Weekly Market Commentary May 20, 2013

The Markets
Much like elementary school children trying to capture the attention of someone they have a crush on, the American economy sent lots of mixed signals last week. Conflicting reports emerged about consumer sentiment during the week. The Conference Board, a non-profit research organization, reported consumers remained somewhat pessimistic about the direction of the economy. In contrast, the University of Michigans consumer sentiment survey rose to a six-year high, according to ABC News. The Index moved from 76.4 in April to 83.7 in May indicating consumers are feeling more confident about the economy. On the employment front, more people filed first-time unemployment claims last week than had filed the week before; however, claims remained well below the levels experienced from mid2008 to 2011. Additionally, data shows during the past six months the average length of unemployment has dropped, the number of hours worked has risen, and earnings have increased. Messages from the Federal Reserve were more consistent than economic data. Members of the Philadelphia, Dallas, and San Francisco Federal Reserve Banks suggested it may be time to begin slowing quantitative easing. Currently, the Federal Reserves quantitative easing efforts have it buying about $85 billion of Treasuries and mortgage-backed securities each month as it works to support the economy. According to reports, quantitative easing could slow to a stop during 2013. Fed comments helped push yields on 10-year Treasuries higher for the week. Stock markets remained undaunted by uncertain economic conditions and the prospect that quantitative easing may end soon. The Dow Jones Industrial Average and the Standard & Poors 500 Indices surged to new highs last week. Markets rallied across the pond, as well, with some major European stock indices reaching levels last seen five or more years ago, according to Reuters.
Data as of 5/17/13 Standard & Poor's 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index 1-Week 2.1% 2.0 -4.1 -0.2 1.9 Y-T-D 16.9% N/A -19.2 -5.3 18.2 1-Year 27.8% 1.7 -11.9 -2.5 31.8 3-Year 13.6% 3.5 3.5 1.7 19.2 5-Year 3.2% 3.8 8.6 -9.3 7.1 10-Year 6.1% 3.5 14.3 1.1 12.6

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, Barrons, djindexes.com, 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.

HEURISTIC IS JUST ANOTHER NAME FOR A SHORTCUT. When academics look to psychology and economics to explain why people make financial decisions the way they do, its called behavioral finance. This field of study describes a phenomenon called heuristics. In general, a heuristic is a mental shortcut that lets someone solve a problem using a rule of thumb. Heuristics may be handy, but they may not take you exactly where you mean to go. For example, consider some of the shortcuts investors have developed to predict the direction of the stock market. You may have heard of the:

Hemline Index: In 1926, George Taylor suggested the length of womens skirts was a useful market predictor. Short hemlines were a positive predictor while long hemlines were a negative predictor. Taylor later became Professor of Industrial Relations at Wharton and became known as the father of American Arbitration. Super Bowl Indicator: Washington and Lee professor George Kester introduced the idea the Super Bowl winner could predict market performance. His theory was the market would move higher for the year when an original National Football League team won the Super Bowl and lower when an original American Football League team won. Presidential Election Cycle Theory: The idea behind this gem is the stock market follows a predictable pattern during each American Presidents term. The year after an election produces the weakest stock market performance while the third year offers the strongest.

Anyone who remembers The Chicago Daily Tribunes headline, Dewey Beats Truman, or CNN and Fox News headlines indicating the Supreme Court struck down the individual mandate, knows predicting the future can be challenging. In general, its a good idea to rememb er that the drivers of market performance tend to be economic factors, investor sentiment, and company fundamentals.

Weekly Focus Think About It

The pursuit of truth and beauty is a sphere of activity in which we are permitted to remain children all our lives. --Albert Einstein, theoretical physicist Best regards, Steve

Steve Gierl Gierl Augustine Investment Management, Inc. 344 N. Pike Road Sarver, PA 16055 724-353-1800 877-979-1800 Fax number 724-353-1832 We appreciate it when you refer our business to others and invite you to forward your email to 1 or 2 other people who might find the content interesting. If you would like to be removed from our email list please respond to this email with "Unsubscribe" in the subject line. Steve@GierlAugustine.com visit our website @ http://www.retirewithga.com Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative. Gierl Augustine Investment Management, Inc., a Registered Investment Advisor. Gierl Augustine Investment Management, Inc., and Cambridge are not affiliated. Cambridge Investment Research, Inc does not accept orders and/or instructions regarding your account by e-mail, voice mail, fax or any alternate method. If you would like to execute a trade or if you have time-sensitive information for me, please call my office at 724-353-1800. Transactional details do not supersede normal trade confirmations or statements. E-mail sent through the Internet may be viewed by others and is not confidential. Cambridge Investment Research, Inc reserves the right to monitor all e-mail. Any information provided in this e-mail has been prepared from sources believed to be reliable, but is not guaranteed by Cambridge Investment Research, Inc and is not a complete summary or statement of all available data necessary for making an investment decision. Any information provided is for informational purposes only and does not constitute a recommendation. Cambridge Investment Research, Inc and its employees may own options, rights or warrants to purchase any of the securities mentioned in e-mail. Cambridge does not offer tax advice. This e-mail is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you did not intend to receive this message, please contact the sender immediately and delete the material from your computer. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer . * 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. * 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. * Consult your financial professional before making any investment decision. Sources: [1] http://www.marketwatch.com/story/leading-economic-indicators-rise-in-april-2013-05-17 [2] http://abcnews.go.com/blogs/business/2013/05/consumer-confidence-rises-to-6-year-high/ [3] http://www.npr.org/blogs/thetwo-way/2013/05/16/184451558/conflicting-signals-from-latest-economic-indicators [4] http://www.marketwatch.com/story/philly-feds-plosser-slow-then-end-bond-buys-2013-05-14 [5] http://www.bloomberg.com/news/2013-05-17/treasuries-are-little-changed-before-consumer-confidence-report.html [6] http://www.bloomberg.com/news/2013-05-16/fed-s-fisher-urges-cutting-mortgage-bond-buys-to-avoid-disorder.html [7] http://www.reuters.com/article/2013/05/16/markets-usa-bonds-idUSL2N0DX21420130516 [8] http://www.reuters.com/article/2013/05/17/us-markets-global-idUSBRE88901C20130517 [9] http://www.investopedia.com/university/behavioral_finance/ [10] http://psychology.about.com/od/hindex/g/heuristic.htm [11] http://www.marketwatch.com/story/hemline-index-falls-out-of-fashion-2010-11-24 [12] http://www.wharton.upenn.edu/125anniversaryissue/taylor.html [13] http://www.forbes.com/pictures/el45ejhkg/the-super-bowl-stock-market-predictor/ [14] http://www.forbes.com/sites/financialfinesse/2012/03/21/financial-tips-during-a-presidential-election-season/ [15] http://www.brainyquote.com/quotes/quotes/a/alberteins148832.html