December 3, 2013

Black Friday Traditions: Sales, Brawls & Taxes

In 2006, Time Magazine's Person of the Year was 'You.' The magazine declared that 2006 was about:

"...Community and collaboration on a scale never seen before... It's about the many wresting power from the few and helping one another for nothing and how that will not only change the world, but also change the way the world changes."

Last week, J.P. Morgan named EVERYONE the winner of the "Most Promotional Retailer Award." While communities across America are very interested in Black Friday sales, these events are less about empowerment and more about brawling for consumer goods. It's a popular activity. In fact, a case could be built that one of the newest Thanksgiving holiday traditions involves the telling of riveting Black Friday (and now Thanksgiving Day) tales that describe retail shopping bravado and adventure.

It may prove to be a short-lived tradition if mobile devices and online sales continue to gain popularity. According to IBM Digital Analytics Benchmark, which collects data from roughly 800 U.S. retail sites in real time, as cited in Barron's, online sales were up 20 percent on Thanksgiving Day this year as compared to last year. They slowed a bit on Black Friday, up just 9 percent relative to last year by mid-afternoon. Many of the folks who chose to forego shopping in stores made their purchases using mobile devices which accounted for 37 percent of online sales on Friday.

Holiday shoppers and retailers aren't the only ones who appreciate robust holiday sales, so do state governments. Ron Alt, senior research associate at the Federation of Tax Administrators, was cited by USA Today as saying "about 10 percent of annual state sales taxes come in to state coffers in January from holiday season sales, topping most other months in which about 7 or 8 percent of the taxes are collected."

We hope your Thanksgiving holiday was filled with wonderful people and adventures.

Data as of 11/29/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 0.1% 26.6% 27.5% 15.0% 17.2% 5.4%
10-year Treasury Note (Yield Only) 2.8 NA 1.6 2.8 2.7 4.4
Gold (per ounce) 0.5 -26.0 -27.4 -2.6 9.0 12.1
DJ-UBS Commodity Index 0.3 -10.7 -13.5 -5.4 1.0 -0.4
DJ Equity All REIT TR Index -0.8 2.1 6.2 10.9 25.4 8.9

Notes: S&P 500, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron's,, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

Giving Thanks for Pensions

Pensions around the world... Here's something a lot of people are thankful for: pensions. There are public pensions, which generally are funded by tax dollars, and private pensions, which generally are funded by companies. defines pension as, "an amount of money that a company or the government pays to a person who is old or sick and no longer works." The Economist takes a slightly different view although its focus was on public pensions:

"A pension is a claim on the earnings of future workers. Some countries choose to pay these claims out of future taxes; others set up special funds to invest in financial assets. But these assets (equities, bonds and property) will be able to pay pensions only because future workers generate the income to make them valuable."

In the late 2000s, tax-financed pensions made up almost 60 percent of gross income on average for people age 65 and older who lived in the 34 countries that comprise the Organization for Economic Co-operation and Development (OECD). Europeans were the most dependent on their governments. Older Belgians and Finns, on average, received about 80 percent of gross income from the state. Older Chileans, Americans, and Canadians were the least reliant. Chileans over age 65 received less than 10 percent of gross income from the government. For Americans and Canadians, government pensions made up about 40 percent of income on average.

In general, public and private pension funds have done pretty well in 2013. They were helped by rising stock prices and higher bond yields. However, the challenges they face, including increasing longevity and volatile markets, are relatively daunting. That's one reason private pensions have been disappearing in United States. The number of employer-sponsored defined benefit pension plans reached an all-time low of about 22,700 single-employer plans in early 2013. That's down from just over 112,000 in 1985.

Weekly Focus - Think About It

"When you rise in the morning, give thanks for the light, for your life, for your strength. Give thanks for your food and for the joy of living. If you see no reason to give thanks, the fault lies in yourself."

—Tecumseh, Native American leader of the Shawnee

Best regards,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

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  • The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
  • The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
  • Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
  • This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
  • The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
  • The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
  • Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
  • Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
  • Past performance does not guarantee future results.
  • You cannot invest directly in an index.
  • The S&P 500 is an unmanaged indenx. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
  • Consult your financial professional before making any investment decision.
  • This newsletter was prepared by Peak Advisor Alliance
  • Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
  • Stock investing involves risk including loss of principal.

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