Quote of the Week

“Children think not of what is past, nor what is to come, but enjoy the present time, which few of us do.” – Jean de La Bruyère

Technical Corner

U.S. stocks rebounded sharply last week, marking the largest weekly gain for 2018. The market rallied this Monday on the news that Mr. Trump and Xi Jinping, the leader of China, came to an agreement over the weekend at the G20 meeting to postpone any new tariffs for 90 days. The markets started off strong yesterday and faded toward the close but still were up substantially. The markets today (Tuesday) are in the process of selling off sharply.

I don’t think anyone knows what the outcome will be with the trade negotiations with China, but I am skeptical of a good outcome. The Chinese press didn’t even mention the agreement yesterday. My concern is that this agreement will be the same as the agreement with North Korea to de-nuclearize which seems to be going in the wrong direction.

The main catalyst for the move higher last was the head of the Fed, Chairman Powell, made the comment that rates are close to neutral. This contrasted with his prior statement in early October that rates are a long way from neutral. The softening in tone was interpreted as dovish from investors standpoint and resulted in bonds rallying. The U.S. 10-year Treasury yield fell back down near 3% which is the lowest level in more than 10 weeks. As of now the yield is 2.91%

Oil finished the week marginally higher, but had the worst monthly decline since October 2008. The price of Light Sweet Crude Oil has dropped from $75.86 on October 3rd to $53.12 today.

I don’t think the future is looking very good for the U.S. economy. Europe and the Developed International economies are declining and starting to move into negative growth territory. The Emerging Markets are a disaster with many markets down around 30% including the Chinese markets. The U.S. economy is also slowing and one financial advisor I subscribe to is predicting the U.S. GDP will come in around 1.3% for the fourth quarter.

Last week the Dow was up 5.2%, the S&P 500 was up 4.8%, the Nasdaq was up 5.6%, and the MSCI EAFE was up 1.0%. Year to date the Dow is up 3.3%, the S&P 500 is up 3.2%, the Nasdaq is up 6.2%, and the MSCI EAFE is down 9.4%. All these market indexes are far off their 2018 highs.

Larry’s Thoughts

If you have read our office’s annual Holiday Letter, you will know that Lynne and I are dog lovers. We adopted a new dog from the Southern Arizona Humane Society about three months ago. Mr. Buck is a one-year old stray of mixed heritage. He is a sweet and happy little boy now that he has found his permanent new home.


What is especially endearing is his habit of wanting to be petted. If he is anywhere near your hand, he will push your hand up with his nose into a petting position. He also has a special toy that he is proud to put in his mouth and prance around the room with.

This week instead of talking about what is going on in the financial world I am publishing a reprint of an article I found on the internet. What prompted me to re-publish this article was a picture in the paper of George Bush’s service dog “Sully” lying next to his coffin. If you are a dog lover and you want to bring a tear to your eye, just Google George Bush, service dog, Sully. There are multiple videos you can watch.

I hope you enjoy the following article.

Do Dogs Have Feelings?

Authors:  Jan Hoole, Lecturer in Biology, Keele University and Daniel Allen, Animal Geographer, Keele University

Disclosure statement:  The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

August 24, 2018

If you live with a dog you just know when it’s happy or miserable, don’t you? Of course you do. Even the scientific community, now admits that dogs have emotions — even if scientists can’t directly measure what they are experiencing.

People have had a close bond with domesticated dogs for centuries. In his 1764 Dictionnaire philosophique, Voltaire observed: “It seems that nature has given the dog to man for his defence and for his pleasure. Of all the animals it is the most faithful: it is the best friend man can have.”

Research has shown time and time again the positive impact pet ownership can have on our lives. Indeed, a study of 975 dog-owning adults, found that in times of emotional distress most people were more likely to turn to their dogs than their mothers, fathers, siblings, best friends, or children.

It’s not surprising then that dogs are now the most commonly used animal in therapy. Our canine pals are being increasingly used as participants in a variety of mental health programmes — offering companionship, happy associations and unconditional love.

In the UK, Pets As Therapy (PAT) has more than 5,000 active PAT dogs, which meet some 130,000 people a week. In the US, the American Kennel Club has a Therapy Dog Program which recognises six national therapy dog organisations and awards official titles to dogs who have worked to improve the lives of the people they have visited.

Dogs who heal

Sigmund Freud is generally acknowledged as the accidental pioneer of canine-assisted therapy. During his psychotherapy sessions in the 1930s, a chow chow called Jofi stayed alongside him in the office. Freud noticed that patients became more relaxed and open when Jofi was present, and it helped him to build a rapport.

But the official beginning of animal-assisted therapy is generally linked to World War Il, when a Yorkshire terrier called Smoky accompanied corporal William Lynne when visiting service hospitals in New Guinea. Her presence lifted the spirits of wounded soldiers.

Despite all this, it was not until the 1960s that the first documented case study of a dog working as a “co-therapist” was made. The US psychotherapist Boris M. Levinson maintained that the presence of his dog Jingles added a “new dimension to child psychotherapy”. Despite opposition from peers, Levinson strongly defended the use of dogs as therapeutic aids.

How dogs feel

But while there is no question that dogs are very good at understanding us, sadly the reverse is not always so true. A classic example of this is when someone has had a little “accident” in the house and dog owners think that their pet looks guilty. But for the dog in question, that look is purely submission and is a way for the dog to say “don’t hurt me” rather than an admission of guilt.

It is very difficult for humans to convince themselves that the canine brain is not able to understand the concepts of right and wrong — but without that ability it is not possible to experience guilt. The dog who is looking guilty is simply afraid of your reaction to the situation — usually based on past experience.

Some of the main difficulties that happen between dogs and their owners are caused by a humans inability to read their pet’s body language correctly. Combine this with the human notion that dogs understand abstract concepts and can use reason on complex issues, and the scene is set for problems.

Doggy hormones

Another way to tell how animals feel is to look at their hormonal environment. Studies have shown that when dogs are stroked by their owners they have increased levels of oxytocin. Among other functions, this hormone is thought to help relaxation. It helps to form bonds between mother and child — and between pet and owner.

So although we can’t know for sure how a dog feels during pleasurable activities, it seems reasonable that oxytocin produces similar sensations in dogs to those that humans experience — suggesting that they are feeling affection towards and attachment to their owners.

Similarly, dogs that are in unpleasant circumstances show raised levels of the stress hormone, cortisol. One of the situations that produces this stress response is being left alone for any length of time. Dogs are pack animals and really need to have company. A solitary dog is rarely a happy dog — and this is something that all dog owners should take into account when planning their lives.

What this all shows is that for dogs and people to live together and work together — and for both parties to be happy about it — an understanding of each other’s emotional state is vital. Even if dogs and people don’t completely understand each other, it seems clear that each species is essential to the other’s well-being and we can help each other to be happier and healthier.

“Do dogs have feelings?” The Conversation https://theconversation.com/do-dogs-have-feelings-101998  Accessed  December 4, 2018

By the Numbers

“IN VOGUE AGAIN – Credit card debt in the USA peaked at $1.02 trillion in May 2008before falling off during the global real estate crisis, eventually hitting a low of $832 billion in April 2011. However, credit card debt has now climbed all the way back to a record level of $1.04 trillion as of August 2018(source: Federal Reserve).” – Michael A. Higley, BTN 12-03-2018

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These are the opinions of Larry Lof and Stephanie Mayoral and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.

The S&P 500 is an index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly.

Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.

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