Our unofficial research shows that for most of us, family ranks at or near the top of our priority list. Higher than our occupation, our business, our money… and most anything else.
So it is for us at JL Davis, too. And in this week’s Update, we take a look at family through the lens of Lee and Kathy’s anniversary last week, among other things.
Of course we’ll also examine recent market activity—which has been quite interesting the last few days, to say the least.
All the best,
Lee and Jeremy
Quote of the Week
“ You don't choose your family. They are God's gift to you, as you are to them.”
--Desmond Tutu
JL Davis Thoughts This Week
Those who know the Davis clan well know we are generally a bit frugal , not given to much extravagance. So when we assembled for four days in the Florida Keys (and missed two and a half days of work!) at Lee and Kathy’s expense last week, even we were surprised.
The occasion was a wedding anniversary, a special milestone for Lee and Kathy that we wanted to celebrate as a family. And celebrate we did. Sea kayaks, plenty of pool time, nice meals and a little wine to boot. Even some golf was in order. The recently expanded Davis family of 10 had plenty of fun; it’s hard to say who had the most.
The time together was priceless—from little Eli’s toothless gaping smile to his sister Sloane’s six hour marathon in the pool, every moment was precious. Christy’s daughter Haley and son Dawson, both teenagers, managed to leave the electronics generally idle. Jeremy and Lee remarkably stayed away from the steady stream of financial news most of the weekend… at least until Sunday night. Kathy, Beth, Christy and Haley enjoyed a ladies spa morning together. A handful of Lee and Kathy’s friends for over 3 decades joined in a special dinner.
One of the most gratifying elements of our job as advisors is the opportunity to work with wonderful families. Each one is a treasure to us. We hang on every word when they share their stories, good, bad or indifferent. We love hearing about their milestones.
With the busy pace of daily life, it’s sometimes easy to overlook what’s truly important. The last few days were a wonderful reminder for us.
Bishop Desmond Tutu was right—family is truly a gift. We thank you for yours.
Lee and Jeremy
http://www.brainyquote.com/quotes/topics/topic_family.html
Wednesday, March 11, 2015
Thursday, February 26, 2015
Another market high; but what happens when you lose? Your Weekly Update
It’s fair to say we’re all smiles just now, what with many portfolios gleaming in the glow of last week’s all time market highs. But what happens when the same market declines and accounts lose money?
Market highs are inevitably followed by declines and it is for that reason we take a moment in this week’s Update to illustrate why we tend to focus first on preserving wealth and second on growing it.
As you’ll see, for many of us, our investment success will be primarily determined by avoiding significant loss and second by achieving returns.
You might want to pass this one along!
All the best,
Lee and Jeremy
Quote of the Week
“Rule Number One: Never lose money. Rule Number Two: Never forget Rule Number One.—Warren Buffett (84 years old billionaire investor, $73 billion net worth)
JL Davis Thoughts This Week
Last week’s all-time U.S. stock market high has many investors, and especially the media, positively giddy. At JL Davis, we have to admit we are all smiles as well. But we never forget Mr. Buffett’s rule expressed above.
Why?
Because in our experience, losing money is the single biggest reason why client’s portfolios can fail. In order to understand why, let’s take a look at the math.
Pretend we have a portfolio of, say $100,000, and we lose 50%. By the way, the S&P 500 stock index lost more than that in 2008-9 in one year’s time. Our $100,000 just became $50,000. So, we need a 50% gain to get our money back, right? Wrong.
A 50% gain on $50,000 is $25,000. Meaning our (now) $50,000 portfolio is worth $75,000, some $25,000 less than we started with. Ouch. To get back to $100,000 in this example, the $50,000 we have left needs a 100% gain! That, friends, isn’t easy to do. Which is why it’s a good idea to have a strategy to limit losses in the first place when possible.
The media as well as the financial industry has done an exceptional job of keeping our eye off the ball by training us to focus on “average returns” or “buy and hold” or “focus on the long term only”. While each of these maxims is important to consider, much, much more important to consider is Mr. Buffett’s rule: Don’t lose money. Whether you happen to be one of our clients with $10 million, or $100,000.
The bottom line is that losses hurt your portfolio much more than equivalent gains help your portfolio simply because the losses come as a percentage of a larger total. Which is precisely why it’s so difficult to recover from the kinds of losses some investors experienced in the tech bubble of 2000-1, or the financial crisis of 2008-9.
So while we at JL Davis are constantly engaged in analysis to construct outstanding portfolios filled with excellent strategies, managers, and tactics designed to achieve fine returns over time, we prefer to go a step further. We prefer to have strategies in place to protect against steep declines.
Now and then, in the short term, those strategies can reduce gains a bit. But over time we have found that the power of preserving capital first seems to win out consistently.
For now, let’s enjoy the new market highs. And let’s keep an eye on keeping our money and remember Buffet’s Rule Number One.
Lee and Jeremy
Market highs are inevitably followed by declines and it is for that reason we take a moment in this week’s Update to illustrate why we tend to focus first on preserving wealth and second on growing it.
As you’ll see, for many of us, our investment success will be primarily determined by avoiding significant loss and second by achieving returns.
You might want to pass this one along!
All the best,
Lee and Jeremy
Quote of the Week
“Rule Number One: Never lose money. Rule Number Two: Never forget Rule Number One.—Warren Buffett (84 years old billionaire investor, $73 billion net worth)
JL Davis Thoughts This Week
Last week’s all-time U.S. stock market high has many investors, and especially the media, positively giddy. At JL Davis, we have to admit we are all smiles as well. But we never forget Mr. Buffett’s rule expressed above.
Why?
Because in our experience, losing money is the single biggest reason why client’s portfolios can fail. In order to understand why, let’s take a look at the math.
Pretend we have a portfolio of, say $100,000, and we lose 50%. By the way, the S&P 500 stock index lost more than that in 2008-9 in one year’s time. Our $100,000 just became $50,000. So, we need a 50% gain to get our money back, right? Wrong.
A 50% gain on $50,000 is $25,000. Meaning our (now) $50,000 portfolio is worth $75,000, some $25,000 less than we started with. Ouch. To get back to $100,000 in this example, the $50,000 we have left needs a 100% gain! That, friends, isn’t easy to do. Which is why it’s a good idea to have a strategy to limit losses in the first place when possible.
The media as well as the financial industry has done an exceptional job of keeping our eye off the ball by training us to focus on “average returns” or “buy and hold” or “focus on the long term only”. While each of these maxims is important to consider, much, much more important to consider is Mr. Buffett’s rule: Don’t lose money. Whether you happen to be one of our clients with $10 million, or $100,000.
The bottom line is that losses hurt your portfolio much more than equivalent gains help your portfolio simply because the losses come as a percentage of a larger total. Which is precisely why it’s so difficult to recover from the kinds of losses some investors experienced in the tech bubble of 2000-1, or the financial crisis of 2008-9.
So while we at JL Davis are constantly engaged in analysis to construct outstanding portfolios filled with excellent strategies, managers, and tactics designed to achieve fine returns over time, we prefer to go a step further. We prefer to have strategies in place to protect against steep declines.
Now and then, in the short term, those strategies can reduce gains a bit. But over time we have found that the power of preserving capital first seems to win out consistently.
For now, let’s enjoy the new market highs. And let’s keep an eye on keeping our money and remember Buffet’s Rule Number One.
Lee and Jeremy
Tuesday, December 9, 2014
Eighteen To Thirty Four…. Your Weekly Update
No, it’s not an NFL score.
18 to 34 year olds comprise over 73 million people in the United States. It’s you, your child, grandchild or 23% of everyone you know.
Millennials. Generation Y. One in the same.
This week’s Update takes a look at the status of what one day may become “The Greatest Generation”….. we all certainly hope. And the statistics are daunting.
We think you’ll find the attached quite enlightening. Not to mention powerful.
Feel free to pass it along (after you’ve caught up on the financial news of course).
All the best,
Lee
This Week’s Quote:
“Intelligence without ambition is a bird without wings.”
― Salvador Dali
JL Davis Thoughts This Week:
If you’re age 18 to 34, all of us are counting on you. And you’re a unique bunch, in many respects.
According to a recently released U.S. Census Bureau report, the “Millennial” generation, also known as “Generation Y” marks a true departure from its predecessors.
If you need a little proof, take a look at the generational differences, just since 1980.
Their generation is more likely to speak a language in addition to English. About 25% converse in a different tongue at home. They’re more likely to be foreign born, double the percentage in 1980.
Employment is modestly down in their group compared to before. Some 65% are employed, versus 69% of the previous generation. Currently, a ghastly number live in poverty; one in five.
And the traditional family dynamic may be changing. As a group, they’re delaying marriage. Three in ten are married, down from six in ten before.
They’re better educated: more than one in four has a college degree, compared to one in five previously. A nice trajectory, since education is power.
Millennials are truly the future. They are just now coming into their own in terms of their impact on American culture. Their imprint on the American economic scene is likely to be massive. They stand to inherit significant wealth from their baby-boom parents (that is if their inheritance isn’t spent). They will have technological tools that are unfathomable today.
Ever the optimists, we at JL Davis are seeing anecdotal evidence that the future is in very good hands with our friends in Generation Y. n our experience, they are much more likely to follow their passion in terms of their occupation. They seem to draw a stark line of demarcation that protects their personal time and their personal lives from a 24 hour workday. Personal happiness is their definition of success.
But that doesn’t mean they don’t work; far from it. The Millennials we see are quite focused individuals, getting more done in less time than ever before. They’re studying at every turn and improving themselves. Seizing opportunities and valuing charity. Perhaps most importantly, valuing relationships.
If you’re impressed with the accomplishments of Mark Zuckerberg, founder of Facebook, or Taylor Swift who may become the best-selling recording artist of all time, get ready. They are just the beginning.
So rock on, Millennials. We believe in you.**
Lee and Jeremy
http://www.forbes.com/sites/danschawbel/2013/09/04/why-you-cant-ignore-millennials/
http://www.census.gov/newsroom/press-releases/2014/cb14-219.html
Market Week: December 8, 2014
The Markets
An unexpectedly strong jobs report on top of generally positive U.S. housing and manufacturing numbers helped nudge the Dow and S&P to new records yet again at the end of the week. However, the report also may have helped bring on a dip in the price of the benchmark 10-year Treasury by raising questions about whether the employment gains would bolster the case for a Federal Reserve rate hike in the first half of
2015.
Last Week's Headlines
• The U.S. economy created 321,000 new jobs in November, and the Bureau of Labor Statistics said the prior two months' gains were higher than previously thought. November's gains also surpassed the 241,000 monthly average so far this year. Job increases were widespread, led by professional/business services, retail, health care, and manufacturing. However, the unemployment rate remained at 5.8%. Hourly wages were up 0.4% during the month and have grown 2.1% over the last year.
• Accelerated promotions may have lured shoppers out early and cut into Black Friday retail sales. The National Retail Federation said sales over the Thanksgiving weekend were down 11% from 2013, but the trade group said it still anticipates total holiday sales to be up more than 4% by the end of the year.
• The latest data from the International Monetary Fund showed that China is expected to be the world's largest economy as of this year. The country's anticipated $17.6 trillion in real GDP edged out the United States' $17.4 trillion.
• A 1.8% increase in construction of single-family homes in October helped send total construction spending up 1.1% for the month, according to the Commerce Department. However, total spending was up just 1.9% over the last 12 months.
• The Institute for Supply Management's gauge of activity in the U.S. services sector showed growth accelerating in November. The 59.3% reading was 2.2% higher than in October. However, the Commerce Department said orders at U.S. manufacturers slid 0.7% in October and would have been
• The U.S. trade deficit saw little change in October, edging downward to $43.4 billion from $43.6 billion in September as exports increased more than imports.
• European Central Bank President Mario Draghi said the ECB expects Europe's slow growth to slump even further next year and that opposition from some of the eurozone's stronger members (i.e., Germany) would not keep the ECB from adopting supportive measures worse if not for a 21.2% jump in orders for military equipment, especially aircraft.
Key Dates/Data Releases
12/9: JOLTS job turnover report
12/11: Retail sales
12/12: Wholesale inflation
Eye on the Week Ahead
In a data-light week, the Commerce Department's retail sales report could help clarify interpretations of last week's Black Friday sales data. The results of an upcoming auction of loans to European banks could influence whether the ECB eventually adds corporate and sovereign bond purchases to its current bond-buying activities.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell
2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2014
18 to 34 year olds comprise over 73 million people in the United States. It’s you, your child, grandchild or 23% of everyone you know.
Millennials. Generation Y. One in the same.
This week’s Update takes a look at the status of what one day may become “The Greatest Generation”….. we all certainly hope. And the statistics are daunting.
We think you’ll find the attached quite enlightening. Not to mention powerful.
Feel free to pass it along (after you’ve caught up on the financial news of course).
All the best,
Lee
This Week’s Quote:
“Intelligence without ambition is a bird without wings.”
― Salvador Dali
JL Davis Thoughts This Week:
If you’re age 18 to 34, all of us are counting on you. And you’re a unique bunch, in many respects.
According to a recently released U.S. Census Bureau report, the “Millennial” generation, also known as “Generation Y” marks a true departure from its predecessors.
If you need a little proof, take a look at the generational differences, just since 1980.
Their generation is more likely to speak a language in addition to English. About 25% converse in a different tongue at home. They’re more likely to be foreign born, double the percentage in 1980.
Employment is modestly down in their group compared to before. Some 65% are employed, versus 69% of the previous generation. Currently, a ghastly number live in poverty; one in five.
And the traditional family dynamic may be changing. As a group, they’re delaying marriage. Three in ten are married, down from six in ten before.
They’re better educated: more than one in four has a college degree, compared to one in five previously. A nice trajectory, since education is power.
Millennials are truly the future. They are just now coming into their own in terms of their impact on American culture. Their imprint on the American economic scene is likely to be massive. They stand to inherit significant wealth from their baby-boom parents (that is if their inheritance isn’t spent). They will have technological tools that are unfathomable today.
Ever the optimists, we at JL Davis are seeing anecdotal evidence that the future is in very good hands with our friends in Generation Y. n our experience, they are much more likely to follow their passion in terms of their occupation. They seem to draw a stark line of demarcation that protects their personal time and their personal lives from a 24 hour workday. Personal happiness is their definition of success.
But that doesn’t mean they don’t work; far from it. The Millennials we see are quite focused individuals, getting more done in less time than ever before. They’re studying at every turn and improving themselves. Seizing opportunities and valuing charity. Perhaps most importantly, valuing relationships.
If you’re impressed with the accomplishments of Mark Zuckerberg, founder of Facebook, or Taylor Swift who may become the best-selling recording artist of all time, get ready. They are just the beginning.
So rock on, Millennials. We believe in you.**
Lee and Jeremy
http://www.forbes.com/sites/danschawbel/2013/09/04/why-you-cant-ignore-millennials/
http://www.census.gov/newsroom/press-releases/2014/cb14-219.html
Market Week: December 8, 2014
The Markets
An unexpectedly strong jobs report on top of generally positive U.S. housing and manufacturing numbers helped nudge the Dow and S&P to new records yet again at the end of the week. However, the report also may have helped bring on a dip in the price of the benchmark 10-year Treasury by raising questions about whether the employment gains would bolster the case for a Federal Reserve rate hike in the first half of
2015.
Last Week's Headlines
• The U.S. economy created 321,000 new jobs in November, and the Bureau of Labor Statistics said the prior two months' gains were higher than previously thought. November's gains also surpassed the 241,000 monthly average so far this year. Job increases were widespread, led by professional/business services, retail, health care, and manufacturing. However, the unemployment rate remained at 5.8%. Hourly wages were up 0.4% during the month and have grown 2.1% over the last year.
• Accelerated promotions may have lured shoppers out early and cut into Black Friday retail sales. The National Retail Federation said sales over the Thanksgiving weekend were down 11% from 2013, but the trade group said it still anticipates total holiday sales to be up more than 4% by the end of the year.
• The latest data from the International Monetary Fund showed that China is expected to be the world's largest economy as of this year. The country's anticipated $17.6 trillion in real GDP edged out the United States' $17.4 trillion.
• A 1.8% increase in construction of single-family homes in October helped send total construction spending up 1.1% for the month, according to the Commerce Department. However, total spending was up just 1.9% over the last 12 months.
• The Institute for Supply Management's gauge of activity in the U.S. services sector showed growth accelerating in November. The 59.3% reading was 2.2% higher than in October. However, the Commerce Department said orders at U.S. manufacturers slid 0.7% in October and would have been
• The U.S. trade deficit saw little change in October, edging downward to $43.4 billion from $43.6 billion in September as exports increased more than imports.
• European Central Bank President Mario Draghi said the ECB expects Europe's slow growth to slump even further next year and that opposition from some of the eurozone's stronger members (i.e., Germany) would not keep the ECB from adopting supportive measures worse if not for a 21.2% jump in orders for military equipment, especially aircraft.
Key Dates/Data Releases
12/9: JOLTS job turnover report
12/11: Retail sales
12/12: Wholesale inflation
Eye on the Week Ahead
In a data-light week, the Commerce Department's retail sales report could help clarify interpretations of last week's Black Friday sales data. The results of an upcoming auction of loans to European banks could influence whether the ECB eventually adds corporate and sovereign bond purchases to its current bond-buying activities.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell
2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2014
Tuesday, December 2, 2014
Energy and Entrepreneurship…..Your Weekly Update
For the first time in the history of the Update, we are giving you someone else’s opinion.
It’s that good.
Brian Westbury is one of the many economists whose opinion we follow, though we may not always agree. Economists are mostly like CPA’s, just without the personality!
Brian is a rare exception, and his take on falling oil prices and the “fruits of entrepreneurship” are priceless. See what you think as you click the attachment.
Then, please let us know!
All the best,
Lee
PS—THANK YOU. As of this week, JL Davis stands at 83 referrals this year from our great clients; over 40 of whom are now NEW clients. We are honored and humbled. And forever appreciative. L&J
This Week’s Quote:
“When freedom prevails, the ingenuity and inventiveness of people creates incredible wealth. This is the source of the natural improvement of the human condition.”
― Brian S. Wesbury
JL Davis Thoughts This Week:
Oil - Just Another Price
By: Brian S. Wesbury, Chief Economist and Robert Stein, Deputy Chief Economist
Don’t take this the wrong way: energy is important. Oil prices are important. But, we believeth those involved in economic punditry often bloweth them out of proportioneth.
Many, who previously fretted that higher oil prices meant economic doom, now say the sharp drop means an economic boom. We are happy to be paying less at the pump, but, from a macro-economic perspective, we don’t expect lower prices to generate a noticeable improvement in the overall economy.
There are four pillars of economic strength (or weakness) – monetary policy, tax policy, trade policy, and spending (or regulatory) policy. Right now, money is loose, tax rates will remain stable, trade policy is improving, and for the past few years, the leftward lurch in government spending and regulation has been gridlocked.
In other words, macro conditions in the US are no worse, and probably better, than they were a few years ago. Entrepreneurship is still flourishing. The US is riding a wave of technology – 3D printing, robotics, the Cloud, smartphones, tablets, apps, bio- and nano-technology – and horizontal drilling and hydraulic fracturing. Many prices are falling as these technologies boost productivity.
The only real mystery is why it took so long for oil prices to finally collapse. It’s not OPEC. The US uses roughly 19 million barrels of oil per day (bpd). Seven years ago US production was 8.5 million bpd; today, 14 million bpd, with energy independence in sight. OPEC is drowning under a gusher of tech-driven oil production.
Also, lower prices aren’t a tax cut any more than free mapping and direction-finder software, or a drought-resistant corn plant, is a tax cut. Lower oil prices, lower food prices, more efficient transportation, and better communication aren’t tax cuts per se, but instead are the fruits of entrepreneurship.
High oil prices stimulate drilling and more production, but squeeze consumers. Low prices slow drilling and production, but free up resources for consumers to spend on other things. It’s not a zero-sum game; it’s part of a process. Relative price changes cause a shift in resources, unlike a tax cut, which changes the incentives for labor and investment.
In other words, don’t look for an economic boom. The drop in oil prices is just a positive reinforcement to the growth engine that has been driving the US economy, and equity values higher, in recent years. It’s a Plow Horse and until a true change in policy kicks in, it will remain a Plow Horse. We need less government spending, less regulation, and lower tax rates to get a real economic boom.
Brian has a political bent in his comments no doubt. We remain apolitical, as always, but many of his points in this piece are spot on, in our view. Especially the power of entrepreneurship and the amazing technology boom that’s powering growth in the U.S. and in the world. May we have more of both!
Lee and Jeremy
Market Week: December 1, 2014
The Markets
The Nasdaq had a good week, but other equity indices saw little change, though the Dow and S&P 500 remained in record territory. The biggest news came from falling oil prices in the wake of a decision by the Organization of the Petroleum Exporting Countries (OPEC) to keep its oil supplies at current levels, which cut the price of oil to roughly $66 a barrel.
Last Week's Headlines
• U.S. gross domestic product grew during the third quarter at a slightly faster rate than the Bureau of Economic Analysis had previously estimated. However, the 3.9% increase in GDP was less than Q2's 4.6%.
• Led by Saudi Arabia, the Organization of the Petroleum Exporting Countries (OPEC) decided to maintain current production levels to try to maintain market share in the face of U.S. competition. The decision hurt not only oil prices around the world but the currencies of countries that depend on oil exports. It also raised concerns about whether falling prices would lead oil companies to curtail investments in future exploration and development.
• Home prices in cities measured by the S&P/Case-Shiller 20-City Composite Index were flat in September. Though there was a 4.9% year-over-year increase, that figure continued to show an overall downward trend; that 4.9% gain was lower than the 5.6% annual increase seen a month earlier.
• U.S. manufacturers saw a 0.4% increase in orders for durable goods in October, according to the Commerce Department. However, a 3.4% gain in the typically volatile aircraft sector was responsible for most of that; excluding transportation, new orders were down 0.9%.
• Sales of new homes were up 0.7% in October; according to the Commerce Department, that put them 1.8% higher than a year earlier.
• Both personal income and personal consumption were up 0.2% in October, according to the Commerce Department.
Key Dates/Data Releases
12/1: ISM manufacturing report
12/2: Auto sales, construction spending
12/3: ISM services report, Fed "beige book," business productivity/costs
12/5: Unemployment/payrolls, factory orders, balance of trade
Eye on the Week Ahead
With traders back at their desks and the end of 2015 on the horizon, reports from last week's retail battlefields will be of special interest for what they suggest about how the U.S. economy might fare through the end of the year. Given the freefall in oil prices last week, investors will be assessing the implications for the global economy and the energy sector. And as always, Friday's unemployment figures will be of interest for what they might mean for Fed action in 2015.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2014
It’s that good.
Brian Westbury is one of the many economists whose opinion we follow, though we may not always agree. Economists are mostly like CPA’s, just without the personality!
Brian is a rare exception, and his take on falling oil prices and the “fruits of entrepreneurship” are priceless. See what you think as you click the attachment.
Then, please let us know!
All the best,
Lee
PS—THANK YOU. As of this week, JL Davis stands at 83 referrals this year from our great clients; over 40 of whom are now NEW clients. We are honored and humbled. And forever appreciative. L&J
This Week’s Quote:
“When freedom prevails, the ingenuity and inventiveness of people creates incredible wealth. This is the source of the natural improvement of the human condition.”
― Brian S. Wesbury
JL Davis Thoughts This Week:
Oil - Just Another Price
By: Brian S. Wesbury, Chief Economist and Robert Stein, Deputy Chief Economist
Don’t take this the wrong way: energy is important. Oil prices are important. But, we believeth those involved in economic punditry often bloweth them out of proportioneth.
Many, who previously fretted that higher oil prices meant economic doom, now say the sharp drop means an economic boom. We are happy to be paying less at the pump, but, from a macro-economic perspective, we don’t expect lower prices to generate a noticeable improvement in the overall economy.
There are four pillars of economic strength (or weakness) – monetary policy, tax policy, trade policy, and spending (or regulatory) policy. Right now, money is loose, tax rates will remain stable, trade policy is improving, and for the past few years, the leftward lurch in government spending and regulation has been gridlocked.
In other words, macro conditions in the US are no worse, and probably better, than they were a few years ago. Entrepreneurship is still flourishing. The US is riding a wave of technology – 3D printing, robotics, the Cloud, smartphones, tablets, apps, bio- and nano-technology – and horizontal drilling and hydraulic fracturing. Many prices are falling as these technologies boost productivity.
The only real mystery is why it took so long for oil prices to finally collapse. It’s not OPEC. The US uses roughly 19 million barrels of oil per day (bpd). Seven years ago US production was 8.5 million bpd; today, 14 million bpd, with energy independence in sight. OPEC is drowning under a gusher of tech-driven oil production.
Also, lower prices aren’t a tax cut any more than free mapping and direction-finder software, or a drought-resistant corn plant, is a tax cut. Lower oil prices, lower food prices, more efficient transportation, and better communication aren’t tax cuts per se, but instead are the fruits of entrepreneurship.
High oil prices stimulate drilling and more production, but squeeze consumers. Low prices slow drilling and production, but free up resources for consumers to spend on other things. It’s not a zero-sum game; it’s part of a process. Relative price changes cause a shift in resources, unlike a tax cut, which changes the incentives for labor and investment.
In other words, don’t look for an economic boom. The drop in oil prices is just a positive reinforcement to the growth engine that has been driving the US economy, and equity values higher, in recent years. It’s a Plow Horse and until a true change in policy kicks in, it will remain a Plow Horse. We need less government spending, less regulation, and lower tax rates to get a real economic boom.
Brian has a political bent in his comments no doubt. We remain apolitical, as always, but many of his points in this piece are spot on, in our view. Especially the power of entrepreneurship and the amazing technology boom that’s powering growth in the U.S. and in the world. May we have more of both!
Lee and Jeremy
Market Week: December 1, 2014
The Markets
The Nasdaq had a good week, but other equity indices saw little change, though the Dow and S&P 500 remained in record territory. The biggest news came from falling oil prices in the wake of a decision by the Organization of the Petroleum Exporting Countries (OPEC) to keep its oil supplies at current levels, which cut the price of oil to roughly $66 a barrel.
Last Week's Headlines
• U.S. gross domestic product grew during the third quarter at a slightly faster rate than the Bureau of Economic Analysis had previously estimated. However, the 3.9% increase in GDP was less than Q2's 4.6%.
• Led by Saudi Arabia, the Organization of the Petroleum Exporting Countries (OPEC) decided to maintain current production levels to try to maintain market share in the face of U.S. competition. The decision hurt not only oil prices around the world but the currencies of countries that depend on oil exports. It also raised concerns about whether falling prices would lead oil companies to curtail investments in future exploration and development.
• Home prices in cities measured by the S&P/Case-Shiller 20-City Composite Index were flat in September. Though there was a 4.9% year-over-year increase, that figure continued to show an overall downward trend; that 4.9% gain was lower than the 5.6% annual increase seen a month earlier.
• U.S. manufacturers saw a 0.4% increase in orders for durable goods in October, according to the Commerce Department. However, a 3.4% gain in the typically volatile aircraft sector was responsible for most of that; excluding transportation, new orders were down 0.9%.
• Sales of new homes were up 0.7% in October; according to the Commerce Department, that put them 1.8% higher than a year earlier.
• Both personal income and personal consumption were up 0.2% in October, according to the Commerce Department.
Key Dates/Data Releases
12/1: ISM manufacturing report
12/2: Auto sales, construction spending
12/3: ISM services report, Fed "beige book," business productivity/costs
12/5: Unemployment/payrolls, factory orders, balance of trade
Eye on the Week Ahead
With traders back at their desks and the end of 2015 on the horizon, reports from last week's retail battlefields will be of special interest for what they suggest about how the U.S. economy might fare through the end of the year. Given the freefall in oil prices last week, investors will be assessing the implications for the global economy and the energy sector. And as always, Friday's unemployment figures will be of interest for what they might mean for Fed action in 2015.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2014
Tuesday, November 25, 2014
Thanksgiving Thoughts from our family to yours…. Your Weekly Update
We pause a moment this week to share a few very special thoughts with the many wonderful people in our lives. You, for example.
We've never been more thankful than we are this Thanksgiving.
So, we've taken a moment in the attached to list a few of the many, many things we are thankful for in 2014. Perhaps you already have your own list that you’ll be sharing over a wonderful family dinner in a couple of days (if not, there’s time!).
We hope you and your family have a wonderful holiday.
All the best,
Lee
PS—We’re also thankful for the continued market highs, which are detailed here too. Enjoy!
This Week’s Quote:
“Gratitude bestows reverence, allowing us to encounter everyday epiphanies, those transcendent moments of awe that change forever how we experience life and the world.”
― John Milton, English poet (1604-1678)
JL Davis Thoughts This Week:
The Davis family, probably like yours, will be gathering this week to celebrate Thanksgiving. A little (?) turkey, a touch of wine, and kids giggling about something or other are just a few of the accoutrements we’ll enjoy. Can’t wait.
And we’ll give thanks.
Here, in no particular order, are a few of the many things we are thankful for in 2014:
1. The incredible country we live in. The USA, for all its foibles, continues to be the beacon of hope for the world. A place where others risk their lives to get in and those of us who live here are free to pursue our dreams, worship as we please, build fortunes…and give them away.
2. The beauty of the world around us. It’s been said that there is more beauty in the slightest handiwork of the Almighty than in all man’s creations combined. A cloudless night with a sky dotted by the radiant heavenly bodies above. Glorious mountains capped in white. The ever radiant sun on a clear day. It’s everywhere.
3. Health. For most of us, we are healthier and will live longer and more vigorously than ever before in history. We are also ever mindful of those who struggle to regain their health and thankful for amazing miracles of medicine—may those miracles bring better days to those who suffer at this time.
4. Prosperity. We are incredibly fortunate to work in an industry that does so much good for so many. We’re ever grateful for the good fortune of our friends and clients.
5. Our failures. Learning from them has been the quintessential element in any and all success we enjoy today.
6. Family, Family, Family. Their precious smiles, their joyous anticipation this time of year, how they walk and talk and everything about each one of them is a wonder to behold. Lest we forget, we’re also thankful for the remarkable generations that came before us, whose shoulders we proudly stand upon today.
7. You. All of you! We’re blessed with hundreds and hundreds of wonderful people who make up the tapestry of our lives. Each one a unique expression. Incredible, fantastic. We are so, so lucky.
Perhaps you’ve already made your own list, or are about to, as you prepare to enjoy the Season. May your list resonate in those around you and the generations to come.**
Happy Thanksgiving,
Lee and Jeremy
Market Week: November 24, 2014
The Markets
Unexpected changes in monetary policy in China and support for additional stimulus in Europe helped propel the Dow industrials and S&P 500 to fresh record highs on Friday. Large caps, many of which earn a substantial portion of their revenues overseas, benefitted most, while the Nasdaq and Russell 2000 small caps ended with little changed.
Key Dates/Data Releases
11/25: Q3 revised GDP, home prices
11/26: Durable goods orders, personal income/spending, new home sales
Last Week's Headlines
• Tacitly acknowledging signs of slowing growth, China's central bank unexpectedly cut two key interest rates to try to stimulate domestic consumption. Meanwhile, European Central Bank President Mario Draghi once again said the ECB is ready to adopt additional stimulus measures if necessary to fight the threat of low inflation.
• President Obama announced a program that will defer deportation for undocumented immigrants and allow them to receive work permits if they have been in the country for at least five years, have no criminal record, and/or have children who are American citizens. The program would not grant permanent resident status or provide for coverage under the Affordable Care Act. However, those affected would receive Social Security cards and would have to pass background checks and pay taxes. Republican congressional leaders criticized the action and said they plan to address immigration policy in 2015. House Republicans also filed suit against the Obama administration, seeking to overturn two provisions of the Affordable Care Act.
• After a second quarter of contraction, Japan is now officially in recession. The country's Cabinet Office announced that gross domestic product fell at an annualized rate of 1.6% in the third quarter. Though that was better than Q2's annualized 7.3% decline, it put pressure on Prime Minister Shinzo Abe to consider postponing a second round of sales tax increases scheduled for October. The higher taxes were designed to attack Japan's high sovereign debt.
• Minutes of the Federal Reserve's monetary policy committee's most recent meeting showed that last month's end to bond-buying efforts came about despite concerns about the potential impact of slowing growth overseas on the U.S. economy. The committee also will watch for signs of falling inflation, which could potentially delay any rate increase.
• After a strong increase in September, industrial production slumped 0.1% in October. The Federal Reserve Board said that though manufacturing output was up, strong declines in mining and utilities offset it. Meanwhile, both the Empire State and Philly Fed manufacturing surveys showed business activity accelerating in November.
• Falling gas prices helped offset increases in housing costs, leaving the Consumer Price Index relatively unchanged in October. That put the inflation rate for the last 12 months at 1.7%, according to the Bureau of Labor Statistics. Meanwhile, wholesale prices rose 0.2% during the month, putting the wholesale inflation rate for the last 12 months at 1.5%--the lowest annualized rate since February.
• Housing starts slipped 2.8% during October. However, the Commerce Department said they were 7.8% higher than the previous October, and building permits were up 4.8% for the month. Meanwhile, existing home sales were not only up 1.5% in October, but the year-over-year gain was at its highest level since October 2013. The National Association of Realtors® said the median home-resale price--$208,300—is 5.5% higher than it was in October 2013.
Eye on the Week Ahead
With many traders heading out for the Thanksgiving holiday, light trading volumes could exaggerate any market movements during the holiday-shortened week ahead, which includes revisions to U.S. GDP.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2014
We've never been more thankful than we are this Thanksgiving.
So, we've taken a moment in the attached to list a few of the many, many things we are thankful for in 2014. Perhaps you already have your own list that you’ll be sharing over a wonderful family dinner in a couple of days (if not, there’s time!).
We hope you and your family have a wonderful holiday.
All the best,
Lee
PS—We’re also thankful for the continued market highs, which are detailed here too. Enjoy!
This Week’s Quote:
“Gratitude bestows reverence, allowing us to encounter everyday epiphanies, those transcendent moments of awe that change forever how we experience life and the world.”
― John Milton, English poet (1604-1678)
JL Davis Thoughts This Week:
The Davis family, probably like yours, will be gathering this week to celebrate Thanksgiving. A little (?) turkey, a touch of wine, and kids giggling about something or other are just a few of the accoutrements we’ll enjoy. Can’t wait.
And we’ll give thanks.
Here, in no particular order, are a few of the many things we are thankful for in 2014:
1. The incredible country we live in. The USA, for all its foibles, continues to be the beacon of hope for the world. A place where others risk their lives to get in and those of us who live here are free to pursue our dreams, worship as we please, build fortunes…and give them away.
2. The beauty of the world around us. It’s been said that there is more beauty in the slightest handiwork of the Almighty than in all man’s creations combined. A cloudless night with a sky dotted by the radiant heavenly bodies above. Glorious mountains capped in white. The ever radiant sun on a clear day. It’s everywhere.
3. Health. For most of us, we are healthier and will live longer and more vigorously than ever before in history. We are also ever mindful of those who struggle to regain their health and thankful for amazing miracles of medicine—may those miracles bring better days to those who suffer at this time.
4. Prosperity. We are incredibly fortunate to work in an industry that does so much good for so many. We’re ever grateful for the good fortune of our friends and clients.
5. Our failures. Learning from them has been the quintessential element in any and all success we enjoy today.
6. Family, Family, Family. Their precious smiles, their joyous anticipation this time of year, how they walk and talk and everything about each one of them is a wonder to behold. Lest we forget, we’re also thankful for the remarkable generations that came before us, whose shoulders we proudly stand upon today.
7. You. All of you! We’re blessed with hundreds and hundreds of wonderful people who make up the tapestry of our lives. Each one a unique expression. Incredible, fantastic. We are so, so lucky.
Perhaps you’ve already made your own list, or are about to, as you prepare to enjoy the Season. May your list resonate in those around you and the generations to come.**
Happy Thanksgiving,
Lee and Jeremy
Market Week: November 24, 2014
The Markets
Unexpected changes in monetary policy in China and support for additional stimulus in Europe helped propel the Dow industrials and S&P 500 to fresh record highs on Friday. Large caps, many of which earn a substantial portion of their revenues overseas, benefitted most, while the Nasdaq and Russell 2000 small caps ended with little changed.
Key Dates/Data Releases
11/25: Q3 revised GDP, home prices
11/26: Durable goods orders, personal income/spending, new home sales
Last Week's Headlines
• Tacitly acknowledging signs of slowing growth, China's central bank unexpectedly cut two key interest rates to try to stimulate domestic consumption. Meanwhile, European Central Bank President Mario Draghi once again said the ECB is ready to adopt additional stimulus measures if necessary to fight the threat of low inflation.
• President Obama announced a program that will defer deportation for undocumented immigrants and allow them to receive work permits if they have been in the country for at least five years, have no criminal record, and/or have children who are American citizens. The program would not grant permanent resident status or provide for coverage under the Affordable Care Act. However, those affected would receive Social Security cards and would have to pass background checks and pay taxes. Republican congressional leaders criticized the action and said they plan to address immigration policy in 2015. House Republicans also filed suit against the Obama administration, seeking to overturn two provisions of the Affordable Care Act.
• After a second quarter of contraction, Japan is now officially in recession. The country's Cabinet Office announced that gross domestic product fell at an annualized rate of 1.6% in the third quarter. Though that was better than Q2's annualized 7.3% decline, it put pressure on Prime Minister Shinzo Abe to consider postponing a second round of sales tax increases scheduled for October. The higher taxes were designed to attack Japan's high sovereign debt.
• Minutes of the Federal Reserve's monetary policy committee's most recent meeting showed that last month's end to bond-buying efforts came about despite concerns about the potential impact of slowing growth overseas on the U.S. economy. The committee also will watch for signs of falling inflation, which could potentially delay any rate increase.
• After a strong increase in September, industrial production slumped 0.1% in October. The Federal Reserve Board said that though manufacturing output was up, strong declines in mining and utilities offset it. Meanwhile, both the Empire State and Philly Fed manufacturing surveys showed business activity accelerating in November.
• Falling gas prices helped offset increases in housing costs, leaving the Consumer Price Index relatively unchanged in October. That put the inflation rate for the last 12 months at 1.7%, according to the Bureau of Labor Statistics. Meanwhile, wholesale prices rose 0.2% during the month, putting the wholesale inflation rate for the last 12 months at 1.5%--the lowest annualized rate since February.
• Housing starts slipped 2.8% during October. However, the Commerce Department said they were 7.8% higher than the previous October, and building permits were up 4.8% for the month. Meanwhile, existing home sales were not only up 1.5% in October, but the year-over-year gain was at its highest level since October 2013. The National Association of Realtors® said the median home-resale price--$208,300—is 5.5% higher than it was in October 2013.
Eye on the Week Ahead
With many traders heading out for the Thanksgiving holiday, light trading volumes could exaggerate any market movements during the holiday-shortened week ahead, which includes revisions to U.S. GDP.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2014
Tuesday, November 18, 2014
Why the future is so bright (READ THIS)…. Your Weekly Update
No fooling. If you read only one Update this year, read this one.
Why?
For good reason. This week’s Update focuses on the precise reason we are so optimistic about the future. It’s the same reason that has created ever expanding possibilities, generation after generation, for nearly 250 years in the United States.
Let us know what YOU think about the reason… and the future.
All the best,
Lee
PS—Yes, you’ll read about the recent stock market records too… enjoy!
This Week’s Quote:
“Never let the future disturb you. You will meet it, if you have to, with the same weapons of reason which today arm you against the present.”
― Marcus Aurelius
JL Davis Thoughts This Week:
Why is the future so incredibly bright? Here’s why.
A young father works two jobs with his teacher bride and a little baby to pay off student loan debt and make a future. Anything can work, if you do.
A brilliant young mother closing two real estate deals with her brand new child fast asleep in his baby carrier. Baby’s with Mom. No problem.
The husband and wife who left the comfort of steady jobs and jumped headlong into uncertainty, founding their own company – a company that will see strong seven figure profits in just their second year.
The soon to be university professor with the wisdom to save a six figure investment account on his meager earnings…already. One dollar at a time.
The young single mom still in her 20’s, whose sweet baby girl is her everything. She works 50-60 hours a week, then goes home to do the rest. With a smile.
The highly successful 30 something asked by a major financial institution to let a film crew follow him around for a day. They’ll show the resulting video to thousands at this year’s conference. Then put it on the web so who knows how many can follow his example.
Two brilliant young men who hold their heads high and work right through the pain after their father passed away tragically. Brighter days are ahead, fellas. Promise.
A young doctor and his accomplished wife, passing like ships in the night, making sure the kids are cared for and loved while they both help others selflessly during the day. Or the two newlyweds who traveled to the poorest part of the globe to minister to those who have absolutely nothing. For almost nothing.
The young attorney in London and his physician brother in the States, blowing the doors off their respective professions, raised by a wonderful Mom and Dad who taught them to believe in themselves. And who still inspire them today.
Some of those who read this missive might just recognize themselves. If you do, as the Aussie’s say, “Good On Ya”. We’re watching and we take notice.
You see, we could write dozens of vignettes like the ones above. They’re not fiction; just a few of the many examples we’ve experienced in 2014 in our daily travels among clients and friends. We are humbled and we are honored.
Thank you, all of you who are early in your lives and careers, for the inspiration you give us. You are why the future is brighter than ever.**
Keep it up!
Lee and Jeremy
Market Week: November 17, 2014
The Markets
Though trading remained within a relatively narrow range, especially compared with recent weeks, the S&P 500 nevertheless managed to hit a new record high, while the Nasdaq's weekly gain kept it in the lead year-to-date. A fresh drop in oil prices brought the price of West Texas Intermediate crude to roughly $75 a barrel.
Last Week's Headlines
• The United States and China agreed to take steps to combat climate change. For the first time, China agreed to cap its output of greenhouse gases no later than 2030 and increase its reliance on zero-emission energy sources to 20% by the same deadline. The United States will cut emissions by 17% by 2020 and by 28% by 2025, which would double the current pace at which it is reducing carbon emissions.
• Despite growth in some of the eurozone's weakest members, the region as a whole was hampered by sluggishness in the larger economies. The eurozone as a whole grew 0.2% during the third quarter, according to the European Union's statistical agency. Germany expanded just 0.1%, while Italy's economy contracted for the 11th time in the last 13 quarters. However, Spain's GDP was up 0.5% and Greece's increased by 0.7%--the eurozone's highest Q3 growth rate.
• President Obama urged the Federal Communications Commission to regulate the Internet as a public utility and adopt rules supporting so-called "net neutrality," which would prevent broadband companies from manipulating transmission speeds or offering a so-called "fast lane" for customers willing to pay more.
• A dispute in the publishing world between Amazon and publisher Hachette ended a months-long dispute over who would set prices for books sold through Amazon. The agreement reportedly would allow Hachette to control the price of its books but give the publisher an incentive to keep prices low.
• Lower gas prices may have helped U.S. retail sales rise 0.3% in September. According to the Commerce Department, sales were up 4.1% from a year ago.
• The Bureau of Labor Statistics' Job Openings and Labor Turnover Survey showed that the number of both new hires and people quitting their jobs increased in September. The number of new hires hit its highest level since December 2007 and the quits rate--seen as an indicator of workers' confidence in their ability to get another job-- was higher than it's been since April 2008.
Key Dates/Data Releases
11/17: Industrial production, Empire State manufacturing survey
11/18: Wholesale inflation, international capital flows
11/19: FOMC minutes, housing starts
11/20: Consumer inflation, Philly Fed manufacturing survey, home resales
11/21: Options expiration
Eye on the Week Ahead
In the wake of the end of quantitative easing, minutes of the most recent Federal Open Market Committee meeting will be of interest, especially if there are any clues to committee members' thinking about future interest rate increases. Also on tap are data on the manufacturing sector and inflation.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
Why?
For good reason. This week’s Update focuses on the precise reason we are so optimistic about the future. It’s the same reason that has created ever expanding possibilities, generation after generation, for nearly 250 years in the United States.
Let us know what YOU think about the reason… and the future.
All the best,
Lee
PS—Yes, you’ll read about the recent stock market records too… enjoy!
This Week’s Quote:
“Never let the future disturb you. You will meet it, if you have to, with the same weapons of reason which today arm you against the present.”
― Marcus Aurelius
JL Davis Thoughts This Week:
Why is the future so incredibly bright? Here’s why.
A young father works two jobs with his teacher bride and a little baby to pay off student loan debt and make a future. Anything can work, if you do.
A brilliant young mother closing two real estate deals with her brand new child fast asleep in his baby carrier. Baby’s with Mom. No problem.
The husband and wife who left the comfort of steady jobs and jumped headlong into uncertainty, founding their own company – a company that will see strong seven figure profits in just their second year.
The soon to be university professor with the wisdom to save a six figure investment account on his meager earnings…already. One dollar at a time.
The young single mom still in her 20’s, whose sweet baby girl is her everything. She works 50-60 hours a week, then goes home to do the rest. With a smile.
The highly successful 30 something asked by a major financial institution to let a film crew follow him around for a day. They’ll show the resulting video to thousands at this year’s conference. Then put it on the web so who knows how many can follow his example.
Two brilliant young men who hold their heads high and work right through the pain after their father passed away tragically. Brighter days are ahead, fellas. Promise.
A young doctor and his accomplished wife, passing like ships in the night, making sure the kids are cared for and loved while they both help others selflessly during the day. Or the two newlyweds who traveled to the poorest part of the globe to minister to those who have absolutely nothing. For almost nothing.
The young attorney in London and his physician brother in the States, blowing the doors off their respective professions, raised by a wonderful Mom and Dad who taught them to believe in themselves. And who still inspire them today.
Some of those who read this missive might just recognize themselves. If you do, as the Aussie’s say, “Good On Ya”. We’re watching and we take notice.
You see, we could write dozens of vignettes like the ones above. They’re not fiction; just a few of the many examples we’ve experienced in 2014 in our daily travels among clients and friends. We are humbled and we are honored.
Thank you, all of you who are early in your lives and careers, for the inspiration you give us. You are why the future is brighter than ever.**
Keep it up!
Lee and Jeremy
Market Week: November 17, 2014
The Markets
Though trading remained within a relatively narrow range, especially compared with recent weeks, the S&P 500 nevertheless managed to hit a new record high, while the Nasdaq's weekly gain kept it in the lead year-to-date. A fresh drop in oil prices brought the price of West Texas Intermediate crude to roughly $75 a barrel.
Last Week's Headlines
• The United States and China agreed to take steps to combat climate change. For the first time, China agreed to cap its output of greenhouse gases no later than 2030 and increase its reliance on zero-emission energy sources to 20% by the same deadline. The United States will cut emissions by 17% by 2020 and by 28% by 2025, which would double the current pace at which it is reducing carbon emissions.
• Despite growth in some of the eurozone's weakest members, the region as a whole was hampered by sluggishness in the larger economies. The eurozone as a whole grew 0.2% during the third quarter, according to the European Union's statistical agency. Germany expanded just 0.1%, while Italy's economy contracted for the 11th time in the last 13 quarters. However, Spain's GDP was up 0.5% and Greece's increased by 0.7%--the eurozone's highest Q3 growth rate.
• President Obama urged the Federal Communications Commission to regulate the Internet as a public utility and adopt rules supporting so-called "net neutrality," which would prevent broadband companies from manipulating transmission speeds or offering a so-called "fast lane" for customers willing to pay more.
• A dispute in the publishing world between Amazon and publisher Hachette ended a months-long dispute over who would set prices for books sold through Amazon. The agreement reportedly would allow Hachette to control the price of its books but give the publisher an incentive to keep prices low.
• Lower gas prices may have helped U.S. retail sales rise 0.3% in September. According to the Commerce Department, sales were up 4.1% from a year ago.
• The Bureau of Labor Statistics' Job Openings and Labor Turnover Survey showed that the number of both new hires and people quitting their jobs increased in September. The number of new hires hit its highest level since December 2007 and the quits rate--seen as an indicator of workers' confidence in their ability to get another job-- was higher than it's been since April 2008.
Key Dates/Data Releases
11/17: Industrial production, Empire State manufacturing survey
11/18: Wholesale inflation, international capital flows
11/19: FOMC minutes, housing starts
11/20: Consumer inflation, Philly Fed manufacturing survey, home resales
11/21: Options expiration
Eye on the Week Ahead
In the wake of the end of quantitative easing, minutes of the most recent Federal Open Market Committee meeting will be of interest, especially if there are any clues to committee members' thinking about future interest rate increases. Also on tap are data on the manufacturing sector and inflation.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
Wednesday, October 29, 2014
Your Weekly Update
The future is a daunting prospect.
All our great clients who are parents and grandparents (and some who are great-grandparents, uncles and aunts!) are all about the future. Especially where it concerns a family’s young ones.
This week’s Update takes a look at the future, financial and otherwise, of one Eli James Davis, Jeremy’s new son. And by extension, the young ones of all families.
We hope you have fun thinking about the future of your young ones. As you do, please jot us a note on your thoughts.
Best always,
Lee and Jeremy
P.S. Markets continue to dazzle, after scaring the devil out of many just a couple of weeks back. You’ll enjoy that part, too!
This Week’s Quote:
“Having a child is surely the most beautifully irrational act that two people in love can commit.”
― Bill Cosby
JL Davis Thoughts This Week:
A week ago Monday, Eli James Davis was born. A bouncing little baby boy to be sure. Having seen a few babies in my time, I found Eli very impressive. Beautiful. He was cool as a cucumber from the start. Relaxed, alert. Calm.
That will serve him well in the future.
By the time Eli graduates high school in the spring of 2032, it’s a good bet he will have intellectual wherewithal far beyond even the college graduate of today. His will be the first generation who can immediately access the answer to any question—any time, any place, from any device. The first generation to apply immediate answers collaboratively, by an order of magnitude, to any issue.
It’s hard to imagine what his generation will accomplish.
Of course, Mom and Dad (Beth and Jeremy) will stay sharp along the way too. They need to. It will take about $5,400/year (in today’s dollars, invested in a 529 plan) to send him to Colorado State, their alma mater. If Eli fancies DU instead, someone has to pony up about $14,000/year for a four year stint. Work hard, Mom and Dad! Pinch some pennies.
Eli will have plenty of part time work along the way in order to put back some cash. He’ll learn to save and invest his money, a little at a time. Maybe he can afford an entry level “pre-owned” Tesla with a two week fuel supply in a battery the size of a notebook computer. Or smaller.
His grandfather’s 2036 Corvette will have 1500 horsepower and run on hydrogen.
In the fall of 2038, Eli starts two years of graduate school, hot after a Masters in Finance and his MBA. For only another $2,100/year, thank you. He’ll pitch in with his earnings as an intern at JL Davis Financial Corporation. That’s where Cheryl Taylor and her team will be showing him the ropes, tuning him up for the future.
In addition to all the hard work, he’ll get to see the great clients coming through the office and meet them. They’ll be some impressive folks he will look up to.
Then in 2040 he’ll graduate with honors and start his career at J.L. Davis. We’ll be glad to have him.
Of course he could become an artist, policeman, architect, oil man, lawyer, doctor, factory worker, politician, computer specialist, engineer, salesman, journalist, or something else. Anything that suits him. Which would be just fine.**
Lee
Market Week: October 27, 2014
The Markets
Relief at last: Investors finally regained some appetite for risk as equities got a break from the recent wave of selling. After four straight weeks of losses, the S&P 500 saw a strong bounce. However, the Nasdaq's rebound was even bigger and the small caps of the Russell 2000 saw their second consecutive week of robust gains. Though the Dow industrials lagged the other three domestic indices, the rally brought the Dow back into positive territory for the year. The Global Dow also recovered from its slump, nearly managing to break even for the year.
The strong showing in equities helped send the benchmark 10-year Treasury yield up as prices fell. Meanwhile, the price of oil stabilized in the low $80s.
Key Dates/Data Releases
10/27: Dallas Fed manufacturing survey
10/28: Durable goods orders, home prices
10/29: Federal Open Market Committee announcement
10/30: Q3 GDP initial estimate
10/31: Personal income/spending
Last Week's Headlines
• Sales of existing homes jumped 2.4% during September, according to the National Association of Realtors®. That's the highest pace of 2014, though the number of sales was 1.7% lower than in the previous September. The $209,700 median sale price was 5.6% higher than a year earlier.
• Meanwhile, new home sales were up 0.2% in September; the Commerce Department said that put them 17% higher than in September 2013.
• Consumer prices rose 0.1% in September. The Bureau of Labor Statistics said that left the Consumer Price Index up 1.7% for the last 12 months--a level that might give the Federal Reserve some leeway to keep interest rates low. Increases in food and housing outweighed a 0.7% drop in energy costs.
• China's growth rate, while still robust compared to the rest of the world, slowed during the third quarter, according to the National Bureau of Statistics. The 7.3% increase in the country's gross domestic product was slightly lower than Q2's 7.5% and below the official target for annual growth (also 7.5%). Real estate prices and sales continued to be a soft spot in the Chinese economy.
• After subjecting 150 European banks to annual stress tests, the European Central Bank and the European Banking Authority said only 12 of them needed to raise additional capital as protection against a worst-case scenario. Italy had the most problem banks, with Greece and Cyprus tied for second.
• Similar stress tests for U.S. banks to be conducted by the Federal Reserve next year will measure how well they would withstand a sharp deterioration in the corporate bond market, especially high-yield bonds issued by highly indebted companies. As in previous years, the tests also will gauge exposure to threats from a variety of factors that include sharp declines in the job market and economic growth, a jump in oil prices to $110 a barrel, and a 60% drop in the stock market. Banks that fail the test could be restricted in their ability to pay dividends or buy back stocks until they address the deficiencies.
Eye on the Week Ahead
Once again, all eyes will be on the Fed as quantitative easing is expected to come to an end. And with recent volatility in the equities markets suggesting investor uncertainty, the first estimate of Q3 gross domestic product is likely to be significant. Also, the release of stress tests conducted on European banks could affect investor perception of the financial system there.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2014
All our great clients who are parents and grandparents (and some who are great-grandparents, uncles and aunts!) are all about the future. Especially where it concerns a family’s young ones.
This week’s Update takes a look at the future, financial and otherwise, of one Eli James Davis, Jeremy’s new son. And by extension, the young ones of all families.
We hope you have fun thinking about the future of your young ones. As you do, please jot us a note on your thoughts.
Best always,
Lee and Jeremy
P.S. Markets continue to dazzle, after scaring the devil out of many just a couple of weeks back. You’ll enjoy that part, too!
This Week’s Quote:
“Having a child is surely the most beautifully irrational act that two people in love can commit.”
― Bill Cosby
JL Davis Thoughts This Week:
A week ago Monday, Eli James Davis was born. A bouncing little baby boy to be sure. Having seen a few babies in my time, I found Eli very impressive. Beautiful. He was cool as a cucumber from the start. Relaxed, alert. Calm.
That will serve him well in the future.
By the time Eli graduates high school in the spring of 2032, it’s a good bet he will have intellectual wherewithal far beyond even the college graduate of today. His will be the first generation who can immediately access the answer to any question—any time, any place, from any device. The first generation to apply immediate answers collaboratively, by an order of magnitude, to any issue.
It’s hard to imagine what his generation will accomplish.
Of course, Mom and Dad (Beth and Jeremy) will stay sharp along the way too. They need to. It will take about $5,400/year (in today’s dollars, invested in a 529 plan) to send him to Colorado State, their alma mater. If Eli fancies DU instead, someone has to pony up about $14,000/year for a four year stint. Work hard, Mom and Dad! Pinch some pennies.
Eli will have plenty of part time work along the way in order to put back some cash. He’ll learn to save and invest his money, a little at a time. Maybe he can afford an entry level “pre-owned” Tesla with a two week fuel supply in a battery the size of a notebook computer. Or smaller.
His grandfather’s 2036 Corvette will have 1500 horsepower and run on hydrogen.
In the fall of 2038, Eli starts two years of graduate school, hot after a Masters in Finance and his MBA. For only another $2,100/year, thank you. He’ll pitch in with his earnings as an intern at JL Davis Financial Corporation. That’s where Cheryl Taylor and her team will be showing him the ropes, tuning him up for the future.
In addition to all the hard work, he’ll get to see the great clients coming through the office and meet them. They’ll be some impressive folks he will look up to.
Then in 2040 he’ll graduate with honors and start his career at J.L. Davis. We’ll be glad to have him.
Of course he could become an artist, policeman, architect, oil man, lawyer, doctor, factory worker, politician, computer specialist, engineer, salesman, journalist, or something else. Anything that suits him. Which would be just fine.**
Lee
Market Week: October 27, 2014
The Markets
Relief at last: Investors finally regained some appetite for risk as equities got a break from the recent wave of selling. After four straight weeks of losses, the S&P 500 saw a strong bounce. However, the Nasdaq's rebound was even bigger and the small caps of the Russell 2000 saw their second consecutive week of robust gains. Though the Dow industrials lagged the other three domestic indices, the rally brought the Dow back into positive territory for the year. The Global Dow also recovered from its slump, nearly managing to break even for the year.
The strong showing in equities helped send the benchmark 10-year Treasury yield up as prices fell. Meanwhile, the price of oil stabilized in the low $80s.
Key Dates/Data Releases
10/27: Dallas Fed manufacturing survey
10/28: Durable goods orders, home prices
10/29: Federal Open Market Committee announcement
10/30: Q3 GDP initial estimate
10/31: Personal income/spending
Last Week's Headlines
• Sales of existing homes jumped 2.4% during September, according to the National Association of Realtors®. That's the highest pace of 2014, though the number of sales was 1.7% lower than in the previous September. The $209,700 median sale price was 5.6% higher than a year earlier.
• Meanwhile, new home sales were up 0.2% in September; the Commerce Department said that put them 17% higher than in September 2013.
• Consumer prices rose 0.1% in September. The Bureau of Labor Statistics said that left the Consumer Price Index up 1.7% for the last 12 months--a level that might give the Federal Reserve some leeway to keep interest rates low. Increases in food and housing outweighed a 0.7% drop in energy costs.
• China's growth rate, while still robust compared to the rest of the world, slowed during the third quarter, according to the National Bureau of Statistics. The 7.3% increase in the country's gross domestic product was slightly lower than Q2's 7.5% and below the official target for annual growth (also 7.5%). Real estate prices and sales continued to be a soft spot in the Chinese economy.
• After subjecting 150 European banks to annual stress tests, the European Central Bank and the European Banking Authority said only 12 of them needed to raise additional capital as protection against a worst-case scenario. Italy had the most problem banks, with Greece and Cyprus tied for second.
• Similar stress tests for U.S. banks to be conducted by the Federal Reserve next year will measure how well they would withstand a sharp deterioration in the corporate bond market, especially high-yield bonds issued by highly indebted companies. As in previous years, the tests also will gauge exposure to threats from a variety of factors that include sharp declines in the job market and economic growth, a jump in oil prices to $110 a barrel, and a 60% drop in the stock market. Banks that fail the test could be restricted in their ability to pay dividends or buy back stocks until they address the deficiencies.
Eye on the Week Ahead
Once again, all eyes will be on the Fed as quantitative easing is expected to come to an end. And with recent volatility in the equities markets suggesting investor uncertainty, the first estimate of Q3 gross domestic product is likely to be significant. Also, the release of stress tests conducted on European banks could affect investor perception of the financial system there.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2014
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