Solis Wealth Management Report – July 15, 2013

The Markets
One of these things is not like the other… If you find yourself humming that old Sesame Street standard when you think about financial markets and world economies, you’re probably not alone.
To the consternation of many, the Dow Jones Industrials Average and the Standard & Poor’s 500 Index rocketed to new highs last week just as the International Monetary Fund (IMF) cut its global economic growth forecast for 2013 and 2014.
Many in the media pointed fingers and announced, “That’s the problem right there!” Of course, the fingers were pointing at Ben Bernanke and the Federal Reserve which continued to dither about Quantitative Easing (QE) last week. While it may feel good to lay blame, the Fed is just one tree in the forest of market volatility and economic growth.
Let’s take a look at another section of the forest: emerging markets. They are expected to power 60 percent of the world’s economic activity by 2030. Yet, just last week, China’s exports slumped, and Brazilian and Indonesian central banks raised interest rates (which generally slows growth). Turkey’s central bank may do the same next week. Is slowing growth in emerging markets the Fed’s fault?
While higher rates in the U.S. may hurt emerging markets, many of those countries have problems of their own, including infrastructure bottlenecks and excessive credit expansion. Last March, the Financial Times quoted Deutsche Bank strategist John-Paul Smith who wrote:
“We believe that 2013 will mark the year when economists and investors focus on the underlying imbalances within the Chinese economy and, accordingly, reduce their expectations of sustainable growth over the medium term. The deterioration in the perception of China is likely to have a very disruptive effect on (global emerging market) equities…”
Smith’s forecast proved out. Early last week, the International Monetary Fund (IMF) lowered expectations for China’s growth to the high-seven percent range.
Of course, it’s not easy to predict the future. Irrefutable evidence of that arrived a few days after the IMF’s report when Lou Jiwei, China’s Minister of Finance, said his country’s growth rate could fall to 7.0 percent or even lower. Economists gasped.
China’s official growth target (set by the National People’s Congress) is 7.5 percent, not 7.0 percent or lower. According to The Wall Street Journal, “Such a sharp downshift in China’s growth would send ripples around the world economy, hitting everything from iron-ore demand in Australia to sales of luxury handbags in Hong Kong stores.”

Notes: S&P 500, Gold, DJ-UBS 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 TR 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.
in america, people are still pulling themselves up by their boot straps. Three-fourths of the folks who participated in the 2013 U.S. Trust Insights on Wealth and Worth (all of whom have $3 million or more in investable assets) made their money the old fashioned way. They worked, owned businesses, and/or invested.
Most believe they’re financially secure and feel confident about the future. While that proved true for many aspects of financial planning, the study uncovered some unrecognized risks, many of which have been created by a volatile investment environment and changing tax laws. They include:

• Incomplete retirement planning. Although the vast majority of those surveyed are very confident about having the income they need during retirement, many have overlooked factors which affect income and assets such as lifestyle expectations, out-of-pocket healthcare expenses, long-term care costs, and others.

• Financial support for extended family. Almost one-half of those surveyed provide significant support to members of their extended families (including parents, in-laws, siblings, and grown children). However, the majority have not included that fact in their financial plans.

• Conflicted emotions about investing. The majority of survey participants said growing assets is more important than preserving them today; however, they also said lowering risk is a higher priority than pursuing higher returns.

• Tax law changes. A majority of wealthy people do not understand the ways in which tax law changes may affect their income, investments, or estates. Few understand the tax strategies which may be available to them.

Weekly Focus – Think About It
“Tell me and I forget. Teach me and I remember. Involve me and I learn.”

—Benjamin Franklin, inventor and statesman

What’s happening at Solis Wealth Management?
Please enjoy this week’s commentary from ~ Tiffany Valentine, Director of Operations/Associate Wealth Advisor
Last week, we celebrated Avery’s 5^th birthday.  At the end of June, Chris and I took her to Disneyland so she had a day all to herself with mom and dad (and no little brother fighting for attention J).  I know she felt so special and blessed by the one on one time.  Unfortunately, I sprained my knee the week before we left so Chris had to push me around in a wheelchair, but it actually helped us a little.  We didn’t need a stroller and we were able to avoid Avery’s famous “my legs are soo tired, I need a rest” comment all day!  She was just able to pop on my lap and roll around the park with me.  All in all it was a wonderful day.  Then for her actual birthday, we had family and close friends over for a BBQ and the kids played in the backyard kiddie pool.  In reflecting on Avery’s birthday, I have to say that I was totally unprepared for how fast the last 5 years have gone by. Sometimes I feel like I missed the first couple years because I was so stressed out about how to adapt to life with a baby.  Avery has taught me so much about love, life and patience, and I know I have so much more to learn.  I’m looking forward to this next stage!
We had a great Father’s Day last month; in fact one I won’t forget because Travis said “I wuv (love) you” to me for the first time.  Something you may not know is Travis has a speech delay; he was born tongue tied and never actually babbled as a baby.  The good news is with weekly therapy (now starting 2x per week), his vocabulary and annunciation have increased so much lately and he’s so intentional about trying!  He blows me away with how smart he is too!  He knows his letters and numbers and even knows how to read some words.  It really blows me away sometimes.  I think because his sister is such a great talker, that sometimes he just lets her do the talking.  We still have a long road ahead of us but I am confident by the time he enters Kindergarten, he will be right where he needs to be.
All in all, this has been a great summer so far.  We are going to Encinitas (San Diego) for a week at the end of July for our annual family vacation and counting the days until we can get a brief break from the heat and humidity here in the desert. Avery and Travis are both very excited to go to the Zoo, the beach and Sea World.  Chris and I are just excited that we will be able to take a walk outside without being drenched in sweat. J
My summer suggestion for all of you is to spend a moment taking a snapshot of something great you and/or your family are doing.  Personally, I am known for carrying my Nikon and iPhone everywhere and taking 1000’s of photos, but I also intentionally stop for minute each day (or week, depending on how busy we get) to take a “mental” picture of something that I am thankful for that day.  Just last night, it was watching the kids hold hands and run through the sprinklers together.  A photo is great, but having the memory of the smell, feel of the air, and sound of the laughter is priceless.  I also encourage all of you to hold your love ones tight, cherish each day, and remember to be thankful for all our blessings.  Each day we’ve been given is a gift.
“This is the day the Lord has made.  We will rejoice and be glad in it.” Psalm 118:24 ~Tiffany
 
Best regards,
Greg R. Solis, AIF®
President

P.S.  You have my permission to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.
* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
* 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 DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* 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.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* 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.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Solis Wealth Management Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject line.
 
Sources:
http://finance.yahoo.com/news/bulls-crosshairs-bernanke-earnings-020139063.html
http://www.imf.org/external/pubs/ft/survey/so/2013/NEW070913A.htm
http://blogs.barrons.com/emergingmarketsdaily/2013/07/12/the-emerging-market-power-rankings-thank-heavens-for-ben-bernanke/?mod=BOL_hpp_blog_stw
http://www.theglobeandmail.com/report-on-business/international-business/asian-pacific-business/indonesia-hikes-interest-rates-as-nations-scramble-over-market-rout/article12508211/
http://blogs.ft.com/beyond-brics/2013/03/01/deutsche-bear-em-stocks-to-drop-10-15/#axzz2YvzcWUrQ
http://online.wsj.com/article/SB10001424127887324425204578600890536037594.html
http://blogs.barrons.com/emergingmarketsdaily/2013/07/12/china-slower-growth-lower-stock-prices/?mod=BOLBlog
http://www.ustrust.com/publish/content/application/pdf/GWMOL/UST-Key-Findings-Report-Insights-on-Wealth-and-Worth-2013.pdf
http://www.ustrust.com/publish/content/application/pdf/GWMOL/UST-Fact-Sheet-Insights-on-Wealth-and-Worth-2013.pdf
http://www.ustrust.com/ust/Pages/Insights-on-Wealth-and-Worth-2013.aspx
http://www.brainyquote.com/quotes/quotes/b/benjaminfr383997.html