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The Ricks Report – April 17, 2017

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The Ricks Report

April 17, 2017

Numbers of $ignificance

  • TAX DATA – The top one-tenth of 1% of US taxpayers (based upon adjusted gross income) paid more federal income tax ($273 billion) during tax year 2014 (the latest year that tax information has been released) than the federal income tax paid ($182 billion) by the bottom 75% of taxpayers, i.e., the top taxpayer out of 1,000 average taxpayers pays more in federal income tax than the bottom 750 taxpayers (source: Internal Revenue Service).
  • DOLLAR CUT-OFFS – For tax year 2014 (the latest year that tax data has been released), it took $465,626 of adjusted gross income (AGI) to rank in the top 1% of taxpayers, $188,996 of AGI to rank in the top 5%, $133,445 of AGI to rank in the top 10%, and $77,714 of AGI to rank in the top 25% (source: IRS).  

Winning at Life with Gregory Ricks

Tune in to every weeknight from 7:00 pm to 8:00 pm and every Saturday from 10:00 am to 1:00 pm!  We are now on News Talk 99.5 WRNO and News Talk 104.9 WBUV, as well as Facebook LIVE, Periscope (GregoryRicks) and the iHeart app.  Gregory Ricks and James Parker will be live in studio talking about some great current events and financial solutions.

The Markets

And the survey said…

In late 2016, Natixis Global surveyed 500 institutional decision makers representing corporate pension plans, public pension plans, sovereign wealth funds, insurance companies, foundations, and endowments. Survey participants said market volatility, geopolitics, and interest rates were their top risk concerns for 2017.

So far, U.S. stock markets haven’t proven to be very volatile, but geopolitics caused some disruption last week. Barron’s reported:

“Stocks fell 1 percent last week in quiet trading, with many market participants out for religious observances. Worries about the war in Syria, North Korean saber-rattling, and the coming French elections had investors reining in riskier positions and heading for safe havens.

Real estate, utilities, and consumer-staples stocks were the only sectors that rose last week. Financials – and banks in particular – fell, despite strong earnings reports from the industry’s big kahunas.”

It was a tough week for stocks, but investors’ flight to safety caused Treasury bonds to rally. Reuters reported the interest rate on 10-year Treasury notes fell 14 basis points. That’s the biggest weekly decline since January 2016. (There is an inverse relationship between bond interest rates and bond prices. When interest rates fall, bond prices rise, and vice-versa.)

 

Data as of 4/14/17 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) -1.1% 4.0% 11.8% 8.1% 11.2% 4.8%
Dow Jones Global ex-U.S. -0.2 6.7 8.8 -1.2 2.9 -1.3
10-year Treasury Note (Yield Only) 2.2 NA 1.8 2.6 2.0 4.8
Gold (per ounce) 1.4 10.8 3.1 -1.1 -5.1 6.5
Bloomberg Commodity Index 0.5 -1.4 6.2 -14.4 -9.4 -6.8
DJ Equity All REIT Total Return Index 0.9 4.4 7.4 11.3 11.2 5.1

S&P 500, Dow Jones Global ex-US, 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.

 

Why do shoelaces come untied? Engineers have solved many knotty problems, but it wasn’t until recently they unraveled the mystery of shoelaces and why they come undone, reported The Economist.

If you don’t wear shoes that lace or spend time with young child who wear lace-ups, you may not have realized how vexing shoelaces can be. Traditional shoelace bows are comprised of a reef knot and a slipknot – a combination that has come undone throughout history. People have explored alternative knots. In fact, there is an entire website devoted to shoelace knots. It details regular, secure, and special purpose options.

As it turns out, the problem with shoelaces is walking. A group of engineers at the University of California, Berkeley worked out the mechanics of shoelace-bow destruction using treadmills, cameras, and tiny accelerometers. The Economist reported:

“The first thing which happens during walking is that the reef itself is loosened by the inertial forces of the lace ends pulling on it. This occurs as a walker’s foot moves first forward and then backward as it hits the ground during a stride. Immediately after that, the shock of impact distorts the reef still further. The combination of pull and distortion loosens the reef’s grip on the lace, permitting it to slip…Probably, nothing can be done about this differential elongation. But it might be possible to use the insights [researchers] have provided to create laces that restrict the distortion of the reef at a bow’s center and, thus, slow the whole process down.”

Could this research win an Ig Nobel in 2017? It’s possible.

 You may recall from previous commentaries, the ‘Igs’ celebrate improbable research and “…honor achievements that first make people laugh, and then make them think. The prizes are intended to celebrate the unusual, honor the imaginative – and spur people’s interest in science, medicine, and technology.”

The 27th First Annual Ig Nobel Prize ceremony will take place September 14, 2017.

Weekly Focus – Think About It

“I put a dollar in one of those change machines. Nothing changed.”

–George Carlin, Comedian

 

Best regards,

Gregory Ricks

 

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Gregory Ricks & Associates is a Registered Investment Advisor which offers services and charges fees as set forth in Form ADV, a copy of which you should obtain prior to investment. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. 

                                    

* 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 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.

* 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

Sources:

https://ngam.natixis.com/cs/us/Render.jsp?did=1250236377948

http://www.barrons.com/articles/stocks-slip-1-on-week-as-geopolitical-worries-grow-1492229480?mod=BOL_hp_we_columns (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-17-17_Barrons-Stocks_Slip_1_Percent_on_Week_as_Geopolitical_Worries_Grow-Footnote_2.pdf)

http://www.reuters.com/article/us-global-markets-idUSKBN17F03U

http://www.investopedia.com/ask/answers/04/031904.asp

http://www.economist.com/news/science-and-technology/21720610-three-californian-engineers-have-found-out-answer-knotty-problem-how (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-17-17_TheEconomist-How_Shoelaces_Come_Undone-Footnote_5.pdf)

https://www.fieggen.com/shoelace/knots.htm

http://www.improbable.com/ig/

http://itsamoneything.com/money/quote-change-machine-changed-george-carlin/#.WPOFPRiZO7o