Monday, December 16, 2013

Weekly Commentary December 16th, 2013

The Markets

You really need to take predictions with a grain of salt. Consider these esteemed opinions:

  • "I think there is a world market for maybe five computers." Thomas Watson, Chairman, IBM, 1943
  • "Who wants to hear actors talk?" H. M. Warner, Founder, Warner Brothers, 1927
  • "Everything that can be invented has been invented." Charles Duell, Commissioner, U.S. Office of Patents, 1899
 
It’s an important to remember the fallibility of experts as we head toward a new year and pundits begin pontificating about the events of the past and predicting what may be ahead.

Barron’s recently pointed out how well U.S. stock markets have performed this year: “Not since 1995, when stocks climbed 34 percent without as much as a 3 percent dip, have we enjoyed a year as agreeable as this. No pain, all gain has turned U.S. stocks into a consensus favorite, the People's Choice award winner, the king of the hill. But, it's no longer the road less traveled.”

The publication tweaked market optimists by pointing out economists’ consensus opinion the U.S. economy will grow by 2.6 percent – admittedly a pretty modest pace for growth – may not seem like a stretch, but it could be. The point was 2014 is almost certain to bring some jarring economic transitions like less monetary support through quantitative easing. Reduced liquidity could negatively affect economic growth (Gross Domestic Product growth in 2013 is projected to be just 1.7 percent).

In a separate article, Barron’s shared insights from 10 strategists – Wall Street professionals who acknowledged 2014 may offer investors a bumpy road. However, their consensus expectation is the Standard & Poor’s 500 will finish 2014 higher. “…Their mean prediction is 1977. The bullish consensus might trouble contrarians, but Wall Street's pros see ample reason for optimism, given their expectations of a stronger economy and rising corporate profits.” 

As you read conflicting opinions about where we’ve been and where we’re going, it’s critical to remember short-term macroeconomic and market predictions should not be given too much weight. You built your investment strategy to meet your long-term investment goals.   


is that a drone? flying through my neighborhood? There may be a new entry on the list of military inventions that have been repurposed for commercial use: Unmanned Aerial Vehicles (a.k.a. UAVs or drones) may soon join global positioning systems (GPS), duct tape, EpiPens, cargo pants, microwaves, and a wealth of other goods Americans rely on in everyday domestic life.

Drones are remote-controlled flying robots. They may be as small as insects or as large as jumbo jets. Today, they’re most known for delivering stealth attacks on selected targets and military service which has included stints on domestic border surveillance and overseas reconnaissance. In the future, they may be thought of as handy tools that help manage a variety of tasks. While no one can be sure which opportunities will pan out and which won’t, there are a lot of potential applications including:

·         Information gathering. Journalism students at the University of Missouri in Columbia are learning to fly drones! They’re gathering pictures, videos, and other news-worthy information. Yes, there are some privacy issues. Already, 42 states are considering bills restricting drone use.

·         Improving agriculture. Students at Oklahoma State University are researching the roles drones could play in increasing yields and monitoring crops for blight and diseases.

·         Disaster relief. The Harvard-MIT Division of Health Sciences and Technology received a grant to develop drones to deliver vaccines and medicines to remote locations and disaster areas.

·         Wildlife research. The U.S. Geological Survey has been using a camera-equipped drone to complete aerial counts of sandhill cranes, and scientists in Indonesia are using drones to study endangered Sumatran orangutans from above the treetops.

·         Shipping goods. American internet retailers are experimenting with using drones to ship goods from fulfilment centers directly to customer’s doors. It may be 2015 before you receive a drone delivery because the Federal Aviation Administration still needs to issue some rules governing drone operations.

So, if you’ve been asking yourself, “What’s the next big thing?,” you might want to read up on drones. They could be it.
 

Weekly Focus – Think About It

“Peace is not absence of conflict, it is the ability to handle conflict by peaceful means.”

--Ronald Reagan, 40th American President

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