Schwartz Financial Weekly Commentary 7/24/17

The Markets

Do we have central banks to thank?

Low interest rates, accommodative monetary policy, and improving economic growth have helped stock markets around the world reach record highs, reports Barron’s:

“…a look around the globe shows the surge of the U.S. market to new peaks to be anything but unique. Major [markets] in Europe and Asia also have been setting records. Even in South Korea, the Kospi closed at a new peak and is up 25 percent from its 52-week low last year, as the global technology rally has proved to be more powerful than the threat of a nuclear-missile launch from North Korea. Last week also saw a record close in the S&P BSE Sensex in India. Japan’s Nikkei is up 25 percent from last August and near a 52-week high (albeit still down 48 percent from its 1989 bubble peak). The Shanghai Composite is a relative laggard, with a 9.6 percent gain from its August lows, bolstered by a 3.7 percent jump over the past five weeks.”

Eventually, central banks are expected to tighten monetary policy by raising interest rates and reducing the size of their balance sheets and that could affect markets. The U.S. Federal Reserve released its Policy Normalization Principles and Plans back in 2014. Last month, Chair Janet Yellen indicated the Fed currently intends to begin normalizing policy during 2017.

U.S. monetary policy isn’t the only phenomenon investors may want to keep an eye on.

Fiscal policy (the steps a government takes to influence its country’s economy) deserves some attention, too. The United States will, once again, hit its legal spending limit (the debt ceiling) this fall. U.S. News reported, “Were the United States to hit its borrowing limit – and thus have to start missing payments and stiffing creditors – there’s no telling the exact consequences, but they wouldn’t be good.”

The bond market does not appear to be confident fiscal policy will proceed smoothly. Barron’s reported, “Yields on T-bills that mature in mid-to-late October jumped relative to surrounding maturities, a sign that the money market saw a risk – however slight – of not getting paid on time.”

Data as of 7/21/17 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 0.5% 10.4% 14.2% 7.8% 12.9% 4.8%
Dow Jones Global ex-U.S. 0.8 16.0 17.2 0.1 6.5 -1.2
10-year Treasury Note (Yield Only) 2.2 NA 1.6 2.5 1.4 5.0
Gold (per ounce) 1.5 7.7 -5.5 -1.6 -4.5 6.2
Bloomberg Commodity Index 0.4 -5.2 -2.3 -13.8 -10.4 -6.9
DJ Equity All REIT Total Return Index 0.7 5.9 -1.4 8.7 10.1 6.4
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, 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.

So, here’s another college conundrum: College is a hot topic. College is a hot topic. In recent years, pundits have debated whether students should attend college or skip it and start their own companies. The Thiel Fellowship, founded by tech entrepreneur Peter Thiel, offers students $100,000 to do just that.

For students who choose college, much has been made about which degrees will pay off. Some argue liberal arts degrees lack value, and technical instruction is the real ticket to success. Meanwhile, technology company leaders have reported liberal arts are essential because “they train students to thrive in subjectivity and ambiguity, a necessary skill in the tech world where few things are black and white.”

College is also known for changing the way students think. A new survey indicates it may alter their culinary perspectives. The Economist commissioned a poll to see if residence, income, education, or political affiliation has an effect on food preferences and, guess what? College and post graduate work may expand students’ gustatory preferences and change their eating habits! No, they don’t develop an unhealthy obsession with ramen noodles, boxed mac and cheese, or free food (usually). The survey found:

  • People with post graduate degrees dine out more frequently – often weekly – than people with high school diplomas.
  • Post grads also tend to eat Indian foods, like curries, more often than people with high school diplomas.
  • College grads are more likely than non-college grads to have eaten sushi within the past year.
  • College grads are also more likely than non-college grads to know what prosciutto is and to have eaten it recently.

As it turns out, the great equalizer was Mexican food. A majority of Americans have eaten Mexican food during the past year, regardless of educational attainment.

Weekly Focus – Think About It

“Peanut butter and jelly in the same jar. I don’t understand that. I mean, I’m lazy but I’d like to meet the guy that needs that. This guy must be thinking, “I could go for a sandwich, but I’m not gonna open TWO jars. I can’t be opening and closing all kinds of jars and cleaning WHO KNOWS how many knives.”

–Brian Regan, American comedian

Value vs. Growth Investing (7/21/17)

Name 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year
US Market 0.57 11.43 1.76 5.64 16.89 9.85 15.03
US Core 0.26 11.89 1.45 4.97 18.06 10.64 16.07
US Growth 1.20 19.13 2.39 8.98 19.40 11.22 15.21
US Large Cap 0.60 12.29 1.55 6.19 17.18 10.17 14.91
US Large Core 0.21 13.27 1.19 5.75 19.73 11.43 16.46
US Large Growth 1.35 20.56 2.44 9.53 20.32 11.95 15.60
US Large Val 0.15 3.70 0.91 3.17 11.55 7.08 12.73
US Mid Cap 0.43 10.12 2.09 4.36 15.60 9.10 15.73
US Mid Core 0.32 10.06 2.01 3.33 13.31 8.82 15.45
US Mid Growth 0.69 15.63 2.09 7.08 15.91 8.97 14.09
US Mid Val 0.25 4.87 2.18 2.78 17.66 9.47 17.72
US Small Cap 0.73 6.68 2.98 3.71 17.64 8.55 14.33
US Small Core 0.65 4.82 2.32 2.54 16.54 8.35 14.49
US Small Growth 0.94 14.50 2.75 8.64 19.83 9.75 14.17
US Small Val 0.58 1.04 3.96 0.05 16.24 7.49 14.24
US Value 0.20 3.75 1.37 2.87 13.11 7.60 13.85
 ©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:

Do you have 401(k) Mechanic?

Everyone wants the auto mechanic who is willing to say, “We’ll keep an eye on this, but I don’t recommend you replace this part on your car right now. Why spend money when you don’t absolutely have to?”

No one wants a mechanic who is always trying to urge you into buying that high-priced part or upgrade when it’s not absolutely necessary. That’s because the first mechanic has your best interests in mind.

They’re not trying to wring as much money from their customers as they can; they’re trying to ensure the customers are always on the road, happy and taken care of.

Here are three separate parts of every company 401(k) retirement plan account. There is the sponsor (the company you work for), the provider (the company who has custody of your company 401(k) money), and you, the company 401(k) retirement plan participant.

Which of these three groups has the highest level of concern regarding your company 401(k) retirement plan account?

The U.S. stock markets are near all-time highs. The Federal Reserve is already in the process of rising interest rates from all-time lows. Now is an excellent time to ask yourself about who has the best interest in mind for your 401(k).

If you currently have old company 401(k) accounts laying around from previous employers, this question is especially timely now. Every company 401(k) retirement plan menu has its own set of risks.

If you would like an experienced and qualified mechanic for your company 401(k) retirement plan accounts please consider our office and we will do our best to make sure that your 401(k) continues to act in your best interest.


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 “”.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s