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
Sunday, April 29, 2012
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.
Subscribe to:
Posts (Atom)