Schwartz Financial Weekly Commentary 10/9/17

The Markets

Slow and steady…

It has been 332 days since the Standard & Poor’s 500 (S&P 500) Index experienced a 5 percent drop, reported Barron’s. If there isn’t a selloff on Monday or Tuesday, this will become the longest rally without such a drop.

During this period, the Index has gained 33 percent. Think about that for a moment: 33 percent over 332 days. By Barron’s calculations, the market has gained less than 0.1 percent per day. That’s a very slow rate of increase, relatively speaking. The longest-ever rally without a 5 percent drop, which began in November 1994, was accompanied by a gain of 56 percent or 0.17 percent per day.

The most recent issue of The Economist pondered the phenomenon of the slow-as-molasses bull market that has pushed asset prices higher:

“No one would mistake the bloodless run-up in global stock markets, credit, and property over the past eight years for a reprise of the ‘roaring 20s,’ or even an echo of the dotcom mania of the late 1990s. Yet only at the peak of those two bubbles has America’s S&P 500 been higher as a multiple of earnings measured over a ten-year cycle. Rarely have creditors demanded so little insurance against default, even on the riskiest ‘junk’ bonds. And rarely have property prices around the world towered so high…the world is in the throes of a bull market in everything.”

It would be a mistake to assume asset prices will continue to move higher indefinitely. One characteristic that may signal the onset of a bear market is investor euphoria, and we haven’t seen that. The most recent American Association of Individual Investors’ Sentiment Survey showed 2.3 percent more investors were bullish last week, pushing the total to 35.6 percent. That’s still well below the historic average of 38.5 percent.

Last week was punctuated by a senseless shooting. Our hearts and prayers are with the people of Las Vegas.

Data as of 10/6/17 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 1.2% 13.9% 18.0% 9.1% 11.9% 5.1%
Dow Jones Global ex-U.S. 0.5 19.3 17.5 3.3 4.8 -1.0
10-year Treasury Note (Yield Only) 2.4 NA 1.7 2.4 1.8 4.6
Gold (per ounce) -1.7 8.9 0.6 1.8 -6.6 5.6
Bloomberg Commodity Index -0.6 -4.1 -1.9 -11.1 -10.6 -6.9
DJ Equity All REIT Total Return Index 0.5 6.6 8.6 10.2 10.1 5.6
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.

Zombie tourism and zombie companies. Zombies have a special place in the heart of pop culture. The undead are pivotal characters in books, movies, games, and television shows. The practical can read The Zombie Survival Guide. Thrill seekers can binge on The Walking Dead. Romantics have Pride and Prejudice and Zombies. Anyone looking for a laugh can watch Shaun of the Dead or Zombieland.

If you’re one of those people who just can’t get enough of roamers, rotters, biters, and crawlers, you’re in for a treat: zombie tourism. National Geographic has identified several travel destinations that are steeped in zombie legend:

  1. American zombie culture appears to have origins in Haiti, where slaves believed death would reunite them with their gods and homelands. The exception was suicide. If slaves took their own lives, they “would be forced to remain in their bodies, soulless, and continue to work the plantations.”


  1. In Greece and elsewhere, folklore historians have found anyone who died of plague or was cursed, murdered, or born on an inauspicious day, could potentially rise from the dead. Some archeology digs have found graves with skeletons weighted by rocks or millstones.


  1. Georgia (in Europe). You won’t find any zombies here – and that’s the point. Apparently, Georgia boasts some of the world’s most promising zombie-proof dwellings. The village of Chazhashi, at the confluence of the lnguri and Black Rivers, has more than 200 nearly impenetrable medieval tower houses.

Zombies aren’t always undead humans. There are zombie companies, too. A zombie company is debt-laden and on the edge of bankruptcy. In fact, the Organization for Economic Co-operation and Development (OECD) thinks zombie firms may be one reason economic growth has been so slow. The Economist reported:

“We know that a few companies are still producing substantial productivity gains but it may be that monetary policy, by keeping rates low, has stymied the forces of creative destruction; ‘zombie’ companies have been kept alive, dragging down the productivity numbers. Whatever the reason, economic growth won’t rebound until productivity perks up.”


Perhaps National Geographic should add some quarterly earnings calls to its zombie tourism list.


Weekly Focus – Think About It


“Fear is the main source of superstition, and one of the main sources of cruelty. To conquer fear is the beginning of wisdom.”

–Bertrand Russell, British philosopher


Value vs. Growth Investing (10/6/17)

Name 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year
US Market 1.27 15.55 3.89 6.49 20.58 11.36 14.18
US Core 1.06 15.46 3.38 5.38 20.53 11.89 15.15
US Growth 1.50 22.88 3.02 7.79 23.35 12.10 14.39
US Large Cap 1.32 16.61 3.52 6.63 21.32 11.53 14.06
US Large Core 1.03 16.75 2.62 5.15 21.63 12.36 15.42
US Large Growth 1.47 24.08 2.59 8.00 24.16 12.57 14.74
US Large Val 1.44 9.57 5.46 6.55 18.27 9.61 12.09
US Mid Cap 1.13 13.45 4.28 5.78 18.40 10.74 14.78
US Mid Core 1.17 13.68 4.72 5.92 17.70 10.61 14.74
US Mid Growth 1.53 19.69 3.58 6.75 20.80 10.25 13.32
US Mid Val 0.65 7.14 4.56 4.53 16.48 11.26 16.30
US Small Cap 1.17 11.06 6.69 7.07 19.36 11.39 13.72
US Small Core 0.99 8.90 6.91 5.92 18.65 11.32 14.06
US Small Growth 1.67 19.63 6.09 8.52 22.18 12.33 13.66
US Small Val 0.79 5.03 7.14 6.80 16.90 10.45 13.35
US Value 1.24 8.77 5.40 6.17 17.85 10.01 13.04

©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:


“The Three Key Challenges of Retirement”

Planning for your retirement can be challenging. It can be scary, and it can be frustrating. I have seen many clients who felt their plan was a disaster waiting to happen. As an advisor, I am here to say that you can handle it. Planning for retirement doesn’t have to be difficult—in fact, it can be fun! But in order to achieve the retirement of your dreams, you must prepare for three major challenges that every retiree is likely to face.

Challenge #1:

Ensuring a Long Retirement Savings Lifespan

One of the greatest fears people have in retirement is that they will outlive their savings. Fortunately, by taking steps now, you can ensure this doesn’t happen to you.

The first step is to budget your expected expenses based on your normal day-to-day costs and any activities you want to pursue during retirement. Things like travel, hobbies, remodeling your home, etc.

Next, take a hard look at your current savings and level of income. How much are you setting aside for retirement? How much more do you need to be saving or investing in order to meet your expected budget? This is where working with a financial advisor can come in handy, because an advisor can help you determine

  • how much your savings need to grow to meet your needs;
  • how long you can expect your savings to last, based on when you plan on retiring, your general health, and activities;
  • how to maximize your income opportunities after retirement; and
  • what the ideal rate of withdrawal will be from any retirement accounts you have so you don’t run out of

Once you have a plan for your retirement savings, you can move onto the next challenge:


Challenge #2:

Planning for Health Care Expenses

As we age, health care becomes a bigger concern, and a more difficult one to deal with. It can be hard to find a plan that provides the coverage you need at a price you can afford. All the politics and legislation affecting the healthcare industry don’t make it easier, either.

The answer, again, is to plan ahead. Here are a few things you can do:

  1. Learn about your various Medicare

If you are one of the lucky few who will have employer-provided health care coverage even after retirement, congratulations. But if not, start familiarizing yourself with the intricacies of Medicare now. The Federal government’s health insurance program for seniors is often referred to as a single plan, but in reality, it’s many types of plans rolled into one. From the basic level of coverage (Part A), to “Medicare medical insurance” (Part B) which covers outpatient hospital care, physical therapy, and home health care, to the more elaborate “Medicare Advantage” plans, most retirees are confronted with too many options, some of which are more appropriate than others. Choosing the best type of coverage for you will be crucial when it comes to paying for your medical expenses.

  1. Look at

Medigap supplemental insurance is sold by private insurance companies, and is designed to help pay those costs not covered by Medicare. Medigap isn’t free, and certain criteria must be met before you can purchase it, but it’s definitely a route to consider.

  1. Consider long-term care

Important disclaimer: not everyone will need long-term care or assisted living in their lives. That said, many people do, and long-term care (LTC) insurance is one of the best ways to pay for it. It can be beneficial to purchase LTC insurance sooner rather than later, as premiums often grow higher as you grow older. However, LTC is expensive in and of itself, so give the subject a lot of careful consideration before making a decision.

As you can see, paying for health care expenses is a huge part of retirement. As you create your retirement plan, make sure you give the subject all the attention it deserves.

Challenge #3:

Planning for Unexpected Expenses

While health concerns are a major source of unexpected costs, there are many other types of expenses that could impact your retirement. For instance

  • Car repairs. You know it will happen one day: the strange clunk-clunk sound you start hearing from your engine ends up being a problem that will cost hundreds, maybe even thousands, to fix. And if it happens more than once …
  • Your bills keep going up. What goes up does not necessarily go down. Anyone who has ever paid for an internet connection or satellite TV knows that prices tend to rise over the years. Your basic utilities are prone to price fluctuation as well. A really cold winter means your gas bill will go up. If you have children in the house who keep leaving the lights on, your electricity bill will go up. You get the picture.
  • Household repairs. When the toilet clogs or the faucet leaks; when a window breaks or the roof starts to degrade; when wood-boring beetles infest the tree in the backyard; unless you really like to DIY, that means paying for a professional … who usually aren’t

The point of all this, is to show that unexpected expenses can come at any time, in many different forms. What’s more, they can really pile up.

So, what’s the solution? Start a rainy-day fund! When most people save, they tend to just throw everything into one savings account and withdraw money whenever they either need or want to. Instead, I suggest creating a separate type of savings account: one that can only be touched whenever the unexpected happens. Every month, devote a set percentage of your income to the rainy-day fund in addition to your regular savings. Then, when your car inevitably breaks down, you won’t have to worry about it interfering with that vacation you’ve been dreaming about for years, because you’ve already set aside the funds to deal with it.

The key to starting a rainy-day fund is to do it now. If you wait until after retirement, you’ll probably have waited too long. Plus, once you’re retired, you’ll likely have less to set aside for those unexpected expenses.

Which brings us to the single most important thing you can do to meet these three key challenges of retirement. Have you guessed what it is yet?

That’s right: plan ahead.

By being proactive, by starting now, you can mitigate these challenges and prevent them from derailing your dream retirement.

As always, if you’d like any assistance with creating a retirement plan, or if you have questions about how to maximize your savings and cover your expenses, feel free to contact me at 215-886-2122.




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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