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Markets
Stocks jumped out of the gates in 2012 with a strong performance in January on
optimism that the US recovery will continue and Europe will manage to at least
avoid major problems in 2012. The
S&P 500 index closed up 4.33% in January to 1,312. Gold surged as well adding 11.25% to close at
$1,740. Oil dropped 0.55% to end at
$98.48. The dollar was lower against
other major world currencies falling 1.22% to $79.26.
Here is how the indexes have performed as of February 3
Dow Jones + 5.28%
Nasdaq + 11.54%
S&P 500 +6.94%
Russell 2000 Small Caps +12.17%
International Stocks EAFE +8.28%
10 Year Treasury Bond Yield 1.95%
30 Year Treasury Bond Yield 3.15%
Stocks gained steadily throughout January as US
economic and earnings data beat expectations.
Europe managed to hold steady and not produce enough negative data to
pull the US markets down.
The month began with good employment data for
December with the economy adding over 200,000 new jobs and a drop in weekly
jobless claims. Manufacturing data in
January was mostly above expectations as well.
Later in the month increasingly positive home
sales data and new building activity increased optimism that the housing market
may be finally turning around although home prices continue to drop, especially
in urban markets.
Earnings news was mostly positive including
Apple’s great numbers that blew through expectations.
4th quarter GDP disappointed
investors as growth increased 2.8% which was higher than the 1.8% growth in the
3rd quarter but lower than expectations.
Europe
issues were mostly muted in January as debt auctions settled down and bond
yields dropped to more sustainable levels.
Greece is still trying to work out an agreement with its creditors
regarding the write down of their long-term bonds. If an agreement is not reached they may
default sometime in March and could cause some volatility in the financial
markets.
Overall I am cautiously optimistic that 2012 could be a good year for investors and
that we will avoid major problems in the financial markets.
For weekly market updates please visit my blog which is now part of my new website
at www.aamllc.com
Mortgage Rates
Mortgage rates drifted higher over the last month. The
Schwab Bank 15-year rate is now at 3.47% and the 30-year rate is at 4.25%. These
rates are as of 2/03/2011 and assume no points, no origination fee and a
$250,000 mortgage. Again, if you have
the equity in your home and a 5+ year time frame this could be a great time to
refinance and lock in historically low rates.
With the money you save you could be paying off your mortgage sooner, paying off
other bills, increasing your cash reserves or building up your long-term
investments. Another great thing to do
would be to save for that vacation you have always wanted.
CD Rates
CD rates were mostly lower over the last month.
Charles Schwab has access to CD’s from banks all over the country. Here are some of the current CD rates
offered.
6 mo CD @ 0.30% 1-Yr CD @ 0.35%
2-Yr CD @ 0.70% 5-Yr CD @ 1.70%
Currently I am not doing much with CD Ladders. I
will start using them again as rates begin to rise. If you want to know what I am doing as an
alternative let me know.
Tips and Suggestions
Are your cash reserves earning less than 1%? Consider a short-term US treasury fund or
Corporate Bond fund to give your secondary cash reserves a yield boost.
Have you defined your long-term investment goals? Are you on track to getting there? If you fail to plan you may be planning to
fail!
What do you want to accomplish in 2012?
Should you contribute to an IRA for 2011?
Should you do a Roth IRA or a Traditional IRA? Do you know the difference?
Do you have debts that have been hanging around for a long time? A debt snowball illustration can be a great
motivator to get these debts paid off.
You may be able to get out of debt a lot quicker than you think.
If you have any question or if you would like to have help with your financial
plan please give me - your Fee-only Certified Financial Planning ™ Practitioner
a call.
Articles
All articles are now found on my website which has been combined with my blog : www.aamllc.com
Retirement Planning: Better With an Advisor?
Estimating your financial needs in
retirement can be difficult. How can working with an advisor help you?
http://www.aamllc.com/2012/01/retirement-planning-better-with-an-advisor/
High Yields Prove Elusive
With Treasuries paying rates in the low
2% range, investors have to search far and wide to find better yields.
http://www.aamllc.com/2012/01/high-yields-prove-elusive/
Buying Time for Europe?
Recent stock market activity appears to
be headline driven, depending on the latest news from the euro zone.
http://www.aamllc.com/2012/01/buying-time-for-europe/
Harnessing Risk in Any Market
This article describes several strategies
you can use to stay focused on your goals and risk tolerance when investing in
the stock market.
http://www.aamllc.com/2012/01/harnessing-risk-in-any-market/
The Growing Public Sector Pension Gap
Gone are the days when a public sector
pension guaranteed a comfortable lifetime retirement. Like their private sector
counterparts, today's public employees need to plan and save.
http://www.aamllc.com/2012/02/the-growing-public-sector-pension-gap/
Contact Me
Want more information on how I can help you? Give me a call or drop me
an email to review or set up a free initial consultation.
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Weekly Blog Updates and My Website www.aamllc.com
