March Madness is upon us…but not in the financial arenas. The last five months have produced a slow and steady climb for stocks, real estate, oil prices, and jobs, too. The impending crowd noise and fan exuberance of the NCAA basketball tournament is a far whoop and cry from the S&P 500’s quiet ascension to its highest levels in 3 years. For a moment last week, it looked like stocks were headed for an anticipated correction. Instead, the American economy dribbled around Europe and made more positive “layups”. Friday marked the three-year anniversary of the S&P 500’s dive to a 12-year low…followed by a sharp rally. The S&P 500 has grown more than 100% from that low.[i] Yesterday was Wall Street’s biggest day of the year punctuated by the NASDAQ reaching an intraday top of 3039…its highest mark since November of 2000.
The leading sector climbers so far in 2012 have been Technology (+16%), Consumer Discretionary Goods (+12%), Financials (+14%), and Materials (+9%). The 10-year Treasury bond rate a year ago was 3.4%; today it is 2.0%. The S&P 500 is up 9.4% this year. The NASDAQ, the DOW, and Gold prices are all higher than last year. The average 30-year mortgage rate has fallen from 4.9% to 4.0% since March 9, 2011. REIT (Real Estate Investment Trust) prices were up again in 2011 and ahead so far in 2012.
Refi Mania! Have you noticed the increasing frequency of mortgage advertisements? This kind of activity could lead one to believe that the lending pendulum is finally beginning to swing back to the borrowers. So, if you haven’t looked into purchasing a home or refinancing (yet again) then now may be a good time to try and grab one of these historically low rates.
Need to make a trade right away? Simply say so! Our policy is to be on-call for you 24/7 and especially during market hours (6:30 AM to 1:00 PM EST). This is the 21st century and no matter where we might be in the world, you should be able to reach us by phone, fax, Skype, or email. We cannot process orders left on voicemail…but as long as we know it’s you, a response should be only a few minutes.
March is Women’s History Month. Actor-author-activist Marlo Thomas writes: “Whatever happened to the women’s movement? The marching and protesting of the Sixties and Seventies opened the door for a generation. It’s exciting to see three women on the Supreme Court, to see three women Secretaries of State, to see women anchor the nightly news, and it’s exciting to know that the chief operating officer of Facebook — the one who helps you connect with your hundreds of ‘friends’ — is Sheryl Sandberg. ‘Fortune favors the bold,’ Sandberg says. ‘Think big. Dream big. We will never close the achievement gap until we close the ambition gap.’”
Lost in 2012. We’ve said goodbye publicly these past few weeks to singers Whitney Houston and Davy Jones. A few other great musicians who have left us already in 2012 are Disney songwriter Robert Sherman, rock guitarist Ronnie Montrose, jazz saxophonist Red Holloway, songwriter Dory Previn, and drummer Michael Hossack. Lesser known, but perhaps even more influential, Rabbi Allen Krause passed away last week. He was first and foremost a teacher of children (including my three kids) and adults here in Orange County. Rabbi Krause was recognized as a worldwide pioneer who brought people of different beliefs together at his annual conferences held at the Mission in San Juan Capistrano. I would also like to remember the contributions and love of our departed friends Bette O’Donnell, Les Spreen, and Phyllis Spear.
“The Rich Rush to REITs”. A survey released by Chicago-based consulting firm Spectrum Group, reports that Real Estate Investment Trusts (REITs) are the most popular alternative investment for investors with assets between $5 million and $25 million. This is not a surprise to many of our clients. Why? These real estate holdings come in a variety of styles and objectives such as residential, industrial, hotels-hospitality, self-storage, and commercial. REITs are liquid and publicly traded, plus… they are required by law to pay out 90% of their income in dividends. In 2011, REIT’s showed a gain of 8.2%, nearly four times the S&P’s 2.1% advance.
More steady income without the volatility. We have been suggesting a substitute technique for qualified customers who want more income and less risk than bonds may offer in today’s marketplace. Depending on age and tax bracket, using a SPIA as a “bond alternative” can generate considerably more tax-preferential income without the ups and downs of bond prices. Our illustrations are typically showing a significant increase in monthly income…and these investments are guaranteed and may be insured, too.
“Market Timing” is like a friend returning from Las Vegas…you hear about the winning but not the losing. Legendary investor John Bogle: “After nearly 50 years in the business, I don’t know anybody who has consistently timed the market with success. I don’t even know anybody who knows anybody who has done it.”
We are treading cautiously in these high market altitudes. For growth accounts, we would like to see the markets take just a little breather and stretch a bit…before heading into the next big run. We try our best to have our clients ready to take advantage of discounts and better entry points before buying. I particularly like investments today that improve Internet security, lower healthcare expenses, increase education, offer outstanding entertainment and technology, and provide for efficient energy.
Good luck with your NCAA tournament brackets and predictions. Have a fun and responsible St. Patrick’s Day. It has surely been a “green” year thus far…with Spring around the corner…and more growth ahead.
Today’s the day.
National Asset Management, Inc. (NAM) is a Registered Investment Advisor with the SEC. NAM provides fundamental investment management services. The views expressed contain certain forward-looking statements. NAM believes these forward-looking statements to be reasonable, although they are forecasts and actual results may be meaningfully different. Actual events may cause adjustments in portfolio management strategies. This material represents an assessment of the market at a particular time and is not a guarantee of future results. This information should not be relied upon as research or investment advice regarding any security. One cannot directly invest in an index. Index performance returns do not reflect any management fees, transaction cost or expenses. Indices are unmanaged. S&P 500 Index is an unmanaged index of 500 common stocks chosen to reflect the industries in the US economy. The NASDAQ is a weighted index of more than 3000 weighted equities listed on the NASDAQ stock exchange. The DOW Jones Industrial Index is an index that shows how 30 large, publicly owned companies based in the United States have traded during a standard trading session in the stock market. Securities offered through National Securities Corporation, Member FINRA/SIPC. The guarantees of fixed annuity contracts are contingent on the claims-paying ability of the issuing insurance company. Most annuities have surrender charges that are assessed during the early years of the contract. In addition, if the annuity contract is surrendered prior to age 59 ½, the contract owner may be subject to a 10% federal income tax penalty. Annuity withdrawals are taxed as ordinary income. Investment Advisory Services offered through National Asset Management, Inc SEC Registered Advisor and affiliate of National Securities Corporation. NAM or Pacific Sun Financial does not offer any legal or tax advice. One should consider consulting with a legal or tax professional before implementing investment strategies.
 J.P. Morgan Asset Management 3/12/12 (Figures from 3/9/11 to 3/12/12)  FTSE NAREIT US Real Estate Index 3/8/12  Huffpost 3/13/12  Onwallstreet 3/12