The next paragraph is a summary published by Vanguard. It gives a concise summary of economic news and an update on some investments. The rest of the information is my view of the weekly events.
The week's economic news suggests increasingly blue skies ahead for the U.S. economy, though not without some remaining clouds. Leading indicators and home sales improved, but durable-goods orders fell. Skies also turned friendlier in Europe, as air travel resumed after being halted by volcanic ash—but not before taking a toll on shipments of perishable items. Meanwhile, Greece's government formally requested international financial support to help forestall possible loan defaults. For the week ended April 23, the S&P 500 Index rose 2.1% to 1,217 (for a year-to-date total return of about 9.8%). The yield of the 10-year U.S. Treasury rose 5 basis points to 3.84% (for a year-to-date decrease of 1 basis point).
The index of economic leading indicators is increasing at a faster than normal rate suggesting that the economy should continue on the path from recovery to growth. Growth in the residential home sales is a very key next step in the recovery process as it provides another foundation for future economic activity. The residential housing market is a huge segment of our economy.
A recovery in the commercial real estate market is the next thing that we need to complete the recovery as this will indicate future business growth. Job growth is the indicator that most people are following. This will grow after business grows and commercial real estate growth is a good indicator to follow. The trail that leads to growth in jobs goes through growth in residential home sales (starting now) followed by growth in commercial real estate (coming soon).
Enjoy the good things of life, Do not follow the doom and gloom in the news.
Saturday, April 24, 2010
Sunday, April 18, 2010
Dow 11,000
This week we saw the US Stock Market indexes reach levels seen about 18 months ago. The Dow Jones Industrial Average reached 11,000 and investors rejoiced. It seemed like people were fixated on reaching this level like it was reaching a major milestone.
The economic news that was reported was mostly good and the Dow went over 11,100. It seemed like good news parade was going to continue. On Friday, the storm clouds rolled in as the SEC charged Goldman Sachs for their actions with the Subprime Mortgage debacle. All of a sudden investor sentiment did a reversal and now the mood is negative and the Dow dropped wiping out most of the gains for the week.
My view of the Goldman Sachs news is people should go to jail for their actions. In fact, others who acted in a similar manner should go to jail. The key issue is having a market that is fair for all and it is illegal for a few people to profit while harming the public.
So the news that was the most important last week was improving economic news not Goldman Sachs. It does show that an investor with a short term time horizon will focus on the Goldman Sachs news and get caught up in the emotion of the event. An investor with a long term time horizon will focus on the improving economic news and maintain course.
The economic news that was reported was mostly good and the Dow went over 11,100. It seemed like good news parade was going to continue. On Friday, the storm clouds rolled in as the SEC charged Goldman Sachs for their actions with the Subprime Mortgage debacle. All of a sudden investor sentiment did a reversal and now the mood is negative and the Dow dropped wiping out most of the gains for the week.
My view of the Goldman Sachs news is people should go to jail for their actions. In fact, others who acted in a similar manner should go to jail. The key issue is having a market that is fair for all and it is illegal for a few people to profit while harming the public.
So the news that was the most important last week was improving economic news not Goldman Sachs. It does show that an investor with a short term time horizon will focus on the Goldman Sachs news and get caught up in the emotion of the event. An investor with a long term time horizon will focus on the improving economic news and maintain course.
Sunday, April 11, 2010
Long Term Treasury Bonds
This will be a very brief article. All of the accounts are performing well and our investments are acting normally. The only thing of interest last week was the interest rate for 10 year Treasury Bond hovered about 4%. The reasons given were fear of inflation, our level of national debt, and improving economy. Of these 3 reasons, only the improving economy makes the most sense.
So what does this mean for us? It means that our investment strategy makes good sense. This is very positive for stocks and mutual funds that invest in stocks as stocks rise with a growing economy.
So what does this mean for us? It means that our investment strategy makes good sense. This is very positive for stocks and mutual funds that invest in stocks as stocks rise with a growing economy.
Saturday, April 3, 2010
Review of the First Quarter 2010
My how time flies, it is hard to imagine that the year is 1/4th done already. This newsletter will review some of the highlights and look at the 2nd quarter. At the end are some Easter facts for your enjoyment. Enjoy your Easter!!!
From an economic business cycle perspective, the 1st quarter was fairly normal. Interest rates stayed relatively flat and the Federal Reserve did not adjust interest rates. The stock market ended up about 5% but it did have some volatility with a pullback about the middle of January to the middle of February. Commodity prices have started to move upward as oil and copper prices are at the highest levels for the quarter. All 3 of these reflect an economic business cycle that is stabilizing and starting to grow.
Growth is being seen in the manufacturing and service sectors helped by the value of the dollar and the effect of the stimulus spending. The construction industry, commercial real estate and housing market remain flat showing stability. Consumer confidence and employment are starting to look more positive. Again these indicators are fairly normal for this part of the economic business cycle.
So what does this mean for investing for the 2nd quarter? These trends should continue and no adjustments are anticipated except for perhaps a change in a bond mutual fund. Some experts are talking about the chance for another economic dip in the 2nd or 3rd quarter, this makes absolutely no sense and these experts should stop talking. Relax and enjoy the good things of life.
Easter Facts
Easter is a Christian Festival that celebrates the Resurrection of Jesus Christ. On the third day after Good Friday, the day of his crucifixion, now called Easter Sunday, He rose from the dead. Mourners went to His tomb to collect His body. However, He was not there and they were greeted by an angel who said
"He is Risen".
The cross is a symbol of His crucifixion and Resurrection. Hot cross buns, a cake or biscuit eaten by many during this season, are also, symbols of these events. The lamb is another symbol associated with Jesus.
He is often referred to, in scriptures, as the, 'Lamb of God',who sacrificed his life for all mankind's eternal life.
Lights, candles and bonfires mark celebrations in many countries. Roman Catholics often put the candles in the church out on Good Friday and light them again with the Pascal Candle or Easter Candle, on Easter Day.
Eggs are a symbol of the new life that returns to nature at Easter Time. The custom of exchanging eggs began long before Easter was celebrated. It was a custom of the Egyptians and the Persians. They exchanged eggs decorated in Spring colors. They believed Earth hatched from an egg which contributed to this custom. Early Christians used red colored eggs to symbolize the Resurrection. In England they began writing messages and dates on their eggs and exchanging them with friends and loved ones. In the 1800's, candied eggs were made. They were open on one end and a scene was put inside. They were used as table centerpieces.
From an economic business cycle perspective, the 1st quarter was fairly normal. Interest rates stayed relatively flat and the Federal Reserve did not adjust interest rates. The stock market ended up about 5% but it did have some volatility with a pullback about the middle of January to the middle of February. Commodity prices have started to move upward as oil and copper prices are at the highest levels for the quarter. All 3 of these reflect an economic business cycle that is stabilizing and starting to grow.
Growth is being seen in the manufacturing and service sectors helped by the value of the dollar and the effect of the stimulus spending. The construction industry, commercial real estate and housing market remain flat showing stability. Consumer confidence and employment are starting to look more positive. Again these indicators are fairly normal for this part of the economic business cycle.
So what does this mean for investing for the 2nd quarter? These trends should continue and no adjustments are anticipated except for perhaps a change in a bond mutual fund. Some experts are talking about the chance for another economic dip in the 2nd or 3rd quarter, this makes absolutely no sense and these experts should stop talking. Relax and enjoy the good things of life.
Easter Facts
Easter is a Christian Festival that celebrates the Resurrection of Jesus Christ. On the third day after Good Friday, the day of his crucifixion, now called Easter Sunday, He rose from the dead. Mourners went to His tomb to collect His body. However, He was not there and they were greeted by an angel who said
"He is Risen".
The cross is a symbol of His crucifixion and Resurrection. Hot cross buns, a cake or biscuit eaten by many during this season, are also, symbols of these events. The lamb is another symbol associated with Jesus.
He is often referred to, in scriptures, as the, 'Lamb of God',who sacrificed his life for all mankind's eternal life.
Lights, candles and bonfires mark celebrations in many countries. Roman Catholics often put the candles in the church out on Good Friday and light them again with the Pascal Candle or Easter Candle, on Easter Day.
Eggs are a symbol of the new life that returns to nature at Easter Time. The custom of exchanging eggs began long before Easter was celebrated. It was a custom of the Egyptians and the Persians. They exchanged eggs decorated in Spring colors. They believed Earth hatched from an egg which contributed to this custom. Early Christians used red colored eggs to symbolize the Resurrection. In England they began writing messages and dates on their eggs and exchanging them with friends and loved ones. In the 1800's, candied eggs were made. They were open on one end and a scene was put inside. They were used as table centerpieces.
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