Market Commentary – September 9, 2019

Market Commentary – September 9, 2019

Remember the movie Groundhog Day?
Bill Murray’s character is a crotchety newsman who lives the same day over and over again. After exhausting other options, he chooses self-improvement and eventually escapes the cycle.

The movie came to mind last week when the United States and China headed to the negotiating table. Again.

Global stocks rallied on the news. Again.

The U.S.-China trade war has had a significant impact on stock market performance during the past two years. Since the trade war began, U.S. stock markets have rallied when trade talks are announced and retreated when trade talks fail. In 2018, MarketWatch reported:  “Trade issues have been at the center of Wall Street’s concerns because they have the potential to ripple into every other issue that has been besieging investors, if [the trade war] escalates. That includes the growth outlook for U.S. corporations, an economic slowdown in China, the pace of rate hikes, and the health of the U.S. economy and stock market…”

Last week, Fox News pointed out U.S. companies and consumers are feeling the effects of tariffs and that could be detrimental to U.S. economic growth, especially if consumer spending slows.

Regardless, major U.S. indices posted gains last week after the United States and China agreed to a new round of trade talks. Ben Levisohn of Barron’s explained:  “Why did the market soar? Not because of the economic data, which still paints the picture of a decelerating U.S. economy. August’s payrolls report came in light, and would have been even worse if not for a big boost from census hiring. The Institute for Supply Management’s manufacturing index fell below 50, signaling a full-blown contraction in industrial activity. But the United States and China finally set a date to go back to the bargaining table on trade – and that was more than enough good news to last the week.”

Maybe, this time around, trade talks will deliver a trade agreement.

If not, be prepared for more possible volatility.

Group outings? gift requests? Let’s talk money etiquette. If you’re of the generation that believes money is a taboo topic, stop reading. If you’ve encountered some perplexing money issues and want to learn more about money-related social etiquette, read on.

Issue: The bride and groom would prefer cash to gifts. Is it okay to request cash?
Answer: It is not okay to ask invited guests to give you cash, writes Carolyn Hax of The Washington Post. “There’s no polite way to bill guests for liking you, pat their pockets for loose change, or coerce them into paying your bills. So, please don’t try. Thank you.”

Issue: You’re organizing a group gift, outing, or trip. How do you avoid money conflicts?
Answer: BuzzFeed Finance recommends avoiding group texts, which “…are a breeding ground for peer pressure and anxiety. Suddenly, everyone agrees that $50 is a reasonable birthday amount, while one person had budgeted to spend around $20 and now feels too awkward to speak up. If you’re the person organizing a joint gift, it’s worth reaching out to people separately to gauge interest and a reasonable dollar amount.”

Issue: You’re raising money for several charities. How often can you ask the same person for a donation?
Answer: It depends, say the editors at Real Simple. It’s okay to approach immediate family for every cause, but limit requests to distant relatives, friends, and acquaintances to a couple of times a year. “You’ll get better results – and keep more friends – by targeting your solicitations, rather than blasting your entire address book.”

Issue: Your girlfriend broke up with you on a peer-to-peer (P2P) payment app. All your friends saw it.
Answer: The default setting for most P2P payment apps is ‘public.’ As a result, people you know – and anyone else using the platform – can see who you paid, when you paid, and (sometimes) what you purchased. Consumer Reports suggests, “Make all your P2P settings the most private possible to ensure the least sharing of your personal data.”

When it comes to money, every generation faces unique challenges.

Weekly Focus – Think About It
“Etiquette is all human social behavior. If you’re a hermit on a mountain, you don’t have to worry about etiquette; if somebody comes up the mountain, then you’ve got a problem. It matters because we want to live in reasonably harmonious communities.”
–Judith Martin (a.k.a. Miss Manners)

Best regards,

John F. Reutemann, Jr., CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

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, Barron’s, 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.

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* This newsletter and commentary expressed should not be construed as investment advice.
* 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 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.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Sources:
https://www.cnn.com/2019/09/06/business/us-china-trade-war-talks/index.html
https://www.marketwatch.com/story/this-chart-shows-why-trade-war-fears-are-the-biggest-catalyst-for-the-stock-market-2018-11-02
https://www.foxbusiness.com/economy/us-china-trade-war-economy-recession-impact
https://www.barrons.com/articles/s-p-500-notches-second-week-of-gains-and-sets-itself-up-for-more-51567817597?mod=hp_DAY_3 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/09-09-19_Barrons-The_S_and_P_500_Finally_Busts_Out_and_Sets_Itself_Up_for_More_Gains-Footnote_4.pdf)
https://www.washingtonpost.com/lifestyle/style/carolyn-hax-wedding-etiquette-advice-on-gift-requests-family-dramas/2013/01/29/6c21c966-64db-11e2-b84d-21c7b65985ee_story.html
https://www.buzzfeed.com/gyanyankovich/money-etiquette-rules-for-2018
https://www.realsimple.com/work-life/money/money-etiquette-advice
https://www.consumerreports.org/digital-payments/p2p-payment-etiquette/
https://www.thespruce.com/quotes-about-good-manners-1216528

Where There’s a Will, There’s a Plan

Where There’s a Will, There’s a Plan

Throughout history people have made inheritance choices that are inexplicable to others. In 1926, Harry Houdini left his magical equipment to his brother, his pulled-from-the-hat rabbits to the children of friends, and a series of random words to his wife. The words were a code that would let her know when he was in touch from the afterlife.

Hope in Humanity

Hope in Humanity

When you turn on the evening news, every broadcast seems to bring more stories of tragedy, fighting, and petty politics. But if we take the time to a look a little closer, we often find that amidst the doom and gloom, people all around the world are constantly demonstrating courage, charity, and sacrifice. So, over the next few months, we’d like to share some inspirational stories we’ve come across that show how even a little bit of kindness can make a big difference. To us, these stories show that there are still a lot of reasons to have…

Hope in Humanity
Story #1: The Tip of a Lifetime

Kasey Simmons, a waiter in Little Elm, Texas, was having a very bad day. In fact, Kasey later described it as “the worst day of my career.”1 The restaurant was so busy, and the patrons so demanding, that he debated just walking away without looking back. But then, a woman entered.

Trying to be polite, Kasey told her that it would be about 45 minutes before he could take her order. But she didn’t want to order a meal. All she wanted was a drink.

“Flavored water,” she requested. It was the cheapest item on the menu – only 65 cents. As Kasey went to get it, he knew it was hardly worth a tip.

He couldn’t have been more wrong. The worst day of his career was about to become his best.

One day earlier
The day before the woman ordered flavored water, Kasey had helped someone else who was having a hard time. While standing in the checkout line at his local grocery store, Kasey noticed an elderly woman with a dejected look on her face. In fact, she looked as if she’d been crying. 

Feeling bad, Kasey tried to start a conversation with her. The woman didn’t really respond. Undeterred, Kasey offered to lift her spirits by paying for her groceries. It was only $17 dollars, but as he later said, “It’s not about money. It’s about showing someone you care.”2

Suddenly grateful, the elderly woman asked for his name. Kasey gave her his business card, paid the bill, and left, thinking that was that. By the next day, it was probably out of his head entirely.

Until the woman in his restaurant ordered flavored water.

The tip of a lifetime
After Kasey brought it, the patron asked for a check so she could leave a tip. Kasey brought that too, then resumed his other responsibilities. When he returned sometime later, he found the woman was gone. In her place was a note written on a napkin.

“Kasey, on behalf of [my] family, I want to thank you for being the person you are. On one of the most depressing days of the year, (the 3-year anniversary of my father’s death) you made my mother’s day wonderful. She has been smiling since you did what you did. You insisted on paying. You told her she is a very beautiful woman. I have not seen her smile this much since Dad died. My mother did not need you to help her, but you made her year. Now accept yours!”1

Next to the napkin was the check. Kasey looked at the tip.
It was for $500. Sometimes, it’s nice to know that despite everything going on in the world, simply paying attention to the people around us can make all the difference in a stranger’s day.

Sometimes, it’s nice to know that simple human decency is alive, well, and as valuable as ever.
Sometimes, it’s nice to know that good deeds can be rewarded.

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1 “Waiter receives $500 tip after showing kindness toward grieving widow,” ABC News, August 23, 2016. https://abc7.com/society/waiter-receives-$500-tip-after-showing-kindness-toward-grieving-widow/1481366/
2 “Waiter tipped $500 for act of kindness,” CNN, August 19, 2016. https://www.cnn.com/2016/08/19/living/iyw-waiter-tippedbig-for-kindness/index.html

Market Commentary – September 9, 2019

Market Commentary – September 3, 2019

What, me worry?
About this time last year, Time Magazine reported on anxiety in America. Almost 40 percent of Americans reported being more anxious than they were the previous year.

The performance of stock and bond markets this summer may have pushed those numbers higher.

Last week finally brought some relief. It was the best week for major U.S. stock indices since June. The Standard & Poor’s 500 Index, Dow Jones Industrial Average, and Nasdaq Composite all gained between 2 and 3 percent, reported Ben Levisohn of Barron’s.

How can investors cope if volatility continues?
Barron’s Randall Forsyth offered a recommendation, “When the stock market is this crazy, you should just invest lazy.” It’s important to note that Forsyth’s definition of ‘managing lazy’ is building a diversified portfolio aimed at achieving your financial goals and leaving it alone.

Marketplace’s Andie Corban and Kai Ryssdal offered a pretty good argument for lazy investing, too. In the audio report, Ryssdal discussed trading algorithms with Joe Gits of Social Market Analytics: “Gits: So these [algorithms] are reading the president’s tweet using natural language processing [NLP], and our current president’s tweets are pretty easy to read with NLP, and they are either going long or going short.

Ryssdal: I’m going to ask you to make a value judgment here, then. Entirely apart from making money, are these algorithms – and the outsized effect that they have on movement of the markets – are they a good thing or a bad thing?

Gits: I think they’re a bad thing in general, because I think the volatility causes a lot of panic by buying and selling and I think the average investor gets hurt.”

Staying calm in the face of volatility isn’t easy, but it’s an important skill for investors to hone. If it helps, remember volatility can be computer-driven.

Imagine Money with an expiration date. At the turn of the 19th century, some economists thought negative interest rates made sense, according to The Economist.

In 1916, Silvio Gesell published The Natural Economic Order, a pamphlet promoting the idea of negative interest rates. A self-taught economist, Gesell lost faith in money after living through a financial crash in Argentina during the 1890s.

Planet Money reported:  “The problem, Gesell believed, was that money served two roles that often came into conflict: It was a way for people to store wealth, and it was the thing everybody needed to conduct business. The fact that money could store wealth meant its holders had a reason to cling to it, especially in crises like the one he saw in Argentina, when opportunities to safely put that money elsewhere looked grim. It was a typical story. When people got scared, they hoarded cash and brought business to a standstill.”

Gesell suggested a solution: negative interest rates on money. If money continuously lost value, people would not hoard it. They would, in fact, have an incentive to spend it.

How do you make money lose value?
Gesell proposed a tax. Every year, money would expire and lose all value unless the money holder purchased a stamp. The stamp wouldn’t be free, reported Financial Times. There would be a fee for the stamp.

For example, if a person held a $100 bill and paid a $1 fee after holding it for a year, the after-stamp value of the money would be $99. After five years of paying fees, $100 would be worth $95.

Gesell believed people would, in effect, earn negative interest rates if they held onto money. As a result, they would be eager to spend, and that would keep the economy healthy, and possibly help prevent future depressions and improve prosperity.

It’s a thought-provoking theory that earned Gesell a number of nicknames, some flattering and some not.

Weekly Focus – Think About It
“The ultimate purpose of economics, of course, is to understand and promote the enhancement of well-being.”
–Ben Bernanke, Former Chair U.S. Federal Reserve

Best regards,

John F. Reutemann, Jr., CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

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, Barron’s, 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.

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* This newsletter and commentary expressed should not be construed as investment advice.
* 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 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.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Sources:
https://time.com/5269371/americans-anxiety-poll/
https://www.barrons.com/articles/stocks-rally-3-ending-a-bad-month-on-a-good-note-51567212639?mod=hp_DAY_3 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/09-03-19_Barrons-Stocks_Rally_3_Percent_Ending_a_Bad_Month_on_a_Good_Note-Footnote_2.pdf)
https://www.barrons.com/articles/when-the-stock-market-is-this-crazy-you-should-just-invest-lazy-51567213413?mod=hp_DAY_1 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/09-03-19_Barrons-When_the_Stock_Market_is_This_Crazy_You_Should_Just_Invest_Lazy-Footnote_3.pdf)
https://www.marketplace.org/2019/08/29/meet-the-algorithms-connecting-trump-tweets-and-the-stock-market/
https://www.npr.org/sections/money/2019/08/27/754323652/the-strange-unduly-neglected-prophet (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/09-03-19_NPR-Planet_Money-The_Strange_Unduly_Neglected_Prophet-Footnote_5.pdf)
https://www.economist.com/finance-and-economics/2018/02/03/why-sub-zero-interest-rates-are-neither-unfair-nor-unnatural (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/09-03-19_TheEconomist-Why_Sub-Zero_Interest_Rates_are_Neither_Unfair_Nor_Unnatural-Footnote_6.pdf)
http://ftalphaville.ft.com/2015/02/02/2103032/negative-rates-and-gesell-taxes-how-low-are-we-talking-here/ (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/09-03-19_FinancialTimes-Negative_Rates_and_Gesell_Taxes-How_Low_are_We_Talking_Here-Footnote_7.pdf)
https://www.brainyquote.com/quotes/ben_bernanke_704771

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