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August 2012 Asset Allocation

Price to Earnings Ratio of the S&P 500 (P/E): 15.89
Dividend Yield of the S&P 500 (DY): 2.07
Average Yield on the AAA Corporate Bond (BY): 2.74
"Earnings Yield" on the S&P 500 - (1/PE) (EY): 6.29

Conclusion

For the month of August, we are maintaining our 50/50 allocation of stocks and bonds.

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July 2012 Asset Allocation

Price to Earnings Ratio of the S&P 500 (P/E): 15.23
Dividend Yield of the S&P 500 (DY): 2.1
Average Yield on the AAA Corporate Bond (BY): 2.47
"Earnings Yield" on the S&P 500 - (1/PE) (EY): 6.57

Conclusion

For the month of July, we are maintaining our 50/50 allocation of stocks and bonds.

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Economic Outlook for July 2012

The three components of a healthy economy are full employment, stable prices, and economic growth. We track three economic indicators monthly to gage the health of the economy, more specifically to gage whether the economy is getting better or worse:

  • Unemployment numbers to track employment
  • The Consumer Price Index (cpi) to track prices/inflation
  • Manufacturing Output to track economic growth

Unemployment Statistics

The unemployment rate is stubbornly holding steady at 8.2% despite continued massive fiscal and monetary stimulus. As a result we expect accomodative fiscal and monetary to continue in the near term. The next reporting date is August 3, 2012.

Inflation

Despite massive fiscal and monetary stimulus, consumer prices have been rising at a very modest rate. Inflation is a major concern to policy makers. Until signs of inflation begin to emerge, expect the stimulus to continue. The next reporting date is August 15, 2012.

Output

Manufacturing output has surprisingly rebounded quite strongly in the last two years. First quarter 2012 revised output was up 10% from the prior year. Based on the data, it appears the massive fiscal and monetary stimulus are having the desired effect of improving output and employment without triggering inflation. That being said, the magnitude of the improvement leaves much to be desired, especially in the area of employment. For now we would expect the Federal Reserve to continue to hold rates down, at least in the near term, not wanting to derail the fragile recovery. We will continue to monitor these economic indicators closely. Second quarter preliminary numbers will be released August 6, 2012.

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GXV Investor Course: July 2012

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Asset Allocation Theory

In this 15 minute video, we explain the proper theory of asset allocation for investors.

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GXV Investor Course: June 2012

Jonathan Lopez shows the new strategy of investing on a portfolio that needs to make up lost ground.

Look for the next video on July 15th!

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GXV Investor Course: May 2012

Jonathan Lopez presents intelligent investing on May 12th, 2012 at Palomar College.
Next meeting June 9th

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GXV Investor Course: April 2012

Intelligent Investor class taught by Jonathan Lopez.
Next Class: May 12th @ 10AM

Here's a quick summary of the stocks evaluated and discussed:

INTC - HOLD
TEVA - SELL
LLL - HOLD
PH - HOLD
TOT - HOLD
SPLS - HOLD
BBY - HOLD
AAPL - HOLD
FTE - BUY

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April 14th, 2012: On Investment Theory

This month, we cover more investing theory, and study how to assess whether or not a company's stock is a good buy.

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GXV Investor Course: March 2012

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