Technology, Predictions and The Weekly Update

There’s no question technology is shaping our lives. This Week’s Update takes a look at that sector of the markets. As well, it takes a look at the adoption of new technology at a “personal” level which is quite interesting (exciting?) to say the least!

By the way, 2013 is off to a roaring start. We think you’ll especially enjoy looking at the market information this week, too.

All the best,
Lee and Jeremy

PS— If you have not sent us your prediction for the close of the 2013 Dow Jones industrial index, please send it immediately! So far the guesses range from a low of 12,100 to a high of nearly 15,000. Remember, the winner receives dinner for two at the restaurant of your choice! –L&J


This Week's Quote:
"The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency."
~ Bill Gates

J.L. Davis Thoughts This Week:

There can be no doubt that Mr. Gates is qualified to talk about the adoption of new technology. There can also be no doubt that his point is very well taken about efficiency. But is it a good time to invest in, or even overweight, the technology sector?

Here at JL Davis, we always seem to be adopting new technology. Right now, the new tablet personal computers we’re using are at the bleeding edge of PC development. We’re happy to report we’re well through the “learning curve”—and even better able to execute our daily activities and client communications.

We are adding these elements to an already robust computer and technology capability at JL Davis. Of course, our firm’s technological capacity is supported up by even more amazing technology at our broker dealer, Cetera, as well as that of a plethora of financial intermediaries we work with. All of whom are constantly upgrading their technology.

The point to all of this is that if our firm is making these changes, it’s a good bet that multitudes of small businesses are as well. And this is clearly the case.

According to the Los Angeles Times, the Consumer Electronics Association (CEA) reports that global spending on consumer electronics will reach $1.1 trillion in 2013, up approximately 4% from the amount spent in 2012. The CEA expects nearly all of the growth in demand to come from emerging markets like China and other parts of Asia. It estimates that tablet and Smartphone sales will account for 40% of all global spending on consumer electronics, a significant increase. Closer to home, by the end of 2013, the CEA estimates that 44% of U.S. households will own a tablet—the gadget which is now one of the fastest growing devices in history.

So is it a good time to invest in technology? Well, Bloomberg reports that the technology sector was up 14.82% in 2012. In the last five years the technology sector is one of the strongest sectors in the entire market. We believe that’s a trend that is not likely to change anytime soon. So, most of our equity portfolios contain a significant allocation toward technology. Of course, there are never any guarantees, but what a strong case there seems to be.

The next time you see us, feel free to ask us how it’s going. Probably like you, anytime we implement these new gadgets, it involves fits and starts. But these technologies allow us to do what we hope we do best, which is to help us take great care of our terrific clients. And the technology sector will be one to watch for decades to come.**


Market Week: January 14, 2013

The Markets

Equities didn't match the prior week's fireworks, but they still posted gains in the new year's second week. The S&P 500 hit a five-year high for the second week in a row. However, the Global Dow soundly beat all four domestic indices for the week, in part because of encouraging retail sales in Europe.

Last Week's Headlines
• President Obama nominated White House chief of staff Jacob Lew to replace Timothy Geithner as Secretary of the Treasury.
• Increased imports of consumer goods such as smart phones were a key factor in widening the trade deficit in November. Exports also rose, but not by as much, according to the Commerce Department. As a result, the trade deficit rose 16% to $48.7 billion.
• Ten mortgage servicers agreed to pay $8.5 billion to help resolve mortgage foreclosures that have been under review for faulty processing. The agreement, which will provide $5.2 billion in mortgage assistance and $3.3 billion in direct payments to borrowers, will bring to an end the case-by-case review of faulty foreclosures. In addition to participating in the settlement, Bank of America agreed to pay $10 billion to Fannie Mae to resolve allegations of faulty processing.
• Eurozone unemployment hit a new record of 11.8% in November as 113,000 workers lost their jobs. However, European retail sales were up for the first time since July.
• The Federal Reserve turned over to the U.S. Treasury almost $77 billion in profits from its 2012 quantitative easing efforts. The interest on Treasury bonds and mortgage-backed securities provided the Treasury's second highest windfall from the Fed, behind only 2010's $79 billion.
• After its deliberations were made public, insurer American International Group (AIG) decided not to join a $25 billion lawsuit filed by former CEO Maurice Greenberg and other shareholders against the U.S. Treasury. That suit claims that the terms of the Treasury's $182 billion bailout of AIG, which has since been repaid, were too onerous.

Eye on the Week Ahead

Earnings reports, particularly those from key financial institutions, will join inflation, retail, and housing data as grist for investor decisions.

Key dates and data releases: wholesale inflation, retail sales, business inventories, Empire State manufacturing survey (1/15); consumer inflation, industrial production, Fed "beige book" report, international capital flows (1/16); housing starts, Philly Fed manufacturing survey (1/17).

Data sources: Includes data provided by Brounes & Associates. 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 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2013