Schwartz Financial Weekly Commentary 7/16/18

The Markets

Investors are becoming more discriminating.

Trade tensions escalated as the U.S. administration expanded tariffs on Chinese goods last week. You wouldn’t have known by watching the performance of benchmark indices, though. Just four of the 25 national stock market indices tracked by Barron’s – Australia, Italy, Spain, and Mexico – moved lower.

However, if you look a little deeper into the performance of various market sectors, you discover an important fact: The market tide wasn’t lifting all stocks.

It has been said a rising tide lifts all boats. When translated into stock-market speak, the saying becomes, ‘A rising market tide lifts all stocks.’ In other words, when the market moves higher, stocks tend to move higher, too. That wasn’t the case last week.

Barron’s reported investors have become more selective:

“We went from a market where everything moved largely together to one where sector fundamentals began to matter more than where the S&P 500 was going…At the sector level, it’s apparent that no one has been ignoring tariffs. While the S&P 500 has gained 1.7 percent over the past month of trading, industrials and materials have dropped 2.5 percent, while financials have slumped 2.9 percent, hit by a double whammy of trade fears and a flattening yield curve. Utilities and consumer staples have outperformed, gaining 8.1 percent and 3.5 percent, respectively.”

Utilities and Consumer Staples are considered to be non-cyclical or defensive sectors of the market because they are not highly correlated with the business cycle.

Defensive companies tend to perform consistently whether a country’s economy is expanding or in recession. For example, a household’s need for power, soap, and food doesn’t disappear during a recession. As a result, the revenues, earnings, and cash flows of defensive companies remain relatively stable in various economic conditions.

In addition, the share prices of these companies tend to be less susceptible to changing economic conditions. Defensive stocks tend to outperform the broader market during periods of recession and underperform it during periods of expansion.


Data as of 7/13/18 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 1.5% 4.8% 14.4% 10.1% 10.7% 8.6%
Dow Jones Global ex-U.S. 0.5 -4.3 4.2 3.2 3.3 1.0
10-year Treasury Note (Yield Only) 2.8 NA 2.4 2.4 2.6 3.9
Gold (per ounce) -1.1 -4.2 1.9 2.5 -0.7 2.5
Bloomberg Commodity Index -2.8 -4.9 2.3 -5.6 -8.2 -9.6
DJ Equity All REIT Total Return Index -0.9 2.2 6.8 8.3 8.3 9.1
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.

what are the biggest risks for retirement investors? If market risk, inflation risk, and interest rate risk were on the tip of your tongue, you need to update your list.

Recently, T. Rowe Price surveyed employers that make defined contribution plans, like 401(k) plans, available to their employees. The company asked plan sponsors to rank the risks they were most concerned about for the people who saved in the plan. The top concerns were:

42 percent =   Longevity Risk. No one knows exactly how long they will live, which makes it difficult for plan participants (and anyone else planning for retirement) to be certain future retirees won’t outlive their savings. Longevity risk was among the top three risks listed by 95 percent of plan sponsors.

25 percent =   Participant Behavioral Risk. “Left on their own, participants tend to take on either too much or too little risk by: failing to properly allocate and diversify their savings; overinvesting in company stock (or stable value/money market funds); neglecting to rebalance in response to market or life changes; and attempting to time the market,” explained T. Rowe Price.

14 percent =   Downside Risk. This is the likelihood an investment will fall in price. For instance, stocks have higher return potential than Treasury bonds, and higher potential for loss. When planning for retirement, it’s important to balance the need for growth against the need to preserve assets.

If you would like to learn more about these risks and strategies that may help overcome them, give us a call.

Weekly Focus – Think About It

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”

–Sun Tzu, Chinese general and military strategist


The clock is running …

We lost a good friend and neighbor, a devoted husband and father of 7, on my birthday this week. After attending his celebration of life, I am hyper aware of the truth today: the clock is running.

Time she flies.

We cannot stop, stall or rewind her. The timer on our lives has been set. None of us knows when our last conversation with our loved ones will happen or when our last breath will be taken.

As for me, I seek to live every day without regret. I don’t always achieve my goal. But today I am recommitting to live on purpose, to consider the lasting impact of my present actions, and to make sure my wife, kids, grandsons, parents, sister and friends know how much I love them.

I encourage you all to ask this vital question today: If this is my last day, will those I leave behind know how much I love them?

Value vs. Growth Investing (7/13/18)

Name 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year
US Market 1.39 6.26 1.03 6.26 17.03 12.16 12.93
US Core 1.01 1.36 0.26 3.83 10.51 10.83 11.98
US Growth 2.17 16.83 2.31 11.84 29.31 15.02 16.36
US Large Cap 1.71 6.25 1.11 6.12 17.34 12.65 13.21
US Large Core 1.12 0.69 0.11 3.19 9.61 11.40 12.11
US Large Growth 2.40 16.90 2.23 10.84 29.71 15.78 17.34
US Large Val 1.01 -0.43 0.23 1.78 10.92 10.05 9.70
US Mid Cap 0.78 5.71 0.82 5.97 15.70 10.82 12.40
US Mid Core 0.96 2.05 0.87 4.57 11.94 9.14 11.91
US Mid Growth 1.47 12.66 1.08 9.56 23.89 11.52 12.98
US Mid Val -0.11 2.37 0.49 3.55 11.11 11.66 12.21
US Small Cap -0.13 8.05 0.83 8.58 17.68 10.82 11.40
US Small Core -0.14 5.63 0.39 7.37 14.96 10.08 10.96
US Small Growth 0.32 15.85 1.97 10.84 26.93 12.73 13.13
US Small Val -0.62 2.88 0.07 7.41 11.30 9.46 9.99
US Value 0.67 0.38 0.27 2.53 11.06 10.37 10.26
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:

7 Rules of Investing

From 1977 to 1990, Peter Lynch ran one of the most successful mutual funds ever, posting an average annual return of 29%.

There are many principles of investing Lynch has espoused over his career. I thought you might be interested to see seven of them in a special infographic I’ve created. They are the same principles we follow here at Schwartz Financial.

I hope you find this infographic insightful. As always, please feel free to call us at 215-886-2122 if you ever have any questions about your own investment portfolio!

7 Rules of Investing

Have a great week!



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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