Posts Tagged ‘Real estate’

Quarterly Market Review; 1Q12

The U.S. economy shows signs of a sustained, modest, expansion.  There were 700,000+ new jobs in the three months ending February 29, 2012.  Inflation at the consumer level accelerated with the Consumer Price Index rising 1.65%.  The Federal Reserve affirmed their target Fed Funds rate of 0.0%-.25% until mid-2014.

U.S. stocks posted the best first-quarter return since 1998, and best quarterly performance since the third quarter of 2009.  Growth stocks outperformed value stocks, across all capitalizations.  Small cap stocks outperformed large cap stocks.  All sectors of the S&P 500 posted positive returns, with the exception of Utilities (-1.58%).  The strongest performer was the Financials sector (+22.00%) followed by Information Technology (+21.44%).

As investors rotated into higher-risk assets, they became net sellers of U.S. Treasury bonds, driving yields higher, long-maturity U.S. Gov’t issues (Barclays Long Treasury, -5.80%) significantly underperformed short-maturity issues (Barclays 1-3 Year Treasury, -0.08%).  Bond investors continued to demand securities with higher yields (Barclays U.S. Credit, +2.04%; Barclays U.S. MBS, +0.57%; Barclays U.S. Government, -1.12%).  U.S. high yield bonds outperformed investment-grade issues (Barclays U.S. High Yield, +5.33%; Barclays U.S. Aggregate, +0.30%).

As investors rotated into higher-risk assets, they became net sellers of U.S. Treasury bonds, driving yields higher, long-maturity U.S. Gov’t issues (Barclays Long Treasury, -5.80%) significantly underperformed short-maturity issues (Barclays 1-3 Year Treasury, -0.08%).

Bond investors continued to demand securities with higher yields (Barclays U.S. Credit, +2.04%; Barclays U.S. MBS, +0.57%; Barclays U.S. Government, -1.12%).  U.S. high yield bonds outperformed investment-grade issues (Barclays U.S. High Yield, +5.33%; Barclays U.S. Aggregate, +0.30%).

Strong performance in export-driven economies such as Germany offset the effects of the continuing  European debt crisis (MSCI Europe, net, +10.66%).  Asia-Pacific stocks (MSCI Pacific, net, +11.27%) were propelled by Japanese equities best quarter in 24 years.

The risk-on trade favored emerging markets equities (MSCI Emerging Markets, net, +14.08%) over developed markets equities (MSCI EAFE, net, +10.86%).

1Q12 FUNdamental Facts

1. Apple announced its first quarterly dividend ($2.65 per share) in company history.  At a total of around $10 billion per year, it is the biggest dividend payout ever.

2. From the end of 1929 through March 2012, reinvested dividends provided almost half the S&P 500 Index’s total return, 9.4% total return comprised of 5.2% price appreciation and 4.2% reinvested dividends.

3. From the end of 1979 through March 2012, a $100 investment in the S&P 500 with dividends reinvested turned into $3,145 compared to $1,305 from price change alone.

5. Dividend payouts by S&P 500 companies grew at 16.2% in 2011, the fastest rate in 30 years.
6. Currently 400 of the 500, S&P 500 companies pay dividends, nearly 89% of the index by market value.  This is in line with levels last seen in the 1980s when 90% of stocks in the index paid dividends.

Asset Strategies Portfolio Services, Inc. is a Registered Investment Advisor with the U.S. Securities and Exchange Commission under the Investment Advisor Act of 1940, and amendments thereto.  Our only line of business is to provide independent, investment advice and consulting services to institutional investors.  We do not sell investment products.  We are not affiliated with any broker-dealer firm.  For a copy of our Form ADV, please contact our office:

Bookmark It

Hide Sites

Is there no voice of reason left in the financial media?  The  financial media operates with incentives that are not in the best interests of investors. The financial media – internet, broadcast and print – have an agenda, like any business, to increase their revenue. They do so by running stories that will maximize their audience and, accordingly, their advertising revenues.  Sometimes they have a political agenda as well.

Headlines are created to stimulate our interest, or at the least, our curiosity. These motivate us to keep watching or keep reading with hope we will buy their publication or spin. We must heed the feeling of sensationalism and trust our intuition.

Aside from increasing unemployment, the most talked about economic problem is housing. The forever optimistic National Association of Realtors (NAR) keeps pointing through the media that the worst is over.  But if you look closely at history, the real story is always different.  Except for two spectacular housing booms – the first after World War II and the second starting in 1998 – residential real estate appreciation has been unimpressive after figuring in inflation.  Technology has allowed builders to nail up more houses faster, ensuring that supply never gets too far behind demand (and often gets ahead of it). The combination of increasing foreclosures and unemployment insures an increasing supply today. The reverse wealth effect and economic malaise insure demand is beaten down. In spite of what NAR would have us believe, does anyone believe housing prices are going to stabilize on the downside anytime soon?

Amherst Securities Group LP, the New York-based mortgage-bond analyst said in September of this year that a “huge shadow inventory” which is about five-and-a-half times larger than 2005’s national tally of delinquencies and foreclosures – threatens to further destabilize a housing market that had shown signs of righting itself over the summer.

While housing is only one factor in the US economic recovery, it’s the number two issue. As with any financial media you follow:

1.    Be smart- temper what you read or hear with your knowledge of the markets and economy

2.    Think long-term – don’t get caught up in the “headline of the day”

3.   Talk to someone you trust- someone steeped in the knowledge of the markets and economy that has no self-interest

Asset Strategies Portfolio Services, Inc.

2635 Lapeer Rd, Auburn Hills, Michigan 48326 | Phone: (248) 373-9900

Bookmark It

Hide Sites