Wow, what a great week for people who have a home mortgage with the 10 year interest rate dropping by 0.28% If you have a mortgage you need to refinance it during June. If you think this makes sense, please forward this e-mail to others. First is the info from Vanguard. At the end are some memorable golf quotes.
Vanguard
The U.S. recovery has slowed more sharply than first thought. The spring job market has been much weaker than expected, and new figures indicate that economic growth earlier this year slowed more than originally reported. Financial markets slumped, and U.S. Treasury yields sank to record lows. For the week ended June 1, the S&P 500 Index fell 3% to 1,278 (for a year-to-date total return—including price change plus dividends—of about 2.6%). The yield on the 10-year U.S. Treasury note fell 28 basis points to 1.47% (for a year-to-date decline of 42 basis points).
Refinance Your Mortgage in June
This week the 10 year US Treasury bond interest rate reached an all time record low for our country at 1.47%. To put this in perspective, as long as 10 year US Treasury bonds have existed in our country the interest rate has never been this low. It is lower now than during the Great Depression of the 1930's, the Great Recession during the 2000's, World War I & II, etc.
Does it make sense that this rate should be this low when looking at other economic data? The economy grew by 1.9% during Q1 of 2012. The current inflation rate is a little bit above 2%. So it does not make sense that this interest rate is lower than economic growth and the rate of inflation.
The reason interest rates are this low is because of the Federal Reserve Operation Twist and international investors buying US Treasury bonds. Operation Twist stops at the end of June which means that the Federal Reserve will stop making these bond purchases. It does not make sense that the Federal Reserve would need to continue to lower interest rates. International investors have driven down bond rates at historically low records in the US, Germany, and Great Britian as they sell bonds in other European Union countries.
Given the actions in the European Union, it makes sense that interest rates will continue to drop in the near term. It would be a great surprise to see the 10 year US Treasury bond go below 1.0% since the 10 year rates in Germany and Great Britian are about 1.2%.
So what is the plan? For the next week or so, research where you can get the best deal and negotiate, negotiate, negotiate. During the middle to the end of June it would be a great time to seal the deal. A good target for a 15 year mortgage is 2.5%. It is a wonderful thing to lock in an interest rate for 15 years that is below the inflation rate.
MEMORABLE GOLF QUOTES –
"I have a tip that can take five strokes off anyone's golf game: it's called an eraser." – Arnold Palmer
"You can't go into a shop and buy a good game of golf." – Sam Snead
"Golf is a game that is played on a 5 inch course - the distance between your ears. " – Bobby Jones
"If you are caught on a golf course during a storm and are afraid of lightening, hold up a one iron. Not even God can hit a one iron." – Lee Trevino
"If you think it's hard to meet new people, try picking up the wrong golf ball." – Jack Lemmon
"I know I am getting better at golf because I'm hitting fewer spectators." – Gerald Ford
"The only time my prayers are never answered is on the golf course." – Billy Graham
"Golf appeals to the idiot in us and the child. Just how childlike golf players become is proven by their frequent inability to count past five. " - John Updike
"Golf is so popular simply because it is the best game in the world at which to be bad." - A.A. Milne
"Golf is like a love affair. If you don't take it seriously, it's no fun; if you do take it seriously, it breaks your heart. " - Arthur Daley
"Forget your opponents; always play against par." - Sam Snead
"I guess there is nothing that will get your mind off everything like golf. I have never been depressed enough to take up the game, but they say you get so sore at yourself you forget to hate your enemies." - Will Rogers
"The reason the pro tells you to keep your head down is so you can't see him laughing." - Phyllis Diller
"If you drink, don't drive. Don't even putt." - Dean Martin
"If I can hit a curveball, why can't I hit a ball that is standing still on a course?" - Larry Nelson
"They call it golf because all of the other four-letter words were taken." - Raymond Floyd
Sunday, June 3, 2012
Monday, May 28, 2012
Zuckered and Happy Memorial Day
I hope you had a wonderful Memorial Day. A very special person sent me information on the history of the song Taps which is shown at the bottom. This week a new word was created, Zuckered which is not a very flattering word. The first paragraph is from Vanguard.
Vanguard
Be it ever so humble, the current housing market recovery may have a foundation. Although the numbers are still low by historical standards, reports on existing-home and new-home sales were both encouraging in a light week for economic news. There was also a bump in durable-goods orders, largely because of a rise in orders for transportation equipment. For the week ended May 25, the S&P 500 Index rose 1.7% to 1,318 (for a year-to-date total return—including price change plus dividends—of about 5.70%). The yield on the 10-year U.S. Treasury note rose 4 basis points to 1.75% (for a year-to-date decrease of 14 basis points).
Zuckered
This week the word Zuckered was created, not a very good word. This week was the first full week of trading for Facebook. During the week this stock went from about $38 to about $31 and then recovered to about $32. So in the 6 days of trading the stock went from about $42 to about $32. So you can imagine that some people are not very happy. Three investors are so upset they filed a lawsuit against Morgan Stanley, Facebook, and Mark Zuckerberg.
Mark Zuckerberg is the CEO of Facebook. So the word comes from first part of the last name. It comes from investors who bought the hype and at the end realized that reality was far from the hype especially when some analysts put the value of the stock between $13 and $22.
So what is the thing to learn from this word? Buy the facts and sell the hype.
History of the Song Taps
We in the United States have all heard the haunting song, 'Taps...' It's the song that gives us the lump in our throats and usually tears in our eyes.
Reportedly, it all began in 1862 during the Civil War, when Union Army Captain Robert Elli was with his men near Harrison's Landing in Virginia. The Confederate Army was on the other side of the narrow strip of land.
During the night, Captain Elli heard the moans of a soldier who lay severely wounded on the field. Not knowing if it was a Union or Confederate soldier, the Captain decided to risk his life and bring the stricken man back for medical attention. Crawling on his stomach through the gunfire, the Captain reached the stricken soldier and began pulling him toward his encampment..
When the Captain finally reached his own lines, he discovered it was actually a Confederate soldier, but the soldier was dead. The Captain lit a lantern and suddenly caught his breath and went numb with shock. In the dim light, he saw the face of the soldier. It was his own son. The boy had been studying music in the South when the war broke out. Without telling his father, the boy enlisted in the Confederate Army.
The following morning, heartbroken, the father asked permission of his superiors to give his son a full military burial, despite his enemy status. His request was only partially granted.
The Captain had asked if he could have a group of Army band members play a funeral dirge for his son at the funeral. The request was turned down since the soldier was a Confederate. But, out of respect for the father, they did say they could give him only one musician.
The Captain chose a bugler. He asked the bugler to play a series of musical notes
he had found on a piece of paper in the pocket of the dead youth's uniform. This wish was granted.
The haunting melody, we now know as 'Taps'used at military funerals was born. The words are:
Day is done. Gone the sun.
From the lakes From the hills.
From the sky. All is well. Safely rest.
God is nigh.
Fading light. Dims the sight.
And a star. Gems the sky.
Gleaming bright. From afar.
Drawing nigh. Falls the night.
Thanks and praise. For our days.
Neath the sun. Neath the stars.
Neath the sky
As we go. This we know.
God is nigh
Vanguard
Be it ever so humble, the current housing market recovery may have a foundation. Although the numbers are still low by historical standards, reports on existing-home and new-home sales were both encouraging in a light week for economic news. There was also a bump in durable-goods orders, largely because of a rise in orders for transportation equipment. For the week ended May 25, the S&P 500 Index rose 1.7% to 1,318 (for a year-to-date total return—including price change plus dividends—of about 5.70%). The yield on the 10-year U.S. Treasury note rose 4 basis points to 1.75% (for a year-to-date decrease of 14 basis points).
Zuckered
This week the word Zuckered was created, not a very good word. This week was the first full week of trading for Facebook. During the week this stock went from about $38 to about $31 and then recovered to about $32. So in the 6 days of trading the stock went from about $42 to about $32. So you can imagine that some people are not very happy. Three investors are so upset they filed a lawsuit against Morgan Stanley, Facebook, and Mark Zuckerberg.
Mark Zuckerberg is the CEO of Facebook. So the word comes from first part of the last name. It comes from investors who bought the hype and at the end realized that reality was far from the hype especially when some analysts put the value of the stock between $13 and $22.
So what is the thing to learn from this word? Buy the facts and sell the hype.
History of the Song Taps
We in the United States have all heard the haunting song, 'Taps...' It's the song that gives us the lump in our throats and usually tears in our eyes.
Reportedly, it all began in 1862 during the Civil War, when Union Army Captain Robert Elli was with his men near Harrison's Landing in Virginia. The Confederate Army was on the other side of the narrow strip of land.
During the night, Captain Elli heard the moans of a soldier who lay severely wounded on the field. Not knowing if it was a Union or Confederate soldier, the Captain decided to risk his life and bring the stricken man back for medical attention. Crawling on his stomach through the gunfire, the Captain reached the stricken soldier and began pulling him toward his encampment..
When the Captain finally reached his own lines, he discovered it was actually a Confederate soldier, but the soldier was dead. The Captain lit a lantern and suddenly caught his breath and went numb with shock. In the dim light, he saw the face of the soldier. It was his own son. The boy had been studying music in the South when the war broke out. Without telling his father, the boy enlisted in the Confederate Army.
The following morning, heartbroken, the father asked permission of his superiors to give his son a full military burial, despite his enemy status. His request was only partially granted.
The Captain had asked if he could have a group of Army band members play a funeral dirge for his son at the funeral. The request was turned down since the soldier was a Confederate. But, out of respect for the father, they did say they could give him only one musician.
The Captain chose a bugler. He asked the bugler to play a series of musical notes
he had found on a piece of paper in the pocket of the dead youth's uniform. This wish was granted.
The haunting melody, we now know as 'Taps'used at military funerals was born. The words are:
Day is done. Gone the sun.
From the lakes From the hills.
From the sky. All is well. Safely rest.
God is nigh.
Fading light. Dims the sight.
And a star. Gems the sky.
Gleaming bright. From afar.
Drawing nigh. Falls the night.
Thanks and praise. For our days.
Neath the sun. Neath the stars.
Neath the sky
As we go. This we know.
God is nigh
Sunday, May 20, 2012
Facebook and General Motors
This week Facebook became a public company with a lot of hype and Berkshire Hathaway bought 10 million shares of General Motors. This represents different styles of investments. Also, at the end is some quotes on leisure for your enjoyment.
Vanguard
The economic recovery continued to move at a slow and sporadic pace; however, longer-term risks seem to be casting shadows on its durability. For the first time in seven months, the Conference Board's index of leading economic indicators did not show growth. The Federal Reserve revealed that some of its members are concerned about long-term obstacles in the form of upcoming fiscal negotiations in the United States and the financial struggles in Europe. The latest reports showed encouraging signs for the housing market and the manufacturing sector, while consumers slowed their retail purchases. For the week ended May 18, the S&P 500 Index fell 4.3% to 1,295 (for a year-to-date total return—including price change plus dividends—of about 3.86%). The yield on the 10-year U.S. Treasury note fell 13 basis points to 1.71% (for a year-to-date decrease of 18 basis points).
Facebook and General Motors
Facebook went public last Friday with much applause and hype. An initial list of investors purchased the shares at $38.00 per share. When trading started when the normal investor could purchase the price was $42. By the end of the day the price was just above $38 per share. The type of investor who would purchase this stock would be momentum investors who believe that the price is on a short term upswing or someone who invest on the potential for future growth instead of the current financial condition. It is interesting that this past week General Motors announced it would stop buying ads on Facebook.
Berkshire Hathaway purchased shares of General Motors. This is an example of a value investor who looks at the financial condition of the company relative to other companies to find the best value for the longer term. This is the opposite type of investor than someone who invests in Facebook.
Each investor needs to know what type they want to pursue. I prefer to have a combination of both as each will do well in certain investing environments. I think that Berkshire Hathaway made the better investment.
Thoughts on Leisure
If people concentrated on the really important things in life, there'd be a shortage of fishing poles.
Doug Larson
The trouble with retirement is that you never get a day off.
Abe Lemons
Middle age is when work is a lot less fun and fun is a lot more work.
Author Unknown
Rest is not idleness, and to lie sometimes on the grass under trees on a summer's day, listening to the murmur of the water, or watching the clouds float across the sky, is by no means a waste of time.
J. Lubbock
Golf is played by twenty million mature American men whose wives think they are out having fun.
Jim Bishop
Don't play too much golf. Two rounds a day are plenty.
Harry Vardon
There's never enough time to do all the nothing you want.
Bill Watterson, Calvin and Hobbes
Our life, exempt from public haunt, finds tongues in trees, books in the running brooks, sermons in stones, and good in everything.
William Shakespeare
Choose a work that you love and you won't have to work another day.
Confucius
Vanguard
The economic recovery continued to move at a slow and sporadic pace; however, longer-term risks seem to be casting shadows on its durability. For the first time in seven months, the Conference Board's index of leading economic indicators did not show growth. The Federal Reserve revealed that some of its members are concerned about long-term obstacles in the form of upcoming fiscal negotiations in the United States and the financial struggles in Europe. The latest reports showed encouraging signs for the housing market and the manufacturing sector, while consumers slowed their retail purchases. For the week ended May 18, the S&P 500 Index fell 4.3% to 1,295 (for a year-to-date total return—including price change plus dividends—of about 3.86%). The yield on the 10-year U.S. Treasury note fell 13 basis points to 1.71% (for a year-to-date decrease of 18 basis points).
Facebook and General Motors
Facebook went public last Friday with much applause and hype. An initial list of investors purchased the shares at $38.00 per share. When trading started when the normal investor could purchase the price was $42. By the end of the day the price was just above $38 per share. The type of investor who would purchase this stock would be momentum investors who believe that the price is on a short term upswing or someone who invest on the potential for future growth instead of the current financial condition. It is interesting that this past week General Motors announced it would stop buying ads on Facebook.
Berkshire Hathaway purchased shares of General Motors. This is an example of a value investor who looks at the financial condition of the company relative to other companies to find the best value for the longer term. This is the opposite type of investor than someone who invests in Facebook.
Each investor needs to know what type they want to pursue. I prefer to have a combination of both as each will do well in certain investing environments. I think that Berkshire Hathaway made the better investment.
Thoughts on Leisure
If people concentrated on the really important things in life, there'd be a shortage of fishing poles.
Doug Larson
The trouble with retirement is that you never get a day off.
Abe Lemons
Middle age is when work is a lot less fun and fun is a lot more work.
Author Unknown
Rest is not idleness, and to lie sometimes on the grass under trees on a summer's day, listening to the murmur of the water, or watching the clouds float across the sky, is by no means a waste of time.
J. Lubbock
Golf is played by twenty million mature American men whose wives think they are out having fun.
Jim Bishop
Don't play too much golf. Two rounds a day are plenty.
Harry Vardon
There's never enough time to do all the nothing you want.
Bill Watterson, Calvin and Hobbes
Our life, exempt from public haunt, finds tongues in trees, books in the running brooks, sermons in stones, and good in everything.
William Shakespeare
Choose a work that you love and you won't have to work another day.
Confucius
Sunday, May 13, 2012
Drifting and Mother's Day
Happy Mother's Day to the most important people of the world. At the end is some information about Mother's Day around the world for your enjoument. An example of the importance of being a mother can be seen when an athlete is on camera he or she says hi mom, seldom if every hi dad. First is the usual information from Vanguard.
Vanguard
Consumers borrowed much more than expected in March, as both student and car loans shot up and credit card borrowing rose after declining in January and February. Analysts are unsure whether this news signals a real pickup in demand or just a need to lean more on credit, as job and income growth remain weak. For the week ended May 11, the S&P 500 Index declined 1.1% to 1,353 (for a year-to-date total return—including price change plus dividends—of about 8.4%). The yield on the 10-year U.S. Treasury note fell 7 basis points to 1.84% (for a year-to-date decrease of 5 basis points).
Drifting
The best way to describe stock, bond, and commodity markets is drifting like a boat going up and down with the current without power either forward or backward. The economic data shows both positives and negatives with the effect of things going up and down without much energy. With a growing economy the 10 year U.S. Treasury interest rates should be going up rather than down.
The bottom line is expect things to continue to drift. Please do not caught up in the day to day noise.
Mother's Day International history and traditions - Wikipedia
In most countries, Mother's Day is a recent observance derived from the holiday as it has evolved in the United States. When it was adopted by other countries and cultures, it was given different meanings, associated to different events (religious, historical or legendary), and celebrated on a different date or dates.
Some countries already had existing celebrations honoring motherhood, and their celebrations have adopted several external characteristics from the American holiday, like giving carnations and other presents to your own mother.
The extent of the celebrations varies greatly. In some countries, it is potentially offensive to one's mother not to mark Mother's Day. In others, it is a little-known festival celebrated mainly by immigrants, or covered by the media as a taste of foreign culture.[citation needed]
In the Roman Catholic Church, the holiday is strongly associated with reverencing the Virgin Mary. In many Catholic homes, families have a special shrine devoted to the Blessed Virgin Mary. In many Eastern Catholic and Eastern Orthodox Churches, a special prayer service is held in honor of the Theotokos Virgin Mary.
In Hindu tradition it is called "Mata Tirtha Aunshi" or "Mother Pilgrimage fortnight", and it is celebrated in countries with Hindu population, especially in Nepal. It is celebrated on the new moon day in the month of Baisakh, i.e., April/May. This holiday is based in Hindu religion and it pre-dates the creation of the Western-inspired holiday by at least a few centuries.[citation needed]
Vanguard
Consumers borrowed much more than expected in March, as both student and car loans shot up and credit card borrowing rose after declining in January and February. Analysts are unsure whether this news signals a real pickup in demand or just a need to lean more on credit, as job and income growth remain weak. For the week ended May 11, the S&P 500 Index declined 1.1% to 1,353 (for a year-to-date total return—including price change plus dividends—of about 8.4%). The yield on the 10-year U.S. Treasury note fell 7 basis points to 1.84% (for a year-to-date decrease of 5 basis points).
Drifting
The best way to describe stock, bond, and commodity markets is drifting like a boat going up and down with the current without power either forward or backward. The economic data shows both positives and negatives with the effect of things going up and down without much energy. With a growing economy the 10 year U.S. Treasury interest rates should be going up rather than down.
The bottom line is expect things to continue to drift. Please do not caught up in the day to day noise.
Mother's Day International history and traditions - Wikipedia
In most countries, Mother's Day is a recent observance derived from the holiday as it has evolved in the United States. When it was adopted by other countries and cultures, it was given different meanings, associated to different events (religious, historical or legendary), and celebrated on a different date or dates.
Some countries already had existing celebrations honoring motherhood, and their celebrations have adopted several external characteristics from the American holiday, like giving carnations and other presents to your own mother.
The extent of the celebrations varies greatly. In some countries, it is potentially offensive to one's mother not to mark Mother's Day. In others, it is a little-known festival celebrated mainly by immigrants, or covered by the media as a taste of foreign culture.[citation needed]
In the Roman Catholic Church, the holiday is strongly associated with reverencing the Virgin Mary. In many Catholic homes, families have a special shrine devoted to the Blessed Virgin Mary. In many Eastern Catholic and Eastern Orthodox Churches, a special prayer service is held in honor of the Theotokos Virgin Mary.
In Hindu tradition it is called "Mata Tirtha Aunshi" or "Mother Pilgrimage fortnight", and it is celebrated in countries with Hindu population, especially in Nepal. It is celebrated on the new moon day in the month of Baisakh, i.e., April/May. This holiday is based in Hindu religion and it pre-dates the creation of the Western-inspired holiday by at least a few centuries.[citation needed]
Feels Like 2011
Congratulations to all of the High School and College graduates. Our oldest daughter graduated from college yesterday and it was a wonderful day. The first paragraph is from Vanguard. The last section are some quotes that I found on the internet for your enjoyment.
Vanguard
The economy continues to seek traction. The latest reports suggest soft job growth, weak business activity in the huge service sector, and increasingly cautious consumers. Yet manufacturing activity appears to be solid and employers seem poised to hire—but who knows when? For the week ended May 4, the S&P 500 Index fell 2.4% to 1,369 (for a year-to-date total return—including price change plus dividends—of about 9.6%). The yield on the 10-year U.S. Treasury note fell 5 basis points to 1.91% (for a year-to-date increase of 2 basis points).
Feels Like 2011 Again
So far this year it feels a lot like last year relative to the US Stock Market, US Treasury bond yields, and commodity prices. Last year had a slowing in the middle part of the year and it appears that we are headed for the same this year. From an investing perspective it would be prudent to look at last year when making decisions.
I believe that it was very prudent to get more conservative late last week and early this week. It appears that we are headed for another buying opportunity later in the year.
Thoughts on the Merits of Work
The worst of work nowadays is what happens to people when they cease to work.
Gilbert K. Chesterton
A retired husband is often a wife's full-time job.
Ella Harris
Retired is being twice tired, I've thought first tired of working, then tired of not.
Richard Armour
To retire is to die.
Pablo Casals
Retirement may be looked upon either as a prolonged holiday or as a rejection, a being thrown on to the scrap-heap.
Simone De Beauvoir
Men and women approaching retirement age should be recycled for public service work, and their companies should foot the bill. We can no longer afford to scrap-pile people.
Maggie Kuhn
Sooner or later I'm going to die, but I'm not going to retire.
Margaret Mead
A man is known by the company that keeps him on after retirement age.
Author Unknown
The best time to start thinking about your retirement is before the boss does.
Author Unknown
Don't think of retiring from the world until the world will be sorry that you retire. I hate a fellow whom pride or cowardice or laziness drive into a corner, and who does nothing when he is there but sit and growl. Let him come out as I do, and bark.
Samuel Johnson
The harder you work, the harder it is to surrender.
Vince Lombardi
Retirement at sixty-five is ridiculous. When I was sixty-five I still had pimples.
George Burns
In this country men seem to live for action as long as they can and sink into apathy when they retire.
Charles Francis Adams
Retirement is the ugliest word in the language.
Ernest Hemingway
Choose a work that you love and you won't have to work another day.
Confucius
Sunday, April 29, 2012
First Quarter Corporate Earnings
Corporate earnings have been rolling out and so far things look pretty good. I have had a few people take advantage of the matching contribution offer to the American Cancer Society. If you want to participate, just send a check to me made out to American Cancer Society by the end of May. At the end are some quotes on Money Issues for your enjoyment.
Vanguard
The U.S. economy grew at a slower pace in the first quarter of 2012 than in the previous quarter, according to the closely watched gross domestic product (GDP) report. Other economic data supported the view that the recovery continues to advance at a modest but uneven pace. For the week ended April 27, the S&P 500 Index rose 1.8% to 1,403 (for a year-to-date total return—including price change plus dividends—of about 12.3%). The yield on the 10-year U.S. Treasury note fell 3 basis points to 1.96% (for a year-to-date increase of 7 basis points).
First Quarter Corporate Earnings
Corporate earnings seem to be doing well. I found 2 articles that illustrates this point. The first is from the April 30, 2012 Barron's that 275 of 500 companies that comprise the S&P 500 have reported earnings and 3/4th of them have exceeded expectations above the normal 2/3rds.
The other is from the April 25, 2012 Wall Street Journal that reported earnings by sector with about 1/3rd of the companies reporting at that time. Here is the info:
Financials: 26 Beat, 4 Met, & 5 Missed
Industrials: 21 Beat, 2 Met, & 1 Missed
Materials: 9 Beat, 1 Met, & 1 Missed
Information Technology: 19 Beat, 4 Met, & 3 Missed
Consumer Staples: 10 Beat, 1 Met, & 1 Missed
Consumer Discretionary: 19 Beat, 2 Met, & 2 Missed
Health Care: 10 Beat, 1 Met, & 1 Missed
Money Issues
When a man retires, his wife gets twice the husband but only half the income.
Chi Chi Rodriguez
Retirement is like a long vacation in Las Vegas. The goal is to enjoy it the fullest, but not so fully that you run out of money.
Jonathan Clements
It is time I stepped aside for a less experienced and less able man.
Scott Elledge
Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate.
Woody Allen
The question isn't at what age I want to retire, it's at what income.
George Foreman
I advise you to go on living solely to enrage those who are paying your annuities. It is the only pleasure I have left.
Voltaire
People may live as much retired from the world as they like, but sooner or later they find themselves debtor or creditor to some one.
Johann Wolfgang Von Goethe
Cessation of work is not accompanied by cessation of expenses.
Cato
Money is something you got to make in case you don’t die.
Max Asnas
It is better to live rich than to die rich.
Samuel Johnson
Not having to worry about money is almost like not having to worry about dying.
Mario Puzo
You can be young without money but you can’t be old without it.
Tennessee Williams
Vanguard
The U.S. economy grew at a slower pace in the first quarter of 2012 than in the previous quarter, according to the closely watched gross domestic product (GDP) report. Other economic data supported the view that the recovery continues to advance at a modest but uneven pace. For the week ended April 27, the S&P 500 Index rose 1.8% to 1,403 (for a year-to-date total return—including price change plus dividends—of about 12.3%). The yield on the 10-year U.S. Treasury note fell 3 basis points to 1.96% (for a year-to-date increase of 7 basis points).
First Quarter Corporate Earnings
Corporate earnings seem to be doing well. I found 2 articles that illustrates this point. The first is from the April 30, 2012 Barron's that 275 of 500 companies that comprise the S&P 500 have reported earnings and 3/4th of them have exceeded expectations above the normal 2/3rds.
The other is from the April 25, 2012 Wall Street Journal that reported earnings by sector with about 1/3rd of the companies reporting at that time. Here is the info:
Financials: 26 Beat, 4 Met, & 5 Missed
Industrials: 21 Beat, 2 Met, & 1 Missed
Materials: 9 Beat, 1 Met, & 1 Missed
Information Technology: 19 Beat, 4 Met, & 3 Missed
Consumer Staples: 10 Beat, 1 Met, & 1 Missed
Consumer Discretionary: 19 Beat, 2 Met, & 2 Missed
Health Care: 10 Beat, 1 Met, & 1 Missed
Money Issues
When a man retires, his wife gets twice the husband but only half the income.
Chi Chi Rodriguez
Retirement is like a long vacation in Las Vegas. The goal is to enjoy it the fullest, but not so fully that you run out of money.
Jonathan Clements
It is time I stepped aside for a less experienced and less able man.
Scott Elledge
Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate.
Woody Allen
The question isn't at what age I want to retire, it's at what income.
George Foreman
I advise you to go on living solely to enrage those who are paying your annuities. It is the only pleasure I have left.
Voltaire
People may live as much retired from the world as they like, but sooner or later they find themselves debtor or creditor to some one.
Johann Wolfgang Von Goethe
Cessation of work is not accompanied by cessation of expenses.
Cato
Money is something you got to make in case you don’t die.
Max Asnas
It is better to live rich than to die rich.
Samuel Johnson
Not having to worry about money is almost like not having to worry about dying.
Mario Puzo
You can be young without money but you can’t be old without it.
Tennessee Williams
Sunday, April 22, 2012
Fear Index
The topic for this week has to do with the Investment Cycle Investing and the use of a Fear Index for making investment decisions. Let's stop Cancer by supporting Relay for Life. I am getting interest from people who want to take advantage of the offer to match contributions for Relay for Life. If you would like to participate, please send me a check made out to the American Cancer Society. The beginning paragraph is from Vanguard. At the end are some quotes on the topic of Irony that I hope you enjoy.
Vanguard Weekly Update
Consumers are helping propel the economy's slow recovery, as retail sales numbers came in better than forecast this week. The housing market has been dim recently, but improvement is evident from a year ago. Leading economic indicators increased for the sixth month in a row. In other news, industrial production was flat and business inventories rose. For the week ended April 20, the S&P 500 Index rose 0.6% to 1,379 (for a year-to-date total return—including price change plus dividends—of about 10.3%). The yield on the 10-year U.S. Treasury note fell 3 basis points to 1.99% (for a year-to-date increase of 10 basis points).
Investing Based Upon the Fear Index
A strategy for investing is called Investment Cycle Investing. The basis for this strategy is that investing occurs in cycles where any investment will go up and down with time. The method that I use to understand this cycle is the Volatily Index, aka VIX, or Fear Index. A low VIX value, below a value of 20, indicates that investors are calm. A VIX value above 30 indicates that investors are getting fearful. The higher the value the greater the amount of fear which is why it is called the Fear Index. Currently the VIX is below 20. Stocks for example remain high with a low VIX, go down with an increasing VIX and go up with a decreasing VIX. This means that a low VIX value indicates a good time to sell some stocks to balance a portfolio and a high VIX value indicates a good time to buy stocks to achieve a portfolio balance. The normal investor tends to do just the opposite to buy with a low VIX and sell with a high VIX. This is a strategy for frustration and losing money. This is known as investing on emotion rather than data. It is better to get more conservative with a portfolio when the VIX is low rather than the VIX is high.
Irony
When a man retires and time is no longer a matter of urgent importance, his colleagues generally present him with a watch. R.C. Sherriff
Half our life is spent trying to find something to do with the time we have rushed through life trying to save. Will Rogers
You have to put off being young until you can retire. Author Unknown
Vanguard Weekly Update
Consumers are helping propel the economy's slow recovery, as retail sales numbers came in better than forecast this week. The housing market has been dim recently, but improvement is evident from a year ago. Leading economic indicators increased for the sixth month in a row. In other news, industrial production was flat and business inventories rose. For the week ended April 20, the S&P 500 Index rose 0.6% to 1,379 (for a year-to-date total return—including price change plus dividends—of about 10.3%). The yield on the 10-year U.S. Treasury note fell 3 basis points to 1.99% (for a year-to-date increase of 10 basis points).
Investing Based Upon the Fear Index
A strategy for investing is called Investment Cycle Investing. The basis for this strategy is that investing occurs in cycles where any investment will go up and down with time. The method that I use to understand this cycle is the Volatily Index, aka VIX, or Fear Index. A low VIX value, below a value of 20, indicates that investors are calm. A VIX value above 30 indicates that investors are getting fearful. The higher the value the greater the amount of fear which is why it is called the Fear Index. Currently the VIX is below 20. Stocks for example remain high with a low VIX, go down with an increasing VIX and go up with a decreasing VIX. This means that a low VIX value indicates a good time to sell some stocks to balance a portfolio and a high VIX value indicates a good time to buy stocks to achieve a portfolio balance. The normal investor tends to do just the opposite to buy with a low VIX and sell with a high VIX. This is a strategy for frustration and losing money. This is known as investing on emotion rather than data. It is better to get more conservative with a portfolio when the VIX is low rather than the VIX is high.
Irony
When a man retires and time is no longer a matter of urgent importance, his colleagues generally present him with a watch. R.C. Sherriff
Half our life is spent trying to find something to do with the time we have rushed through life trying to save. Will Rogers
You have to put off being young until you can retire. Author Unknown
Sunday, April 15, 2012
Sell in May
I have been researching the topic of Sell in May and Go Away, the topic for this week. Also, I am still offering to match contributions to the Relay for Life, please consider supporting cancer research as we probably will all need it as we get older. At the end are some quotes on aging for your enjoyment.
Vanguard
Economic activity continued at a modest pace, as data revealed growth was both diverse and consistent nationwide. For the week ended April 13, the S&P 500 Index fell 2% to 1370.27 (for a year-to-date total return—including price change plus dividends—of about 9.63%). The yield on the 10-year U.S. Treasury note fell 5 basis points to 2.02% (for a year-to-date increase of 13 basis points).
Sell in May Revisited
While reading the 2012 Stock Trader's Almanac, I found an interesting chart that pertains to this topic. This same information was in the April 16, 2012 Barron's magazine.
The information is the value of the S&P 500 index starting on April 30, 1945 through the end of September 2011. $100 was invested on April 30, 1945 and divided into 2 periods: the beginning of May to the end of September and the beginning of October to the end of April. If this $100 was invested only during the period of May - September this amount declined $1 to a value of $99. If this $100 was invested only during the period of October - May this amount grew to a value of $9,329.
While the spring and summer time period was relatively flat the fall and winter period was very volatile with both large gains and large declines. I remember a few Octobers that were very painful. October has traditionally been the month when rallies begin.
So what is the bottom line? The data suggests that during the May - September period reducing the amount of stocks and increasing the amount of bonds seems prudent.
Aging
You know you're getting old when you stoop to tie your shoelaces and wonder what else you could do while you're down there.
George Burns
People ask me what I'd most appreciate getting for my eighty-seventh birthday. I tell them, a paternity suit.
George Burns
I don't feel old. I don't feel anything until noon. Then it's time for my nap.
Bob Hope
I don't plan to grow old gracefully. I plan to have face-lifts until my ears meet.
Rita Rudner
I do wish I could tell you my age but it's impossible. It keeps changing all the time.
Greer Garson
I'm very pleased to be here. Let's face it, at my age I'm very pleased to be anywhere.
George Burns
Except for an occasional heart attack I feel as young as I ever did.
Robert Benchley
Vanguard
Economic activity continued at a modest pace, as data revealed growth was both diverse and consistent nationwide. For the week ended April 13, the S&P 500 Index fell 2% to 1370.27 (for a year-to-date total return—including price change plus dividends—of about 9.63%). The yield on the 10-year U.S. Treasury note fell 5 basis points to 2.02% (for a year-to-date increase of 13 basis points).
Sell in May Revisited
While reading the 2012 Stock Trader's Almanac, I found an interesting chart that pertains to this topic. This same information was in the April 16, 2012 Barron's magazine.
The information is the value of the S&P 500 index starting on April 30, 1945 through the end of September 2011. $100 was invested on April 30, 1945 and divided into 2 periods: the beginning of May to the end of September and the beginning of October to the end of April. If this $100 was invested only during the period of May - September this amount declined $1 to a value of $99. If this $100 was invested only during the period of October - May this amount grew to a value of $9,329.
While the spring and summer time period was relatively flat the fall and winter period was very volatile with both large gains and large declines. I remember a few Octobers that were very painful. October has traditionally been the month when rallies begin.
So what is the bottom line? The data suggests that during the May - September period reducing the amount of stocks and increasing the amount of bonds seems prudent.
Aging
You know you're getting old when you stoop to tie your shoelaces and wonder what else you could do while you're down there.
George Burns
People ask me what I'd most appreciate getting for my eighty-seventh birthday. I tell them, a paternity suit.
George Burns
I don't feel old. I don't feel anything until noon. Then it's time for my nap.
Bob Hope
I don't plan to grow old gracefully. I plan to have face-lifts until my ears meet.
Rita Rudner
I do wish I could tell you my age but it's impossible. It keeps changing all the time.
Greer Garson
I'm very pleased to be here. Let's face it, at my age I'm very pleased to be anywhere.
George Burns
Except for an occasional heart attack I feel as young as I ever did.
Robert Benchley
Sunday, April 8, 2012
Quarter 1 2012 Bond Funds and Happy Easter
I hope you have had a wonderful Easter. At the end is some information that I found on Easter celebrations around the world. This week the topic is the performance of different types of bonds during the first quarter 2012. First is the weekly recap from Vanguard which was published before the disappointing jobs report last Friday.
Vanguard
Ahead of the long holiday weekend (for many), most signs suggest that tomorrow's employment report will show the U.S. economy added about 200,000 jobs in March—continuing a string of improvement. Amid the progress, the Federal Reserve signaled that no new monetary stimulus is likely anytime soon. The stock market will be closed on Good Friday; the bond market is expected to close at noon. For the week, through April 5, the S&P 500 Index fell 0.7% to 1,398 (for a year-to-date total return—including price change plus dividends—of about 12%). The yield on the 10-year U.S. Treasury note fell 4 basis points to 2.19% (for a year-to-date increase of 30 basis points).
Performance of Bond Mutual Funds
Bonds come in many different categories. My preference to purchasing bonds is to purchase a mutual fund of bonds rather than individiudal bonds. The April 9, 2012 Barron's publication had a section devoted to the performance of mutual funds including bond mutual funds. As you will see not all bonds and bond funds are created equally and you can lose money on bonds and bond funds.
Barron's shows 17 different categories of taxable bond funds and gave performance during the past quarter,1 year, 5 years, and 10 years. My personal view is that the future for bonds is best represented by the past quarter rather than the other categories. My reason is that bonds have had an unprecedented bull market where interest rates have been declining for about 30 years and that it has come to an end.
Below is the quarterly performance of some of the different types of bond mutual fund categories compared to a money market fund and my favorite bond fund:
Money Market Funds = 0.00%
Short US Government = 0.43%
Short Investment Grade = 1.33%
Intermediate US Government = -0.28%
Intermediate Investment Grade = 1.50%
General US Government = -0.61%
General Bond = 1.78%
GNMA = 0.36%
High Yield - Non Investment Grade = 5.42%
Emerging Market Debt - Non Investment Grade = 6.92%
My Favorite Bond Fund = 3.47%
You will note that investing in bonds issued by the US Government gave the worst return due to rising interest rates. This trend will continue which is why I am avoiding them.
My favorite bond fund did very well compared to the other categories of investment grade bonds. The bond funds that did not have investment grade bonds did better but also have a risk level higher than I do not want to accept. I will continue to hold my favorite bond fund.
Easter Celebrations Around the World from Crown Relocations
In New Zealand, people attend Church Services over the weekend to celebrate both the death and resurrection of Christ and to mark the end of the season of Lent. The stores all carry Hot Cross Buns and stock chocolate Easter eggs for the Easter Bunny to fill his basket in anticipation of his delivery rounds on Easter Sunday morning. This usually results in Easter egg hunts for the children.
France has held on to its traditions by giving eggs (chocolate nowadays) on Easter day, which is related to the renewal of nature in spring time. It has also been related to the end of fast period, a period during which no eggs could be eaten, creating abundance thereafter. Louis XIV gave eggs gilded with gold to his sycophants. They were filled with "surprises" and the tradition remains until today. It is also the symbol of resurrection in Christian religions.
On Easter Sunday in Italy, all members of the family exchange Easter eggs, which can also be made especially for the occasion containing special gifts that are placed inside the egg. On Easter Sunday morning, each family usually eats a breakfast of salami, eggs, a special cheese cake and the traditional ''colomba'' – a sweet cake which contains almonds and candied fruits. On Easter Monday, everybody goes out for a picnic or by the sea and many families eat lamb, broad beans and a strong sheep’s milk cheese.
For the Czech Republic, in general, Easter is no longer considered a great Catholic feast. It is more of a welcome to spring, an opportunity for a family to meet at dinner or to visit one of the cultural events held during Easter. Fairs are held in many places, there is usually a wide offer of beautiful hand-painted Easter eggs, and eggs decorated by different techniques – the so called "kraslice" (yolk and white are removed and egg-shell is decorated), which decorate shops as well as households.
There are a variety of Easter traditions in Australia. Pancake Day is associated with Shrove Tuesday, because pancakes were a dish that could use up perishable foodstuffs prior to the beginning of the 40 days of fasting during Lent. Hot Cross Buns have a cross, the symbol of Christ, placed on top of the buns, either with pastry or a simple mixture of flour and water. The buns are traditionally eaten on Good Friday; however, in Australia they are available in bakeries and stores many weeks before Easter. Easter eggs, symbolizing new life, have long been associated with the Easter festival.
The United States shares many of the traditions with other countries. On Easter Sunday children wake up to find that the Easter Bunny has left them baskets of candy. He has also hidden the eggs that they decorated earlier that week. Children hunt for the eggs all around the house and outside. Neighborhoods and organizations hold Easter egg hunts, and the child who finds the most eggs wins a prize. Families also get together for an Easter meal.
For Ireland, Easter-time is rich with traditions, the overlapping and commingling of centuries of ritual celebrating rebirth, resurrection, salvation and everlasting life. Many of the traditions surrounding Easter in Ireland are universal to the Christian world. Others – such as the dawn dance, the herring funeral, and the cake dance – are distinctly Celtic, and many hark back to the traditions of pre-Christian times.
On Sunday morning in Poland, beautifully laid tables are covered with colored eggs, cold meats, coils of sausages, ham, yeast cakes, pound cakes, poppy-seed cakes, and in the middle of it all, a lamb made of sugar, commemorating the resurrected Christ. No smoke is permitted; therefore no warm meals are served. Sharing a boiled egg with one’s relatives is a national tradition. A piece of egg with salt and pepper, consecrated by priest, is an inseparable accessory in the good wishes we extend to each other at Easter.
In Brazil, parents hide chocolate eggs the Saturday before Easter around the house, so the kids can find them on Sunday morning. There are different sizes but all made out of chocolate. Sometimes close friends and relatives also exchange eggs.
Traditions for the people of the U.K. include eating hot cross buns – meant to symbolize the Cross, exchange chocolate eggs or bunnies (symbols of new life) on Easter Sunday and often small eggs are hidden around house and garden for children to find. Children paint decorations on egg shells and simnel cakes are baked – a rich fruit cake with a layer of marzipan in the middle and 11 balls of marzipan on top symbolizing 11 true apostles (excluding Judas). This is less common now except in a very traditional Easter.
Vanguard
Ahead of the long holiday weekend (for many), most signs suggest that tomorrow's employment report will show the U.S. economy added about 200,000 jobs in March—continuing a string of improvement. Amid the progress, the Federal Reserve signaled that no new monetary stimulus is likely anytime soon. The stock market will be closed on Good Friday; the bond market is expected to close at noon. For the week, through April 5, the S&P 500 Index fell 0.7% to 1,398 (for a year-to-date total return—including price change plus dividends—of about 12%). The yield on the 10-year U.S. Treasury note fell 4 basis points to 2.19% (for a year-to-date increase of 30 basis points).
Performance of Bond Mutual Funds
Bonds come in many different categories. My preference to purchasing bonds is to purchase a mutual fund of bonds rather than individiudal bonds. The April 9, 2012 Barron's publication had a section devoted to the performance of mutual funds including bond mutual funds. As you will see not all bonds and bond funds are created equally and you can lose money on bonds and bond funds.
Barron's shows 17 different categories of taxable bond funds and gave performance during the past quarter,1 year, 5 years, and 10 years. My personal view is that the future for bonds is best represented by the past quarter rather than the other categories. My reason is that bonds have had an unprecedented bull market where interest rates have been declining for about 30 years and that it has come to an end.
Below is the quarterly performance of some of the different types of bond mutual fund categories compared to a money market fund and my favorite bond fund:
Money Market Funds = 0.00%
Short US Government = 0.43%
Short Investment Grade = 1.33%
Intermediate US Government = -0.28%
Intermediate Investment Grade = 1.50%
General US Government = -0.61%
General Bond = 1.78%
GNMA = 0.36%
High Yield - Non Investment Grade = 5.42%
Emerging Market Debt - Non Investment Grade = 6.92%
My Favorite Bond Fund = 3.47%
You will note that investing in bonds issued by the US Government gave the worst return due to rising interest rates. This trend will continue which is why I am avoiding them.
My favorite bond fund did very well compared to the other categories of investment grade bonds. The bond funds that did not have investment grade bonds did better but also have a risk level higher than I do not want to accept. I will continue to hold my favorite bond fund.
Easter Celebrations Around the World from Crown Relocations
In New Zealand, people attend Church Services over the weekend to celebrate both the death and resurrection of Christ and to mark the end of the season of Lent. The stores all carry Hot Cross Buns and stock chocolate Easter eggs for the Easter Bunny to fill his basket in anticipation of his delivery rounds on Easter Sunday morning. This usually results in Easter egg hunts for the children.
France has held on to its traditions by giving eggs (chocolate nowadays) on Easter day, which is related to the renewal of nature in spring time. It has also been related to the end of fast period, a period during which no eggs could be eaten, creating abundance thereafter. Louis XIV gave eggs gilded with gold to his sycophants. They were filled with "surprises" and the tradition remains until today. It is also the symbol of resurrection in Christian religions.
On Easter Sunday in Italy, all members of the family exchange Easter eggs, which can also be made especially for the occasion containing special gifts that are placed inside the egg. On Easter Sunday morning, each family usually eats a breakfast of salami, eggs, a special cheese cake and the traditional ''colomba'' – a sweet cake which contains almonds and candied fruits. On Easter Monday, everybody goes out for a picnic or by the sea and many families eat lamb, broad beans and a strong sheep’s milk cheese.
For the Czech Republic, in general, Easter is no longer considered a great Catholic feast. It is more of a welcome to spring, an opportunity for a family to meet at dinner or to visit one of the cultural events held during Easter. Fairs are held in many places, there is usually a wide offer of beautiful hand-painted Easter eggs, and eggs decorated by different techniques – the so called "kraslice" (yolk and white are removed and egg-shell is decorated), which decorate shops as well as households.
There are a variety of Easter traditions in Australia. Pancake Day is associated with Shrove Tuesday, because pancakes were a dish that could use up perishable foodstuffs prior to the beginning of the 40 days of fasting during Lent. Hot Cross Buns have a cross, the symbol of Christ, placed on top of the buns, either with pastry or a simple mixture of flour and water. The buns are traditionally eaten on Good Friday; however, in Australia they are available in bakeries and stores many weeks before Easter. Easter eggs, symbolizing new life, have long been associated with the Easter festival.
The United States shares many of the traditions with other countries. On Easter Sunday children wake up to find that the Easter Bunny has left them baskets of candy. He has also hidden the eggs that they decorated earlier that week. Children hunt for the eggs all around the house and outside. Neighborhoods and organizations hold Easter egg hunts, and the child who finds the most eggs wins a prize. Families also get together for an Easter meal.
For Ireland, Easter-time is rich with traditions, the overlapping and commingling of centuries of ritual celebrating rebirth, resurrection, salvation and everlasting life. Many of the traditions surrounding Easter in Ireland are universal to the Christian world. Others – such as the dawn dance, the herring funeral, and the cake dance – are distinctly Celtic, and many hark back to the traditions of pre-Christian times.
On Sunday morning in Poland, beautifully laid tables are covered with colored eggs, cold meats, coils of sausages, ham, yeast cakes, pound cakes, poppy-seed cakes, and in the middle of it all, a lamb made of sugar, commemorating the resurrected Christ. No smoke is permitted; therefore no warm meals are served. Sharing a boiled egg with one’s relatives is a national tradition. A piece of egg with salt and pepper, consecrated by priest, is an inseparable accessory in the good wishes we extend to each other at Easter.
In Brazil, parents hide chocolate eggs the Saturday before Easter around the house, so the kids can find them on Sunday morning. There are different sizes but all made out of chocolate. Sometimes close friends and relatives also exchange eggs.
Traditions for the people of the U.K. include eating hot cross buns – meant to symbolize the Cross, exchange chocolate eggs or bunnies (symbols of new life) on Easter Sunday and often small eggs are hidden around house and garden for children to find. Children paint decorations on egg shells and simnel cakes are baked – a rich fruit cake with a layer of marzipan in the middle and 11 balls of marzipan on top symbolizing 11 true apostles (excluding Judas). This is less common now except in a very traditional Easter.
Friday, March 30, 2012
Quarter 1 2012 & Palm Sunday
The first quarter of 2012 is upon us and it has been rather unusual on a couple of fronts. First the weather has been warmer than normal. Secondly, the Dow Jones Industrial Average had the best Quarter 1 return since 1998. At the end is some information from Wikipedia about how Palm Sunday is celebrated around the world, I found it interesting.
Vanguard
In a television interview earlier this week, Federal Reserve Chairman Ben Bernanke said that the economy has made strides over the past few months, but that housing and unemployment remain a threat to a full recovery. Economic indicators this week were a mixed bag. The U.S. economy expanded in the fourth quarter. Consumer confidence fell slightly. Consumers are spending more, and businesses are investing—but at a slower pace. For the week ended March 30, the S&P 500 Index rose 0.8% to 1,408 (for a year-to-date total return—including price change plus dividends—of about 12.6%). The yield on the 10-year U.S. Treasury note fell 2 basis points to 2.23% (for a year-to-date increase of 34 basis points).
Quarter 1 Review
The biggest concern during the quarter was the price of oil and the Iranian oil issue. So far this has not had a significant impact on our economy and it appears that many world leaders are trying to keep it that way. It is important to listen for the clues from leaders around the world on this issue.
Two concerns existed when the quarter began which seem to have faded. These were the economic recovery and Europe. Our economy remains on a slow recovery and it will for quite awhile. The European crisis seems to have blown over once people realized that it was time to bring it to closure.
So what happens in quarter 2? I sure wish I knew the answer. My plan is to take some profits and get more conservative in some accounts during April since we have gotten a gain during the quarter which normally would occur during the entire year. I like the saying of a bird in the hand is worth 2 in the bush.
Palm Sunday Celebrations Around the World - Wikipedia
It is customary in many churches for the worshippers to receive fresh palm leaves on Palm Sunday. In parts of the world where this has historically been impractical, substitute traditions have arisen.
In Lebanon, Syria, Jordan and Israel, Palm Sunday – known as Shaa’nini in Arabic- is perhaps the best-attended service in the Christian Calendar, among the Orthodox, Catholic (Latin rite and Eastern rite), Maronite and Anglican Churches, perhaps because it is notably a family occasion. On this day, children attend church with branches from olive and palm trees. Also, there will be carefully woven crosses and other symbols made from palm fronds and roses. There will normally be a procession at the beginning of the service and at some point, the priest will take an olive branch and splash holy water on the faithful.
In Latvia, Palm Sunday is called "Pussy Willow Sunday", and pussy willows – symbolizing new life – are blessed and distributed to the faithful.[9] Children are often woken that morning with ritualistic swats of a willow branch. People also catch and spank each other with the branches, a ritual often consummating in sexual intercourse.
India
Flowers (in this instance marigolds) strewn about the sanctuary in an Oriental Orthodox church in Mumbai, India on Palm SundayIn the South Indian state of Kerala, (and in Indian Orthodox,Church of South India(CSI), Syro-Malankara Catholic Church, and Syrian Orthodox Church (Jacobite) congregations elsewhere in India and throughout the West), flowers are strewn about into the sanctuary on Palm Sunday during the reading of the Gospel at the words uttered by the crowd welcoming Jesus, "Hosanna! Blessed is he who is come and is to come in the name of the Lord God." These words are read to the congregation thrice. The congregation then repeats, "Hosanna!" and the flowers are scattered. This echoes pre-Christian Hindu celebrations in which flowers are strewn on festive occasions; however, this also echoes the honour shown to Jesus upon his entry into Jerusalem. Indian Orthodoxy traces its roots to the arrival in India of St. Thomas the Apostle in AD 52 (according to tradition) and his evangelism among both the Brahmans of the Malabar Coast and the ancient Jewish community there. Its rites and ceremonies are both Hindu and Jewish, as well as Levantine Christian, in origin.
In Elche, Spain, the location of the biggest palm grove in Europe, there is a tradition of tying and covering palm leaves to whiten them away from sunlight and then drying and braiding them in elaborate shapes.
A Spanish rhyming proverb states: Domingo de Ramos, quien no estrena algo, se le caen las manos ("On Palm Sunday, the hands drop off of those who fail to wear something new").
All the parishes of Malta and Gozo on Palm Sunday (in Maltese Ħadd il-Palm) bless the palm leaves and the olive leaves. Those parishes that have the statues of Good Friday bless the olive tree they put on the statues of "Jesus prays in the Olive Garden" (Ġesù fl-Ort) and the "Betrayal of Judas" (il-Bewsa ta' Ġuda). Also, many people take a small branch of olive to their homes because they say the blessed olive branch keeps away disease and the evil eye (l-għajn ħażina or is-seħta).
In the Saxon regions of the Netherlands, crosses are decorated with candy and bread, made in the form of a rooster. In the diocese of Groningen-Leeuwarden, a great procession with oil lamps is held the night before Palm Sunday in honour of the Sorrowful Mother of Warfhuizen.
Many Polish towns and villages (the best known are Lipnica Murowana in Małopolska and Łyse in Podlasie) organize artificial palm competitions. The biggest of those reach above 30 meters in length; for example, the highest palm in 2008 was 33.39 meters high.
In Romania, Palm Sunday is known as Duminica Floriilor.
In Bulgaria, Palm Sunday is known as Tsvetnitsa or Vrabnitsa. People with flower-related names, (for example Tzviatko, Margarita,Ralitza, Lilia, Violeta, Yavor, Zdravko, Zjumbjul, Nevena, Temenuzhka,Rosa etc.) celebrate this day as their "name day".
In the Philippines, some places re-enact of Jesus' triumphal entry. The Catholic priest rides a horse and is surrounded by the congregation, bearing palms. Sometimes women spread large cloths or aprons along the procession route.
Palm branches, called palaspas, are taken home after being blessed in the Mass and are hung beside, on or above doorways and windows in front of their houses. Although the real objective of placing the leaves in front of houses is to welcome Jesus Christ, some Filipinos say the palm leaves turn away evil spirits.
In Finland, it is popular for children to dress up as Easter witches and go door to door in neighborhoods for coins and candy. It is an old Karelian custom called Virpominen.
Vanguard
In a television interview earlier this week, Federal Reserve Chairman Ben Bernanke said that the economy has made strides over the past few months, but that housing and unemployment remain a threat to a full recovery. Economic indicators this week were a mixed bag. The U.S. economy expanded in the fourth quarter. Consumer confidence fell slightly. Consumers are spending more, and businesses are investing—but at a slower pace. For the week ended March 30, the S&P 500 Index rose 0.8% to 1,408 (for a year-to-date total return—including price change plus dividends—of about 12.6%). The yield on the 10-year U.S. Treasury note fell 2 basis points to 2.23% (for a year-to-date increase of 34 basis points).
Quarter 1 Review
The biggest concern during the quarter was the price of oil and the Iranian oil issue. So far this has not had a significant impact on our economy and it appears that many world leaders are trying to keep it that way. It is important to listen for the clues from leaders around the world on this issue.
Two concerns existed when the quarter began which seem to have faded. These were the economic recovery and Europe. Our economy remains on a slow recovery and it will for quite awhile. The European crisis seems to have blown over once people realized that it was time to bring it to closure.
So what happens in quarter 2? I sure wish I knew the answer. My plan is to take some profits and get more conservative in some accounts during April since we have gotten a gain during the quarter which normally would occur during the entire year. I like the saying of a bird in the hand is worth 2 in the bush.
Palm Sunday Celebrations Around the World - Wikipedia
It is customary in many churches for the worshippers to receive fresh palm leaves on Palm Sunday. In parts of the world where this has historically been impractical, substitute traditions have arisen.
In Lebanon, Syria, Jordan and Israel, Palm Sunday – known as Shaa’nini in Arabic- is perhaps the best-attended service in the Christian Calendar, among the Orthodox, Catholic (Latin rite and Eastern rite), Maronite and Anglican Churches, perhaps because it is notably a family occasion. On this day, children attend church with branches from olive and palm trees. Also, there will be carefully woven crosses and other symbols made from palm fronds and roses. There will normally be a procession at the beginning of the service and at some point, the priest will take an olive branch and splash holy water on the faithful.
In Latvia, Palm Sunday is called "Pussy Willow Sunday", and pussy willows – symbolizing new life – are blessed and distributed to the faithful.[9] Children are often woken that morning with ritualistic swats of a willow branch. People also catch and spank each other with the branches, a ritual often consummating in sexual intercourse.
India
Flowers (in this instance marigolds) strewn about the sanctuary in an Oriental Orthodox church in Mumbai, India on Palm SundayIn the South Indian state of Kerala, (and in Indian Orthodox,Church of South India(CSI), Syro-Malankara Catholic Church, and Syrian Orthodox Church (Jacobite) congregations elsewhere in India and throughout the West), flowers are strewn about into the sanctuary on Palm Sunday during the reading of the Gospel at the words uttered by the crowd welcoming Jesus, "Hosanna! Blessed is he who is come and is to come in the name of the Lord God." These words are read to the congregation thrice. The congregation then repeats, "Hosanna!" and the flowers are scattered. This echoes pre-Christian Hindu celebrations in which flowers are strewn on festive occasions; however, this also echoes the honour shown to Jesus upon his entry into Jerusalem. Indian Orthodoxy traces its roots to the arrival in India of St. Thomas the Apostle in AD 52 (according to tradition) and his evangelism among both the Brahmans of the Malabar Coast and the ancient Jewish community there. Its rites and ceremonies are both Hindu and Jewish, as well as Levantine Christian, in origin.
In Elche, Spain, the location of the biggest palm grove in Europe, there is a tradition of tying and covering palm leaves to whiten them away from sunlight and then drying and braiding them in elaborate shapes.
A Spanish rhyming proverb states: Domingo de Ramos, quien no estrena algo, se le caen las manos ("On Palm Sunday, the hands drop off of those who fail to wear something new").
All the parishes of Malta and Gozo on Palm Sunday (in Maltese Ħadd il-Palm) bless the palm leaves and the olive leaves. Those parishes that have the statues of Good Friday bless the olive tree they put on the statues of "Jesus prays in the Olive Garden" (Ġesù fl-Ort) and the "Betrayal of Judas" (il-Bewsa ta' Ġuda). Also, many people take a small branch of olive to their homes because they say the blessed olive branch keeps away disease and the evil eye (l-għajn ħażina or is-seħta).
In the Saxon regions of the Netherlands, crosses are decorated with candy and bread, made in the form of a rooster. In the diocese of Groningen-Leeuwarden, a great procession with oil lamps is held the night before Palm Sunday in honour of the Sorrowful Mother of Warfhuizen.
Many Polish towns and villages (the best known are Lipnica Murowana in Małopolska and Łyse in Podlasie) organize artificial palm competitions. The biggest of those reach above 30 meters in length; for example, the highest palm in 2008 was 33.39 meters high.
In Romania, Palm Sunday is known as Duminica Floriilor.
In Bulgaria, Palm Sunday is known as Tsvetnitsa or Vrabnitsa. People with flower-related names, (for example Tzviatko, Margarita,Ralitza, Lilia, Violeta, Yavor, Zdravko, Zjumbjul, Nevena, Temenuzhka,Rosa etc.) celebrate this day as their "name day".
In the Philippines, some places re-enact of Jesus' triumphal entry. The Catholic priest rides a horse and is surrounded by the congregation, bearing palms. Sometimes women spread large cloths or aprons along the procession route.
Palm branches, called palaspas, are taken home after being blessed in the Mass and are hung beside, on or above doorways and windows in front of their houses. Although the real objective of placing the leaves in front of houses is to welcome Jesus Christ, some Filipinos say the palm leaves turn away evil spirits.
In Finland, it is popular for children to dress up as Easter witches and go door to door in neighborhoods for coins and candy. It is an old Karelian custom called Virpominen.
Saturday, March 24, 2012
Steps to Retirement
The topic for this week are some simple steps to take to get ready to retire. At the end are some quotes on retirement for your enjoyment.
Vanguard Info
News on the housing market was a hot property this week, though results were mixed. While home sales and starts declined last month, their improvement over the last few years seems to show that the housing market—the core of the last financial crisis—may be digging itself out of a 7-year hole. Meanwhile, an important gauge of future economic activity rose for the 5th consecutive month. For the week ended March 23, the S&P 500 Index fell 0.5% to 1,397.11 (for a year-to-date total return—including price change plus dividends—of about 11.6%). The yield on the 10-year U.S. Treasury note fell 6 basis points to 2.25% (for a year-to-date increase of 36 basis points).
Steps to Retirement
Some steps to take to get ready for retirement:
1) Save 10% of your income from each paycheck
2) Pay off your home mortgage to reduce expenses when retirement starts
3) Get a new car and have it paid off to have lower repair costs when retirement starts
4) Invest for growth not income
5) Calculate current annual living expenses
6) Guess when you want to retire
7) Calculate retirement annual income from Social Security, Pensions, etc. at this retirement age.
8) Calculate the difference between income and expense
9) Determine the amount of savings needed by multiplying the answer in step 8 by at least 20
10) If you do not have enough retirement savings call me and develop a plan
Retirement Quotes
Preparation for old age should begin not later than one's teens. A life which is empty of purpose until 65 will not suddenly become filled on retirement.
Arthur E. Morgan
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.
William A. Ward
The best time to start thinking about your retirement is before the boss does.
Source Unknown
Vanguard Info
News on the housing market was a hot property this week, though results were mixed. While home sales and starts declined last month, their improvement over the last few years seems to show that the housing market—the core of the last financial crisis—may be digging itself out of a 7-year hole. Meanwhile, an important gauge of future economic activity rose for the 5th consecutive month. For the week ended March 23, the S&P 500 Index fell 0.5% to 1,397.11 (for a year-to-date total return—including price change plus dividends—of about 11.6%). The yield on the 10-year U.S. Treasury note fell 6 basis points to 2.25% (for a year-to-date increase of 36 basis points).
Steps to Retirement
Some steps to take to get ready for retirement:
1) Save 10% of your income from each paycheck
2) Pay off your home mortgage to reduce expenses when retirement starts
3) Get a new car and have it paid off to have lower repair costs when retirement starts
4) Invest for growth not income
5) Calculate current annual living expenses
6) Guess when you want to retire
7) Calculate retirement annual income from Social Security, Pensions, etc. at this retirement age.
8) Calculate the difference between income and expense
9) Determine the amount of savings needed by multiplying the answer in step 8 by at least 20
10) If you do not have enough retirement savings call me and develop a plan
Retirement Quotes
Preparation for old age should begin not later than one's teens. A life which is empty of purpose until 65 will not suddenly become filled on retirement.
Arthur E. Morgan
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.
William A. Ward
The best time to start thinking about your retirement is before the boss does.
Source Unknown
Monday, March 19, 2012
Economist Projection
hope you are surviving March Madness and Saint Patrick's Day. We have a Saint Patrick's Day tradition in our house to serve a meal that is entirely green. Perhaps you have a similar tradition. At the end is some information that I found about Saint Patrick's Day and the culture of your friends in Ireland. The beginning paragraph is from Vanguard. The middle section is some economic projections for your consideration that show things are pretty good except for Europe.
Vanguard
Hopes that the recovery is gaining strength were bolstered by encouraging retail sales data. Although warmer-than-usual weather across much of the nation may have triggered some earlier-than-usual spring spending, investors took heart that a stronger recovery may be finally blooming. For the week ended March 16, the S&P 500 Index rose 2.4% to 1,404 (for a year-to-date total return—including price change plus dividends—of about 12.2%). The yield on the 10-year U.S. Treasury note rose 27 basis points to 2.31% (for a year-to-date increase of 42 basis points).
Economist Projections - ECBI
According to the Electroindustry Business Confidence Index (EBCI) developed
by NEMA, Rosslyn, VA, USA,the current North American conditions jumped sharply in February, rising more than 18 points to 72.5, its highest level in more than six years. The survey’s measure of the degree of change in current North American conditions rose to its highest mark in almost two years, rising to +0.7 in February from +0.1 in January 2012.
The ECBI tracks economic conditions in North America, Latin America, Europe, and Asia Pacific regions. An economic reading above 50 indicates expansion. The index is calculated for the current economic condition and the condition in the future 6 months out. Here are the numbers for each region:
North America: Current = 72.5, Future = 75.0
Latin America: Current = 57.7, Future = 67.9
Europe: Current = 37.6, Future = 34.4
Asia Pacific: Current = 50, Future = 71.9
Bottom Line: All regions except for Europe are experiencing good economic conditions with the future projected to be better.
Saint Patrick's Day - Irish Perspective
Many people will be eating Irish food such as Irish Stew and Corned Beef and cabbage on St. Patrick's Day. Corned Beef is not an Irish dish. It is what Americans think the Irish eat. A more traditional meal would be ham and cabbage or bacon and cabbage. Some say that in Ireland on St. Patrick's Day the traditional green beer is prominent. However, in Ireland, many years ago, St. Patrick's Day is considered a holy day and Pubs were not open for business. There were no parades, no drinking or wearing green. Green was considered an unlucky color.
St. Patrick's Day Pinch - School children have started a little tradition of their own. They pinch classmates who don't wear green on this holiday. Wearing green is strictly a U.S. custom, as the color green is not popular in Ireland. Green is connected to the old green flag and a time when Ireland was not free. Green is also a color connected with hope and nature.
Some Irish Superstitions:
Moon, moon tell unto me,
When my true love I shall see?
What fine clothes am I to wear?
How many children will I bear?
For if my love comes not to me,
Dark and dismal my life will be.
This verse, recited by a maiden as she gathered special herbs by the light of the first full moon of the new year, could reveal a future husband and cause the girl to have a true dream about the man--if she first complied with certain requirements. With a black-handled knife she had to cut out three pieces of earth, bring them home, tie them in her left stocking, and secure the bundle with her right garter. The completed package then had to be placed upon her pillow.
When yawning, make the sign of the cross instantly over your mouth, or the evil spirit will make a rush down and take up his abode with you.
It is unlucky to offer your right hand in salutation, for thee is an old say, "A curse with the left hand to those we hate, but the right hand to those we honor."
If the palm of your hand itches you will be getting money; if the elbow, you will be changing beds.
Breaking a mirror brought seven years of bad luck, while two people washing hands in the same basin at the same time courted disaster.
Vanguard
Hopes that the recovery is gaining strength were bolstered by encouraging retail sales data. Although warmer-than-usual weather across much of the nation may have triggered some earlier-than-usual spring spending, investors took heart that a stronger recovery may be finally blooming. For the week ended March 16, the S&P 500 Index rose 2.4% to 1,404 (for a year-to-date total return—including price change plus dividends—of about 12.2%). The yield on the 10-year U.S. Treasury note rose 27 basis points to 2.31% (for a year-to-date increase of 42 basis points).
Economist Projections - ECBI
According to the Electroindustry Business Confidence Index (EBCI) developed
by NEMA, Rosslyn, VA, USA,the current North American conditions jumped sharply in February, rising more than 18 points to 72.5, its highest level in more than six years. The survey’s measure of the degree of change in current North American conditions rose to its highest mark in almost two years, rising to +0.7 in February from +0.1 in January 2012.
The ECBI tracks economic conditions in North America, Latin America, Europe, and Asia Pacific regions. An economic reading above 50 indicates expansion. The index is calculated for the current economic condition and the condition in the future 6 months out. Here are the numbers for each region:
North America: Current = 72.5, Future = 75.0
Latin America: Current = 57.7, Future = 67.9
Europe: Current = 37.6, Future = 34.4
Asia Pacific: Current = 50, Future = 71.9
Bottom Line: All regions except for Europe are experiencing good economic conditions with the future projected to be better.
Saint Patrick's Day - Irish Perspective
Many people will be eating Irish food such as Irish Stew and Corned Beef and cabbage on St. Patrick's Day. Corned Beef is not an Irish dish. It is what Americans think the Irish eat. A more traditional meal would be ham and cabbage or bacon and cabbage. Some say that in Ireland on St. Patrick's Day the traditional green beer is prominent. However, in Ireland, many years ago, St. Patrick's Day is considered a holy day and Pubs were not open for business. There were no parades, no drinking or wearing green. Green was considered an unlucky color.
St. Patrick's Day Pinch - School children have started a little tradition of their own. They pinch classmates who don't wear green on this holiday. Wearing green is strictly a U.S. custom, as the color green is not popular in Ireland. Green is connected to the old green flag and a time when Ireland was not free. Green is also a color connected with hope and nature.
Some Irish Superstitions:
Moon, moon tell unto me,
When my true love I shall see?
What fine clothes am I to wear?
How many children will I bear?
For if my love comes not to me,
Dark and dismal my life will be.
This verse, recited by a maiden as she gathered special herbs by the light of the first full moon of the new year, could reveal a future husband and cause the girl to have a true dream about the man--if she first complied with certain requirements. With a black-handled knife she had to cut out three pieces of earth, bring them home, tie them in her left stocking, and secure the bundle with her right garter. The completed package then had to be placed upon her pillow.
When yawning, make the sign of the cross instantly over your mouth, or the evil spirit will make a rush down and take up his abode with you.
It is unlucky to offer your right hand in salutation, for thee is an old say, "A curse with the left hand to those we hate, but the right hand to those we honor."
If the palm of your hand itches you will be getting money; if the elbow, you will be changing beds.
Breaking a mirror brought seven years of bad luck, while two people washing hands in the same basin at the same time courted disaster.
Sunday, March 4, 2012
Living to 100? That Will Be $3.5 Million
I found this article that talks about the income needs in retirement. The dollar amount is not the important part of the article as the amount of money that someone will spend depends upon a lot of different variables. It is an article that tries to quantify the dollar amount on average retirement money needs. It is important to understand how the expenses change with time.
The bottom line is that you need to be prepared for retirement especially for health care costs that are rising faster than inflation. It is important to optimize Social Security and pension benefits that tends to grow at the rate of inflation or less.
_____________________________-
Living to 100? That Will Be $3.5 Million
By Jonnelle Marte and Linda Lacina | SmartMoney – Mon, Feb 27, 2012 11:30 AM EST
Here's to your long life -- and the heaps of cash it will require.
The average American who lives to the ripe old age of 100 will spend $3.5 million in his or her lifetime, according to an analysis of data from the Bureau of Labor Statistics. A good chunk of that bill, more than $1.5 million, will have been racked by your 50th birthday. The next 30 or so years -- the average 50-year-old today can expect to live until 81 -- will run another $1.4 million. And the lucky few who make it to 100 will need an additional $630,000. Experts say these high costs of living often come as a shock to retirees, many of whom expect to dramatically cut back on their living expenses as they get older and stick to a fixed budget. "A lot of time people actually end up spending more money in retirement than they may have spent when they were working," says Heidi Schmidt, a wealth manager in Dallas with USAA.
Just where that money goes depends largely on your decade. Most people in their 60s spend a lot of their savings on entertainment -- finally buying that sail boat or splurging on trips to the Caribbean. Those in their 80s, on the other hand, typically swap a good portion of their leisure budget for medical bills.
Of course, not all expenses come down to age, experts say. A healthy octogenarian with wanderlust might have spending habits more in line with people twenty or thirty years younger. And certainly many Americans will spend much less in retirement -- either through careful planning, a good bit of luck or both. Whatever the retirement goals, here's a breakdown of how spending tends to vary through the retirement years.
60's
Housing (mortgage, utilities and decor): $155,500
Furnishings and appliances: $15,000
Entertainment and eating out: $46,700
Transportation: $71,000
In this decade of transitioning into retirement, 60-somethings spend more than older age groups on everything from housing to clothes. Many who retire in their 60s often find themselves with the time -- and savings -- to finally splurge a little on traveling or a big-ticket item like a car. Or to indulge their favorite hobbies: According to the Bureau of Labor Statistics, the average recently retired American spends $2,300 a year on activities like going to the movies, caring for a pet and buying the latest gadgets. That drops to an average of $1,300 after age 75.
70's
Total health care costs: $48,400
Prescription drugs: $8,100
Household repairs: $16,400
Utilities: $33,900
Aging's challenges come with bigger price tags. When people hit their 70s, health care costs begin to spike. Longer life spans and the rise of chronic illnesses have pushed up national health care spending, according to the Kaiser Family Foundation. People in their late 60s and early 70s spend an average $4,900 a year on healthcare, an increase of almost 30% from people in their late 50s and early 60s, according to the Bureau of Labor Statistics. Adding to the burden, health-care costs are expected to grow faster than income over the coming years, according to Kaiser.
80's
Health Insurance: $30,300
Entertainment and eating out: $26,000
Groceries: $26,400
Gasoline: $9,800
Eighty-somethings spend 57% more on health insurance and half as much on entertainment as folks in their 50s. More retirees are saving money in their later years of retirement by moving in with their adult children. A survey by the Pew Research Center released in 2010 found that 21% of adults age 85 and above live in a multi-generational household that includes at least two adult generations or a grandparent. That is up from 17% of people in their late 40s and early 50s.
90's
Nursing home (private room): $87,200
Out-of-pocket long-term care: $14,000
Assisted living: $89,000
Adult day services: $36,400
Health costs grow exponentially from one's 50s to mid-90s. And America's 1.9 million nonagerians depend heavily on Social Security and pensions. But the former source may come up short by the time most baby boomers are in their 90s: the Social Security Administration has already started tapping its trust fund to cover benefits and current projections estimate that Social Security will only have enough funds to cover 75% of scheduled benefits after 2036.
The bottom line is that you need to be prepared for retirement especially for health care costs that are rising faster than inflation. It is important to optimize Social Security and pension benefits that tends to grow at the rate of inflation or less.
_____________________________-
Living to 100? That Will Be $3.5 Million
By Jonnelle Marte and Linda Lacina | SmartMoney – Mon, Feb 27, 2012 11:30 AM EST
Here's to your long life -- and the heaps of cash it will require.
The average American who lives to the ripe old age of 100 will spend $3.5 million in his or her lifetime, according to an analysis of data from the Bureau of Labor Statistics. A good chunk of that bill, more than $1.5 million, will have been racked by your 50th birthday. The next 30 or so years -- the average 50-year-old today can expect to live until 81 -- will run another $1.4 million. And the lucky few who make it to 100 will need an additional $630,000. Experts say these high costs of living often come as a shock to retirees, many of whom expect to dramatically cut back on their living expenses as they get older and stick to a fixed budget. "A lot of time people actually end up spending more money in retirement than they may have spent when they were working," says Heidi Schmidt, a wealth manager in Dallas with USAA.
Just where that money goes depends largely on your decade. Most people in their 60s spend a lot of their savings on entertainment -- finally buying that sail boat or splurging on trips to the Caribbean. Those in their 80s, on the other hand, typically swap a good portion of their leisure budget for medical bills.
Of course, not all expenses come down to age, experts say. A healthy octogenarian with wanderlust might have spending habits more in line with people twenty or thirty years younger. And certainly many Americans will spend much less in retirement -- either through careful planning, a good bit of luck or both. Whatever the retirement goals, here's a breakdown of how spending tends to vary through the retirement years.
60's
Housing (mortgage, utilities and decor): $155,500
Furnishings and appliances: $15,000
Entertainment and eating out: $46,700
Transportation: $71,000
In this decade of transitioning into retirement, 60-somethings spend more than older age groups on everything from housing to clothes. Many who retire in their 60s often find themselves with the time -- and savings -- to finally splurge a little on traveling or a big-ticket item like a car. Or to indulge their favorite hobbies: According to the Bureau of Labor Statistics, the average recently retired American spends $2,300 a year on activities like going to the movies, caring for a pet and buying the latest gadgets. That drops to an average of $1,300 after age 75.
70's
Total health care costs: $48,400
Prescription drugs: $8,100
Household repairs: $16,400
Utilities: $33,900
Aging's challenges come with bigger price tags. When people hit their 70s, health care costs begin to spike. Longer life spans and the rise of chronic illnesses have pushed up national health care spending, according to the Kaiser Family Foundation. People in their late 60s and early 70s spend an average $4,900 a year on healthcare, an increase of almost 30% from people in their late 50s and early 60s, according to the Bureau of Labor Statistics. Adding to the burden, health-care costs are expected to grow faster than income over the coming years, according to Kaiser.
80's
Health Insurance: $30,300
Entertainment and eating out: $26,000
Groceries: $26,400
Gasoline: $9,800
Eighty-somethings spend 57% more on health insurance and half as much on entertainment as folks in their 50s. More retirees are saving money in their later years of retirement by moving in with their adult children. A survey by the Pew Research Center released in 2010 found that 21% of adults age 85 and above live in a multi-generational household that includes at least two adult generations or a grandparent. That is up from 17% of people in their late 40s and early 50s.
90's
Nursing home (private room): $87,200
Out-of-pocket long-term care: $14,000
Assisted living: $89,000
Adult day services: $36,400
Health costs grow exponentially from one's 50s to mid-90s. And America's 1.9 million nonagerians depend heavily on Social Security and pensions. But the former source may come up short by the time most baby boomers are in their 90s: the Social Security Administration has already started tapping its trust fund to cover benefits and current projections estimate that Social Security will only have enough funds to cover 75% of scheduled benefits after 2036.
Medicare Revolution Coming, Wyden-Ryan Bill
Please read this and forward to others. We potentially have the most signficant change coming to the Medicare program since the program was created. We all need to keep track of the Wyden-Ryan Bill that will likely get traction late in 2012. The key concepts are premium support, defined contribution, and competition. My personal view is that it makes a lot of sense.
The overall concept is that Medicare will change from a fee for service program without limit to benefits to defined contribution plan with limits. The amount of support would match the price of the insurance premiums. The end result should be increased competition as insurance companies will compete for this business. As with anything in politic things can change so we need to keep track of Wyden-Ryan.
___________________________________________________________
LA Times article: The Wyden-Ryan proposal brings innovation to the market without dismantling the federal program.
If you were looking for someone to save Medicare, you might think of Sen. Ron Wyden (D-Ore.), a healthcare wonk who helped found his state's chapter of the Gray Panthers advocacy group for senior citizens. You probably wouldn't pick House Budget Committee Chairman Paul D. Ryan (R-Wis.), whose proposal to replace Medicare with vouchers has made him some senior groups' Public Enemy No. 1. Nevertheless, the two have teamed up to offer a bold and politically risky plan that could help slow the rate of growth of premiums and bring more innovation to the health insurance market without dismantling one of the federal government's most popular programs. Lawmakers should give it serious consideration as they look for ways to solve the government's long-term budget problems.
The Wyden-Ryan plan is, simply put, a much better version of Ryan's previous proposal. Starting in 2022, it would give seniors subsidies that they could use to buy insurance through new regional marketplaces called exchanges, similar to the ones created by the 2010 healthcare reform law. But rather than eliminating Medicare for anyone not yet 55 years old, as Ryan proposed, Wyden-Ryan would continue to make the current Medicare program available as an option through the new exchanges. And rather than shifting the risk of rising healthcare costs onto seniors, the plan would guarantee that subsidies would be large enough to buy at least as much coverage and value as Medicare provides. In other words, the government would provide the same kind of defined benefit that Medicare does today, while giving seniors the option to obtain that coverage somewhere else.
Why bother providing a private alternative, if Medicare works? Because its costs are growing unsustainably. It's already one of Washington's costliest programs, and its burgeoning demand for dollars is draining resources from other priorities. It can't survive on its current trajectory. Although the healthcare reform law took numerous steps to rein in Medicare, including a cap on its budget that increases only slightly faster than the economy grows, it didn't do enough to eliminate the incentives in the system to demand too much care and charge too much for it.
The Wyden-Ryan proposal tries to slow the increase in costs by basing the subsidy amount on the cost of the second-least-expensive insurance plan in the exchange, whether it be Medicare or a private plan offering equivalent or better benefits. That would give insurers the same incentive to compete on price that they have in Medicare's prescription drug plan, whose costs have grown more slowly than projected. That sort of competition is absent from or hobbled in Medicare's other coverage areas. To give seniors more incentive to look at low-cost alternatives, the proposal would let them keep the difference between the federal subsidy and their monthly premiums. It also would let them move back to traditional Medicare if they weren't happy with the alternatives.
Wyden-Ryan would also let small businesses offer employees tax-free subsidies to purchase health insurance through exchanges, an innovation that would give workers more choices and more freedom to retain plans if they change jobs. By joining thousands of other shoppers in the exchange, they should also have access to better deals than their employers do in the market for small group policies.
The proposal isn't a silver bullet. It wouldn't address the fraud, inefficiencies and quality problems that contribute to Medicare's rising costs; it leaves much of that work to the healthcare reform law. Competition may not hold down costs as effectively in insurance as in other goods and services because a patient's demand for care may be completely unaffected by price. Someone might shop around for a better price on a hip replacement, but not on emergency treatment. Private insurers may find ways to attract the healthiest seniors to their plans, sticking Medicare with the sickest and most expensive patients. And by shifting some of Medicare's customer base into private plans, the proposal would reduce Medicare's ability to set prices for physician and hospital services well below the rates negotiated by private insurers. On the other hand, Medicare's low rates have led doctors and hospitals to just shift part of their costs onto non-Medicare patients.
The overall concept is that Medicare will change from a fee for service program without limit to benefits to defined contribution plan with limits. The amount of support would match the price of the insurance premiums. The end result should be increased competition as insurance companies will compete for this business. As with anything in politic things can change so we need to keep track of Wyden-Ryan.
___________________________________________________________
LA Times article: The Wyden-Ryan proposal brings innovation to the market without dismantling the federal program.
If you were looking for someone to save Medicare, you might think of Sen. Ron Wyden (D-Ore.), a healthcare wonk who helped found his state's chapter of the Gray Panthers advocacy group for senior citizens. You probably wouldn't pick House Budget Committee Chairman Paul D. Ryan (R-Wis.), whose proposal to replace Medicare with vouchers has made him some senior groups' Public Enemy No. 1. Nevertheless, the two have teamed up to offer a bold and politically risky plan that could help slow the rate of growth of premiums and bring more innovation to the health insurance market without dismantling one of the federal government's most popular programs. Lawmakers should give it serious consideration as they look for ways to solve the government's long-term budget problems.
The Wyden-Ryan plan is, simply put, a much better version of Ryan's previous proposal. Starting in 2022, it would give seniors subsidies that they could use to buy insurance through new regional marketplaces called exchanges, similar to the ones created by the 2010 healthcare reform law. But rather than eliminating Medicare for anyone not yet 55 years old, as Ryan proposed, Wyden-Ryan would continue to make the current Medicare program available as an option through the new exchanges. And rather than shifting the risk of rising healthcare costs onto seniors, the plan would guarantee that subsidies would be large enough to buy at least as much coverage and value as Medicare provides. In other words, the government would provide the same kind of defined benefit that Medicare does today, while giving seniors the option to obtain that coverage somewhere else.
Why bother providing a private alternative, if Medicare works? Because its costs are growing unsustainably. It's already one of Washington's costliest programs, and its burgeoning demand for dollars is draining resources from other priorities. It can't survive on its current trajectory. Although the healthcare reform law took numerous steps to rein in Medicare, including a cap on its budget that increases only slightly faster than the economy grows, it didn't do enough to eliminate the incentives in the system to demand too much care and charge too much for it.
The Wyden-Ryan proposal tries to slow the increase in costs by basing the subsidy amount on the cost of the second-least-expensive insurance plan in the exchange, whether it be Medicare or a private plan offering equivalent or better benefits. That would give insurers the same incentive to compete on price that they have in Medicare's prescription drug plan, whose costs have grown more slowly than projected. That sort of competition is absent from or hobbled in Medicare's other coverage areas. To give seniors more incentive to look at low-cost alternatives, the proposal would let them keep the difference between the federal subsidy and their monthly premiums. It also would let them move back to traditional Medicare if they weren't happy with the alternatives.
Wyden-Ryan would also let small businesses offer employees tax-free subsidies to purchase health insurance through exchanges, an innovation that would give workers more choices and more freedom to retain plans if they change jobs. By joining thousands of other shoppers in the exchange, they should also have access to better deals than their employers do in the market for small group policies.
The proposal isn't a silver bullet. It wouldn't address the fraud, inefficiencies and quality problems that contribute to Medicare's rising costs; it leaves much of that work to the healthcare reform law. Competition may not hold down costs as effectively in insurance as in other goods and services because a patient's demand for care may be completely unaffected by price. Someone might shop around for a better price on a hip replacement, but not on emergency treatment. Private insurers may find ways to attract the healthiest seniors to their plans, sticking Medicare with the sickest and most expensive patients. And by shifting some of Medicare's customer base into private plans, the proposal would reduce Medicare's ability to set prices for physician and hospital services well below the rates negotiated by private insurers. On the other hand, Medicare's low rates have led doctors and hospitals to just shift part of their costs onto non-Medicare patients.
Saturday, February 25, 2012
Earnings and Consumer Confidence
The end of February is upon us and we still have time to make 2011 contributions to an IRA account and reduce your 2011 taxes. Given the rhetoric about future changes to entitlement programs, aka retirement money, it would be a great idea to contribute to your future nest egg. The headlines for this week included information on corporate earnings and consumer confidence. The biggest risk to our economy is not related to Europe, rather the price of gasoline and oil. It is important to keep a very close watch on consumer confidence. Now is a great time to invest and leave the news media behind you.
Vanguard Weekly Recap
Positive news emerged from two of the global economy's most-troubled precincts: the U.S. housing market and Greek debt negotiations. January results showed that home sales extended their favorable trend in the deeply depressed sector, while European negotiators hammered out an agreement on a second bailout plan for Greece, subject to approvals. For the week ended February 24, the S&P 500 Index rose 0.3% to 1,366 (for a year-to-date total return—including price change plus dividends—of about 8.9%). The yield on the 10-year U.S. Treasury note declined 3 basis points to 1.98% (for a year-to-date increase of 9 basis points).
Corporate Earnings
S&P 500 Gets 9% Cheaper as Record Profit Restores $3.2 Trillion to Stocks
By Inyoung Hwang and Lu Wang | Bloomberg – Thu, Feb 23, 2012 12:01 AM EST
Profits in the Standard & Poor's 500 Index are rising faster than its price, leaving the gauge 9 percent cheaper than it was in April even after American equities climbed within 6 points of last year's peak.
"The world is profoundly underinvested in U.S. equities," Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a phone interview on Feb. 21. His firm manages $300 billion. "The public is bombarded with all these negatives. Greece this, Portugal that, dysfunctional governments. The retail investor is frozen."
Corporate profits have topped analyst estimates for 12 straight quarters. Analysts that cover companies in the S&P 500 project earnings will rise this year to $104.27 a share, the highest level ever, according to data compiled by Bloomberg. That would represent a 69 percent increase in earnings since 2009, compared with the 22 percent rally in the index in the past two years. Earnings for S&P 500 companies from Priceline.com Inc. to MasterCard Inc. and Lorillard Inc. are estimated to jump 9.6 percent from last year.
Consumer Confidence
Consumer Comfort Highest in Almost Four Years
By Bob Willis | Bloomberg – Thu, Feb 23, 2012 9:45 AM EST
Consumer confidence in the U.S. increased last week to the highest level since April 2008 as more Americans had a favorable view of their finances.
The Bloomberg Consumer Comfort Index rose to minus 38.4 in the period ended Feb. 19, its fifth consecutive gain, from minus 39.8 the previous week. It marked the second straight week above minus 40, which is the level associated with recessions and their aftermath. Men, homeowners and households with annual incomes of more than $50,000 were the most optimistic in more than a year.
A majority rated their personal finances as positive for the first time since July, indicating a rising stock market and job growth may encourage consumers to keep spending. At the same time, higher gasoline costs threaten to unravel the recent gains in sentiment, as occurred a year ago.
"An improving labor market and rising equity prices have bolstered sentiment of survey participants, especially those in the upper-middle and wealthy classes," said Joe Brusuelas, a senior economist at Bloomberg LP in New York. Still, the "improvement will be put to the test in coming weeks due to the spike in gasoline prices."
The price of a gallon of regular unleaded gasoline climbed to $3.57 as of Feb. 19 from a 10-month low of $3.21 in December, according to AAA, the nation's largest automobile association. A year ago, gasoline costs rose through the middle of May, climbing to $3.99 a gallon, from $3.10 at the end of January. At the same time, confidence waned.
English Language - Somewhat confusing
Let's face it - English is a crazy language. There is no egg in eggplant, nor ham in hamburger; neither apple nor pine in pineapple. English muffins were not invented in England or French fries in France. Sweetmeats are can-dies while sweetbreads, which aren't sweet, are meat. If we explore its paradoxes, we find that quicksand works slowly, boxing rings are square and a guinea pig is nei-ther from Guinea nor is it a pig.
In addition, why is it that writers write but fingers don't fing, grocers don't groce and hammers don't ham? If the plural of tooth is teeth, why isn't the plural of booth, beeth? One goose, 2 geese. So one moose, 2 meese? One index, 2 indices? Doesn't it seem crazy that you can make amends but not one amend? If you have a bunch of odds and ends and get rid of all but one of them, what do you call it?
How can a slim chance and a fat chance be the same, while a wise man and a wise guy are opposites? You have to marvel at the unique lunacy of a language in which your house can burn up as it burns down, in which you fill in a form by filling it out and in which, an alarm goes off by going on.
English was invented by people, not computers, and it reflects the creativity of the human race, which, of course, is not a race at all. That is why, when the stars are out, they are visible, but when the lights are out, they are invisible.
Vanguard Weekly Recap
Positive news emerged from two of the global economy's most-troubled precincts: the U.S. housing market and Greek debt negotiations. January results showed that home sales extended their favorable trend in the deeply depressed sector, while European negotiators hammered out an agreement on a second bailout plan for Greece, subject to approvals. For the week ended February 24, the S&P 500 Index rose 0.3% to 1,366 (for a year-to-date total return—including price change plus dividends—of about 8.9%). The yield on the 10-year U.S. Treasury note declined 3 basis points to 1.98% (for a year-to-date increase of 9 basis points).
Corporate Earnings
S&P 500 Gets 9% Cheaper as Record Profit Restores $3.2 Trillion to Stocks
By Inyoung Hwang and Lu Wang | Bloomberg – Thu, Feb 23, 2012 12:01 AM EST
Profits in the Standard & Poor's 500 Index are rising faster than its price, leaving the gauge 9 percent cheaper than it was in April even after American equities climbed within 6 points of last year's peak.
"The world is profoundly underinvested in U.S. equities," Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a phone interview on Feb. 21. His firm manages $300 billion. "The public is bombarded with all these negatives. Greece this, Portugal that, dysfunctional governments. The retail investor is frozen."
Corporate profits have topped analyst estimates for 12 straight quarters. Analysts that cover companies in the S&P 500 project earnings will rise this year to $104.27 a share, the highest level ever, according to data compiled by Bloomberg. That would represent a 69 percent increase in earnings since 2009, compared with the 22 percent rally in the index in the past two years. Earnings for S&P 500 companies from Priceline.com Inc. to MasterCard Inc. and Lorillard Inc. are estimated to jump 9.6 percent from last year.
Consumer Confidence
Consumer Comfort Highest in Almost Four Years
By Bob Willis | Bloomberg – Thu, Feb 23, 2012 9:45 AM EST
Consumer confidence in the U.S. increased last week to the highest level since April 2008 as more Americans had a favorable view of their finances.
The Bloomberg Consumer Comfort Index rose to minus 38.4 in the period ended Feb. 19, its fifth consecutive gain, from minus 39.8 the previous week. It marked the second straight week above minus 40, which is the level associated with recessions and their aftermath. Men, homeowners and households with annual incomes of more than $50,000 were the most optimistic in more than a year.
A majority rated their personal finances as positive for the first time since July, indicating a rising stock market and job growth may encourage consumers to keep spending. At the same time, higher gasoline costs threaten to unravel the recent gains in sentiment, as occurred a year ago.
"An improving labor market and rising equity prices have bolstered sentiment of survey participants, especially those in the upper-middle and wealthy classes," said Joe Brusuelas, a senior economist at Bloomberg LP in New York. Still, the "improvement will be put to the test in coming weeks due to the spike in gasoline prices."
The price of a gallon of regular unleaded gasoline climbed to $3.57 as of Feb. 19 from a 10-month low of $3.21 in December, according to AAA, the nation's largest automobile association. A year ago, gasoline costs rose through the middle of May, climbing to $3.99 a gallon, from $3.10 at the end of January. At the same time, confidence waned.
English Language - Somewhat confusing
Let's face it - English is a crazy language. There is no egg in eggplant, nor ham in hamburger; neither apple nor pine in pineapple. English muffins were not invented in England or French fries in France. Sweetmeats are can-dies while sweetbreads, which aren't sweet, are meat. If we explore its paradoxes, we find that quicksand works slowly, boxing rings are square and a guinea pig is nei-ther from Guinea nor is it a pig.
In addition, why is it that writers write but fingers don't fing, grocers don't groce and hammers don't ham? If the plural of tooth is teeth, why isn't the plural of booth, beeth? One goose, 2 geese. So one moose, 2 meese? One index, 2 indices? Doesn't it seem crazy that you can make amends but not one amend? If you have a bunch of odds and ends and get rid of all but one of them, what do you call it?
How can a slim chance and a fat chance be the same, while a wise man and a wise guy are opposites? You have to marvel at the unique lunacy of a language in which your house can burn up as it burns down, in which you fill in a form by filling it out and in which, an alarm goes off by going on.
English was invented by people, not computers, and it reflects the creativity of the human race, which, of course, is not a race at all. That is why, when the stars are out, they are visible, but when the lights are out, they are invisible.
Sunday, February 19, 2012
Importance of Investing Internationally
I hope Valentine's Day went well for you and your family. The topic is the importance of diversification by investing in international stocks. At the end is a paragraph titled Inner Peace. The first section is the weekly recap published by Vanguard.
Vanguard
The U.S. economy is showing progress as some risks abate—at least for the moment. A deal in Congress to extend a payroll tax cut and federal unemployment benefits means households won't end up with less cash to spend this year, which some analysts had feared could have caused the recovery to falter. And though the housing market remains deeply troubled, home construction is showing signs of life. For the week ended February 17, the S&P 500 Index rose 1.4% to 1,361 (for a year-to-date total return—including price change plus dividends—of about 8.6%). The yield on the 10-year U.S. Treasury note rose 2 basis points to 2.01% (for a year-to-date increase of 12 basis points).
Importance of Investing Internationally
When building a portfolio that includes mutual funds of stocks it is always a good idea to have a mutual fund that buys stocks in international companies to provide some diversification. During this year, these mutual funds have not done as well as mutual funds that invests in US stocks because of a strong US Dollar. So while a strong US Dollar has been good for the US based stocks it has hurt the return for international based stocks. Given the actions by the federal government and the Federal Reserve this will ultimately change which is the focus of this section.
The primary reason given to purchase this type of mutual fund is that most countries outside of the US and the European Union have a faster growth rate. The primary risk with this type of mutual fund relates to currency fluctuations. An optimum ratio of US stock mutual funds to international stock mutual funds has been studied and a portfolio should have more in US stock mutual funds.
As the value of US Dollar changes relative to other currencies the value of international mutual funds will change while US mutual funds will not be impacted. The relative value of the US Dollar to other currencies is a function of the amount of US Dollars in circulation as well as the perception of the US government as a safe haven.
An example to illustrate the impact of the strength of the US Dollar will be the value of the US Dollar relative to the Canadian Dollar and the change in the Canadian Stock Market. In this example, a Canadian Stock Market Index goes up by 10% during a year. Since we live in the US and our currency is the US Dollar the changes has to be converted.
1) If the value of the US Dollar to the Canadian Dollar does not change during the year then the investment should go up by about 10% in your account.
2) If the US Dollar to the Canadian Dollar gets stronger by about 10% then the investment should not change in your account.
3) If the US Dollar to the Canadian Dollar gets weaker by about 10% then the investment should go up by about 20% in your account.
As our national debt climbs by about $1 Trillion each year this means that we are printing $1 Trillion more US Dollars each year. This trend looks to continue for awhile. The question is do investors want to buy more and more of this additional money each year? If they do then the US Dollar strengthens and if they do not then the US Dollar weakens. So right now, investors view the US as a safe haven and the US Dollar is strengthening.
In the future, when our debt level reaches that of European Union countries the US Dollar will weaken. When this happens owning this type of mutual fund will be very, very important. The question is not if it will happen but when will it happen?
Inner Peace
If you can start the day without caffeine - if you can al-ways be cheerful, ignoring aches and pains - if you can resist complaining and boring people with your troubles - if you can eat the same food every day and be grateful for it - if you can understand when your loved ones are too busy to give you any time - if you can take criticism and blame without resentment - if you can conquer tension without medical help - if you can relax without alcohol - if you can sleep without the aid of drugs - then you are probably -the family dog!
Vanguard
The U.S. economy is showing progress as some risks abate—at least for the moment. A deal in Congress to extend a payroll tax cut and federal unemployment benefits means households won't end up with less cash to spend this year, which some analysts had feared could have caused the recovery to falter. And though the housing market remains deeply troubled, home construction is showing signs of life. For the week ended February 17, the S&P 500 Index rose 1.4% to 1,361 (for a year-to-date total return—including price change plus dividends—of about 8.6%). The yield on the 10-year U.S. Treasury note rose 2 basis points to 2.01% (for a year-to-date increase of 12 basis points).
Importance of Investing Internationally
When building a portfolio that includes mutual funds of stocks it is always a good idea to have a mutual fund that buys stocks in international companies to provide some diversification. During this year, these mutual funds have not done as well as mutual funds that invests in US stocks because of a strong US Dollar. So while a strong US Dollar has been good for the US based stocks it has hurt the return for international based stocks. Given the actions by the federal government and the Federal Reserve this will ultimately change which is the focus of this section.
The primary reason given to purchase this type of mutual fund is that most countries outside of the US and the European Union have a faster growth rate. The primary risk with this type of mutual fund relates to currency fluctuations. An optimum ratio of US stock mutual funds to international stock mutual funds has been studied and a portfolio should have more in US stock mutual funds.
As the value of US Dollar changes relative to other currencies the value of international mutual funds will change while US mutual funds will not be impacted. The relative value of the US Dollar to other currencies is a function of the amount of US Dollars in circulation as well as the perception of the US government as a safe haven.
An example to illustrate the impact of the strength of the US Dollar will be the value of the US Dollar relative to the Canadian Dollar and the change in the Canadian Stock Market. In this example, a Canadian Stock Market Index goes up by 10% during a year. Since we live in the US and our currency is the US Dollar the changes has to be converted.
1) If the value of the US Dollar to the Canadian Dollar does not change during the year then the investment should go up by about 10% in your account.
2) If the US Dollar to the Canadian Dollar gets stronger by about 10% then the investment should not change in your account.
3) If the US Dollar to the Canadian Dollar gets weaker by about 10% then the investment should go up by about 20% in your account.
As our national debt climbs by about $1 Trillion each year this means that we are printing $1 Trillion more US Dollars each year. This trend looks to continue for awhile. The question is do investors want to buy more and more of this additional money each year? If they do then the US Dollar strengthens and if they do not then the US Dollar weakens. So right now, investors view the US as a safe haven and the US Dollar is strengthening.
In the future, when our debt level reaches that of European Union countries the US Dollar will weaken. When this happens owning this type of mutual fund will be very, very important. The question is not if it will happen but when will it happen?
Inner Peace
If you can start the day without caffeine - if you can al-ways be cheerful, ignoring aches and pains - if you can resist complaining and boring people with your troubles - if you can eat the same food every day and be grateful for it - if you can understand when your loved ones are too busy to give you any time - if you can take criticism and blame without resentment - if you can conquer tension without medical help - if you can relax without alcohol - if you can sleep without the aid of drugs - then you are probably -the family dog!
Saturday, February 11, 2012
Watching Money Flow
Next week is Valentine's Day so make sure you take care of your Valentine.
Vanguard Weekly Recap
In a light week for economic news, the U.S. trade deficit increased and U.S. consumer borrowing rose. The trend of fewer people applying for jobless benefits continued, a sign that hiring is picking up. For the week ended February 10, the S&P 500 Index declined 0.2% to 1,343 (for a year-to-date total return—including price change plus dividends—of about +7.0%). The yield on the 10-year U.S. Treasury note fell 1 basis point to 1.96% (for a year-to-date increase of 7 basis points).
Watching Money Flow
Last week I reported on something that I follow called the ARMS index. Another thing that I follow is the money flow in and out of mutual funds. I find this information each week in Barron's.
Equity Funds averaged $5.4 Billion inflow of money over a 4 week period. Money Market Funds averaged $11.5 Billion outflow of money over a 4 week period. Municipal Bond Funds averaged $1.2 Billion inflow of money over a 4 week period. Taxable Bond Funds averaged $7.7 Billion inflow of money over a 4 week period. So for the last month money has been leaving money market funds and ha3 been put to work buying stocks and bonds, driving the stock market indexes higher.
When we look at the change from the previous 4 week average we get a feel for momentum. Last week the Equity Funds had a huge swing from -$1.0 Billion to $5.4 Billion while Taxable Bond Funds had a big swing from $5.0 Billion inflow to $7.7 Billion inflow. Money Market Funds and Municipal Bond Funds were relatively flat.
So last week, we had a huge increase in money going into Equity Funds while the US Stock Indexes went down slightly, interesting. The drop on Friday was about 0.7%, not much compared to the drops we saw last year. A huge increase in money going into Equity Funds and the US Stock Indexes not going up indicates that the US Stock Indexes have hit a short-term resistance. If the increase in money going into Equity Funds continues this indicates that US Stock Indexes will continue to go up. It should be an interesting year to watch the money flow.
2011 Valentine's Day Spending
According to a National Retail Federation survey of nearly 9,000 consumers, shoppers will spend an average of $116.21 on traditional Valentine’s Day merchandise, such as greeting cards, flowers and candy, this year, up 11% from $103.00 in 2010. 18.1% of consumers say they’ll include online retailers among the venues they’ll shop.
A separate survey of 1,200 online consumers from eBillme, an Internet payment service vendor, and conducted by Javelin Strategy & Research, is more bullish about the web’s role in Valentine’s Day gift-shopping. It says 32% of consumers plan to do their Valentine’s Day shopping online, up from 23% last year.
Jewelry sales are expected to climb, as 17.3% of consumers say they’ll buy jewelry as a Valentine’s Day gift this year, up from 15.5% last year, according to the NRF survey. The NRF says consumer spending on jewelry is expected to reach $3.5 billion, up from $3.0 billion in 2010. Apparel sales also are expected to increase slightly.
Vanguard Weekly Recap
In a light week for economic news, the U.S. trade deficit increased and U.S. consumer borrowing rose. The trend of fewer people applying for jobless benefits continued, a sign that hiring is picking up. For the week ended February 10, the S&P 500 Index declined 0.2% to 1,343 (for a year-to-date total return—including price change plus dividends—of about +7.0%). The yield on the 10-year U.S. Treasury note fell 1 basis point to 1.96% (for a year-to-date increase of 7 basis points).
Watching Money Flow
Last week I reported on something that I follow called the ARMS index. Another thing that I follow is the money flow in and out of mutual funds. I find this information each week in Barron's.
Equity Funds averaged $5.4 Billion inflow of money over a 4 week period. Money Market Funds averaged $11.5 Billion outflow of money over a 4 week period. Municipal Bond Funds averaged $1.2 Billion inflow of money over a 4 week period. Taxable Bond Funds averaged $7.7 Billion inflow of money over a 4 week period. So for the last month money has been leaving money market funds and ha3 been put to work buying stocks and bonds, driving the stock market indexes higher.
When we look at the change from the previous 4 week average we get a feel for momentum. Last week the Equity Funds had a huge swing from -$1.0 Billion to $5.4 Billion while Taxable Bond Funds had a big swing from $5.0 Billion inflow to $7.7 Billion inflow. Money Market Funds and Municipal Bond Funds were relatively flat.
So last week, we had a huge increase in money going into Equity Funds while the US Stock Indexes went down slightly, interesting. The drop on Friday was about 0.7%, not much compared to the drops we saw last year. A huge increase in money going into Equity Funds and the US Stock Indexes not going up indicates that the US Stock Indexes have hit a short-term resistance. If the increase in money going into Equity Funds continues this indicates that US Stock Indexes will continue to go up. It should be an interesting year to watch the money flow.
2011 Valentine's Day Spending
According to a National Retail Federation survey of nearly 9,000 consumers, shoppers will spend an average of $116.21 on traditional Valentine’s Day merchandise, such as greeting cards, flowers and candy, this year, up 11% from $103.00 in 2010. 18.1% of consumers say they’ll include online retailers among the venues they’ll shop.
A separate survey of 1,200 online consumers from eBillme, an Internet payment service vendor, and conducted by Javelin Strategy & Research, is more bullish about the web’s role in Valentine’s Day gift-shopping. It says 32% of consumers plan to do their Valentine’s Day shopping online, up from 23% last year.
Jewelry sales are expected to climb, as 17.3% of consumers say they’ll buy jewelry as a Valentine’s Day gift this year, up from 15.5% last year, according to the NRF survey. The NRF says consumer spending on jewelry is expected to reach $3.5 billion, up from $3.0 billion in 2010. Apparel sales also are expected to increase slightly.
Sunday, February 5, 2012
ARMS Index
Last week was very nice to us investors and I hope that many more nice weeks are ahead. I have been having severe back pain for the last few days and am spending a lot of time sitting down with a heating pad. If anyone has a cure for back pain please let me know. The topic this week is the ARMS index and what it means for us. The weekly recap from Vanguard is the first section. The last section is something that I found titled, The English Language.
Vanguard
The first major employment report for the year suggested that businesses may be willing to hire at greater levels than expected. While the unemployment rate remains historically high and risks abound, there are more signs that the economic recovery is strengthening. Manufacturing activity continues to grow, construction spending is improving, and consumers' expectations for the near term are somewhat positive. For the week ended February 3, the S&P 500 Index rose 2.2% to 1,345 (for a year-to-date total return—including price change plus dividend—of about +7.1%). The yield on the 10-year U.S. Treasury note rose 4 basis points to 1.97% (for a year-to-date increase of 8 basis points).
ARMS Index
The Arms Index, also known as TRIN, an acronym for TRading INdex, was developed in 1967 by Richard Arms. It is a volume-based indicator, which determines market strength and breadth by analyzing the relationship between advancing and declining issues and their respective volume; it is used to measure intra-day market supply and demand, and it can be applied over short or longer time periods.
An index value of 1.0 indicates that the ratio of up volume to down volume is equal to the ratio of advancing issues to the declining issues. The market is said to be in a neutral state when the index equals 1.0, since the up volume is evenly distributed over the advancing issues and the down volume is evenly distributed over the declining issues. Many analysts believe the Arms Index provides a bullish signal when it is below 1.0 and a bearish signal when it is above 1.0; however, the index is also said to be useful as an overbought and oversold indicator.
So why is the ARMS index important? When the ARMS index is above 1 it means that value investing will give better performance to growth investing. Conversely when the index is below 1 it means that growth investing will give better performance than value investing. This is a good reason to have a mutual fund that is a value fund and also to have a mutual fund that is a growth fund.
Last year the ARMS index spent most of the time being slightly above 1. This year the index is spending most of the time below 1. This is a very positive indicator for the US stocks for the near term and that growth mutual funds will give the best performance.
The English Language
Let's face it - English is a crazy language. There is no egg in eggplant, nor ham in hamburger; neither apple nor pine in pineapple. English muffins were not invented in England or French fries in France. Sweetmeats are can-dies while sweetbreads, which aren't sweet, are meat. If we explore its paradoxes, we find that quicksand works slowly, boxing rings are square and a guinea pig is nei-ther from Guinea nor is it a pig.
In addition, why is it that writers write but fingers don't fing, grocers don't groce and hammers don't ham? If the plural of tooth is teeth, why isn't the plural of booth, beeth? One goose, 2 geese. So one moose, 2 meese? One index, 2 indices? Doesn't it seem crazy that you can make amends but not one amend? If you have a bunch of odds and ends and get rid of all but one of them, what do you call it?
How can a slim chance and a fat chance be the same, while a wise man and a wise guy are opposites? You have to marvel at the unique lunacy of a language in which your house can burn up as it burns down, in which you fill in a form by filling it out and in which, an alarm goes off by going on.
English was invented by people, not computers, and it reflects the creativity of the human race, which, of course, is not a race at all. That is why, when the stars are out, they are visible, but when the lights are out, they are invisible.
Vanguard
The first major employment report for the year suggested that businesses may be willing to hire at greater levels than expected. While the unemployment rate remains historically high and risks abound, there are more signs that the economic recovery is strengthening. Manufacturing activity continues to grow, construction spending is improving, and consumers' expectations for the near term are somewhat positive. For the week ended February 3, the S&P 500 Index rose 2.2% to 1,345 (for a year-to-date total return—including price change plus dividend—of about +7.1%). The yield on the 10-year U.S. Treasury note rose 4 basis points to 1.97% (for a year-to-date increase of 8 basis points).
ARMS Index
The Arms Index, also known as TRIN, an acronym for TRading INdex, was developed in 1967 by Richard Arms. It is a volume-based indicator, which determines market strength and breadth by analyzing the relationship between advancing and declining issues and their respective volume; it is used to measure intra-day market supply and demand, and it can be applied over short or longer time periods.
An index value of 1.0 indicates that the ratio of up volume to down volume is equal to the ratio of advancing issues to the declining issues. The market is said to be in a neutral state when the index equals 1.0, since the up volume is evenly distributed over the advancing issues and the down volume is evenly distributed over the declining issues. Many analysts believe the Arms Index provides a bullish signal when it is below 1.0 and a bearish signal when it is above 1.0; however, the index is also said to be useful as an overbought and oversold indicator.
So why is the ARMS index important? When the ARMS index is above 1 it means that value investing will give better performance to growth investing. Conversely when the index is below 1 it means that growth investing will give better performance than value investing. This is a good reason to have a mutual fund that is a value fund and also to have a mutual fund that is a growth fund.
Last year the ARMS index spent most of the time being slightly above 1. This year the index is spending most of the time below 1. This is a very positive indicator for the US stocks for the near term and that growth mutual funds will give the best performance.
The English Language
Let's face it - English is a crazy language. There is no egg in eggplant, nor ham in hamburger; neither apple nor pine in pineapple. English muffins were not invented in England or French fries in France. Sweetmeats are can-dies while sweetbreads, which aren't sweet, are meat. If we explore its paradoxes, we find that quicksand works slowly, boxing rings are square and a guinea pig is nei-ther from Guinea nor is it a pig.
In addition, why is it that writers write but fingers don't fing, grocers don't groce and hammers don't ham? If the plural of tooth is teeth, why isn't the plural of booth, beeth? One goose, 2 geese. So one moose, 2 meese? One index, 2 indices? Doesn't it seem crazy that you can make amends but not one amend? If you have a bunch of odds and ends and get rid of all but one of them, what do you call it?
How can a slim chance and a fat chance be the same, while a wise man and a wise guy are opposites? You have to marvel at the unique lunacy of a language in which your house can burn up as it burns down, in which you fill in a form by filling it out and in which, an alarm goes off by going on.
English was invented by people, not computers, and it reflects the creativity of the human race, which, of course, is not a race at all. That is why, when the stars are out, they are visible, but when the lights are out, they are invisible.
Saturday, January 28, 2012
Federal Reserve
This week the Federal Reserve issued a policy of maintaining low interest rates for another 3 years, until 2015. It is very important to undertand the implications of this policy. The first section is from Vanguard. The last section is titled One of 7 Billion which should get us thinking about the future.
Vanguard
Amid some encouraging signs that the economy continues to grow modestly, Federal Reserve officials gave an unprecedented look at the details of their economic expectations. In a report issued Wednesday, the Fed signaled that it expects growth to remain modest enough to allow short-term interest rates to remain near rock bottom for even longer than it had projected in recent months. For the week ended January 27, the S&P 500 Index rose 0.1% to 1,316 (for a year-to-date total return—including price change plus dividends—of about +4.8%). The yield on the 10-year U.S. Treasury note fell 12 basis points to 1.93% (for a year-to-date increase of 4 basis points).
Implications of the Federal Reserve Actions
The Federal Reserve sets monetary policy for the US so when a policy statement is given it is a very important event. This week the Federal Reserve stated that interest rates would be maintained at this current low level for 3 more years, until 2015. So what are the implications of this policy?
First, this means that interest rates will be less than the rate of inflation. This means that a Certificate of Deposit will not keep up the inflation and relatively it will lose spending power. The better solution is to invest in a high quality mutual fund that invests in corporate bonds.
Second, it means that this is being done to help the housing market and capital equipment that involves a long term loan. The interest rate for mortgage will continue to stay low. The philosophy is that we will only have an economic recovery when the housing market recovers. It also means that now is a good time to purchase a new automobile if you are secure in your job.
Third, this is good for the stock market as stock valuations tend to rise with low interest rates. The reasons are stock buyers like a stable environment and stocks can be bought that yields a higher dividend than bonds. A stock valuation equation is the annual dividend rate divided by the difference between the growth rate and interest rate. An improving economy gives a higher growth rate and with low interest rates this gives higher stock values.
Lastly, it means that the Federal Reserve is projecting that it will take 3 years to fully recover. For an investor with a time horizon of at least 3 years, owning stocks makes good sense. It also suggests that owning stocks could be somewhat choppy for the next 3 years.
ONE OF 7 BILLION
Today, you are one of 7 billion people on Earth. Global population is expected to reach 8 billion by 2025, according to the United Nations. It also has many wondering whether the Earth can support so many people. About half were added just in the past 40 years, and 3 billion more are expected by 2100.
Where Western powers ruled the world in 1920, today the West is aging and dying, and much of the world is on fire with anti-white and anti-Western resentment after 500 years of European domination. In 1920, Western people were nearly one-third of mankind. Today, Western man is down to one-sixth of the world's population, shrinking to one-eighth by 2050, and not even one tenth by century's end.
Global population has swelled in record time since 1987, when it hit 5 billion. At this time, world population is growing at the most rapid pace in history. In 1900, we were at 1.6 billion. In 99 years, we flipped the numbers to 6.1 billion. The world is adding more people in less time but the annual population growth rate is slowing down — from 2.1% in the late 1960s to 1.2% today — reflecting lower birth rates.
In 1999, when we passed the 6 billion mark, the world economy was in overdrive, In October 2011, we grew to 7 billion, in a recession and an economic atmosphere of pessimism. Recessions and depressions slow population growth, especially in developed nations. Currently, growth is highest in poorest countries where health care advances are keeping people alive longer while birth rates are still relatively high. The result is a yawning age gap. The share of the population 65 and older is at 21% in Germany and 23% in Japan. In countries such as Gambia and Senegal, only 2% are in that age group.
As many more people are added in the next century, more will live in cities. Even in developing nations, a growing share of the population lives in urbanized areas, a shift that is leading to denser living conditions and creating more pressure to reduce energy use and build new infrastructure.
Vanguard
Amid some encouraging signs that the economy continues to grow modestly, Federal Reserve officials gave an unprecedented look at the details of their economic expectations. In a report issued Wednesday, the Fed signaled that it expects growth to remain modest enough to allow short-term interest rates to remain near rock bottom for even longer than it had projected in recent months. For the week ended January 27, the S&P 500 Index rose 0.1% to 1,316 (for a year-to-date total return—including price change plus dividends—of about +4.8%). The yield on the 10-year U.S. Treasury note fell 12 basis points to 1.93% (for a year-to-date increase of 4 basis points).
Implications of the Federal Reserve Actions
The Federal Reserve sets monetary policy for the US so when a policy statement is given it is a very important event. This week the Federal Reserve stated that interest rates would be maintained at this current low level for 3 more years, until 2015. So what are the implications of this policy?
First, this means that interest rates will be less than the rate of inflation. This means that a Certificate of Deposit will not keep up the inflation and relatively it will lose spending power. The better solution is to invest in a high quality mutual fund that invests in corporate bonds.
Second, it means that this is being done to help the housing market and capital equipment that involves a long term loan. The interest rate for mortgage will continue to stay low. The philosophy is that we will only have an economic recovery when the housing market recovers. It also means that now is a good time to purchase a new automobile if you are secure in your job.
Third, this is good for the stock market as stock valuations tend to rise with low interest rates. The reasons are stock buyers like a stable environment and stocks can be bought that yields a higher dividend than bonds. A stock valuation equation is the annual dividend rate divided by the difference between the growth rate and interest rate. An improving economy gives a higher growth rate and with low interest rates this gives higher stock values.
Lastly, it means that the Federal Reserve is projecting that it will take 3 years to fully recover. For an investor with a time horizon of at least 3 years, owning stocks makes good sense. It also suggests that owning stocks could be somewhat choppy for the next 3 years.
ONE OF 7 BILLION
Today, you are one of 7 billion people on Earth. Global population is expected to reach 8 billion by 2025, according to the United Nations. It also has many wondering whether the Earth can support so many people. About half were added just in the past 40 years, and 3 billion more are expected by 2100.
Where Western powers ruled the world in 1920, today the West is aging and dying, and much of the world is on fire with anti-white and anti-Western resentment after 500 years of European domination. In 1920, Western people were nearly one-third of mankind. Today, Western man is down to one-sixth of the world's population, shrinking to one-eighth by 2050, and not even one tenth by century's end.
Global population has swelled in record time since 1987, when it hit 5 billion. At this time, world population is growing at the most rapid pace in history. In 1900, we were at 1.6 billion. In 99 years, we flipped the numbers to 6.1 billion. The world is adding more people in less time but the annual population growth rate is slowing down — from 2.1% in the late 1960s to 1.2% today — reflecting lower birth rates.
In 1999, when we passed the 6 billion mark, the world economy was in overdrive, In October 2011, we grew to 7 billion, in a recession and an economic atmosphere of pessimism. Recessions and depressions slow population growth, especially in developed nations. Currently, growth is highest in poorest countries where health care advances are keeping people alive longer while birth rates are still relatively high. The result is a yawning age gap. The share of the population 65 and older is at 21% in Germany and 23% in Japan. In countries such as Gambia and Senegal, only 2% are in that age group.
As many more people are added in the next century, more will live in cities. Even in developing nations, a growing share of the population lives in urbanized areas, a shift that is leading to denser living conditions and creating more pressure to reduce energy use and build new infrastructure.
Sunday, January 22, 2012
Decision Time
2012 is starting off very well for investors and accounts are starting to grow. It was about 6 months ago when we last saw the Dow Jones Industrial Average at this level. This means that it is decision time for investors, more on this later. First is the weekly recap from Vanguard. At the end is something that I found on preparing for retirement.
Vanguard
The economy continues its modest forward pace, without stoking higher inflation. In fact, this week's data show price increases decelerating, easing fears for the moment that the Fed's accommodative monetary policies are sowing the seeds of high inflation down the road. For the week ended January 20, the S&P 500 Index rose 2.0% to 1,315.38 (for a year-to-date total return—including price change plus dividends—of about +4.7%). The yield on the 10-year U.S. Treasury note rose 16 basis points to 2.05% (for a year-to-date increase of 16 basis points).
Decision Time
Since the Dow Jones Industrial Average has approached the previous high from July 2011, this suggests that investors have a decision to make. The decision is to either take some profits at this time or to let it ride. An investor probably has about 1-2 weeks to make this decision as the news of positive earnings report tends to move stocks for about a month.
To make this decision an investor has to answer 1 question. Is the stock market in a trading range or a new leg up? This is a relatively simple question to ask but perhaps difficult to answer as it depends on risk level, time horizon, and perception of the future. If you believe that it is a trading range then you want to take some profits and smile. If an investor believes that it is a new let up then it is time to stay put.
I will be asking some clients this question this week.
Five Things Before You Retire (Tom Lauricella | The Wall Street Journal EG)
1. Start keeping close track of your spending.
During the planning phase for retirement finances, much of the math was based on guesswork. Now is the time to get real.
Start by going back over the past few months of bills and expenses to get a detailed picture of your spending and expenses. Plan on keeping close tabs on a continuing basis, remembering that some spending may be seasonal — such as holiday presents or greens fees for golf.
Budgeting tools, such as Mint.com, will enable you to highlight certain spending that won't continue after retirement, such as commuting costs.
Keep in mind this will be a work in progress even once you stop working. For many people "it's going to take a year or so before you really get the hang of it, knowing what you are spending your time doing, how you are spending your money," says Jonathan Guyton of Cornerstone Wealth Advisors in Minneapolis.
2. Fine-tune your income expectations.
Recent years haven't been kind to savers. A lousy decade for stocks has been compounded by interest rates that are at historically low levels and seem likely to remain low for years.
Unfortunately, 401(k) calculators typically don't rely on current yields when projecting your income during retirement. Instead, they usually rely on historical patterns.
That means some people nearing retirement may be in denial about how much money they can earn from safe investments such as bonds or certificates of deposit, says Lawrence Glazer, a managing partner at Mayflower Advisors in Boston. "You have to be realistic about today's income environment," he says.
3. Start thinking about Social Security.
Central to your income planning will be Social Security benefits. You won't know the exact size of the check until the first one arrives, but the Social Security Administration can provide an estimate that should be relatively close. You can get an estimate at SocialSecurity.gov, on the phone or in person at your local office. Be sure to check if you're due additional benefits if you are widowed or divorced.
All this leads to one of the most important decisions regarding retirement planning: when to start taking Social Security benefits. Delaying benefits means larger checks in the future, but it may require eating into your savings upfront. Sit down with an adviser to do the math.
4. Build a cash reserve.
One thing you want to avoid in retirement: being forced to sell during a steep selloff in the stock or bond markets in order to raise cash to pay bills.
The solution is to keep enough cash on hand that you can sell investments when you are comfortable. Many advisers recommend at least a year's worth of money.
At Evensky & Katz in Coral Gables, Fla., advisers have long recommended that retirees hold two years of money in a separate account. A retiree then cuts himself a "paycheck" once a month which goes into a checking account for day-to-day living.
"In a perfect world, an investor would begin developing the reserve prior to retirement," says Harold Evensky, president of Evensky & Katz.
A dedicated cash reserve is especially important if you are delaying taking Social Security. "The idea is that this is a bridge account that will deplete itself by the time Social Security kicks in," says Mr. Guyton.
5. Get emotionally ready.
Amid the focus on financial planning, don't lose sight of the fact that for most people, retirement is a completely new and different experience that can be challenging on an emotional level.
While many people can't wait to get out of the 9-to-5 grind, there are those for whom a career was more than a job. It was an identity.
"You've got the executive who has worked 24-7... and has always identified his self worth with that paycheck," says Mayflower's Mr. Glazer. "Without that paycheck, he feels a little empty."
Cornerstone's Mr. Guyton urges those approaching retirement to think in terms of "retiring to something" and not "retiring from something."
"If your definition of retirement is framed in terms of what you are leaving, you are setting yourself up for a much more difficult transition emotionally," he says. "Even if it's just some relatively small thing that you are energized about and this is something you get to do right now…you generally do much better."
Vanguard
The economy continues its modest forward pace, without stoking higher inflation. In fact, this week's data show price increases decelerating, easing fears for the moment that the Fed's accommodative monetary policies are sowing the seeds of high inflation down the road. For the week ended January 20, the S&P 500 Index rose 2.0% to 1,315.38 (for a year-to-date total return—including price change plus dividends—of about +4.7%). The yield on the 10-year U.S. Treasury note rose 16 basis points to 2.05% (for a year-to-date increase of 16 basis points).
Decision Time
Since the Dow Jones Industrial Average has approached the previous high from July 2011, this suggests that investors have a decision to make. The decision is to either take some profits at this time or to let it ride. An investor probably has about 1-2 weeks to make this decision as the news of positive earnings report tends to move stocks for about a month.
To make this decision an investor has to answer 1 question. Is the stock market in a trading range or a new leg up? This is a relatively simple question to ask but perhaps difficult to answer as it depends on risk level, time horizon, and perception of the future. If you believe that it is a trading range then you want to take some profits and smile. If an investor believes that it is a new let up then it is time to stay put.
I will be asking some clients this question this week.
Five Things Before You Retire (Tom Lauricella | The Wall Street Journal EG)
1. Start keeping close track of your spending.
During the planning phase for retirement finances, much of the math was based on guesswork. Now is the time to get real.
Start by going back over the past few months of bills and expenses to get a detailed picture of your spending and expenses. Plan on keeping close tabs on a continuing basis, remembering that some spending may be seasonal — such as holiday presents or greens fees for golf.
Budgeting tools, such as Mint.com, will enable you to highlight certain spending that won't continue after retirement, such as commuting costs.
Keep in mind this will be a work in progress even once you stop working. For many people "it's going to take a year or so before you really get the hang of it, knowing what you are spending your time doing, how you are spending your money," says Jonathan Guyton of Cornerstone Wealth Advisors in Minneapolis.
2. Fine-tune your income expectations.
Recent years haven't been kind to savers. A lousy decade for stocks has been compounded by interest rates that are at historically low levels and seem likely to remain low for years.
Unfortunately, 401(k) calculators typically don't rely on current yields when projecting your income during retirement. Instead, they usually rely on historical patterns.
That means some people nearing retirement may be in denial about how much money they can earn from safe investments such as bonds or certificates of deposit, says Lawrence Glazer, a managing partner at Mayflower Advisors in Boston. "You have to be realistic about today's income environment," he says.
3. Start thinking about Social Security.
Central to your income planning will be Social Security benefits. You won't know the exact size of the check until the first one arrives, but the Social Security Administration can provide an estimate that should be relatively close. You can get an estimate at SocialSecurity.gov, on the phone or in person at your local office. Be sure to check if you're due additional benefits if you are widowed or divorced.
All this leads to one of the most important decisions regarding retirement planning: when to start taking Social Security benefits. Delaying benefits means larger checks in the future, but it may require eating into your savings upfront. Sit down with an adviser to do the math.
4. Build a cash reserve.
One thing you want to avoid in retirement: being forced to sell during a steep selloff in the stock or bond markets in order to raise cash to pay bills.
The solution is to keep enough cash on hand that you can sell investments when you are comfortable. Many advisers recommend at least a year's worth of money.
At Evensky & Katz in Coral Gables, Fla., advisers have long recommended that retirees hold two years of money in a separate account. A retiree then cuts himself a "paycheck" once a month which goes into a checking account for day-to-day living.
"In a perfect world, an investor would begin developing the reserve prior to retirement," says Harold Evensky, president of Evensky & Katz.
A dedicated cash reserve is especially important if you are delaying taking Social Security. "The idea is that this is a bridge account that will deplete itself by the time Social Security kicks in," says Mr. Guyton.
5. Get emotionally ready.
Amid the focus on financial planning, don't lose sight of the fact that for most people, retirement is a completely new and different experience that can be challenging on an emotional level.
While many people can't wait to get out of the 9-to-5 grind, there are those for whom a career was more than a job. It was an identity.
"You've got the executive who has worked 24-7... and has always identified his self worth with that paycheck," says Mayflower's Mr. Glazer. "Without that paycheck, he feels a little empty."
Cornerstone's Mr. Guyton urges those approaching retirement to think in terms of "retiring to something" and not "retiring from something."
"If your definition of retirement is framed in terms of what you are leaving, you are setting yourself up for a much more difficult transition emotionally," he says. "Even if it's just some relatively small thing that you are energized about and this is something you get to do right now…you generally do much better."
Sunday, January 15, 2012
Stocks and Bonds
The Monday January 9, 2012 Wall Street Journal had a article titled "Stocks or Bonds? The Pros Say..." This article gives great info on the historical performance and future of the S&P 500 Stock Index and Long Term US Treasury Bonds. I will add my comments on why an investor would own US Stocks or long term US Treasury Bonds. At the end is a short story titled The Tennessee Preacher that seems appropriate for this year.
Vanguard
Sluggish retail sales data were announced this week following a report that consumer borrowing increased in November by the highest amount in a decade. This suggests that while spending isn't particularly strong, consumers are nonetheless continuing to spend and provide moderate support for the overall economy. For the week ended January 13, the S&P 500 Index rose 0.9% to 1,289.09 (for a year-to-date total return—including price change plus dividends—of about 2.6%). The yield on the 10-year U.S. Treasury note fell 9 basis points to 1.89% (for no change year to date).
Future of US Stocks versus US Treasury Bonds
Here is the information from the WSJ article:
1) Over the past 30 years the S&P 500 index had an average annual return of 11.03% and long term Treasuries had an average annual return of 10.98%.
2) From 1926 through 2011 the S&P 500 index had an average annual return of 9.8% and long term Treasuries had an average annual return of 5.7%.
3) From 1926 through 2011 the S&P 500 index was 6-7% higher than the inflation rate and long term Treasuries was 2-3% higher than the inflation rate.
4) From 1956 through 1981 the S&P 500 index had an average annual return of about 10% and long term Treasuries had an average annual return of about 2.5%.
If we compare these time periods we see that the S&P 500 index was more consistent than long term Treasury Bonds. During the last 30 years, long term Treasury Bonds returned about twice the return since 1926 and about 4 times the return during 1956 to 1981.
So why did this happen? About 30 years ago, during a period of stagflation, the long term Treasury interest rate was about 18%. Leading up to 30 years ago, long term Treasury rates rose significantly which hurt performance. During the last 30 year period was an unprecedented drop in interest rates. It is interesting that the last time long term Treasury Bond rates were this low was about 60 years ago.
So what does this mean for the future of the S&P 500 index and long term US Treasury Bond rates? The data suggests that the S&P 500 index will continue to increase. Since long term US Treasury Bond rates are at a 60 year low it means that these rates will go up which will hurt performance.
So why would an investor own a mutual fund of US Stocks? The answer is higher growth with some volatility. So why own a mutual fund that invests in long term US Treasury bonds. The answer is that I would not instead I would ownn other types of bonds. A blend of US Stocks and bonds does give a blend of growth and more consistency.
The Tennessee Preacher
An old Tennessee country preacher had a teenage son, and it was time the boy should give some thought to choosing a profession. Like many young men his age, the boy didn't really know what he wanted to do, and he didn't seem too concerned about it. One day, while the boy was at school, his father tried an experiment. He went into the boy's room and placed four objects on his son’s desk.
1. A Bible.
2. A silver dollar.
3. A bottle of Jack Daniels whisky.
4. A Playboy magazine.
“I'll hide behind the door,” the old preacher said to him-self. “When he comes home from school, I'll see which object he picks up. If it's the Bible, he's going to be a preacher like me, and what a blessing that would be! If he picks up the silver dollar, he's going to be a businessman, and that would be okay, too. However, if he picks up the bottle, he's going to be a no-good drunken bum, and Lord, what a shame that would be. And worst of all if he picks up that magazine he's going to be a skirt-chasing womanizer.”
The old preacher waited anxiously, and soon heard his son's footsteps as he entered the house and headed for his room. The boy tossed his books on the bed, and as he turned to leave the room, he spotted the objects on his desk. With curiosity in his eyes, he walked over to inspect them. Finally, he picked up the Bible and placed it under his arm. He picked up the silver dollar and dropped it into his pocket. He uncorked the whiskey bottle and took a drink, while he admired the centerfold in Playboy.
“Lord have mercy,” the old preacher whispered disgusted-ly. “He's gonna run for Congress.”
Vanguard
Sluggish retail sales data were announced this week following a report that consumer borrowing increased in November by the highest amount in a decade. This suggests that while spending isn't particularly strong, consumers are nonetheless continuing to spend and provide moderate support for the overall economy. For the week ended January 13, the S&P 500 Index rose 0.9% to 1,289.09 (for a year-to-date total return—including price change plus dividends—of about 2.6%). The yield on the 10-year U.S. Treasury note fell 9 basis points to 1.89% (for no change year to date).
Future of US Stocks versus US Treasury Bonds
Here is the information from the WSJ article:
1) Over the past 30 years the S&P 500 index had an average annual return of 11.03% and long term Treasuries had an average annual return of 10.98%.
2) From 1926 through 2011 the S&P 500 index had an average annual return of 9.8% and long term Treasuries had an average annual return of 5.7%.
3) From 1926 through 2011 the S&P 500 index was 6-7% higher than the inflation rate and long term Treasuries was 2-3% higher than the inflation rate.
4) From 1956 through 1981 the S&P 500 index had an average annual return of about 10% and long term Treasuries had an average annual return of about 2.5%.
If we compare these time periods we see that the S&P 500 index was more consistent than long term Treasury Bonds. During the last 30 years, long term Treasury Bonds returned about twice the return since 1926 and about 4 times the return during 1956 to 1981.
So why did this happen? About 30 years ago, during a period of stagflation, the long term Treasury interest rate was about 18%. Leading up to 30 years ago, long term Treasury rates rose significantly which hurt performance. During the last 30 year period was an unprecedented drop in interest rates. It is interesting that the last time long term Treasury Bond rates were this low was about 60 years ago.
So what does this mean for the future of the S&P 500 index and long term US Treasury Bond rates? The data suggests that the S&P 500 index will continue to increase. Since long term US Treasury Bond rates are at a 60 year low it means that these rates will go up which will hurt performance.
So why would an investor own a mutual fund of US Stocks? The answer is higher growth with some volatility. So why own a mutual fund that invests in long term US Treasury bonds. The answer is that I would not instead I would ownn other types of bonds. A blend of US Stocks and bonds does give a blend of growth and more consistency.
The Tennessee Preacher
An old Tennessee country preacher had a teenage son, and it was time the boy should give some thought to choosing a profession. Like many young men his age, the boy didn't really know what he wanted to do, and he didn't seem too concerned about it. One day, while the boy was at school, his father tried an experiment. He went into the boy's room and placed four objects on his son’s desk.
1. A Bible.
2. A silver dollar.
3. A bottle of Jack Daniels whisky.
4. A Playboy magazine.
“I'll hide behind the door,” the old preacher said to him-self. “When he comes home from school, I'll see which object he picks up. If it's the Bible, he's going to be a preacher like me, and what a blessing that would be! If he picks up the silver dollar, he's going to be a businessman, and that would be okay, too. However, if he picks up the bottle, he's going to be a no-good drunken bum, and Lord, what a shame that would be. And worst of all if he picks up that magazine he's going to be a skirt-chasing womanizer.”
The old preacher waited anxiously, and soon heard his son's footsteps as he entered the house and headed for his room. The boy tossed his books on the bed, and as he turned to leave the room, he spotted the objects on his desk. With curiosity in his eyes, he walked over to inspect them. Finally, he picked up the Bible and placed it under his arm. He picked up the silver dollar and dropped it into his pocket. He uncorked the whiskey bottle and took a drink, while he admired the centerfold in Playboy.
“Lord have mercy,” the old preacher whispered disgusted-ly. “He's gonna run for Congress.”
Sunday, January 8, 2012
2012
The first week of the year is behind us and the initial economic indications look pretty good. The topic is the investing game plan for 2012 and the reasoning behind the decision. The first section is the weekly recap from Vanguard. The last section is titled Watches which is an interesting story about an entrepreneur.
Vanguard
The U.S. economy kicked off 2012 with encouraging employment numbers resulting in the lowest unemployment rate since February 2009. Combined with economic reports that beat analysts' expectations in the areas of construction spending, manufacturing, and factory orders, the first week of 2012 showed signs of hope for the long-struggling economy. For the week ended January 6, the S&P 500 Index rose 1.6% to 1,278 while the yield on the 10-year U.S. Treasury note rose 9 basis points to 1.98%.
2012 Investing Game Plan
We know that the US deficit will continue to grow which means that spending on entitlements has to go down in the future. This means that Social Security and Medicare benefits are going to come under pressure in the future. It is prudent for everyone who has the ability to continue to prepare for the future and contribute to a retirement plan.
The growth rate of the US Economy has returned back to the level of April 2011 before the earthquake and tsunami that hit Japan and tornadoes that hit Alabama, Missouri, and other parts of the country. Because of this, I am looking to adjust accounts back to normal when US Stock indexes reach this April 2011 level.
Many smart people have given their 2012 forecast with a diversity in predictions. I am not smart enough to make an accurate prediction. The only thing that I am sure of is that each forecast is wrong the question is how far wrong? What we know is the US government will continue with a fiscal policy that is pro-growth and will continue to have an annual deficit of about $1 Trillion. The Federal Reserve will do everything they can to get the economy growing and interest rates will stay low. The Chinese government has agreed to allow their currency, Yuan RMB, to appreciate by 4% during the year which will help US manufacturing and increases inflation. All of this means that we have a presidential election year and the Obama administration is doing everything to improve the economy and get re-elected.
With an improving economy, low interest rate, improving housing market, pro-growth fiscal policy, pro-growth monetary policy, improving automobile market, improving employment rate, and positive consumer confidence one would think that the US Stock market would be going up, interest rates would be going up, commodity prices would be going up, and the news would be happy. The anvil on this helium filled balloon of good economic news is the European crisis and a concern about slower growth in China. If you can predict when the European crisis will get better then you can predict when the US Stock market goes up, interest rates go up, and commodity prices go up.
For a long term investor, take advantage of the situation and buy at these low US Stock prices and make some larger purchases at these low interest rates. Enjoy the lower cost of natural gas, gas, and oil. For a short term investor, take advantage of higher US Stock prices to take profits. The overall strategy is to use an Investment Cycle strategy to determine when to make investment changes.
Watches
If you were in the market for a watch in 1880, would you know where to get one? You would probably go to a store, right? Well, of course, you could do that, but if you wanted one that was cheaper and better than most of the store watches, you went to the local train station! Sound a bit funny? For about 500 towns across the northern United States, that's where the best watches were found.
Why were the best watches found at the train station? The railroad company wasn't selling the watches. The telegraph operators sold them. Usually the telegraph op-erator was located in the railroad station because the tele-graph lines followed the railroad tracks from town to town. The rail line had already secured the shortest dis-tance between towns and the right-of-ways.
Most of the station agents were also skilled telegraph op-erators as that was the primary way they communicated with the railroad. They would know when trains left the previous station and when they were due at their next station. In fact, for a period of nine years the telegraph operators sold more watches than all of the retail stores combined.
A telegraph operator named Richard arranged all this. He was on duty in the North Redwood, Minnesota train station when a load of watches arrived from the East. It was a huge crate of pocket watches. No one came to claim them.
Richard sent a telegram to the manufacturer and asked them what they wanted to do with the watches. The manufacturer didn't want to pay for the return freight, so they wired Richard to see if he could sell them. Richard sent a wire to every agent in the system asking them if they wanted a cheap, but good, pocket watch. He sold the entire case in less than two days and at a handsome profit.
That started it all. Richard ordered more watches from the watch company and encouraged the telegraph opera-tors to set up a display case in the station offering high quality watches for a low price to all the railroad passen-gers. It worked! It didn't take long for the word to spread and, before long, people, other than travelers, came to the train station to buy their watches.
Richard became so busy that he had to hire a professional watchmaker to help him with the orders. That person was Alvah. And the rest, as they say, is history.
Their business took off and they expanded into many other lines of merchandise. Richard and Alvah left the train station and moved their company to Chicago -- and it's still there. It’s a little known fact that for a while in the 1880's, the biggest watch retailers in the country were train stations.
It all started with a telegraph operator - Richard Sears and his partner - Alvah Roebuck! Sears & Roebuck Co.
Vanguard
The U.S. economy kicked off 2012 with encouraging employment numbers resulting in the lowest unemployment rate since February 2009. Combined with economic reports that beat analysts' expectations in the areas of construction spending, manufacturing, and factory orders, the first week of 2012 showed signs of hope for the long-struggling economy. For the week ended January 6, the S&P 500 Index rose 1.6% to 1,278 while the yield on the 10-year U.S. Treasury note rose 9 basis points to 1.98%.
2012 Investing Game Plan
We know that the US deficit will continue to grow which means that spending on entitlements has to go down in the future. This means that Social Security and Medicare benefits are going to come under pressure in the future. It is prudent for everyone who has the ability to continue to prepare for the future and contribute to a retirement plan.
The growth rate of the US Economy has returned back to the level of April 2011 before the earthquake and tsunami that hit Japan and tornadoes that hit Alabama, Missouri, and other parts of the country. Because of this, I am looking to adjust accounts back to normal when US Stock indexes reach this April 2011 level.
Many smart people have given their 2012 forecast with a diversity in predictions. I am not smart enough to make an accurate prediction. The only thing that I am sure of is that each forecast is wrong the question is how far wrong? What we know is the US government will continue with a fiscal policy that is pro-growth and will continue to have an annual deficit of about $1 Trillion. The Federal Reserve will do everything they can to get the economy growing and interest rates will stay low. The Chinese government has agreed to allow their currency, Yuan RMB, to appreciate by 4% during the year which will help US manufacturing and increases inflation. All of this means that we have a presidential election year and the Obama administration is doing everything to improve the economy and get re-elected.
With an improving economy, low interest rate, improving housing market, pro-growth fiscal policy, pro-growth monetary policy, improving automobile market, improving employment rate, and positive consumer confidence one would think that the US Stock market would be going up, interest rates would be going up, commodity prices would be going up, and the news would be happy. The anvil on this helium filled balloon of good economic news is the European crisis and a concern about slower growth in China. If you can predict when the European crisis will get better then you can predict when the US Stock market goes up, interest rates go up, and commodity prices go up.
For a long term investor, take advantage of the situation and buy at these low US Stock prices and make some larger purchases at these low interest rates. Enjoy the lower cost of natural gas, gas, and oil. For a short term investor, take advantage of higher US Stock prices to take profits. The overall strategy is to use an Investment Cycle strategy to determine when to make investment changes.
Watches
If you were in the market for a watch in 1880, would you know where to get one? You would probably go to a store, right? Well, of course, you could do that, but if you wanted one that was cheaper and better than most of the store watches, you went to the local train station! Sound a bit funny? For about 500 towns across the northern United States, that's where the best watches were found.
Why were the best watches found at the train station? The railroad company wasn't selling the watches. The telegraph operators sold them. Usually the telegraph op-erator was located in the railroad station because the tele-graph lines followed the railroad tracks from town to town. The rail line had already secured the shortest dis-tance between towns and the right-of-ways.
Most of the station agents were also skilled telegraph op-erators as that was the primary way they communicated with the railroad. They would know when trains left the previous station and when they were due at their next station. In fact, for a period of nine years the telegraph operators sold more watches than all of the retail stores combined.
A telegraph operator named Richard arranged all this. He was on duty in the North Redwood, Minnesota train station when a load of watches arrived from the East. It was a huge crate of pocket watches. No one came to claim them.
Richard sent a telegram to the manufacturer and asked them what they wanted to do with the watches. The manufacturer didn't want to pay for the return freight, so they wired Richard to see if he could sell them. Richard sent a wire to every agent in the system asking them if they wanted a cheap, but good, pocket watch. He sold the entire case in less than two days and at a handsome profit.
That started it all. Richard ordered more watches from the watch company and encouraged the telegraph opera-tors to set up a display case in the station offering high quality watches for a low price to all the railroad passen-gers. It worked! It didn't take long for the word to spread and, before long, people, other than travelers, came to the train station to buy their watches.
Richard became so busy that he had to hire a professional watchmaker to help him with the orders. That person was Alvah. And the rest, as they say, is history.
Their business took off and they expanded into many other lines of merchandise. Richard and Alvah left the train station and moved their company to Chicago -- and it's still there. It’s a little known fact that for a while in the 1880's, the biggest watch retailers in the country were train stations.
It all started with a telegraph operator - Richard Sears and his partner - Alvah Roebuck! Sears & Roebuck Co.
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