September 18, 2017

The Markets

“In theory, there is no difference between theory and practice, in practice there is.”

Yogi Berra was talking about baseball, but the concept also applies to diversification, according to the GMO White Paper, The S&P 500: Just Say No. From the title, you might think the authors – Matt Kadnar and James Montier – don’t like U.S. stocks. They do:

“Being a U.S. equity investor over the past several years has felt glorious. The S&P 500 has trounced the competition provided by other major developed and emerging equity markets. Over the last 7 years, the S&P is up 173 percent (15 percent annualized in nominal terms) versus MSCI EAFE (in USD terms), which is up 71 percent (8 percent annualized), and poor MSCI Emerging, which is up only 30 percent (4 percent annualized). Every dollar invested in the S&P has compounded into $2.72 versus MSCI EAFE’s $1.70 and MSCI Emerging’s $1.30.”

The authors’ concern is U.S. markets have performed so well, investors may be tempted to abandon diversification and concentrate their portfolios in indexed U.S. stocks. Kadnar and Montier wrote, “Human nature is to extrapolate the recent past. It is easy to see, given the strong performance of U.S. equities in both absolute and relative terms, why many are suggesting they are the only asset you need to own.”

Focusing assets in the United States, according to GMO, ignores the most important determinant of long-term returns: valuation. “From our perspective, one has to make some fairly heroic assumptions to believe that the S&P is even remotely close to fair value.”

High valuations haven’t dulled the appeal of U.S. stocks for investors, though. Last week, the S&P 500 closed at a record high, and the Dow Jones Industrial Average posted its biggest gain since last December, reported CNBC.com.

7 STEPS TO PROTECT YOURSELF AFTER THE EQUIFAX BREACH. From May through July, hackers exploited a website vulnerability at Equifax, one of the major consumer credit reporting agencies. If you have a credit report, there is a chance your sensitive and personal information including Social Security numbers, birth dates, addresses, and driver’s license numbers, may have fallen into the wrong hands. The stolen information could be used in tandem with passwords taken from other databases to commit financial crimes against you, reported a source cited by Consumer Reports.

Here are seven steps to take to help protect your assets and credit:

1. Find out if you were affected. From a secure computer or encrypted network connection, go to the Equifax website, www.equifaxsecurity2017.com. Scroll down and click on ‘Potential Impact.’ You will be asked to provide your last name and the last six digits of your Social Security number.

2. Enroll in TrustedID Premier. If your data has been breached, Equifax will offer enrollment in TrustedID Premier. The program provides up to $1 million in ID theft insurance, Social Security Number Scanning, 3-bureau credit file monitoring, and the option to freeze your Equifax credit report.

3. Place a fraud alert or credit freeze on your other credit reports. Experian, TransUnion, and Innovis also provide credit reporting services. Contact each of the companies to place an alert or a freeze on your credit report:

          • A fraud alert warns both current and prospective lenders they must take reasonable steps to verify your identity before providing credit. When you’re a victim of ID theft,                   an alert can be put in place for up to seven years.

          • A credit freeze is different. It restricts access to your credit report. If you request a freeze, the credit agency will send a letter with a personal ID number (PIN). Keep the PIN              in a safe place. You’ll need it to unfreeze your accounts, according to the Federal Trade Commission.

4. Change your passwords. Create new passwords for online banking, brokerage, and financial accounts. Each account should have a unique password. Best practices suggest passwords have 12 to 14 characters.

You may want to consider using a password management application. They’re designed to store and retrieve passwords so you can keep track of multiple long, unique password combinations without security issues like storing passwords improperly or failing to remember them.

5. Activate two-factor authentication. Two-factor authentication provides an additional layer of security for email and other accounts. After you enter your user ID and password, you’ll be asked for a code to verify your identity. You can have the account provider text a code to your phone, although that creates vulnerability if your phone is stolen. A better option may be to download an authenticator app so you can generate your own code.

6. Beware email links. Some fraud attempts are obvious: text or email from a Nigerian prince or an update request from a financial institution where you don’t have an account. Others may be more difficult to spot. As a rule of thumb, if you receive an email with a link requesting you update or make changes to a financial account, don’t click on it. Call the financial institution or go directly to its website to make any changes.

7. Keep an eye on your accounts. Check bank, brokerage, and other financial statements for suspicious transactions. If you find unauthorized activity, report it to the institution and the proper authorities.

If you have any questions or concerns about this breach or the markets, please contact us. 

Weekly Focus – Think About It 
“The most effective way to do it, is to do it.”–Amelia Earhart, American aviation pioneer

 * These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.* All indices referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.* Past performance does not guarantee future results. Investing involves risk, including loss of principal.* You cannot invest directly in an index.* Consult your financial professional before making any investment decision.* Stock investing involves risk including loss of principal.

Sources:1 https://www.brainyquote.com/quotes/quotes/y/yogiberra141506.html2 https://www.gmo.com/docs/default-source/research-and-commentary/strategies/asset-allocation/the-s-p-500-just-say-no.pdf?sfvrsn=7 (Pages 4 and 8)3 https://insight.factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_091517.pdf4 https://www.cnbc.com/2017/09/15/us-stocks-weekly-gains-fed-retail.html5 https://www.consumer.ftc.gov/blog/2017/09/equifax-data-breach-what-do6 https://www.equifaxsecurity2017.com/potential-impact/7 https://www.consumerreports.org/equifax/how-to-lock-down-your-money-after-the-equifax-breach/8 https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs9 https://support.norton.com/sp/en/us/home/current/solutions/v121052439_EndUserProfile_en_us10 https://www.pcworld.com/article/3056827/security/4-password-managers-that-make-online-security-effortless.html11 http://stylecaster.com/beauty/strong-women-quotes/

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August 28, 2017

The Markets

Hope floats.

Optimism about possible pro-growth economic policies, including tax reform and deregulation, helped U.S. stock indices finish higher last week, reported Barron’s. It wasn’t all smooth sailing, though. Stocks bobbed up and down as investors’ optimism was weighted by concerns about a possible debt-ceiling battle and government shutdown.

CNN offered some insight to the historic economic impact of government shutdowns on productivity:

“The last time the government was forced to close up shop – for 16 days in late 2013 – it cost taxpayers $2 billion in lost productivity, according to the Office of Management and Budget. Two earlier ones – in late 1995 and early 1996 – cost the country $1.4 billion.”

For investors, it’s important to distinguish between a shutdown’s potential effect on the U.S. economy and its possible impact on U.S. stock markets. A source cited by The New York Times reported:

“…during all 18 government shutdowns, starting in 1976…the Standard & Poor’s 500-stock index averaged just a 0.6 percent loss over the course of those closures. Early on in shutdown history, investors reacted very negatively. Closures in 1976 and 1977 coincided with 3 percent declines in the [S&P 500].

As investors grew more accustomed to shutdowns, they seemed to become more blasé about them. During the mid-1990s and the 2013 closure, for instance, stocks actually rose. They gained 3.1 percent during the 2013 stoppage.”

Bond investors were relatively calm last week, according to Financial Times. Although, there were signs of “debt ceiling jitters.” Yields on U.S. Treasuries that mature in October (when a shutdown may occur) rose on concerns investors might not be repaid in a timely way.

No matter what happens in September and October, keep your eyes on the horizon and your long-term goals.

  

 Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

MILLENNIALS ARE KILLING IT! A recent article in Buzzfeed listed headlines announcing the various things Millennials have “killed” or are “killing.” The list included Big Oil, the NFL, the workday, the cereal industry, and bar soap.

Here’s another industry that is being undermined by millennials’ preferences: cable and satellite television. Millennials are leading a viewing revolution. They are unwilling to ante up for cable and satellite subscriptions, preferring less expensive Internet and streaming services that provide content via the World Wide Web.

A 2017 survey from Videology found more than half of millennial men (ages 18 to 34) have stopped paying for cable, and Forbes reported:

“…on average, the 30-and-under crowd’s primary means of consuming content is through mobile devices, streaming, and online. That’s in sharp contrast to the over-30 crowd who still rely on television for an average of more than 80 percent of their film and TV show viewing.”

The waning popularity of cable and satellite TV appears to have a lot to do with cost. The typical household paid more than $1,200 a year, on average, for cable and satellite television in 2016, according to Nerdwallet – and the cost increased in 2017. Consumer Reports wrote, “Most pay TV companies have announced modest price hikes, but there are also new hidden fees.”

Budget-minded millennials may be having an influence on older generations whose preferences appear to be changing, too. GfK, a market research company, reported:

“New findings…show that U.S. TV households are embracing alternatives to cable and satellite reception. Levels of broadcast-only reception [a.k.a. antenna reception] and Internet-only video subscriptions have both risen over the past year, with fully one-quarter (25 percent) of all U.S. TV households now going without cable and satellite reception.”

So, what kind of savings can be generated when you cut the cable? It all depends on what you currently pay, but it may be worth crunching the numbers.

Weekly Focus – Think About It

“I find television very educating. Every time somebody turns on the set, I go into the other room and read a book.”
–Groucho Marx, American comedian

 * These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indices referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* Stock investing involves risk including loss of principal.

Sources:
http://www.barrons.com/articles/stocks-rally-on-renewed-talk-of-tax-reform-1503725643?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-28-17_Barrons-Stocks_Rally_on_Renewed_Talk_of_Tax_Reform-Footnote_1.pdf)
http://www.cnn.com/2017/04/25/politics/government-shutdown-daily-life-trnd/index.html
https://www.nytimes.com/2017/08/25/business/government-shutdown-investors.html
https://www.ft.com/content/a5509830-e4ad-3c7f-a821-d92c14374c21 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-28-17_FinancialTimes-Debt-ceiling_Debate_Starts_to_Stir_Parts_of_US_Treasuries_Market-Footnote_4.pdf)
https://www.buzzfeed.com/ahmedaliakbar/millennial-murder-spree?utm_term=.qh8Nr12Rax#.cwL25Np1Pm
http://www.gfk.com/en-us/insights/press-release/one-quarter-of-us-households-live-without-cable-satellite-tv-reception-new-gfk-study/
https://videologygroup.com/press-releases/2017/2/13/new-survey-highlights-digital-habits-of-millennial-males
https://www.forbes.com/sites/markhughes/2015/03/21/the-millennial-trends-that-are-killing-cable/#cbe981e2293b
https://www.nerdwallet.com/blog/finance/bills/cut-the-cord-and-save-money-if-you-do-it-right/
https://www.consumerreports.org/tv-services/your-cable-bill-is-going-up-more-than-you-think-this-year/
https://www.brainyquote.com/quotes/quotes/g/grouchomar109303.html

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The Markets

North Korea may be a little country, but it can churn up big trouble.

The possibility that verbal hostilities between the United States and North Korea could trigger geopolitical conflict had investors on the run last week. In the United States, the Standard & Poor’s 500 Index fell by 1.4 percent, the Dow Jones Industrial Average lost 1.1 percent, and the NASDAQ Composite finished 1.5 percent lower.

Financial Times explained:

“The sell-off came as U.S. President Donald Trump escalated the war of words against the North Korean regime’s accelerated [program] of nuclear testing. Mr. Trump tweeted on Friday, “military solutions are now fully in place, locked and loaded, should North Korea act unwisely.”

While major U.S. indices headed south, the CBOE Volatility Index (VIX) – also known as Wall Street’s fear gauge – headed north. The VIX, which has been flirting with historic lows for much of the year, rose 44 percent in a single day, reported CNBC.

Stock markets in Europe and Asia were also affected by the saber rattling. National indices across Europe suffered weekly losses of 2.2 percent (Sweden) to 3.5 percent (Spain), according to Barron’s. In the Asia-Pacific region, India’s Sensex 30 lost 3.4 percent and South Korea’s Kospi was down 3.2 percent for the week.

Geopolitical concerns overshadowed some important economic news in the United States. Inflation, as measured by the U.S. Consumer Price Index, rose very little in July. In fact, consumer prices have been soft for five straight months, reported MarketWatch. Persistently low inflation could affect the Federal Reserve’s plan to raise interest rates this year. The Fed’s goal is 2 percent inflation.

 

ARE ELECTRIC ENGINES THE TORTOISE COMPETING WITH THE COMBUSTION ENGINE’S HARE? In the late 1800s, the Paris-Rouen race for horseless carriages included 102 vehicles fueled by steam, petrol, electricity, compressed air, and hydraulics, reports The Economist. Not a single electric engine made it to the starting blocks. (The internal combustion engine won.)

Oh, how times have changed!

The International Energy Agency’s Global EV Outlook 2017 reported:

“New registrations of electric cars hit a new record in 2016, with over 750 thousand sales worldwide. With a 29 percent market share, Norway has incontestably achieved the most successful deployment of electric cars in terms of market share, globally. It is followed by the Netherlands, with a 6.4 percent electric car market share, and Sweden with 3.4 percent. The People’s Republic of China (hereafter, “China”), France, and the United Kingdom all have electric car market shares close to 1.5 percent. In 2016, China was by far the largest electric car market, accounting for more than 40 percent of the electric cars sold in the world and more than double the amount sold in the United States.”

Financial Times reported the UBS analysis suggests the market may be at an inflection point as the total cost of ownership for electric vehicles may become comparable to that of combustion engine vehicles as early as 2018 in Europe, 2023 in China, and 2025 in the United States.

Even though their popularity is growing, electric cars comprise a small portion of the market today. UBS expects electric cars to account for 14 percent of the global market, and more than one-third of the European auto market, by 2025.

Weekly Focus – Think About It

“Though most of them sit idle, America’s car and [truck] engines can produce ten times as much energy as its power stations. The internal combustion engine is the mightiest motor in history.”
–The Economist, August 12, 2017

 

* These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indices referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* Stock investing involves risk including loss of principal.

 

Sources:
https://www.ft.com/content/44ce541e-5e13-365a-8918-2857025b8cb0 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-14-17_FinancialTimes-S_and_P_Clocks_Worst_Week_Since_March_Despite_Fridays_Bounce-Footnote_1.pdf)
https://www.cnbc.com/2017/08/11/all-time-record-options-bets-on-volatility-spook-wall-street-over-leverage-risk.html
https://www.cnbc.com/2017/07/25/heres-what-happened-the-last-time-the-vix-traded-this-low.html
http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html (Click on U.S. & Intl Recaps, “Geopolitical worries deflate stocks”) (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-14-17_Barrons-Global_Stock_Market_Recap-Footnote_4.pdf)
http://www.marketwatch.com/story/us-consumer-inflation-remains-soft-in-july-cpi-shows-2017-08-11
https://www.federalreserve.gov/faqs/money_12848.htm

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July 10, 2017

The Markets 

Things you may want to know…

Last Friday, Financial Times (FT) published, ‘Five markets charts that matter for investors.’ Among the issues addressed in the charts were:

The bond market bear watch. The yield on 10-year German Bunds (Germany’s government bonds) reached an 18-month high of 0.58 percent recently. Yields rose after the European Central Bank’s Mario Draghi indicated its stimulus efforts would end at some point.

When bond yields rise, bond values fall, and that makes rising interest rates quite a significant event for anyone who holds lower yielding bonds. In the United States, 10-year U.S. Treasuries moved to a seven-week high last week and then dipped lower following the release of the Federal Open Market Committee meeting minutes, reported CNBC.com.

• Financial companies gaining favor. During the past month, U.S. stock markets have seen a sector rotation. FT reported:

“…S&P financials have gained some 6 percent, with tech sliding almost 4 percent. That still leaves financials lagging behind the S&P 500 for the year and well behind the roughly 17 percent gain for tech. A similar story has unfolded in Europe between banks and tech.”

Investors’ appetite for financial companies may reflect the belief higher interest rates are ahead. Banks and other financial firms generally benefit when interest rates rise. Investor’s Business Daily reported

“Several Wall Street giants have warned of weak trading revenue in Q2, continuing the lackluster trend in 2017…Still, bank stocks large and small have been leading in recent weeks, helped by higher bond yields and massive buyback and dividend plans.”

Last week, the unemployment rate in the United States rose from 4.3 to 4.4 percent. It was good news according to an expert cited by Barron’s, “…the rise in labor force participation indicates slack remains in the labor market.” That may be the reason wages showed little improvement.

  

IT DOESN’T APPEAR TO BE COMMON KNOWLEDGE BUT there may be an affordable car crisis in the United States. The latest Bankrate.com Car Affordability Study found:

“…typical households in most of America’s larger cities don’t earn enough to afford the average new vehicle, under a common budgeting rule for buyers… The ‘20/4/10’ rule says you should aim to put down at least 20 percent of a vehicle’s purchase price, take out a car loan for no longer than four years, and devote no more than 10 percent of your annual income to car payments, interest, and insurance. If you can’t stay within those lines, you can’t afford the car.”

The only major city where a new car remains affordable is Washington, D.C.!

For some, the obvious solution is choosing a less expensive model. For others, the answer is buying a used vehicle. For the latter group, here’s some bad news: even an average-priced used car – nationally, the average price is about $19,200 – is unaffordable for households in eight of the 25 largest cities.

Leasing is also an option; one that may have helped create an oversupply of used cars. In July, Automotive News reported:

“…millions [of] cars that were leased two or three years ago, many of them used compact and midsized cars with low mileage, are heading toward auction lots and used car dealerships. That surge in supply threatens to depress prices for new and used vehicles, raising the risk of losses for automakers and finance companies on lease deals. It also undercuts the value of cars customers want to trade in for a new vehicle.”

The rising popularity of ride-sharing and car-sharing, and the introduction of self-driving vehicles, may also depress prices. In fact, some automakers have introduced their own ride-sharing services.

Weekly Focus – Think About It 
“A man is rich in proportion to the number of things he can afford to let alone.”–Henry David Thoreau, American philosopher and naturalist

* These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.* All indices referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.* Past performance does not guarantee future results. Investing involves risk, including loss of principal.* You cannot invest directly in an index.* Consult your financial professional before making any investment decision.* Stock investing involves risk including loss of principal.

Sources:

https://www.ft.com/content/c4de73e2-17a1-11e7-9c35-0dd2cb31823a (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-10-17_FinancialTimes-Five_Markets_Charts_that_Matter_for_Investors-Footnote_1.pdf)http://www.cnbc.com/2017/07/06/why-a-surge-in-bond-yields-could-be-around-the-corner.htmlhttps://www.investors.com/news/q2-earnings-season-why-analysts-are-so-bullish/ (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-10-17_InvestorsBusinessDailyNews-Earnings_Season_on_Tap-Here_are_the_3_Top_Sectors-Footnote_3.pdf)http://www.barrons.com/articles/june-jobs-report-payrolls-climb-but-wages-dont-1499431826?mod=BOL_hp_highlight_1?mod=BOL_hp_highlight_1 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-10-17_Barrons-June_Jobs_Report-Payrolls_Climb_More_than_Expected_But_Wages_Dont-Footnote_4.pdf)http://www.bankrate.com/auto/new-car-affordability-survey/http://www.autonews.com/article/20170707/RETAIL04/170709866/automakers-auctions-align-to-prop-up-used-car-priceshttps://www.nytimes.com/2017/06/08/technology/automakers-race-to-get-ahead-of-silicon-valley-on-car-sharing.htmlhttps://www.brainyquote.com/quotes/quotes/h/henrydavid108303.html

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July 3, 2017

The Markets

This is the way the quarter ends – with a central bank scare.

Central bankers are stodgy. They speak carefully. For many, reading the words ‘Federal Reserve’ is enough to cause boredom to set in and web surfing to ensue.

Last week, though, the European Central Bank and Bank of England cracked the ‘open secret’ (i.e., central banks will provide less stimulus and increase rates at some point), and investors did not like what they heard.

Central bankers were quick to say they didn’t necessarily mean what people had heard, but the rumor of less accommodative monetary policy was already moving markets. Barron’s wrote:

“But make no mistake: Last week was a game changer. Federal Reserve Chair Janet Yellen fretted about the high level of asset prices, the Bank of England’s Mark Carney hinted at a rate hike, and Mario Draghi suggested the European Central Bank could be nearing the end of its bond buying…The market didn’t take it sitting down. Long-term Treasury yields surged, resulting in a wider spread off of short-term bond yields.”

A wider spread between short- and long-term Treasuries could be good news. The Federal Reserve Bank of Cleveland explained:

“The slope of the yield curve – the difference between the yields on short- and long-term maturity bonds – has achieved some notoriety as a simple forecaster of economic growth. The rule of thumb is that an inverted yield curve (short rates above long rates) indicates a recession in about a year, and yield curve inversions have preceded each of the last seven recessions…”

Central bankers comments affected U.S. stock markets, too. The technology sector lost its allure, while the possibility of rising interest rates made the financials sector more attractive. It didn’t hurt that all major institutions passed the Fed’s stress tests for the first time. That could translate into share buybacks and higher dividends, reported Financial Times.

There were some notable statistics during the second quarter of 2017. For instance:

Investors were preternaturally calm
Throughout second quarter, investors have been confident the Standard & Poor’s 500 Index would offer a smooth ride. The CBOE Volatility Index (VIX), a.k.a. the fear gauge, has only closed below 10 sixteen times; seven occurred during the second quarter of 2017.

Consumer sentiment was quite positive
Consumers were feeling highly optimistic throughout the quarter. In June, the University of Michigan Consumer Sentiment Survey reported, “Although consumer confidence slipped to its lowest level since Trump was elected, the overall level still remains quite favorable. The average level of the Sentiment Index during the first half of 2017 was 96.8, the best half-year average since the second half of 2000…”

Investor sentiment shifted into neutral
Last week, the number of investors who were neutral (rather than bullish or bearish) about markets hit its highest level in a year. The AAII Blog reported:

“This year’s record highs for the S&P 500 and the NASDAQ have encouraged some individual investors, but the Trump administration’s ability (or lack thereof) to move forward on economic and tax policy remains on the forefront of many others’ minds. Also playing a role in influencing sentiment are earnings, valuations, concerns about the possibility of a pullback in stock prices, and interest rates/monetary policy.”

The U.S. economy appears to be growing, albeit slowly. Last week, the Federal Reserve Bank of Atlanta forecast real GDP (Gross Domestic Product) growth during the second quarter of 2017 at 2.7 percent.

 
YOU SAY POTATO, I SAY POTATO. A persistent debate among the geek set is how to pronounce the abbreviation for Graphics Interchange Format (GIF). You know, GIFs, the animated images you see online. Graphics starts with a hard ‘g’ sound, but pronunciation conventions suggest that ‘g’ makes a soft sound before the vowel ‘i.’ The Economist wrote:

“Some questions will be pondered for all eternity. What is the meaning of life? Where do you go when you die? And, even more puzzlingly, what is the right way to pronounce “GIF?”…Debates over whether it begins with a hard “g,” as in “gift,” or a soft one, as in “giraffe,” can make discussions about religion or politics look civil by comparison. Well aware of the risk that taking a side could lead to protests, boycotts, or worse, the Oxford English Dictionary and Merriam-Webster have maintained strict neutrality. They proclaim that both pronunciations are acceptable, betraying nary a hint of favoritism.”

It’s interesting that dictionaries, those arbiters of correct spelling and pronunciation, would stake out neutral ground. After all, in the early days of the United States correct spelling was open to interpretation. In the American Constitution, the word ‘choose’ is spelled ‘chuse’ and ‘Pennsylvania’ was spelled ‘Pensylvania’ (the Liberty Bell inscription has one ‘n,’ as well). Also, ‘defense’ was spelled ‘defence.’

The first American dictionary wasn’t published until 1806. Its author, Noah Webster, decided many spelling conventions were artificial, so he imposed the standards he preferred, changing ‘musick’ to ‘music,’ ‘centre’ to ‘center,’ and ‘women to wimmen.’ Not all of his changes were accepted.

This year, in an effort to resolve the GIF issue once and for all, a forum for computer programmers surveyed 50,000 users in 200 countries. Sixty-five percent believed a hard ‘g’ pronunciation was correct, while 26 percent believed the soft ‘g’ was right.

The survey results inflamed soft ‘g’ users, who claim it was rigged.

Weekly Focus – Think About It

“My seven-year-old grandson sleeps just down the hall from me, and he wakes up a lot of mornings and he says, ‘You know, this could be the best day ever.’ And other times, in the middle of the night, he calls out in a tremulous voice, ‘Nana, will you ever get sick and die?’ I think this pretty much says it for me and most of the people I know, that we’re a mixed grill of happy anticipation and dread.”
–Anne Lamott, American novelist and non-fiction writer

* These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indices referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* Stock investing involves risk including loss of principal.

Sources:
https://www.reuters.com/article/us-ecb-policy-bundesbank-idUSKBN19M3FM
http://www.barrons.com/articles/a-game-changing-week-for-markets-sees-nasdaq-fall-2-1498887177?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-03-17_Barrons-A_Game-Changing_Week_for_Markets_Sees_NASDAQ_Fall_2_Percent-Footnote_2.pdf)
https://www.clevelandfed.org/our-research/indicators-and-data/yield-curve-and-gdp-growth.aspx
https://www.ft.com/content/d7c47dae-5dd7-11e7-9bc8-8055f264aa8b (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-03-17_FinancialTimes-Second_Quarter_Ends_with_Fierce_Rotation_Away_from_Tech_Stocks-Footnote_4.pdf)
http://www.cboe.com/blogs/options-hub/2017/06/02/vix-index-closes-below-10-again-as-professor-called-vix-level-the-biggest-financial-mystery
http://www.cboe.com/products/vix-index-volatility/vix-options-and-futures/vix-index/vix-historical-data (click on “VIX data for 2004 to present”)
http://www.sca.isr.umich.edu (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-03-17_SurveysOfConsumers-Final_Results_for_June_2017-Footnote_7.pdf)
http://blog.aaii.com/aaii-sentiment-survey-highest-level-of-neutral-sentiment-in-nearly-a-year/
https://www.frbatlanta.org/cqer/research/gdpnow.aspx
http://theweek.com/articles/463959/why-are-there-two-pronunciations-letter-g
https://www.economist.com/blogs/graphicdetail/2017/06/daily-chart-21 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-03-17_TheEconomist-How_Do_You_Pronounce_GIF-Footnote_11.pdf)
https://www.usconstitution.net/constmiss.html
https://www.merriam-webster.com/about-us/americas-first-dictionary
https://www.ted.com/talks/anne_lamott_12_truths_i_learned_from_life_and_writing/transcript

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June 19, 2017

The Markets

All eyes on inflation!

Inflation is the way economists measure changes in the prices of goods and services. The United States has enjoyed relatively low inflation for a significant period of time. Last week, the consumer price index indicated inflation had moved lower in May.

Inflation is our focus because it is at the core of two very different opinions that currently are influencing markets and investors. A commentary on the Kitco Blog explained:

“One of the most important economic debates today is whether the economy will experience reflation or deflation (or low inflation) in the upcoming months. Has the recent reflation been only a temporary jump? Or has it marked the beginning of a new trend? Is the global economy accelerating or are we heading into the next recession?”

Another key factor is employment. Traditional economic theory holds when unemployment falls (i.e., when more people are employed) inflation will rise because demand for workers will push wages higher. That hasn’t happened yet in the United States even though unemployment has fallen significantly.

In fact, inflation remains stubbornly below the Federal Reserve’s 2 percent target, reported The Economist. Regardless, the Federal Reserve believes higher inflation is ahead, so it raised the Fed funds rate last week and indicated it was preparing to shrink its balance sheet if the economy continues to grow as expected.

There is a group that disagrees with the Fed. They believe inflation will remain low regardless of employment levels. Barron’s wrote:

“In the theoretical world, low unemployment threatens to unleash a torrent of inflation, which needs to be staved off by tighter monetary policies. Back in the real world, disruption, innovation, and competition relentlessly drive down prices while wage growth is hard to come by.”

The difference of opinion was apparent in stock and bond markets last week. In the bond market, yields on 10-year Treasuries moved lower after the Federal Reserve raised rates. In the U.S. stock market, the top-performing sectors were Industrials, which tend to do well when investors are optimistic about growth, and Utilities, which tend to do well when investors are worried about the future.

 

A CENTURY-OLD MEDICINE MAY HELP WITH AUTISM. Estimates from the Centers for Disease Control suggest one in every 68 American children has been identified with autism spectrum disorder. Few effective treatments have been found, but a medicine that has been around for more than a century may prove helpful.

The Economist reported a very small human trial – only 10 boys were involved – showed a drug used since 1916 to treat the sleeping sickness spread by tsetse flies, may help children with autism. The trial paired the participating boys by age, IQ, and their level of autism. In each pair, one boy received the drug and the other received a placebo:

“Every participant given suramin showed statistically significant improvements in their performance on the tests at seven days. Those on the placebo showed no significant improvement. At 45 days, the boys who were given the drug were performing better on the tests than they had before the infusion, but it was clear that as suramin was leaving their system, their autistic traits were returning.”

The study’s results were published in the Annals of Clinical and Translational Neurology in late May; however, the research summary did not include parent’s personal statements. The study’s first author Dr. Robert Naviaux published those statements on his website.

One parent wrote, “Immediately after the infusion, a kind of inner cheerfulness started to come out. When we were walking back to the car, he was holding me hand. He started giggling and looked up at me and said, ‘I just don’t know why I’m so happy.’”

Another wrote, “In fact, his teachers at school were unaware of the trial and one day we got a note from the teacher asking about what we had changed. We were naturally concerned and when we asked they told us that, ‘He has completed 3 weeks of schooling in 3 days!’”

Let’s hope larger trials prove the drug to be safe and its positive effects enduring.

Weekly Focus – Think About It

“If you’ve met one person with autism, you’ve met one person with autism.”
–Dr. Stephen Shore, Autistic professor of special education at Adelphi University

 

* These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indices referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* Stock investing involves risk including loss of principal.

Sources:
http://www.barrons.com/articles/bond-yields-are-going-up-right-not-so-fast-1497674052?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/06-19-17_Barrons-Bond_Yields_are_Going_Up_Right-Not_So_Fast-Footnote_1.pdf)
http://www.kitco.com/commentaries/2017-06-16/Reflation-Deflation-and-Gold.html
http://www.econlib.org/library/Enc/PhillipsCurve.html
https://www.economist.com/news/finance-and-economics/21723422-economists-and-federal-reserve-are-not-about-abandon-phillips (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/06-19-17_TheEconomist-Inflation_Has_Not_Yet_Followed_Lower_Unemployment_in_America-Footnote_4.pdf)
http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html (Click on U.S. & Intl Recaps, then “Central banks move markets”)
http://www.barrons.com/articles/is-the-federal-reserve-living-in-the-real-world-1497674080?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/06-19-17_Barrons-Is_the_Federal_Reserve_Living_in_the_Real_World-Footnote_6.pdf)
http://www.barrons.com/articles/stocks-mostly-edge-forward-on-muddled-data-1497675744?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/06-19-17_Barrons-Stocks_Mostly_Edge_Forward_on_Muddled_Data-Footnote_7.pdf)
https://www.cdc.gov/ncbddd/autism/data.html
http://www.economist.com/news/science-and-technology/21722732-it-was-only-initial-trial-suramins-effects-were-dramatic?zid=318&ah=ac379c09c1c3fb67e0e8fd1964d5247f (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/06-19-17_TheEconomist-A_Drug_Used_to_Treat_Sleeping_Sickness_May_Also_Help_with_Autism-Footnote_9.pdf)
https://health.ucsd.edu/news/releases/Pages/2017-05-26-century-old-drug-potential-new-approach-to-autism.aspx
http://naviauxlab.ucsd.edu/wp-content/uploads/2016/06/Parent-Statments.pdf
http://the-art-of-autism.com/favorite-quotes-about-autism-and-aspergers/

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June 5, 2017

The Markets

The bull market in U.S. stocks is getting really old!

In fact, this bull has been charging, standing, or sitting for more than eight years. In April, it became the second longest bull market in American history, according to CNN Money.

There are some good reasons the stock market in the United States has continued to trend higher. For one, companies have become more profitable. During the first quarter of 2017, companies in the Standard & Poor’s 500 Index reported earnings increased by 14 percent, year-over-year. That was the highest earnings growth rate since 2011, according to FactSet.

In addition, the economy in the United States has been chugging along at a steady pace. CIO Charles Lieberman wrote in Bloomberg View:

“…U.S. economic growth is continuing at a moderate pace, an economic recovery is finally underway in Europe, inflation is under control, corporate profits are rising, and there is some prospect for tax reform and deregulation, even if whatever gets implemented is less than what is really needed. These conditions imply continued growth in corporate profits.”

Last week’s employment report boosted both stock and bond markets. Financial Times opined the report was weak enough to ease pressure on bond rates and strong enough to boost share prices higher.

No one can say with certainty how long a bull market will last. Typically, bull markets are interrupted by corrections – declines in value of 10 percent or more. Historically, bulls have turned into bears, eventually. That’s why it’s important to employ investment strategies that manage risk and preserve capital even when markets are moving higher.

 

FRESH FROM THE ANNALS OF IMPROBABLE RESEARCH. Anyone who enjoys the Ig Nobel Prizes – which spur people’s interest in science, medicine, and technology by making them laugh and then making them think – may like The Annals of Improbable Research (AIR). An enthusiastically nerdy science humor magazine, the publication offers readers the opportunity to read about new and improbable things every other month.

During its 21-year history, AIR has covered a variety of topics, including:

• The Taxonomy of Barney. “In February 1994, we observed on television an animal which was there identified as a dinosaur, Barney. Its behavioral characteristics suggested that it was dissimilar to the diverse dinosaurian faunas that are so well documented…To test the hypothesis that Barney is a reptile descended from the true dinosaurs, we went into the field in order to capture and study a living specimen. This we accomplished with remarkable ease, as Barney was advertised to be appearing at a local shopping mall.”

• Horse Calculus. “The idea is that a heart is like a little battery, pushing weak electric currents in a three-dimensional pattern round the body…During each heartbeat, the vector (tip of the arrow) draws a loop – the heart loop – whose shape is a powerful diagnostic of health. Therefore it is useful to measure this loop…His specific question was: does the theory apply to a real horse or only to an ideal cylindrical horse…The moral of this is that applications of mathematical knowledge can be unexpected; you may find yourself taking a surface integral over a horse.”

• Which Feels Heavier – A Pound of Lead or a Pound of Feathers? “Which weighs more – a pound of lead or a pound of feathers?” The seemingly naive answer to the familiar riddle is the pound of lead. The correct answer, of course, is that they weigh the same amount. We investigated whether the naive answer to the riddle might have a basis in perception. When blindfolded participants hefted a pound of lead and a pound of feathers each contained in boxes of identical size, shape, and mass, they reported that the box containing the pound of lead felt heavier at a level above chance.”

Lurking beneath the unusual is some potentially useful scientific research.

Weekly Focus – Think About It

“Being a scientist is like being an explorer. You have this immense curiosity, this stubbornness, this resolute will that you will go forward no matter what other people say.”
–Sara Seager, Professor of Planetary Science and Physics at Massachusetts Institute of Technology (MIT)

* These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indices referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* Stock investing involves risk including loss of principal.

Sources:
http://money.cnn.com/2016/04/29/investing/stocks-2nd-longest-bull-market-ever/
https://insight.factset.com/hubfs/Resources/Research%20Desk/Earnings%20Insight/EarningsInsight_060217.pdf
https://www.bloomberg.com/view/articles/2017-05-30/stocks-rally-as-washington-burns-and-that-s-not-odd
https://www.ft.com/content/1fab9c52-bc35-31d8-a3a3-f428649ca203 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/06-05-17_FinancialTimes-US_Stocks_Set_New_Records_as_Wall_St_Shrugs_Off_Disappointing_Jobs_Report-Footnote_4.pdf)
https://www.yardeni.com/pub/sp500corrbear.pdf
http://www.improbable.com/ig/ (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/06-05-17_Improbable-About_the_Ig-Footnote_6.pdf)
http://www.improbable.com/airchives/paperair/volume1/v1i1/barney.htm (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/06-05-17_Improbable-The_Taxonomy_of_Barney-Footnote_7.pdf)
http://www.improbable.com/airchives/paperair/volume16/v16i4/Horse_calculus.pdf (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/06-05-17_Improbable-Horse_Calculus-Footnote_8.pdf)
http://www.improbable.com/airchives/paperair/volume20/v20i5/Feathers-Research-Review-20-5.pdf (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/06-05-17_Improbable-Feathers_Research_Review-Footnote_9.pdf)
http://blog.ted.com/the-ted2015-conference-in-30-quotes/

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