Financial Tech

Fears of a China Bubble and Federal Reserve Tapering – The Guide Rock Capital Market Commentary – FT053

Was it a stutter step or have markets lost their balance? Anybody who knows football can tell you a lot goes into every play. Strategy, practice, game review, and preparation all affect outcomes, as do decisions and execution during games. Many, many factors influence gains and losses on the field. Similarly, numerous issues affect the performance of stock and bond markets – a fact that became abundantly clear when pundits tried to explain last week’s market downturn. Here are a few of the things which may have helped put investors on the defensive last week: · Fears of a China bubble: According to Barron’s, a dip in the nation’s manufacturing index stirred experts’ fears China may be experiencing a credit bubble that is creating property and infrastructure bubbles. If this proves true and the bubble bursts, the repercussions may be felt throughout global markets. Listen Mobile: · Concern about Federal Reserve tapering: The Fed has begun to pursue a less stimulative monetary policy and that has some worried about growth, especially in emerging countries which rely on foreign currency to finance their deficits, according to The Washington Post. · Anxiety about emerging markets resilience: Giving weight to concerns about the impact of changing Federal Reserve policy, currencies in Argentina, Venezuela, South Africa, and Turkey lost value late last week. The New York Times said rising interest rates may increase borrowing costs triggering painful readjustment periods in some emerging markets. · Unease over unemployment: Reuters suggested stronger economic growth in the United States, Japan, and Europe could camouflage issues related to youth unemployment and skills shortages. · Lack of enthusiasm over mixed earnings: Fourth quarter earnings reports have been roughly in line with the mixed results reported throughout 2013. Sixty-three percent of companies’ earnings beat analysts’ expectations, 12 percent were in line, and 25 percent came in lower than expected. So, is this a correction? Or, has the bull market concluded its run? You may as well ask whether the Broncos or the Seahawks will win on Sunday. Nobody knows for sure. Data as of 1/24/14 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) NA Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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. HOW DO YOU DEFINE ‘BIG DATA?’ There is little agreement about the definition of ‘Big Data.’ Broadly speaking, it is a term that describes the storage and analysis of large and/or complex data sets. According to the MIT Technology Review, “There is unanimous agreement that big data is revolutionizing commerce in the 21st century. When it comes to business, big data offers unprecedented insight, improved decision-making, and untapped sources of profit.” In other words, data – collected through rewards cards, social media websites, industry research, and other sources – is helping companies better understand their businesses and their customers. Big data is helping companies in diverse industries. The International Business Times reported retailers, supermarkets, and pharmaceutical companies are collecting thousands of gigabytes of consumer data in real time and through online data mining in order to improve sales and marketing efforts. An article on said: “Pattern recognition software applied to patient records, clinical trials, medical reports, and journals makes it possible for computers to be used as diagnostic tools, comparing data to arrive at the best possible treatment plan… Fraud detection, pre-trial research in legal cases, stock trading, and patient monitoring are now handled by software after the arrival of big data.” The Big Data revolution also is likely to change the employment picture in the United States, according to a report titled, The Future of Employment: How Susceptible Are Jobs to Computerization? The report covered a study which was released by Oxford University last September and evaluated about 700 different types of occupations in the United States. It found about 47 percent of jobs in the United States are at risk of being computerized within the next two decades. Occupations at low risk of being computerized included therapists of different types, social workers, curators, anthropologists, and others. Those at high risk included telemarketers, loan officers, payroll clerks, legal secretaries, and (ironically) data entry technicians. Weekly Focus – Think About It “Truth is like the sun. You can shut it out for a time, but it ain’t goin’ away.” –Elvis Presley, “The King of Rock and Roll” Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 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 London afternoon gold price fix as reported by the London Bullion Market Association. * The DJ 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 TR 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook group for the The Average Guy Network
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Financial Tech

Strong Domestic Demand in China Drives Imports to Record Highs – The Guide Rock Capital Market Commentary – FT052

The People’s Republic of China (PRC) appears to have taken the words of American industrialist Henry Ford to heart. Ford said, “There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.” Last week, we learned from CNBC China’s annual trade was more than $4 trillion in 2013. That pushed the PRC ahead of the United States and gave it standing as the world’s biggest trader. According to The New York Times, China’s annual trade surplus, in dollar terms, was the largest since 2008 and percent ahead of 2012’s surplus. In other words, China exported more than it imported. Listen Mobile: It’s interesting to note imports to China increased significantly. In fact, imports rose more than exports which reflects strong domestic demand, according to an expert quoted by CNBC. That demand may have been driven by rising wages and a growing middle class. The New York Times wrote: “Export gains… suggest that despite years of predictions of trouble for China’s export juggernaut, it has not yet been derailed by fast-rising costs for blue-collar labor, by an appreciating Chinese currency, or by foreign investment shifts toward other, lower-wage Asian countries… Blue-collar pay has soared between fivefold and ninefold in dollar terms in the last decade, wrecking China’s reputation as a low-wage place for export-oriented manufacturing… A decade ago [a company] paid about $75 a month for entry-level industrial workers and provided virtually no benefits. Now, [a company] pays $570 a month plus $100 a month in government-mandated benefits.” The Economist forecast China’s economy will overtake the United States’ in 2019 if economic growth averages percent a year in China and percent in America and inflation averages 4 percent and percent, respectively, between 2010 and 2020. In late 2013, the Organization for Economic Cooperation and Development forecast growth in China would accelerate to about percent with percent inflation during 2014, according to Reuters. Growth in the United States is estimated to be to percent with inflation of to percent for the year, according to the Federal Reserve. Data as of 1/10/14 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) NA Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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.   IS THE GLASS HALF FULL WHEN IT COMES TO UNEMPLOYMENT? OR IS IT HALF EMPTY? You’re probably familiar with that famous saying about the three types of lies: there are lies, damned lies, and statistics. When trying to parse the implications of economic data from government and non-government organizations, the myriad of ways in which statistics can be sliced and diced quickly becomes apparent. December’s jobs report, which was released last week, is a prime example. The unemployment rate fell from percent to percent; however, just 74,000 jobs were added in the United States during the month. That’s less than one-half the number of jobs economists had anticipated. So, there was less unemployment, but the number of new jobs created didn’t meet expectations. Does that mean the employment picture is weaker than experts thought? Not necessarily. According to The Economist: “Payroll gains were revised up in November to 241,000 (from 203,000) suggesting that some of December’s hiring may have been pulled forward. The two-month average of 157,000 is probably a better picture of reality than either month’s tally. Finally, the household survey, which while typically more volatile is still a useful check on the better-known survey of employer payrolls, shows employment rose 143,000, one reason the unemployment rate plunged to from 7%.” Does that mean the employment picture is positive? Not necessarily. The number of people participating in the labor force in the United States was trending south before the recession started back in December of 2007. Our workforce has been shrinking because of cyclical factors, like people giving up on finding jobs because jobs are hard to find, and structural factors, such as Baby Boomers retiring and the participation of women in the workforce has been leveling off. All in all, million Americans (that’s about 38 percent of all unemployed workers) have been unemployed for at least 27 weeks. Are they discouraged? Have they retired? Are they raising children? There are probably some statistics out there that could provide further insight.   Weekly Focus – Think About It “The superior man acts before he speaks, and afterwards speaks according to his action.” –Confucius, Chinese philosopher Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 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 London afternoon gold price fix as reported by the London Bullion Market Association. * The DJ 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 TR 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook group for the The Average Guy Network
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Financial Tech

Is Topping 3% a Bad Thing? – The Guide Rock Capital Market Commentary – FT051

Like the mother of a bride reviewing flower arrangements and fretting that a brilliantly sunny day could be marred by dark clouds hidden just beyond the horizon, pundits have been parsing the exceptional year-to-date performance of stock markets and fussing over the future. It’s true. stock markets look like they may be headed toward a fizzy champagne finish even after retreating a bit last Friday. Through Thursday, the Dow Jones Industrial Index had closed at record highs 50 times this year and the Standard & Poor’s 500 Index wasn’t far behind with 44 record high closes, according to NASDAQ. Listen Mobile: stocks aren’t the only markets analysts are stewing over. They’re also pondering the potential effects of higher interest rates. Last week, the yield on benchmark 10-year Treasury notes ascended beyond 3 percent for the first time since 2011. It’s possible higher yields (and a potential drop in bond values) will cause investors to seek out better performing assets next year, but that may not be all bad, according to Barron’s. “IS TOPPING 3% A BAD THING? Not necessarily, considering the reason for the 10-year yield’s march higher: the Federal Reserve’s decision to taper $85 billion a month in Treasury purchases, starting with $10 billion less in January. It’s a small paring, but sends a big message: Maybe – just maybe – after years of recovery, the economy is returning to normal.” Returning to normal in the United States may not prove to be any easier than seeking a new normal in China. Top communist party leaders in China recently implemented policies that give markets a more significant role in the country’s economic development. Concern that high levels of local government debt could pose a risk to ongoing economic growth has the People’s Bank of China (PBOC) employing some unconventional measures to manage interest rates. Last week, those actions caused China’s seven-day repurchase rate to rise precipitously which triggered the worst case of interbank jitters since June’s liquidity crunch in China. The PBOC “injected fresh money into the markets on Tuesday, easing the pressure on the financial system and quelling fears about a credit crisis.” As an investor, it’s important to remember that no one knows what the future holds or how central banks and markets will respond. Data as of 12/27/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) NA Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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. WHAT’S THE DIFFERENCE BETWEEN A BULL AND A BUBBLE? During 2013, stock markets in the United States and Europe generally delivered very attractive returns so it’s not all surprising that talk of market bubbles fills the air. After all, bubbles are not a new phenomenon and they’ve done some damage in the past. In the 1800s Charles Mackay penned Memoirs of Extraordinary Popular Delusions and the Madness of Crowds. The book chronicled some of the earliest bubbles, including Holland’s Tulipmania of 1624 during which tulip bulbs were valued more highly than gold. He also describes the popularity of the South Seas Corporation whose shares traded higher and higher (on little more than word of mouth) until the stock crashed. More recently, we’ve experienced bubbles in stock markets, real estate, technology stocks, and other types of assets. So, how do we tell the difference between a bull market and a bubble? According to The Economist, Nobel Laureate Robert Shiller of Yale University, “Describes a bubble as ‘a psycho-economic phenomenon. It’s like a mental illness. It is marked by excessive enthusiasm, participation of the news media, and feelings of regret among people who weren’t in the bubble.’ They are often enlarged by an expansion of credit.” Shiller measures valuation levels using cyclically-adjusted price-to-earning ratios (CAPEs). According to Barron’s, the Shiller CAPE for the S&P 500 Index was at 21 in January of 2013. That was higher than its long-term average and lower than its recent trend so equities were somewhere between neutral and significantly over valued. Since January 2013, some stock markets have delivered returns in the double digits, pushing the Shiller CAPE toward 25. On the face of it, equities appear to be highly valued. However, in early December, The Economist reported Shiller was “not yet ready to declare a bubble in American equities… There is nothing like the same excitement about shares that was seen in the late 1990s; net flows into mutual funds only just turned positive this year. Another measure of public indifference is CNBC, a television station that tracks the financial markets, suffered its lowest ratings since 2005 in the third quarter.” So, is this a bubble or a bull market? The experts aren’t certain. Keep your eyes peeled for signs of irrational exuberance.   Weekly Focus – Think About It Every day of the week, The Economist explains a new topic on its website. The most popular explanations during 2013 included: What is the difference between Sunni and Shia Muslims? How does copyright work in space? Why are your friends more popular than you? How did Estonia become a leader in technology? Why are there so many tunnels under London? Why don’t Americans ride trains? How might your choice of browser affect your job prospects? Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 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 London afternoon gold price fix as reported by the London Bullion Market Association. * The DJ 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 TR 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook group for the The Average Guy Network
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Financial Tech

Things You Wish You Never Would Have Said – The Guide Rock Capital Market Commentary – FT050

You really need to take predictions with a grain of salt. Consider these esteemed opinions.  “I think there is a world market for maybe five #8221; Thomas Watson, Chairman, IBM, 1943.  “Who wants to hear actors talk?” H. M. Warner, Founder, Warner Brothers, 1927. “Everything that can be invented has been #8221; Charles Duell, Commissioner, Office of Patents, 1899. Listen Mobile: Send your questions or comments to It’s an important to remember the fallibility of experts as we head toward a new year and pundits begin pontificating about the events of the past and predicting what may be ahead. Barron’s recently pointed out how well stock markets have performed this year: “Not since 1995, when stocks climbed 34 percent without as much as a 3 percent dip, have we enjoyed a year as agreeable as this. No pain, all gain has turned stocks into a consensus favorite, the People’s Choice award winner, the king of the hill. But, it’s no longer the road less traveled.” The publication tweaked market optimists by pointing out economists’ consensus opinion the economy will grow by percent – admittedly a pretty modest pace for growth – may not seem like a stretch, but it could be. The point was 2014 is almost certain to bring some jarring economic transitions like less monetary support through quantitative easing. Reduced liquidity could negatively affect economic growth (Gross Domestic Product growth in 2013 is projected to be just percent). In a separate article, Barron’s shared insights from 10 strategists – Wall Street professionals who acknowledged 2014 may offer investors a bumpy road. However, their consensus expectation is the Standard & Poor’s 500 will finish 2014 higher. “…Their mean prediction is 1977. The bullish consensus might trouble contrarians, but Wall Street’s pros see ample reason for optimism, given their expectations of a stronger economy and rising corporate profits.” As you read conflicting opinions about where we’ve been and where we’re going, it’s critical to remember short-term macroeconomic and market predictions should not be given too much weight. You built your investment strategy to meet your long-term investment goals. Data as of 12/13/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) NA Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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.   IS THAT A DRONE? FLYING THROUGH MY NEIGHBORHOOD? There may be a new entry on the list of military inventions that have been repurposed for commercial use: Unmanned Aerial Vehicles ( UAVs or drones) may soon join global positioning systems (GPS), duct tape, EpiPens, cargo pants, microwaves, and a wealth of other goods Americans rely on in everyday domestic life. Drones are remote-controlled flying robots. They may be as small as insects or as large as jumbo jets. Today, they’re most known for delivering stealth attacks on selected targets and military service which has included stints on domestic border surveillance and overseas reconnaissance. In the future, they may be thought of as handy tools that help manage a variety of tasks. While no one can be sure which opportunities will pan out and which won’t, there are a lot of potential applications including: · Information gathering. Journalism students at the University of Missouri in Columbia are learning to fly drones! They’re gathering pictures, videos, and other news-worthy information. Yes, there are some privacy issues. Already, 42 states are considering bills restricting drone use. · Improving agriculture. Students at Oklahoma State University are researching the roles drones could play in increasing yields and monitoring crops for blight and diseases. · Disaster relief. The Harvard-MIT Division of Health Sciences and Technology received a grant to develop drones to deliver vaccines and medicines to remote locations and disaster areas. · Wildlife research. The Geological Survey has been using a camera-equipped drone to complete aerial counts of sandhill cranes, and scientists in Indonesia are using drones to study endangered Sumatran orangutans from above the treetops. · Shipping goods. American internet retailers are experimenting with using drones to ship goods from fulfilment centers directly to customer’s doors. It may be 2015 before you receive a drone delivery because the Federal Aviation Administration still needs to issue some rules governing drone operations.   So, if you’ve been asking yourself, “What’s the next big thing?,” you might want to read up on drones. They could be it.   Weekly Focus – Think About It “Peace is not absence of conflict, it is the ability to handle conflict by peaceful means.” –Ronald Reagan, 40th American President Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 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 London afternoon gold price fix as reported by the London Bullion Market Association. * The DJ 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 TR 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook group for the The Average Guy Network
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Financial Tech

Taking a Stroll Down Memory Lane – The Guide Rock Capital Market Commentary – FT049

Send your questions or comments to If every piece of positive news was a petal, then you might say the American economy was in bloom last week. Moving into the holiday season, consumer confidence was at a five-month high. Early in the week, manufacturing showed improvement. On Thursday, the Commerce Department unfurled the news the American economy grew faster than expected during the third quarter of 2013. The next day, it was reported the unemployment rate was at the lowest level since 2008. Hourly earnings increased, as did the length of the work week. Participation in the work force improved slightly, although it remains at historical lows. Listen Mobile: There are sound reasons to expect America’s resurgence will continue into 2014, according to The Economist. They reported America’s progress was due, in part, to: Policymakers in the providing direct government support for failing companies and creating liquid capital markets that helped companies recover after the financial crisis. Companies benefitting from an increase in domestic energy production. Often the fuel comes from unconventional sources. American businesses leading the way in social media. They are expected to blaze the trail when finding ways to profit from Big Data and developing a sharing economy. There was good news in other parts of the world, too. A global trade agreement – the first major deal in 20 years – was reached that could simplify customs procedures and speed up the flow of goods across the world. CNN Money hailed it as the most significant multilateral trade pact since the World Trade Organization was founded. The agreement has the potential to reduce trade costs by as much as 15 percent, saving developing nations about $445 billion each year, and boost the global economy. Despite the good economic news, stock markets slumped through Thursday of last week largely because of investors’ concerns that positive economic news would encourage the Federal Reserve to end quantitative easing sooner rather than later. Those concerns seemed to dissipate with the release of positive employment numbers on Friday and markets surged higher. Data as of 12/6/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) NA Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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.   LET’S TAKE A STROLL DOWN MEMORY LANE… In a recent issue, The Economist pointed out during March 2009 the prospects for American companies were pretty sketchy: “…The Dow Jones Industrial Average closed below 6,627, a 53% decline from its all-time high less than two years earlier. The number of American firms in the global top ten by market capitalization was on its way down from six to three, and America’s share of the top 50 companies from 50% to 40%. Once regarded even in Communist China as the business model for the world, corporate America had lost its crown.” Oh, the difference just a few years can make! According to an November 18, 2013 article , If we look ahead to 2014, American firms are expected to comprise the majority of the global top ten (when measured by market value) and make up almost two-thirds of the top 50 companies in the world. It’s not all that surprising when you consider the fact, as a headline in Forbesannounced, corporate profits are at an all-time record peak making up almost 70 percent of gross domestic product. That may have something to do with the way Americans are spending their money. Citing an expert from Bank of America Merrill Lynch, Barron’s reported: “ import growth has shrunk from 11% to less than 1% between 2010 and 2013, while job growth has repaired from a negative to #8230; Domestically produced energy now accounts for 87% of what we consume, up from 70% five years ago, and the share of vehicles sold here that are manufactured stateside has risen from 63% to 73%… We’re also spending more on domestic goods and services… Nearly 40,000 Americans turn 65 every week, and aging boomers tend to steer more of their disposable income toward services like medical care, accommodation, and recreation that are typically made in America.” Perhaps what Alexis de Tocqueville, French historian and political thinker, said about America still holds true, “The greatness of America lies not in being more enlightened than any other nation, but rather in her ability to repair her faults.” Weekly Focus – Think About It “When even one American who has done nothing wrong is forced by fear to shut his mind and close his mouth, then all Americans are in peril.” –Harry S. Truman, American President Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 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 London afternoon gold price fix as reported by the London Bullion Market Association. * The DJ 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 TR 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook group for the The Average Guy Network
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Financial Tech

Black Friday Retail Shopping Bravado and Adventure – The Guide Rock Capital Market Commentary – FT048

Send your questions or comments to In 2006, Time Magazine’s Person of the Year was ‘You.’ The magazine declared that 2006 was about: “…Community and collaboration on a scale never seen before… It’s about the many wresting power from the few and helping one another for nothing and how that will not only change the world, but also change the way the world changes.” Listen Mobile: Last week, Morgan named EVERYONE the winner of the “Most Promotional Retailer #8221; While communities across America are very interested in Black Friday sales, these events are less about empowerment and more about brawling for consumer goods. It’s a popular activity. In fact, a case could be built that one of the newest Thanksgiving holiday traditions involves the telling of riveting Black Friday (and now Thanksgiving Day) tales that describe retail shopping bravado and adventure. It may prove to be a short-lived tradition if mobile devices and online sales continue to gain popularity. According to IBM Digital Analytics Benchmark, which collects data from roughly 800 retail sites in real time, as cited in Barron’s, online sales were up 20 percent on Thanksgiving Day this year as compared to last year. They slowed a bit on Black Friday, up just 9 percent relative to last year by mid-afternoon. Many of the folks who chose to forego shopping in stores made their purchases using mobile devices which accounted for 37 percent of online sales on Friday. Holiday shoppers and retailers aren’t the only ones who appreciate robust holiday sales, so do state governments. Ron Alt, senior research associate at the Federation of Tax Administrators, was cited byUSA Today as saying “about 10 percent of annual state sales taxes come in to state coffers in January from holiday season sales, topping most other months in which about 7 or 8 percent of the taxes are collected.” We hope your Thanksgiving holiday was filled with wonderful people and adventures. Data as of 11/29/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) NA Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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. PENSIONS AROUND THE WORLD… Here’s something a lot of people are thankful for: pensions. There are public pensions, which generally are funded by tax dollars, and private pensions, which generally are funded by companies. defines pension as, “an amount of money that a company or the government pays to a person who is old or sick and no longer works.” The Economisttakes a slightly different view although its focus was on public pensions: “A pension is a claim on the earnings of future workers. Some countries choose to pay these claims out of future taxes; others set up special funds to invest in financial assets. But these assets (equities, bonds and property) will be able to pay pensions only because future workers generate the income to make them valuable.” In the late 2000s, tax-financed pensions made up almost 60 percent of gross income on average for people age 65 and older who lived in the 34 countries that comprise the Organization for Economic Co-operation and Development (OECD). Europeans were the most dependent on their governments. Older Belgians and Finns, on average, received about 80 percent of gross income from the state. Older Chileans, Americans, and Canadians were the least reliant. Chileans over age 65 received less than 10 percent of gross income from the government. For Americans and Canadians, government pensions made up about 40 percent of income on average. In general, public and private pension funds have done pretty well in 2013. They were helped by rising stock prices and higher bond yields. However, the challenges they face, including increasing longevity and volatile markets, are relatively daunting. That’s one reason private pensions have been disappearing in United States. The number of employer-sponsored defined benefit pension plans reached an all-time low of about 22,700 single-employer plans in early 2013. That’s down from just over 112,000 in 1985. Weekly Focus – Think About It “When you rise in the morning, give thanks for the light, for your life, for your strength. Give thanks for your food and for the joy of living. If you see no reason to give thanks, the fault lies in yourself.” –Tecumseh, Native American leader of the Shawnee Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 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 London afternoon gold price fix as reported by the London Bullion Market Association. * The DJ 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 TR 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.   Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook page for the The Average Guy Network
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Financial Tech

The Double Sided Coin of Employment Numbers – The Guide Rock Capital Market Commentary – FT047

After last week’s surprisingly strong employment report, it’s almost possible to picture Ben Bernanke slapping trail dust from his leg, ducking his head, and saying, “Just doin’ my job.” After all, running the economy is as laden with complications and unexpected events as a cattle drive. Richard Graboyes, an economist who was once the Director of Education for the Federal Reserve Bank of Richmond, wrote that driving cattle seems “arduous, but simple – walk some cattle from point A to point B. But, the endeavor is fraught with natural and human risks for both rancher and driver.” Listen Mobile: Clearly, the head of the Fed and the head of a cattle drive face different challenges. According to The Federal Reserve System: Purposes and Functions publication: “The Federal Reserve sets the nation’s monetary policy to promote the objectives of maximum employment, stable prices, and moderate long-term interest rates. The challenge for policymakers is that tensions among the goals can arise in the short run and that information about the economy becomes available only with a lag and may be imperfect.” Last week, the employment numbers seemed to support the idea the economy is gaining steam. According to Forbes, employers added more than 200,000 jobs in October, which was far more than economists had anticipated. The government continued to employ fewer people (employees furloughed during the government shutdown were still counted as being employed). There were 12,000 fewer government jobs in October, and 94,000 fewer for the year. The biggest employment gains were in the hospitality, retail, technical services, manufacturing, and health care sectors. It’s not time to whoop and holler, though. The New York Times reported the labor force participation rate fell to percent, which is a 35-year low. More than 700,000 jobs disappeared during October which was the largest monthly drop since the end of 2009. A smaller labor force can make overall unemployment rate appear to be lower than it is. Let’s hope the labor force isn’t like a herd of cattle that moves too fast and arrives at market a lot skinnier and worth a lot less. Data as of 11/8/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) NA Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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. IF YOU WERE ASKED TO COMPARE TEACHERS’ SOCIAL STATUS TO THAT OF other professions, how would it compare? Are teachers like doctors? Librarians? Social workers? Nurses? Local government officials? Web designers? Lawyers? Policemen? Engineers? Accountants? Education and training have a profound effect on economies and individuals. In the United States, people who have graduated from college tend to earn more than those who have graduated from high school. Earning an MBA, JD, or MD can translate into significantly higher earnings over a lifetime. Clearly, becoming educated has a significant economic value. What value, then, do we place on those who provide education? How much respect do we have for the people who teach and train us? As it turns out, the answer varies widely from country to country. According to the Varkey GEMS Foundation’s Global Teacher Status Index survey, which surveyed 21 countries to determine the status of teachers, people in China, Greece, and Turkey have the highest level of respect for teachers and their social standing. So, how does the teaching profession compare to other professions? In the Czech Republic, Egypt, Switzerland, and many other countries, survey respondents said teachers have the status of social workers. In Brazil, France, Turkey, and the United States, people think teachers are roughly on par with librarians. The Japanese think teachers have the same status as local government managers. More than one-third of Chinese participants said teachers had the same status as doctors. According to the report: “The ranked in the middle of the Teacher Status Index with a score of Notably, the ranking of primary school teachers is at the higher end of the table and above all the European countries. respondents scored consistently across the different variables in the study, demonstrating moderate to positive respect for their teachers.” As you might expect, the more respect a country had for teachers, the more likely people in that country were to encourage their children to enter the profession. Parents in China, South Korea, Turkey, and Egypt were most likely to encourage kids to become teachers. Weekly Focus – Think About It “Education is the key to success in life, and teachers make a lasting impact in the lives of their students.” — Solomon Ortiz, Former Representative from Texas Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 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 London afternoon gold price fix as reported by the London Bullion Market Association. * The DJ 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 TR 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook page for the The Average Guy Network
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