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Market Commentary
Economic Updates
Recent News |
Weekly Commentary
November 2, 2009
The
Markets
Have we solved the problems in our
economy or just postponed them?
Last week, the government announced
that third-quarter GDP grew a solid 3.5%. That was quite a relief coming off
four consecutive quarters of negative growth. Gains in the auto and home
building sectors led the charge. Those two sectors in particular benefited from
federal stimulus programs and without the stimulus, "Real GDP would have risen
little, if at all, this past quarter," according to Christina Romer,
president of the White House Council of Economic Advisers.
Proponents of stimulus spending say
it's doing exactly what it should do - it's helping the economy grow. Critics
say we're just delaying another inevitable deep economic adjustment and it's
better to take our medicine now than suffer death by a thousand cuts.
The stock market seems confused
lately as to which strategy - more stimulus or the end of stimulus - is better.
Last week, for example, the Dow Jones Industrial Average experienced three
triple-digit declines and one triple-digit advance as investors vacillated
between a positive and negative outlook for the economy. This volatility may
suggest that after a substantial rise in the markets since early March,
investors are pausing to reflect on where we go from here.
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Data as of 10/30/09
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1-Week
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Y-T-D
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1-Year
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3-Year
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5-Year
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10-Year
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Standard &
Poor's 500 (Domestic Stocks)
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-4.0%
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14.7%
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7.0%
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-9.1%
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-1.7%
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-2.6%
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DJ Global ex
US (Foreign Stocks)
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-4.4
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33.5
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32.8
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-5.2
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4.6
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1.4
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10-year Treasury
Note (Yield Only)
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3.4
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N/A
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3.9
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4.7
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4.1
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6.1
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Gold (per
ounce)
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-2.0
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19.6
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37.7
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19.6
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19.4
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13.6
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DJ-UBS
Commodity Index
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-4.0
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12.5
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0.5
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-7.6
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-3.0
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4.0
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DJ Equity All
REIT TR Index
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-3.4
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12.1
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6.9
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-15.2
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-0.7
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9.5
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Notes: S&P
500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested
dividends (gold does not pay a dividend) and the three-, five-, and 10-year
returns are annualized; the DJ Equity All REIT TR Index does include reinvested
dividends and the three-, five-, and 10-year returns are annualized; and the
10-year Treasury Note is simply the yield at the close of the day on each of
the historical time periods.
Sources: Yahoo!
Finance, Barron's, djindexes.com, London Bullion Market Association.
Past performance
is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. N/A means not applicable or not available.
THE UPSIDE TO THE
RECESSION OF THE PAST TWO YEARS is
that it may have unleashed a new wave of innovation and corporate growth that
otherwise would have been buried in better economic times. When times are
tough, companies are forced to work smarter, be more creative, and jettison old
methods of business that are no longer working. The net result is a changing of
the guard in the business world as those companies that are unable to make the
switch get passed by their nimbler competitors.
A study
by management consulting firm Bain & Company showed that during the 1991-92
recession, there was a significant re-ordering of the pecking order of companies
in a wide variety of fields. Specifically, companies that were in the bottom
quartile in their industry jumped to the top quartile of their industry at
twice the rate during recessionary times as compared to non-recessionary times,
according to the study as reported in The
Economist. Other studies have reached similar conclusions that recessions
bring out the best - and the worst - in companies.
From an
investment standpoint, this suggests that the winners coming out of this
recession may be quite different from those who went into it as winners. This
"changing of the guard" may create new investment opportunities and we are
diligently doing our best to find the winners from among the wreckage.
Weekly
Focus - Think About It
"There
is no comparison between that which is lost by not succeeding and that lost by
not trying."
-- Francis
Bacon, Sr.
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Warm Regards,
Jim Forcella, CFP®, CFS
LPL Branch Manager
LPL Investment Adviser Representative
CA Insurance License #0635256
P.S. - Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.
Closing Reminders - Should your personal or financial situation change (i.e. Marital or employment status, beneficiary changes or income needs) please contact us at 530.222.6301 or 800.546.5573 for either a phone review, or an appointment. We want to ensure that your current financial objectives meet your personal circumstances.
Forcella Wealth Management Information - Are you receiving too much mail regarding your investments? You now have the option to receive your LPL Financial communications electronically! LPL Financial is pleased to offer the convenience of viewing shareholder communications, including the fund prospectus, annual reports, and proxy statements online. Visit the link below to be directed to a secure website where you will enter your LPL Financial account number and Email address. You will no longer receive shareholder communications information through the mail but can request a hard copy at any time. Please feel free to contact us if you have any questions regarding this form.
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Forcella Wealth Management
1600 Victor Ave ● Redding, CA 96003
Phone 530.222.6301 ● Toll Free 800.546.5573 ● Fax 530.226.1677
jim.forcella@lpl.com ● www.forcellawealth.com
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* This
newsletter was prepared by PEAK.
*
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 DJ Global ex US is an unmanaged group of non-U.S. securities designed to
reflect the performance of the global equity securities that have readily
available prices.
*
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.
*
Gold represents the London afternoon gold price fix as reported by the London
Bullion Market Association.
*
The DJ Commodity Index is designed to be a highly liquid and diversified
benchmark for the commodity futures market. The Index is composed of futures
contracts on 19 physical commodities and was launched on July 14, 1998.
*
The DJ Equity All REIT TR Index measures the total return performance of the
equity subcategory of the Real Estate Investment Trust (REIT) industry as
calculated by Dow Jones.
* Yahoo!
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.
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Securities Offered Through LPL Financial Member FINRA/SIPC
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