Page 19 - Boca Club News - June '21

Boca Club News, Page 19

Film Review:

“Two Distant Strangers”

By Nils A. Shapiro by the emotional power of this story, the acting, and the of Andrew Howard
This seems to be a month in which good things come in successful execution of its intended message. Two Distant in front of a shocked
small packages. Note my Book Review on the preceding Strangers earned its Oscar. woman who is behind
page, and in this case a column about this year’s Academy As the film opens, Andrew Howard (a Black man played the counter at a nearby
Award winner for Best Live Action Short Film, which is by rapper Joey Badass) is just awakening after having spent newsstand.
exactly 32 minutes long but delivers an emotional impact the night at the apartment of his girlfriend, Perri (Zaria Suddenly, Andrew
that will last for years with many in its audience! Simone). He dresses hurriedly, explaining apologetically awakens once again,
That impact will take several different forms, however, that he needs to get home to feed his dog, Jeter. sweaty and shaken. It
depending on the political and cultural ideology you When he reaches the street, he stops for a moment to light has all been a dream!
personally bring to its viewing, which at the time of this a cigarette...and is immediately approached aggressively We see him dress
writing is limited to screening on Netflix. You will either be by white NYPD police officer Merk, who suspects that his again, and explain
moved to fury through empathy with its leading character... cigarette may be a “joint.” Andrew objects to the officer’s again that he needs
or to fury against him for what he represents. assumption, the officer escalates to a physical assault, to get home to feed
But if you are honest, you cannot help but be impressed and in moments the encounter ends in the shooting death his dog. Back on the
street, he lights a
cigarette...then, with
slight changes in the
proceedings, he is once again shot and killed by officer
Merk! And awakens once again from what appears to have
been a dream.
So it goes, repeating itself over and over in a series of
The Bull Is Back... Will Raymond James Financial Services, Inc. time loops—in the fashion of Groundhog Day—but in horror
and frustration for Andrew Howard, as he tries to make
It Keep Charging? Arthur Rottenstein small changes each time to try in vain to alter the ending.

Finally, he succeeds in making a major change—one that
Registered Securities Principal
On August 18, 2020, the S&P 500 set a record high for the first time 561-241-6616 appears to end the cycle and get him home to feed Jeter.
since COVID-19 ushered in a bear market on February 19. The cycle But I will not spoil the jolt for you by revealing an ending
from peak to peak was just 126 trading days, the fastest recovery in ArthurRottenstein@ that underscores the genius of this film’s director, Travon
the history of the index, erasing losses from an equally historic plunge RaymondJames.com
of almost 34% in February and March. 1 bocaratonfinancialplanner.com Free, who co-wrote the story with Martin Desmond Roe.
Based on the traditional definition of market cycles, the new record Their message speaks to the current issues about policing
confirms that a bull market began on March 23 when the index closed
at its official low point. This also confirms that the February-March and the Black Lives Matter movement in America more
bear market was the shortest on record, lasting just 33 days. 2 vividly than any newspaper headlines you have read. As I
Although the strong comeback is good news for investors, there
is a striking disconnect between the buoyant market and an economy stated earlier, your reaction to this film will depend on what
still struggling with high unemployment and a public health crisis. Joseph Carpenito you bring to it.
The market is not the economy, but the economy certainly affects the
market. So it may seem puzzling that the market could reach a record Financial Advisor But there is a reason it won the Oscar: It deserved it.
high not long after the largest quarterly decline in gross domestic
product (GDP) in U.S. history. 3 561-241-6616
Joseph.Carpenito@
raymondjames.com.
301 Yamato Road, Suite 3160
Boca Raton, FL 33431

Optimism vs. exuberance
Whereas GDP measures current economic activity, the stock market is forward looking. The rapid bounceback suggests that investors believe
the pandemic will be controlled in the not-too-distant future and that business activity will return to normal. Whether this optimism is warranted
remains to be seen. The current economic situation remains tenuous, but there are hopeful signs.
A vaccine could be available in early 2021, later than anticipated but offering light at the end of the tunnel. In the meantime, the virus
4
continues to suppress business activity. The 10.2% July unemployment rate represented a big improvement over the previous three months, but
it was still higher than at any time during the Great Recession. Recent projections of corporate earnings suggest they will not contract as much as
5
expected, but they will still contract. GDP is projected to make up ground in the third and fourth quarters but remain negative for the year. 7 It’s Time To Travel Again!
6
The extreme of market optimism is irrational exuberance, and there may be some of that at work in the current situation. The proliferation of
low-cost trading apps has encouraged less-experienced investors to trade aggressively, which might be driving some of the market surge. 8
Economic stimulus Now is the time to start planning your
The single, most important factor behind the market recovery is the deep commitment from the Federal Reserve to provide unlimited support
through low interest rates and bondbuying programs. For some investors, the fact that the economy is still struggling has a strangely positive effect next luxury vacation for late 2021
in guaranteeing that the Fed will keep the money flowing. 9
Further support from the federal government is more uncertain, but the strong market suggests that investors may be counting on a second and into 2022. Whether you prefer
stimulus package. 10
cruising or taking a land vacation, we
Nowhere else to go
Low interest rates make it easier for businesses and individuals to borrow, but they have reduced bond yields to the point that many investors will curate an itinerary that will deliver
are willing to take on greater risk in equities in order to generate income. Money that might normally be invested in the bond market has poured
into stocks, driving prices higher. This situation has its own acronym: TINA, There Is No Alternative to Stocks. 11 unforgettable memories.
Big tech at the wheel
While the S&P 500 is generally considered representative of the U.S. stock market as a whole, the recovery has centered around technology Elevate Your Expectations!
companies, which have helped provide goods and services throughout the pandemic. The Big Six tech stocks — Apple, Facebook, Amazon, Netflix,
Microsoft, and Alphabet (Google’s parent) — were up collectively by more than 43% for the year through August 18. By contrast, the rest of the
companies in the S&P 500 were down collectively by about 4%. The Big Six tech companies now represent more than one-fourth of the total
market capitalization of the S&P 500 and thus have an outsized effect on index performance. 12
One question facing investors is whether to chase the winners or look to stocks and sectors that still lag their previous highs and may have
greater growth potential. Chasing performance is seldom a good idea, but there are solid reasons why certain stocks have been so successful in
the current environment.
Are stocks overvalued?
The most common measure of stock value is price/earnings (P/E) ratio, which represents the stock price divided by corporate earnings over the
previous 12 months or by projected earnings over the next 12 months. The projected P/E ratio for the S&P 500 on August 18 was 22.6, the highest
since March 2000 at the peak of the dot-com bubble. Big tech stocks were even higher, trading at 26 times their projected earnings, and the Big
Six were higher still at more than 40 times projected earnings. 13-14
A different measure of stock value compares the total market capitalization of all U.S. stocks with GDP. By this measure, the market was 77.6%
overvalued on August 18, by far the highest valuation ever recorded. The previous highs were 49.3% in January 2018 and 49.0% in March 2000.
This extreme ratio illustrates the current disconnect between the stock market and GDP, but a significant GDP increase during the third quarter
could bring it down. 15
In considering these valuations, keep in mind that these are extraordinary times, and traditional expectations and measures of value may
not tell the whole story. If nothing else, the extreme volatility and rapid market cycles of 2020 have illustrated the importance of maintaining a
diversified all-weather portfolio and the danger of overreacting to market movements. While new records are exciting, they are only signposts
along the road to achieving your long-term goals.
The return and principal value of stocks and bonds fluctuate with changes in market conditions. Shares, when sold, and bonds redeemed Specializing Only In Luxury Travel
prior to maturity may be worth more or less than their original cost. Investments seeking to achieve higher yields also involve a higher degree
of risk. Diversification is a method used to help manage investment risk; it does not guarantee a profit or protect against investment loss. The
performance of an unmanaged index such as the S&P 500 is not indicative of the performance of any specific investment. Individuals cannot invest
directly in an index. Past performance is not a guarantee of future results. Actual results will vary. • 25 Years of World Travel Experience
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1, 3, 6, 8, 11, 13) The Wall Street Journal, August 18, 2020
2) CNBC, August 18, 2020 • Bespoke Travel Experiences
4, 9) The New York Times, August 18, 2020
5) U.S. Bureau of Labor Statistics, 2020 • Network of Elite Travel Partners
7) The Wall Street Journal Economic Forecasting Survey, August 2020
10) CNBC, August 14, 2020 • Awarded “Signature Travel Experts”
12, 14) The Washington Post, August 20, 2020
15) Forbes, August 18, 2020
Call Today…877-493-2929
Arthur Rottenstein is a Registered Securities Principal and Branch Manager with Raymond James Financial Services, Inc. in Boca
Raton and founder of Portfoliorepair.com. He has been managing the financial affairs of a number of select families in South Florida Boca Raton - Delray Beach - West Palm Beach
since 1982. Please feel free to call for an appointment at (561) 241-6616 or email him at arthur.rottenstein@raymondjames.
com. Please feel free to visit his website at bocaratonfinancialplanner.com. Securities offered through Raymond James Financial
Services, Inc., member FINRA/SIPC. Investment Advisory services offered through Raymond James Financial Services Advisors, Inc. Visit us at: travelwithaway.com