Schwartz Financial ­Weekly Commentary 4/10/17

The Markets

U.S. stock markets are sending mixed signals.

If you look at the performance of the CBOE Volatility Index (a.k.a. the VIX or fear gauge), which is a measure of market expectations for volatility in the near future, it appears all is well and investors expect no unexpected events. Barron’s explained:

“…which brings us back to a central fact: the absence of volatility. The first quarter was historic for the CBOE Volatility Index…It ranged from 10.6 to 13.1, and its average level was 11.69, the lowest in an initial quarter since the VIX was born in 1990 and the second-lowest quarterly average since the 11.3 of 2006’s final three months…”

The VIX remained stubbornly low last week, too, despite weaker than expected employment news, wage news, and generally flat economic data.

If you turn your eyes to the number of companies whose shares have reached new highs, you might form a different opinion about the steadiness of stock markets. Barron’s wrote:

“…the squadron of stocks pushing 52-week highs at the New York Stock Exchange has shrunk from 338 on March 1 to 72 late last week…But, if the planet really is enjoying a synchronized economic recovery, why are we lunging at these stocks as if they were the only game in town?”

It’s difficult to know how to factor in last week’s air strikes against Syria, which registered as a tiny blip on the U.S. stock market radar. Some analysts say that’s as it should be. The real drivers of market performance in 2017 will be tax reform and global monetary policy. Others are concerned involvement in Syria could lead to a reshuffling of political priorities and delay progress on domestic legislation.

In times like these, diversification is critical.

Data as of 4/7/17 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) -0.3% 5.2% 15.4% 8.5% 11.3% 5.0%
Dow Jones Global ex-U.S. -0.4 7.0 13.2 -1.4 2.8 -1.2
10-year Treasury Note (Yield Only) 2.4 NA 1.7 2.7 2.0 4.7
Gold (per ounce) 1.7 9.3 2.0 -0.8 -5.1 6.5
Bloomberg Commodity Index 0.6 -1.9 10.8 -13.9 -9.5 -6.7
DJ Equity All REIT Total Return Index 0.9 3.5 7.3 10.7 11.0 4.9

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.

pulling ink out of the air. Air pollution is one of the biggest environmental and human health threats in the world, according to a 2016 World Health Organization report:

“To date, air pollution – both ambient (outdoor) and household (indoor) – is the biggest environmental risk to health, carrying responsibility for about one in every nine deaths annually. Ambient (outdoor) air pollution alone kills around 3 million people each year…Air pollution continues to rise at an alarming rate and affects economies and people’s quality of life; it is a public health emergency.”

Engineer Anirudh Sharma was familiar with the problem. The MIT Media Lab student was walking down a street in Mumbai, reported, when he noticed that diesel exhaust from passing buses and cars was staining his clothes black.

The experience sparked an idea: Was it possible to recycle air pollution and use it to make something useful? Like ink?

During the past few years, Sharma has developed technology to create the world’s first line of art supplies derived from air pollution. He and his team have built an exhaust filter that captures carbon soot as it is emitted from cars, generators, and ferries. Once pollution has been gathered, impurities are removed. The remaining soot is ground into pigment and mixed with vegetable oil to create inks, markers, and paints.

One artist commented, “I don’t know if it’s the pollution, but the quality of the ink is really special…It’s pitch black, really thick and dries incredibly quickly.”

Last month, the first Clean Air Gallery opened in London. It features work by artists from London, Glasgow, Leeds, Southampton, and Nottingham – some of the most polluted cities in the United Kingdom – using Sharma’s ink. Other exhibitions are expected to open in Berlin, Singapore, and New York.

Weekly Focus – Think About It

“A mind which really lays hold of a subject is not easily detached from it.”

–Ida Tarbell, Investigative journalism pioneer

Value vs. Growth Investing (3/31/17)

Name 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year
US Market -0.33 5.56 -0.34 3.74 18.49 10.38 13.25
US Core -0.14 6.64 0.04 5.03 21.60 11.06 14.54
US Growth -0.27 8.29 0.68 5.42 13.75 10.73 12.16
US Large Cap -0.22 6.03 -0.44 4.19 17.72 10.82 13.23
US Large Core 0.01 7.47 0.16 5.77 22.29 11.69 14.97
US Large Growth -0.13 9.02 0.77 5.96 12.86 11.82 12.57
US Large Val -0.53 1.97 -2.14 1.08 18.51 8.91 12.21
US Mid Cap -0.42 5.25 0.05 3.26 19.63 9.57 13.54
US Mid Core -0.25 6.03 -0.10 4.28 18.76 9.94 13.73
US Mid Growth -0.41 7.06 0.64 4.53 15.38 7.87 10.93
US Mid Val -0.62 2.62 -0.35 0.88 24.94 10.87 16.01
US Small Cap -1.18 1.94 -0.54 0.59 23.54 7.97 12.53
US Small Core -1.26 1.03 -0.66 0.49 23.36 8.28 12.70
US Small Growth -1.41 4.27 -0.07 2.41 20.13 7.16 11.31
US Small Val -0.88 0.56 -0.94 -1.16 27.06 8.45 13.55
US Value -0.57 2.00 -1.72 0.89 20.38 9.29 13.09

©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:

Tax Season Fast Ending

Tax season is winding down.  For adults like us, this time of year is like a second Christmas.  The stress of filing is over, and now we have our tax refunds to look forward to.  The question is, what will you do with yours?

Because tax refunds come outside our regular income, some people treat them like change beneath the couch cushions—it’s extra spending money.  They think, “Now I can buy that new iPad, or go away for the weekend!”  Others are more prudent, and use the cash to pay down their debt, handle every-day expenses, or line their savings account.  How do I know?  Back in 2011, CNN did a study to see how most Americans spend their tax refund.  This is what they found1:

  2007 2008 2009 2010 2011
Pay down debt 43.10% 46.50% 48% 43.90% 41.90%
Savings 38.60% 37.20% 38.90% 40.30% 42.10%
Everyday expenses 26.50% 27% 26.70% 28.80% 29.70%
Major purchase 11% 12.10% 11% 12.50% 13.20%
Vacation 13.3% 12.1% 11.1% 10% 11.9%
Other 7.2% 7.5% 7.5% 7.3% 6.7%

As a financial advisor, I don’t have a problem with any of these categories.  It’s always good to save, and it’s always good to pay down your debt.  It’s equally important to enjoy the money you’ve worked so hard to attain.  So, if there’s a dream vacation you’ve been planning to take, go for it!  Just remember to send a postcard.

BUT.  (And there’s always a “but.”)

Don’t just spend your tax refund for the sake of spending it.  Don’t just stick it in a savings account because you can’t think of anything else.  As a financial advisor, this is something I feel every investor should remember.  My philosophy is that the money you earn not earmarked for expenses should always be put toward reaching your goals.  Remember, goals can be short-term, mid-term, or long-term.  So if one of your goals is to see the beaches of Copacabana, then there’s no harm in using your tax refund to go there.  But if you don’t have a goal like that in mind, it would be a mistake to think, “Okay, I’ve got my refund … might as well have some fun in Vegas this weekend!”  That’s not a goal.  That’s a whim.  And I think it’s a shame to waste your tax refund on a whim.

Instead, consider this: invest your tax refund.  It’s not sexy.  It may not provide immediate gratification.  But it could make you happier down the road.  Why?  Because achieving our goals is always a bigger thrill than satisfying our whims.

Now, I don’t think you should invest money just to invest it, either.  That’s why I’d advise you to invest in a way that will help you reach your goals.  For instance, you could invest your refund in an IRA or Roth IRA.  (I’m not necessarily recommending this; I would never do that without knowing more about you or your situation.  This is just an example.)

Here’s the point.  Never give up the things you want the most for the things you only want right now.  Investing your tax refund is a fantastic way to get that much closer to the things you want most in life.  A refund is a vehicle you can use to reach your goals; investing is the road that takes you there.

So, here’s what I propose.  When you get your refund, don’t do anything with it immediately.  Instead, take five minutes to stop and think.  Would using the money now really get you what you want … or is investing it the smarter choice?  It’s at least worth considering.

Regardless of what you do, enjoy your refund!  Happy end-of-tax season!


,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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