How Steve Jobs Started – Infographic

As people around the world wonder if innovation at Apple stopped with Steve Jobs, we wanted to share with you a snapshot of the genius’s life.

How Steve Jobs Started – Infographic

Source: Funders and Founders

How Bill Gates Started – Infographic

Bill Gates’s father was a lawyer. A very successful one. His mother a teacher. Reading business magazines in middle school, Bill Jr. had a different dream – to open a company. You could say that’s how he started – with a childish dream. Many kids have dreams, though. How was he different?

How Bill Gates Started – Infographic

Source: Funders and Founders

How Mark Zuckerberg Started – Infographic

At the young age of 10, Mark was already bored with school. His father noticed and introduced him to the computer. Together they wrote a program that connected the computer at home with the computer at his father’s office. And the rest, as they say, is history.

How Mark Zuckerberg Started – Infographic

 

Source: Funders and Founders

How Jeff Bezos Started – Infographic

Jeff Bezos is one of the world’s wealthiest people. But he was born poor. He wanted to start a business right after college, but didn’t. So how did he start?

How Jeff Bezos Started Infographic

Source: Funders and Founders

The Growth Of The Autonomous Car Market – Infographic

The autonomous car market is currently growing at an existential rate and many driverless vehicles are expected to be on our roads this year, and in large numbers. Let’s take a look at the growth of the autonomous car market.

the-growth-of-autonomous-car-market

 

Source: Get Off Road

How Elon Musk Started – Infographic

Elon Musk is now Earth’s most future-oriented person. How did such a person come to be?

how-elon-musk-started-infographic

Source: Funders and Founders

Why We Think Munis are Offering a Buying Opportunity Now

Municipal bond prices have taken a beating lately and I don’t believe that the downward move is justified. As Jon Rocafort of Eaton Vance points out in his blog post below, this might be a great buying opportunity!

 

Jon Rocafort, Co-Director of SMA Strategies at Eaton Vance

We think the extreme move in the municipal bond market after the U.S. election may offer an attractive entry point for investors.

Let’s start with some historical context on the recent spike in muni yields, which has sent bond prices lower. The BofA Merrill Lynch Municipal Master Index lost 3.7% in November, its largest one-month decline since 2008. Zooming out a bit, we have witnessed one of the largest five-month increases in yields on record.

Our view is that this historic move has created an emerging opportunity to lock in higher yields and potentially generate higher future returns. For investors lamenting the “sticker shock” of low muni yields recently, this could be their chance to enter the sector or add to existing holdings.

The chart below illustrates the resilience of the municipal market and demonstrates that sharp increases in municipal yields have created buying opportunities and rewarded investors with strong returns in subsequent months. Although as always, past performance is no guarantee of future results.

10-yr-muni-b

The noticeable yield upswings in 2008, 2010 and 2013 all offered investors the chance to buy munis at not only higher yields, but also at attractive valuations. For example, the 2010 scare was driven by analyst Meredith Whitney’s prediction of hundreds of billions of dollars of muni defaults – that never materialized. Also, during the 2013 “Taper Tantrum” both Treasury and municipal yields rose sharply after the Federal Reserve said it would start slowing its bond purchases.

We may be witnessing another overreaction in the bond market. Many of Donald Trump’s plans, including tax cuts and fiscal stimulus, would come with very high price tags and likely be challenged by fiscal hawks in Congress. At this point, it’s extremely difficult to predict what will actually be passed, in what form, and over what horizon. In our view, the “Trump rally” in stocks and the sell-off in bonds are based on very little detail on the President-elect’s policy initiatives, and seems driven more by speculation.

And even if the Trump administration succeeds in reducing personal income tax rates, muni yields still look attractive. First, the ratio of 10-year AAA muni yields versus 10-year U.S. Treasury yields has risen from 93% before the election to about 105% (higher ratios indicate cheaper muni valuations). Also, as we have discussed recently in a separate blog, historical changes in the highest marginal tax bracket have not had a material impact on the relative valuation of muni bonds over the medium to long term.

Bottom line: Treasury and municipal bond yields have seen an extreme short-term reaction after the U.S. election. It is surprising what has taken place without more actual detail. The move could be an overreaction that gives investors a chance to scale into munis at higher yields and cheaper valuations – an opportunity similar to what developed following 2008, 2010 and 2013.

 

 

 

 

 

An imbalance in supply and demand in the municipal market may result in valuation uncertainties and greater volatility, less liquidity, widening credit spreads and a lack of price transparency in the market. There generally is limited public information about municipal issuers. As interest rates rise, the value of certain income investments is likely to decline. Rising interest rates could reduce the value of the bonds in the portfolio, thus adversely affecting the value of the overall investment.

Source: Eaton Vance

Welcome To The Strongest Month Of The Year For Equities Historically

The month of November is in the books. We came into the month with the longest Dow losing streak in 35 years and many concerns over the U.S. presidential election. In the end, the fears didn’t materialize and equities had a big move higher.

Here is a summary of what happened last month:

• November was a great month for equities, as the S&P 500 gained 3.4%—its best monthly gain since a 6.6% gain in March. It was the best return in November since a 5.7% bounce in 2009.
• As good as the month was for equities, it was that bad for bonds as rates spiked. The Barclays Global Aggregate Total Return Index was down 4% for the worst month on record going back to 1990.
• The S&P 500 went the entire month without a 1% drop, only the third time that has happened the past 20 years during November.
• Small caps had a huge month, as the Russell 2000 gained 11.0% for the largest monthly gain since a 15.0% jump in October 2011.
• During the month, the Russell 2000 (RUT) gained 15 consecutive days for only the fifth time since 1979, but the record of 21 straight green closes from 1988 remains safe.
• Turning to sectors*, financials gained 14.0%, for their best monthly gain since a 14.3% advance in October 2011. Industrials, energy, and materials all led as well. Utilities and real estate lagged as higher rates lowered demand for higher yielding assets. Consumer staples also lagged, as money rotated away from more defensive sectors.
• All four days of Thanksgiving week were green, something that interestingly has now happened in three consecutive election years.

December is known for many things, but from a financial point of view, the best thing might be that it has been a historically strong month for stocks. Per Ryan Detrick, Senior Market Strategist at LPL Financial, “December is the feel-good time of the year and Santa tends to come for equities as well, as no month is higher more often or up more on average. Not to mention the Dow has been lower each of the past two Decembers, and since 1896, it has never been lower three years in a row.”

12-01-16_blog_fig1

Here are some points to remember:

• December has been historically one of the strongest months for equities. Going back to 1950**, the S&P 500 has averaged a gain of 1.6% and been higher 76% of the time; both are the best out of all 12 months.
• When the S&P 500 has been up for the year heading into December, the average return in the month jumped to 2%. When the year has been down heading into the month, the average return dropped to 0.8%.
• The catch is the S&P 500 has been lower in December during the past two years for only the sixth time in history (going back to 1928). It has never been lower for three consecutive years.
• It is rare to see a large pullback during this month as well, as since 1950, the average return when the month is negative has been only -2.1%, the smallest loss out of all 12 months.
• Incredibly, since 1950, only once has the S&P 500 closed the month of December beneath the low close from the month of November.
• Going back to 1950, the S&P 500 has never had its weakest month of the year during the month of December. In fact, it has only had the 11th and 10th worst months of the year seven times.
• The last time December was the worst month of the year for the Dow was in 1916, when it dropped more than 10% during World War I.

 

 

 

 

IMPORTANT DISCLOSURES

Past performance is no guarantee of future results. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. The economic forecasts set forth in the presentation may not develop as predicted. *As measured by S&P 500 sub-indexes. **The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1928 incorporates the performance of predecessor index, the S&P 90. Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a nondiversified portfolio. Diversification does not ensure against market risk. Because of their narrow focus, specialty sector investing, such as healthcare, financials, or energy, will be subject to greater volatility than investing more broadly across many sectors and companies. The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Barclays U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS (agency and non-agency). The Dow Jones Industrial Average Index is comprised of U.S.-listed stocks of companies that produce other (non-transportation and nonutility) goods and services. The Dow Jones Industrial Averages are maintained by editors of The Wall Street Journal. While the stock selection process is somewhat subjective, a stock typically is added only if the company has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors, and accurately represents the market sectors covered by the average. The Dow Jones averages are unique in that they are price weighted; therefore, their component weightings are affected only by changes in the stocks’ prices. The Russell 2000 Index measures the performance of the small cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. This research material has been prepared by LPL Financial LLC. 

 

 

Is This 100-year Old Indicator Suggesting Market Strength?

The Dow Jones Industrial Average (Dow) gained for the sixth consecutive day yesterday and closed at a new all-time high for the third straight day. The Dow Jones Transports (Transports), meanwhile, had another big day yesterday and has been one of the top performers since the election. The Dow and Transports will forever be linked, as they are the two components to Dow Theory. Charles Dow created the Dow Theory in the late 1800’s, and it revolves around needing confirmation from both industrial and transports before establishing market direction. Think about it—if both the industrial and transports are strong, this likely suggests an improving economy. The flip side is if both are going lower, the economy is weakening.

Another way to look at the relationship between the two indexes is to compare them on a relative strength chart. When the ratio of the Transportation Index to the Dow increases, this means that transports are outperforming. We have found that when this ratio on a weekly chart moves above its 40-week simple moving average for more than three weeks, stocks tend to move higher over the next year. This signal triggered recently; the last time it happened was in late 2012, right before a huge equity rally in 2013.

chart-1

Looking at historical data going back to 1979, this signal triggered 20 times. Take note, we removed the two largest recessions over the past 20 years, as we don’t see any signs of a coming recession. The S&P 500 gained more than 9% on average six months later and was higher 80% of the time. Going out a full year, the S&P 500 has been up more than 16% on average and higher all 20 times.

111516_blog_figure3

Could this newfound strength from the transports be telling us the economy could be set for strong improvement as we head into 2017? It very well could be, and this could be another reason to expect the equity bull market could possibly continue as well.

IMPORTANT DISCLOSURES

Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.The economic forecasts set forth in the presentation may not develop as predicted. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. Stock investing involves risk including loss of principal. Because of its narrow focus, specialty sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Dow Jones Industrial Average Index is comprised of U.S.-listed stocks of companies that produce other (non-transportation and nonutility) goods and services. The Dow Jones Industrial Averages are maintained by editors of The Wall Street Journal. While the stock selection process is somewhat subjective, a stock typically is added only if the company has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors, and accurately represents the market sectors covered by the average. The Dow Jones averages are unique in that they are price weighted; therefore, their component weightings are affected only by changes in the stocks’ prices. This research material has been prepared by LPL Financial LLC.

What Happens Historically After Elections?

As America heads to the polls tomorrow to elect our next leader, many questions have come up. The most logical from an investment point of view is what will happen to equities. We addressed this important subject last week in Could There Be A Big Sell-Off After The Election? Taking another look at this, today we’ll break down what has happened historically from election day until inauguration day.

Going back to 1952*, the S&P 500 has gained from election day until inauguration day in 11 out of 16 elections for an average return of 1.0%. The median return jumps up to 3.0%, as things are greatly skewed by the huge 19.9% drop during the financial crisis.

what-happend-from-election-day-till-inauguration-day

The reality is if the economy is on firm footing and not in a recession (2008) or falling into a recession (2000), most the time the returns have been rather strong for the S&P 500. Considering the economy currently is probably the best economy an incoming president has inherited since Clinton in 1992, this could be another plus for equities after this election.

Last, here’s another look at all the returns after elections since 1952.

market-returns-after-elections-since-1952

 

 

 

IMPORTANT DISCLOSURES

Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market. * Any data prior to March 4, 1957 is back-tested, as published by the index’s parent company, S&P DOW Jones Indices. All information for an index prior to its Launch Date is back-tested, based on the methodology that was in effect on the Launch Date. Back-tested performance, which is hypothetical and not actual performance, is subject to inherent limitations because it reflects application of an Index methodology and selection of index constituents in hindsight. No theoretical approach can take into account all of the factors in the markets in general and the impact of decisions that might have been made during the actual operation of an index. Actual returns may differ from, and be lower than, back-tested returns. The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Indices are unmanaged index and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. This research material has been prepared by LPL Financial LLC.