Greetings!
If the majority of people were right, a majority of people would be rich.
Investor behavior drives returns. The economy is almost irrelevant. I know this sounds crazy, and I also struggle with the issues myself. How can we invest in a world with so much uncertainty?
What follows is some research from our friends at Athena Invest. Dr. Tom Howard recently looked at the volatility of the stock market and the subsequent performance of the stock market. As it turns out, periods when the market was exceptionally volatile, like last July and August, are historically followed by periods of great returns and relative calm, like we've experienced since September 2011.
In other words, this is normal.
They call this the "volatility trap". We're all dreading the political campaigns that have already been fought and the onslaught of negative advertisements on the way. But a period of higher risk, caused by politicians, bankers or (insert the enemy of the day here), is historically followed by a period of great returns.
Based on S&P 500 index returns from Jan 1928 - Oct 2011.
Volatility is measured as the trailing standard deviation of weekly returns. See The Volatility Trap: Why Staying the Course Makes Sense at AthenaInvest.com for more details. Data Source: Standard & Poors Inc.
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| Weekly Economic Update | |
CONSUMER SENTIMENT HITS A 4-YEAR PEAK May's initial Thomson Reuters/University of Michigan consumer sentiment survey came in with an index reading of 77.8, the highest mark since January 2008. The current economic conditions sub-index rose to 87.3 from last month's final 82.9 reading. Descending oil and gas prices may have been factors promoting some optimism.(1)
BIGGEST DROP IN PPI IN 6 MONTHS Falling energy prices influenced this development as well. Producer prices retreated 0.2% in April according to the Labor Department. Economists surveyed by Reuters had forecast no change. The bulk of the retreat was attributed to the 1.4% April drop in energy costs. The PPI has only risen 1.9% in the last 12 months, the smallest annualized wholesale price inflation recorded since October 2009. (2,3)
GOLD & OIL PRICES RETREAT After anxieties emerged last week about a China slowdown, the broad commodities market took a hit. So at Friday's close, gold had fallen 3.72% across five trading days to $1,584.00 per ounce while crude futures had slipped 2.40% to $96.13 a barrel. As of Friday evening, gold was +1.10% YTD and oil was -2.73% YTD. (2)
NEW DOUBTS IN THE EU AFFECT STOCKS Eurozone elections brought new worries about whether Greece would abide by austerity cuts and stick with the euro. Efforts to form a coalition government in Greece stalled last week, and French president Nicolas Sarkozy was defeated in his reelection bid by socialist candidate Francois Hollande. Factor in the usual spring thoughts about whether stocks are ready to pull back, and the weekly losses were as follows: S&P 500, -1.15% to 1,353.39; DJIA, -1.67% to 12,820.60; NASDAQ, -0.76% to 2,933.82. (2,4,8) |
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Watch Karl Frank's Interview "Raising Money-Smart Kids" on
Tuesday May 22th, 2012
Channel 9 - 8:30am | |
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| Market Summary |
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% Change |
Y-T-D |
1Yr Chg |
5-Year Avg | |
DJIA |
+4.94 |
+1.51 |
-0.76 | |
NASDAQ |
+12.62 |
+3.12 |
+2.09 | |
S&P 500 |
+7.62 |
+0.84 |
-2.02 |
(Source: msn.money.com, bigcharts.com, treasury.gov, treasurydirect.gov - 5/11/12). Past performance is no guarantee of future results. Indices are unmanaged, and investors cannot invest in them directly. |
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Create a beautiful week!
Karl Frank, MBA, MSF
Certified Financial Planner (R)
A & I Financial Services LLC
303.690.5070
Citations:
1 - www.marketwatch.com/story/consumer-sentiment-in-may-at-post-recession-high-2012-05-11 [5/11/12]
2 - money.msn.com/market-news/post.aspx?post=eb995dbd-6940-465b-8bcb-3488ef1c2b7e [5/11/12]
3 - www.nytimes.com/2012/05/12/business/economy/us-wholesale-inflation-falls.html [5/12/12]
4 - montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29 [5/11/12]
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 |
"He who is not courageous enough to take risks will accomplish nothing in life."
Muhammad Ali |
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Karl Frank In Investment Advisor Magazine |
 | | Investment Advisor - November 2011 |
Investment 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. |
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Riddle of the Week
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We know that a seahorse isn't a horse, and we know that a silverfish isn't a fish. For that matter, a snakehead isn't a snake - but what is it?
Last week's riddle:
About 90% of this country's land area is made up of arid tan desert, yet its flag is solid green - in fact, at present it is the only nation in the world with a flag containing just one color. What nation is this?
Last week's answer:
Libya |
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Karl Frank was interviewed by 9News on March 28th, 2012 regarding "3 Things You Should Do if You Win the Mega Millions Lottery". | |
Click Here to View Video
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