Market Data Bank

3Q 2019


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S&P 500 SURGES SHARPLY IN 3Q2019

For the quarter, stocks posted a +1.7% gain. It followed a +4.3% gain in the second quarter.

 

 


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U.S. STOCKS TROUNCED FOREIGN

American blue-chip companies were the winners among major global share markets.

Since the financial crisis of 2008, the U.S. has led major world economies in its growth, and that's propelled large-cap S&P 500 companies as well as U.S. small- and mid-sized companies to outperform stock indexes of the other major economies of the world.

Europe over the past five years was stuck in slow-growth, a condition that may not change in the years ahead.

China's fledgling stock market showed the strongest returns of the foreign stock markets. However, Chinese control over the share market makes Chinese stocks subject to unusual financial as well as political risk.

 

 


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INTEREST RATES DROVE SECTORS

This five year snapshot of returns on different industry sectors of the S&P 500 stock index shows the tech sector - dominated by Apple, Amazon, Facebook, and Netflix - showed an astounding +131% return in the five years shown. These higher-risk growth companies paid off in a big way!

Of the 10 sectors, energy shares actually lost 23% of their value in these five years of bull market returns.

If you are employed in the tech sector, it's wise to examine your overall exposure personally to its risk. If you work in the tech sector, your job is obviously tied to the continued growth of the sector. Plus, you also may receive shares or incentives to buy your company stock as part of your compensation plan.

The growth in value of your tech investments could lead you to concentrate too much of your wealth in one sector.

It's just a risk that is often overlooked.

Longtime workers in the energy industry who concentrated their wealth on the oil economy for the past five years are undoubtedly regretting that they overlooked that risk.

 

 


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INDEXES TRACKING 13 ASSET CLASSES

The 13 asset classes shown here ranked by returns make a case for diversification.

The risk of being overweighted in shares of commodities-related companies, that make the raw materials of tangible goods we buy and food we eat, were huge losers.

Shares in crude-oil-related companies in the five years ended September 30th, 2019 lost a stunning two-thirds of their value.

MLPs mostly own energy-related investments, which explains why they fell in value.

 

 


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WORKING-AGE POPULATION

Investors could be in for permanently lower yields on bonds because the low-yield trend is tied to slow-moving demographic trends.

In contrast, however, the U.S. baby boom will spawn an echo-boom generation that is unique among the world's major economies. That's a strong positive fundamental economic factor to consider for long-term American investors.

 

 


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MANUFACTURING DIPS

Since September 2018, manufacturing activity plunged from a record-high of 61.3%. Last week's manufacturing activity report showed further deterioration, from 51.2% in July to 49.1% in August, and the press covered it widely.

This monthly manufacturing data series from the Institute of Supply Management, which certifies purchasing management professionals employed across the U.S. and globally, is designed to signal a recession when it falls to less than 50%. In the last three decades, it has predicted six of the last three recessions.

Over the last three economic cycles, the ISM Manufacturing Index dipped below 50% six times and was not followed by a recession three out of those times; rather, it soared again and after it dropped to less than the 50% recession signal.

 

 

 

 

Past performance is never a guarantee of your future results. Indices and ETFs representing asset classes are unmanaged and not recommendations. Foreign investing involves currency and political risk and political instability. Bonds offer a fixed rate of return while stocks fluctuate. Investing in emerging markets involves greater risk than investing in more liquid markets with a longer history.

 

 

 

 

 

 

 

Disclaimer

Howard Materetsky, Ira S. Materetsky CFP®, Matt Welsh and Mark Furman offer advisory products and services through Materetsky Financial Group, a registered investment advisor. Securities offered through Private Client Services, Member FINRA/SIPC. Materetsky Financial Group is not affiliated with Private Client Services. Tom Gau offers advisory products and services through Materetsky Financial Group, a registered investment advisor.

Materetsky Financial Group advisors are registered in the following states: AL, AZ, CA, CO, CT, DE, FL, GA, HI, IL, MA, MD, ME, MI, MN, MO, NC, NH, NJ, NM, NV, NY, OH, PA, RI, SC, VA, WA, WI, WV, and WY. No offers may be made or accepted from any resident outside the specific states referenced.

SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. The firm is not engaged in the practice of law or accounting. Tom Gau has been featured as one of the top 100 independent financial advisors in Barron’s in 2008, 2009, 2010, 2011, and 2013. The Barron's rankings are based on data provided by over 4,000 of the nation's most productive advisors. Barron’s uses a deeply researched, quantitative and qualitative approach to identify the top 100 independent financial advisors, which represents 2.5%. Factors included in the rankings are a minimum of 7 years in the business, client retention, assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. Investment performance isn't an explicit component because not all advisors have audited results and because performance figures often are influenced more by client’s risk tolerance than by an advisor's investment-picking abilities. Third-party rankings and recognition from rating services or publications are no guarantee of future investment success. Working with a highly-rated adviser does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be construed as an endorsement of the adviser by any client nor are they representative of any one client’s evaluation. Generally, ratings, rankings and recognition are based on information prepared and submitted by the adviser. Barron’s does not receive any compensation from this advisor in exchange for ratings. For more information on these ratings, please contact the financial advisor or www.barrons.com.

 
 
 

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