Weekly Market Commentary

July 20, 2015

The Markets

Investors around the world breathed a sigh of relief last week.

It wafted many markets higher. The NASDAQ jumped by more than 4 percent. The Standard & Poor’s 500 Index gained 2.4 percent. France’s national benchmark index rose 4.5 percent, Germany’s was up 3.2 percent, Italy’s increased by 3.6 percent, and China’s Shanghai Composite was up 2.1 percent. So, what happened? 

Global markets stabilized.

First, the Chinese stock market staunched its wounds and recovered some value, which eased investors’ worries. According to Barron’s, by the end of the week, the Shanghai Composite Index was up 13 percent from its early July low. The market’s recovery owed much to Chinese government intervention. BloombergBusiness explained:

“Chinese policy makers have gone to unprecedented lengths to put a floor under the market as they seek to bolster consumer confidence and prevent soured loans backed by equities from infecting the financial system. Over the past few weeks, they’ve banned large shareholders from selling stakes, ordered state-run institutions to buy shares, and let more than half of the companies on mainland exchanges halt trading.”

Investors also were appreciative when Greece reached an agreement with its creditors. It accepted austerity measures, which voters had soundly rejected with a ‘no’ vote on July 5 to forge a bailout agreement with European Union (EU) leaders.

That doesn’t mean the Greek debt debacle is over. Late last week, the International Monetary Fund issued a memo indicating it would not support a bailout for Greece unless significant debt relief was involved. Neither the EU nor the European Central Bank is interested in forgiving Greek debt. In fact, that was one of the main reasons negotiations with creditors failed the first time around.

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

Are you missing out on a possible triple tax advantage? If you have a high deductible health insuranceplan and you’re not contributing the maximum to a health savings account (HSA), then you may be missing out. A study cited by The Washington Post found just one in 20 people with HSAs take full advantage of the opportunity.

In general, HSAs offer three tax benefits:

1. Contributions are federally tax-deductible up to certain limits ($3,350 for a single person and $6,650 for a family in 2015; add $1,000 to those limits if you’re age 55 or older).
2. Any interest earned on money in an HSA grows tax-deferred.
3. Withdrawals used to pay qualified medical expenses are income tax free.

Tax advantages aren’t the only reason to open an HSA. Money set aside in these accounts can be used to pay health insurance deductibles as well as qualified medical expenses. Although, according to The New York Times, determining which products can be purchased with HSA savings can be confusing:

“Under a change enacted with the Affordable Care Act, most over-the-counter drugs, like common allergy medications or pain relievers, are HSA-eligible only if you get a prescription for them from your doctor. On the other hand, items like sunscreen and contact lens solution are eligible for purchase – without a prescription – with your HSA funds.”

 HSA assets also can be used to pay health insurance premiums (if workers are receiving unemployment benefits) and long-term care premiums.

It’s important to make sure HSA funds are used for qualified expenses because any money withdrawn for non-qualified expenses is taxed as ordinary income, plus a 20 percent penalty tax is assessed if the account holder is younger than age 65.

That brings us to another advantage provided by HSAs. Kiplinger.com explained money not spent during the contribution year remains in the account. Any earnings grow tax-deferred and the savings that accumulate may be used for qualified medical expenses in the future or, once the account holder reaches age 65, for living expenses. In the latter case, withdrawals may be taxed as ordinary income.

Weekly Focus – Think About It

“In theory there is no difference between theory and practice. In practice there is.”

--Yogi Berra, American baseball player

Best regards,

Lee R Barczak

President

 * Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.

*Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

It’s a cautionary tale…

Many Chinese investors were so optimistic about the prospects for Chinese stock markets they bought on margin, meaning they borrowed money to buy stocks. Borrowing to invest has been so popular that the amount of margin loans doubled in just six months to about $320 billion, according to Barron’s. Experts cited in the article said, “…margin financing in China is equal in size to Indonesia’s entire stock market valuation and as high a portion as it has been in any market at any time…”

The problem with buying on margin is repaying the loan if stocks move in the wrong direction. Since the middle of June, Chinese stock markets have lost more than $3 trillion, reported CNN.com. Barron’s explained how margin works:

“In China, a typical investor can borrow $1.25 for every dollar of cash she has, giving her what China calls a “guarantee ratio” of 180 percent, or $2.25 (cash and stock bought on margin) divided by $1.25 (loan value). But, as her stock loses value, the guarantee ratio also falls. At 150 percent, the broker will start to issue margin calls. When the ratio hits 130 percent, the brokerage will force the liquidation of the position to meet the loan.”

About 80 percent of the investors in China’s markets live in China. Many have suffered significant losses as markets have moved lower.

The BBC reported China’s market regulator responded to the market downturn by making it even easier for people to borrow money to invest. Apparently, the hope is small investors will put more money in stocks. Regulators also banned investors who hold 5 percent or more of a company’s stock from selling their shares for six months.

By the middle of last week, Chinese markets had stopped losing value. Only time will tell whether they have truly stabilized.

Closer to home, the New York Stock Exchange (NYSE) suffered a computer glitch that halted trading for several hours last week. The NYSE tweeted, “The issue we are experiencing is an internal technical issue and is not the result of a cyber breach.”

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

Big data is making the news. A well-known search engine company has introduced a cloud-based big data service and a news laboratory which provides data about trends to journalists. During 2014 and 2015, it provided:

• The Economist with information about the employers and industry sectors that were most popular with American job seekers.
• TIME with five of the top trending people and topics for 2014: Ebola, the Ice Bucket Challenge, Ferguson [Missouri], Vladimir Putin, and Dilma Rousseff.
• The New York Times with a state-by-state assessment of popular Thanksgiving foods. In California they like persimmon bread; in Texas it was sopapilla cheesecake; in Minnesota they were searching for wild rice casserole; and in New York the favorite was stuffed artichokes.
• The Washington Post with data on depression, pain, anxiety, stress, and fatigue, so it could create a daily misery index for the year.
• Buzzfeed and Vocativ with British and American political data, including the most searched candidate names and questions most frequently asked of candidates.

The search engine also tracks what we don’t know or can’t remember. For instance, it has created a cocktail tool to provide instructions for making the drinks most frequently sought in online searches and a nutrition comparison tool to facilitate food smack downs (mashed potatoes beat sweet potatoes for sugar, but sweet potatoes win when it comes to Vitamin A, potassium, and calcium).

Always remember: When you go online and use certain search engines, your data is being stored and sorted. It’s important to know.

Weekly Focus – Think About It

“We think too small, like the frog at the bottom of the well. He thinks the sky is only as big as the top of the well. If he surfaced, he would have an entirely different view.”

--Mao Zedong, Former Chairman of the Communist Party of China

Best regards,

Lee R Barczak

President

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.

*Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

It’s been a wild, wild quarter.

In early April, stock markets were doing so well (14 of 47 national benchmark indices hit all-time highs) that global market capitalization — the value of stocks trading on exchanges throughout the world — pushed past $70 trillion, according to Bloomberg Business. The publication attributed the climb to stimulus programs. About two-dozen countries’ central banks were either engaged in quantitative easing or had committed to lower interest rates.

Rate hike speculation

Since the start of the year, analysts have been avidly seeking clues about when the Federal Reserve may begin to tighten monetary policy. Would it happen in June? In September? In December? In 2016?

After a mid-June policy meeting, The Wall Street Journal reported that Fed officials expect to raise rates during 2015. However, the latest turn of events in Greece, turmoil in Chinese markets, a strong dollar (which could slow U.S. growth), and other factors may cause that signal to change.

China’s bull market ends

By late May, China’s Shanghai and Shenzhen Stock Exchanges were valued at about $10.3 trillion dollars. The Shanghai Composite Index was up about 60 percent from the start of the year, and the Shenzhen was up about 120 percent for the same period. Markets were pushed higher by enthusiastic Chinese investors.  In April, the Financial Times described it like this:

“After years of poor performance, confidence in the stock market has returned in China with a vengeance. Savers have switched hundreds of billions of dollars out of property, deposits, and wealth management products in the hope of making a fast buck in stocks.”

Those hopes may have been dashed when Chinese markets headed south late in the quarter. During the last three weeks, Chinese markets have lost about $2.8 trillion in value, bringing the longest bull market in that nation’s history to a rather abrupt end.

Angst in the European Union

The European Central Bank’s 2015 quantitative easing (QE) program was a shot in the arm for Europe. Expectations that QE would spur economic growth and help the region conquer deflation helped push some stock markets to all-time highs.

Late in second quarter, however, the high gloss of QE was dulled by Greek gamesmanship. After a stellar first quarter, the Stoxx 600 Index, which includes stocks of companies in 18 European countries, saw its first-half gains fall to 11 percent, according to Bloomberg Business.

Crowdfunding for Greece?

You may be familiar with crowd funding. If not, boiled down, it comes to this: Someone has an idea, sets up an online campaign, and raises money to fund the concept. Often perks are offered for contributions.

Late in the second quarter, a 29-year-old shoe salesman in York, England, set up the Greek Bailout Fund. He wrote, “All this dithering over Greece is getting boring…The European Union (EU) is home to 503 million people, if we all just chip in a few Euro then we can get Greece sorted and hopefully get them back on track soon. Easy.”

You’ve got to admire his audacity. The goal? Raise €1.6 billion. As of July 5, 2015, €1.8 million had been pledged. 

A no vote in Greece

We may be in for more excitement during third quarter, which began with the Greek voters rejecting the EU’s bailout offer. 

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

the European central bank is no U.S. federal reserve or people’s bank of china or Bank of england… Recent matters in Greece have highlighted some of the problems with the European Union. One of the most important is the EU does not have a single government pursuing a coherent fiscal policy. Nope. As The Economist suggests, it’s a conglomeration of countries with disparate economic goals and circumstances.

A writer at Forbes captured the essence of the problem in a Tweet: “No currency-issuing national central bank would freeze the money supply in a depression. But that's what the [European Central Bank] ECB has done to Greece.”

The lesson about money supply was learned during the Great Depression. The Federal Reserve began tightening monetary policy in 1928. It allowed money supply in the United States to shrink by about one-third from 1929 to 1933, and that had a disastrous effect on the American economy. It’s hard to grow when you have less and less money. In 2002, then-Fed Chairman Ben Bernanke fessed up, “…the Great Depression can reasonably be described as having been caused by monetary forces.”

But the heart of the Forbes Tweet is the observation that no national central bank would freeze money supply. The Economist pointed out that the ECB is not a national central bank. It is an international central bank, and that is problematic.

“The ECB, of course, doesn't derive its mandate from the Greek government, but from all euro zone member governments. And here there is a clear conflict of interest; Greece owes money, not just to the rest of the EU, but to the ECB itself. When the ECB provides liquidity to Greek banks, it increases the bank's exposure to a government that may not repay it. This works both ways; neither the British nor the American government would want the credibility of their central banks to be undermined. But the Greeks don't have any interest in maintaining the reputation of the ECB.”

If the interests of the various countries in the EU don’t align, how does the region pursue a coherent fiscal policy? How does the ECB implement effective monetary policy? Should one country’s pension or healthcare system be more generous than another’s? How does the United States do it?

Eurozone countries have a complex relationship. We’re likely to learn a lot about its long-term sustainability in coming weeks.

Weekly Focus – Think About It

“It's not what happens to you, but how you react to it that matters.

-- Epictetus, Greek Philosopher

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

Not quite as popular as Branjelina and Kimye, ‘Grexit’ (short for Greek Exit) has gained traction as a nickname during the past few months. The British press appropriated a variation, Brexit, when they discovered that the Bank of England was researching the potential risks of renegotiating membership in the European Union, or possibly even leaving the group—but that’s another story.

This is about Greece, and it’s a Grexhausting tale. Last week, The Economist explained the state of affairs this way,

“…euro-zone finance ministers failed for the third time in four days [on June 25] to find a breakthrough in their talks over Greece's bail-out…But four days before its twice-extended bail-out expires and a €1.5 billion ($1.7 billion) payment to the [International Monetary Fund] IMF falls due, Greece and its far-left prime minister, Alexis Tsipras… still have no deal.”

By Saturday, a deal was off the table. After days of negotiations, CNN Money stated, “Prime Minister Alexis Tsipras…could not accept the terms being offered by Europe and the IMF. He said he would recommend that Greeks vote against them in a referendum on July 5.” The move was perceived to be a delaying tactic and, when Greece requested bailout extension, European finance ministers refused.

Greece owes about 1.5 billion euros to the IMF, and a payment is due on Tuesday. In the meantime, the European Central Bank (ECB) has been providing emergency funding—a line of credit currently worth about $95 billion—to keep Greek banks from collapse.

It’s unclear whether Greece will be able to make the payment due to the IMF this week. If it does not, Bloomberg Business reported the country is at risk of joining a rather disreputable club: countries that have failed to repay the IMF on time. Current membership includes Sudan, Somalia, Zimbabwe, Cuba, Cambodia, and Honduras.

CNN Money explained that Greeks are queuing at ATMs, banks are strapped for cash, and the European Central Bank may decide to curtail emergency funding. On Sunday, in an attempt to manage the financial fallout, Greece decided to keep its banks closed on Monday and close the Athens stock exchange.

One expert cited by the International Business Times suggested that a Greek default could make international credit markets unavailable to the country for many years. In addition, Greece may experience rapidly accelerating inflation and economic decline.

If the economic effects of default prove less dire than anticipated, other debt-strapped Eurozone countries such as Italy, Spain, and Portugal, may decide to follow suit. The possibility has many worried about the future of the Euro.

There is a good chance markets will be volatile this week as events play out.

has Your car joined the internet of everything? Auto buyers have mixed feelings about cars and connectivity.

A McKinsey & Company survey found that more than 25 percent of participating car buyers in Brazil, China, Germany, and the United States prioritized automobile connectivity ahead of traditional features like engine power and fuel efficiency. Thirteen percent wouldn’t even consider purchasing a vehicle unless it had Internet access.

Hacking is a serious issue. Last summer, a group of automobile engineers, policy-makers, security experts, and high school and college students had a confab. The topic of discussion was the security of connected automobiles. Autoblog wrote that a student was tasked with remotely infiltrating a car; an assignment some security experts predicted would take months of planning. They were wrong. The student spent $15 on equipment, built his own circuit board, and took control of the car. Consumer Reports, the magazine cautioned readers against plugging any unknown or unscreened devices—even thumb drives with music—into their cars’ USB or OBD-II diagnostic ports.

“Beware of little expenses. A small leak will sink a great ship.”

-- Benjamin Franklin, Founding Father of the United States
Best regards,

Lee R Barczak
President

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
*Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Consult your financial professional or engaging firm for whom this commentary is written before making any investment decision.

So, when is the Federal Reserve going to increase the rate for overnight borrowing?

It’s a question that has plagued bond investors throughout the first quarter of 2015. In January, 10-year Treasury yields fell as low as 1.6 percent. Early in March, they rose to about 2.2 percent before falling back below 2.0 percent. The Financial Times reported:

“Higher volatility is typical when markets are on the cusp of a major turning point, and that has been the story so far this year for U.S. Treasury debt… The year has already been characterized by big swings in bond yields, which move inversely with prices… The lack of a clear signal over when policy shifts towards a tightening phase may provide the central bank with greater flexibility but does not quell the uncertainty facing investors.”

In recent weeks, Fed Chairwoman Janet Yellen indicated the timing and pace of a rate change would be determined by economic data. In general, the Fed considers a variety of employment and inflation measures when determining policy. The Times suggested bond markets have priced out the possibility of a June rate hike, although several Federal Reserve officials recently said a June increase is still under consideration.

U.S. stock markets reflected investor uncertainty last week, too. Turmoil in the Middle East sparked concern an oil price reversal could occur if supply is disrupted. In addition, investors worried weaker-than-expected economic data might indicate U.S. economic growth was slowing. The Commerce Department reported business investment spending plans fell for the sixth straight month. That could result in reduced expectations for first quarter growth, as well as delay a Fed rate increase. Stock markets showed signs of life late in the week but finished lower.

S&P 500, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Your grandparents and great-grandparents saw a lot of things change during their lifetimes… During the 20th century, the first Nobel prizes were awarded. The first license plates were issued. The first World Series was played. Americans lived through McCarthyism, the Great Depression, and Orson Welles’ ‘The War of the Worlds’ broadcast. Rock and roll became popular. The first theme parks opened, NASA was formed, and Earth Day was introduced. Two World Wars were fought as well as the Vietnam, Korean, and Gulf Wars. The Gold Standard ended and the tech revolution arrived.

Many of these events had immediate or eventual implications for industries – automobiles, sports, communications, entertainment, defense, technology, and others – as well as financial markets. The last decade has seen some significant changes, too. Here are a few milestones we’ve witnessed:

2006: The United States population passed 300 million. (100 million in 1915; 200 million in 1967)
2007: More babies were born in the United States than in any other year in American history.
2008: Nielsen reported texting had become more popular than calling.
2009: More people lived in urban areas than in rural areas across the globe.
2010: This was the hottest year since 1880 – until the record was broken again in 2014.
2011: Digital music sales overtook physical music sales for the first time ever.
2012: China became the world’s biggest trading nation and largest pork producer.
2013: The United States overtook the Saudis to become the world’s biggest oil producer.
2014: China’s economy surpassed that of the United States.
2015: Millennials (born 1980 to late 1990s) became our nation’s largest living generation.

When considering investment opportunities, it can be helpful to ponder the ways in which demographic and economic shifts may affect the future and what types of businesses may benefit (or not benefit) from the changes.

Weekly Focus – Think About It

“Friendship is always a sweet responsibility, never an opportunity.”
--Khalil Gibran, Lebanese poet and writer