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April - 2008
1. INVESTING IN ITSELF - The companies in the S&P 500 stock index bought $589 billion of their own stock in calendar year 2007, an all-time record for stock buybacks. The total is more than the combined stock buybacks for all 500 companies during the 4 consecutive years of 2001-04. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: S&P).
2. PROFITS – The S&P 500 companies reported +48% more in profits for calendar 2007 than they did in calendar year 1999, but last year’s total earnings for all 500 companies was 20% less than 2006 (source: S&P).
3. A TRILLION HERE, A TRILLION THERE - The S&P 500 lost $1.4 trillion of market value during the 1st quarter 2008. As of 3/31/08, the stock index had a total market capitalization of $11.5 trillion. Just 20 years ago (3/31/88), the total market capitalization of the entire S&P 500 was $1.8 trillion (source: S&P).
4. STOCKS IN CHINA - After gaining +353% during the last 2 calendar years (2006-07), the Chinese Shanghai stock index has fallen 34% YTD through last Friday. The Shanghai index is an unmanaged index that is generally considered representative of the Chinese stock market. These international securities involve additional risks including currency fluctuations, differing financial accounting standards and possible political and economic volatility (source: BTN Research).
5. REBALANCE OR NOT? - If you allocated $100,000 in a pretax account on 1/01/83 between stocks (60%) and bonds (40%) and never rebalanced the portfolio, the account would be worth $1.51 million on 12/31/07. That equates to a +11.5% annualized total return over the 25-year period. Annual rebalancing back to the original 60/40 allocation would have generated $1.46 million or an annualized total return of +11.3%. The S&P 500 was used as the stock proxy. The Lehman Brothers Aggregate bond index, calculated using 6,000 publicly traded government and corporate bonds with an average maturity of 10 years, was used as the bond measurement. This mathematical calculation ignores the ultimate impact of taxes on the account which are due upon withdrawal, is for illustrative purposes only and is not intended to reflect any specific investment or performance. Actual results will fluctuate with market conditions and will vary (source: BTN Research).
6. RECORD LEVELS - The price of a barrel of oil closed last Friday (4/11/08) at $110.14, a +78% increase over its closing price ($62.01) from exactly 1-year earlier (4/11/07). The highest closing price ever for oil ($110.87) was set last Wednesday (source: New York Mercantile Exchange).
7. WHERE IT COMES FROM - More than half of the oil the US imports (52%) comes from the 4 countries of Canada, Saudi Arabia, Mexico and Venezuela (source: Energy Information Administration).
8. TRADE NUMBERS - The US exported $5.80 billion of goods and services to Britain and Ireland combined in February 2008, slightly more than the $5.77 billion we exported to China (source: Commerce Department).
9. LOYAL TO THE COMPANY - 45% of employees say the benefits provided by their employer are an important part of their decision to stay on the job (source: MetLife Employee Benefits Trends Study).
10. NOT ENOUGH - Only 23% of Americans at least age 55 have accumulated savings and retirement assets of at least $250,000 (source: Employee Benefit Research Institute).
11. SAFE MONEY - As of last week, the total value of money market funds exceeded $3.5 trillion, an all-time record. The total is up $1.1 trillion in the last 12 months (source: Investment Company Institute).
12. NO TRIP TO THE MALL - American consumers are expected to increase their online purchases by +17% in 2008 over the previous year to $204 billion. Projections include the purchase of $27 billion of clothes, $24 billion of computers and $19 billion of autos (source: National Retail Federation).
13. AT THE END - The medical expenses incurred during an individual’s last year-of-life represent 22% of all medical expenditures (source: Health Services Research).
14. HARDER THAN A DIET - More Americans believe it is harder to start planning for their retirement (30% of those surveyed) than it is to begin a diet (28%). 23% of the 1,000 people surveyed have done no retirement planning (source: Bank of America).
15. MBA or MLB? - The 10th highest-paid major league baseball player will earn $16.0 million during the current season. The 10th highest-paid chief executive officer of a publicly-held company made $26.6 million during calendar year 2007 (source: USA Today).
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