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In This Issue
The Markets
Are Stock Market Returns Closely Related To
Weekly Focus
Thought for the Week
Securities Information

The Markets


The situation is fluid.


As politicians scramble and we inch closer to the fiscal cliff day of reckoning, it's important to keep one thing in mind-the big picture. While the cliff situation dominates the headlines, the underlying economy is quietly marching ahead. Consider this recent data.

  • Orders for long-lasting goods jumped in November. The data suggested a surprisingly strong and broad increase in corporate spending.
  • Sales of existing homes climbed in November to the highest rate in three years.
  • Consumer spending climbed in November "as Americans pushed aside the threat of higher taxes next year, buying gifts for the holidays and making up for shopping lost to superstorm Sandy," according to Bloomberg.
  • Car and light truck sales rose in November to the highest annual rate since 2008.
  • Economic growth, as measured by gross domestic product, was revised up to 3.1 percent in the third quarter from the originally reported 2.7 percent, according to Reuters. That's more than double the growth rate from the second quarter.
  • Corporate profits hit a record high in the third quarter and, "Clearly, corporate America is on a roll," according to Forbes.

Sources: MarketWatch, Bloomberg, Reuters, Forbes


The above paints the bull case for the economy. Yet, it's not all rosy. The U.S. still faces tough budget deficit issues, tax issues, and an overhang of malaise that could pose stiff headwinds. And overseas, Europe is still problematic. 


Returning to the big picture, let's remember that economic cycles and political wrangling have been and always will be with us (just watch Steven Spielberg's new movie Lincoln). The players may change and the nature of the issues may vary, but as Led Zeppelin sang, The Song Remains the Same.


The good news...we survived the end of the world last Friday as the Mayan prophecy was a non-event! And we suspect we'll survive whatever happens in Washington, too.



Data as of 12/21/12







Standard & Poor's 500 (Domestic Stocks)







DJ Global ex US (Foreign Stocks)







10-year Treasury Note (Yield Only)







Gold (per ounce)







DJ-UBS Commodity Index







DJ Equity All REIT TR Index







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, 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.

IS BUILDING A BUY-AND-FORGET PORTFOLIO that tries to capture long-term trends a good idea? Well, FORTUNE Magazine thought it was, so back on August 14, 2000, they published a list of 10 stocks and said, "If you're a long-term investor, these 10 should put your retirement account in good stead."


To begin, FORTUNE identified the following long-term trends that they felt had the potential to transform the economy.


  1. The lightning-fast changes in communications networking.
  2. The brave new world of entertainment.
  3. The "boomerization" of financial services.
  4. The coming of age in biotech.


From there, the magazine came up with a list of 10 stocks to capitalize on these trends.


So, let's see how their 10 stock picks performed over the next 12 years and 4 months between August 14, 2000 and December 19, 2012 as reported by Ritholtz.com.


  • 2 of the 10 stocks went bankrupt.
  • 1 received a government bailout.
  • 2 were bought out at prices lower than their August 14, 2000 price.
  • 0 stocks rose in price by the end of the 12-year period.
  • The cumulative portfolio, excluding dividends, declined by more than 50 percent during the period. By comparison, the S&P 500 index rose more than 20 percent during the period.

Source: Rithotz.com


As you can see, the magazine's results were not pretty. Here are four conclusions from this buy-and-forget experiment.


  1. Don't get your stock picks from magazines! You have to do serious research.
  2. Long-term trends are powerful, but the winners at the beginning of the trend may not be the winners at the end of the trend.
  3. Since "winners rotate," it's important to have a "sell discipline" to help you avoid hanging on to stocks long past their prime.
  4. To paraphrase an old saying, if you follow a static crystal ball, you may end up eating a lot of broken glass.


While nobody can predict the future, trends can last a long time and may offer profitable investment opportunities. However, as this example shows, you still have to diligently manage your portfolio so you don't get caught on the wrong side if a shift happens.

Weekly Focus - Think About It...


It came without ribbons! It came without tags!

It came without packages, boxes, or bags!

Then the Grinch thought of something he hadn't before! 

Maybe Christmas, he thought, doesn't come from a store. 

Maybe Christmas... perhaps... means a little bit more! 

--Dr. Seuss, How the Grinch Stole Christmas!

Thought for the Week 



Paralyze resistance with persistence. ~Woody Hayes




Best regards,





Lofy Group Wealth Management


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Securities offered through LPL Financial, Member FINRA/SIPC

Accounting and Legal Services are not affiliated with LPL Financial



* This newsletter was prepared by Peak Advisor Alliance.


* 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.