Schwartz Financial Weekly Commentary February 6, 2017


The Markets

U.S. stock markets were unsettled last week.

President Trump’s executive order banning travel from seven predominantly Muslim countries to the United States for 90 days, in tandem with some disappointing earnings reports, inspired turmoil and uncertainty that helped push U.S. stock markets lower early in the week. The Dow Jones Industrial Average dropped below 20,000.

Mid-week, markets remained sanguine after the Federal Reserve left interest rates unchanged. An economist cited by Barron’s said:

“[The Federal Reserve] left open the door to hike rates further should the trend in inflation accelerate while also maintaining the option to hold rates steady for an extended period. I expect the minutes to be released in a few weeks will show a more wide ranging debate than that indicated by the policy statement, but the clear lack of visibility on key trade, tax, spending, and regulatory initiatives argued for a well-scrubbed statement.”

Late in the week, markets rallied when the Bureau of Labor Statistics delivered a reasonably strong jobs report. The Boston Globe wrote, “…employers added a healthy 227,000 workers to their payrolls in January. But, despite a surge of local minimum-wage increases in states across the country, wage growth was meager.”

Financial shares gained on Friday. The Washington Post reported market optimism returned after The Wall Street Journal published an interview with Gary Cohn, White House Economic Council Director. Cohn indicated President Trump planned to sign executive orders preparing the way to dismantle Dodd-Frank reforms and limit other regulations affecting the financial industry.

The Dow finished the week just above 20,000.

Data as of 2/3/17 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 0.1% 2.6% 20.1% 9.7% 11.3% 4.7%
Dow Jones Global ex-U.S. 0.3 4.3 15.3 -0.1 1.8 -1.0
10-year Treasury Note (Yield Only) 2.5 NA 1.9 2.6 2.0 4.8
Gold (per ounce) 2.6 4.8 7.4 -1.3 -6.9 6.5
Bloomberg Commodity Index -0.1 0.5 15.3 -11.4 -9.6 -6.1
DJ Equity All REIT Total Return Index 0.8 0.7 13.4 12.5 10.2 4.2

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,, 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.

Does college open doors? A new study examined how college affects Americans’ social mobility by cross-referencing data from the Department of Education (from 1999-2013) with 30 million tax returns. The researchers looked at the earnings of graduates from various colleges and how graduates’ earnings varied relative to parental income. The Economist described some of the findings:

“…some colleges do a better job of boosting poor students up the income ladder than others. Previously, the best data available showed only average earnings by college. For the first time, the entire earnings distribution of a college’s graduates – and how that relates to parental income – is now known.

These data show that graduates of elite universities with single-digit admissions rates and billion-dollar endowments are still the most likely to join the top 1 percent (though having wealthy parents improves the odds). And despite recent efforts to change, their student bodies are still overwhelmingly wealthy…

…legacy admissions, which give preferential treatment to family members of alumni, exacerbate the imbalance. Of Harvard’s most recently admitted class, 27 percent of students had a relative who also attended. There’s evidence that this system favors the already wealthy. MIT and the California Institute of Technology, two elite schools with no legacy preferences, have much fewer students who hail from the ranks of the super-rich.”

The top colleges by mobility rate (students moving from the bottom to the top 20 percent) included: Cal State University-Los Angeles, Pace University-New York, SUNY-Stony Brook, Technical Career Institutes, University of Texas-Pan American, CUNY System, Glendale Community College, South Texas College, Cal State Polytechnic-Pomona, and University of Texas-El Paso.

The top colleges by upper-tail mobility rate (students moving from the bottom 20 percent to the top 1 percent) were: University of California-Berkeley, Columbia University, MIT, Stanford University, Swarthmore College, Johns Hopkins University, New York University, University of Pennsylvania, Cornell University, and University of Chicago.

Weekly Focus – Think About It

“Oh give me a home where the buffalo roam,

Where the deer and the antelope play,

Where seldom is heard a discouraging word,

And the skies are not cloudy all day.”

–Lyrics to Home on the Range

If you followed our blog at:   you would not have missed these recent posts over the weekend.

Recent Posts

Value vs. Growth Investing (2/3/17)

Name 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year
US Market 0.23 2.90 2.06 11.33 24.26 11.63 13.55
US Core 0.37 2.85 2.28 10.92 26.24 12.51 14.46
US Growth 0.03 4.41 3.51 10.02 17.76 10.43 12.79
US Large Cap 0.13 2.73 1.87 10.25 21.95 11.86 13.58
US Large Core 0.30 2.81 2.26 9.96 25.32 12.91 14.88
US Large Growth -0.14 4.36 3.37 9.00 15.13 11.28 13.40
US Large Val -1.10 0.05 0.05 10.47 25.89 10.16 12.60
US Mid Cap 0.48 3.62 2.80 12.90 28.66 11.25 13.67
US Mid Core 0.50 3.38 2.67 11.97 25.75 11.56 13.47
US Mid Growth 0.45 4.83 4.13 11.72 24.29 8.21 11.16
US Mid Val 0.50 2.72 1.67 15.04 36.57 14.18 16.47
US Small Cap 0.57 2.63 1.88 17.83 36.95 10.13 12.62
US Small Core 0.68 1.81 1.41 17.49 36.27 11.09 12.90
US Small Growth 0.64 3.84 3.20 15.95 31.39 7.42 11.10
US Small Val 0.38 2.37 1.13 19.98 43.46 11.87 13.83
US Value -1.09 0.46 0.46 11.76 29.23 10.70 13.53

©2004 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) is not warranted to be accurate, complete or timely. Morningstar is not responsible for any damages or losses arising from any use of this information and has not granted its consent to be considered or deemed an “expert” under the Securities Act of 1933. Past performance is no guarantee of future results.  Indices are unmanaged and while these indices can be invested in directly, this is neither a recommendation nor an offer to purchase.  This can only be done by prospectus and should be on the recommendation of a licensed professional.

Office Happenings:

Overwhelming Majority Failed 401k Financial Education Quiz

Think 401k participants understand the plans in which they’re enrolled? Think again.

More than 70 percent of respondents failed a 401k financial education workplace quiz, missing at least three of the nine basic questions.  The quiz, administered by RIA bigwig Ken Fisher and Fisher Investments 401(k) Solutions finds a “startling” knowledge gap among Americans when it comes to 401k plans.

The results found that most Americans understand topics like 401k matching, but they struggled on the quiz when asked about additional topics that are critical to making 401k decisions.

For example, only 24 percent of respondents could define a mutual fund and only 43 percent knew the percentage of their salary they should save for a comfortable retirement.  “These results point to a larger issue that I see regularly with clients,” Nathan Fisher, managing director and head of Fisher Investments 401k Solutions, said in a statement.

“People tend to understand the big picture value of 401k plans, but when you start to get more specific they quickly struggle, which is a huge problem.” This sentiment was reflected in the data: while four out of five Americans say they prefer to work for companies that offer a plan, a majority (66 percent) are not confident in choosing 401(k) investment options.

Moreover, one in four Americans claim they were not involved or can’t recall how they picked their 401k assets, and over 40 percent are not confident that they will reach their retirement goals.

Employees at small businesses (those with between five and 200 employees) tend to be even less confident about their 401k. This group had a larger fail rate in the quiz, with nearly four out of five respondents failing. This group was also more likely to say that their provider “does not make them feel in control of their financial future and that they wish their 401k plan was easier to understand.”

“Small businesses owners want to provide the best possible benefits to their employees, but they often lack the time or resources to assess benefits like 401k plans,” Fisher concluded.

“However, it doesn’t have to be daunting. This survey can provide a road map for small business owners to evaluate and select plans that will help address the gaps.” Additional findings from the survey include: Americans don’t trust their 401k providers: Trust is an important aspect of retirement planning–both trusting your employer and your advisers.

Unfortunately, the survey found one out of four Americans does not trust their provider. Interestingly, a third of respondents said that they look to friends or family members for information and guidance on 401ks. This number was much higher among millennial’s, with 41 percent saying they look to friends and family members for information.

Women are less confident when it comes to 401ks: Though academic and industry research shows women tend to make more thoughtful investment decisions, when it comes to monitoring the progress of accounts, only 1 in 5 women make it a priority. Moreover, women were less likely to say they know how to pick investments in their 401ks.


Michael L. Schwartz, RFC®, CWS®, CFS

 P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.


Michael L. Schwartz, RFC, CWS, CFS, a registered principal offering securities and advisory services through Independent Financial Group, LLC., a registered broker-dealer and investment advisor.  Member FINRA-SIPC. Schwartz Financial and Independent Financial Group are unaffiliated entities.


This information is provided for informational purposes only and is not a solicitation or recommendation that any particular investor should purchase or sell any security. The information contained herein is obtained from sources believed to be reliable but its accuracy or completeness is not guaranteed.  Any opinions expressed herein are subject to change without notice.  An Index is a composite of securities that provides a performance benchmark.  Returns are presented for illustrative purposes only and are not intended to project the performance of any specific investment.  Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly.  Past performance is not a guarantee of future results.


* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.


* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices. 


* 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 London afternoon gold price fix as reported by the London Bullion Market Association.


* The DJ 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 TR 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.


* Past performance does not guarantee future results.


* You cannot invest directly in an index.


* Consult your financial professional before making any investment decision.


* To unsubscribe from our “market commentary” please reply to this e-mail with    “Unsubscribe” in the subject line, or write us at “

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