Major indices in the United States and elsewhere dipped lower as U.S. economic growth came in below expectations. The Commerce Department reported gross domestic product (GDP) grew by 0.2 percent annualized during the first quarter. Growth was hindered by the strength of the U.S. dollar, which made exports less attractive, and cold winter weather. U.S. market performance also reflected last week’s earnings news for technology stocks which wasn’t quite as rosy as the previous week’s.
Markets across much of Asia lost value last week, too. China was a notable exception. The Shanghai Composite gained more than 1 percent during the period. It was a truly remarkable performance as China is in the midst of its worst earnings season since the global financial crisis. Bloomberg reported:
“…2014 profits missed estimates by the most in six years and analysts cut their outlooks at the fastest pace since 2009…Yet, it’s mainland individuals who account for at least 80 percent of trades, and they’re still buying shares at a record pace in anticipation of further government stimulus. That helps explain why the highest price-to-earnings ratios in five years have failed to slow the Shanghai Composite’s advance.”
China’s economic growth has also slowed. During the first quarter, its GDP grew by 7 percent. That’s a much better showing than the United States but not so great when benchmarked against previous growth in China. In fact, it was China’s slowest growth since 2009.
The Economist commented, “…the question for China is not whether growth will rebound to anything like the double-digit pace of the past. Instead, it is whether its slowdown will be a gradual descent – a little bumpy at times but free from crisis – or a sudden, dangerous lurch lower.”
|Data as of 5/1/15||1-Week||Y-T-D||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor’s 500 (Domestic Stocks)||-0.4%||2.4%||11.9%||14.5%||11.9%||6.1%|
|Dow Jones Global ex-U.S.||-0.9||7.8||0.5||6.4||3.8||3.8|
|10-year Treasury Note (Yield Only)||2.1||NA||2.6||2.0||3.7||4.2|
|Gold (per ounce)||-0.6||-1.9||-8.0||-10.9||-0.2||10.6|
|Bloomberg Commodity Index||1.8||-0.9||-24.1||-9.9||-5.2||-3.8|
|DJ Equity All REIT Total Return Index||-3.0||-0.8||13.0||10.9||12.0||8.5|
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, djindexes.com, 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.
When do you have a duchenne smile? According to Martin Seligman, professor of psychology at the University of Pennsylvania and author of Authentic Happiness, the Duchenne is a genuine smile, typically accompanied by eye crinkling, and it demonstrates real happiness. The alternative, the Pan American, is a counterfeit smile. It may be the one we employ in exasperating customer service situations. The point is: When we are truly happy, our smiles are genuine.
Researchers in the field of positive psychology and happiness have spent quite a bit of time trying to determine whether money makes us happy. There has been no decisive answer to date, although some studies’ findings offer abundant food for thought.
More money means greater happiness. “…rich individuals are more satisfied with their lives than poorer individuals, and we find that richer countries have significantly higher levels of life satisfaction.”
–Betsey Stevenson and Justin Wolfers of University of Pennsylvania
A dearth of money can cause emotional pain. “More money does not necessarily buy more happiness, but less money is associated with emotional pain.”
–Daniel Kahneman and Angus Deaton of Princeton University
Experience offers a better value for your dollar. “People generally believe that making money and obtaining material possessions will improve their lives… However, materialism has repeatedly been shown to be detrimental to well-being…Investing discretionary resources into life experiences, rather than buying material possessions, makes people happier.”
–Ryan Howell et al, San Francisco State and University of Southern California
Anticipation makes experience all the sweeter. “Four studies demonstrate that people derive more happiness from the anticipation of experiential purchases and that waiting for an experience tends to be more pleasurable and exciting than waiting to receive a material good.”
–Amit Kumar et al, Cornell University
The relationship between emotional well-being and financial well-being is complex and worth exploring. How does money affect your life? Does it make you happy? Could it make you happier?
Weekly Focus – Think About It
“Look up at the stars and not down at your feet. Try to make sense of what you see and wonder about what makes the universe exist. Be curious.”
–Stephen Hawking, English theoretical physicist
DEAN, JACOBSON FINANCIAL SERVICES
Securities and Retirement Plan Consulting Program advisory services offered through LPL Financial, a Registered Investment Advisor, member FINRA/SIPC. Other advisory services and investment advice offered through Dean, Jacobson Financial Services, LLC, a Registered Investment Advisor, and separate entity from LPL Financial.
*This newsletter was prepared by Peak Advisor Alliance for use by Dean, Jacobson Financial Services, LLC. Peak Advisor Alliance is not affiliated with LPL Financial.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
*Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* 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 afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg 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 Total Return 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.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* Stock investing involves risk including loss of principal.
http://online.barrons.com/mdc/public/page/9_3063 economicCalendar.html?mod=BOL_Nav_MAR_hpp (click on “U.S. & Intl Recaps,” select “Data soft, week rough,” and scroll down to “Global Stock Market Recap”) (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/05-04-15_Barrons-Global_Stock_Market_Recap-Footnote_1.pdf)
http://online.barrons.com/articles/twitter-yelp-linkedin-implode-as-disappointed-investors-flee-1430527154 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/05-04-15_Barrons-Twitter_Yelp_LinkedIn_Implode-Footnote_3.pdf)
http://www.economist.com/news/briefing/21648567-chinese-growth-losing-altitude-will-it-be-soft-or-hard-landing-coming-down-earth (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/05-04-15_TheEconomist-Coming_Down_to_Earth-Footnote_5.pdf)
Seligman, Martin. Authentic Happiness: Using the New Positive Psychology to Realize Your Potential for Lasting Fulfillment, 2002, pg 5: http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/05-04-15_Authentic_Happiness-Footnote_6.pdf)