Shabri's Notebook
Look Who Made the Newspaper!
Shabri is quoted in Sunday's Frederick News Post. Check it out.
www.fredericknewspost.com/sections/business/display.htm
January 2010 Market Recap
A disappointing start
Equity markets opened 2010 on an upswing, but a sell-off in the second half of the month pushed major U.S. indices into negative territory.
· The Dow Jones Industrial Average lost 3.32 percent, while the S&P 500 Index lost 3.60 percent—its first monthly loss since March 2009.
· Investors are left wondering whether the rally can continue, especially since the S&P 500 has gained more than 60 percent from its March lows and advanced more than 25 percent in 2009.
It’s becoming clear that the success drivers in 2009 probably won’t be the same ones to fuel performance in 2010.
· One difference has to do with fundamentals for stocks and bonds.
· Stock valuations have pushed higher; the price/earnings ratio on the S&P 500 is now more than 18 times trailing earnings. It was a little more than 14 times earnings in early 2009.
· Bond spreads have narrowed substantially in both the corporate and high-yield spaces to hover around their long-term averages. This makes a difficult case for a further narrowing of spreads, which would push prices higher and fuel gains.
· In fact, high-yield spreads actually widened by more than 50 basis points in the second half of January; corporate spreads widened as well.
· Despite this slide, the Barclays Capital Aggregate Bond Index gained 1.53 percent.
Revisiting the case for a weak market
Last month, we described scenarios for weak and strong markets in 2010. So far, the bears seem to have it right.
· Stocks looking to advance on better-than-expected data have instead sold off.
o Stocks briefly pushed higher on news of a strong gross domestic product (GDP) number—indicating that the economy grew at a 5.70-percent rate in the fourth quarter—on the last day of the month. Yet, by the end of the day, the markets had traded down sharply.
o This was perhaps a reaction to news that about 3.50 percent of the GDP number was attributed to a rebuilding of inventory, not to actual growth.
There are some signs, however, that the economy is improving.
· Consumer confidence rose to 55.9 in January.
· While likely not a sign that consumer spending is returning to pre-recession levels, the trend points to an improving economic outlook.
Still, investor optimism continues to be challenged by high unemployment.
· The rate in January fell slightly to 9.70 percent, but the economy still shed 20,000 jobs.
· It is unlikely that we’ll see a strong economic recovery without new job growth to drive spending.
The earnings keep coming strong
It’s difficult to ignore the strong fourth-quarter earnings reported thus far.
· As of January 29, 220 of the S&P 500 companies had reported earnings.
o 78 percent of them beat analysts’ estimates, while only 14 percent came up short.
o The blended earnings growth rate for the S&P 500 stood at 206 percent year-over-year.
Yet the market seems to be doing so, again raising concerns over the potential for near-term growth.
The government is still our business partner
The government continues to drive the Main Street agenda and is looking for ways to further influence actions on Wall Street.
· Because markets have reacted favorably to stimulus, monetary policy, and programs to purchase and support mortgage assets, it will be critical for the government to sustain the recovery.
· President Obama’s budget proposes modest spending cuts, but it still shows a projected deficit of $1.6 trillion for the coming year.
o This—coupled with his intention to raise taxes on individuals making more than $250,000, banks, and multinational companies—raises concerns over the budget’s potential impact on economic growth.
· The Democrats’ loss of their filibuster-proof majority following the Massachusetts senatorial election has also intensified concerns regarding future policy decisions.
Prepare for heightened volatility
Risk complacency at the end of 2009 is being replaced with the need for vigilance in the near term.
· The VIX, a measure of volatility in the S&P 500, rose from a compressed level of 18 to 25 by the end of January.
· While a far cry from the highs of 75–80 seen during the market downturn, it’s definitely a sign of renewed volatility in the equity markets.
It’s impossible to predict where the markets will head, but there are signs that this year will not be the same as last year.
· We suggest preparing for potential volatility—looking to reduce portfolio risk where possible—and advise you not to be afraid to realize some of the hard-earned profits in your portfolios.
· It’s our view that, while the economy will continue to chug along and markets may eke out modest gains in 2010, it is likely going to be a rough ride.
Disclosure: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Barclays Capital Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Barclays Capital government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities.
Authored by Simon Heslop, CFA®, director of asset management, at Commonwealth Financial Network.
© 2010 Commonwealth Financial Network®
____________________________________________________________________
September 2009
National Life Insurance Awareness Month
July 2009 Advanced Strategies for a Rising Tax Environment
On January 1, 2010, nearly $1.4 trillion of retirement assets will become immediately eligible to be converted to a Roth IRA. CPAs need to plan now for 2010. Who will benefit from converting? Moore Wealth offered CPAs a training seminar on Roth Conversion. This is part of Moore Wealth's Platinum CPA CPE Seminar Series, now celebrating its 5th year.
Shabri and speaker, Chip Saltz, VP Wood Logan, Inc.
April 2009 Retirement: Why You Will Need More Than You Think
Shabri's on the front cover of the FNP's Senior Living Section this month. Check it out. Shabri on Retirement.
January 2009 Jane Helm, Senior Paraplanner
Not many people are familiar with the term paraplanner. Find out what Jane does at Moore Wealth...Senior Paraplanner makes news in the Frederick New Post.
 January 2009 Economy Spurs Moore Wealth to Open a Financial Clinic
Frederick, MD --- January 12, 2009 On the last Friday of each month, Moore Wealth will offer a free financial clinic for those who have recently lost their jobs and need a strategy to preserve their savings and retirement investments.
This is a ”no strings attached” consultation which will concentrate on giving the individual guidance, options and strategies to think about. The consultation is approximately a half hour and is only available through appointment.
“Over 2.6 million people lost their jobs in 2008. In the Frederick and Montgomery county area, over 24,000 are unemployed. Whatever financial decisions these people make now could have a far reaching impact on their futures,” said Shabri Moore, CFP® and president of Moore Wealth. “This is one way I thought Moore Wealth could help.”
Ms. Moore said that she plans to offer this free service until June and will continue, if there is still a need. Clinic days are scheduled for January 30, February 27, March 27, April 24, May 29 and June 26. Appointments are limited and will be held at the Moore Wealth office at 50 Carroll Creek Way, Suite 335 in Frederick, MD. For an appointment, call 301-631-1207.
September 2009
National Life Insurance Awareness Month
January 2010 Market Recap
A disappointing start
Equity markets opened 2010 on an upswing, but a sell-off in the second half of the month pushed major U.S. indices into negative territory.
· The Dow Jones Industrial Average lost 3.32 percent, while the S&P 500 Index lost 3.60 percent—its first monthly loss since March 2009.
· Investors are left wondering whether the rally can continue, especially since the S&P 500 has gained more than 60 percent from its March lows and advanced more than 25 percent in 2009.
It’s becoming clear that the success drivers in 2009 probably won’t be the same ones to fuel performance in 2010.
· One difference has to do with fundamentals for stocks and bonds.
· Stock valuations have pushed higher; the price/earnings ratio on the S&P 500 is now more than 18 times trailing earnings. It was a little more than 14 times earnings in early 2009.
· Bond spreads have narrowed substantially in both the corporate and high-yield spaces to hover around their long-term averages. This makes a difficult case for a further narrowing of spreads, which would push prices higher and fuel gains.
· In fact, high-yield spreads actually widened by more than 50 basis points in the second half of January; corporate spreads widened as well.
· Despite this slide, the Barclays Capital Aggregate Bond Index gained 1.53 percent.
Revisiting the case for a weak market
Last month, we described scenarios for weak and strong markets in 2010. So far, the bears seem to have it right.
· Stocks looking to advance on better-than-expected data have instead sold off.
o Stocks briefly pushed higher on news of a strong gross domestic product (GDP) number—indicating that the economy grew at a 5.70-percent rate in the fourth quarter—on the last day of the month. Yet, by the end of the day, the markets had traded down sharply.
o This was perhaps a reaction to news that about 3.50 percent of the GDP number was attributed to a rebuilding of inventory, not to actual growth.
There are some signs, however, that the economy is improving.
· Consumer confidence rose to 55.9 in January.
· While likely not a sign that consumer spending is returning to pre-recession levels, the trend points to an improving economic outlook.
Still, investor optimism continues to be challenged by high unemployment.
· The rate in January fell slightly to 9.70 percent, but the economy still shed 20,000 jobs.
· It is unlikely that we’ll see a strong economic recovery without new job growth to drive spending.
The earnings keep coming strong
It’s difficult to ignore the strong fourth-quarter earnings reported thus far.
· As of January 29, 220 of the S&P 500 companies had reported earnings.
o 78 percent of them beat analysts’ estimates, while only 14 percent came up short.
o The blended earnings growth rate for the S&P 500 stood at 206 percent year-over-year.
Yet the market seems to be doing so, again raising concerns over the potential for near-term growth.
The government is still our business partner
The government continues to drive the Main Street agenda and is looking for ways to further influence actions on Wall Street.
· Because markets have reacted favorably to stimulus, monetary policy, and programs to purchase and support mortgage assets, it will be critical for the government to sustain the recovery.
· President Obama’s budget proposes modest spending cuts, but it still shows a projected deficit of $1.6 trillion for the coming year.
o This—coupled with his intention to raise taxes on individuals making more than $250,000, banks, and multinational companies—raises concerns over the budget’s potential impact on economic growth.
· The Democrats’ loss of their filibuster-proof majority following the Massachusetts senatorial election has also intensified concerns regarding future policy decisions.
Prepare for heightened volatility
Risk complacency at the end of 2009 is being replaced with the need for vigilance in the near term.
· The VIX, a measure of volatility in the S&P 500, rose from a compressed level of 18 to 25 by the end of January.
· While a far cry from the highs of 75–80 seen during the market downturn, it’s definitely a sign of renewed volatility in the equity markets.
It’s impossible to predict where the markets will head, but there are signs that this year will not be the same as last year.
· We suggest preparing for potential volatility—looking to reduce portfolio risk where possible—and advise you not to be afraid to realize some of the hard-earned profits in your portfolios.
· It’s our view that, while the economy will continue to chug along and markets may eke out modest gains in 2010, it is likely going to be a rough ride.
Disclosure: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Barclays Capital Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Barclays Capital government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities.
Authored by Simon Heslop, CFA®, director of asset management, at Commonwealth Financial Network.
© 2010 Commonwealth Financial Network®
__________________________________________________________________
Nearly 1 in 3 Americans do not have life insurance reports a 2008 national survey conducted by Heritage Union, a Richmond, VA Life Insurance Company. That means that about 77 million adult Americans are exposed to financial trouble if the worst was to happen.
Despite the reality of being uninsured, 77 percent of the same people surveyed believe it important to provide for loved ones after they were gone.
Shabri Moore, CFP®, president of Moore Wealth Inc., said, “This incongruity points to the fact that we, financial planners, have an obligation to make people aware of what is at risk without life insurance. That’s why September has been tapped as National Life Insurance Awareness Month.”
The theme for this year is the Wonders of Life.” We all have moments of wonder in our lives…witnessing the birth of a child, a baby’s first steps, graduations and wedding days are just a few,” adds Jane Helm, Senior Paraplanner at Moore Wealth. “Life insurance is a way to ensure the life that you’ve worked hard to achieve for your loved ones won’t come to a halt if something were to happen to you.”
The survey also found that of the Americans that do have life insurance, 22 percent believe that they don’t have enough cover to support their families if they ever needed to claim on the the life insurance policy.
The biggest reasons given by those surveyed for not having life insurance was the fact that it was too expensive. “What most people don’t realize is that the insurance companies offer products that are affordable to those who may have a pre-existing condition,” said Ms. Moore.
In honor of National Life Insurance Awareness, talk to a CERTIFIED FINANCIAL PLANNER™ professional who can guide you through what you need for adequate life insurance coverage and help you update your beneficiary information.
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