T his Week from Jesse Hurst
Jesse W. Hurst, II
CFP® CERTIFIED FINANCIAL PLANNER™
AIF ® ACCREDITED INVESTMENT FIDUCIARY
 
Five Years and 1,000 Points


It may seem like a long time ago, however, on August 26 of 2014 the S&P 500 closed above the 2,000-point level for the first time ever. At the time there was much rejoicing as a new, major milestone had been set. On Friday, July 12, 2019, just short of five years later, the S&P 500 has now closed for the first time above the 3,000-point level.

This marks a 50% gain for the benchmark index over that time. However, it certainly has not been a smooth or even ride. There have been many issues and concerns over that time period, including China devaluing their currency in August 2015, and oil prices subsequently dropping from over $100 a barrel to less than $30 a barrel in a very short time period. The Federal Reserve Bank raised interest rates nine times during that span of time and is now suggesting that they are ready to start cutting interest rates if necessary, to keep the economic expansion growing. There was also a Brexit vote, a presidential election, claims of Russian collusion and of course, the Mueller probe.

As you can see from the chart below, from the time the index first crossed the 2,000-point level, it was still at that same level nearly two years later in the summer of 2016 after the Brexit vote. During this time period, people saw their quarterly statements fluctuate sideways for nearly eight straight quarters. It is important to remember time periods like this require BOTH patience and faith that free markets and capitalism will eventually move both profits and the markets higher. By the way, during the 1,779 days that it took for the markets to travel 1,000 points, the overall value of the S&P 500, as measured by market capitalization, rose to $25.7 trillion. 

Take another look at the chart below. You can see that there were four different drops in the market during this period of time that exceeded 10%, the common definition of a correction. This includes the correction during the fourth quarter of 2018. During this time, the markets dropped 19.8% in value, just below the definition of a bear market. There were also a number of drops of less than 10% during this time beginning with the first one on the far left of the chart that happened in late 2014, when a young lady from Tallmadge, Ohio boarded a plane in Cleveland and flew to Dallas with Ebola. This set off a panic and nearly a 10% drop in the stock market. 

What can we learn from all of this information? That TIME IN the market, even during wacky financial and political times, is generally way more important than TIMING the market. It is a lesson that we should remember as we are more than ten years into an economic recovery that is now the longest lasting in US history. This will lead to stories about upcoming recessions and the economy and the stock markets coming demise.

Please remember, the stock market generally climbs a wall of worry, and there has been plenty for the stock market to worry about since the 2008/2009 financial crisis. We will continue to stay abreast of what is going on in the markets and the economy so that we can help guide our friends and clients toward outcomes that will keep them "Moving Life Forward."


Jesse



**Investors cannot directly invest in indices. Past performance does not guarantee future results. All information is believed to be reliable resources; however, we make no representation as to its completeness accuracy.



Weekly Market Commentary
July 29 , 2019
 

The Markets
 
It has been said there are two sides to every story. Just look at world financial markets. Stock markets and bond markets are telling very different stories.
 
In the United States, stock markets were blue ribbon winners last week.
 
The Standard & Poor's 500 Index rebounded to a record high. The Nasdaq Composite also set a new record. Barron's reported U.S. stock markets were supported by abundant optimism inspired by expectations for solid earnings growth and a Federal Reserve rate cut in July.
 
Optimism pushed stocks higher in Europe last week, too. CNBC reported investors were receptive to news suggesting the European Central Bank would ease monetary policy to support the European economy. A significant number of national stock indices in Europe, the Middle East, and Asia finished last week higher, according to Barron's.
 
Bond markets have been telling a less optimistic story.
 
In many regions of the world, bond yields have sunk below zero, and bond buyers have been locking in losses by investing in bonds with negative yields.
 
In the United States, the 10-year Treasury yield remains positive, but it has dropped from 3.2 percent in November 2018 to 2.1 percent at the end of last week.
 
So, what are bond markets saying? Barron's suggested some possibilities:
 
"...bond buyers locking in subzero yields aren't doing it, of course, for love of losses. They might think that the certainty of small losses will prove a better deal in the years ahead than whatever stocks provide...There's something else that negative yields could be telling us. Investors need bonds for things like diversification and setting aside money at known rates to offset known liabilities. For an investor who must buy bonds, a purchase here with negative yields isn't necessarily a bet against stocks. It could just be a wager that bond yields won't get much better - that slow growth and meager inflation will loom for many years."
 
Time will tell.


Data as of 7/26/19
1-Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Standard & Poor's 500 (Domestic Stocks)
1.7%
20.7%
6.6%
11.7%
8.9%
11.9%
Dow Jones Global ex-U.S.
-0.4
11.0
-4.3
5.3
-0.2
3.5
10-year Treasury Note (Yield Only)
2.1
NA
3.0
1.6
2.5
3.7
Gold (per ounce)
-1.3
10.8
15.6
2.4
1.7
4.1
Bloomberg Commodity Index
-0.8
2.6
-7.3
-2.0
-9.5
-4.4
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, MarketWatch, 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.

Music, Earworms, and Data Storage.
Anyone who has ever suffered an earworm (known in scientific circles as Involuntary Musical Imagery) understands the power of music. Some tunes that repeatedly pop into people's heads may include:
 
  • It's a Small World (Disney)
  • Don't Stop Believing (Journey)
  • Who Let the Dogs Out? (Baha Men)
  • Silver Bells (Bing Crosby)
  • We are the Champions (Queen)
 
Let's face it. Music can be potent. In The Power of Music, Elena Mannes writes, "...science today is showing that music is in fact encoded in our bodies and brains." She discusses research suggesting music may be able to help people heal, change behavior, and treat neurological disorders.
 
It may be used in other ways, too. Soon, you may experience a new music phenomenon called Imperceptible Audio Communication. That's when data is secretly coded into music. You won't be able to hear it, but your smartphone and other devices will.
 
At the 44th IEEE (Institute of Electrical and Electronics Engineers) International Conference on Acoustics, Speech and Signal Processing, a pair of doctoral students shared their work, which focuses on storing data in music.
 
Imagine, someday you may be:
 
  • Walking through an airport, not really listening to the piped-in sounds, when your phone picks up a data feed from the music and lets you know your flight is delayed.
  • Pushing your cart down a grocery aisle and Muzak® advises your smartphone cauliflower is on sale.
  • Checking into a hotel and having the lobby music send the Wi-Fi password and other check-in data directly to your smartphone.
  • Dancing in a club and having your smartphone flash a drink special.
 
The times - they are changing.

Weekly Focus - Think About It

"Any sufficiently advanced technology is indistinguishable from magic."
                                                                           --Arthur C. Clarke, British writer and inventor


Best regards, 
 
Jesse Hurst CFP ®, AIF®
Investment Advisor Representative
 
Impel Wealth Management 
 
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Securities and advisory services offered through Cetera Advisors LLC, member FINRA/SIPC, a broker/dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity.

* These views are those of Carson Coaching, and not the presenting Representative or the Representative's Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named broker/dealer.
* 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.
* All indexes referenced are unmanaged. 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.
* The Dow Jones Industrial Average (DJIA), commonly known as "The Dow," is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* 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.
* Stock investing involves risk including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.

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