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The Ricks Report

January 23, 2017

 

Numbers of $ignificance

  • YOU ARE REPLACEABLE – Although just 5% of occupations consist of activities that are 100% automatable, i.e., they could be replaced entirely by technology or robots, 60% of all occupations have at least 30% of their daily activities that are automatable (source: McKinsey Global Institute).
  • TWO SUCCESSFUL PRESIDENTS – When Abraham Lincoln (R-IL) won the 1860 presidential election, he got just 39.8% of the popular vote. Lincoln received 55.0% of the popular vote when he won the 1864 election.  When Bill Clinton (D-AR) won the 1992 presidential election, he got just 43.0% of the popular vote.  Clinton received 49.2% of the popular vote when he won the 1996 election (source: PresidentElect.us).  

Winning at Life with Gregory Ricks

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The Markets

Markets weren’t quite sure which direction to move last week.

The Trump rally, which lost some steam, gained momentum early in the week. The Standard & Poor’s 500 Index finished January 19, the day before the inauguration, with its biggest election-to-inauguration gain since Bill Clinton won a second term in 1996, according to MarketWatch, and the Dow Jones Industrial Average remained within striking distance of 20,000, according to Yahoo!Finance.

On Friday, President Trump delivered his inauguration address, but it didn’t resolve the uncertainty that has been nagging investors. The speech mentioned infrastructure activity, brushed over stimulus spending and tax cuts, and leaned heavily into protectionism. Mr. Trump said:

“America will start winning again, winning like never before. We will bring back our jobs. We will bring back our borders. We will bring back our wealth. And we will bring back our dreams. We will build new roads, and highways, and bridges, and airports, and tunnels, and railways all across our wonderful nation. We will get our people off of welfare and back to work – rebuilding our country with American hands and American labor. We will follow two simple rules; buy American and hire American.”

The market response to Friday’s speech was subdued, according to Financial Times:

“…with U.S. stocks edging higher, Treasuries putting in mixed performances and the dollar easing back against its main rivals. Oil prices rose sharply amid hopes that producers would show compliance to a global deal to cut output. Gold initially struggled for traction but held above the $1,200 an ounce mark.”

All major U.S. stock markets finished the week slightly lower, and 10-year Treasury yields finished the week slightly higher.

 

Data as of 1/20/17 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) -0.2% 1.5% 22.2% 7.2% 11.5% 4.8%
Dow Jones Global ex-U.S. -0.5 2.5 18.2 -2.6 2.3 -1.1
10-year Treasury Note (Yield Only) 2.5 NA 2.0 2.8 2.0 4.8
Gold (per ounce) 0.9 3.6 9.0 -1.5 -6.2 6.5
Bloomberg Commodity Index -0.2 1.0 21.3 -10.9 -9.0 -5.8
DJ Equity All REIT Total Return Index 0.7 0.8 18.8 11.8 11.3 4.7

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

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

 

TREMENDOUS. Awe-inspiring. Groundbreaking. OVERWHELMING. Those were just a few of the adjectives used to describe 2017’s Consumer Electronics Show (CES), which showcased all kinds of new technology. This year, gadgets and gizmos included wall-sized televisions that are as thin as house keys, computers that scan 2D and 3D objects, and beds that read biometric clues to warm your feet and reduce snoring. Here are a few notable trends that captured media attention:

Smart cars. Black Enterprise reported, “If there was one, star attraction at CES this year, arguably it was vehicles…Artificial intelligence is the power behind the new crop of autonomous, assistive vehicles. These cars not only self-drive, they can read your emotions, make snap decisions in the presence of danger on the road, and can even tell you about the flora and fauna at your destination site.”

 Smarter homes. CNET Magazine wrote, “For…years, we’ve been saying the “real” smart home is just around the corner. But at CES 2017, it finally felt more tangible than ever before…Whether it’s lighting, DVRs, refrigerators, robot vacuums, home security systems, phones, or cars – to name just a few – the list of stuff you’ll be able to interact with…is set to explode in the coming months. And with such networked integration now becoming the rule rather than the exception in major appliances…there’s no turning back.”

Even smarter routers. Popular Science liked a new Wi-Fi router that “…rather than protecting each of your devices individually…will use…software to protect up to 20 laptops, computers, tablets, or smartphones – and an unlimited number of IoT devices – in one fell swoop…You’ll be able to monitor…all devices connected to the router, through a smartphone app…You can even tell the router to turn off internet access to certain devices – or devices linked to a particular profile – at certain times. So, you can make sure little Johnny isn’t up all night watching YouTube videos on any of his devices (except for his phone, maybe, but that’s your own dang fault for getting the kid a data plan).”

Of course, trends in technology are just one American story. Another trend, in some states, is the growing popularity of rural, sustainable, off-the-grid properties, according to NPR. “Despite the remoteness of these homes, they’re not backwoods shacks with sagging metal roofs. Some… listings sell for more than $1 million if there’s a lot of land and if water rights are included. The one with the helicopter pad is a spiffy, two-story log home with a wraparound porch.”

Weekly Focus – Think About It

 

“When I dare to be powerful, to use my strength in the service of my vision, then it becomes less and less important whether I am afraid.”

–Audre Lorde, African American writer

 

Best regards,

Gregory Ricks

 

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Gregory Ricks & Associates is a Registered Investment Advisor which offers services and charges fees as set forth in Form ADV, a copy of which you should obtain prior to investment. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. 

                                

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* 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.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Past performance does not guarantee future results.

* You cannot invest directly in an index.  

Sources:

http://www.marketwatch.com/story/how-the-trump-rally-stacks-up-to-other-postelection-stock-market-gains-2017-01-18

https://finance.yahoo.com/quote/^DJI?p=^DJI

https://www.washingtonpost.com/news/the-fix/wp/2017/01/20/donald-trumps-full-inauguration-speech-transcript-annotated/?utm_term=.5e618d7a29fd

https://www.ft.com/content/fe66322a-deb8-11e6-86ac-f253db7791c6 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/01-23-17_FinancialTimes-Markets_Give_Muted_Response_to_Trump_Speech-Footnote_4.pdf)

http://blogs.barrons.com/stockstowatchtoday/2017/01/20/condemned-to-hope-dow-dips-0-3-this-week-as-market-waits-for-trump-revival/?mod=BOL_hp_blog_stw

https://finance.yahoo.com/quote/%5ETNX/history?p=%5ETNX

http://www.forbes.com/sites/johnarcher/2017/01/04/lg-unveils-stunning-new-oled-tv-range-including-jaw-dropping-wallpaper-design/#538766222c05

https://www.cnet.com/products/hp-sprout-pro-g2/preview/

https://www.cnet.com/products/sleep-number-360-smart-bed/preview/

http://www.blackenterprise.com/technology/ces-2017-incredibly-smart-cars/

https://www.cnet.com/news/ces-2017-the-final-word/

http://www.popsci.com/most-exciting-tech-at-ces-2017-are-wi-fi-routers

http://www.npr.org/2016/04/28/474673707/in-the-rural-northwest-a-growing-market-for-survivalist-homes

https://www.globalfundforwomen.org/wp-content/uploads/2015/09/audre-lorde.jpg