Where did the S & P 500 on my quarterly report go?

Starting in 2011, we are changing two of the equity benchmarks on our quarterly reports.  We are removing the S & P 500 and Russell 2000, and replacing them with the Russell 3000.  We will continue to display the MSCI EAFE (Europe, Australasia, and Far East) index of international companies. 

What’s the difference?  The S & P 500 index consists of the 500 largest U.S. companies by market capitalization.  Market cap is a measure of company size; it is simply the number of shares outstanding times the price per share. Since our client portfolios include small and mid-sized companies for diversification purposes, we believe the Russell 3000 is a better benchmark to use.  It will make it easier for our clients to make an apples-to-apples comparison at a glance.

The Russell 3000 is a broader market index consisting of the 3000 largest companies in the U.S. by market capitalization.  It is more reflective of the total stock market rather than only large companies.  The Russell 3000 is also what we use internally for portfolio management, including setting target weightings for various economic sectors and company sizes.  We believe it is logical for our performance reporting to reflect the composition of the index that we use when managing client assets. 

Client portfolio returns are best compared to a blend of the Russell 3000 for U.S. companies and the EAFE for the portion of the portfolio invested internationally.

We have also changed our fixed income benchmark from the Barclays Aggregate Bond Index to the Barclay Intermediate Government /Credit Index.  We believe this is a better reflection of our client’s fixed income holdings with regard to the maturities and types of securities that we purchase.  For example, the Intermediate Government/Credit Index does not include mortgage-backed securities, which we typically do not invest in.

 

Bill Hansen, CFA

Managing Partner

 

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Weekly Market Update through 1/28/11

as of January 28, 2011        
  Total Return
Index 12 months YTD QTD MTD
Stocks        
Russell 3000 21.73% 1.41% 1.41% 1.41%
S&P 500 20.07% 1.59% 1.59% 1.59%
DJ Industrial Average 20.02% 2.26% 2.26% 2.26%
Nasdaq Composite 24.61% 1.31% 1.31% 1.31%
Russell 2000 29.13% -1.01% -1.01% -1.01%
EAFE Index* 11.71% 2.20% 2.20% 2.20%
*EAFE index does not include dividends.        
         
Bonds        
Barclays US Aggregate 5.48% 0.27% NA 0.27%
Barclays Intermediate US Gov/Credit 5.19% 0.51% NA 0.51%
Barclays Municipal  1.12% -0.75% NA -0.75%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $91.65    $87.76
Natural Gas    $4.32    $4.68
Gold    $1,330.30    $1,344.90
Euro    $1.36    $1.36
         
         
RECOVERY!        
  Since 3/09/09      
Index  Total Return TR annualized    
Stocks        
Russell 3000 102.20% 45.13%    
S&P 500 96.15% 42.82%    
DJ Industrial Average 90.28% 40.54%    
Nasdaq Composite 115.76% 50.20%    
Russell 2000 131.69% 55.96%    
EAFE Index* 85.96% 38.84%    
*EAFE index does not include dividends.        

 

Mark A. Lewis

Research & Trading Associate

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Weekly Market Update through 1/21/11

as of January 21, 2011        
  Total Return
Index 12 months YTD QTD MTD
Stocks        
Russell 3000 18.53% 1.72% 1.72% 1.72%
S&P 500 17.27% 2.13% 2.13% 2.13%
DJ Industrial Average 17.38% 2.68% 2.68% 2.68%
Nasdaq Composite 19.96% 1.40% 1.40% 1.40%
Russell 2000 24.57% -1.31% -1.31% -1.31%
EAFE Index* 7.12% 1.83% 1.83% 1.83%
*EAFE index does not include dividends.        
         
Bonds        
Barclays US Aggregate 4.84% -0.12% NA -0.12%
Barclays Intermediate US Gov/Credit 4.58% 0.05% NA 0.05%
Barclays Municipal  0.13% -1.56% NA -1.56%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $87.76    $92.25
Natural Gas    $4.68    $4.56
Gold    $1,344.90    $1,419.00
Euro    $1.36    $1.33
         
         
RECOVERY!        
  Since 3/09/09      
Index  Total Return TR annualized    
Stocks        
Russell 3000 102.83% 45.93%    
S&P 500 97.20% 43.75%    
DJ Industrial Average 91.06% 41.34%    
Nasdaq Composite 115.95% 50.90%    
Russell 2000 130.97% 56.42%    
EAFE Index* 85.28% 39.03%    
*EAFE index does not include dividends.        

 

Mark A. Lewis

Research & Trading Associate

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Benchmark Returns – 2010

as of December 31, 2010      
  Total Return
Index 2010 4th QTR December
Stocks      
Russell 3000 16.93% 11.59% 6.78%
S&P 500 15.06% 10.76% 6.68%
DJ Industrial Average 14.06% 8.04% 5.33%
Nasdaq Composite 18.15% 12.34% 6.29%
Russell 2000 26.86% 16.25% 7.94%
EAFE Index* 4.90% 6.23% 8.02%
*EAFE index does not include dividends.      
       
Bonds      
Barclays US Aggregate 6.54% NA -1.08%
Barclays Intermediate US Gov/Credit 5.89% NA -1.25%
Barclays Municipal  2.38% NA -1.94%
       
  Current   Prior
Commodity/Currency Level   Level
       
Crude Oil  $92.25    $91.12
Natural Gas  $4.56    $4.11
Gold  $1,419.00    $1,401.30
Euro  $1.33    $1.31
       
       
RECOVERY! Since 3/09/09    
   Total Return TR annualized  
Index      
Stocks      
Russell 3000 99.39% 46.30%  
S&P 500 93.08% 43.73%  
DJ Industrial Average 86.07% 40.83%  
Nasdaq Composite 112.97% 51.71%  
Russell 2000 134.04% 59.81%  
EAFE Index* 81.95% 39.10%  
*EAFE index does not include dividends.      

 

Mark A. Lewis

Research & Trading Associate

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New Estate Tax Exemption

The new tax package stipulates that the estate tax exemption amount for each individual will be $5,000,000 – a new all-time high. The estate tax exemption was $50,000 in 1916 and rose slowly to $675,000 in 2000-2001. Interestingly, the value of $50,000 in 2000 dollars (3% inflation added) is $598,820 so in reality the exemption amount hadn’t grown that much. It was $3,500,000 in 2009 and zero in 2010.

Most of us are well under the $5,000,000 threshold, but for others, this means that a couple can pass $10,000,000 to their beneficiaries estate tax free. Of course, they will need a trust to shelter the first $5,000,000. A single person can pass the $5,000,000 and all values over that are taxed at a modest 35%. While 35% may not seem modest, the tax has been as high as 55% in previous years.

The exemption amount was scheduled to go back to $1,000,000 in 2011 unless Congress agreed on a different amount. While $1,000,000 is a lot of money, it isn’t what it used to be. According to Money Magazine, there were 7.8 million individuals classified as millionaires in the US at the end of 2009. The ultra-high net worth individual, which is categorized as $5 million or more, was only 980,000, which is a pretty exclusive group.

At the end of 2009, the average US resident’s net worth – the market value of property and investments minus mortgage, credit card and other debts – was $175,600 according to data from the Fed and the Commerce Department That is a long way from $5,000,000 or even $1,000,000! How do you get there from here? Live within your means and save between 15% and 20% of your income. When you live within your means you do not use a credit card to buy things that you cannot afford. It sounds pretty simple but I know it is hard to do. The media blitz of things that we must have, that we can’t live without, that seem to be an absolute necessity, are just never ending. It is hard to be frugal in the current climate. However, if you are not frugal in the years you are earning an income, I can guarantee that you will be frugal in your retirement years because you will not have enough assets to last your lifetime.

Barbara Gray, CFP®
Partner

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Weekly Market Update through 12/17/10

as of December 17, 2010        
  Total Return
Index 12 months YTD QTD MTD
Stocks        
Russell 3000 17.92% 15.63% 10.35% 5.59%
S&P 500 15.79% 13.74% 9.48% 5.46%
DJ Industrial Average 14.53% 13.19% 7.22% 4.52%
Nasdaq Composite 22.52% 17.68% 11.90% 5.86%
Russell 2000 30.62% 26.10% 15.56% 7.29%
EAFE Index* 4.69% 2.58% 3.88% 5.63%
*EAFE index does not include dividends.        
         
Bonds        
Barclays US Aggregate 4.91% 6.15% NA -1.44%
Barclays Intermediate US Gov/Credit 4.50% 5.70% NA -1.43%
Barclays Municipal  1.98% 2.24% NA -2.07%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $88.36    $89.08
Natural Gas    $4.11    $4.54
Gold    $1,386.70    $1,391.00
Euro    $1.31    $1.32
         
         
RECOVERY!        
  Since 3/09/09      
Index  Total Return TR annualized    
Stocks        
Russell 3000 97.17% 46.58%    
S&P 500 90.86% 43.92%    
DJ Industrial Average 84.64% 41.26%    
Nasdaq Composite 112.12% 52.74%    
Russell 2000 132.63% 60.89%    
EAFE Index* 77.92% 38.34%    
*EAFE index does not include dividends.        

Mark A. Lewis
Research & Trading Associate

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Weekly Market Update through 12/10/10

as of December 10, 2010        
  Total Return
Index 12 months YTD QTD MTD
Stocks        
Russell 3000 17.32% 15.22% 9.96% 5.22%
S&P 500 14.81% 13.39% 9.15% 5.13%
DJ Industrial Average 12.66% 12.35% 6.42% 3.75%
Nasdaq Composite 21.64% 17.40% 11.63% 5.62%
Russell 2000 32.13% 25.62% 15.11% 6.88%
EAFE Index* 3.81% 2.68% 3.98% 5.74%
*EAFE index does not include dividends.        
         
Bonds        
Barclays US Aggregate 5.04% 6.06% NA -1.52%
Barclays Intermediate US Gov/Credit 4.56% 5.63% NA -1.49%
Barclays Municipal  2.62% 2.90% NA -1.44%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $89.08    $89.24
Natural Gas    $4.54    $4.48
Gold    $1,391.00    $1,415.40
Euro    $1.32    $1.32
         
         
RECOVERY!        
  Since 3/09/09      
Index  Total Return TR annualized    
Stocks        
Russell 3000 96.47% 46.90%    
S&P 500 90.27% 44.24%    
DJ Industrial Average 83.28% 41.20%    
Nasdaq Composite 111.62% 53.24%    
Russell 2000 131.74% 61.38%    
EAFE Index* 78.10% 38.91%    
*EAFE index does not include dividends.        

Mark A. Lewis

Research & Trading Associate

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Weekly Market Update through 12/03/10

as of December 3, 2010        
  Total Return
Index 12 months YTD QTD MTD
Stocks        
Russell 3000 16.22% 13.68% 8.49% 3.81%
S&P 500 13.61% 11.91% 7.72% 3.76%
DJ Industrial Average 12.81% 11.99% 6.08% 3.42%
Nasdaq Composite 20.48% 15.32% 9.66% 3.74%
Russell 2000 30.09% 22.29% 12.06% 4.05%
EAFE Index* 0.30% 2.32% 3.62% 5.36%
*EAFE index does not include dividends.        
         
Bonds        
Barclays US Aggregate 5.86% 6.97% NA -0.68%
Barclays Intermediate US Gov/Credit 5.56% 6.66% NA -0.53%
Barclays Municipal  3.98% 4.13% NA -0.26%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $89.24    $84.55
Natural Gas    $4.48    $4.42
Gold    $1,415.40    $1,364.10
Euro    $1.32    $1.31
         
         
RECOVERY!        
  Since 3/09/09      
Index  Total Return TR annualized    
Stocks        
Russell 3000 93.84% 46.38%    
S&P 500 87.79% 43.73%    
DJ Industrial Average 82.69% 41.47%    
Nasdaq Composite 107.87% 52.39%    
Russell 2000 125.60% 59.74%    
EAFE Index* 77.47% 39.13%    
*EAFE index does not include dividends.        

 

Mark A. Lewis

Research & Trading Associate

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Weekly Market Update through 11/26/10

as of November 26, 2010        
  Total Return
Index 12 months YTD QTD MTD
Stocks        
Russell 3000 11.87% 10.32% 5.29% 1.33%
S&P 500 9.27% 8.63% 4.56% 0.73%
DJ Industrial Average 8.90% 9.04% 3.29% 0.08%
Nasdaq Composite 19.73% 12.77% 7.23% 1.25%
Russell 2000 28.53% 18.43% 8.53% 4.26%
EAFE Index* 1.05% -0.71% 0.54% -2.90%
*EAFE index does not include dividends.        
         
Bonds        
Barclays US Aggregate NA 7.50% NA -0.76%
Barclays Intermediate US Gov/Credit NA 7.03% NA -0.86%
Barclays Municipal  NA 4.18% NA -2.21%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $84.55    $81.54
Natural Gas    $4.42    $4.14
Gold    $1,364.10    $1,354.50
Euro    $1.31    $1.36
         
         
RECOVERY!        
  Since 3/09/09      
Index  Total Return TR annualized    
Stocks        
Russell 3000 88.13% 44.47%    
S&P 500 82.28% 41.84%    
DJ Industrial Average 77.88% 39.83%    
Nasdaq Composite 103.26% 51.12%    
Russell 2000 118.49% 57.61%    
EAFE Index* 72.21% 37.22%    
*EAFE index does not include dividends.        

 

Mark A. Lewis

Research & Trading Associate

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Weekly Market Update through 11/19/10

as of November 19, 2010        
  Total Return
Index 12 months YTD QTD MTD
Stocks        
Russell 3000 14.36% 10.87% 5.81% 1.83%
S&P 500 11.45% 8.84% 4.75% 0.94%
DJ Industrial Average 10.68% 9.27% 3.48% 0.29%
Nasdaq Composite 18.53% 11.99% 6.40% 0.42%
Russell 2000 25.13% 16.76% 6.94% 2.68%
EAFE Index* 4.46% 2.85% 4.15% 0.58%
*EAFE index does not include dividends.        
         
Bonds        
Barclays US Aggregate 6.52% 7.51% NA -0.75%
Barclays Intermediate US Gov/Credit 6.13% 7.04% NA -0.85%
Barclays Municipal  4.35% 3.64% NA -2.72%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $81.54    $85.59
Natural Gas    $4.14    $3.81
Gold    $1,354.50    $1,362.90
Euro    $1.36    $1.36
         
         
RECOVERY!        
  Since 3/09/09      
Index  Total Return TR annualized    
Stocks        
Russell 3000 89.06% 45.23%    
S&P 500 82.65% 42.32%    
DJ Industrial Average 78.27% 40.31%    
Nasdaq Composite 101.74% 50.86%    
Russell 2000 115.37% 56.75%    
EAFE Index* 78.39% 40.37%    
*EAFE index does not include dividends.        

 

Mark A. Lewis

Research & Trading Associate

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