 |
Greetings! Just when nobody expected it, July turned in the best month in the last twelve. The Dow Jones Industrial Average led the three major indexes with an increase of 7.53%, the S&P 500 was up 6.81% and the NASDAQ gained 6.81% (Yahoo finance).
July was led higher by greater than expected corporate earnings. Each quarter, publicly traded corporations must report their latest earnings. Leading up to the earnings report, private financial analysts throughout the financial world try to predict the numbers. Those predictions or estimates are a major element that drives a stock price ahead of the earnings release. Much time and effort goes into an estimate but once the company reports, it is pretty worthless since investors now have the actual numbers to use in their decision as to buy, hold or sell.
However, since stock prices are loosely based on the prediction--or actually a consensus of forecasts, when the new actual numbers are published there is often movement to a new and theoretically more accurate price for the stock. As of August 3, with nearly 2/3 of all corporate earnings released, nearly 76% of the actual numbers beat the forecasts, according to a Bloomberg article. (http://www.bloomberg.com/news/2010-08-03/asian-stocks-oil-advance-on-improving-economy-two-year-treasuries-gain.html)
Quite simply, companies are doing better than most people think--even those people who are paid pretty handsomely to do in-depth analysis are being proven overly pessimistic. So it is no wonder that you may be too. It is very easy to look around at what you see on a macro-level and miss what is happening on the micro-level.
True, there are daily news reports about high unemployment and slow GDP growth and overwhelming sovereign debt and current budget deficits for as long as the imagination can fathom, but all that doesn't add up to the death of free market capitalism. In fact, the corporate balance sheet is in better shape now than any time in recent history. Plus, input costs for most companies are at least steady if not going down--raw materials are cheap, power is cheap and labor is cheap and plentiful.
With the profit margins growing, companies don't need the same revenue to generate the same profit. So it is that we get 76% of the earnings beating the estimates. And when a company makes more than anyone predicted, then the market shifts the price of the underlying stock upward.
Marty |
|
|
Concept of the Month: Nursing Home Planning
A good friend of mine recently began a long and difficult search for a nursing home for her father. So when I was thumbing through my latest edition of Smart Money, (August 2010) my eye was drawn to an article written by Peter Keating on page 42, "Nursing Home Time?" The gotcha quote came in the first paragraph when he said that "approximately one-half of all nursing home admissions come directly after hospital stays, according to the AARP."
It must be difficult to find a home for your parent, all the issues that go into that decision must be heart retching. But just imagine if you had to find a suitable home at the drop of a hat. What if your parent or spouse was hospitalized for a fall or maybe a stroke and sometime during the hectic running around back-and-forth to the hospital someone from patient discharge calls you on a Thursday to report that your loved one is being discharged on Friday. Now what?
Well that is the gist of the article by Keating. He advocates planning ahead just like a retirement, will or estate plan so you're not searching for a permanent home in the middle of a crisis.
To begin the search there are many resources available to help, one of the best ones that Keating lists is the Medicare.gov website which not only lists all nursing homes within a geographical area, but it also rates them 1 to 5 stars based on their most recent inspections. The site also gives all kinds of information specific to the home in question; things like the number of patients, how many care-givers, when it opened, etc. If you have someone already in care, check the home out to see how it did. (http://www.medicare.gov/NHCompare)
Plus, if you live in Maryland another resource is the State's Ombudsman for Long Term Care--their web address is http://www.mdoa.state.md.us/senior.html. There are 19 regional offices around Maryland that work with people, free of charge, who may need help with the tangled web of Long Term Care.
And finally, if you just need some help trying to keep your person in their home, or while you're deciding if a nursing home is appropriate--there are for-profit organizations like Comfort Keepers (with an office right in our building in Chestertown 410-778-4470) or non-profits like Homeports in Chestertown at 443-480-0940 or on the web at www.homeports.org. These organizations can help Mom or Dad stay at home much longer than you think.
Time is relentless and sooner or later we all could be facing difficult decisions such as nursing-home care or at-home care. The more you plan for it the better choices you'll make when the time comes.
Marty |
 |
Chesapeake Investment Advisors Inc. Martin Knight, MBA CFP®
410-810-0735
800-994-0221
Fax: 410-810-3422
Securities and Advisory Services offered through Geneos Wealth Management, Inc. Member FINRA/SIPC |
|
|
|
|
|
