Solis Wealth Management Report – September 16, 2013

The Markets

Baseball great Yogi Berra once said, “In theory there is no difference between theory and practice. In practice there is.” He may have been on to something.

Last May, Fed Chairman Ben Bernanke introduced the idea the Fed’s economic stimulus program, known as Quantitative Easing (QE), might be ratcheted down sooner rather than later. The concept, that easy money – the Fed has injected about $2.75 trillion into financial markets during the past five years – could soon be behind us, threw global markets into a tizzy.

Expectations that interest rates in more developed economies would move higher as QE tapered off caused investors to pull money from emerging markets (where many had sought higher returns). This created challenges in emerging countries with large current account deficits (deficits that occur when total imports exceed total exports, making a country a debtor nation).

So, what will happen when the Fed actually begins to buy fewer bonds? Pundits are mixed in their opinions. Some believe markets may become more volatile; others believe markets have already factored in the effects of tapering. In August, theFinancial Times described it this way:

“The beginning of the end for QE matters greatly as for the past five years central banks led by the Fed have actively encouraged investors to pile into risky assets. With QE suppressing interest rates and more importantly, the volatility of prices, investors duly obliged and sought risky assets. Now with the Fed thinking about reversing some support, this summer’s turmoil may be a taste of what is coming in the form of higher long-term bond yields and market volatility. Some will argue the Fed’s taper is pretty much reflected by the sharp rise we have seen in long-term Treasury yields since May.”

We’ll know more when the Federal Open Market Committee announcement is made. Over time, however, it may not be all that easy to quantify the effects of more accommodative monetary policy in the United States, if that’s what the Fed chooses to do this week. There are other flashpoints that could affect markets, as well, including economic stressors in emerging markets, decisions on Syria, and upcoming Washington budget battles.

Data as of 9/13/13

1-Week

Y-T-D

1-Year

3-Year

5-Year

10-Year

Standard & Poor’s 500 (Domestic Stocks)

2.0%

18.4%

15.6%

14.6%

7.2%

5.2%

10-year Treasury Note (Yield Only)

2.9

NA

1.8

2.7

3.5

4.2

Gold (per ounce)

-5.0

-22.2

-23.9

2.0

11.2

13.4

DJ-UBS Commodity Index

-1.1

-7.0

-14.1

-1.9

-5.6

0.8

DJ Equity All REIT TR Index

2.3

2.3

1.3

11.8

7.1

9.8

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.

EXPLORING THE INTERNET OF EVERYTHING… Before you read further, you may want to cue the music to Hanna Barbera’s space age cartoon, The Jetsons. The Internet of Everything (a.k.a. The Internet of Things) seems to be bringing the world closer to a reality where your refrigerator can order groceries, your smartphone can start your car, and tattoos only show when you want them to be seen. Two of the keys to connecting everyday things to each other and to the Internet are radio frequency identification (RFID) chips and Near Field Communication (NFC) systems.

RFID chips are all around us. Companies use them to manage inventories, farmers use them to track livestock and, in Boston, commuters use 3D-printed, chip-embedded rings to pay for mass transit. If you’ve traveled overseas recently, you probably used an RFID chip. Newer American passports have chips embedded to make it easier for Homeland Security to read them. In addition, contactless smart credit cards, which rely on chips and pin codes, are the standard across most of Europe and much of South America and Asia. As a result, Americans who try to use credit cards that have magnetic stripes and require signatures sometimes face challenges when trying to pay for goods abroad.

NFC is short-range wireless communications technology that may be best known for making it easier to pay for things with your smartphone or tablet. According to Venture Beat, an online magazine that focuses on the role of technology in daily life, one of the most powerful applications of NFC technology may be tag writing and reading. How does it work? Imagine this:

“When you arrive at home you will hold your phone up to the NFC tag embedded in the door. This will turn the electronic lock, opening the door, but it will also switch your phones to “home mode,” enabling it to use your home Wi-Fi network and launching an app that connects to your home server to turn on the lights. Heading to the kitchen, you might then put your tablet next to the stovetop to begin cooking the evening meal. NFC tags in the tablet and stovetop recognize each other, the tablet starts up the recipe app with instructions on cooking tonight’s dinner. At the end of the evening, you’ll place your device on the bedside table and the proximity to another tag will bring up the clock/alarm app.”

Just think. Someday, the Internet of Everything may even include Jetsons-style flying cars.

Weekly Focus – Think About It

Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen.

John Steinbeck, American writer

What’s happening at Solis Wealth Management?

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

It’s hard to believe the summer has come and gone (especially when we are still having temperatures here in the Desert in the double digits!)  But, I know that the beautiful fall weather is just around the corner….just this morning as I walked outside to go to work I thought to myself, “Oh, it feels a little cooler today! Maybe I should bring a sweater?” Funny thing about us Desert rats…if the temperature falls below 80 degrees, we’re cold! J

My “summer” ended with a trip to Santa Barbara to drop Hannah off at WestmontCollege to start her second year.  I can assure you that this year was MUCH easier than last year!  I think I cried for two months straight last year!  I had just started my job here at Solis Wealth last year at this time and I am so thankful for the love and support I received during this time from my co-workers, who I now proudly call my “family”.  This year I cried for about 20 minutes (a huge relief for my friends, family and co-workers, I am sure!) I still miss her dearly and it was hard to return home to an empty house but I am slowly adjusting to this new life (at least for the next nine months until she returns home again.)  We had such a special summer together and have truly grown to be friends.  Just this past week she sent me a text saying, “I miss you and hanging out with you.  I love you!”  What a blessing it is to be a mom to this special girl and everyday I thank God that He entrusted her to me.

Following the “college drop-off”, we headed to Lake Tahoe for a week with lots of motorcycling riding to see some beautiful country. And for those of you that were wondering, yes, I got my stop in Mammoth on the way home (never quite enough time there but I was thankful for the time I did have.)  Lake Tahoe and the surrounding areas were very smoky for much of the week due to the fires in Yosemite.  It was very sad and really made me grateful for those that serve to protect us in various capacities.

I trust that wherever you are that you too are enjoying the beginning of the fall season and having many wonderful memories of this past summer and spending time with those you love.  We look forward to seeing many of you back here as the temperatures continue to drop.  In the meantime, please do not hesitate to call us if we can be of assistance in any way. ~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) 771-3181www.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.

* 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.

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

Sources:

http://www.brainyquote.com/quotes/authors/y/yogi_berra.html

http://www.nytimes.com/reuters/2013/09/10/business/10reuters-usa-fed-preview.html?ref=quantitativeeasing&_r=0

http://www.reuters.com/article/2013/09/13/us-usa-stocks-weekahead-idUSBRE98C0ZC2013091

http://www.ft.com/cms/s/0/ec1b9358-1003-11e3-99e0-00144feabdc0.html#axzz2eySf2Jdt (Go to this link if you are not able to read the Financial Times article:http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/09-16-13_FT_Source_4-Pivotal_Period_Looms_After_Summer_of_QE_Tension.pdf)

http://www.ft.com/cms/s/0/20802e26-1e12-11e3-a40b-00144feab7de.html#axzz2eyyRRTUo

(Go to this link if you are not able to read the Financial Times article:http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/09-16-13_FT_Source_5-Bank_Lending_to_Emerging_Markets_Soars_to_Record.pdf)

http://www.investopedia.com/terms/c/currentaccountdeficit.asp

http://news.nationalgeographic.com/news/2013/08/130830-internet-of-things-technology-rfid-chips-smart/

http://www.digitaltrends.com/social-media/the-man-with-the-gif-in-his-hand/

http://venturebeat.com/2011/06/21/nfc-and-the-internet-of-things/

http://www.psfk.com/2013/09/rfid-subway-card-ring.html

http://www.emvco.com/documents/EMVCo_EMV_Deployment_Stats.pdf