What an exciting week!
Prior to attending a relaxing business meeting on Amelia Island, I had the opportunity to spend couple of sun-filled days with my wife, kids, and a throng of tourists laden with bandoliers full of money at a popular Florida theme park. While the Dow posted a new high, housing prices jumped over 9.5% (the largest increase in years), auto sales hit the highest level since the great recession, and the U.S. economy added 165,000 new jobs this past April, I was whirling on roller-coasters and copping autographs from cartoon characters.
Despite the fact that I was with thousands of people who thought nothing of forking over 4 plus dollars for bottled water, negative sentiments still remain at an all-time high, which might account for the masses willingly parting with their hard-earned dollars at an over-priced playland rather than putting them to work in the markets.
Don’t be discouraged by the recent 4% dip or that new highs may ultimately lead to sell-offs; P/E ratios (price to earnings ratios), a measure of how expensive stocks are priced, are below historical averages. The current market splash may create MickeyFinn-induced expectations of a roller-coaster drop in prices, but don’t be fooled. As I have mentioned in past Updates, take a conservative approach and slowly dollar cost average into equity over the spring and summer months, as these usually provide investors with decent market entry points.
As a matter of fact, this is a good point in time to have an advisor give your portfolio a Cinderella makeover, and remember, you don’t need a Hopper Pass to move a small portion of your assets from fixed income to equities.
Getting back to my “vacation,” one must marvel not only at how efficiently a modern-day theme park operates, but also the immeasurable marketing genius that motivates us to pay outrageous prices to ride merry-go-rounds and bumper cars. (Oh, but they’re Toy Story bumper cars!) Best of all for theme park stockholders, customers will even pay to shop! One huge outdoor shopping mall offers goods from all over the world, including Canada, France, Italy, Germany Mexico, and China. Isn’t that amazing? And it only costs $90 per person to enter!
Ever hear of Walmart or Amazon?
Can someone please explain to me the appeal of slowly evaporating in tropical hell while your significant other purchases jewelry in “Italy” from a young accented saleswoman who grew up down the street in Kissimmee? (As an aside, I did notice that when gentlemen my age entered a shop for a little AC relief, many of them attempted to avoid glaring at a sales associate’s country-specific décolletage.)
And, it doesn’t stop there. Most of us travel by air to get to the park, and therefore, we need a place to stay. You got it: rooms are priced at a premium, but we needn’t worry because bundled pricing is available, so the family and I could feel justified about waiting in line for over an hour to enjoy a three-minute tea cup ride. What a business! We can almost draw a parallel from this insanity to the recent stock market surge. Despite a deep recession in Europe, saber rattling by the new North Korean leader, never ending conflict in the Middle East, a dysfunctional U.S. Government, and the budget cutting sequester, equity markets still keep climbing that imaginary Space Mountain.
Anyway, my six-year-old daughter, Taylor, had a great time at all the attractions; my wife, Marea, made her contribution to the Florida economy by buying a host of items we cannot live without—like a painted portrait of Taylor (even though I had my camera and could have just as easily taken a picture); my 29 year-old-son relaxed by the pool, and I, of course, meandered after Marea and Taylor like an agitated, disgruntled old man. Aside from my daughter’s glee, there were a few bright spots, including a relaxing dinner at a French restaurant where we ordered Choucroute Garnier and ice cold German beer; however, I kept coming back to one question: where are the pedicabs? Theme park planners would certainly need to carve out a “pedicab travel lane,” but I think they would be as popular as cyclical stocks are today.
Anyway, the Monorail has not left the station…yet. You do have time to get on this year’s equity express. Slightly accelerated domestic growth and positive moves overseas are likely to lead to a reasonably strong, if not magical, second half of the year for the world economy.
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