Total Returns %

1 Week

YTD

Dow Jones Industrial Average

+3.05%

+5.55%

NASDAQ Composite

+3.76%

+3.40%

S&P 500 Index

+2.70%

+4.47%

Russell 2000

+3.67%

+5.13%

U.S. Aggregate Bond Index

-0.63%

-0.47%

MSCI All Country World

+2.53%

+2.05%

Source: Yahoo! Finance.  Data through 3-25-11

Global markets enjoyed a bounce-back week after a couple ugly weeks.  However, extra vigilance must be top-of-mind for investors as the list of worries (which all have possibly potent impacts) are growing.  It is one thing to have the Middle East boiling; it is quite another to have it in the midst of the troubles in Japan, the debt problems in Europe coming back, and what looks like a slowdown in the US economy ahead.  This past week, troubling news from the housing industry told of new home purchases declining in February to the slowest pace on record, and prices dropped to the lowest level since 2003.  In addition, consumer confidence in the US has fallen to November 2009 levels.

Here are few things everyone can agree on right now:

  • The US, Europe, and Japan have all been printing unprecedented amounts of money, which comes with consequences like rising prices and devalued currencies. 
  • The record levels of debt that the US, Europe, and Japan are carrying.
  • The three wars the US is involved in are not free. 
  • The states in the US are under extraordinary fiscal pressure. 

For some time, we in the US have been told that inflation (as defined by the government as rising prices) is under control.  The reality is prices are rising.  Milk, coffee, oil, metals, soybeans, cotton are all rising drastically.  Keep in mind also that the price of a product at the register does not have to rise to have rising prices.  For example, the dent in the bottom of a Skippy peanut butter jar has gotten deeper, but the price stays the same.  The quality of a North Face cotton shirt has declined, but the price remains the same. 

To drive the point home a little further, take a look at how stocks have fared over the last few years.  Many people are feeling flush as the media tells us that the market has gained back all its losses since the implosion of 2008.  Is that really true?  No.  Remember that the S&P 500 is priced in dollars – devalued dollars.  So, let’s look at the S&P 500 priced in gold over the last three years.  The chart below is the value of the S&P 500 priced in gold.  Not so rosy is it?  

It is at this point that investors must take notice and adjust for a severely weakened US dollar and inflation because it is clear that the leaders of this country are not stepping up to stop these events. 

Would you like an analysis of your current investment portfolio?  Call me to schedule your free consultation- 913.693.7918.

John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals.  For more information, visit https://www.chladekwealth.com.

All written content on this site is for information purposes only.  Opinions expressed herein are solely those of John P. Chladek, MBA, CFP®, President, Chladek Wealth Management, LLC.  Material presented is believed to be from reliable sources and we make no representations as to its accuracy or completeness.  All information and ideas should be discussed in detail with your individual advisor prior to implementation.  Investment Advisory services are offered by Chladek Wealth Management, LLC, a registered investment advisory firm in the State of Kansas.  The presence of this web site on the Internet shall in no direct or indirect way be construed or interpreted as a solicitation to sell or offer to sell investment advisory services to any residents of any state other than the State of Kansas or where otherwise legally permitted.