September 30th marked the end of the third quarter, a 3-month period rocked by 11th hour lawmaker dissention, the Standard & Poor’s® US rating downgrade, rising fear over the European debt crisis, and volatile markets that were up one week and down the next.
Bad news last Friday revealed that Americans’ incomes decreased in the month of August for the first time in nearly two years, at a reduction of 0.1%. The personal savings rate also decreased to 4.5% – its lowest level since December 2009.
(CLICK HERE for the full August Personal Income and Outlays Report, Bureau of Economic Analysis, September 30, 2011.)
Jeremy Siegel, a finance professor at Wharton, takes an optimistic view of the negative news. “When everyone has become optimistic or pessimistic, then you know you have reached a top or a bottom. The prevailing opinion is always wrong.” He believes that stocks are the most attractive investment out there based on valuations, noting that there is downside protection knowing that you’re not buying at an inflated price.
(CLICK HERE to read the full article, Does ‘Stocks for the Long Run’ Still Work? at Wharton Today, September 28, 2011)
These days it seems like the hottest discussion no longer centers on national debt, real estate values or even the rollercoaster stock market – it’s all about jobs. On September 8, President Obama proposed his Americans Jobs Act, which includes reducing payroll taxes by 50% (to 3.1%) for small businesses for the first $5 million in wages and providing up to $4,000 in tax credits to businesses that hire workers who’ve been unemployed for six months.
In addition, the SBA recently announced the administration has helped secure commitments from 13 private lenders and large banks to increase lending for small businesses by a combined $20 billion over the next three years.
(CLICK HERE to view a video announcement of $20 billion commitment to small business, White House, September 22, 2011)
Most economists seem to agree that the job market can only be saved by the small business sector, historically responsible for creating three-quarters of new jobs each year. In fact Charles Schwab recently took pen to paper in an editorial published at in the Wall Street Journal to talk about his experience founding the fledgling brokerage firm back in 1974, when unemployment and inflation were high but the economy and consumer confidence similarly weak.
“We can spark an economic recovery by unleashing the job-creating power of business, especially small entrepreneurial businesses, which fuel economic and job growth quickly and efficiently,” Schwab writes, noting, “Indeed, it is the only way to pull ourselves out of this economic funk.”
(CLICK HERE to read Schwab’s article at the Wall Street Journal, September 28, 2011.)
What does this mean for investor portfolios? One might consider that investing for your future truly means investing in America – via established and start-up companies. And if you’re seeking growth and willing to accept the risk, note that the Dow Jones U.S. Venture Capital Index reports that the market value of venture capital-financed companies rose 10.1% in 2011’s first quarter.
(CLICK HERE to read performance press release from Dow Jones Indexes, September 20, 2011.)
Please contact us today if you’d like to discuss positioning your portfolio with new growth alternatives for the future!