January 2012. Market Factors. Tim Vorpahl. Vorpahl Wing Securities, Inc. 505 W. Riverside Ave., Ste 205 Spokane, WA 99201 (509) 747-1749 firstname.lastname@example.org. Vorpahl Wing Securities. INVESTMENT ADVICE FOR EVERY GENERATION.
Vorpahl Wing Securities, Inc.
505 W. Riverside Ave., Ste 205
Spokane, WA 99201
Vorpahl Wing Securities
INVESTMENT ADVICE FOR EVERY GENERATION
Not fdic insured. May lose value. No bank guarantee. Not insured by any government agency.
Graph made with information taken from the Wall Street Journal
January 19th, 2012
So far in 2012, the market has seen slow, steady increases.
Using the current rates (as of 01/19/12), the current rule of 20 comes up with the number 15.31 indicating that the market may be undervalued.
One method of market valuations is the use of the Rule of 20.
This measure takes the P/E ratio of the market (the price per share over the expected earnings per share), a ratio commonly used to determine whether a stock is overvalued or undervalued, and add the current inflation rates as measured by the Consumer Price Index. If the number is more than 20, then the market is overvalued, if it is under 20 than the market is undervalued.
P/E + CPI = Rule of 20
P/E taken from WSJ.com and CPI from the Bureau of Labor & Statistics.
Graph taken January 19th, 2011
As seen in the graph, GDP remained positive the last two years following a down period in 2008-2009.
The current GDP growth rate (using the third quarter of 2011) is 2.5%, up from 1.3% in Q2 2011.GDP
This graph taken from Standard and Poors
Graph taken January 19th, 2012
While unemployment is slowing down, those who are employed are beginning to see positive changes in terms of overall employment payroll.
Graph taken January 19th, 2011
Graph created with data from the Bureau of Labor Statistics on November 18th, 2011
Graph created with data from the Bureau of Labor Statistics on January 19th, 2012
Inflation is becoming present throughout parts of the world. China’s inflation for November 2011 was 4.2%.
Graph created with data from the Bureau of Labor Statistics on December 27th, 2011
Graph created with data from the Bureau of Labor Statistics on September 19th, 2011
Charts taken from The New York Times
After a bailout of Greece and Ireland in 2010, significant downgrades in ratings, and change of leadership in Greece and Italy, confidence in the European bond market has dwindled.
Investment decisions should be based on an individual’s own goals, time allowance, and tolerance for risk.
Investing involves risk of loss.
Although bonds generally present less short-term risk and volatility than stocks, bonds do contain interest rate risk and the risk of default, or the risk that an issuer will be unable to make income or principal payments.
Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, market , or economic developments. Foreign securities are subject to interest-rate, currency-exchange rate, economic and political risks, all of which are magnified in emerging markets.
Sources: Bureau of Labor Statistics, Google Finance, Bloomberg, Fidelity, Pioneer as of 3/4/11 and the Wall Street Journal as of 3/20/11
As with all of your investments, you must make your own determination whether an investment in any particular security or fund is consistent with your investment objectives, risk tolerance, financial situation, and your evaluation of the investment option.
Vorpahl Wing Securities is not recommending or endorsing any particular investment option by mentioning it in this presentation or by making it available to its customers. This information is provided for educational purposes only, and you should bear in mind that laws of a particular state and your particular situation may affect this information.
There is no guarantee the trends discussed here will continue. Investment decisions should take into account the unique circumstances of the individual investor.
Past performance is no guarantee of future results. It is not possible to invest directly in an index or average. Index performance is not meant to represent that of any mutual fund.
Before investing, consider the funds’ investment objectives, risks, charges, and expenses.
Not FDIC insured. May lose value. No bank guarantee.