Market Week: November 26, 2012

November 26th, 2012

The Markets

During a holiday-shortened trading week, equities had their best week in months. Encouraged by a more conciliatory tone out of Washington and improved economic data on Chinese manufacturing and U.S. housing, investors took advantage of light trading volumes to push stocks up, particularly the technology stocks that had been beaten up in recent weeks. The renewed appetite for risk sent the 10-year Treasury yield up as demand fell.

Market/Index

2011 Close

Prior Week

As of 11/23

Week Change

YTD Change

DJIA

12217.56

12588.31

13009.68

3..35%

6..48%

Nasdaq

2605.15

2853.13

2966.85

3..99%

13.88%

S&P 500

1257.60

1359.88

1409.15

3..62%

12.05%

Russell 2000

740.92

776.28

807.18

3..98%

8..94%

Global Dow

1801.60

1848.57

1926.45

4..21%

6..93%

Fed. Funds

.25%

.25%

.25%

0 bps

0 bps

10-year Treasuries

1..89%

1..58%

1..70%

12 bps

-19 bps

Equities data reflect price changes, not total return.

Last Week’s Headlines

· Dissension in Europe: European finance ministers failed to come to an agreement on how best to reduce Greek debt to 120% of GDP by 2020, but will meet again to try to resolve the issue so an additional €31.5 billion bailout payment can be released. Also, talks on the European Union’s long-term budget broke down after British and German leaders split with France in rejecting the proposed budget for the European Commission while their domestic budgets are undergoing substantial cuts.

· Moody’s became the second rating service to take away France’s AAA credit rating. Citing rising risks from its exposure to the problems of other eurozone countries, its prospects for long-term economic growth, and reduced resilience to potential eurozone crises, Moody’s downgraded the country’s debt one notch to Aa1 with a negative outlook.

· A preliminary survey of Chinese purchasing managers showed manufacturing expansion for the first time in 13 months as the HSBC PMI index rose to 50.4 in November (any number above 50 represents expansion).

· The stream of encouraging news from the U.S. housing market continued. The 3.6% increase in housing starts in October put them at their highest level in more than four years and 42% higher than last year, according to the Commerce Department. Building permits (an indicator of future activity) were down 2.7%, driven primarily by a 10.6% decline in multi-unit buildings; permits for single-family homes were up 2.2%. Meanwhile, the National Association of Realtors® said sales of existing homes rose 2.1% in October and were almost 11% higher than last October, while reduced inventory helped push up the median home resale price by more than 11% from a year earlier.

· Based on a 0.2% rise in its index of leading economic indicators in October, the Conference Board said it expects a continued modest expansion in the U.S. economy.

· The Securities and Exchange Commission filed what it said is the biggest insider trading case in its history. The SEC accused former hedge fund advisor Mathew Martoma and CR Intrinsic Investors LLC of trading based on unpublicized information about drug trials that allegedly was provided by the chairman of the committee overseeing the trial.

· Preliminary reports on consumer spending over the Black Friday weekend raised hopes for a robust holiday shopping season to come.

Eye on the Week Ahead

U..S. economic data will compete with political news out of Washington and Europe for investor attention.

Key dates and data releases: durable goods orders, home prices (11/27); new home sales, Fed “beige book” report (11/28); 2nd estimate of Q3 gross domestic product (11/29); personal income/outlays (11/30).

Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

a few observations

November 25th, 2012

Here are a few observations today, November 20th. By the time you read this, of course, it will be completely out of date:

1. Apple stock seems to have hit bottom, at around 520, and now seems on the way back up. A friend of mine that follows it closely says it should be back to the mid 600s by Mid January. I believe it, but of course it depends on holiday sales. Even though it has come up 7% just today, to 565, I still consider it a “buy.” We have a new IPAD mini and we love it.

2. Wal-Mart stock is starting to look pretty good. It seems to be going up every year, and as it fixes up its website, it seems to be a better competitor for Amazon. And, as I see it, internet shopping with quick delivery is where it’s at now. The new smart phone feature, to help you find stuff in the stores, seems like a good idea. With a 2.3% dividend and a 14 PE, at anything under $70 it seems like a good buy. Here’s how it looked over the past three months:

screenshot

3. A friend sent me a detailed report on the world economy, and especially on problems with debt structure around the world. A lot of the article talked about Japan, which it selected as the country that is in the most financial trouble of all—even more than Greece and Portugal and the EU in general. Germany was not spared. The article was so scary it’s enough to make you want to go short on all of the country ETF’s. But the bottom line for my friend was that he shorted the Japanese yen.

Shorting the currency of a major economic power, even if it is in trouble, takes internal fortitude. I never do it. I think of it as the weather forecasters: do you notice that they cannot always get the weather forecasts right because there are so many variables. A little breeze comes in from here or there, and the forecast proves to be wrong. And so it is with currencies. There are so many variables it seems to me to be hard to forecast. Standard economic factors are only some of the variables.

If I were going to short any country, it would be France. Under the current leadership this has to be a country about to fail. But with the currency tied to the Euro one can’t short the currency. How do you short a country?

4. I read a lot of reports from economic and investment advisors. One recently wrote that it makes no sense to invest in bonds right now, when good quality stocks at low PE ratios are paying dividends that are higher than bank interest or safe bonds. I tend to agree. In this period of really low interest rates, the usual reason to invest in bonds, safety, no longer applies. It’s never safe to invest in something that returns less than the expected rate of inflation. That’s investing in a guaranteed loss.

5. By the time you read this Green Mountain Coffee should have reported third quarter earnings. Just before the report I note that the stock has moved up. Do some of the investment community know something the public doesn’t know? In any event I expect the earnings to be pretty good, and to get even better during the holiday season. This is the kind of stock I like for naked put writing. Taking in premiums anywhere around a $20 strike price seems almost like a gift.

6. And, finally, have you ever heard of the “skillet?” Probably not. It’s an invention by my friend Harvey, who writes the complex computer research tools for my website DoubleYourYield.com. Since he started working on my website he became interested in options, and now has made an average of $6,000 a month over the past 6 months with very little investment (but a stock portfolio to support margin requirements). I don’t recommend what he does, because it’s a strategy that requires you to watch it every day, and I never like those. And I never invest in a way that doesn’t have a guaranteed limit, by hedging, on the potential loss.

Nevertheless, the skillet is an interesting investment strategy. Harvey buys a put and a call, or several of each, at the current market price. That gives him a profit if there is enough movement in either direction over the following 30 days. At the same time he sells a large number of puts below the current price, and a large number of calls above the current price. He titrates the sales so that the proceeds from the sales exceed the cost of the straddle by $1,000.

That means that if there is no significant movement in the stock price over the 30 days period he makes a $1,000 profit. But usually there is movement. And if there is enough movement the profit goes way up. Unless it’s too much movement, beyond the strike prices of the puts and calls. Then there is a very large loss potential. So he watches it closely every day, and if the stock moves anywhere close to the potential loss points, he closes it out and takes his profit.

It’s a terrific strategy for the right kind of investor. If you graph it out, which some of the tools on the website do, it looks like an upside-down skillet, with a flat surface in the middle and steep drops on the ends (the losses). It seems like a great strategy for someone confined to his home who can watch the market every day. But that would be a big detriment to my golf game, which is already suffering!

Merv Hecht
November 19, 2012

Hey American consumer, you can afford to live a little now

November 19th, 2012

If you ask Bill Gross or CNN, we remain in the depths of the darkest recession since the 1930s and will for several more years. We disagree: while we’re still a long way from boom times, we are in an economic expansion we think has many more years to run. Corporate earnings—the main driver of equity prices—remain strong despite slow sales growth, and the employment picture in the US continues to improve, although at a slower rate than many had hoped. And while corporate spending has rebounded smartly from its precipitous 2008 decline (albeit at a much slower pace recently), the American consumer has been holding back. We think that’s about to change.

The shell-shocked consumer

The average American saw his or her investments plummet four years ago. Millions lost their jobs, and those that remain employed likely haven’t seen their compensation rise much since 2009. What do people do when money gets tight? You can’t stop paying your mortgage, car insurance premiums or utility bills (if you want to remain housed, insured and warm). Instead, you cut discretionary spending: buying fewer luxury items, taking cheaper vacations, eating at home instead of in restaurants, putting off home remodeling, keeping that rickety old car instead of buying a new one. You get the picture—we cut things we can live without, things we enjoy but don’t need. Americans started cutting discretionary spending four years ago, and they did it forcefully and quickly.

The stock market illustrates this vividly: From the November 2007 market top to the March 2009 bottom, only the Financial and Materials sectors performed worse than Consumer Discretionary stocks. With the financial industry supposedly on the verge of collapse, it makes sense for financial stocks to have fallen -75%. On the other hand, seeing the shares of consumer discretionary firms fall -55% over the same period is almost more surprising. Nike, McDonald’s and Home Depot didn’t need bailouts, and their balance sheets weren’t fatally leveraged like AIG and many mortgage lenders. These stocks tanked because the American consumer cut his/her spending so much and so quickly, wreaking havoc on these companies’ bottom lines.

Why we should see a rise in discretionary spending

One of the reasons I believe we will see a significant rise in discretionary spending in the US is that we are collectively spending so little on it now relative to our discretionary income. In the second quarter of 2012, American consumers spent only 28.2% of their after-tax income on necessary items: housing, food, energy and financial obligations (rent or mortgage payments, credit card debt, auto leases, homeowners’ insurance, property taxes, gasoline, etc.). This is the lowest such level in at least 40 years. As you can see in the graph below, this figure hovered in the 30-32% range for much of the 2000s and was as high as 36% in 1980. For simplicity, let’s call the percentage of after-tax income spent on housing, food, energy and financial obligations “X.”

License To Spend

Mark Twain said “there are three kinds of lies: lies, damned lies and statistics,” so let’s make sure we’re not being tricked. We calculate X as a simple fraction: (dollars spent on food, energy and financial obligations / dollars earned after-taxes). If incomes increased on average while dollars spent on the three categories remained the same, the fact that X is so low would be misleading. However, personal after-tax income today is barely higher than it was in 2008, so that the denominator has not been growing lately.

This means that the numerator (dollars spent on the three non-discretionary categories) must have dramatically decreased over the past 4 years, with most of that coming from lower debt payments owing to falling interest rates and consumer deleveraging (paying off debt). It also means the statistic is probably not a lie (or a damned lie), and correctly indicates that Americans have a much larger percentage of their income available to spend on things they want.

What do I do with this information as an investor?

Does more free cash flow automatically lead to more discretionary purchases? Obviously not; people can save this money instead of spending it, and they have been doing exactly that for the past 4 years. But prior to the Great Recession, the average American accumulated plenty of mortgage and credit card debt by buying things they couldn’t really afford. Now that people can afford to buy things again, why wouldn’t they eventually buy more of what they want (rather than need), since they were willing to do it even when they couldn’t afford it? And let’s not forget that over the past four years, people have held off on home remodeling and car buying, taken more frugal vacations, eaten out less and reined in their online shopping habits. There’s a lot of pent up demand out there that will eventually need to be satisfied.

As an investor, I over-weight a sector that I believe will do particularly over the next year or two. Recently, I have started increasing the weighting of consumer discretionary stocks in client portfolios. I can do this in one or more of three ways:

(1) Buy more consumer discretionary stocks, such as Home Depot (NYSE: HD), Amazon.com (NASDAQ: AMZN), Chipotle Mexican Grill (NYSE: CMG) and Toyota Motor (NYSE: TM). Note: These are just examples. I am not recommending you purchase these, or any, specific stocks.

(2) Buy stocks that are not classified as “consumer discretionary” but that benefit from increased consumer spending. Examples include American Express (NYSE: AXP), VISA (NYSE: V), and Apple Computer (NYSE: AAPL).

(3) Buy a mutual fund or ETF that offers exposure to the consumer discretionary sector.
I cannot tell you which approaches make the most sense for you; it depends on your risk tolerance and the current makeup of your investment portfolio (and of course, whether your portfolio is being managed by KCS or another firm).

Nothing in the above article is to be construed as an investment recommendation. I do not recommend that you buy or sell securities before consulting your financial advisor.

Dr. Ken Waltzer MD, MPH, AIF®, CFA, CFP®
Founder and President – Kenfield Capital Strategies (KCS)
Kenfield Capital Strategies™ (KCS) is a registered investment adviser. Our services include discretionary management of individual and institutional investment accounts, along with comprehensive financial, estate and tax planning services.

The Post-Election Correction

November 19th, 2012

On November 6, President Obama was re-elected for 4 more years. On November 7, the S&P 500 fell -2.3% and has continued to fall since; it is now down -4.6% since Election Day. Overseas markets have fared somewhat better, as the MSCI All-Country World ex-US index is down only -3.3% over the same period. What gives?

You’ve probably heard about the various worries in the news: the impending “fiscal cliff,” continued concerns about Greece and Spain, recession in the Eurozone, the once-in-a-decade transfer of power in China and now, a possible war in the Mideast between Israel and Hamas. There are certainly enough negatives to keep our spirits down.

But except for the Mideast conflict, all of the above have been known about for many months. Could it be that a majority of investors were hoping that one political party would control both houses of Congress and the Presidency, permitting a quick solution to the fiscal cliff? This is highly unlikely. The polls, the various betting websites and bookies from Vegas to London all had odds significantly favoring the outcome we actually experienced: Obama remains president, the Democrats continue to control the Senate, and the Republicans own the House.

Perhaps the only surprise was the Democrats’ margin of victory, which was wider than most expected. This worries conservatives, as the Dems may think they have a mandate for all their policies, including raising taxes on the wealthy, making compromise less likely. And yet the Republicans are holding fast to their pledge not to raise taxes on the rich. A continued impasse over the fiscal cliff seems likely.

Don’t Worry, Be Happy

Don’t let this worry you too much. First, the stock market’s fall is being largely driven by individuals taking capital gains this year, as they expect the rate to rise from 15% to 20% in 2013. Stocks that have been particularly strong over the past 12 months are falling hard post-election. Apple Computer, for example, is down almost -9.1% since last Tuesday, double the fall of the S&P 500. Brokers are calling their clients urging them to sell in order to take advantage of this year’s lower capital gains tax rate, and clients are apparently obliging.

Second, at today’s press conference after the “fix the fiscal cliff” kickoff meeting, it became clear that both sides are ready to compromise in order to reach an agreement. It’s still possible that only a temporary fix will be put in place and need to be revisited in 2013, but that’s OK as well because the same key players (Obama, Boehner, Reid, Pelosi and McConnell) will be at the negotiating table next year. The stock market’s reaction to lawmakers’ optimistic tone was swift and sharp, with the S&P 500 rising +1% in a matter of minutes. The quick market turnaround also suggests that it won’t take much to push stocks back up.
Third, as I’ve said before, the fiscal “cliff” is really more of a gentle slope. Even without a deal before January 1, the government has a lot of flexibility to delay spending cuts. At the same time, a significant part of the additional taxes owed—should the Bush tax cuts expire—will be borne by individuals who pay quarterly estimated taxes, and these aren’t due until April 15. The effect on the much larger number of individuals having taxes withheld from paychecks will be more muted.

Fourth, stocks have already discounted a lot of bad news, including a recession next year. In the 1990-1991 recession (which is a more “typical” recession than either of the last two), corporate earnings fell -19% from their peak before recovering. If we assume a similar decline in corporate earnings next year (which I am not predicting), then at today’s close the S&P 500 is selling at 16.9 times those recession-level earnings. This is, perhaps coincidentally, exactly the same as the average price-earnings ratio since 1960. Thus, one could logically say that a recession is already priced into the market. If corporate earnings actually grow next year—or just don’t decline—then stocks are at least 20% undervalued today.

Fifth, investor sentiment is in the toilet, with most measures nearly as low as in May of this year when the S&P was about 6% below its level today. And investors have become bearish very quickly: the AAII bull-bear spread went from -1.4% last week to -20.0% this week. (It bottomed in May at -22.4%.) At the same time that investors are down on stocks, they aren’t too optimistic about the economy, either. As I meet with professional investors, nearly every one I speak to thinks the US will go into recession next year (which by itself might explain the market’s funk). I think they’re quite wrong. And even if they are correct, the market has already priced this in (see above).

Stand Out from the Crowd

These professionals also seem to be putting their clients’ money where their mouth is. Individual investors have continued to shun cheap stocks and buy expensive bonds. Since the stock market peaked on November 1, 2007, investors have pulled over $475 billion out of equity mutual funds, while stuffing $1.02 trillion into bond funds. And this trend shows no signs of abating. Last month, investors pulled $15.2 billion out of equity mutual funds, after removing $24.4 billion in September (despite a strong stock market that month). Over the past year, money flowed out of stock funds during 11 of 12 months, while bond funds have seen inflows in every one of those months.

When individual investors dump stocks for many months in a row, that’s good news for the minority who stay invested. As you probably know from reading my newsletters, individual investors have lousy timing. In the early 1980s, when stocks began soaring upward, equity mutual funds didn’t start attracting money again until 1986, and this was merely a trickle. Investors only started pouring money into mutual funds in earnest after 1994, more than 12 years into one of the greatest bull markets in history. They continued to increase their investments until—you guessed it—2000, at which point the market began a long decline and investors started pulling money out again.

Individual investors’ impeccably bad timing continues. In the face of a market that has doubled since March 2009, investors continue to pull record amounts of money from stock funds and stuff it in bonds at record low yields. (Why are people buying 10-year Treasury bonds at a fixed 1.6% yield when stocks like Proctor and Gamble are paying a 3.4% dividend that, at least currently, is more lightly taxed and tends to increase every year?) If history is any guide, investors will start piling back into equities only after the bull market is several years—even a decade—old and interest rates have risen substantially, crushing the value of those bond funds. Please don’t follow the crowd: your wallet will thank you.

Dr. Ken Waltzer MD, MPH, AIF®, CFA, CFP®
Founder and President – Kenfield Capital Strategies (KCS)
Kenfield Capital Strategies™ (KCS) is a registered investment adviser. Our services include discretionary management of individual and institutional investment accounts, along with comprehensive financial, estate and tax planning services.

Post-Election Battle

November 11th, 2012

After hundreds of hours of debates by various candidates, well over a billion dollars spent on political attack ads, and a seemingly endless barrage of news coverage, the 2012 election battle is finally over. Now the fighting really begins.

The hard-fought election will likely be followed by more fighting in a divisive and bitter “lame duck” session in Congress that runs from November 13 through year-end. The stakes are high as those on Capitol Hill seek to mitigate the budget bombshell of tax increases and spending cuts, known as the fiscal cliff, due to hit on January 1. The two parties have very different visions of what a deal should look like. Failure to reach a compromise in the coming weeks could lead to a recession and bear market for stocks in early 2013.

However, a deal is in the best interest of those on Capitol Hill. The Republicans have a lot of items to lose that are important to them in foregoing a deal with Democrats: the Bush tax cuts would expire and the looming spending cuts hit defense spending hard while not really impacting the big entitlement programs (such as Social Security, Medicare, Medicaid, and Affordable Care Act). To avoid being blamed for a return to recession on their watch, Democrats may only need to compromise on extending the middle-class tax cuts, which President Obama already communicated his support of during his campaign, and delaying the impact of some of the spending cuts.

While a deal may be likely, there are risks for investors. With the S&P 500 having risen back to within 10% of all-time highs in October, markets seem confident that the Senate Democrats will quickly find a compromise with House Republicans to avoid going over the fiscal cliff. However, a compromise may be hard to reach. Recall that the gridlock in Washington was no help to markets in 2011, as the unwillingness to compromise on both sides of the aisle led to the debt ceiling debacle last August, which sent the S&P 500 down over 10% in a few days despite the ultimate approval of the increase to the debt ceiling.

Despite the risks, there is room for guarded optimism. If there ever were a time to enact long-term fiscal discipline, now is that time. The United States’ large and unsustainable budget deficits helped push total U.S. debt over 100% of GDP in 2012. Previously unmentionable as part of the “third-rail” of politics, wide-reaching bipartisan proposals have been unveiled to put the United States back on a path to fiscal sustainability. A long-term solution of permanent changes to tax rates and entitlement programs as well as ending the battles over the debt ceiling could emerge in 2013. This would be welcomed by the markets and lift the uncertainty plaguing business leaders and investors alike.

The battle is likely to result in a compromise that averts the worst case outcome, but the negotiations themselves, coming on the heels of hard-fought election battles, may drive market swings in the days and weeks ahead. Fortunately, the lowest valuations for stocks in 20 years may help to limit downside and create potential investment opportunities.

Best regards,
Westside Investment Management LLC

The Fiscal Cliff: What Does It Mean

November 11th, 2012

Here is a link to an informative audio-visual presentation explaining the fiscal cliff tax implications for 2013. It suggests that it might be a good idea to take long term gains before the end of this year:

image003
https://www.forefieldkt.com/kt/htmlnl.aspx?type=fca&id=31&mid=94709&iplf=lp&ciid=0

Market Week: November 5, 2012

November 6th, 2012

The Markets

As the East Coast struggled to recover from Sandy, financial markets came back from their two-day hiatus down but not out. Despite some volatility on Thursday and Friday, domestic indices ended the week essentially flat. Meanwhile, a stronger U.S. dollar contributed to Friday's decline of roughly $38 an ounce in the spot price of gold.

Market/Index

2011 Close

Prior Week

As of 11/2

Week Change

YTD Change

DJIA

12217.56

13107.21

13093.16

-..11%

7..17%

Nasdaq

2605.15

2987.95

2982.13

-..19%

14.47%

S&P 500

1257.60

1411.94

1414.20

.16%

12.45%

Russell 2000

740.92

813.25

814.37

.14%

9..91%

Global Dow

1801.60

1915.30

1932.44

.89%

7..26%

Fed. Funds

.25%

.25%

.25%

0 bps

0 bps

10-year Treasuries

1..89%

1..78%

1..75%

-3 bps

-14 bps

Equities data reflect price changes, not total return.

Last Week's Headlines

·                      Estimates of the damage done by last week's superstorm, including not only property damage but lost revenue from business activity, reached as high as $50 billion. Some economists warned that Sandy's economic impact could cut as much as 0.5% from the nation's gross domestic product in the fourth quarter, though rebuilding efforts also could add to GDP in subsequent quarters.

·                      The U.S. economy added 171,000 jobs in October and job growth in the previous two months was revised upward, according to the Bureau of Labor Statistics. However, the unemployment rate ticked up slightly from 7.8% to 7.9%, in part because more people once again sought to enter the labor force.

·                      There was more good news from the housing market as home prices continued to rise in August, though at a slightly slower pace than the month before. The 0.9% increase in the S&P/Case-Shiller 20-city index, which followed July's 1.6% increase, put prices at their highest level since September 2010, and up 2% from August 2011.

·                      Consumers spent more in September, according to the Commerce Department, but they may have been dipping into their savings to do so. While spending was up 0.8%, the personal savings rates fell to 3.3% of income–the third straight month of declines in the savings rate. Meanwhile, personal incomes were up 0.4%, although they were essentially unchanged after accounting for taxes and inflation.

·                      U..S. manufacturing also saw some encouraging signs. New factory orders grew more during September–4.8%–than in any month in more than a year, according to the Commerce Department. Business productivity rose 1.9% in the third quarter–about the same pace as in Q2–and the number of hours worked was up 1.3%. Almost all of the gains came in the services sector rather than manufacturing, which has been hurt by reduced global demand. However, in October, the Institute for Supply Management's index of manufacturing activity saw a second month of accelerating expansion, rising to 51.7% (anything above 50% represents growth).

Eye on the Week Ahead

Let the games begin: Financial markets are likely to begin assessing how the election results might affect the January 1 fiscal cliff and renewed debate over the debt ceiling. Also, both the European Central Bank and Bank of England will meet, and the Greek parliament will vote on fresh austerity and budget measures.

Key dates and data releases: U.S. services sector (11/5); balance of trade (11/8).

Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.