July 25, 2016

The Markets


Like a cool breeze on a hot day, the post-Brexit market rally has soothed investors.


The CBOE Volatility Index (VIX), also known as the fear gauge, fell significantly during the past few weeks, according to CNBC.com. The VIX measures investors’ concerns about future volatility. The lower the Index is; the calmer investors are about the future. In late June, the VIX rose as high as 25.76. Last week, it hovered around 12.


Barron’s reported the latest advisory sentiment readings from Investors Intelligence showed bullishness at 54.4 percent, up two percentage points from last week. That’s the highest reading since April 2015 (just before the S&P 500 hit its previous record).


The relative serenity of investors has been good for markets. By the middle of last week, the Dow Jones Industrial Average (Dow) and the Standard & Poor’s 500 Index (S&P 500) were at record highs. Not everyone is convinced investor positivity is a good sign, however. Barron’s explained:


“After nearly two years of sideways trading, albeit with some large swings, the indexes finally gave what should be an important buy signal. But is it really? ...I am not talking about the simple divergence between price and volume during the June-July rally, although that certainly does not help the bulls. Nor am I considering the seasonal cycle, which teaches us to ‘Sell in May’ and sit out the usually weaker summer months. And I am not talking about any news from politics to Brexit to terrorism…What really bothers me is the lack of dissent in the bullish chorus.”


Contrarians, investors who use popular opinion as a gauge of what not to do, may find themselves leaning toward pessimism.


OUR INVESTMENT STRATEGIES HAVE CHANGED SLIGHTLY.  After the “Brexit” concerns faded (there still could be some future issues to consider) we added to stocks in most of our models.  The stock market seems “tired” and the recent rally is on very low volume with very few stocks reaching 52 week highs which is a concern.  The market is notorious for reacting too much to news issues both on the upside and downside.  We remain focused on flexible stock and bond managers who have a proven track-record as well as alternative investments that don’t focus on the traditional markets. 


Fake charities are on the list. Groups masquerading as charitable organizations to solicit donations from generous-minded individuals are among the twelve cons named in the Internal Revenue Service’s (IRS) ‘Dirty Dozen,’ a list of common scams targeting taxpayers.


Americans tend to be a generous bunch. During 2015, they gave more than $373 billion to charities, setting a record for the second year in a row, according to GivingUSA.org. People gave to all sorts of organizations including:


  • Religion ($119.30 billion)
  • Education ($57.48 billion)
  • Human Services ($45.21 billion)
  • Foundations ($42.26 billion)
  • Health ($29.81 billion)
  • Public-Society Benefit ($26.95 billion)
  • Arts/Culture/Humanities ($17.07 billion)
  • International Affairs ($15.75 billion)
  • Environment/Animals ($10.68 billion)


Millions more may have gone to groups pretending to be charities.  The IRS offered some recommendations for avoiding scams. Before you give, get the exact name of the charity. Many fake charities use names that sound similar to those of legitimate charities.


Also, request the charity’s employer identification number and use the IRS’s Exempt Organizations Select Check search tool to review the organization’s tax status and filings. (While you’re at it, you may want to review how much the charity spends on fundraising versus programs to confirm it is spending donations judiciously.)


Once you’ve done your homework, don’t give cash. Making your donation by check or credit card provides a record for tax purposes and is more secure.


Finally, no matter how kind a charity’s representative seems on the phone or in person, do not give him or her personal financial information or other important identification data, like your Social Security number.


Weekly Focus – Think About It


“You are never too old to set another goal or to dream a new dream.”

-- C. S. Lewis, British novelist


Best regards,


The GPS Team


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[1] http://www.cnbc.com/2016/07/19/no-fear-heres-why-the-vix-has-cratered.html or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-25-16_No+fear_+Here%E2%80%99s+why+the+VIX+has+cratered.pdf

[2] http://www.cboe.com/micro/vix/historical.aspx  (For June index readings choose Historical Daily Prices – Spreadsheet with Closing Prices for Several Indexes) or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-25-16_VIX_Historical_Price_Data_CBOE.pdf

[3] http://www.barrons.com/articles/as-investors-sing-a-happy-tune-smart-money-wonders-if-its-time-to-sell-stocks-1469120253  

[4] http://www.barrons.com/articles/3-reasons-to-worry-that-stock-rallys-end-is-near-1469050014

[5] https://www.irs.gov/uac/Newsroom/Fake-Charities-Are-a-Problem-and-on-the-IRS-Dirty-Dozen-List-of-Tax-Scams-for-2016-1 or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-25-16_Fake_Charities_Are_a_Problem_and_on_the_IRS_%E2%80%9CDirty_Dozen%E2%80%9D_List_of_Tax_Scams_for_2016.pdf

[6] http://givingusa.org/giving-usa-2016/ or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-25-16_Giving_USA_2015_Was_America%E2%80%99s_Most_Generous_Year_Ever_Giving_USA.pdf

[7] http://www.consumerreports.org/charitable-donations/best-and-worst-charities-for-your-donations/ or go https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-25-16_Best_and_Worst_Charities_for_Your_Donations_Consumer_Reports.pdf

[8] http://www.brainyquote.com/quotes/quotes/c/cslewis119176.html?src=t_motivational or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-25-16_You_are_never_too_old_to_set_another_goal_or_to_dream_a_new_dream_CS_+Lewis.pdf



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