This past weekend, the Kentucky Derby ran for it’s 139th consecutive time since 1875. It’s a race for three year old horses and lasts about two minutes. It’s the first leg of the crowing achievement in horse racing. The window of opportunity for these horses, owners, and trainers is so small yet the stakes are so high.
Thank goodness we aren’t horses. We have a lifetime to achieve and live out our own triple crown. If we fall off the horse, we can get right back up.
Here’s what we cover in May to keep you on the real wealth saddle:
Here is the market scoreboard for April 2014:
|Data as of April 2014||Price||April %|
|Standard & Poor’s 500 (Domestic Stocks)||1,883.95||.62%|
|MSCI World Index ex US (Foreign Stocks)||1939.63||.93%|
|10-year Treasury Note (Yield Only)||2.65%|
|Gold (per ounce)||$1,291.10||.51%|
|Reuters/Jefferies Commodity Index (CRB)||309.53||1.59%|
|Dow Jones REIT Index||293.60||2.85%|
Notes: S&P 500, MSCI World Index 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 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: www.stockcharts.com. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
April was a funky month in the stock market. What started with a 3% decline and finished the month up slightly over ½ percent. April concluded with the best payroll (jobs) numbers since January 2012. Non-farm payroll rose 288,000 in April, exceeding expectations of 210,000 and suggests an acceleration in economic activity.
Despite the headline positive narrative, if the economic improvement was truly seen by market participants one would expect stocks to outpace their conservative treasury bond counterparts. Typically, an improving economy is met with falling bond prices and rising interest rates. That is not the case right now. Since late 2013, bonds have been outperforming stocks. While the market sits a stone’s throw from its all-time highs, a strong theory suggests economic confidence is waning. Throughout most of 2013, stocks handily outperformed bonds. This factual data is indicating the market tone has shifted from the go-go 2013.
If you were following the market in 2005, you might notice a lot of similarities to 2014, according to a recent article published by Michael Santoli. A couple of the ways 2014 resembles 2005 are as follows: 1.) the S&P 500 was fresh off having experienced strong gains in prior years 2.) “hot tech stocks” experienced considerable pull-backs in the first few months of the year, and 3.) the Federal Reserve was in the process of withdrawing significant amounts of stimulus. Of course, we only bring up the similarities because it’s thought provoking and are in no way predicting an exact outcome. However, it’s interesting to note that in 2005, the S&P 500 never fell by more than 6 percent, and never increased by more than 5 percent from where it began the year.
So, what do we take from this? Mostly, that not all years are exciting. They may feature a lot of motion but little progress either way while the market just bounces back and forth in trading range. And if history rhymes with 2005, 2014 could be one of those years where the index as a whole, may not produce the major moves we’ve become accustomed to over the past several handful of years.
As you increase your financial intelligence, we suggest you continue learn about market history and determine the behaviors that will improve your odds of investment success.
Illumination’s Insights: Never Ask A Barber If You Need A Haircut
“Never ask a barber if you need a haircut”. – Warren Buffet
You know these headlines…
The Top 5 IPO’s to Buy
3 Stocks That Could Double This Year
The 10 Hottest Mutual Funds for 2014
2014 Crash Will be Worse Than 1987’s
Anything that Jim Cramer says
Have you ever take action on anything like this before?
Listen, I’ve seen far too many people throw away their hard earned money on useless financial advice such as this. I too have learned this lesson from the school of hard knocks so take what I am saying to heart.
The talking heads have no idea about your goals, ongoing financial responsibilities, your time horizon and tolerance for risk. There’s a huge disconnect between financial predictions you read about or see on TV and your personal circumstances. Most of the headlines your read and what you see on TV or hear on the radio is plain old financial fiction. The reason they put this out there is because it is entertaining and what sells the best.
If you want a prosperous future, you need to understand what financial advice is worth spending your time and resources on and what is not. Entertainment is not what you need to improve your investments success. Knowledgeable financial advice is based on facts and things you can control, not based on opinions and predictions. Smart investors who want consistent returns over the long term develop a plan and employ a disciplined approach to their saving and investing.
This means you must avoid financial advice that seeks to predict the future and focus your limited time and resources on the simple things that truly matter and are within your control.
Articles of Illumination
Here’s our monthly compilation of interesting articles and videos designed to keep you informed and engaged in the areas of personal finance, the economy and life. We hope you enjoy this month’s edition. Please send us your thoughts on this month’s articles and suggestions for future posts.
Seth Godin’s Blog: Get Rich (Quick)
Star Tribune: It’s scary how well marketers know you.
Behavior Gap: What if Financial Success is About Saving More?
Economy & Business
Los Angeles Times: Think you pay too much in taxes? 52% of America agrees with you.
Success: How to Live Your Life on Purpose
Success: The Upside to Stress
Great TED Talks & Videos
Sarah Lewis: Embrace the near win
Elizabeth Gilbert: Success, failure and the drive to keep creating
“The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some difference that you have lived and lived well.” – Ralph Waldo Emerson
Instead of life’s triple crown, perhaps your purpose is the Quadruple Crown as the man quoted above suggests. No matter what it is for you, we appreciate you taking two minutes to read this as we strive to be useful and empower you to live your best life.
All the Best,
Matt & The Illumination Wealth Team
Feel free to forward this to any of your family, friends or colleagues; if this was forwarded to you, you may subscribe here.
The opinions and forecasts expressed are those of Matt Rinkey, President of Illumination Wealth Management (IWM) and may not actually come to pass. Mr. Rinkey’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Illumination Wealth services. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of IWM’s services. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Rinkey or Illumination Wealth nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Entities including, but not limited to IWM, its officers, directors, employees, customers and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. The analysis contained is based on both technical and fundamental research. Although the information contain is derived from sources which are believed to be reliable, they cannot be guaranteed. Past performance is never a guarantee of future results.