Solis Wealth Management Report – May 13, 2013

The Markets 

‘Sell in May and Go Away’ is a trading maxim which, according to Investopedia, encourages an investor to “sells his or her stock holdings in May and get back into the equity market in November…” Traders who adhere to that adage may be pondering averages and exceptions right now. During the first two weeks of the month, the Dow Jones Industrials Average, the Standard & Poor’s 500, and the Russell 2000 Indices all reached new highs. The Dow passed 15,000, the S&P reached 1,600, and the Russell 2000 hit 968.

Bulls are in the majority among investors, although there is some bearish sentiment, according to the Bull and Bear Wise Index. Investors’ changing expectations are reflected in CNNMoney’s Fear & Greed Index which showed investor sentiment has shifted from ‘fear’ one year ago to ‘extreme greed’ last week. The premise of the index, which measures seven indicators, is investors are driven by two emotions: fear and greed. When investors are fearful, stock markets may fall more than they should; when investors are greedy, markets may be pushed higher than they should be.

Investors’ inclination toward stocks may be one of the reasons for declines in the value of gold and commodities last week.

Although there was little of it, economic news generally was positive last week. The U.S. Labor Department announced the number of Americans filing initial claims for jobless benefits dropped unexpectedly. Approximately 323,000 people filed for unemployment benefits which was about the same number that filed each week before the recession started in December 2007. According to Bloomberg, investors took the news as a sign the U.S. economy is improving which helped push yields on 10-year Treasuries higher.

Perceived economic strength in the U.S. caused the U.S. dollar to gain against many of the 16 major world currencies last week, as well as the 24 emerging countries’ currencies tracked by Bloomberg.com.

Data as of 5/10/13

1-Week

Y-T-D

1-Year

3-Year

5-Year

10-Year

Standard & Poor’s 500 (Domestic Stocks)

1.2%

14.6%

20.3%

12.1%

3.1%

5.6%

10-year Treasury Note (Yield Only)

1.9

N/A

1.9

3.5

3.8

3.6

Gold (per ounce)

-2.9

-15.8

-10.8

6.0

10.1

15.1

DJ-UBS Commodity Index

-0.9

-5.1

-3.0

0.4

-9.3

1.2

DJ Equity All REIT TR Index

0.8

16.0

22.4

17.4

7.0

12.3

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, 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.

 

Where will you live during RETIREMENT? As with many of life’s important questions, the answer depends on you and, possibly, your partner or spouse. Before you make a decision and decide to retire to wherever your grandchildren live (or in your favorite vacation spot) you might want to take a moment and consider the tax implications of your decision.

If your grandchildren live in Alaska, Nevada, Wyoming, Mississippi, or Georgia, you’re probably okay. Each year, Kiplinger.com reviews the tax rules of each of the 50 states, giving special consideration to states which offer attractive tax incentives to retirees and then provides a list of those states it deems most tax-friendly for retirees. For 2012, Kiplinger reported the five states listed above were the most tax-friendly. According to the article,

“All of these tax havens exempt Social Security benefits from taxation (and some impose no state income tax at all). Many of them exclude government and military pensions from income taxes, and some exempt private pensions, too. A few offer blanket exclusions up to a specific dollar amount of retirement income from a wide variety of sources, which is important if you depend on distributions from IRAs and 401(k) plans rather than traditional pensions. Review all of your sources of income before you decide which state may be the best fit for your retirement home.”

Kiplinger.com reported the least tax-friendly states included Connecticut, Vermont, Rhode Island, Montana, and Minnesota, which have one or more of the following:

  • Estate or inheritance taxes
  • High property taxes
  • No tax breaks on Social Security benefits
  • No special treatment for various types of retirement income

Source: Kiplinger.com

No matter where you decide to settle, it’s important to evaluate all of the factors which may affect your income during retirement.

 

Weekly Focus – Think About It

“Every saint has a past and every sinner has a future.”

Oscar Wilde, Irish writer and poet

 

What’s happening at Solis Wealth Management? 

Please enjoy this week’s commentary from ~ Kris Placencia, Director of Client Relations

Last week was an exciting week for me as I welcomed my one-and-only child home from her first year of college.  She is attending WestmontCollege in Santa Barbara where she is studying pre-med with a major in cellular molecular biology.  Most of us did not know what we wanted to do “when we grew up” (and some still don’t J), and many only dream about being a doctor so they can make a lot of money or gain respect in society. Hannah is unique in that she absolutely knows this is her mission and calling in life.  When she was a baby, she had a growth on her lip the size of a cherry (called a hemangioma). To make a long story short, after some really amazing circumstances, we found a doctor in Los Angeles who removed the growth.  He had done some truly amazing work for many children and the small growth he took care of on Hannah’s lip was nothing compared to some of the other surgeries he had performed.   In his spare time, he would travel to third world countries and perform these types of surgeries for underprivileged kids.  Several years ago, after wanting to be a vet for many years, Hannah realized (and shared with me with tears in her eyes) that she wanted to do something that would “help people”, that she wanted to do the same thing this doctor had done for her and travel to third world countries and help others.  I think you could say I’m pretty proud of her and the woman she is becoming.

It has been great having her home and fun to spend time with her again. She is my best buddy and I have missed her. I have seen such growth in her in so many ways since she has been away.  As I was pushing the grocery cart out of Trader Joe’s the other night she grabbed the cart from me and began to push it.  I asked her why she was doing that.  She said, “I know you have had to do this for yourself so I thought I would do it for you.”  Having been a single mom for 16 years, she has watched me do a lot of things for myself and I think being away from home this past year has really brought a new sense of gratitude and appreciation for that.

She is spending a lot of time on the couch this week and catching up on her sleep while searching for a part-time job.  I am adjusting to my house not being perfectly in order and not having the personal quiet time that I have grown accustomed to.  I know she will only be home for a few short months and this time together is invaluable, so for now, I let the house go and adjust as needed.

Have a great week and enjoy the ones you love! ~Kris

Best regards,

Greg R. Solis, AIF®
President

Solis Wealth Management
78-075 Main Street
Suite 204
La Quinta, CA 92253
Office: (760) 771-3339
Fax: (760) 771-3181

www.soliswealth.com (http://www.soliswealth.com/)
E-Mail: greg.solis@lpl.com

CA Insurance License #0795867

Greg R Solis is a Registered Representative with and
Securities offered through LPL Financial, Member FINRA/SIPC

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______________________________________

* 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 DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.

* 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.

* 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.

 

Sources:

http://www.investopedia.com/terms/s/sell-in-may-and-go-away.asp

http://finance.yahoo.com/news/wall-street-week-ahead-sell-224849895.html

http://online.barrons.com/article/SB50001424052748704253204578471390309717114.html

http://www.bullandbearwise.com/

http://money.cnn.com/data/fear-and-greed/

http://money.cnn.com/investing/about-fear-greed-tool/

http://www.forbes.com/sites/kitconews/2013/05/10/metals-outlook-us-dollar-strength-economic-data-may-influence-gold/

http://www.bloomberg.com/news/2013-05-10/treasuries-head-for-second-weekly-loss-as-stocks-rise-to-record.html

http://money.cnn.com/2013/05/09/news/economy/unemployment-benefits/