“Off The Wall” Blog
Unique, straight-forward, unfiltered opinion on topics of concern for individuals with newfound wealth.
Well, May 21st came and went – we are still here.
By David B. Armstrong, CFA | May 23, 2011 | Weekly Market Commentary
I was out in Las Vegas as a speaker for the 2011 Investment Management Consultants Association Conference this past week (including May 21st) and the only judgment I faced was dirty looks for not laying odds behind the come line on the craps table. Then, my empty pockets resulted in more judgment, this time from my wife.
Judging from the look of things, it seems like the spring of 2011 is shaping up to be a lot like the spring of 2010 – softening economic data and markets pulling back on European debt. However, we think it’s a lot different.
The equity markets we track were all losers last week. The Dow Jones Industrial Average (DJIA) lost -0.66% to finish at 12,512, the Standard & Poor’s 500 Index lost -0.34% to finish at 1,333 and the Nasdaq Composite Index lost -0.89% to finish at 2,803. The Russell 2000 index, which tracks the performance of small capitalization stocks, lost -0.79% to finish at 829.
It looks like the European debt problems have swelled again but economic conditions are much healthier in the United States than they were this time last year. They are also better able to withstand this pressure.
Why? Well a year ago, the economy had shed jobs during 10 of the 12 previous months. This year, new jobs have been added in each of the past twelve months (totaling 1.7 million jobs). Also, deflation was a major concern a year ago, while this year it’s inflation everyone is worried about. Finally, last year businesses were unwilling to borrow and banks were unwilling to lend. Today, loan demand has turned positive as businesses seek to fund growth and banks have eased standards.
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Securities and Financial Planning offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC
**Standard Compliance Disclosures
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 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....
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