THE MARKETS
Can Sir Isaac Newton's first law of motion help explain the
continuing surge in the stock market?
In 1686, the great mathematician and physicist first presented
his three laws of motion. The first law stated that, "Every object
will remain at rest or in uniform motion in a straight line unless
compelled to change its state by the action of an external force."
Well, some unknown "external force" compelled the stock market to
change its downward spiral in early March and since then, it's been
up, up, and away.
Last week, the S&P 500 index rose another 2.3%, stopping
just shy of the 1,100 mark. Better than expected earnings from
companies such as Disney and Abercrombie plus more merger and
acquisition activity (Hewlett-Packard agreed to buy 3Com at a large
premium) helped keep the market in upward motion. Gold continued
its fabulous run and finished the week with its ninth gain in the
past 10 trading days, according to Associated Press. And, the U.S.
dollar became cheaper last week against most of its major
counterparts, partly due to reports showing other countries are
recovering faster than the U.S., according to Bloomberg.
We are keeping our eyes and ears open for early signs of an
"external force" that may change the upward course of the markets.
In the meantime, enjoy the ride.
|
Data as of 11/13/09
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic Stocks)
|
2.3%
|
21.0%
|
25.2%
|
-7.6%
|
-1.6%
|
-2.4%
|
|
DJ Global ex US (Foreign Stocks)
|
2.3
|
39.0
|
48.3
|
-4.3
|
4.5
|
1.5
|
|
10-year Treasury Note (Yield Only)
|
3.4
|
N/A
|
3.8
|
4.6
|
4.2
|
5.9
|
|
Gold (per ounce)
|
0.7
|
26.9
|
54.7
|
21.0
|
20.3
|
14.3
|
|
DJ-UBS Commodity Index
|
0.2
|
12.3
|
6.6
|
-7.7
|
-2.8
|
3.7
|
|
DJ Equity All REIT TR Index
|
6.2
|
19.4
|
24.4
|
-12.6
|
-0.3
|
10.3
|
Notes: S&P 500, DJ
Global ex US, Gold, DJ-UBS 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
TR 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 or
not available.
WHEN IS MONEY A GOOD INVESTMENT? Back in 1962,
artist Andy Warhol completed a hand-drawn silkscreen painting
titled "200 One Dollar Bills." True to its title, the massive
7½-foot wide painting depicted 200 one dollar bills reproduced in
tones of black on grey, according to Bloomberg. The owner of the
work, Pauline Karpidas, a London-based collector, purchased the
painting with her husband back in 1986 for $385,000. Last week, Ms.
Karpidas sold the painting for - are you ready for this - an
incredible $43.8 million! And we all thought the dollar was
depreciating.
From $385,000 to $43.8 million in 23 years translates into an
average annual return of nearly 23%. Not bad for a painting. By
contrast, the S&P 500 index rose at a modest-by-comparison
average annual rate of approximately 6.5% from mid-1986 to today,
according to data from Yahoo! Finance.
As the stunning value of the Warhol painting shows, investment
opportunities may show up in places you wouldn't normally think of.
Unlike the financial markets, though, there are no easy ways to
invest in masterpiece paintings on behalf of our clients. However,
the point of mentioning Warhol is that we do search far and wide to
try and find investment opportunities that may help offset the
volatility of the stock and bond markets. Fortunately, innovation
in the financial markets over the past few years has expanded the
types of products available and we continue to analyze and perform
due diligence on them to see how they might benefit our
clients.
Weekly Focus - Think About It
"Money is neither my god nor my devil. It is a form of
energy that tends to make us more of who we already are, whether
it's greedy or loving."
--Dan Millman
For your convenience the sources have been listed below:
www.grc.nasa.gov/WWW/K-12/airplane/newton1g.html
news.yahoo.com/s/ap/20091113/ap_on_bi_st_ma_re...
www.marketwatch.com/story/wall-street-embraces...
www.bloomberg.com/apps/news?pid=20602081&sid=a...
www.economist.com/opinion/displayStory.cfm?story_...
www.bloomberg.com/apps/news?pid=20601088&sid...
finance.yahoo.com/q/hp?s=%5EGSPC&a=11&b=...
finance.yahoo.com/q/hp?s=%5EGSPC&a=11&b=3...
www.quotegarden.com/money.html
