Libya and Investing

This week Libya was the top economic news story and the perceived impact on our economy. The news media spread fear about higher prices and a slowing economy. While it is good for traders, it really is not significant for a longer term investor. In honor of President's Day, the last section is on 5 memorable Presidents.

Vanguard

The U.S. economy grew 2.8% in the fourth quarter, the sixth straight quarterly increase, though the pace was more modest than an earlier estimate. Less spending by fiscally strapped state and local governments was one reason for the downward revision. Consumers also spent less than initially thought. For the week ended February 25, the S&P 500 Index fell 1.7% to 1,320 (for a year-to-date total return—including price change plus dividends—of about 5.3%). The yield of the 10-year U.S. Treasury note fell 17 basis points to 3.42% (for a year-to-date increase of 12 basis points).

Libya and Investing

First, I want to commend all of my clents for keeping their cool this week with all of the fear being spread by the media. I did not contact any clients because I did not agree with the gloom and doom and the volatility index indicated that this was not a significant investing event. This is a story that will fade and eventually the good news of an improving economy will prevail. If you are a trader this is a great opportunity to buy and sell stocks, if you own mutual funds this created no opportunity at all, let me explain.

When a mutual fund is bought or sold it is done at the end of the day. So when bad news comes and the stock market drops the buyer or seller get's the price at the end of the day. As good news comes and the stock market goes up the buyer or seller get's the price at the end of the day. If I would have sold the bad news and bought on the good news as an investor in mutual funds the end result would have been added cost with no benefit to you.

The bond centric and commodity centric mutual funds did well this week. These funds are owned to provide balance and stability during a crazy week. The bottom line is that an investor in mutual funds should maintain some balance and change on significant longer term events.

Information on Five Memorable Presidents

1. President John F. Kennedy — Famous for being the youngest president elected at that time and first Catholic president. He said the famous quote, “Ask not what your country can do for you but what you can do for your country.” He was the 4th president to be assassinated in office, shot in the head during a parade in Dallas, Texas. John F. Kennedy was a Democrat.
2. President Dwight D. Eisenhower — Famous for concentrated on maintaining world peace. He watched with pleasure the development of his “atoms for peace” program — the loan of American uranium to “have not” nations for peaceful purposes.
3. President Teddy Roosevelt — Famous for: With the assassination of President McKinley, Theodore Roosevelt, not quite 43, became the youngest President in the Nation’s history. He brought new excitement and power to the Presidency, as he vigorously led Congress and the American public toward progressive reforms and a strong foreign policy. He won the Nobel Peace Prize for mediating the Russo-Japanese War, reached a Gentleman’s Agreement on immigration with Japan, and sent the Great White Fleet on a goodwill tour of the world.
4. President Franklin D. Roosevelt — Famous for: He undertook immediate actions to initiate his New Deal. To halt depositor panics, he closed the banks temporarily. Then he worked with a special session of Congress during the first “100 days” to pass recovery legislation which set up alphabet agencies such as the AAA (Agricultural Adjustment Administration) to support farm prices and the CCC (Civilian Conservation Corps) to employ young men.
5. President Herbert Hoover — Famous for: Herbert Clark Hoover: Graduated Stanford University (1895). Secretary of Commerce under Harding, Secretary of Commerce under Coolidge. The New York Stock Market crashed on October 29, 1929, marking the beginning of a severe economic depression that dominated the Hoover presidency. The School of Engineering and Applied Science of Columbia University in 1964, Herbert Hoover and Thomas Edison were named the two greatest engineers in U. S. History. He was the youngest member of Stanford University’s first graduating class. During their first three years in the White House, the Hoovers dined alone only three times, each time on their wedding anniversary. Hoover was the first president to donate his salary to charity. One of the most honored presidents, Hoover received 84 honourary degrees, 78 medals and awards, and the keys to dozens of cities.