View
AN
Unobstructed
SUMMER 2016
QUARTERLY INVESTMENT INSIGHT FROM HIGHTOWER LAS VEGAS
Quiz Time!
D
espite the S&P 500 reaching new all-time highs, the last few months
have been difficult to stomach. Global economic growth concerns and
the surprising Brexit vote have pushed markets around wildly. Yes, we all
know markets come back and rather than hammer that point further into your head,
we thought we would provide readers a chance to learn something new about the
markets. On with the quiz! Let us know how you do.
1
2
3
4
5
6
7
8
9
10
What city was home to the first U.S.
stock exchange?
Which current member of the Dow Jones
Industrial Average was also an original member?
What year did the Dow Jones Industrial Average
close above 1,000 for the first time?
As of June 30th 2016, how many stocks
were in the S&P 500?
Which company in the S&P 500 produces the
most annual revenue?
What is the largest publicly-traded company
headquartered in Nevada?
Who was the first U.S. president to visit the New
York Stock Exchange while serving in office?
As of mid-2016, what is the U.S. government’s net
profit/loss on the now infamous bailouts?
On average, which year of a U.S. presidential
term is best for the stock market?
How much is a “ton of money” assuming
your ton is measured in $20 bills?
(answers on inside flap)
LAS VEGAS
BELOW ARE THE ANSWERS
TO THE STOCK MARKET QUIZ.
WE HOPE YOU ENJOYED THE EXERCISE.
1.Philadelphia
The Philadelphia Stock Exchange was
established in 1790 at the Merchants
Coffee House. The stock exchange was
called “Board of Brokers” for its first 85
years, but officially changed its name
to the Philadelphia Stock Exchange in
1875. Today, the Philadelphia Stock
Exchange holds about 16% of U.S.
trading market share.
2.General Electric (GE)
The Dow Jones Industrial Average was
established in 1896 and was made
up of 12 stocks: American Cotton Oil,
American Sugar, American Tobacco,
Chicago Gas, Distilling & Cattle
Feeding, General Electric, Laclede
Gas, National Lead, North American,
Tennessee Coal & Iron, U.S. Leather, and
United States Rubber.
3.1972
The Dow Jones Industrial Average
crossed the 1,000 mark in late 1972. As
of mid-2016, the Dow Jones Industrial
Average was trading at over 18,000.
4.505
What many don’t realize is that
inclusion in the S&P 500 is not only
about size. In order to be considered for
inclusion a company must meet certain
size, liquidity, and income thresholds.
Additionally, some companies have
multiple share classes and can end up
having more than one security listed on
the exchange. As of June 30th, 2016 the
S&P 500 was made up of 505 stocks
representing 498 parent companies.
5.Walmart
Walmart is simply gigantic. The
company’s revenues topped $485
billion in 2015, which is more than
double the next largest company by
sales, Apple. Approximately 74% of
Walmart’s sales come from inside the
U.S. while the other 26% is scattered
across the globe.
6.Las Vegas Sands (LVS)
It comes as no surprise that a gaming
company is Nevada’s largest company.
Las Vegas Sands currently has a market
capitalization of about $36 billion,
making it by far the largest Nevadaheadquartered company. Interestingly,
at the market’s low in 2009, the value
of Las Vegas Sands fell to under $1
billion. An incredible comeback indeed!
7.Ronald Reagan
President Reagan became the first U.S.
president in office to visit the NYSE on
March 28th, 1985. His visit was a salute
to “the robust American expansion”
that was occurring at
the time.
8.Approximately $69 Billion
of Profit
Banks received approximately $245
billion in aid, auto companies received
almost $80 billion, and AIG received
just under $68 billion. In addition,
the conservatorships of Fannie Mae
and Freddie Mac totaled $187 billion
and other bailouts totaled $40
billion. According to ProPublica, the
government has earned approximately
$299 billion in revenue from its
investments in addition to about $390
billion that has been returned by bailedout companies.
9.Year Three of a
Presidential Term
When it comes to presidential terms,
year three is the best for the market.
According to Cornerstone Macro,
the average return of the S&P 500
during the third year of a presidential
cycle is more than double that of any
other year.
10. Approximately
$18.16 Million
A $20 bill weighs about one gram
and it takes about 454 bills to equal
one pound. A U.S. short ton is 2,000
pounds, so it takes roughly 908,000
twenty dollar bills to equal one ton.
The Traffic Light
H
ow do we manage the funds entrusted
to us by our clients? We utilize a topdown approach that starts with our view
of where the world is headed. Each quarter, we
complete an exhaustive study of many different
economic indicators and trends. The Traffic Light
is a quarterly summary of these macro-economic issues, and our opinion of them, that
form the basis of our research and portfolio
management process. While not everything in life can be easily categorized,
in this piece we attempt to look for
the hopeful (green light) signs
in the world economy as well
as the more worrisome
(red light) issues and
everything in between
(yellow light).
GREEN
YELLOW
RED
Employment
Growth
Election
Uncertainty
China’s Economic
Woes
Low Inflation
Slowing Industrial
Sector
Weak Corporate
Profits
European
Uncertainty
Global Geopolitical
Risks
Energy Prices
Stable Housing
Market
Stimulative Federal
Budget
HighTower Las Vegas is registered with HighTower Securities, LLC, member FINRA, MSRB
and SIPC, and with HighTower Advisors, LLC,
a registered investment advisor with the SEC.
Securities are offered through HighTower Securities, LLC; advisory services are offered through
HighTower Advisors, LLC.
no guarantee that the investment process or
the investment opportunities referenced herein
will be profitable. Past performance is not indicative of current or future performance and is
not a guarantee. The investment opportunities referenced herein may not be suitable for
all investors.
This is not an offer to buy or sell securities. No
investment process is free of risk, and there is
All data and information reference herein are
from sources believed to be reliable.
At the mid-point of each year, we like to look back at what has occurred in an
attempt to gain insight into the future. Over the past few months, the U.S. stock
market broke out of its trading range and climbed to all-time highs but the other
major markets around the globe have not. The Brits decision to leave the EU didn’t
help, as equity markets were quite surprised by the vote. Interest rates continue to
be remarkably low while energy prices have rallied. Employment growth seemed
to falter in May but bounced back strongly in June and July, and housing prices
continue to ascend at a healthy rate.
What can we divine from all of this data? We believe that the sluggish but lengthy
economic recovery continues in the U.S. while the outlook in many other countries
is less clear. However, the next several months should provide more clarity about
the longer-term direction of both the economy and the markets. Key indicators that
we will be watching include the election outcome, inflation, the employment picture
and how Britain and Europe proceed after the Brexit vote.
In this environment, we are focused on managing well-diversified portfolios with
particular emphasis on high-quality technology and financial stocks as well as bonds
with relatively short maturities. We also believe it is imperative to maintain exposure to international stocks, as global markets move in cycles and leadership shifts
with time. Over the past three decades of caring for our clients, we have learned
that attempting to time short-term market movements is futile, and we know that
investment success is a function of time and a well-diversified portfolio.
What are they talking about?
The Pacts of Europe
As Brexit moves from a vote to reality, the United Kingdom (UK) has a tangled
mess to unwind. There are multiple pacts governing trade and economics in Europe.
Luckily, the UK has never been a part of the Euro Zone (the 19 country group using
the euro currency), so it will not need to change its base currency. However, the UK
is in the 28-nation European Union, which operates as a single market with shared
regulation. The European Union allows for the free movement of goods, services,
capital, and people. Many people believe the UK is going to try to join the European
Economic Area (EEA), which is similar to the EU, but allows for slightly more control
over immigration. However, the EU may force the UK into a less advantageous pact
in order to set an example. Needless to say, Brexit and the complicated nature of the
European business environment will create plenty of headaches and uncertainty in
the coming quarters.
“Many people believe the
UK is going to try to join the
European Economic Area (EEA),
which is similar to the EU,
but allows for slightly more
control over immigration.”
In the Media
Mike
on Channel 13 News
Adam
on the MoneyLife Show
Check out our other publications for
insight into our thoughts and process:
ruminATions:
http://www.hightoweradvisors.com/who-we-are/
hightower-advisors/las-vegas/blog/
Thinking & Thriving:
http://www.hightoweradvisors.com/who-we-are/
hightower-advisors/las-vegas/thinking-and-thriving/
The Stat Pack:
http://www.thestatpack.com
What’s New?
After four great years with
HighTower Las Vegas, Johnny has
decided to retire from financial
services and focus on his true
passion, judging dog shows. As
our Director of First Impressions,
Johnny always went out of his way
to make our visitors feel welcome
and special. We will miss his warm
personality and his contributions to
the firm.
While losing Johnny is unfortunate,
we are thrilled to announce we have
a new member of our client service
team, Seth Crawley. He graduated
from UNLV with a degree in economics
and was a leader in the student
government. He also was a member of
the Rebel Investment Group, which is a
student managed fund at the university. In his free time, Seth is an avid
golfer, film buff, and actively involved
in his church.