Sorensen Wealth Management Blog

Weekly Market Commentary 12/05/11

2011-12-05T16:42:00.000-08:00

The Markets

Politicians may struggle to work together, but at least the world’s central bankers can.

At 8:00 a.m. EST on November 30, the Federal Reserve released a statement that sent worldwide financial markets skyrocketing. Here’s the first paragraph of the statement:

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.

The U.S. Federal Reserve went on to say that should liquidity conditions continue to deteriorate, it has “a range of tools available” and “is prepared to use these tools as needed.” For many investors, this move meant world central banks “get it” and are ready to pull out “the big guns” to keep the worldwide economy from grinding to a halt.

Investors rejoiced and, by the end of the day, stocks had soared as the Dow Jones Industrial Average rose 4.2 percent, according to The Wall Street Journal.

While the central banks’ moves were welcome, they don’t solve the economy’s underlying problem. Certain European countries (and the U.S., too) suffer from too much debt and too little growth. The banks’ moves were akin to taking ibuprofen -- they mask the pain, but don’t provide a cure.

The cure likely won’t happen until European politicians agree on a credible and enforceable, “long-term regime of fiscal discipline,” according to The Wall Street Journal. While European leaders meet frequently to discuss policy solutions, they unfortunately suffer from the old truism, “When it’s all said and done, a lot more gets said than gets done.”

Data as of 12/2/11	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	7.4%	-1.1%	1.6%	13.6%	-2.5%	1.0%
DJ Global ex US (Foreign Stocks)	8.7	-14.4	-10.9	13.6	-4.2	4.9
10-year Treasury Note (Yield Only)	2.0	N/A	3.0	2.7	4.4	4.7
Gold (per ounce)	3.5	23.9	25.8	30.8	22.0	20.3
DJ-UBS Commodity Index	3.2	-9.9	-3.6	7.9	-3.1	4.9
DJ Equity All REIT TR Index	6.1	1.8	4.0	28.6	-3.0	9.9

Notes: S&P 500, DJ Global ex US, 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.

WHO WANTS TO BE A BILLIONAIRE? Ever wonder how billionaires got to that level? Here are 10 success tips shared by four billionaires on a recent episode of the news show “20/20:”

1. Figure out what you're so passionate about that you'd be happy doing it for 10 years, even if you never made any money from it. That's what you should be doing.

2. Always be true to yourself.

3. Figure out what your values are and live by them, in business and in life.

4. Rather than focus on work-life separation, focus on work-life integration.

5. Don't network. Focus on building real relationships and friendships where the relationship itself is its own reward, instead of trying to get something out of the relationship to benefit your business or yourself.

6. Remember to maximize for happiness, not money or status.

7. Get ready for rejection.

8. Success unshared is failure. Give back -- share your wealth.

9. The truth is cold and hard, but it's the first point on the path to hope and salvation.

10. Successful people do all the things unsuccessful people don't want to do.

Even if you’re not focused on becoming a billionaire, these are some pretty good tips to live by. Which ones resonate with you?

Weekly Focus – Fun With Math

It’s been said that compound interest is the eighth wonder of the world. Compound interest simply means that you get “interest on your interest” instead of just interest on your original principal. Here are a couple math questions that display the power of compounding.

A typical piece of copy paper is 0.004 inches thick. If you were able to fold this piece of paper in half everyday for 10 days (i.e., double the thickness each day), how thick would your paper be after 10 days?

Taking this a step further, how many times would you have to fold your paper in half in order for your piece of paper to be as thick as the average distance between the earth and the moon? Here’s a hint: the average distance between the earth and moon is 238,857 miles.

Are you ready for the answers? After 10 days, your paper would be 4.1 inches thick. And, to reach the moon, you’d have to fold your paper in half each day for just 42 days. Surprised?

The power of compounding also makes a good case for reinvesting your dividends so you can get a “return on your return.”

Best regards,

Jeff Sorensen

P.S. Please feel free 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.

Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Sorensen Wealth Management (SWM). SWM is a Registerred Investment Advisor and is not affiliated with Triad Advisors.

* 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.

Weekly Market Commentary

2011-11-28T13:49:00.000-08:00

The Markets

“It’s a small world after all.”

Living in an age of jet travel, the internet and mobile communication have its advantages. It makes our world of 7 billion people seem a bit smaller since we’re just one plane ride or “one boot of the computer” away from connecting with anyone in the world.

But, along with the good comes the bad.

Worldwide interconnectedness not only connects us socially, it also connects us economically. What happens in China, for example, doesn’t necessarily stay in China. A collapse of their real estate market or a revolt against the government could have repercussions around the world.

A bit closer to home, the sovereign debt problems in Europe are helping keep a lid on stock prices in the U.S., according to MarketWatch. As the debt problem spreads from the peripheral euro-zone countries to the core in Germany -- which had a failed bond auction last week -- the U.S. is caught in the cross fire.

What’s disappointing about being joined at the hip with Europe is that the U.S. economy is actually performing okay. Consider these positive points:

· Our trade deficit declined for the third month in September, thanks to rising exports.

· Industrial production rose strongly in October.

· Residential building improvements are touching record highs.

· October car sales hit the highest level since February.

· Consumer sentiment in November rose to the highest level since June, according to data from the University of Michigan and Thomson Reuters.

· Personal income in October showed the largest increase since March.

· Black Friday sales rose sharply from a year ago.

Sources: Economist; MarketWatch

Granted, these improvements are coming off a low base and are so fragile that the modest recovery in the U.S. could get derailed if the euro-zone situation continues to deteriorate. Our small world is now focused on Europe and whether it can pull out of its debt debacle. Time to do so is running out for our friends across the pond.

Data as of 11/25/11	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-4.7%	-7.9%	-2.6%	10.6%	-3.5%	0.0%
DJ Global ex US (Foreign Stocks)	-5.7	-21.2	-17.5	9.7	-5.3	3.8
10-year Treasury Note (Yield Only)	2.0	N/A	2.9	3.1	4.5	5.0
Gold (per ounce)	-1.8	19.7	23.0	27.2	21.5	20.0
DJ-UBS Commodity Index	-2.2	-12.7	-3.2	5.4	-3.8	4.7
DJ Equity All REIT TR Index	-5.7	-4.0	-0.2	23.4	-3.5	9.2

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.

DOES IT MAKE SENSE to invest outside of the United States? The concept of diversification suggests that you own a diverse group of investments that have uncorrelated return characteristics. One of these diverse groups of investments could include non-U.S. stocks. That might make sense because, as the following chart shows, the U.S. stock market captures less than one-third of worldwide stock market value based on market capitalization.

% of World Equity Market Capitalization
Country	5 Years Ago	Mid August 2011	5-Year Change
1. U.S.	36.05%	29.14%	-6.91%
2. China	1.36	7.87	6.52
3. Japan	10.93	7.73	-3.20
4. UK	7.76	6.43	-1.33
5. Hong Kong	2.98	4.88	1.90
6. Canada	3.25	4.20	0.96
7. France	4.95	3.33	-1.62
8. Germany	3.35	2.80	-0.55
9. India	1.43	2.77	1.35
10. Brazil	1.34	2.72	1.37

Source: Bespoke Investment Group, August 22, 2011; New Forces in the World Economy

by Brad Roberts

The above chart shows some interesting trends:

· The U.S. is still, by far, the largest market in the world, but it has declined substantially in the past five years.

China

has catapulted to second place with dramatic growth in the past five years.

Japan

, UK, France, and Germany join the U.S. as developed countries that have lost ground over the past five years.

· Emerging countries such as Hong Kong, India, and Brazil have shown strong relative growth.

· Although not shown on the chart, back in the late 1980s, Japan’s stock market represented 45 percent of world equity market capitalization. Now, it’s less than 8 percent due to a 20-year bear market.

As the world turns from developed countries to emerging ones, we are keeping our eyes open and our pencils sharpened for the investment opportunities that might arise beyond our borders.

Weekly Focus – Think About It

“We live in a wonderful world that is full of beauty, charm and adventure. There is no end to the adventures we can have if only we seek them with our eyes open.”

--Jawaharial Nehru, First prime minister of independent India

Best regards,

Jeff Sorensen

Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Sorensen Wealth Management (SWM). SWM is a Registered Investment Advisor and is not affiliated with Triad Advisors.

* 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.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* 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.

Grandma's Secret Yam Recipe

2011-11-22T13:06:00.000-08:00

This secret yam recipe has been passed on for generations in my family and now I would like to share it with you! If you are like me, yams at Thanksgiving doesn’t sound very good. However, once you try my grandma’s secret yams, you may never go back to the same old boring way that you have prepared them before.

Forget tradition! Surprise your family and start a new one with the secret yam recipe I am going to share with you!

This recipe came over on the Mayflower and very possibly could have been part of the first Thanksgiving dinner!

Have a wonderful Thanksgiving and make sure to give thanks and have gratitude in your heart for this great country we live in, the wonderful family that surrounds your table and the little things that make it all worthwhile.

Grandma’s Yams

4-5 yams

1 cube butter

2 cups brown sugar

2 Tablespoons Light corn Syrup

2-3 Tablespoons Heavy Whipping Cream

Boil yams with the skins on until tender (be careful not to overcook). Remove from boiling water when done and let cool. Remove skin and slice yams about ½ inch thick. Set aside.

In a large saucepan, melt butter and then add sugar and light corn syrup. Over medium heat and stirring continuously, bring the mixture to a rapid boil. Let it boil for a few minutes, being careful not to burn. Then add the whipping cream and mix well.

Add the sliced yams into the large saucepan with the candied mixture, coat well and heat through. Place on plate and serve. It’s best to use a spatula to transfer to the plate so the yams don’t break apart.

Enjoy!

Weekly Market Commentary 11-21-11

2011-11-21T13:18:00.000-08:00

The Markets

“Printing money is really just a softer method of default, because it effectively converts the meaning of default from ‘getting less than 100% of the currency you were owed’ to ‘getting all the currency you were owed, but ending up with less than 100 percent of the purchasing power you expected.’”

--John Hussman

They say money doesn’t grow on trees, but, for some governments, it metaphorically does. Earlier this year, the U.S. Federal Reserve completed a $600 billion “quantitative easing” program, which is a fancy way of saying “money printing,” according to Forbes. Similarly, the Bank of England recently announced an additional 75 billion pound sterling quantitative easing program on top of an earlier 200 billion program, according to The Wall Street Journal.

These programs are designed to help reduce long-term interest rates and boost the economy. Critics say they may lead to hyperinflation.

Now, some folks are saying a similar money printing program is the only way to solve the eurozone debt crisis.

As the sovereign debt crisis spreads in Europe, government bond interest rates are rising above what’s considered a sustainable level. Rates are rising because bond buyers are scarce; they’re concerned that certain governments may default on their payments so they demand a higher rate to compensate for the risk of default.

If demand for government bonds drops too much, then some countries may have to default because they won’t have enough money to pay their bills. That’s where the European Central Bank (ECB) may have to step in.

The ECB is the central bank for 11 national central banks, each serving its own country. Those 11 national central banks are the original members of the Eurozone, according to CNBC.

As a highly respected organization, the ECB could step in and say it will back its member countries’ debt and buy that debt in unlimited quantities to keep interest rates down. If it did, then the current crisis would likely abate (at least temporarily) and give the troubled countries some breathing room to implement reforms and restart economic growth, according to Reuters.

So far, though, the ECB has declined to make such a statement for several reasons:

1. It might undermine its independence from politics and its price stability mandate.

2. It could push up eurozone inflation.

3. It would reduce pressure on wayward countries to cut spending and implement growth-boosting structural overhauls.

Sources: Reuters, The Wall Street Journal

In short, it’s “politics as usual” in Europe. Meanwhile, as Europe fiddles, the markets remain unsettled.

Data as of 11/18/11	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-3.8%	-3.3%	1.3%	12.3%	-2.8%	0.5%
DJ Global ex US (Foreign Stocks)	-3.9	-16.5	-13.8	12.0	-4.0	4.4
10-year Treasury Note (Yield Only)	2.0	N/A	2.9	3.5	4.6	4.8
Gold (per ounce)	-3.0	21.9	27.3	32.6	22.4	20.2
DJ-UBS Commodity Index	-2.7	-10.8	-1.1	5.8	-2.9	4.9
DJ Equity All REIT TR Index	-3.2	1.8	7.6	27.0	-2.3	9.9

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.

HERE ARE A FEW QUOTES from top investors that are worth pondering:

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”

--Warren Buffett

“In investing, what is comfortable is rarely profitable.”

--Robert Arnott

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”

--Sir John Templeton

“Your success in investing will depend in part on your character and guts, and in part on your ability to realize at the height of the ebullience and the depth of despair alike that this too shall pass.”

--John Bogle

“You make most of your money in a bear market, you just don’t realize it at the time.”

--Shelby Cullom Davis

“To achieve long-term success over many financial market and economic cycles, observing a few rules is not enough. Too many things change too quickly in the investment world for that approach to succeed. It is necessary instead to understand the rationale behind the rules in order to appreciate why they work when they do and don't when they don't.”

--Seth Klarman

Weekly Focus – Think About It

“It is one of the paradoxes of success that the things and ways that got you there are seldom those that keep you there.”

--Charles Handy, Irish author/philosopher

Best regards,

Jeff Sorensen

* 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.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* 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.

Weekly Market Commentary

2011-11-14T15:28:00.000-08:00

The Markets

Greece

and Italy just dumped their political leaders and are hoping that new leadership will calm the financial markets and drive important structural reform.

One of the insightful bits of investing wisdom is that you don’t have to recoup a loss using the same investment that caused the loss. In other words, it’s okay to sell a loser and redeploy the money in another investment that may have a better chance of going up in value. That seems to be what Greece and Italy are doing with their leadership change.

Greece

is now counting on Lucas Papademos and Italy is counting on Mario Monti to lead their countries out of their debt mess.

If these guys take swift action and gain credibility, it could help the markets. As Barron’s pointed out this past weekend, “In the absence of new and nasty headlines or evidence of acute market stress, the default mode of stocks – at least for now – is to hang firm or to climb a bit.”

As of last Friday, the S&P 500 index turned positive on a year-to-date basis. We’ll have to wait and see if political change in Europe is enough to kick start the markets.

Data as of 11/11/11	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	0.9%	0.5%	5.4%	12.0%	-1.8%	1.2%
DJ Global ex US (Foreign Stocks)	-0.8	-13.1	-11.5	11.1	-3.3	5.2
10-year Treasury Note (Yield Only)	2.1	N/A	2.7	3.8	4.6	4.3
Gold (per ounce)	1.4	25.7	26.8	34.2	23.3	20.3
DJ-UBS Commodity Index	-0.4	-8.3	-3.1	5.8	-2.3	5.1
DJ Equity All REIT TR Index	-0.6	5.1	7.1	23.0	-0.7	10.5

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.

RIP VAN WINKLE SLEPT FOR 20 YEARS AND AWOKE TO DISCOVER that his world had changed dramatically. The U.S. stock market has been “asleep” for about 13 years now and in another seven, we may find our world is much different, too.

In the nearly 13 years between January 11, 1999 and last Friday, the S&P 500 index rose as high as 1,565 and dropped as low as 676. During that volatile period, we witnessed numerous impactful events including the following:

· The bursting of the dot-com bubble

· The rise of the euro

· 9/11

· The war on terrorism

· The rise and fall of the real estate bubble

· The spectacular rise of the price of gold

· The Southeast Asia tsunami and the Japan tsunami

· The rise of social media

· The Great Recession

· The sovereign debt crisis

Yet, with all those world events and the tremendous moves in the S&P 500 – both up and down – during those nearly 13 years, guess how much the S&P 500 price changed between January 11, 1999 and last Friday?

Exactly zero!

That’s right. The S&P 500 closed at 1,263 on January 11, 1999 and at 1,263 last Friday, according to data from Yahoo! Finance.

Does this mean you should never invest in the stock market because it’s been flat for so long? No. Here are five things to understand from this long market malaise:

1. Dividends matter. While there was no price change between these two time periods, reinvesting dividends or owning investments that pay dividends may have generated a positive return.

2. Diversification matters. The S&P 500 was flat, but some other asset classes did fine over the past 13 years, so it’s important to search far and wide for investment opportunities.

3. Perspective matters. It’s easy to get caught up in the large day-to-day swings in the market, but understanding the broader trend or context of the market is important to help prevent day-to-day volatility from causing you to make bad investment decisions.

4. Patience matters. As long-term investors, we’re more like the tortoise than the hare. Short-term, rapid traders create a lot of noise and may lead the pack from time-to-time, but we’re focused on winning at the end, not at each checkpoint.

5. Valuation matters. The bubble-like values placed on some companies in the late 1990s were so out of whack with normalcy that it’s taken the market many years to work off those excesses. So, while patience is important, it’s also necessary to understand that valuation at the time you make your investment could have a major impact on how long it takes to get a return on your investment.

Nobody knows if the market will remain “asleep” for another seven years to match Mr. Van Winkle. Regardless, the world will be different and we’ll keep searching for ways to help you reach your destination without nightmares.

Weekly Focus – Think About It

“Rip Van Winkle, however, was one of those happy mortals, of foolish, well-oiled dispositions, who take the world easy, eat white bread or brown, which ever can be got with the least thought or trouble, and would rather starve on a penny than work for a pound.”

--Excerpt from Rip Van Winkle by Washington Irving

Best regards,

Jeff Sorensen

* 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.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* 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.

Embrace Change or Change Will Embrace You

2011-11-07T17:22:00.000-08:00

I have a good friend that reminds me to make a conscious effort to change and anticipate change because change is going to happen whether I like it or not.

This is great advice and when I have paid attention and applied this strategy, the long-term benefits have far outweighed the inevitable short-term pain. Change is not always easy to do; we all get comfortable with many aspects of our lives because of our need for certainty.

Our need for certainty can make change almost impossible to implement because of the fear of not knowing what will happen next. This is unsettling for many of us.

Our team and some of our clients recently took the time to go to the L.A. Midnight Mission and serve lunch to the homeless. Before lunch, we took a tour of the facility and learned more about the history of the mission as well as those who benefit from their services. What I thought was both sad and fascinating, was that some of the homeless have been using the services of the Mission for many years. We were informed that some of the best social services in the State were within a few blocks and there was the option of free health care, dental, food, etc. Once the basics of life are met for some, the possibilities of what they can become in life become dwarfed by the need to be certain that they will never go without these necessities. This is just a basic need for survival but the point is for some of them, they could change and be self-sufficient if they wanted to. There would be some pain, uncertainty and growth, but the long-term benefits to their self confidence and to society in general would be monumental.

What needs to change in our lives? How can we become better at anticipating changes that will happen? How can we enjoy the process of changing and make change a part of who we are?

All the change that is going on in the world is causing uncertainty in the markets. This is the short-term pain that we are experiencing by excess volatility. This is centered in Europe for now, but are Europe’s problems our future problems?

I want to remind you that we have an investment process that is all about change. We are not Bullish or Bearish; we are realistic to what is actually going on. When the trends change, we change. It is an unemotional, mathematically calculated process that drives our decisions. Our Mantra is “Process Over Attitude and Opinion.”

Change is here to stay and we will do everything we can to embrace and anticipate how that will affect your money!

Weekly Market Commentary

2011-11-07T17:12:00.000-08:00

The Markets

This Europe problem just won’t go away and it’s keeping the financial markets on edge.

Despite an October 27 agreement that strengthened the bailout of Greece, the “Greek Tragedy” continues as the country’s government is a mess, Prime Minister George Papandreou is reportedly stepping down and the populace is protesting. And, with each day of delay, Greece is running out of money and European leaders are running out of patience.

Meanwhile, across the Ionian Sea from Greece, Italy is quickly becoming the next problem. Its 10-year government bond yield rose to a euro-era record of 6.4 percent last Friday. The Wall Street Journal says, “The 6% mark on the 10-year bond is seen as crucial because a breach of that level in the past has portended a sharp rise in bond yields of other fiscally frail countries.”

When bond yields rise dramatically, it increases a country’s borrowing costs and suggests investors are losing faith in that country’s ability to pay its bills.

Even though Greece is grabbing most of the headlines, Italy is much more crucial to world markets than Greece because Italy’s government bond market is the third largest in the eurozone behind Germany and France. If Italy goes the way of Greece, that would elevate the European crisis to a whole new level.

Ultimately, there’s just too much debt in the worldwide monetary system. Until it gets cut to a manageable level, the markets may behave erratically.

Data as of 11/4/11	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-2.5%	-0.4%	2.2%	7.6%	-1.9%	1.3%
DJ Global ex US (Foreign Stocks)	-4.7	-12.4	-12.1	8.1	-3.1	5.5
10-year Treasury Note (Yield Only)	2.1	N/A	2.5	3.8	4.7	4.3
Gold (per ounce)	0.5	24.0	26.7	33.1	22.8	20.2
DJ-UBS Commodity Index	-0.9	-8.0	-1.8	2.8	-2.6	5.3
DJ Equity All REIT TR Index	-2.0	5.7	4.3	15.1	-0.6	10.7

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.

ONE OF THE CORE BELIEFS OF MODERN INVESTING TURNED OUT TO BE not so true. Investors have long believed in “stocks for the long run” and that stocks outperform bonds over a long period of time. Well, we need to re-evaluate that old truism.

New data shows that for the 30 years ending September 30, 2011, long-term government bonds outperformed stocks. During that period, bonds rose by 11.5 percent a year on average, beating the 10.8 percent increase in the S&P 500, according to Jim Bianco, president of Bianco Research in Chicago, as reported by Bloomberg. That’s the first time bonds beat stocks over a 30-year period since the Civil War!

Here’s some long-term historical data on how stocks and bonds have performed relative to each other:

Period	# of Years	Winner
1803 – 1857	54	Bonds
1803 – 1871	68	Tie
1857 – 1929	72	Stocks
1929 – 1949	20	Bonds
1932 – 2000	68	Stocks
1981 – 2011	30	Bonds

Sources: Bloomberg, October 31, 2011; Index Universe; Ibbotson SBBI

Is this an argument for dumping stocks and just owning bonds? No. The recent outperformance of bonds over stocks was partially a function of the starting point and the “lost decade” for stocks. Specifically, in 1981, long-term government bonds yielded in the 13 to 15 percent range while, last Friday, the yield was down to 3.1 percent, according to data from Yahoo! Finance. As the yield drops, the price of the bond rises, thus, giving investors a capital gain on top of the interest return.

With yields so low now, you won’t get the same capital gain boost from bonds that we experienced over the past 30 years. In fact, Professor Jeremy Siegel, author of Stocks for the Long Run, says, “It’s absolutely mathematically impossible for bonds to get any kind of returns like this going forward.”

Bonds also benefitted from the “lost decade” in stocks as stocks experienced two bear markets in the past 11 years.

This historical data does two things for us:

1. It suggests that there are no “absolutes” when it comes to investing, except, perhaps, that there are no absolutes. Key takeaway – be flexible.

2. It suggests that there is a time and a place for each asset class and placing each asset class within historical context is important. Key takeaway – know history.

Oh, we should add a third key takeaway from this data – be a continuous learner!

Weekly Focus – Think About It

“I'm interested in the way in which the past affects the present and I think that if we understand a good deal more about history, we automatically understand a great more about contemporary life.” --Toni Morrison, Nobel Prize and Pulitzer Prize-winning American novelist, editor, and professor

Best regards,

Jeff Sorensen

* 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.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* 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.

Weekly Market Commentary

2011-10-31T13:20:00.000-07:00

The Markets

After 14 summits in 21 months, have European leaders finally solved their sovereign debt problem? Judging by the stock market’s reaction, you might think the answer is yes.

In marathon sessions last week, European leaders agreed on a new, three-point deal to stave off a deeper debt crisis. The deal includes:

1) A commitment by banks and other private bondholders to accept a voluntary 50% writedown on Greek government debt.

2) A boost in the lending power of the euro-zone bailout fund.

3) A 106 billion euro ($148 billion) recapitalization of European banks.

Source: MarketWatch

Even though details were still a bit sketchy, investors threw caution to the wind and bid up stock prices. U.S. stock prices rose 3.8 percent last week and 14 percent for the month with just one trading day left, according to Bloomberg.

With Europe’s debt crisis tempered for the moment, attention now turns to the U.S. On the positive side, the U.S. economy grew at a 2.5 percent clip in the third quarter, which was the fastest pace in a year. In addition, third-quarter earnings are still coming in strong as about 75 percent of the companies reporting so far have beaten expectations, according to Bloomberg.

Looming on the horizon, the congressional supercommittee has about one month left before making its recommendations on how to cut at least $1.2 trillion from the federal budget. If the supercommittee fails, then across the board budget cuts of a like amount would ensue.

As of last week, investors were happy to breathe a sigh of relief that Europe seems to have dodged a disaster (at least for now) and the U.S. economy still has some life.

Data as of 10/28/11	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	3.8%	2.2%	8.6%	11.0%	-1.4%	1.8%
DJ Global ex US (Foreign Stocks)	6.9	-8.1	-4.3	16.7	-1.9	5.8
10-year Treasury Note (Yield Only)	2.3	N/A	2.7	3.8	4.7	4.5
Gold (per ounce)	6.0	23.5	30.6	33.6	23.4	20.1
DJ-UBS Commodity Index	4.1	-7.1	2.7	5.6	-2.0	5.2
DJ Equity All REIT TR Index	6.5	7.9	10.9	19.3	-0.8	11.1

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.

THE WEATHER AND THE STOCK MARKET HAVE A LOT IN COMMON – they’re both very unpredictable! This past weekend, the Northeast got walloped by a surprisingly strong snowstorm that dumped as much as two feet of snow in parts of Massachusetts. Central Park in New York City even set an October record with 1.3 inches of snow. And, this all happened before Halloween!

Likewise, the stock market has a habit of surprising investors with its ability to rise or fall dramatically in short periods of time. For example, remember the “Flash Crash?” On May 6, 2010, the U.S. stock market plunged for no apparent reason and briefly erased $862 billion from stock values in less than 20 minutes, according to Bloomberg. It then quickly rebounded.

As it relates to weather, we always know what season we’re in. One look at the calendar tells us whether its winter, spring, summer, or fall. And, depending on where you live, you have a pretty good idea – based on history – of what to expect for each day’s temperature. But, just like the Northeast experienced, you can have an “out of season” experience that messes up your best-laid plans.

The stock market doesn’t have four seasons, but it does have bull and bear markets, which are further divided into secular and cyclical. Market analysts have some general criteria that they use to categorize the markets into these buckets. Yet, like the weather, you could be in a bull market, but still have a nasty market drop that temporarily derails the path of the bull.

Bottom line, just like weather forecasters, market analysts may have a sense for general conditions in the market, but surprises still happen.

Weekly Focus – Think About It

“Sunshine is delicious, rain is refreshing, wind braces us up, snow is exhilarating; there is really no such thing as bad weather, only different kinds of good weather.”

--John Ruskin, leading English art critic of the Victorian era

Best regards,

Jeff Sorensen

* 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.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* 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.

Weekly Market Commentary

2011-10-25T14:24:00.000-07:00

The Markets

“Good news is good and bad news is bad, but a lack of bad news can be good, at least for investors,” so wrote Vito Racanelli in the current issue of Barron’s.

Since the recent October 3 low, the S&P 500 index has risen 12.6 percent on the back of “a lack of bad news,” according to data from Yahoo! Finance.

Here’s what we could classify as a lack of bad news in the past few weeks:

· Corporate earnings are coming in okay so far this quarter as 75 percent of the 118 companies that reported earnings have beaten estimates, according to financial data provider FactSet.

· Economic news has generally supported the idea that the economy, while soft, is not collapsing.

· European leaders, after months of tough talk, but little action, may finally be on the verge of taking “comprehensive” action to quell (at least temporarily) the sovereign debt crisis, according to Phil Orlando, chief equity market strategist at Federated Investors.

Whether this “lack of bad news” turns into good news or bad news going forward, remains to be seen. Either way, we’ll work hard to profit from it.

Data as of 10/21/11	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	1.1%	-1.5%	4.7%	9.0%	-2.1%	1.3%
DJ Global ex US (Foreign Stocks)	-0.3	-14.0	-11.1	8.1	-3.1	5.3
10-year Treasury Note (Yield Only)	2.2	N/A	2.5	3.7	4.8	4.6
Gold (per ounce)	-2.1	16.5	22.3	28.6	23.0	19.5
DJ-UBS Commodity Index	-2.2	-10.7	0.3	2.0	-2.7	4.8
DJ Equity All REIT TR Index	3.6	1.4	2.3	14.6	-1.8	10.4

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.

THE WORLD’S POPULATION IS EXPECTED TO HIT 7 BILLION on October 31, according to the United Nations’ population division. That’s up from 2.5 billion in 1950. To put 7 billion people in perspective, see if you can correctly answer the following question.

If 7 billion people stood shoulder to shoulder, which of the following geographic areas is the smallest that could accommodate them?

A) Zanzibar (about 650 square miles)

B) Maui (about 727 square miles)

C) Rhode Island (about 1,033 square miles)

D) Sicily (about 9,925 square miles)

Cuba

(about 42,845 square miles)

New Zealand

(about 103,733 square miles)

The answer… in a moment.

Here are some interesting facts regarding the rate of growth of the world’s population.

It took…

· 250,000 years for the world to reach a population of 1 billion (hit in 1804)

· 123 years for the next billion (2 billion in 1927)

· 33 years to reach the next billion (3 billion in 1960)

· 14 years to reach the next billion (4 billion in 1974)

· 13 years to reach the next billion (5 billion in 1987)

· 12 years to reach the next billion (6 billion in 1999)

Sources: The Economist; United Nations World Population Prospects: The 2000 Revision, Volume III: Analytical Report

And, the growth continues… we’re projected to hit 9.3 billion by 2050.

For decades, experts have argued over whether or not our planet can handle this growth. What is not up for debate, though, is the fact that a growing population will affect the demand for goods and services. Food, of course, is high on the list.

The World Bank says, “Between 2005 and 2055 agricultural productivity will have to increase by two-thirds to keep pace with rising population and changing diets.” Okay, this is interesting, but why should we pay attention to this type of information?

As financial advisors, we want to monitor trends that could impact the demand for goods and services, which, in turn, may suggest areas ripe (no pun intended!) for investment. By keeping a finger on the pulse of long-term trends -- like the rising world population -- we might get an early read on investment opportunities.

Getting back to the population/geography question, The Economist says the answer is A) Zanzibar. Does that surprise you?

Weekly Focus – Think About It

“The investor of today does not profit from yesterday's growth.” --Warren Buffett

Best regards,

Jeff Sorensen

Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Sorensen Wealth Management (SWM). SWM not affiliated with Triad Advisors.

* 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.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* 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.