Pat Webb - Phase 2 Advisors
 
Don't Be Fooled By Fickle Markets
Weekly Update - December 5, 2011
In This Issue
Performance
Headlines
Recipe
Golf Tip
Health Tip
Green Fact
From the worst Thanksgiving week since 1932 [1], to the best weekly gain since 2009, last week illustrated how fickle the stock market can be. The Dow Jones Industrial Average finished up 7% for the week, bouncing back from a 5% loss the previous week on news about... are you ready for it... positive developments in Europe. Basically, several central banks made dollar financing cheaper through swap arrangements, and finance ministers took steps to expand the European Financial Stability Facility. [2] Just as bad news from Europe pushed markets down during Thanksgiving week, good news from Europe pulled markets back up last week. At this point, it should be clear to everyone that we are dealing with highly Europe-charged investor sentiment right now. 

 

So does last week's rally mean we're out of the woods and the bulls are back on top? It's possible, but we don't recommend counting on it. While some analysts are expecting stocks to maintain their momentum on the "Santa Clause effect" (Stocks have risen in December nearly four out of five times since 1945, according to S&P Capital IQ, and have risen almost 2% in December after dropping in November - as they did last month), [3] most understand that Europe is still a wild card.

 

When we see encouraging news and market rallies, it is easy to become excessively positive when we should actually be cautiously optimistic. In the same manner, when we see bad news and steep declines, it is easy to become excessively negative when we should actually be moderately cautious. What is our point? In times of uncertainty and volatility, it is particularly critical to stick to a long-term investment strategy that aligns with your personal goals and risk tolerance. We encourage you to avoid letting short-term market moves and flashy headlines influence your investment decisions. If you have any questions about whether your current financial plan is still right for you, please feel free to reach out to us. We are always here to help guide you through turbulent times.

 

ECONOMIC CALENDAR:  

Monday - Factory Orders, ISM Non-Manufacturing Index  

Tuesday - Bank of Canada Announcement  

Wednesday - EIA Petroleum Status Report, Consumer Credit

Thursday - BOE Announcement, ECB Announcement, Jobless Claims, Wholesale Trade

Friday -International Trade, Consumer Sentiment 

 



Performance


12_05_11 Chart
  

 Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. 

Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not available. 

 

Headlines

It's hard to believe it's already been 10 years since Enron filed for bankruptcy on December 2, 2001. At the time the largest bankruptcy in U.S. history - the once high-flying energy company cemented its reputation as the very symbol of corporate fraud. [4]

 

The unemployment rate fell by 0.4 percentage points to 8.6% in November, and nonfarm payroll employment rose by 120,000, the U.S. Bureau of Labor Statistics reported Friday. Employment continued to trend up in retail trade, leisure and hospitality, professional and business services, and health care. Government employment continued to trend down. [5]

 

Treasury Secretary Timothy F. Geithner will head to Europe next week to meet with French President Nicolas Sarkozy, new Italian leader Mario Monti, and other key government officials to discuss their efforts to resolve the debt crisis. Geithner, who has been urging European leaders to take more forceful action, will travel there for three days beginning Tuesday "for discussions with his counterparts on their efforts to reinforce the institutions in the Euro area," the Treasury Department said Friday. [6]

 

The coming year-end spending spree after so much debate over budget deficits shows just how hard it is to stem the government's flow of red ink. Lawmakers are poised to spend $120 billion or so to renew a Social Security tax cut that averaged just under $1,000 per household this year. They're ready to commit up to $50 billion more to continue unemployment benefits to people out of work for more than half a year. [7]

 



Quote of the Week

"We are what we repeatedly do. Excellence, then, is not an act but a habit." 

- Aristotle 

Recipe of the Week

Eggnog Cookies


12_05_11 Recipe


Ingredients:

1 cup margarine

1 cup white sugar

1 egg

1 cup eggnog

3 1/4 cups all-purpose flour

1 teaspoon baking powder

1 teaspoon baking soda

1/2 teaspoon salt

1 1/2 cups confectioners' sugar

3 tablespoons eggnog

 

Directions:

  1. Preheat oven to 350 degrees F (175 degrees C). Grease cookie sheets.
  2. In a medium bowl, cream together the margarine and white sugar until smooth. Stir in the egg and 1 cup eggnog. Combine the flour, baking powder, baking soda, and salt; stir into the sugar mixture so it is well blended. Drop by rounded spoonfuls onto the prepared cookie sheets. 
  3. Bake for 8 to 10 minutes in the preheated oven. Allow cookies to cool on baking sheet for 5 minutes before removing to a wire rack to cool completely.
  4. To prepare the icing, put the confectioners' sugar into a small bowl. Stir in the remaining eggnog one tablespoon at a time until the desired consistency is reached. Spread onto cooled cookies and let dry before serving.


Golf Tip

Cool Off 

You will be angry and frustrated after a bad shot. It's only natural. The key is to give yourself some time to cool off before you hit your next shot in order to avoid turning one bad shot into two or three. Before you hit again, ask your playing partner to hit his shot first, and take an extra practice swing or two before playing your next shot.


Healthy Lifestyle

Steam Your Broccoli

 

Italian researchers recently discovered that steaming broccoli increases its concentration of glucosinolates (compounds found to fight cancer) by 30 percent. Boiling actually lowers the levels. [8]


Green Living

Stop the Junk Mail


Each year, 100 million trees are cut down and turned into junk mail, with Americans receiving a total of 400 million tons of it every year. Earthworks Group, an environmental consulting firm, said cutting out junk mail is one of the most effective things people can do to reduce pollution. For a $15 one-time fee, Green Dimes will send you a junk-mail opt-out kit that will remove your name from mailing lists for junk mail and catalogs. They then monitor the lists to make sure your names stay off of them, potentially reducing your junk mail by 90%. Green Dimes also plants 10 trees for each kit sold. [9]



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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.    

 

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

 

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia. 

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Google Finance is the source for any reference to the performance of an index between two specific periods.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information. 

 

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[1] http://www.cnbc.com/id/45435459 


[3] http://blogs.smartmoney.com/advice/2011/12/02/record-week-for-stocks-time-to-take-gains/?mod=rss_&link=SM_home_blogsum   

[4] http://www.usatoday.com/money/companies/management/story/2011-12-03/enron-10-years-later/51592092/1 

[5] http://www.bls.gov/news.release/empsit.nr0.htm 

 

[6] http://latimesblogs.latimes.com/money_co/2011/12/timothy-geithner-nicolas-sarkozy.html 

 

[8] http://www.msnbc.msn.com/id/23727899/ns/health-health_care/t/quick-tips-longer-healthier-life/#.TtzjTs2ZgYZ 



Pat Webb
Pat Webb - Phase 2 Advisors
8100 Turman Ct
Fort Collins, CO 80525
970-776-3306
patwebb@phase2adv.com
http://www.phase2adv.com