Monthly Archives: February 2017

February 27, 2017

The Markets

Once upon a time, five blind men discovered an elephant. Each man examined a different part of the elephant and formed a unique impression about the animal. One believed an elephant was like a pillar, while another decided an elephant was like a snake.

In recent weeks, stock and bond markets have been telling different stories, too.

Following a rally on Friday, the Dow Jones Industrial Average finished at a record high for the 11th time last week. Reuters reported major U.S. benchmark indices have been driven higher by optimism about tax reform, eased regulation, and increased infrastructure spending.

Both Reuters and Financial Times wrote some investors have become more cautious amidst growing doubts about the pace at which the new administration’s economic policies may be achieved, as well as concerns about the outcome of European elections. These concerns are reflected in the bond market. Barron’s reported:

“The market’s recent advance has taken place on expectations of the reflationary impact of the Trump administration’s policies…the action in global bond markets suggests something else. The 10-year U.S. Treasury yield ended the week at 2.317 percent, the lowest since late November, despite the reflation trade in stocks and expectations of a Fed hike by June, if not May. Even more startling was the slide in the German two-year yield, to minus 0.95 percent, by week’s end, close to a record low, amid growing concern about France’s coming presidential election. While stock investors are smiling at daily Dow records, the bond crowd seems to be hunkering down.”

Who is correct? As with the folk tale about the elephant, both stock and bond markets may be right. Fiscal stimulus could boost economic growth, supporting higher stock values. However, the positive effects of a potential stimulus package are unlikely to be felt before 2018, according to Treasury Secretary Mnuchin. In the meantime, uncertainty about governments and policies at home and abroad may have investors opting for investments they perceive to be lower risk, such as U.S. Treasuries, and that could keep bond yields lower than some had expected.

  

THE BEST INVENTIONS OF 2016. Late last year, Time Magazine selected 25 inventions that “are making the world better, smarter, and – in some cases – a little more fun.” Past editions have included underground parks, gluten sniffers, and the desktop DNA lab. For 2016, the list included:

• Spherical tires. Intended for self-driving cars, spherical tires move in every direction, allowing cars to maneuver in new and unexpected ways. For example, a car can slide sideways into a parallel parking space. A critical difference between current tires and spherical tires is magnetic levitation. That’s right. The tires hover beneath the car instead of being bolted on.

• Levitating lightbulbs. This wireless floating lightbulb “relies on electromagnetism to levitate and spin, and on resonant inductive coupling – a technical term for wireless power transmission – to shine.” The bulbs were so popular, the company created levitating clocks (with custom orbits that can be set for one minute or one year) and planters.

• Smarter toothbrushes. The war on gum disease is never over. Dental hygiene slackers may find using these electric toothbrushes, which vibrate every 30 seconds to remind users to switch brush position, more rewarding. Next up: a more satisfying flossing experience.

• Assistive tableware. If you have a loved one with a cognitive disability, assistive tableware may provide a mealtime solution, helping users eat more and maintain their dignity. The trick is in the design – bright colors, wide rubber bases, and easy-to-hold cups and flatware.

• Playful prosthetics. A new prosthetic arm for children encourages play and is likely to make siblings and friends jealous. “When they need a hand, they have one. But they can replace it with any number of toy-like attachments, all of which are compatible with” a famous brand of building blocks.

It’s always impressive to discover what a well-leavened blend of technology and cleverness will produce.

Weekly Focus – Think About It

“Their conclusion: more gender diverse companies offer similar return with lower volatility. In other words: More gender diversity, particularly in corporate settings, can translate to increased productivity, greater innovation, better decision-making, and higher employee retention and satisfaction.”
–Morgan Stanley, An Investor’s Guide to Gender Diversity

* 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://betterlifecoachingblog.com/2010/07/23/five-blind-men-and-an-elephant-a-story-about-perspective/
http://www.reuters.com/article/us-usa-stocks-idUSKBN1631DO
https://www.ft.com/content/adde67ba-fa37-11e6-bd4e-68d53499ed71 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-27-17_FinancialTimes-Late_Rally_Sends_Dow_to_11th_Straight_Record_Close-Footnote_3.pdf)
http://www.barrons.com/articles/an-active-voice-for-bonds-1488000330?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-27-17_Barrons-An_Active_Voice_for_Bonds-Footnote_4.pdf)
http://www.barrons.com/articles/the-case-for-u-s-treasury-bonds-1488000294?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-27-17_Barrons-The_Case_for_US_Treasury_Bonds-Footnote_5.pdf)
http://time.com/4572079/best-inventions-2016/
http://time.com/4115398/best-inventions-2015/
https://www.kickstarter.com/projects/flyte/story-the-levitating-timepiece
https://www.eatwellset.com/inspiration-cqyc
http://www.morganstanley.com/ideas/gender-diversity-investor-guide (Pages 3-4)

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February 21, 2017

The Markets

Up!

Four major U.S. benchmark stock indices closed at record highs for four consecutive days during Valentine’s Day week, reported Financial Times (FT).

To date, positive corporate earnings and robust investor confidence have offset fiscal and political uncertainty and helped push U.S. stock markets higher, said sources cited by FT. With 82 percent of companies in the Standard & Poor’s 500 Index reporting, corporate earnings are up 4.6 percent for the fourth quarter of 2016, and the Investors Intelligence Advisors Sentiment survey showed bullishness at a 12-year high last week, according to CNBC.com.

While bullish performance is welcome by stock investors, a Barron’s article titled, ‘Memo to Investors: What Goes Up Must Come Down,’ listed the responses of traders at a firm whose chief market strategist asked:

“In order to stay long U.S. equities, you have to believe…what? Here are some answers: Trump’s recent troubles are just the typical pains of any new administration. The Federal Reserve hikes rates twice, not three times, in 2017, and the yield on 10-year Treasuries stays at or below 3 percent. Oil prices remain stable. The Street, for once, is too pessimistic on earnings, but since analysts already forecast profit growth of 10.5 percent in 2017 and 11.7 percent in 2018, lower taxes must goose growth.

To this list, [the chief strategist] added the following: Trump doesn’t introduce overtly protectionist policies. U.S. growth stays in the 2 percent to 3 percent range until Trump’s economic agenda passes Congress. And no geopolitical event either increases global energy prices or dampens U.S. consumer confidence.”

Stock markets may be highly valued, but the Conference Board Leading Economic Index, which was designed to determine highs and lows in the business cycle, indicates the U.S. economy is doing well. The index increased for three consecutive months (November through January). The Conference Board’s director of business cycles and growth research, Ataman Ozyildirim, said, “The January gain was broad based among the leading indicators. If this trend continues, the U.S. economy may even accelerate in the near term.”

 

 
THINGS YOU DIDN’T KNOW YOUR CAT WANTED. Cat wine didn’t win the first Pet Care Innovation Prize – that went to a dishwasher-safe bowl that connects to the pet owner’s phone and Wi-Fi – but the product has been in the news. Hostilities appear to have broken out between competing start-up companies that make faux wine for cats (and a few faux wines for discriminating dogs). The New York Times reported:

“But already the company that brought its products to market first…‘the original cat winery’ – is accusing its newer competitor…of being a copycat…Both have come up with clever names for their products: For $11.95, people can buy Fluffy an 8-ounce bottle of Catbernet or Pinot Meow…Or for $14.95, they can pour 12 ounces of Meow & Chandon…Since alcohol can harm cats, these products are essentially catnip water, which can make a cat loopy and an owner happy. But based on a wine tasting I conducted at a local cat cafe-slash-adoption center, the products are primarily catnip for the owners: The shelter cats did not like wines from either company – only two of them indulged – but the people visiting the tastings loved the concept.”

The challenge for companies that want cats to enjoy their wines, according to data from National Geographic, is the active ingredient in catnip – the oil found on catnip’s stems and leaves – functions as a pheromone. While humans have ingested catnip for years in teas that assist digestion or reduce tension, cats prefer to smell the stuff. That could make the bouquet of cat wine quite important. Next on the docket for the cat wine start-ups: products for the next generation – kittens.

If cat wine sounds over-the-top to you, ponder this: One of the cat wine start-ups sold half of a million dollars worth of pet wines last year.

Weekly Focus – Think About It

“Stories matter. Many stories matter. Stories have been used to dispossess and to malign, but stories can also be used to empower and to humanize. Stories can break the dignity of a people, but stories can also repair that broken dignity.
Chimamanda Ngozi Adichie, Nigerian novelist

* 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/1bb7875e-f488-11e6-95ee-f14e55513608 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-21-17_FinancialTimes-US_Economy_Props_Wall_Street_Rally_as_Investors_Wait_on_Trump_Policies-Footnote_1.pdf)
https://insight.factset.com/hubfs/Resources/Research%20Desk/Earnings%20Insight/EarningsInsight_021717.pdf
http://www.cnbc.com/2017/02/14/professional-investors-are-getting-fired-up-for-economic-boom.html
http://www.barrons.com/articles/memo-to-investors-what-goes-up-must-come-down-1487399135?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-21-17_Barrons-Memo_to_Investors-What_Goes_Up_Must_Come_Down-Footnote_4.pdf)
https://www.conference-board.org/data/bcicountry.cfm?cid=1
http://eqstl.com/obe-creator-new-smart-pet-bowl-wins-first-ever-pet-care-innovation-prize-powered-purina/
https://www.nytimes.com/2017/02/15/business/smallbusiness/wine-products-for-cats-and-dogs.html?ref=smallbusiness
http://www.nationalgeographic.com/people-and-culture/food/the-plate/2016/06/do-cats-really-need-their-own-wine-/
https://www.ted.com/talks/chimamanda_adichie_the_danger_of_a_single_story/transcript?language=en

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February 13, 2017

The Markets

What’s the word ‘phenomenal’ worth? It all depends on who says it.

Barron’s shared Wilshire Associates’ calculations which indicated the word was worth about $175 billion – the amount markets gained last Thursday – when President Trump used it to describe the tax plan his administration will deliver “ahead of schedule.” Markets gained another $100 billion in value on Friday. Barron’s reported:

“While tax reform is definitely coming, a final bill is still a long way off, and a 2017 effective date is looking less likely…Yet, as the action late last week suggests, the equity markets are more than willing to give the new administration the benefit of the doubt. Something’s coming, even if we don’t know what or when. And that seems good enough to bid stocks higher…”

The word ‘phenomenal’ is probably worth a bit less than Wilshire’s estimate. United States stocks pushed higher on positive earnings growth, too. With 71 percent of companies in the Standard & Poor’s 500 Index reporting results for the fourth quarter of 2016, “…the blended earnings growth rate for the S&P 500 is 5.0 percent. The fourth quarter will mark the first time the index has seen year-over-year growth in earnings for two consecutive quarters since Q4 2014 and Q1 2015.”

Consumer confidence remained high, but wavered a bit in February, according to the University of Michigan Surveys of Consumers. Americans are happy with their current financial circumstances, but expectations for the future dropped sharply. Surveys of Consumers chief economist, Richard Curtin, wrote:

“… a total of nearly six-in-ten consumers made a positive or negative mention of government policies. In the long history of the surveys, this total had never reached even half that amount…These differences are troublesome: the Democrat’s Expectations Index is close to its historic low (indicating recession) and the Republican’s Expectations Index is near its historic high (indicating expansion). While currently distorted by partisanship, the best bet is that the gap will narrow to match a more moderate pace of growth.”

This week could be bumpy. On Valentine’s Day, Fed Chair Janet Yellen will testify about the state of the economy before the U.S. Senate.

 
ON THE ROAD TO BREXIT…Last week, Members of Parliament (MPs) approved the Article 50 bill, green-lighting Britain’s exit from the European Union (EU). If the House of Lords follows suit, which is far from certain, then the British government will follow the lead of the British people and invoke Article 50 of the Lisbon Treaty. (Article 50 gives member states the right to withdraw from the EU.)

The Economist reported:

“But a different sort of Brexit bill is approaching and will be harder to manage. It could yet scupper the whole process. Leave campaigners promised voters that Brexit would save the taxpayer £350m ($440m) a week. That pledge was always tendentious. But officials in Brussels are drawing up a bill for departure that could mean Britain’s contributions remain close to its membership dues for several years after it leaves. In a new report for the Centre for European Reform, a think-tank, Alex Barker, a Financial Times correspondent, puts the figure at anything between €24.5bn ($26.1bn) and €72.8bn.”

Michel Barnier, the EU’s chief Brexit negotiator, indicated the matter of how much Britain owes must be settled before questions about Britain’s future relationship (i.e., trade agreements) with the EU can be addressed, according to Bloomberg.

To date, Prime Minister Theresa May has been taking a hard line, which has roiled tempers throughout the EU. Bloomberg reported the Prime Minister’s comments:

“…are elevating the likelihood that the United Kingdom leaves the bloc in 2019 without an exit deal, let alone the sweeping trade pact it seeks…The messages from the diplomats are that EU governments are preparing to enforce their line that the United Kingdom can’t be better off outside the bloc than inside it and that they value safeguarding their own interests and regional stability above the need to maintain good relations with the United Kingdom.”

The pending negotiations bring to mind the words of German Field Marshal Helmut Von Moltke, “No operation extends with any certainty beyond the first encounter with the main body of the enemy.”

Weekly Focus – Think About It

“What counts for most people in investing is not how much they know, but rather how realistically they define what they don’t know.”
Warren Buffett, The Oracle of Omaha

* 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/magical-mystery-tax-plan-1486794351?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-13-17_Barrons-Magical_Mystery_Tax_Plan-Footnote_1.pdf)
http://insight.factset.com/hubfs/Resources/Research%20Desk/Earnings%20Insight/EarningsInsight_021017.pdf
http://www.sca.isr.umich.edu (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-13-17_UniversityofMichigan-Surveys_of_Consumers-Footnote_3.pdf)
http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html?mod=BOL_Nav_MAR_hps (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-13-17_Barrons-Yellen_to_Give_Semiannual_Monetary_Policy_Testimony-Footnote_4.pdf)
https://www.ft.com/content/7c25dd1c-ee1f-11e6-930f-061b01e23655 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-13-17_FinancialTimes-MPs_Give_Green_Light_for_Theresa_May_to_Trigger_Brexit-Footnote_5.pdf)
http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/577971/EPRS_BRI(2016)577971_EN.pdf
http://www.economist.com/news/britain/21716629-bitter-argument-over-money-looms-multi-billion-euro-exit-charge-could-sink-brexit?cid1=cust/ddnew/n/n/n/2017029n/owned/n/n/nwl/n/n/NA/email (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-13-17_TheEconomist-The_Multi-Billion-Euro_Exit_Charge_that_Could_Sink_Brexit_Talks-Footnote_7.pdf)
https://www.bloomberg.com/news/articles/2017-02-10/bad-tempered-brexit-talks-loom-as-may-s-demands-irk-eu-officials
http://www.ralphkeyes.com/quote-verifier/
http://www.marketwatch.com/story/the-genius-of-warren-buffett-in-23-quotes-2015-08-19

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The Markets

U.S. stock markets were unsettled last week.

President Trump’s executive order banning travel from seven predominantly Muslim countries to the United States for 90 days, in tandem with some disappointing earnings reports, inspired turmoil and uncertainty that helped push U.S. stock markets lower early in the week. The Dow Jones Industrial Average dropped below 20,000.

Mid-week, markets remained sanguine after the Federal Reserve left interest rates unchanged. An economist cited by Barron’s said:

“[The Federal Reserve] left open the door to hike rates further should the trend in inflation accelerate while also maintaining the option to hold rates steady for an extended period. I expect the minutes to be released in a few weeks will show a more wide ranging debate than that indicated by the policy statement, but the clear lack of visibility on key trade, tax, spending, and regulatory initiatives argued for a well-scrubbed statement.”

Late in the week, markets rallied when the Bureau of Labor Statistics delivered a reasonably strong jobs report. The Boston Globe wrote, “…employers added a healthy 227,000 workers to their payrolls in January. But, despite a surge of local minimum-wage increases in states across the country, wage growth was meager.”

Financial shares gained on Friday. The Washington Post reported market optimism returned after The Wall Street Journal published an interview with Gary Cohn, White House Economic Council Director. Cohn indicated President Trump planned to sign executive orders preparing the way to dismantle Dodd-Frank reforms and limit other regulations affecting the financial industry.

The Dow finished the week just above 20,000.

 

DOES COLLEGE OPEN DOORS? A new study examined how college affects Americans’ social mobility by cross-referencing data from the Department of Education (from 1999-2013) with 30 million tax returns. The researchers looked at the earnings of graduates from various colleges and how graduates’ earnings varied relative to parental income. The Economist described some of the findings:

“…some colleges do a better job of boosting poor students up the income ladder than others. Previously, the best data available showed only average earnings by college. For the first time, the entire earnings distribution of a college’s graduates – and how that relates to parental income – is now known.

These data show that graduates of elite universities with single-digit admissions rates and billion-dollar endowments are still the most likely to join the top 1 percent (though having wealthy parents improves the odds). And despite recent efforts to change, their student bodies are still overwhelmingly wealthy…

…legacy admissions, which give preferential treatment to family members of alumni, exacerbate the imbalance. Of Harvard’s most recently admitted class, 27 percent of students had a relative who also attended. There’s evidence that this system favors the already wealthy. MIT and the California Institute of Technology, two elite schools with no legacy preferences, have much fewer students who hail from the ranks of the super-rich.”

The top colleges by mobility rate (students moving from the bottom to the top 20 percent) included: Cal State University-Los Angeles, Pace University-New York, SUNY-Stony Brook, Technical Career Institutes, University of Texas-Pan American, CUNY System, Glendale Community College, South Texas College, Cal State Polytechnic-Pomona, and University of Texas-El Paso.

The top colleges by upper-tail mobility rate (students moving from the bottom 20 percent to the top 1 percent) were: University of California-Berkeley, Columbia University, MIT, Stanford University, Swarthmore College, Johns Hopkins University, New York University, University of Pennsylvania, Cornell University, and University of Chicago.

Weekly Focus – Think About It

“Oh give me a home where the buffalo roam,
Where the deer and the antelope play,
Where seldom is heard a discouraging word,
And the skies are not cloudy all day.”
–Lyrics to Home on the Range

* 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.forbes.com/sites/antoinegara/2017/01/30/trump-travel-ban-stirs-u-s-stock-selloff-fitbit-and-tempur-sealy-plunge-on-weak-earnings-guidance/#5456d1d246cd
http://www.barrons.com/articles/dow-holds-on-to-20-000by-the-skin-of-its-teeth-1486188910?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-06-17_Barrons-Dow_Holds_on_to_20000-By_the_Skin_of_Its_Teeth-Footnote_2.pdf)
http://blogs.barrons.com/stockstowatchtoday/2017/02/01/did-i-miss-something-dow-little-changed-as-stocks-ignore-fed-snoozer/?mod=BOL_da_rta
https://www.bostonglobe.com/business/2017/02/03/starts-year-with-job-surge-but-pay-gains-are-weak/FFKfutGVD3eMfDBYGLCPBJ/story.html
https://www.washingtonpost.com/news/morning-mix/wp/2017/02/03/trump-to-order-rollback-friday-of-regulations-aimed-at-finance-industry-top-aide-says/?utm_term=.50ba0a1af37e
http://www.equality-of-opportunity.org/papers/coll_mrc_paper.pdf
http://www.economist.com/news/united-states/21715735-new-data-show-joining-1-remains-unsettlingly-hereditary-skipping-class (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-06-17_TheEconomist-Skipping_Class-Footnote_7.pdf)
http://www.scoutsongs.com/lyrics/home-on-the-range.html

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