Play a song for me…
Hey Mr. Tambourine Man play a song for me
I’m not sleepy and there is no place I’m going to
Hey Mr. Tambourine Man play a song for me
In the jingle jangle morning I’ll come followin’ you
Bob Dylan – Mr. Tambourine Man
As many of you may have heard, Bob Dylan will be the first musician to win the Nobel Prize. For about a half of a century Mr. Dylan has confounded expectation and sold millions of records with his heavy, mysterious lyrics. His singing voice reminds me of conversations with my teenage son, I can understand about every third word.
The market has been sleeping and has found no place to go as of the last few months. As Mr. Dylan opines later in his song:
I’m ready to go anywhere, I’m ready for to fade
Into my own parade
Cast your dancing spell my way, I promise to go under it
We too are ready to move forward; we are ready for a parade. While the market has been flat as of late, flat may be impressive given the obstacles the market has faced. Markets do not like uncertainty and we have had a lot of that; the Fed, the election, some softer economic data and some companies lowering their earnings expectations. Investors have been skeptical as well and have been buying bond funds and selling stock funds. So, at the current time flat is the new good. What many of those investors may be missing is that roughly 60% of stocks in the S&P 500 have dividend yields above the 10-year Treasury yield, according to Ned Davis Research.
Defensive sectors (Consumer Staples, Utilities and Telecom) have been some of the worst stock performers as of late. That usually reflects confidence, by investors, in the economic outlook as they move away from the defensive and take on higher risk sectors. Recent data has suggested there may be some tailwinds for the equity markets. The October Purchasing Managers Index in Europe is showing a global growth pick up. Inflation is starting to rise a bit and building permits exceeded expectations in September.
While we are starting to see inflation creeping into our economy, one area we are seeing deflation is in the cost of cheese. We are in a “cheese glut,” that the Wall Street Journal reported would take every man, woman and child in the US one year and three extra pounds of cheese to resolve.
The glut that has produced cheap cheese may be good news to many, an area many American are not seeing a glut is in their savings. As the chart below shows, many American are not prepared for retirement..
As many as 33% of Americans do not have a dollar saved for retirement and 74% have less than $100,000. Our job is to keep you to the right side of that chart.
Many investors fail because they do not save, do not plan and they focus on the wrong issue. One of the biggest risks to financial freedom is investor behavior. Making financial decisions because of some headline or some rumor can prove disastrous. As you can see below, with all of the “shark attacks” that have been in the news we calculate our odds of a bite as pretty high, but statistically you have far better odds of meeting your demise from a mosquito.
Next week should remove a large bit of uncertainty and we hope to start moving forward to “dance beneath the diamond sky.” We are pleased that our clients are not a statistic and that you all have an action plan in place to keep you away from the 74% of the average…who wants to be average.
* Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results, and there is always the risk that an investor may lose money. Diversification neither assures a profit nor guarantees against loss in a declining market. The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities mentioned. The information contained herein, while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice. Bob Dylan Lyrics www.metrolyrics.com/bob-dylan-lyrics Ned Davis Research is an independent firm. Cheese glut is overtaking American from May 16, 2016 Wall Street Journal. Retirement Savings chart from October 8, 2016 Orange County Register, with further credit to the following sources: Money, Farmers Insurance, Fidelity, Pew Research and Dave Ramsey. World’s deadliest animals – www.ob.org/mosquitoweek
The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities mentioned. The information contained herein, while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice.