Womack Weekly Commentary
May 7,
2018
The
Markets
What in the world?
A
lot happened last week. Some of the notable events included:
·
Trade talks between the United States and China. The talks were described as “frank, efficient, and
constructive,” although significant issues have yet to be resolved.
·
A Federal Open Market Committee meeting. The Federal Reserve indicated it expects to raise
rates during 2018, but did not do so last week.
·
Low unemployment in the United States. U.S. unemployment fell to 3.9 percent, which is the
lowest it has been since 2000. Typically, low employment is a sign of a strong
economy.
·
Sky-high rates in Argentina. In an effort to shore up the nation’s currency, Argentina’s
central bank “…hiked rates to 40 percent from 33.25 percent, a day after they
were raised from 30.25 percent.”
·
Katy Perry roasted Warren Buffett. Katy Perry revealed the ‘Left Shark’ – a backup
dancer famous for being out of sync during Perry’s 2015 Super Bowl performance
– was Warren Buffett.*
What
do asset managers and researchers make of the current state of world economies
and markets? A portfolio manager cited by Barron’s
said, “…until proved otherwise, we remain in a long bull market, and there is
an absence of indicators outside of the equity market itself (most notably in
credit markets or financial conditions) to suggest this has ended.”
Michael
Wilson, Chief U.S. Equity Strategist at Morgan
Stanley has a different opinion. “Even strong earnings results haven’t been
able to boost most stocks into positive territory. Why? Because rising interest
rates have reached a point at which they have become a constraint on
valuations.”
Some
researchers are concerned about growth outside the United States. Alvise
Marino, an FX strategist for Credit
Suisse told The Wall Street Journal,
“This is really a Goldilocks [U.S. employment] report…But investors are worried
that global growth is not as strong as some had thought.”
We’re tracking events and their potential impact on
markets, and we’ll keep you informed.
*
Warren Buffet wasn’t really the Left Shark. Her comments were part of a humorous
video.
Data as of
5/4/18
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
-0.2%
|
-0.4%
|
11.5%
|
8.0%
|
10.5%
|
6.6%
|
|
Dow Jones Global ex-U.S.
|
-0.9
|
-1.2
|
11.6
|
2.7
|
3.2
|
0.0
|
|
10-year Treasury Note (Yield Only)
|
2.9
|
NA
|
2.4
|
2.1
|
1.8
|
3.9
|
|
Gold (per ounce)
|
-0.9
|
1.0
|
6.6
|
3.0
|
-1.9
|
4.1
|
|
Bloomberg Commodity Index
|
0.7
|
2.1
|
9.5
|
-4.6
|
-7.6
|
-8.2
|
|
DJ Equity All REIT Total
Return Index
|
1.2
|
-4.8
|
1.7
|
5.2
|
5.7
|
6.2
|
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.
Myth Busted! Founders of new companies aren’t who many people think
they are. Sure, you’ve read
stories about entrepreneurs who leave college to found companies that become
behemoths. In fact, The Thiel Fellowship encourages young people to skip
college and, “Pursue ideas that matter instead of mandatory tests. Take on big
risks instead of big debt.”
While
helping young people pursue new ideas is admirable, research from the
Massachusetts Institute of Technology (MIT) and the National Bureau of Economic
Research (NBER) suggest a different age group is more likely to found successful
fast-growth companies:
“Our primary finding is that successful
entrepreneurs are middle-aged, not young. Taking numerous measures to identify
potentially high-growth firms as well as studying ex-post growth of each firm,
we find no evidence to suggest that founders in their 20s are especially likely
to succeed. Rather, all evidence points to founders being especially successful
when starting businesses in middle age or beyond…Across the 2.7 million
founders in the U.S. between 2007-2014 who started companies that go on to hire
at least one employee, the mean age for the entrepreneurs at founding is 41.9. The
mean founder age for the 1 in 1,000 highest growth new ventures is 45.0. The
most successful entrepreneurs in high technology sectors are of similar ages.
So, too, are the most successful founders in the entrepreneurial regions of the
U.S.”
Almost
one-fourth of new entrepreneurs are ages 55 to 64, reports Entrepreneur.com. They often have financial stability, professional
support networks, and experience – all things The Thiel Fellowship tries to provide
to younger founders.
What’s
the point of this story? Age is just a number. People of all ages have great
ideas and great potential.
Weekly
Focus – Think About It
“The
critical ingredient is getting off your butt and doing something. It's as
simple as that. A lot of people have ideas, but there are few who decide to do
something about them now. Not tomorrow. Not next week. But today. The true
entrepreneur is a doer, not a dreamer.”
--Nolan
Bushnell, Entrepreneur
Best regards,
Womack Investment Advisers, Inc.
WOMACK INVESTMENT ADVISERS, INC.
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Phone (405) 340-1717 - Toll Free (877) 340-1717
Website: www.womackadvisers.com
Womack Investment Advisers, Inc. (WIA) is
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* 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
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Sources:
http://www.barrons.com/mdc/public/page/2_3064-485653.html (Click on “U.S. & Intl
Recaps,” then "Keeping up with the facts")
https://www.wsj.com/livecoverage/berkshire-hathaway-2018-annual-meeting-analysis (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-07-18_WSJ-Warren_Buffett_Holds_Court_at_Berkshire_Hathaways_Annual_Woodstock_for_Capitalists-Footnote_5.pdf
https://www.barrons.com/articles/a-sampling-of-advisory-opinion-1525478403 (or go
to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/05-07-18_Barrons-A_Sampling_of_Advisory_Opinion-Footnote_6.pdf
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