Direction of Interest Rates

April 30, 2018

The Markets

A meeting of the minds.

The Federal Reserve and the U.S. bond market appear to be in agreement about the direction of interest rates. For more years than anyone cares to count, investment professionals have been predicting the end of the bull market in bonds. Bond guru Bill Gross called the end of the bond bull in 2011 – and called it again in 2013. He wasn’t alone. Strategists who participated in Barron’s Outlooks anticipated rising interest rates in 2014 and 2015, too.

The Federal Reserve began encouraging interest rates higher in December 2015 when it increased the Fed funds rate for the first time in a decade. However, the yield on 10-year Treasuries remained stubbornly low. In fact, it fell below 2 percent following the rate hike and stayed there until November 2016.

Since 2015, the Fed has raised rates six times. The latest increase, along with signs of higher inflation, helped push bond rates higher. Higher interest rates could shift investors’ preferences in some significant ways, according to sources cited by Barron’s:

“Two years ago, dividend stocks provided investors a one-percentage point advantage over risk-free rates…Now those places have been swapped…this ability to get a “safe yield” for the first time in a decade, with no risk from falling stock or bond prices, represents a ‘seminal shift and a huge source of competition for the dividend allure of the stock market.’”

We may be at a turning point.

 

WE’LL NEED A NEW KIND OF UMBRELLA FOR THIS. In February, a new research paper disclosed a finding no one wants to hear about: Viruses are falling from the sky. Literally. Science Daily summarized a report from the University of British Columbia. The report said:

“An astonishing number of viruses are circulating around the Earth’s atmosphere – and falling from it – according to new research…‘Roughly 20 years ago we began finding genetically similar viruses occurring in very different environments around the globe,’ says [University of British Columbia virologist Curtis Suttle.] ‘This preponderance of long-residence viruses travelling the atmosphere likely explains why – it’s quite conceivable to have a virus swept up into the atmosphere on one continent and deposited on another.’”

The New York Times reported the researchers journeyed to Spain and used buckets on mountaintops to catch whatever might fall from the sky. The scientists weren’t surprised to find viruses, but they were surprised by the quantity of viruses captured. Best estimates suggest 800 million viruses shower every square meter of the Earth every day.

Don’t panic! Viruses are responsible for a lot more than diseases. Scientists theorize viruses and humans may have a symbiotic relationship. According to Popular Science:

“Each of us has a unique collection of viruses although there are some species common to us all…endogenous viruses make up some 8 percent of our genetic material. Originally, they were thought to be nothing more than junk pieces of evolutionary history. But we now know they have a variety of functions. One of the most studied topics…focuses on reproduction. A particular protein encoded by one particular virus…appears to be imperative for proper formation of the placenta.”

Good or bad, the question remains: where do atmospheric viruses originate? No one knows for sure. There are a variety of theories. One theory is viruses are swept from the planet into the atmosphere. Another is viruses originate in the atmosphere. A third is viruses arrive from outer space.

The truth is out there!

Weekly Focus – Think About It

“The diversity of the phenomena of nature is so great, and the treasures hidden in the heavens so rich, precisely in order that the human mind shall never be lacking in fresh nourishment.”
–Johannes Kepler, German scientist

* These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Group Coaching. Carson Group Coaching 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 indexes 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.
* Stock investing involves risk including loss of principal.
* Consult your financial professional before making any investment decision.

Sources:
https://www.barrons.com/articles/BL-INCOMB-2495 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-30-18_Barrons-Pimcos_Gross-30-Yr_Bond_Bull_Market_Officially_Over-Footnote_1.pdf)
https://www.barrons.com/articles/stocks-could-rise-10-in-2016-according-to-market-strategists-1449899461 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-30-18_Barrons-Stock_Market_Outlook_2016-Footnote_2.pdf)
https://www.barrons.com/articles/outlook-2015-stick-with-the-bull-1418449329 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-30-18_Barrons-Outlook_2015-Stick_with_the_Bull-Footnote_3.pdf)
http://money.cnn.com/2015/12/16/news/economy/federal-reserve-interest-rate-hike/index.html
https://finance.yahoo.com/quote/^TNX/history?period1=1448949600&period2=1524891600&interval=1mo&filter=history&frequency=1mo (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-30-18_Yahoo_Finance-CBOE_Interest_Rate-Footnote_5.pdf)
https://www.bloomberg.com/news/articles/2018-04-26/central-banks-take-it-easy-to-give-global-growth-a-second-look
https://www.barrons.com/articles/the-stock-market-thats-never-satisfied-1524875305 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-30-18_Barrons-The_Stock_Market_Thats_Never_Satisfied-Footnote_7.pdf)
https://www.sciencedaily.com/releases/2018/02/180206090650.htm
https://www.nytimes.com/2018/04/13/science/virosphere-evolution.html
https://www.popsci.com/our-viral-friends
https://www.brainyquote.com/quotes/johannes_kepler_144004?src=t_phenomena

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Global Debt

April 23, 2018

The Markets

The world is in debt. 

The April 2018 International Monetary Fund (IMF) Fiscal Monitor reported global debt has reached a historically high level. In 2016, debt peaked at 225 percent of global gross domestic product (GDP) (the value of all goods and services produced across the world). Public debt is a significant component of global debt. The IMF wrote:

“For advanced economies, debt-to-GDP ratios have plateaued since 2012 above 105 percent of GDP – levels not seen since World War II – and are expected to fall only marginally over the medium term…In emerging market and middle-income economies, debt-to-GDP ratios in 2017 reached almost 50 percent – a level seen only during the 1980s’ debt crisis – and are expected to continue on an upward trend.”

There are numerous reasons high levels of government debt (the amount a government owes) and significant deficits (the difference between how much a government takes in from taxes and other sources and how much it spends) are a cause for concern: 

Higher interest payments. Governments typically finance debt by issuing government bonds. When bonds mature, the government issues new debt. If interest rates have risen, the cost of that debt increases. As a result, high debt levels can make tax hikes and spending cuts a necessity, explained the Committee for a Responsible Federal Budget.
Lower national savings and income. You may have heard the phrase, “Robbing Peter to pay Paul,” which means taking money from one source to pay another. When a country runs a deficit, a similar thing happens. In The Long-Run Effects of Federal Budget Deficits on National Saving and Private Domestic Investment, the Congressional Budget Office explained, “…a dollar’s increase in the federal deficit results in…a 33 cent decline in domestic investment.”
The tax lag. In his book, Do Deficits Matter?, Daniel Shaviro suggests sustained deficit spending creates a ‘tax lag’ by shifting responsibility for current spending onto future generations.

The IMF Fiscal Monitor wrote, “countries need to build fiscal buffers now by reducing government deficits and putting debt on a steady downward path.”

Last week, the interest rate on 10-year U.S. Treasuries rose above 2.9 percent, which raised concerns about inflation. Markets moved higher early in the week and tumbled later in the week. The major U.S. stock indices finished the week higher.

 

ARE YOU AN INSECT GOURMET? Throughout history, people have eaten bugs. According to National Geographic, hunter-gatherers probably learned which insects were edible by watching birds. People’s appetite for bugs didn’t disappear as they became more civilized. Pliny, a Roman scholar, wrote beetle larvae fed a diet of flour and wine were a favorite snack of aristocratic Romans.

The tradition of eating insects continues today.

According to National Geographic, “Gourmands in Japan savor aquatic fly larvae sautéed in sugar and soy sauce. De-winged dragonflies boiled in coconut milk with ginger and garlic are a delicacy in Bali. Grubs are savored in New Guinea and aboriginal Australia. In Latin America cicadas, fire-roasted tarantulas, and ants are prevalent in traditional dishes.”

Reuters said in Germany, Netherlands, and Belgium, shoppers can buy burgers made of buffalo worms (the larvae of buffalo beetles) at the local grocery. It’s a visually pleasing product, according to one of the burger company’s founders, because the insects don’t show.

In North Carolina, diners can order a tarantula burger, described as “…a hamburger topped with a crunchy full-grown, oven-roasted tarantula.” It comes with a side of fries – and possibly a drink to wash it down as fast as possible. Other restaurants across the United States offer fried silkworm larvae, red ant salad, cricket crab cakes and cricket pastry, and grasshopper rolls, according to Reuters and Spoon University.

Bon appetit! (Or should that be bug appetit?) 

Weekly Focus – Think About It 

“Then I say the earth belongs to each of these generations during its course, fully, and in their own right. The 2d. generation receives it clear of the debts and encumbrances of the 1st., the 3d. of the 2d. and so on. For if the 1st. could charge it with a debt, then the earth would belong to the dead and not the living generation. Then no generation can contract debts greater than may be paid during the course of its own existence.”
Thomas Jefferson, Third President of the United States and principal author of the Declaration of Independence

* These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Group Coaching. Carson Group Coaching 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 indexes 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.
* Stock investing involves risk including loss of principal.
* Consult your financial professional before making any investment decision.

Sources:
http://www.imf.org/en/Publications/FM/Issues/2018/04/06/fiscal-monitor-april-2018 (Click on Chapter 1, Full Text of Chapter 1, page 1)
https://www.investopedia.com/articles/personal-finance/081315/debt-vs-deficit-understanding-differences.asp
http://www.crfb.org/blogs/marc-goldwein-national-debt-yes-rising-annual-deficits-threaten-us-economy
http://www.cbo.gov/sites/default/files/cbofiles/attachments/45140-NSPDI_workingPaper.pdf (Page 6)
http://www.press.uchicago.edu/Misc/Chicago/751120.html
https://www.nasdaq.com/article/stock-market-news-for-apr-20-2018-cm950849
http://online.barrons.com/mdc/public/page/9_3063-economicCalendar.html (Click on “U.S. & Intl Recaps,” then “Geopolitical concerns ease”)
https://news.nationalgeographic.com/news/2004/07/0715_040715_tvinsectfood.html
https://www.reuters.com/article/us-germany-food-insectburger/german-shoppers-sample-burgers-made-of-buffalo-worms-idUSKBN1HS0JF
https://www.reuters.com/article/us-north-carolina-tarantula-burger/you-want-tarantula-with-that-at-u-s-burger-joint-its-an-option-idUSKBN1HO29S
https://spoonuniversity.com/place/us-restaurants-that-serve-insect-dishes
http://library.intellectualtakeout.org/content/quotes-united-states-national-debt-budget-deficits

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Bullish, Bearish, or Neutral?

April 16, 2018

The Markets

What do you think?

• Are you bullish, bearish, or neutral about the U.S. stock market? 
• Are U.S. stocks undervalued, overvalued, or fairly valued?
• What is the biggest threat the U.S. stock market faces this year?

During the first four months of 2018, U.S. stocks have experienced not one, but two, 10 percent declines. These short-term reversals are known as corrections. They occur relatively often, helping to wring out investor exuberance and, sometimes, to create buying opportunities as share prices drop.

The current twinset of corrections appears to have created a fair amount of uncertainty, according to Barron’s bi-annual Big Money Poll of professional investors. The ranks of the bullish have diminished, and the bearish remain relatively unchanged, but the number of those who are ‘neutral’ has swelled:

Professional investors say their clients are also unsure about stock markets. They indicated 60 percent of clients were neutral about stocks, while 23 percent were bullish and 17 percent were bearish.

When asked about market valuations, a majority thought U.S. stocks were fairly valued (57 percent) after the corrections. Thirty-five percent believe stocks remain overvalued, and 8 percent believe stocks have become undervalued.

If either ‘political/policy missteps’ or ‘rising interest rates’ was your answer to the biggest threat to U.S. stocks, then you’re thinking like a professional investor. Their list of worries included:
 

Last week, the Dow Jones Industrial Average gained 1.8 percent, the Standard & Poor’s 500 Index was up 2.0 percent, and the NASDAQ Composite rose 2.8 percent.

  

WHAT DOES YOUR PLAYLIST SAY ABOUT YOU? Your preference for pop, country, opera, classic rock, or some other type of music may provide clues to your personality, according to an article in Psychological Science entitled ‘Musical Preferences Predict Personality.’

Psychologists have been studying ‘personality’ for a long time. Their goal is to understand why people think, feel, and behave differently in the same situation. The prevailing personality model is called the ‘Big Five.’ It holds there are five factors that describe a broad range of personality traits and characteristics. No single factor describes personality by itself:

Extroversion includes people on two ends of a spectrum, introverts and extroverts. Extroverts thrive on interactions with others while introverts thrive on solitude. This factor reflects a person’s tendency to be sociable, assertive, talkative, and friendly. 
Agreeableness describes how well people get along well with others. This factor encompasses altruism, trust, tact, and loyalty.
Conscientiousness describes how well people control their impulses and act in socially acceptable ways. It encompasses persistence, ambition, energy, and resourcefulness.
Neuroticism describes how comfortable and confident people are with themselves. It encompasses awkwardness, pessimism, insecurity, and wariness.
Openness to experience describes willingness to try new experiences and think outside the box. This factor reflects perceptiveness, curiosity, insightfulness, and imagination.

As it turns out, musical preferences are pretty good predictors of some personality factors, especially openness, extroversion, and agreeableness. Openness is associated with a preference for ‘sophisticated’ music (classical, operatic, world, and jazz), extroversion is associated with ‘unpretentious’ music (country and folk), and, as you might expect, agreeableness is associated with liking all types of music. 
It’s notable that musical preferences fail to predict conscientiousness.

Weekly Focus – Think About It

“Sometimes they would take two ropes and turn them as a single rope together, but you could separate them and turn them in like an eggbeater on each other. The skipping rope was like a steady timeline – tick, tick, tick, tick – upon which you can add rhymes and rhythms and chants. Those ropes created a space where we were able to contribute to something that was far greater than the neighborhood.”
–Kyra Gaunt, Professor, Songwriter, Performer

* These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Group Coaching. Carson Group Coaching 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 indexes 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.* Stock investing involves risk including loss of principal.
* Consult your financial professional before making any investment decision.

Sources:
https://www.investopedia.com/terms/c/correction.asp
https://www.barrons.com/articles/big-money-poll-more-good-news-for-stocks-1523665374 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-16-18_Barrons-Big_Money_Poll-More_Good_News_for_Stocks-Footnote_2.pdf)
https://www.barrons.com/articles/dow-closes-the-week-up-427-pointsthe-hard-way-1523664000 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-16-18_Barrons-Dow_Closes_the_Week_Up_427_Points-the_Hard_Way-Footnote_3.pdf)
https://www.researchgate.net/publication/322506461_Musical_Preferences_Predict_Personality_Evidence_from_Active_Listening_and_Facebook_Likes
https://positivepsychologyprogram.com/big-five-personality-theory/
https://www.ted.com/talks/kyra_gaunt_how_the_jump_rope_got_its_rhythm/transcript#t-84378

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Trade Tentions

April 9, 2018

The Markets

You could almost hear the spurs jingling.

Trade tensions ratcheted higher last week as the United States and China staked new positions on the not-so-dusty main street of trade. It was the latest round of posturing in what has the potential to become a trade war between the world’s largest economies. Barron’s explained:

“The trade battle has escalated since President Trump announced steel tariffs in March. China retaliated to those tariffs with its own duties, and the resulting back and forth resulted in announced tariffs on $50 billion worth of goods on both sides. Late on Thursday, Trump also directed the U.S. trade representative to identify $100 billion more in potential tariffs on Chinese goods.”

It was unwelcome news in financial markets where one-upmanship created uncertainty and unnerved investors. Distress in stock and bond markets may have been exacerbated by analysts’ warnings about worst-case scenarios, including the possibility of China reducing its $1.2 trillion position in U.S. Treasuries and diversifying its foreign exchange reserves into other nation’s currencies, according to Financial Times.

American manufacturing businesses have concerns about supply chain and other issues that may be created by tariffs, reported Forbes. In addition, farmers are bracing for the impact of a potential trade war. The New York Times wrote:

“China’s aggressive response to Mr. Trump’s tariffs is aimed squarely at products produced in the American heartland, a region that helped send him to the White House. A trade war with China could be particularly devastating to rural economies, especially for pig farmers and soybean and corn growers. Nearly two-thirds of United States soybean exports go to China.”

Major U.S. indices finished lower last week for the third time in four weeks. The Dow Jones Industrial Average was down 10.1 percent from its January closing high. Technically, that puts the Dow in correction territory.

 

THE NOT-SO-SECRET MARCH MADNESS EFFECT. Have you ever wondered how students select colleges? Economic theory suggests, “Models of college choice typically assume that high school students are fully informed and choose to apply to and eventually attend a school that maximizes their expected, present discounted value of future wages less the costs associated with college attendance.”

It’s a good theory, if you’re an economist who believes people act in perfectly rational ways. Of course, there aren’t many high school students (or parents) who can explain the present discounted value of something, much less use it as a tool to choose a college.

The filters on college search tools include criteria that may be more relevant to the decision. College Board’s BigFuture online interactive guide asks students to consider their test scores – as well as a college or university’s geography, size, type, cost, diversity, and support services – among other factors.

Those other factors include college sports. As it turns out, the success of a school’s sports teams plays a significant role in the college selection process for some students. The Journal of Sports Economics published ‘Understanding College Application Decisions: Why College Sports Success Matters.’ It’s the work of economists at the University of Chicago (UC) who found:

“A school that is invited to the NCAA basketball tournament can on average expect an increase in sent SAT scores in the range of 2 percent to 11 percent the following year depending on how far the team advances in the tournament. The top 20 football teams also can expect increases of between 2 percent and 12 percent the following year.”

Having a sports team make it to the Final Four is roughly equivalent to a college adjusting tuition or financial aid by 6 percent to 32 percent or moving halfway up the list on the U.S. News College Rankings, according to UC researchers.

Weekly Focus – Think About It

“They say that nobody is perfect. Then they tell you practice makes perfect. I wish they’d make up their minds.”
–Wilt Chamberlain, American basketball player

 

* These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Group Coaching. Carson Group Coaching 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 indexes 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.
* Stock investing involves risk including loss of principal.
* Consult your financial professional before making any investment decision.

Sources:
https://www.theguardian.com/world/2018/apr/05/china-us-win-concessions-tariff-war-trade-donald-trump-xi-jinping
https://www.barrons.com/articles/the-brewing-u-s-china-trade-war-explained-in-charts-1523052689 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-09-18_Barrons-The_Brewing_US-China_Trade_War_Explained_in_Charts-Footnote_2.pdf)
https://www.ft.com/content/df22be26-37fc-11e8-8eee-e06bde01c544 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-09-18_FinancialTimes-Brewing_US-China_Trade_War_Spooks_Asset_Managers-Footnote_3.pdf)
https://www.forbes.com/sites/stevebanker/2018/03/02/trumps-tariffs-trade-wars-and-the-supply-chain/#67740190729a
https://www.nytimes.com/2018/04/07/us/politics/trump-trade-china-politics-heartland.html
https://www.barrons.com/articles/tariff-fears-and-a-jobs-report-send-stocks-lower-1523066354 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-09-18_Barrons-Tariff_Fears_and_a_Jobs_Report_Send_Stocks_Lower-Footnote_6.pdf)
http://faculty.chicagobooth.edu/devin.pope/research/pdf/Website_Sports%20Econ%20Attention.pdf
https://bigfuture.collegeboard.org/college-search (Pages 107-108; 127; and 128)
http://bleacherreport.com/articles/57090

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Strong performance was supported by strong fundamentals

April 2, 2018

The Markets

In like a lion…

Investors roared into 2018.

During the first week of the first quarter of the New Year, the Dow Jones Industrial Average rose above 25,000 for the first time ever. Less than two weeks later, it closed above 26,000. The Standard & Poor’s (S&P) 500 Index and NASDAQ Composite also reached new all-time highs.

Strong performance was supported by strong fundamentals. In December 2017, Mohamed A. El-Erian wrote in BloombergView economic and policy fundamentals, including synchronized global recovery, progress on U.S. tax reform, improved certainty around Brexit, and orderly acceptance of changing U.S. monetary policy, “…reinforce the prospects for better actual and future growth, thereby increasing the possibility of improved fundamentals validating notably elevated asset prices.”

During the first quarter, the global economy remained robust, reported Forbes. American companies were profitable (profitability is measured by earnings) and earnings per share for the S&P 500 Index are expected to increase during 2018. FactSet reported analysts currently estimate the S&P 500 Index will deliver double-digit earnings growth (18.5 percent overall) during 2018. Here’s what the analysts anticipate each quarter:

• Q1: Earnings growth of 17.3 percent 
• Q2: Earnings growth of 19.1 percent 
• Q3: Earnings growth of 20.9 percent 
• Q4: Earnings growth of 17.1 percent 

Improving expectations for American companies can be credited, in large part, to tax reform, which lowered corporate tax rates significantly. In addition, rising oil prices may help companies in the Energy sector, and rising interest rates may give a boost to companies in the Financials sector.

Despite a robust global economy, strong earnings, and improving earnings per share (EPS) expectations, the major U.S. stock indices delivered negative quarterly returns for the first time since 2015. On March 29, the last trading day of the quarter, the Dow closed at about 24,100.

If fundamentals are strong, why did major indices in the United States (and many indices around the world) finish the quarter lower? Financial Times suggested uncertainty might have something to do with the retreat:

“The tax cut has been achieved. We are no longer so sure that [President Trump’s] remaining ideas are so good, and most investors think his ideas about trade are downright terrible. And so the market has started reacting to presidential tweets… Most importantly, though, key assumptions have been stripped away. We can no longer rely on low volatility. And critically, the positive view of a low-inflation strong-growth future has been called into question – but only after the stock market had priced in that assumption as a done deal.”
Market declines may also reflect concern about valuations. One financial professional told Financial Times many asset classes have gone from being very expensive to being expensive. They haven’t yet gotten inexpensive.

Out like a lamb…

The last week of the quarter was a good one for U.S. stock markets, which pushed higher. However, the major indices were unable to overcome deficits accumulated earlier in the quarter. The Dow Jones Industrial Average gained 2.4 percent last week, finishing the quarter down 2.5 percent. The S&P 500 Index was up 2.0 percent last week, down 1.2 percent for the quarter. Likewise, the NASDAQ bounced 1.0 percent last week, but ended the quarter down 2.3 percent, reported Barron’s.

 

IF YOU ASKED ARTIFICIAL INTELLIGENCE (AI) TO BAKE, WHAT WOULD IT MAKE? Janelle Shane at PopSci.com wrote, “When computers try to imitate humans, they often get confused. But simulated brain cells in so-called neural networks can mimic our problem-solving skills. An AI will look at a dataset, figure out its governing rules, and use those instructions to make something new. We already employ these bots to recognize faces, drive cars, and caption images for the blind. But can a computer cook?”

Shane addressed the question by training a computer’s neural network to write a recipe. The computer reviewed a dataset of more than 24,000 online recipes (647 of them began with the word chocolate and 8 included blood as an ingredient). After two days of processing, the network delivered a remarkable recipe that includes a title, category, ingredients, and directions, although the nonsensical word choices are likely to leave bakers uncertain about how to proceed:

“CHOCOLATE BUTTERBROTH BLACK PUDDING

cheese/eggs

4 oz cocoa; finely ground
1 teaspoon butter
½ cup milk
¼ teaspoon pepper
¼ cup rice cream, chopped
1 lb cream
1 sesame peel

– DATE HOLY –

1 large egg
1 powdered sugar serving barme
¼ cup butter or margarine, melted

Brown sugar, chocolate; baking powder, beer, lemon juice and salt in chunk in greased 9×2 inch cake. Chill until golden brown and bubbly. Place serve garlic half by pieoun on top to make more use bay. Place in frying pan in preheated oven. Sprinkle with fresh parsley for cooking. Eating dish to hect in pot of the oil, pullover half-and half…Yield: 1 cake”

AI seems to have missed an important governing rule for recipes: Instructions should not include unlisted ingredients and all ingredients should be included in the instructions. DATE HOLY is particularly baffling. The author suggested the neural network might have been trying for frosting. It is a cake, after all. 

Weekly Focus – Think About It 

“We are surrounded by hysteria about the future of artificial intelligence and robotics – hysteria about how powerful they will become, how quickly, and what they will do to jobs…Mistaken predictions lead to fears of things that are not going to happen, whether it’s the wide-scale destruction of jobs, the Singularity, or the advent of AI that has values different from ours and might try to destroy us. We need to push back on these mistakes.” 
–Rodney Brooks, Australian robotics entrepreneur

* These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Group Coaching. Carson Group Coaching 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 indexes 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.* Stock investing involves risk including loss of principal.
* Consult your financial professional before making any investment decision.

Sources:
https://www.barrons.com/articles/dow-25-000-how-high-can-it-go-1515213968 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-02-18_Barrons-Dow_25000-How_High_Can_It_Go-Footnote_1.pdf)
https://www.bloomberg.com/view/articles/2017-12-11/4-developments-to-watch-in-global-economy
https://www.forbes.com/sites/kenrapoza/2018/03/27/sorry-bears-these-big-market-corrections-are-not-evidence-the-end-is-near/#307d2be9fa38
https://insight.factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_032918.pdf
https://insight.factset.com/record-high-increase-in-sp-500-eps-estimates-for-q1-and-cy-2018
https://finance.yahoo.com/quote/%5EDJI/history?p=%5EDJI
https://www.ft.com/content/05a60e04-3357-11e8-ac48-10c6fdc22f03 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-02-18_FinancialTimes-Four_Financial_Questions_for_Passover-Footnote_7.pdf)
https://www.ft.com/content/1e6c15e4-3359-11e8-ac48-10c6fdc22f03 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-02-18_FinancialTimes-US_Stocks_Hit_by_First_Quarterly_Losses_Since_2015-Footnote_8.pdf)
https://www.barrons.com/articles/dow-gains-569-points-but-falls-for-the-quarter-1522454402 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-02-18_Barrons-Dow_Gains_569_Points_but_Falls_for_the_Quarter-Footnote_9.pdf)
https://www.popsci.com/neural-network-bakes-a-cake (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-02-18_PopularScience-Recipe-Chocolate_Butterbroth_Black_Pudding-Footnote_10.pdf)
https://www.technologyreview.com/s/609048/the-seven-deadly-sins-of-ai-predictions/

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Saving and Investing

March 26, 2018

The Markets

Why am I saving and investing?

After a week like last week, it’s an important question. There are many reasons people save and invest, including to:

• Live the life they want today and in the future
• Accumulate resources so they’re prepared for any bumps in the road
• Provide an education for their children• Offer assistance to parents
• Support a young person with a disability
• Do good in the world
• Live comfortably in retirement without anxiety

However, none of these reasons have anything to do with short-term market fluctuations. 

Last week, major U.S. stock indices experienced a selloff, and we saw a dramatic downturn in stock markets. The Dow Jones Industrial Average was down 5.7 percent, the Standard & Poor’s 500 index lost 6 percent, and the NASDAQ fell 6.5 percent, reported Barron’s.

Those are big moves for a single week. The kind of moves that light up the emotion centers of investors’ brains and make them want to sell.

It’s not a new phenomenon. In 2002, in an article for CNN Money, Jason Zweig explained the brain’s potentially negative influence on investment decisions, “But in the world of investing, a panicky response to a false alarm – dumping all your stocks just because the Dow is dropping – can be as costly as ignoring real danger. For one thing, it can cause you to flee the market at a low point and miss out when the market bounces back. A moment of panic can also disrupt your long-term investing strategy.”

So, what happened last week? In short:

The Fed raised rates, as expected. The Federal Reserve raised the Fed funds rate by a quarter of a percent, which may benefit savers and investors, but will make borrowing more expensive.
Tariffs triggered trade war worries. The Trump administration levied tariffs on China, raising concerns of a global trade war.
You’re fired! There was additional turnover among senior advisers to President Trump.
Can they do that? British news reported a data analytics firm has been influencing elections around the world in some unsavory ways.
Don’t share my data! There was news a social media firm had shared the personal data of thousands with a researcher who shared it with a third-party firm without permission.
Sigh. Another data breach. An online travel company experienced a data breach that may have exposed the personal information of 880,000 users.
The economy is chugging along. Last week’s U.S. economic releases were overshadowed by everything else, but many indicated a strengthening economy, reported Barron’s.

That’s a lot to take in over the span of five days. The critical thing is to recognize these short-term events are unlikely to change your long-term financial goals. Financial decisions, including buying and selling investments, are important and can be life shaping. They should be grounded by long-term financial goals and foundational principles of investing. They should not be based on the brain’s instinctive fear and flight response. 

  

LET’S TAKE A GOOD NEWS BREAK. After last week, we could all use some good news. Here are 10 intriguing headlines from the Good News Network:

1. Scientists Believe They Found a Way to Stop Future Hurricanes in Their Tracks
2. Strangers Rally Around 13-Year-old Whose Rock Museum was Robbed
3. Dog that Shoplifted a Book on ‘Abandonment’ is Given the Love It was Asking For
4. Stranger Becomes Honorary Grandma After She Opens Home to Stranded Father in Distress
5. We’re Not Spinning a Yarn Here: Knitting May Boost Health and Happiness
6. Robot Becomes Part of the Community After Easing Daily Burden of Water Collection in Remote Village
7. Instead of Using Trees, Scientists are Making Sustainable Paper Out of Manure
8. World’s First Mass-Produced, 3D-Printed Car is Electric and Costs Under $10K
9. This Pollution-Gobbling City Bench Can Absorb as Many Toxins as 275 Trees
10. Free Clothing Hung on Streets to Help the Homeless Stay Warm

There is a lot of good news in the world. Unfortunately, it doesn’t pack a wallop like bad news does, so we hear less about it. 

Weekly Focus – Think About It 

“When the weather changes, nobody believes the laws of physics have changed. Similarly, I don’t believe that when the stock market goes into terrible gyrations its rules have changed.” 
Benoit Mandelbrot, Mathematician and polymath

* These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Group Coaching. Carson Group Coaching 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 indexes 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.
* Stock investing involves risk including loss of principal.
* Consult your financial professional before making any investment decision.

Sources:
https://www.barrons.com/articles/why-did-dow-drop-1-400-pick-your-poison-1521852744 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-26-18_Barrons-Why_Did_Dow_Drop_1400-Pick_Your_Poison-Footnote_1.pdf)
https://www.scientificamerican.com/article/what-is-loss-aversion/
http://money.cnn.com/2002/09/25/pf/investing/agenda_brain_short/index.htm
https://www.consumerreports.org/interest-rate/fed-rate-hike-your-money/
https://www.cnn.com/2018/03/22/politics/donald-trump-china-tariffs-trade-war/index.html
https://www.brookings.edu/research/tracking-turnover-in-the-trump-administration/
https://www.ft.com/content/e4e95b6c-2dac-11e8-9b4b-bc4b9f08f381 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-26-18_FinancialTimes-Chiefs_Hubris_Steered_Cambridge_Analytica_to_Data_Scandal-Footnote_7.pdf)
https://www.marketwatch.com/story/this-data-breach-affected-880000-people-and-it-has-nothing-to-do-with-facebook-2018-03-24
https://www.cnet.com/news/how-to-stop-sharing-facebook-data-after-cambridge-analytica-mess/
http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html?mod=BOL_Nav_MAR_other (Click on U.S. & Intl Recaps, then “Factory sector accelerates, housing prices climb”) (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-26-18_Barrons-Factory_Sector_Accerlerates-Housing_Prices_Climb-Footnote_10.pdf)
https://www.goodnewsnetwork.org/scientists-believe-they-found-a-way-to-stop-future-hurricanes-in-their-tracks/
https://www.goodnewsnetwork.org/strangers-rally-around-13-year-old-whose-rock-museum-was-robbed/
https://www.goodnewsnetwork.org/dog-shoplifts-book-on-abandonment/
https://www.goodnewsnetwork.org/stranger-becomes-honorary-grandma-after-she-opens-home-to-stranded-father-in-distress/
https://www.goodnewsnetwork.org/were-not-spinning-a-yarn-here-knitting-may-boost-health-and-happiness/
https://www.goodnewsnetwork.org/robot-becomes-part-of-the-community-after-easing-daily-burden-of-water-collection-in-remote-village/
https://www.goodnewsnetwork.org/instead-of-using-trees-scientists-are-making-sustainable-paper-out-of-manure/
https://www.goodnewsnetwork.org/worlds-first-mass-produced-3d-printed-car-is-electric-and-costs-under-10k/
https://www.goodnewsnetwork.org/this-pollution-gobbling-city-bench-absorbs-as-much-co2-as-275-trees/
https://www.goodnewsnetwork.org/free-clothing-hung-on-streets-to-help-the-homeless/
https://www.brainyquote.com/quotes/benoit_mandelbrot_301439

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March 19, 2018

The Markets

It’s a good time for a gut check. 

Last week, after sliding lower for four days, the Standard & Poor’s 500 Index recouped some of its losses on Friday. The reasons behind the week’s poor showing were diverse. Barron’s reported:

“The market is so discombobulated right now that it can’t even decide what it’s afraid of. What do we mean? When the Standard & Poor’s 500 index suffered its first correction since the beginning of 2016 last month, the cause was easily identified – a good old-fashioned inflation scare caused by a larger-than-expected increase in wages and a rapidly rising 10-year Treasury yield, which almost hit 3 percent…Fast-forward more than a month and those fears seem almost quaint.” 

Those fears included:

• Special Counsel Robert Mueller’s subpoena of the Trump Organization.
• The effects of recent tariffs and the possibility of trade wars.
• The departure of Secretary of State Rex Tillerson.
• The Atlanta Fed revised its GDPNow Forecast downward for the first quarter of 2018. Weakness in consumer spending, net exports, and inventory investment offset gains in private fixed-investment growth.
• The Commerce Department reported weak retail sales for the third month in a row. Economists had expected sales to rise.

Here’s the thing: During 2017, volatility settled at historically low levels and stock markets charged ahead. As a result, it was relatively easy for investors to become sanguine about risk. You could say 2017 made investing seem as mundane as driving across the flatlands of the Plains states. It’s possible 2018 will be more like traveling icy switchbacks through the Rocky Mountains. 

No matter what happens in the months to come, it’s a good time to reassess your risk tolerance and make sure it aligns with your financial goals and asset allocation.

 
HOW MUCH DO YOU SPEND ON HEALTHCARE? Healthcare costs have been going up for a long time. The Centers for Medicare & Medicaid Services reported annual health spending – healthcare paid for through private health insurance, Medicare, Medicaid, or out-of-pocket spending by businesses, households and governments – in the United States averaged $3.3 trillion in 2016.

That’s about $10,348 per person. It’s a significant amount even before you consider the median income in the United States was about $57,600 that year.

Here’s another perspective: Healthcare spending was equal to almost one-fifth (17.9 percent of GDP) of everything the United States economy produced during 2016 (Gross Domestic Product – GDP – measures the value of all goods and services produced in a country). That’s more than U.S. manufacturing produced (11.7 percent of GDP) during 2016. Add in retail (5.9 percent of GDP) and the total is just shy of spending on healthcare.

The cost of healthcare is important not just because it’s high, but because it’s a critical aspect of retirement planning. A retirement plan is built around a horizon, which is the number of years you expect retirement to last. It’s a difficult number to think about because it’s a reflection of how long you expect to live. 

In general, the planning horizon for women should be longer than the planning horizon for men. Women tend to live longer, and that means their healthcare costs may be considerably higher. About $79,000 higher, according to one estimate that found a healthy 55-year-old woman could pay almost $523,000 in healthcare expenses (Medicare Parts A, B, D, a supplemental policy F, dental, and all out-of-pocket expenses) during retirement.

There are a variety of approaches that may help cover the expense – even if you’re closing in on retirement. A retirement planning strategy that factors in healthcare expenses with an appropriate planning horizon can help improve financial stability in your later years.

Weekly Focus – Think About It 

“We’re optimistic about ourselves, we’re optimistic about our kids, we’re optimistic about our families, but we’re not so optimistic about the guy sitting next to us, and we’re somewhat pessimistic about the fate of our fellow citizens and the fate of our country. But private optimism about our own personal future remains persistent. And it doesn’t mean that we think things will magically turn out okay, but rather that we have the unique ability to make it so.”
 –Tali Sharot, Associate Professor of Cognitive Neuroscience, University College London

* These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Group Coaching. Carson Group Coaching 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 indexes 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.* Stock investing involves risk including loss of principal.
* Consult your financial professional before making any investment decision.

Sources:
https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC
https://www.barrons.com/articles/whipsawed-by-events-the-dow-drops-389-points-1521249865 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-19-18_Barrons-Whipsawed_by_Events_the_Dow_Drops_389_Points-Footnote_2.pdf)
https://www.frbatlanta.org/cqer/research/gdpnow.aspx
https://www.cnbc.com/2018/03/14/retail-sales-decline-for-third-straight-month-in-february.html
https://finance.yahoo.com/news/markets-story-2017-fake-news-real-returns-162747489.html
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/index.html
https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nhe-fact-sheet.html
https://www.bea.gov/iTable/iTable.cfm?reqid=56&step=2&isuri=1#reqid=56&step=51&isuri=1&5602=5 (Click on Value Added By Industry, then select U. Value Added by Industry as Percentage of Gross Domestic Product) (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-19-18_BureauOfEconomics-U_Value_Added_by_Industry_as_a_Percentage_of+GDP-Footnote_8.pdf)
http://www.hvsfinancial.com/wp-content/uploads/2016/12/Women_Retirement_Health_Care.pdf 
https://www.ted.com/talks/tali_sharot_the_optimism_bias/transcript#t-141213

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