Weekly Commentary September 10, 2012 TheMarkets

Itsabouttime.

Believeitornot,theU.S.stockmarketasmeasuredbytheS&P500indexhitanalltimerecordhigh lastweekwhenyouincludereinvesteddividends,accordingtoBloomberg.Now,youmaynothave seenthatheadlineinthenewslastweekbecausetheindexitselfisstill9.3percentbelowitsalltime highreachedonOctober9,2007.

Hereareafewotherinterestingstatstoponder: 1) In2012alone,theriseintheU.S.stockmarketadded$1.9trilliontoinvestorswealth. 2) Asoflastweek,theS&P500indexrose112percentfromits12yearlowreachedinMarch 2009. 3) Eventhougheconomicgrowthissluggish,U.S.corporateearningsareprojectedtoreacha recordhighthisyear.Ifreached,thiswouldplaceearningsabout20percenthigherthan2007s theyeartheU.S.stockmarkethititsalltimehigh. 4) Byhistoricalstandards,TheS&P500istrading13percentbelowitsaveragevaluationsince the1950s. 5) Worldcentralbanksexpandedtheirbalancesheetsbyabout9trilliondollarssincethefinancial crisisstarted.
Sources:Bloomberg;Barrons

Number5aboveisanimportantpointtokeepinmind.Easymoneyhasgreasedtheworldeconomy andnowtherestalkofevenmoremonetarystimulusinEuropeandtheU.S.,accordingto MarketWatch.Whatremainsunansweredis,howmuchofthemarketsrisehasbeenstimulatedby thestimulusandwhathappenswhenthestimulusisnolongeravailableoreffective?Cantheeconomy standonitsown?

Barronsframeditthisway,Atsomelevel,themarketgetspricednotsimplyforthemonetaryeasing curetoremedyeconomicills,butforthatdrugbeingadministeredtoahealthypatientforrecreational purposes.Translationifcentralbanksovershootandmarketsgetaddictedtotheeasymoneyhigh, theinevitablewithdrawalofthemoneydrugmaybepainful.

Dataasof9/7/12
Standard&Poor's500(DomesticStocks) DJGlobalexUS(ForeignStocks) 10yearTreasuryNote(YieldOnly) Gold(perounce) DJUBSCommodityIndex DJEquityAllREITTRIndex

1Week
2.2% 2.7 1.7 4.8 0.8 1.6

YTD
14.3% 6.9 N/A 9.8 4.7 19.3

1Year 3Year 5Year

20.0% 1.0 2.0 4.5 9.3 23.1 11.9% 2.0 3.5 20.3 5.5 25.9 0.2% 5.3 4.4 19.8 2.5 4.3

10Year
4.8% 6.7 4.1 18.3 3.3 11.4

Notes:S&P500,DJGlobalexUS,Gold,DJUBSCommodityIndexreturnsexcludereinvesteddividends(golddoesnotpayadividend)andthe three,five,and10yearreturnsareannualized;theDJEquityAllREITTRIndexdoesincludereinvesteddividendsandthethree,five,and10 yearreturnsareannualized;andthe10yearTreasuryNoteissimplytheyieldatthecloseofthedayoneachofthehistoricaltimeperiods. Sources:Yahoo!Finance,Barrons,djindexes.com,LondonBullionMarketAssociation. Pastperformanceisnoguaranteeoffutureresults.Indicesareunmanagedandcannotbeinvestedintodirectly.N/Ameansnotapplicable.

CANGOODNEWSBEGOODFORTHEWRONGREASON?Lastweek,thegovernmentreleased
theeagerlyawaitedmonthlypayrollreport.Itshowedamodest96,000increaseinnonfarmjobsin Augustcomparedtothemonthbefore.Whilethatnumberwasdisappointinglylow,the unemploymentrateshowedasurprising(andpositive)dropto8.1percent;downfrom8.3percentthe previousmonth.

Hereswhereitgetstricky:thedropintheunemploymentrateoccurredforthewrongreason, accordingtoTheEconomist.Themainreasonwhytheunemploymentratedroppedwas368,000 peopleleftthelaborforce.Withfewerpeoplebeingcountedinthelaborforce,theunemployment ratelooksbetterthanitmightbeotherwise.

Arelatedstatistic,calledthelaborforceparticipationrate,measurestheshareoftheworkingage populationeitherworkingorlookingforwork.Thisfigurefellto63.5percentlastmonthathree decadelow,accordingtoTheEconomist.

Isadeclininglaborforceparticipationrateabadthing?AccordingtoMatthewOBrienwritinginthe Atlantic,Lesspeopleinthelaborforcemeans,allelseequal,thatwewillproducelessstuffinthelong run.And,lessstuffmeanswehavelesswealth,lowerstockprices,andfewertaxestopayfor retirement.

So,whyarepeopleleavingthelaborforce?Hereareafewreasons: Goingbacktoschool Raisingchildren Retiring Goingondisability

Source:TheWallStreetJournal

Now,theresonemorebigreasonwhypeopleleavethelaborforcetheygetdiscouragedandsimply stoplookingforajobeventhoughtheywantone.Conveniently,thegovernmenttellsusthereare, unfortunately,nearly7millionofthosefolksasoftheendofAugust;thatsupfromabout4.4million neartheendof2007.

FedChairmanBenBernankerecentlycalledtheunemploymentlevelagraveconcernandthe numbersseemtosupporthim.Bottomline,eventhoughtheunemploymentratedropped,itdropped forthewrongreasonandwestillhavealongwaytogotogetthiscountryworkingagain.

WeeklyFocusThinkAboutIt
Lazinessmayappearattractive,butworkgivessatisfaction. AnneFrank,TheDiaryofaYoungGirl

Bestregards,

PattyLoris,MBA,CFP LPLFinancialAdvisor

P.S.Pleasefeelfreetoforwardthiscommentarytofamily,friends,orcolleagues.Ifyouwouldlikeus toaddthemtothelist,pleasereplytothisemailwiththeiremailaddressandwewillaskfortheir permissiontobeadded. SecuritiesofferedthroughLPLFinancial,MemberFINRA/SIPC.

*ThisnewsletterwaspreparedbyPeakAdvisorAlliance. *TheStandard&Poor's500(S&P500)isanunmanagedgroupofsecuritiesconsideredtoberepresentativeof thestockmarketingeneral. *TheDJGlobalexUSisanunmanagedgroupofnonU.S.securitiesdesignedtoreflecttheperformanceofthe globalequitysecuritiesthathavereadilyavailableprices. *The10yearTreasuryNoterepresentsdebtowedbytheUnitedStatesTreasurytothepublic.SincetheU.S. Governmentisseenasariskfreeborrower,investorsusethe10yearTreasuryNoteasabenchmarkforthe longtermbondmarket. *GoldrepresentstheLondonafternoongoldpricefixasreportedbytheLondonBullionMarketAssociation. Preciousmetalinvestingissubjecttosubstantialfluctuationandpotentialforloss. *TheDJCommodityIndexisdesignedtobeahighlyliquidanddiversifiedbenchmarkforthecommodityfutures market.TheIndexiscomposedoffuturescontractson19physicalcommoditiesandwaslaunchedonJuly14, 1998. *TheDJEquityAllREITTRIndexmeasuresthetotalreturnperformanceoftheequitysubcategoryoftheReal EstateInvestmentTrust(REIT)industryascalculatedbyDowJones. *Yahoo!Financeisthesourceforanyreferencetotheperformanceofanindexbetweentwospecificperiods. *Opinionsexpressedaresubjecttochangewithoutnoticeandarenotintendedasinvestmentadviceorto predictfutureperformance. *Pastperformancedoesnotguaranteefutureresults. *Youcannotinvestdirectlyinanindex. *Consultyourfinancialprofessionalbeforemakinganyinvestmentdecision. *TounsubscribefromthePattyLorisWeeklyCommentarypleasereplytothisemailwithUnsubscribein thesubjectline.

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