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WOMACK WEEKLY COMMENTARY Renew. Regenerate. Refocus.
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January 29, 2018
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THE MARKETS
The numbers are coming in.
Publicly-traded
companies report their earnings and sales numbers for the previous quarter in
the current quarter. For example, fourth quarter’s sales and earnings are
reported during the first quarter of the year, and first quarter’s sales and
earnings will be reported during the second quarter, and so on.
Through last
week, about one-fourth of the companies in the Standard & Poor
(S&P)’s 500 Index had reported actual sales and earnings for the fourth
quarter of 2017. As far as sales go, a record number – 81 percent – of
companies sold more than expected during the fourth quarter. That was quite
an improvement. FactSet reported:
“During the
past year (four quarters), 64 percent of the companies in the S&P 500
have reported sales above the mean estimate on average. During the past five
years (20 quarters), 56 percent of companies in the S&P 500 have reported
sales above the mean estimate on average.”
The mean is
the average of a group of numbers.
The money a
company makes through sales is called revenue. For instance, if a lemonade
stand sells 100 glasses of lemonade for $1 each, then the proprietors have
earned $100. That is the stand’s ‘revenue.’ Of course, as every parent who
has financed a lemonade stand knows, revenue doesn’t include the cost of the
product. ‘Earnings’ are what the company has left after expenses – the bottom
line. If every glass of lemonade cost 50 cents, then the stand’s earnings are
$50.
Companies in
the S&P 500 are doing pretty well on earnings, too. About three out of four
companies have reported earnings higher than expected. Overall, earnings are
4.5 percent above estimates.
Through
Friday, annual earnings growth for S&P 500 companies was 10.1 percent.
It’s still early in the fourth quarter earnings season, but the data so far
seem likely to confirm that 2017 was a bright, sun-shiny year for U.S.
companies.
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.
CERTAIN PARTS OF THE CIRCULAR ECONOMY probably adapt to cities and towns
better than they do to rural areas.
What is the circular economy?
It
is “a system that reduces waste through the efficient use of resources.
Businesses that are part of the circular economy seek to redesign the current
take/make/dispose economy, a model which relies on access to cheap raw
materials and mass production. For example, car sharing addresses the
inefficiency of privately owned cars – which are typically used for less than
one hour a day,” explains Morgan Stanley.
Imagine
not owning a car.
Clearly,
it’s not something that would work everywhere. However, if you live in a city
or town that has public transportation, ride sharing, car rentals, and
bicycles, it’s possible. If you’re retired and you can organize your days in
the way you like, it may even be sensible because owning a car is expensive.
Transportation costs are the second highest budget item for most households,
reports U.S. News. Housing costs top the list.
Giving
up a car could help households save a lot of money.
According
to AAA, owning and operating a new car in 2017 cost about $8,469
annually, on average, or $706 a month. Small sedans are the least costly
($6,354 per year), on average, and pickup trucks are the most expensive
($10,054 per year), on average, of the vehicles in the study. The
calculations include sales price, depreciation, maintenance, repair, and fuel
costs.
AAA’s estimate does not include insurance. In
2017, the national average premium for a full-coverage policy was $1,318
annually, according to Insure.com. Auto insurance premiums are
highest in Michigan ($2,394) and lowest in Maine ($864).Combining the averages, the cost of auto ownership is almost $10,000 a year. It’s food for thought. Weekly Focus - Think About It --Aldo Leopold, American author and conservationist 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 Website: www.womackadvisers.com Are you prepared for the eventual market volatility?
Be prepared and have a plan. Watch our
new video above on successful investing, and receive a free report on how
much risk you should be taking.
P.S. Please feel free to forward this
commentary to family, friends, or colleagues. If you would like us to add
them to the list, please reply to this email with their email address and we
will ask for their permission to be added.Womack Investment Advisers, Inc. (WIA) is a registered investment adviser whose principal office is located in Oklahoma. Womack Investment Advisers, Inc. is also registered in the State of California, the State of Illinois, the State of Indiana, and the State of Texas. WIA only transacts business in states where it is properly registered, or excluded, or exempted from registration requirements.
*
These views are those of Carson Group Coaching, and not the presenting
Representative or the Representative’s Broker/Dealer, and should not be
construed as investment advice.
* This newsletter was prepared by Carson Group Coaching. Carson Group Coaching 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 indexes 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. * Stock investing involves risk including loss of principal. * Consult your financial professional before making any investment decision. * To unsubscribe from the Womack Weekly Commentary please reply to this email with “Unsubscribe” in the subject line, or write us at raegan@womackadvisers.com. |
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