a private company or a public corporation. And it is one that money can’t buy.


  • Market Quick Glance

Lest you’ve come to believe that it has been The Donald’s magic wand that has driven stock prices higher, so much for the wand.

At the close of business on Friday, December 1, 2016, all four of the indices followed here closed lower than they did during the previous week with one exception….the DJIA closed a tad higher, as in 24 basis points higher.

So while there may have been a short Trump rally, the president-elect did not create this long-toothed bull market. His presidency, however, could crush it especially if you believe the following:“In every single instance at the end of a two-term presidency, there’s been a recession. This means there is a 100% chance of recession for the new president.”

John Mauldin wrote that in his recent SeekingAlpha.com column titled, “We Are Putting Off The Inevitable”.

With that in mind, let’s hope your portfolio’s year-end returns are holiday sweet.

Below are the weekly and 1-year performance results for four popular stock indices along with their respective P/E Ratios based on prices at the mid-day close of business on Friday, Dec. 2, 2016, according to Bloomberg.


-Dow Jones +12.90% YTD up a tad from last week’s 12.66%

  • 1yr Rtn +10.33% downa tad from last week’s 10.48%

P/E Ratio 18.21 down a tad from last week’s 18.23


-S&P 500 +9.46% YTD down from last week’s 10.47%

  • 1yr Rtn +7.11% down from last week’s 8.21%

P/E Ratio 20.50 down from week’s 20.7

NASDAQ +6.30% YTD down from last week’s 9.17%

  • 1yr Rtn +3.61% down from last week’s 6.73%

P/E Ratio 30.60 (last week NA)


Russell 2000 +17.27% YTD down from last week’s 20.16%

  • 1yr Rtn +12.74% down from last week’s 13.73%

P/E Ratio 45.59 down from last week’s 46.89


-Mutual funds

Just as equities fell during the week, so too did the year-to-date performance of the average U.S. Diversified Equity Fund. At the close of business on Thursday, Dec. 1, 2016, the average fund under this broad heading was up 8.55%, according to Lipper. Last week that average was 9.67%.

Small-Cap Value Funds were up on average 22.47%, down a bit from the previous week’s close.

Equity Leverage Funds were up 17.42% and Mid-Cap Value Funds up 16.03% on average. that lead the way, up on average 23.21%.

Year-to-date returns for investors in the largest mutual funds around take note that the top performer of the 25 largest is the Dodge & Cox Stock fund, up 20.08%. Next in line the American Funds IA:A, up 12.59%.

Visit www.allaboutfunds.com for more information about how various 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.

  • Interest rates and you

If there is one truth to behold about interest rates it is this: Any movement in interest rates impacts all of us.

In a rising interest rate environment decide to buy a home, car or any other kind of loan in which fixed-income plays a part and you’ll be paying more the the privilege of borrowing money.

Decide to bank any part of your momey and it will be working harder for you—albeit the return could be puny.