“I want to put a ding in the Universe.” Steve Jobs
Our world has experienced more than a ‘ding’ in it from Steve Jobs. More like a big dent. His vision, creativity and marketing were truly phenomenal. Mac, Ipod, Iphone, Ipad. Incredible! We were fortunate to have his genius. If you haven’t seen it, and you ever wish to be inspired for life in just 14 minutes, watch Steve’s commencement address to Stanford graduating students: http://www.youtube.com/watch?v=D1R-jKKp3NA
Another extraordinary person has been present lately courtesy of Martin Scorsese and HBO. On the tenth anniversary of his death, George Harrison is being remembered as a creative force who also changed the world through his music and sprituality. Most people would consider George as one of the greatest guitarists who ever lived. His lyrics, along with his sound (and his mates), truly revolutionized the planet. Our guitars gently weep.
Speaking of dings and dents…your accounts will likely reflect another scratch or two in your September statement. October has already recaptured a portion of September’s decline. The DOW gained nearly 2% last week and advanced for the third week out of the last four. The bears are focused on troubled Europe and our domestic problems while the bulls are optimistic about undervalued equities and growth in jobs and the GDP. The markets have been relatively flat now for a year. The DOW was at 10,949 on October 7, 2010 and today’s 330 point gain took it to 11,433. The S&P 500 stood at 1,158 on October 7, 2010 and climbed 39 points higher today to close at 1,194. Residential real estate prices in California are down 6.8% from September of 2010 according to Zillow. As loans become easier to obtain in the future, property values will rise again. Mortgage rates fell to an all-time low last week. The average fixed rate 30-year loan is now the lowest in history at 3.94%. Gold is up 22.6% for the past year through October 7th, but down 9.8% in the last 30 days.[1]
Do you think another recession is about to happen? According to the Economic Cycle Research Institute, if you think another one is around the corner…than you would be right. A CNN survey of economists put the odds of a double-dip recession at 1 in 3. A Russell Investments report released last week found that more than 75% of investment managers do not believe a recession is imminent. What do you get when you put 4 economists in a room? 5 opinions. Adding to the problem of who to believe is the spoiled credibility of Bill Gross, head of the world’s largest mutual fund. The highly respected bond guru was outperformed by 80% of funds in the same category this year. Gross, and other managers like him, did not see the rally in Treasuries coming our way.[2]
Your accounts are being upgraded via the Internet. National Securities has made some improvements to viewing your investments online with Streetscape. The enhancements include higher speed, more data, and better tools. You can log on to your accounts through our website at www.pacsunfinancial.com. While you are on our website, you may want to check out the Daily Market Notes written by our Chief Analyst Don Selkin. His analysis and insights are posted every day on our website under Company reports and news. Don is frequently quoted on Bloomberg and CNBC. His daily report combines global and domestic observations of the markets, technical breakdowns, investment history lessons, important statistics, and prognostication.
The latest Forbes list of the world’s most powerful women include some names you may not know: Indra Nooyi, Sheryl Sandberg, and Christine Lagarde. These influential ladies are in Forbes’ top 10. Indra lives in Connecticut and has been the CEO of PepsiCo for the last five years. She leads a company of 300,000 employees with revenue of $60 billion. (PepsiCo has a current dividend yield of 3.3%.) Sheryl resides in Atherton and serves as second-in-command at Facebook. She has helped the company grow from 70 million users to nearly 750 million active “friends”. The IPO of Facebook is tentatively scheduled for early 2012. Christine was named the first woman to head the IMF (International Monetary Fund) after Dominique Strauss-Kahn resigned this past year. She lives in Washington DC and she is directly involved with solving the financial crises in the Eurozone.[3]
It will soon be that time of year to begin Required Minimum Distributions (RMD) for IRA accounts. For those of you over 70 ½, you can see the amount required on the first page of your monthly statement. You will be receiving several reminders from us that your minimum distribution must occur before 12-31-11. You can also call us for the amount, the forms and strategies to help coordinate with other retirement accounts.
Here are a few economic tidbits for the pessimists and for the optimists: Europe is in a credit crises but container traffic in the Port of Los Angeles has risen this year. Jobless claims have been averaging more than 400,000 per month but consumption and production has reaccelerated in the third quarter. The Institute for Supply Management reports only half of the companies in America are expanding but restaurant sales are on track to reach a record $600 billion this year and hotels are reporting double-digit increases in per-room revenue. Volatility has been on the rise making investors nervous but a stronger dollar should drive import prices down.[4]
The bottom line for every investor is to try and find great businesses with exceptional leaders like Steve Jobs and to continue to live by a George Harrison-like mantra of “Buy low and sell high”.
Mitch Fisher
[1] Proformative 9/30/1, Goldprice.org 10/7/11, Zillow.com 10/7/11, JPM Asset Management 10/10/11, Yahoofinance.com 10/6/11[2] Investment News 10/6/11[3] Forbes 8/24/11[4] Investment News 10/3/11