Explore Our
“Off The Wall” Blog
Unique, straight-forward, unfiltered opinion on topics of concern for individuals with newfound wealth.
A Market Sell-Off, a New Hire, and a Promotion – All in One Week
We’d like to announce the newest member of the Monument Wealth Management Team, Dr. Ann Schnorrenberg. Ann holds a Doctorate from Columbia University in Economics and is a Financial Planning Associate on the Monument Wealth Management team. We are excited to have her aboard and look forward to everyone meeting her.
Additionally, this was a celebratory weekend for me as well, as I was promoted to the rank of Lieutenant Colonel in the United States Marine Corps Reserve.
Now back to the news. Friday’s March jobs report seems to have disappointed the market, but in reality, it is not a huge game changer. The employment report was a disappointment relative to both what was expected to be reported, as well as some labor market data from recent months. Today, the markets are reacting.
For the week, the Dow Jones Industrial Average (DJIA) lost -1.15% to 13,060, the Standard & Poor’s (S&P) 500 lost -0.74% to 1,398, and the Nasdaq Composite Index lost -0.36% to 3,080. The Russell 2000 Index, which tracks the performance of small capitalization stocks, lost -1.46% to finish at 818.
While the employment report was a disappointment, it created some hope that another round of quantitative easing (QE) could be quite possible. The March employment report showed the economy adding 121,000 private sector jobs in the month of March. This fell way short of the 215,000 that were expected, and was well below the 250,000 jobs created on average in the three months ending in February 2012.
Now on the surface that seems bad, BUT the labor market is indeed healing and is in way better shape than last summer. The problem is that the economy is probably only growing fast enough to create about 200,000 jobs a month. With that, we think that this increases the probability that the Fed will step in and bring on a third round of Quantitative Easing, also known as QE3. Look for that announcement to come probably sometime in April.
The BIG question that everyone will be asking is, “is this the start of the same thing we saw before the summer of 2010 and 2011?” Here’s what I think – just because it has happened twice in a row DOES NOT mean it is more likely to happen a third.
Why? There are a few reasons. FIRST – The clearest and one of the most significant positives this year versus 2010/2011 is that housing has turned the corner. Higher rents are pushing buyers to act, and investment buyers, both domestic and foreign, are helping. Also, property taxes are declining in the wake of lower assessed property prices. SECOND – global short term interest rates (referred to as Global Short Rates) rose in 2010 and 2011. This year, they are declining. THIRD – Even though we had a poor reading on the employment report on Friday, which measures the number of jobs added, the unemployment claims last week were 362k versus 406k a year ago and 468k two years ago.
Oh – and in the hopper for next week – Earnings Season! So while macroeconomic data and events will probably drive the market this week, microeconomics will also have the attention of the market next week as companies begin to release their first quarter of 2012 earnings reports.
IMPORTANT NOTE: Due to industry regulations, comments are not permitted on this blog. If you would like to contact the author, please email us at info@monumentwm.com.
Securities and Financial Planning offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 is an unmanaged index generally comprised of companies with lower price-to-book ratios and lower forecasted growth values.
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....
IMPORTANT DISCLOSURE INFORMATION
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.