August 7, 2017
The Markets
Who’s been buying shares of company stock?
Since the start of the bull market in 2009, U.S. companies
have been buying their own stock. Stock buybacks peaked during the first three
quarters of 2016 and have dropped off sharply since then, reports Financial Times citing a report from Goldman Sachs.
Companies participate in stock buyback (a.k.a. share
repurchase) programs to improve shareholder value. For example, if company management
believes a company’s shares are undervalued, it can buy shares on the stock
market or offer shareholders a fixed price to purchase their shares. This
reduces the number of shares in the marketplace and increases earnings per
share, which has the potential to boost the company’s stock price.
The slowdown in stock buybacks hasn’t hurt stock markets. Financial Times reported:
“The slowing pace of companies
buying back their own shares has certainly not halted Wall Street’s stellar run
so far this year. While there is a reduced tail wind of buybacks helping boost
earnings per share via a lower share count, U.S. companies have reported robust
year-on-year sales and earnings growth for the recent quarter. That has helped
offset the decline in buyback activity, but some warn that the clock is ticking
for Wall Street bulls.”
There was no sign of a slowdown in the bull market last week,
though. The Department of Labor reported
the United States added more new jobs than anyone had expected during July, and
the unemployment rate fell to 4.3 percent – the same
level as May 2017, which was the lowest in 16 years, according to Barron’s.
Jobs growth was music to many investors’ ears.
Financial Times
reported, “U.S. equity indices hovered near record highs – with the Dow Jones Industrial
Average touching an all-time peak of 22,089.05 in early trade – with financials
bolstered by the rise in yields. European [markets] ended the week on a strong
note, helped by a sharp retreat for the euro against the dollar.”
Data as of 8/4/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard
& Poor's 500 (Domestic Stocks)
|
0.2%
|
10.6%
|
14.4%
|
8.5%
|
12.2%
|
5.4%
|
|
Dow
Jones Global ex-U.S.
|
0.6
|
17.0
|
17.5
|
0.8
|
5.4
|
-0.4
|
|
10-year
Treasury Note (Yield Only)
|
2.3
|
NA
|
1.5
|
2.5
|
1.6
|
4.7
|
|
Gold
(per ounce)
|
-0.6
|
8.5
|
-7.7
|
-0.4
|
-4.8
|
6.4
|
|
Bloomberg
Commodity Index
|
-1.4
|
-4.8
|
-0.8
|
-13.3
|
-10.3
|
-6.8
|
|
DJ
Equity All REIT Total Return Index
|
-0.2
|
6.1
|
-0.5
|
9.2
|
9.6
|
7.0
|
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.
Saving
Is as Easy As Riding A Bike! If you would like to save more money – for
retirement, college tuition, healthcare costs, or some other financial priority
– hop on your bike and ride.
As it turns out, riding your bike may help boost your
savings. Whether you commute to work on two wheels or cycle around town doing
errands, opting for manpower instead of horsepower can help generate some
additional savings, according to a source cited by Bankrate.com:
“The average American household
spends over $9,000 a year on transportation, making it the second-largest
expense after housing…Many families simply take for granted the two-car, driving-to-work
arrangement that’s the norm for American households and often don’t consider
alternatives like public transportation, carpooling, or biking…That’s a shame,
because its status as a major household cost means cutting transportation can
radically cut your overall costs and, potentially, increase your ability to save…”
If you are serious about saving, imagine what your finances
would look like if you:
·
Drove less. AAA reported owning a small car costs
about $6,600 a year, while rumbling around in an SUV costs more than $10,000
annually. (The estimate includes fuel, insurance, depreciation, maintenance,
fees and licensing, finance charges, and tires.) Eliminating a car could
significantly improve your ability to save.
·
Cycled more.
Not everyone can get by without a car; however, if you bike shorter distances
or when the weather is good, then you could qualify for a low mileage discount
on your auto insurance.
·
Didn’t go to the gym. If you’re riding a bike to work or to run errands,
then you probably don’t need spin class. The average gym membership runs $54 a month
or almost $650 a year.
·
Bought less stuff. Impulse purchases are less tempting when you’re cycling because bike baskets
and saddlebags have limited storage space. Who knows how much that could help
you save?
In addition to saving money, two-wheeled travel options are
likely to improve your fitness and reduce the stress of rush hour driving.
Cycling may even eliminate the need for dieting and some medications. Here’s an
added bonus: If biking improves your longevity, you may have more time to spend
the money you save!
Weekly Focus – Think About It
“Life is like a 10-speed bicycle. Most of us have gears we never use.”
--Charles
M. Schultz, Cartoonist
Best regards,
Womack
Investment Advisers, Inc.
WOMACK INVESTMENT ADVISERS, INC.
Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 500 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717
Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 500 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717
Website: www.womackadvisers.com
P.S. Please feel free to forward this commentary
to family, friends, or colleagues. If you would like us to add them to the
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*
These views are those of Peak Advisor Alliance, and not the presenting Representative
or the Representative’s Broker/Dealer, and should not be construed as
investment advice.
*
This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is
not affiliated with the named broker/dealer.
*
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
indices 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 DJ Equity All REIT Total Return Index measures the total return performance
of the equity subcategory of the Real Estate Investment Trust (REIT) industry
as calculated by Dow Jones.
*
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.
*
Consult your financial professional before making any investment decision.
*
Stock investing involves risk including loss of principal.
* To unsubscribe from the Womack Weekly Commentary
please reply to this e-mail with “Unsubscribe” in the subject line, or write us
at megan@womackadvisers.com
Sources:
https://www.ft.com/content/c4de73e2-17a1-11e7-9c35-0dd2cb31823a (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-07-17_FinancialTimes-Five_Markets_Charts_that_Matter_for_Investors-Footnote_1.pdf)
http://www.barrons.com/articles/july-jobs-report-called-near-perfect-as-payrolls-and-wages-rise-1501850651 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-07-17_Barrons-July_Jobs_Report_Called_Near_Perfect_as_Payrolls_and_Wages_Rise-Footnote_4.pdf)
https://www.ft.com/content/b4257d20-78b8-11e7-a3e8-60495fe6ca71 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-07-17_FinancialTimes-Dollar_and_Treasury_Yields_Lifted_by_US_Jobs_Data-Footnote_5.pdf)
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