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WOMACK WEEKLY COMMENTARY Renew. Regenerate. Refocus.
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February 5, 2018
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THE MARKETS
It was not a good week for stocks.
Last week,
stock markets around the world lost value. In the United States, the Standard
& Poor’s 500 Index (S&P 500), Dow Jones Industrial Index (Dow), and
NASDAQ all finished lower.
Some pundits
have been drawing comparisons between the performance of the Dow last Friday
and Black Monday, the memorable day in 1987 when the index shed 508 points in
a single day.
They may be
barking up the wrong tree.
Yes, the Dow
lost more than 600 points on Friday. That was about 2.5 percent of its value.
On Black Monday a lesser drop equated to a 22 percent loss for the Dow. In
addition, Black Monday was widely attributed to program trading gone awry.
The culprit behind last Friday’s fall is likely to be bonds, according to Barron’s.
Last week, the
U.S. Treasury announced it would begin selling more short-term government
bonds to fund the rising budget deficit. That sparked concerns about the
impact of a bigger bond supply on interest rates. When bond supply exceeds
demand, interest rates typically go up to attract investors. The United
States already has ample bond supply since the Federal Reserve curtailed its
bond buying program. Financial Times reported:
“Equity
investing involves a delicate balance of three things: earnings, interest
rates and valuation. Over the past decade, low long-term bond yields have
played a crucial role in helping elevate equity valuations… ‘You have to
consistently show economic and earnings growth to justify these valuations at
higher rates,’ says Nicholas Colas, cofounder at DataTrek. ‘People forget how
closely tied economic and profit growth is to rising rates – it is a horse
race and profit growth has to win – even if just by a little.’”
News about
employment and wage gains added fuel to the fire of investor worries. In
January, the United States experienced its strongest wage growth since 2009.
While that’s good news for workers, it may cause the Fed to raise rates more
aggressively in an effort to keep inflation manageable.
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.
WHAT DOES SUCCESS MEAN TO YOU? For some, having a big following on social media
translates as success. NASA, which has more followers than any other
government organization worldwide (28 million), may be considered successful.
Of course, NASA doesn’t hold a candle to Katy Perry, who has close to 106
million followers.
It
will surprise few to learn the U.S. Treasury, which manages the money
resources of the United States, doesn’t have many followers (770,000);
however, it has more than the Federal Reserve (446,000).
It’s almost enough to make you wonder
whether Americans care about money. They do, but on a more personal level. A
corporate survey, Making It in America, queried Americans about what
it means to reach “…a level of success, comfort, and security that you find
wholly satisfying.” As you might expect, there were a variety of answers.
One gauge of
success is income, according to about two-thirds of the respondents. The
group’s average income was $57,426 a year. They would know they’d ‘made it’ when
they earned about $147,000 a year. According to CNBC, annual income of
$150,000 would put many people in the middle class, depending on where they
lived and the size of their households. It’s notable few people aspire to
join the ranks of the wealthiest Americans. More than three-fourths said they
would not want to earn more than one million dollars a year.
Of course,
money is not the only measure of success. A Pew Research study found
just 11 percent of those surveyed thought wealth was an essential part of the
American dream. Far more important were:
• Freedom of
choice in how to live (77 percent)
One participant said, “Even though I truly
believe that having money is freedom, money is really just a tool to make
experiences in life possible.”• Having a good family life (70 percent) • Retiring comfortably (60 percent) • Contributing to their communities (48 percent) • Owning a home (43 percent) • Having a successful career (43 percent) Weekly Focus - Think About It --Louise Smith, NASCAR driver 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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