Economic and Investment News Bits
- Boeing Company (BA) is working with South African Airways (SAA) as part of a group of companies that started a project to turn a nicotine-free tobacco variety called Solaris into a clean fuel. Testing could begin as soon as 2015. In addition to the environmental advantages, the project is also expected to benefit small farmers in South Africa by providing new economic opportunities, with a goal of creating as much as 130 million gallons of fuel per year. (Source: Bloomberg)
- “Growth of the internet in China embodies the government’s goal of transitioning to a consumption-based economic model. Although the number of smart devices in China last year grew from 380 million to 700 million, less than 50% of the population is online. This compares to 80% penetration in major developed countries. Companies we see benefitting from this growth include Baidu (internet search provider), China Mobile (mobile telecom), and Tencent (gaming and messaging),” (Source: Artisan Partners).
- The average U.S. state spends 24% of its annual budget on Medicaid expenses. The federal government, on average, funds 57% of total Medicaid expenses, while states pick up the remaining 43% of expenditures for this federally mandated program. (Source: Medicaid)
- According to a study by Accenture, 46% of 1,000 college graduates from 2012 and 2013 that are currently employed are working jobs unrelated to the college degree they earned.
- “Despite what the so-called experts on financial media outlets are saying, historical evidence is clear: falling oil and other commodity prices have been bullish for stocks, especially in the absence of a recession,” (Source: Linda Duessel).
- Milken Institute has ranked the top 10 states for high-paying, high-tech jobs. The same states appeared in a 2012 survey, but with different rankings. They are (lowest to highest), Delaware, Connecticut, New Hampshire, Virginia, Washington, Utah, Colorado, California, Maryland, and Massachusetts.
Thought for the week
“Life isn’t about finding yourself. Life is about creating yourself.”
George Bernard Shaw, Irish playwright (1856-1950)
Wealth Idea of the Week
For 2014, diversified investment portfolios generally provided low, single-digit returns. By contrast, the S&P 500 was up by as much as 14%. The sell-off last week, however, provided evidence that boring bonds have a place in many investors’ portfolios. While stocks lost 3.5% to 5%, and energy commodities dropped 7% to 9%, bonds held their values. It can be easy to concentrate on short-term numbers (what have you done for me lately?), but it only takes a few days to remind us that boring can also have some beautiful moments. Remember that the returns you NEED may be more important than the returns you WANT.
Graph of the Week (CLICK TO ENLARGE)
We believe that a global perspective to investing is crucial. Those who only invested in the U.S. stock market have been rewarded over the last few years, but those who took a global perspective experienced a much smoother ride. As this chart from AllianceBernstein shows, the difference between the best and worst performing major stock index has been at least 9%. However, if history is any judge of what could happen in the future, it would be a mistake to sell the underperforming international stocks and buy U.S. stocks after this run-up.
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