Reames Financial

Leading or Lagging, What Does IT Tell Us?

No BS Weekly Update  9/24/2012

In This Issue
Looking in the Mirror
Cool Stuff
Secret Lives of Links
Good Eats

QOTD

 

"To fulfill a dream, to be allowed to sweat over lonely labor, to be given a chance to create, is the meat and potatoes of life. The money is the gravy." -Bette Davis 

 

 

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Dear  ,

 

Leading or Lagging, What Does It Tell Us?

 

As we watch the market march on, seemingly defying gravity itself we keep looking for clues about where it is headed next.  There are a lot of opinions out there.
17000
(Click to read article)
rogers
(Click to read article)

As you can see, even the best and the brightest in the investing industry have diametrically opposed views on the subject.  So how do we sort it all out?


Indicators-Leading and Lagging

 

While nobody has a crystal ball that works 100% of the time, the economy does give us clues.  These clues show up in some of our indicators.  Some indicators turn up or down before the economy turns up or down and therefor are called leading indicators.  Other indicators like unemployment are lagging indicators.  That means they change after the economy has already changed.  Because of that, they have no real predictive value, they merely help confirm what we may already expect based on our leading indicators.  Make sense?

Why is unemployment a lagging indicator?  Because most businesses don't start to hire and expand their workforce until after things have picked up.  Very seldom does a company go out and expand its workforce in anticipation of an upturn of the economy.
 
Shipping

One of our favorite indicators to follow is shipping.  Take a look at some of the article from the shipping industry lately.
norfolk
(Click to read article)
ups
(Click to read article)
fedex
(Click to read article)
OK but what does that tell us?

Ah, that's the key question isn't it?  What does that tell us?  And the answer to that question depends on the answer to this question.  Is shipping a leading or a lagging indicator?  If it is a lagging indicator then not that useful.  What it is telling us is that the news should already be priced in.  On the other hand, what if it is a leading indicator?  What does that tell us about the possible future of the economy and the markets?

Not sure?  Then give us a call or send us an email.


I'd love to schedule a phone call to explain it to you!
 
Until next week , Protect Your Wealth! 

 

Sincerely,
Phil's signature in blue

 

 

 

 

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Week In Review
The Narrative Structure of Global Weakening(Project-Syndicate.org)

RF: Here's a little reading from off the beaten path. Dr. Shiller is one of the co founders of the Case-Shiller Real Estate Index.

Norfolk Southern Will Miss Profit Target as Volumes Fall(Bloomberg)

RF: As I've mentioned in the past, keep an eye on shipping if you want a clue about the economy.

Marc Faber: Federal Reserve Policies Will 'Destroy the World'(MoneyNews)

RF: Dr. Faber may be engaging in a bit of hyperbole but if you substitute "the world's financial system" he may not be far off.

Ed Moya: QE3 Will Devalue Dollar, Do Little Else(Moneynews)

RF: Bailout Kabuki continues!

Dow 17,000 by Next Year? Why Not, says Wharton's Siegel(Moneynews)

RF: I doubt this will happen but I still want you to see the oposing view.

Laughter

cartoon  

COD
(www.chartoftheday.com)

Growth 

Richard Branson: Advice for Entrepreneurs
Richard Branson: Advice for Entrepreneurs

Link 
 
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Good Eats
I made this recipe this weekend and it was really good.  As always I made a couple of substitutions.  I'm not a big carrot fan so I substituded with a zuchinni and a summer squash.  When I served the meat I put a little bit of raspberry preserves and sauteed almond slivers on top of it.  Incredible!
recipe
(Click for rest of recipe and to print)

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Securities offered through Foothill Securities, Inc.  Member FINRA/SIPC
Reames Financial is not an affiliate of Foothill Securities, Inc.

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 Reames Financial and not necessarily those of Foothill Securities, Inc., and should not be construed as investment advice. Neither Phil Reames, Reames Financial, nor Foothill Securities, Inc. 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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Phil Reames

Reames Financial

1856 Skyler Dr.

Kalamazoo, MI 49008

269-349-3966

[email protected]