Solis Wealth Management Report – September 15, 2014

The Markets

If you’re familiar with fairy tales, you’ve probably encountered a story or two that involves the granting of wishes. Usually, these are cautionary tales. Well, there was some wishing going on around the globe last week and, if the wishes come true, the outcomes may be less beneficial than anticipated.

In the United States, some folks wish Chairwoman Janet Yellen and her peers at the Federal Reserve would set a timetable for rate hikes. Barron’s offered the opinion that abandoning a data-driven process in favor of a calendar-driven one would be a mistake. Recent improvements including a slight spike in consumer confidence, somewhat stronger consumer spending, and a generally improving job market remain mired in residue of the Great Recession. For instance:

“Housing remains in the doldrums as potential buyers cite insufficient savings, excess debt, poor credit scores, and, yes, their incomes as stumbling blocks on the road to home ownership. Higher rates won’t fix any of those problems, and even setting a schedule for rate hikes could create head winds if it causes loans to become harder to get in anticipation of the change.”

Across the pond, the United Kingdom of Great Britain and Northern Ireland (U.K.) may cover a lot less territory if Scotland wins independence in next week’s referendum. Until recently, few thought the measure had enough support to pass, but the latest polls say that it may happen. While independence may seem like a reasonable objective, there are economic and other challenges attached that could profoundly affect the new country. These include:

  • What currency will the Scots adopt? (U.K. leaders have said Scotland cannot keep the Pound.)
  • How will the U.K.’s national debt be divided? (By population? By gross domestic product?)
  • How will markets respond to Scottish independence? (Will Scotland establish its own stock market? Will companies relocate to England?)
  • How will the remainder of the United Kingdom be affected?

There is an adage that may prove appropriate here: Be careful what you wish for because you just might get it.

Data as of 9/12/14 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) -1.1% 7.4% 18.0% 19.5% 13.6% 5.8%
10-year Treasury Note (Yield Only) 2.6 NA 2.9 1.9 3.4 4.2
Gold (per ounce) -2.7 2.5 -7.3 -12.4 4.3 11.9
Bloomberg Commodity Index -2.8 -3.5 -6.6 -8.8 -0.5 -1.7
DJ Equity All REIT Total Return Index -5.0 15.3 16.1 14.9 16.6 8.8

S&P 500, Gold, Bloomberg 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 Total Return 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.

BEWARE UNPAID INTERNSHIPS! For decades, internships have offered opportunities to learn new skills and find gainful employment. However, a rise in of lawsuits involving unpaid interns and the companies where they worked has focused new attention on the subject. In an article on the topic, The Economist offered some information worth pondering:

“Banks and accountancy firms now hire more than half of their recruits through their internship programs; careers in politics, medicine, the media, and many other fields nearly always begin with an internship. Two-thirds of American students have at least one internship under their belts before they leave college. But they are often badly compensated: nearly half the internships in America are completely unpaid. How do unpaid internships exist in countries that have minimum-wage laws?”

It’s an interesting question and one that’s answered in Fact Sheet #71 from the U.S. Department of Labor. The sheet sets forth six criteria that must be met for interns to work without pay. In broad terms, unpaid internships:

  1. Must be similar to training provided in an educational environment
  2. Must benefit the intern
  3. Must not displace regular employees
  4. Must not provide immediate advantage to the employer
  5. Do not necessarily end in employment
  6. Are clearly understood to be unpaid by both employer and intern

So, which internships, paid or unpaid, are most likely to help someone land a job? A recent study from LinkedIn examined the availability of internships by field as well as the likelihood of an internship leading to a full-time position. The best bets for prospective interns were accounting, computer networking, semiconductors, aviation and aerospace, investment banking, design, and consumer goods.

Weekly Focus – Think About It

“Individual commitment to a group effort – that is what makes a team work, a company work, a society work, a civilization work.”

–Vince Lombardi, Coach of the Green Bay Packers (1959-1967)

What’s happening at Solis Wealth Management?

Please enjoy this week’s commentary from ~ Greg Solis

A small tragedy hit the Solis family on Monday, September 8th, 2014.  La Quinta, California experienced its second “hundred year storm” in the past 13 months – so much for hundred year storm (hopefully this is not the new norm).  Early Monday morning as our family was preparing to leave the house for school and work we noticed a big black cloud coming along the mountains.  Jack, who we sometimes call “Google” and the “Weatherman”, had clearly seen that a storm was brewing.  He quickly got out the sump pump to protect the sunken bar that we have, and we were confident that we were well prepared for a downpour since we had just experienced this 13 months ago.

The rain began and we were winning the battle with the sump pump going and the new gutters that we installed after the first storm.  Jack and I, in our bathing suits, went to work outside bailing the water out with buckets.  The girls were busy on the inside shoring everything up. Jack and I were bailing hard but the rain came down like we have never seen before in the desert.  Within 30 minutes our swimming pool was overflowing and the whole street was backing up.  It didn’t take much longer before I realized we were fighting a losing battle and the house would soon be flooded.

Upon this realization, I gathered up the family and brought them all into the living room.  They were a little shocked because they thought we were going to continue to work but I knew our work would be futile.  We sat in a circle and said a prayer knowing that God had a plan.  After the prayer, we remained on the living room sofa and just watched the water pour through every single door of our house.  By the end of this, there was probably three inches of water throughout the entire house.  It was horrible to watch; it was not fun and it was sad.  Monica got a little choked up, but at the end of the day we knew that all things were going to work towards good.

Despite the chaos of dealing with the post-flood issues we are all safe and in some ways it has pulled us a little bit closer together having gone through this challenge.  We will probably be out of our house for the next four months.  The damages are in the hundreds of thousands of dollars, but thank God we had the proper insurance.  Let me also add that if you have not checked your property and casualty and homeowner’s insurance recently, I would strongly encourage you to do so in order to make certain you are properly covered.  Please give our office a call and we will be happy to help you out any way we can.  As this market commentary is being written we are living in a hotel.  Hopefully in the next few days we can firm up our temporary housing arrangements and regain some of the normalcy to our life.

Despite the flood all is well with the Solis family and all is well with Solis Wealth Management.  I am humbled and honored to have the team I have who can keep everything running smoothly, even in the midst of me trying to solve some of these other issues.  Again, I can’t tell you all how much I appreciate your trust and confidence.  It’s times like these when I reflect on how truly grateful I am.  I am absolutely convinced that all things will work towards good as it states in my life verse, Romans 8:28.  That’s it for now.  Please keep us in your thoughts and prayers as my family and I go through this journey together.  Have a great day.  God bless. ~Greg

Greg R. Solis, AIF®
President

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

www.soliswealth.com
E-Mail: greg.solis@lpl.com

CA Insurance License #0795867

The Wealth Advisors of Solis Wealth Management are also Registered Representatives with and securities and advisory services are offered through LPL Financial, a Registered Investment Advisor. 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.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

*Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* 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.

*The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* 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. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Stock investing involves risk including loss of principal.

* To unsubscribe from the Solis Wealth Management Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject line.

Sources:

http://online.barrons.com/news/articles/SB51005578970899454132304580141961085594610?mod=BOL_hp_we_columns (or go tohttp://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/09-15-14_Barrons-The_70s_in_Reverse-Footnote_1.pdf)

http://www.economist.com/blogs/buttonwood/2014/09/markets-0 (or go tohttp://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/09-15-14_The_Economist-What_if_the_Scots_Say_Yes-Footnote_2.pdf)

http://www.businessweek.com/articles/2013-06-27/unpaid-intern-lawsuits-explained

http://www.economist.com/blogs/economist-explains/2014/09/economist-explains-7#sthash.Qk6xTa7e.dpuf (or go tohttp://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/09-15-14_The_Economist-Are_Unpaid_Internships_Illegal-Footnote_4.pdf)

http://www.dol.gov/whd/regs/compliance/whdfs71.htm

http://blog.linkedin.com/2014/08/21/an-internship-can-lead-to-a-full-time-job-but-your-industry-matters/

http://www.brainyquote.com/quotes/quotes/v/vincelomba129818