Explore Our
“Off The Wall” Blog

Unique, straight-forward, unfiltered opinion on topics of concern for individuals with newfound wealth.

Turns Out This Recovery May Be For Real

U.S. News and World Report Smarter Investor

There’s more to it than the naysayers acknowledge.

We’ve had 18 straight weeks of good economic news, and the news from last week was very impressive. Unemployment is down from 8.5 percent to 8.3 percent, non-farm payrolls surged to 243,000 vs. an expected 140,000, vehicle production is up, and consumer confidence is on the rise.

Eighteen straight weeks: That’s pretty darn good when you consider that everyone was screaming double-dip recession and we saw close to a 20 percent drawdown in the equity markets in the late part of last summer.

It’s far from perfect (I know). The unemployment rate is still pretty high. There are still a lot of people out of work, employed in jobs way beneath their skill level, or no longer looking because they are so discouraged.

So it’s easy to think that things are still bad. But let’s not let that gloss over the fact that things have gotten better since last summer.

Real Gross Domestic Product (GDP) has grown for the past 10 quarters. Profits at Standard & Poor’s companies are still doing well, and with over half of them reporting their fourth quarter 2011 numbers, 54 percent have exceeded their revenue estimates and 60 percent have exceeded their earnings estimates. If the world was falling apart in the third quarter, it sure didn’t show up three months later in fourth quarter reporting!

In fact, consensus estimates for the S&P 500’s forward 12-month earnings stand at $106 per share and have hardly moved over the reporting season. That means the forward price-to-earnings ratio is at (a VERY reasonable) 12.5x. The historical 15-year P/E ratio is more like 16.9x. This indicates that the S&P 500 may still be at a very favorable level.

The Institute for Supply Management (ISM) publishes two monthly reports that are used to determine the health of both the manufacturing and non-manufacturing sectors. The index readings are used as a barometer, and any reading above 50 means the sectors are expanding.

The January readings were 54.1 for manufacturing (up from 53.1 in December) and 56.8 for non-manufacturing (up from 53 in December). That signals that the economy is STILL moving forward and gaining speed month over month.

This leads me to wonder how much of the doom and gloom from the naysayers is being driven by politics. I remember back to 1992 when the economy was improving but everyone who wanted President George H.W. Bush out of office refused to acknowledge that things were getting better. They were so blinded by wanting him out of office that all they could see was the bad.

I wonder if that is playing out again now? There are a lot of people trying to oust President Obama. Is it possible that they are tricking us into focusing on the negatives about the economy despite the clear facts that it is improving?


So here’s what you should be doing. Formulate an investing strategy and stick to it. Base your investment decisions on either your immediate need for liquidity or on a long-term strategy within a complete financial plan, despite any fear or anxiety you may feel.

And if you don’t have a plan, please get one in 2012.

Read this article on U.S. News and World Report or Yahoo Finance >

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual. All performance references are historical and are not a guarantee of future results.

David B. photo

David B. Armstrong, CFA

President & Co-Founder

Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....

Learn more ...


Please remember that past performance is no guarantee of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Monument is engaged, or continues to be engaged, to provide investment advisory services. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.

A copy of the Monument’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.monumentwealthmanagement.com/disclosures. Please Note: Monument does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Monument’s website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results.  It should not be assumed that your Monument account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Monument accounts; and, (3) a description of each comparative benchmark/index is available upon request.

Please Remember: If you are a Monument client, please contact Monument, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Stay up to date!

Subscribe to our “Off the Wall” Blog for articles and videos on all things wealth management, by all members of our Team. Unlike Facebook, we will never share your data with anyone.