How much good news can these financial markets take? Read on to find out…
The employment reports this month were exceptionally positive. US employers added 236,000 jobs in February, up from 119,000 in January…and the unemployment rate fell to 7.7%. Real estate was up and away nationwide. The number of new homes sold in January grew 30% more than a year earlier with prices gaining an average of 7.3%. The highest price increases were in Phoenix +23%, San Francisco +14%, Las Vegas and Detroit +13%, Miami and Los Angeles +10%. Manufacturing is nearly full steam ahead with the “PMI” at 54.2%. CD rates today earn you less than 1%. Retail sales jumped 1.1% in February. All of these factors are great news for stocks: The DOW blasted to an all-time high last Thursday of 14,539! The S&P 500 is only a few points shy of its record peak of 1565.
More good news: The Academy Awards seemed to get it right this year as top honors went to Daniel Day Lewis, Jennifer Lawrence, and “Argo”. We have a new Pope Francis from Argentina. He has promised to promote “friendship, respect and dialogue”. Perhaps his promise will rub off on our politicians in Washington? As for politics, the catchy disaster phrases like “fiscal cliff” and now “sequestration, haven’t put a cog in this rally’s wheel. The deadline passed, $85 billion of tax cuts began, and the “equity love train” continued to roll.
“There is good news from Washington. Congress is deadlocked and cannot act.” Will Rogers
Being patient during this record breaking market run is not easy…especially with cash earning zilch. In baseball, there is an art to swinging at good pitches and not swiping at balls out of the strike zone. If investing was truly a science, we could simply plug in a formula to double our money every few years…know precisely when to buy and sell…and I would be looking for a different line of work. When Warren Buffet loses 30% in a bad year, and Bill Gross is at the very bottom of bond manager rankings, then we should see that there is no such thing as a guaranteed recipe for making good money. Investing is not a science! Markets and prices rise and fall, but they are not predictable like ocean tides. For Pac Sun clients, we intend to patient and to be ready for a lower tide to purchase. We’re in the boat with our client’s investments: When your accounts grow…we grow, too.
“Never take advice from someone who doesn’t have to live with the consequences.” Mark Cuban
Your taxes have good news, too. It is easier to plan and minimize taxes with the passage of the American Taxpayer Relief Act 2012. We know what rates will be now and what they are projected to be 10 years from now. The AMT exemption has a permanent fix. Estate tax rates are locked down with a $5M exemption and new spousal benefits for unused exemptions. Up to $100,000 of income can be excluded from your IRA distributions if given to charity. Talk with your CPA about the good news.
“The bad news is that time flies. The good news is that you’re the pilot.” Michael Althsuler
There is great news about saving lives and money with your smart phone. I have been a proponent of investing for growth in the tech and medical sectors for years. For those of you who have heard me say that “someday we’ll be able scan our smart phone along our body for a medical diagnosis”, here is a story that recently appeared on NBC’s ‘Rock Center’:
It happened on flight from Washington, DC to San Diego. The pilot’s urgent question reverberated over the intercom during a cross-country flight, “Is there a doctor on board?” A passenger was experiencing severe chest pains, and luckily for him Dr. Eric Topol was sitting in seat 6A. Topol is the energetic chief academic officer of Scripps Health, a prominent cardiologist and the foremost figure in the field of wireless medicine. He believes the future of health lies in our own hands, namely in our smart phones and other portable electronic devices. According to Topol, “the smart phone will be the hub of the future of medicine. And it will be your health-medical dashboard.” That day on the airplane, Dr. Topol displayed the potential of wireless medicine when he snapped an AliveCor device onto his iPhone and performed a cardiogram at 30,000 feet. Using this portable cell phone powered device, Topol was able to see that the passenger was definitely having a heart attack and he recommended an urgent landing. The passenger was rushed to the hospital and survived. Topol said this was a “Eureka!” moment for him; such devices could lead to better and cheaper health care everywhere, from airplanes to senior citizen’s homes.
“Everyone has inside a piece of good news. The good news is that you don’t know how great you can be, how much you can love, what you can accomplish, and what your potential is.” Anne Frank
Last week, I attended the Charles Schwab symposium “Investment Outlook 2013” in Los Angeles. About 200 financial advisors hunkered down for a day of information and fine food at the Four Seasons. Many of the top investment firms were represented by their analysts and portfolio managers who brought statistics, opinions, and prognostications. In a nutshell, the overriding sentiment is that our economy is in full recovery mode. Consumer spending and housing are the keys to growth in the US…and these are both stabilizing. The highlight for me was Liz Ann Sonders’ hour-long market perspective. Here are a few “good news” comments from Liz’ presentation: “There is a renaissance going on here as Germany and Japan are bringing their manufacturing to us. Businesses are hoarding cash at the highest levels since WWII. Any market pullback won’t be sinister or last very long. Household debt is way down as a percentage of disposable income. We’re already out of the ‘lost decade’ with an average of 8% growth for the last ten years. Housing delinquencies have plummeted. We’re just in the first inning of the housing recovery cycle. We have exuberance now, but it’s the rational type.”
“How beautiful on the mountains are the feet of those who bring good news, who proclaim peace, who bring good tidings.” Book of Isaiah
Today’s the day.
Mitch Fisher
Pacific Sun Financial Corp; 95 Argonaut, Suite 105, Aliso Viejo, CA. 92656 Telephone: (949) 716-8646 Fax: (949) 716-8645 Website: www.pacsunfinancial.com
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. DOW Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange. Investment Advisory Services offered through National Asset Management, Inc SEC Registered Advisor. 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.