Tuesday, July 29, 2014

How the Future Used to Look

Even the best investing experts struggle when it comes to making predictions about where the market is headed. Case in point: At the start of the year, the investing research firm Birinyi Associates tracked 18 strategists and found that their consensus was that the S&P 500 would rise by 5.3 percent in 2014.
The S&P is already up by about 8 percent on the year, so it looks like the expert forecast has already fallen short. On the other hand, the market could also drop between now and the end of the year, bringing the overall increase down to the initially projected level (although we’re all crossing our fingers that doesn’t happen).
Birinyi went back to its strategists for a revised prediction. The new consensus is that the S&P will rise by 7.4 percent on the year – leaving it roughly flat for the remainder of 2014.

Monday, July 28, 2014

IRAs Movin' On Up

If you have an IRA, how much money are you contributing to it every year? According to research from Fidelity, the average annual contribution to an IRA topped $4,000 for the first time last year. The average of $4,150 was 5.7 percent higher than it had been a year earlier.

Not surprisingly, that average varies greatly by age. People aged 60 to 69 made the highest IRA contributions, an average of $4,990. Those in their 30s contributed just $3,540 - but that was up 6.7 percent from the year earlier.

Add it all up, and IRA balances are now at an average of $89,100. That's a good sign that America is taking its retirement planning very seriously.

Friday, July 25, 2014

The Joys of Vegetarianism

Over the past 12 months, food prices have been rising at a rate of about 2.4 percent. That's slightly higher than the overall consumer price index, which has risen by 2.1 percent over that same time span. But not all food prices are rising in lockstep.

In fact, if you're a vegetarian, you've been enjoying much less inflation than meat-eaters have had to deal with. Fresh fruit prices are up 5.8 percent in the past year, driven in large part by citrus fruits, which are up by 12.2 percent. But tomatoes, to take one example, are up just 0.6 percent.

Those increases pale in comparison to meat prices, though. Fish and seafood are up 7.3 percent in the past year; beef and veal are up 10.4 percent. Pork prices are up a whopping 12.0 percent.

Thursday, July 24, 2014

Old Tech Comes Back

We are in the middle of a bit of a high-tech boom: The S&P 500 tech sector has risen 8.5 percent this year, outperforming not only the larger S&P but the Nasdaq  and small-cap Russell 2000 as well. But this time it's not the brand-new Silicon Valley companies that are making waves.

It's the more mature, well-established tech stocks that have been leading the charge. Intel, Hewlett-Packard, Microsoft are all up by more than 20 percent on the year. Despite its mixed results yesterday, Apple has risen by 23 percent in 2014, when you adjust for its 7-for-1 split.

The best-performing of the old-tech companies this year has been Micron Technology, a Boise-based producer of semiconductors. Micron is up more than 50 percent on the year.

Wednesday, July 23, 2014

Apple's Day

For many investors, Apple is still the most exciting report of earnings season, if for no other reason than to see how the market reacts. Apple's earnings report yesterday was a mixed bag: Earnings of $1.28 a share exceeded the Wall Street consensus of $1.23 a share, but the sales figure of $37.4 billion was slightly below the $38 billion forecast, although a notch up from the $35.3 billion in the year-ago quarter.

Apple used to beat its estimates regularly, by wide margins, so those results weren't enough to excite investors. Shares didn't move much after the announcement, but it was after hours; we'll know more about the reaction today.

The better numbers were found in iPhone sales, which were up nearly 13 percent, to 35.2 million units. The biggest impact came from China, where iPhone sales were up a whopping 48 percent. Mac sales were also a positive, rising by a surprising 18 percent.

Tuesday, July 22, 2014

Gas Prices Leveling Off

Since most Americans tend to drive more in the summer, gas prices tend to go up in the summer as well. But this year has been a little different. After reaching a peak in late April, the price of a gallon of gas has actually been declining nationwide.

Nationwide, the highest that gas has been this year was $3.70 a gallon, a price that was recorded on  April 27. Since then, the national average price has dropped by just under 4 percent, to its current level of $3.57.

Gas prices reached their all-time high in July of 2008, at a national average of $4.11. After dropping off the next couple of years to less than $3.00 a gallon, the summer price has been right around where it is now each of the past four years.

Monday, July 21, 2014

Investors Moving Back to Bonds

Intermediate-term bonds have long represented a solid, relatively stable part of many investors' portfolios. Intermediates make up the largest category of bond funds by assets, with $956 billion invested in them. That's why it was a bit of a shock last year when intermediate bond funds lost, on average, 1.4 percent of their value.

But they've rebounded strongly in 2014. Those same funds have returned an average of 4.1 percent through the first half of the year. Unsurprisingly, investors are coming back to intermediate funds, putting $3.48 billion in them in June.

This is all part of a bigger move back into bond funds, which saw net outflows of $37.12 billion last year. Through the first six months of  2014, these funds have taken in flows of $70.53 billion.