Imagine spending Easter in space. The six astronauts in the International Space Station received some gifts this week…not from the Easter Bunny…but from a cargo ship called the Easter Dragon. It took 2 days from its launch at Cape Canaveral for the special delivery capsule to catch up to the space station. What was in the gift “basket” from Earth? Two tons of food, spacewalking gear, mating fruit flies, a little veggie hothouse (?), and legs for the station’s resident robot. What’s next…a holiday egg hunt in space suits?
The financial world continues to bring gifts this spring to most investors. Last week’s deliveries were the best presents of the year. Although trading volume was light ahead of Good Friday, the Dow and NASDAQ handed out gains of 2.4% while the S&P 500 contributed 2.7% for the week. After a 56 month gain of 150%, is the gift giving streak coming to an end soon? It is surely a time to be cautious when making purchases at these price peaks. Although last year’s historic performance was music to most ears, it was only the sixth best positive market since the end of World War II. The longest bull market lasted 113 months from October 1990 to March 2000. During this time, the S&P 500 gained 417%.[1]
Our weekly market recap data center (through April 7th) showed US manufacturing increasing by the Institute for Supply Management’s standard to 54.7. There was a 16.4M gain in light vehicle sales, 192,000 more private payroll jobs, and a nationwide unemployment rate of 6.7%. The 10-year Treasury note earned 2.74%, a barrel of Crude Oil was $101.14, gold was priced at $1297 per ounce, and the average 30-year fixed mortgage rate was 4.56%. The latest real estate analysis from Case-Shiller reports that seasonally adjusted home prices increased across the nation by nearly 1% in January. The best S&P 500 sectors year-to-date have been Utilities +10.1%, Healthcare +5%, and Materials 3% with Mid Cap Value +5.1% leading the way.[2]
Spring is usually a wonderful time in Sports. The NBA and NHL playoffs have arrived. Major League Baseball is just getting started. Bubba Watson won the Masters at Augusta National last week. Kids are playing soccer, tennis, and tee-ball in the park. There’s a new arena football team in the OC. When it comes to money, pro athletes without good financial advisors are mostly failures. According to Sports Illustrated, 78% of former NFL players are bankrupt within two years after hanging up their cleats, and 60% of NBA players are broke within five years of retirement. There are some well-known exceptions. Here is Forbes’ list of the highest paid retired athletes and their earnings in 2013: Michael Jordan $63M, Arnold Palmer $40M, David Beckham $37M, Jack Nicklaus $30M, and Magic Johnson $22M. Wayne Gretsky $17M, Pele $15M, Sachin Tendulkar (Cricket) $13M, and Roger Staubach $12M are also in the top 12.[3]
In addition to Nirvana, Kiss, Cat Stevens, Hall & Oates and Peter Gabriel…Linda Ronstadt entered the Rock and Roll Hall of Fame this month. Never a sweeter voice was heard than Linda’s. The 11-time Grammy winner was raised in Tucson and formed her folk-rock trio called The Stone Poneys in the 1960’s. She toured with the Doors, Jackson Browne, and Neil Young before selling out concert stadiums on her own. Linda was the highest paid female vocalist in the 1970’s and became known as the “Queen of Rock” with hits like ‘Desperado’, ‘Poor Poor Pitiful Me’, and ‘Blue Bayou’. She moved in many musical circles…from rock to opera to Broadway to Mexican music. Recently, she announced her retirement from singing due to the effects of Parkinson’s on her voice. Linda has been a joy for millions of music lovers.
Tax season is behind us now. At Pac Sun, we make it a point to be available and responsive during mid-April to help with questions, to gather cost-basis data for accountants, and to accept IRA contribution checks. Waiting until the last few days to retrieve tax information can add pressure and anxiety…but we understand that it happens. The expression, “I’m always late, but worth the wait”, doesn’t really apply to the IRS. If your tax returns were ‘on hold’ from missing or late partnership K1’s…be the squeaky wheel early with the people who provide these figures. The most important part of filing taxes is, of course, to have a great accountant.
Does investing need to be complicated? Here’s a tidbit from a Certified Financial Consultant (CFA) at State Street Global Advisors: “A consistent and transparent investment strategy that captures returns beyond the traditional market cap-weighted asset class falls into four categories. 1. Commodities, gold, infrastructure, and currency carry, 2. Options overwriting, leveraged strategies, and inverse strategies; 3. Rules-based/emulation strategies, hedge fund beta and convertible arbitrage; and 4. Using advanced beta or smart beta.” Are you kidding? I prefer a simple mantra: “Buy good investments when prices are down…and hold on to them.”
Science fiction has become reality. Here are a few innovations already working today that will shape our tomorrows: 1. Biotech has created a bionic hand controlled by brain signals; 2. Computer processing speed has grown so fast that by 2020 computers could have the intellectual capability of humans; 3. Fuel for autos is electricity…with cars like Tesla and Prius leading the way; 4. Overlaying video on to our vision is being pioneered by Google glasses; 5. Understanding DNA, cellular parts and sequences is providing medicine a bright light to improve our health and cure disease; 6. Internet marketing (You Tube, Facebook, and Twitter) is leveling the playing field for fame and fortune; 7. Clothing is using nanotechnology to warm us with electrical energy from our blood flow and physical movements; 8. Robots are here to help with explosives, shipping, and surgeries. 9. Solar, wind, and wave energy are sending fossil fuels back to the dinosaurs.[1]
In the spirit of spring and giving, consider one or more of these simple gifts of kindness: Send a note of encouragement to a child or to someone struggling. Be a fundraiser for a good cause. Call a teacher or mentor or loved one who has changed your life. Complain less. Buy a new item of clothing…give one away. Allow a driver to merge into your lane and smile. Send a gift to a friend. Leave a generous tip. Remember to appreciate beauty and smell the roses along the way.
Today’s the day.
Mitch Fisher