A&I Financial Services Periscope

A & I Financial Services LLC Newsletter

For the Week of
February 15, 2012
 
Greetings!  

Lately, the investors who haven't looked at their accounts are doing significantly better than the folks who have been. Why is that the case?

Here is an interesting chart from JP Morgan Chase. Look at it closely. Since 1980, the market has had an annual decline of 14.3%.*

In other words, on any given year, you're likely to lose 14.3% in your account-at any given time-and yet in 24 of the past 31 years, the market has given you a positive Calendar Year Return.*

What this means is that our natural inclinations are our enemies. The short-view, looking at the losses, is a sure way to run into the wall. Instead, we need to take the long view and remember that, over the length of the rest of our lives, stocks are likely to outperform the other asset classes because they have before.
Dr. Tom Howard calls this "volaphobia." Short-term volatility is the reason that equities outperform over time, because it scares the rest of us out of investing!

2012 is off to a very good start.  Will it last? Who knows! What is likely to happen? A 14.3% decline in your stocks could happen because it certaintly has happened before. And, the year could  end up positive - or at least it has in 24 out of 31 of the most recent years.*


 

JP Morgan Chase, Guide to the Markets, 4th Quarter, 2011.
Standard and Poor's, FactSet, J.P. Morgan Asset Management.
Returns are based on price index only and do not include dividends. Intra-year drops refers to the largest market drops over periods of 6 months or less. For illustrative purposes only.
Data are as of 9/30/11.
Weekly Economic Update 

  

WILL THE MORTGAGE ACCORD BRING MUCH RELIEF?
While the $25+ billion settlement reached last week between five large mortgage servicers and 49 states was momentous, it may not help many borrowers in trouble. Only about 1 million of the estimated 11 million underwater homeowners will see relief as loans sold to Fannie Mae and Freddie Mac aren't included in the deal. Much of the settlement money will go toward mortgage modification. Roughly 750,000 homeowners are slated to receive financial compensation from the accord (an average of about $2,000 per household). The lenders involved are JPMorgan Chase, Bank of America, Ally Financial, Citigroup and Wells Fargo; other banks could join them. (The state of Oklahoma forged its own agreement with the five lenders.) (1,2)
  
CONSUMER CONFIDENCE TAKES A DIP
The University of Michigan's initial February consumer sentiment survey fell to 72.5 from its one-year peak of 75.0 at the end of January. Economists polled by Bloomberg News had expected a 74.8 reading. However, the percentage of consumers who felt the jobless rate would fall in future months was at the highest level the survey had seen in 28 years. (3)

 

GOLD SLIPS, OIL GAINS
Gold futures pulled back $14.60 last week, settling at $1,723.30 on the COMEX Friday; that left gold up 10.06% YTD. Oil is still hovering around $100: NYMEX crude finished Friday at $98.67, advancing 0.85% for the week.(4)

 

STOCKS RETREAT FOR THE WEEK ON FRIDAY LOSSES
When the Dow's worst day of 2012 brings only an 89-point loss, it seems the year is off to a good start. That loss occurred Friday after another stall in the Greek debt negotiations. On the week, the major U.S. indices pulled back a bit: DJIA, -0.47% to 12,801.23; S&P 500, -0.17% to 1,342.64; NASDAQ, -0.06% to 2,903.88. (5,6)

 

Market Summary

% Change

Y-T-D

1Yr Chg

5-Year Avg

DJIA

+4.78

+4.68

+0.35

NASDAQ

+11.47

+4.06

+3.61

S&P 500

+6.76

+1.57

-1.43

(Source: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov - 2/10/12).  Past performance is no guarantee of future results.  Indices are unmanaged, and investors cannot invest in them directly.
Create a beautiful week!

Karl Frank, MBA, MSF
Certified Financial Planner (R)
A & I Financial Services LLC
303.690.5070
 
Citations:   

 

(1) - abcnews.go.com/Business/feds-announce-25b-foreclosure-deal/story?id=15545458#.TzWEzOSX1c4 [2/9/12]
(2) - www.thefiscaltimes.com/Articles/2012/02/10/What-the-$26-Billion-Bank-Deal-Means-to-You.aspx#page1 [2/10/12]
(3) - www.businessweek.com/news/2012-02-10/consumer-sentiment-in-u-s-falls-more-than-forecast-economy.html [2/10/12]
(4) - blogs.wsj.com/marketbeat/2012/02/10/data-points-energy-metals-546/ [2/10/12]
(5) - montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29 [2/10/12]
(6) - blogs.wsj.com/marketbeat/2012/02/10/data-points-u-s-markets-79/ [2/10/12]
This material has been prepared and is distributed solely for information purposes only. It is not a solicitation or an offer buy any securities or instrument or to participate in any trading strategy. There is no assurance that a particular trading strategy will achieve investment success.
 
Securities offered through Geneos Wealth Management, Inc., member FINRA/SIPC.  Investment advisory services offered through A & I Financial Services LLC, registered investment advisor.

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Words for Thought

 

"A successful person is one who can lay a firm foundation with the bricks that others throw at him or her."


 David Brinkley
 

Karl Frank In  Investor Advisor Magazine

Holiday header
Investor Advisor - November 2011
 
Investor Advisor Magazine's November 2011 edition features Karl Frank.  In the article "Never Satisfied," John Sullivan writes:  Passion born of tragedy drives Karl Frank to do all he can to help business owners ensure a legacy for loved ones and heirs.  Industrial age publisher and philanthropist Frederick Bonfils said there is no hope for the satisfied man. If that's the case, Karl Frank is full of hope. 

 

"I'm never satisfied," Frank says matter-of-factly when asked about his advisory firm

.....Read More.

Karl Frank was interviewed by 9News on January 9, 2012 regarding "Key Questions to ask when picking a financial advisor". 

Click Here to View Video 

 

 

 

 

 

 

  Riddle of the Week

 A train moving as fast as it can go strikes a man's hand, yet he is uninjured and the train goes off its tracks. Under what circumstances could this happen? 

 

 Last week's riddle:

    

 A lone pine tree stands on a cliff. The wind is blowing from the east through the mountains. Which way do the tree's leaves blow?  

        

 

 

Last week's answer:  

 

 

A pine tree has needles, not leaves. So no leaves are blowing in the first place.