Conflict Overseas – Market Brief March 28, 2022

conflict

Stocks recorded their first back-to-back weekly gains since late January / early February. U.S. equities rose modestly, as strong economic data was checked by geopolitical tensions. Investors’ attention will be focused this week on inflation and jobs data. The Fed is betting on a soft landing for the economy, but the outcome is far from certain.

Last Week – Conflict Overseas Reaches 2nd Month

Last week, the Dow Jones Industrial average was up 0.3%. The S&P 500 was up 1.8%, and the Nasdaq Composite rose 2%. Year-to-date, the numbers are still negative. In housing news, the average 30-year fixed mortgage rate reached a 3-year high of 4.5%. This is boxing out some buyers as new and pending home sales fell in February. Inventory remains limited, keeping asking prices high.

Nonfarm payrolls are expecting to be 450,000 for March, a drop from the 678,000 in February. The unemployment rate is expecting to be 3.7% for February. A slight tightening from the 3.8% the month prior. The consensus sees a slight rise in personal income to 0.5% for February. Personal spending is expecting to show a sharp slowdown at 0.6% in February, versus 2.1% in January. This goes along with inflationary pressures that consumers are feeling, especially elevated gas prices at the pumps.

Federal Reserve Chairman Jerome Powell stated the Federal Reserve will be more aggressive with monetary policy. Key economic data out last week included: New home sales, durable goods orders, and UMich Consumer Sentiment. One significant weekly data point was initial jobless claims which posted at 187,000 for the week ending March 19, its lowest number in 50 years, and a sharp decline versus the week prior of 215,000.

New home sales came in at 772,000 SAAR for February versus a consensus of 825,000 and compared to a revised 788,000 SAAR in January. The final UMich Consumer Sentiment number posted at 59.4 for March, slightly lower than the 59.7 expected. Consumer sentiment of course has pressure from volatile oil prices and the conflict in Ukraine.

The Week Ahead

Key economic data releasing this week include nonfarm payrolls, the unemployment rate, personal income and spending, and Real GDP. In this time of inflation and geopolitical uncertainty, all of this data matters. The Federal Reserve is carefully considering each data point to help decipher the health of the overall economy. The labor market remained strong, with initial jobless claims falling to the lowest level since September 1969.

As the war in Ukraine enters its second month, and with negotiations seemingly at a stalemate, investors’ attention will focus on inflation and jobs data. The Fed is betting on a soft landing for the economy, but the outcome is far from certain. The labor market is tight. The Fed’s preferred inflation measurement, the Core PCE Price Index, is the main event on Thursday, while ISM Manufacturing PMI joins a busy end of the week.

In Europe, Germany will publish preliminary CPI for March along with monthly retail sales and consumer confidence. These numbers have turned pessimistic given the Russia-Ukraine conflict. Year-to-date index performance; Dow down 4.06%, S&P down 4.68%, and Nasdaq down 9.43% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

Erie CO Financial Advisor; investments, wealth management, retirement income planning; Boulder, Broomfield, Louisville, Niwot, Windsor, Berthoud CO

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Energy Prices on the Rise – Market Brief March 14, 2022

U.S. equities attempted to rally at the end of last week as Russian President Putin claimed some progress in talks with Ukraine. Indexes finished near the lows, extending the 2022 losing streak. Months of anticipation will reveal in the Fed’s interest rate decision this week, the beginning of rate hikes. Surging energy prices and inflation is largely attributable to supply-side challenges, yet the Fed believes the current policy is too loose. The S&P 500 and Nasdaq Composite indexes fell more than 3% last week.

Last Week – Energy Prices

The stock market losing streak continued. The DJIA was down 1.99%, while the S&P 500 was off 2.88%, and the Nasdaq Composite declined 3.53% for the week. On Tuesday, the NFIB small business optimism index for February slipped to 95.7. Lower than January’s reading of 97.1. Small business owners are feeling the impacts of wage inflation and rising fuel costs. On Wednesday, weekly mortgage applications rose 8.5% overall. Both originations and refinancing’s were up in high single digits among rising rates.

energy prices

Weekly initial unemployment claims moved higher on Thursday, to 227,000 from the pandemic low of 216,000 the prior week. The big inflation data last week was the February consumer price index (CPI) report. The all-items CPI rose 7.9% annually, the highest in 40 years. Energy prices soared as the war in Europe continues. The core index, which excludes food and fuel, rose 0.5% monthly and 6.4% annually. The Russian invasion dismissed belief of cooling inflation. The War in Europe has spiked petroleum prices around the world. Wrapping the data week on Friday, University of Michigan consumer sentiment for March slipped below 60 to 59.7. Consumer sentiment reached 10-year lows. On top of inflation concerns, the war in Europe is adding to general geopolitical anxiety.

Week Ahead

The markets may need the Luck of the Irish on Thursday to snap the losing streak. The February Producer Price Index estimates to rise 1.0% month-over-month and 10% annually. The core PPI estimate to rise 0.6% monthly and 8.3% annually. Wednesday retail sales report, expected to rise 0.5% for February after the surprising 3.8% gain for January. Inflation is causing consumers to spend more for less and potentially cutting into savings. Most experts agree the Fed’s hiking path is likely to be slower than previously expected considering the war in Europe. The current reports believe a 0.25% rise in interest rates on Wednesday.

The NAHB housing market index estimate for March is the low 80s, in line with February’s 82. On Thursday, February housing starts are forecast at a 1.700 million SAAR (seasonally adjusted). This would be an improvement from the 1.638 million SAAR for January. Capacity utilization is forecast to edge higher to 77.8% from 77.6% for January. Factories continue to run all-out to address the supply-chain crisis. On Friday, existing home sales report estimated to come in at a 6.17 million SAAR for February. This would be a decline from a 6.50 million SAAR for January.

Year-to-date index performance; Dow down 9.3%, S&P down 11.8%, and Nasdaq down 17.9% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

Financial Advisor Erie CO focus on investment and wealth management, retirement planning; Boulder, Louisville, Niwot, Lafayette, Windsor, Berthoud, CO

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Invasion Continues – Market Brief March 7, 2022

The Russian invasion of Ukraine extended the stock market’s losing streak last week. The invasion intensified, sending global commodity prices soaring and sustaining volatility. Uncertainty is mounting. With the spike in commodity prices, global central banks’ mission to curtail inflation becomes more difficult. For the week ending Friday, Nasdaq fell 2.75%, S&P 500 down 1.24%, and the Dow Jones down 1.23%.

The last two weeks, the world changed. As we watch the horrifying events unfold in Ukraine and the political and economic fallout, it’s hard not to worry. One thing that can help when you feel worried is to identify and take small steps to create positive results. For example:

  • – review your portfolio, we can look for ways to diversify your investments if needed to help reduce risk and renew your confidence that we continue on the path to help achieve your long-term goals
  • – don’t forget about other money deadlines, like your tax preparation for filing this year
  • – take time to recognize signs of burnout and focus on your personal wellbeing

Last Week – Invasion Continues

With geopolitical tensions rising, investors ignored highly positive economic data in the U.S. last week. The S&P 500 hit an all-time closing high on the first day of trading this year. Since then, the index reversed and is down 8.94% year-to-date as of last Friday. Crude oil closed at $115.68 per barrel on Friday, rising 26.30% for the week. Crude hasn’t seen per barrel prices of $100 or more since 2014.

The jobs report released last week showed the U.S. added 678,000 jobs in February, which was well above expectations. The unemployment rate fell from 4.0% in January to 3.8% in February. Slightly above the 3.5% rate from February 2020. Both readings of the February ISM Manufacturing and Non-Manufacturing Indexes continued to indicate expansion. Supply chain issues and labor shortages remain a headwind for both. However, this comes amid strong demand as the economy continues to reopen.

On Wednesday, Federal Reserve Chairman Jerome Powell confirmed rate hikes were coming, while acknowledging uncertainty related to Ukraine. He also said he would support a quarter-percentage-point rate hike at the Fed’s upcoming meeting on March 15-16. This is the Fed’s first rate increase since 2018. Powell also said the Fed will tread carefully given geopolitical turmoil and its uncertain impact on the U.S. economy. The comments all but end speculation that the Fed would raise interest rates by 0.50% at the March meeting. Larger rate hike are not ruled out for future meetings if inflation doesn’t come down from current four-decade highs.

Week Ahead

Uncertainty is only mounting. The spike in commodity prices is making the global central banks’ mission to curtail inflation increasingly more difficult. Inflation data will dominate investor headlines this week. On Tuesday, the NFIB small business optimism index for February is forecast to hold in the high 90’s range. Small business sentiment, already hurt by wage inflation, could worsen as the Ukrainian invasion further pushes up gas prices. On Wednesday, weekly mortgage applications are expected to extend recent declines. Largely thanks to the February surge past 2.0% in the 10-year Treasury yield.

In addition to weekly initial unemployment claims, Thursday brings the consumer price index report for February. The all-items CPI is forecast to rise 0.7% on a month-over-month basis and 7.9% year-over-year. Wrapping the data week on Friday is University of Michigan consumer sentiment. The reading is expected to drop to 61.7 for March from 62.8 for February. The war in Europe adds to consumer worries. Year-to-date, the Dow is down 7.5%; the S&P 500 is off 9.2%. The Nasdaq is now down 14.9% year to date.

Click here if you would like to learn more about your options. And if we can assist you with your wealth management, investment, and retirement planning.

Erie CO Financial Advisor; investments, wealth management, retirement income planning; Boulder, Broomfield, Louisville, Niwot, Windsor, Berthoud CO

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Starting Now – Market Brief February 28, 2022

Starting Now

Starting now, when is the best time to plant a tree? According to the old Chinese proverb, the best time was 20 years ago, but the second-best time is now. There’s such great wisdom in that proverb when it comes to your financial strategy, especially when you consider the bumpy start the economy has taken so far this year. Volatility can cause anxiety. Maybe you’re worried you aren’t on track for the retirement you envision. Maybe you think it’s too late to start. I’m here to tell you that it’s not. 

Starting Now

Starting now, we can work together on a strategy that puts you in the best path possible to pursue your long-term goals. We can modify our existing strategy to meet new economic realities or as your goals evolve. Starting now, we can build your confidence in the financial future you want for yourself and your family. Let’s keep the conversation flowing, schedule a time to talk, and reach out with your thoughts.

Last Week – Starting Now

The S&P 500 and Nasdaq indexes both gained on the week after being down more than 5% at the week’s lows. The large focus last week was on the Russian invasion of the Ukraine. Despite the invasion and following sanctions against Russia, the Fed is likely to remain focused on inflation, and sticking to the plan to raise rates.

Consumer spending, wages, and durable goods orders all surged higher. Rising home prices and and higher mortgage rates led to a 4.5% decline in new home sales. Pending home sales also dropped 5.7% in January. The Dow down 0.03%, S&P up 0.84%, and Nasdaq up 1.1%.

Week Ahead

Human and economic assessment is taken into account this week. Along with what actions world leaders take beyond the already imposed sanctions against Russia. From the economic standpoint, eyes are on the U.S. employment report coming out on Friday. Over 1.6M jobs have been created the past 3 months despite the impact of Covid variants, and another strong report may put further pressure on the Fed’s tightening schedule.

Year-to-date index performance; Dow down 6.3%, S&P down 8%, and Nasdaq down 12.5% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

Financial Advisor Erie CO focus on investment and wealth management, retirement planning; Boulder, Louisville, Niwot, Lafayette, Windsor, Berthoud, CO

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief February 22, 2022 – Sloppy Spring?

Is a sloppy spring in store this year? Tax season is underway and it may be a little more complicated this year due to a backlog at the IRS. As we continue to recover from the pandemic’s effects on the economy and our individual finances, you may be facing some complicated situations or a backlog yourself. 

Whatever questions you have, know you’re not going it alone. A problem shared is a problem halved. Together, we can tackle each issue you’re up against – whether it’s concerns about your tax return, an aging parent, or even strategies around how best to save for more of life’s unexpected changes. Even the most complicated situations can be simplified into actionable next steps. And I can be a great resource for you. Reach out and let’s talk about it.

Last Week

The stock market fell last week as the attention changed from inflation to the potential Russian invasion of Ukraine. The geopolitical uncertainty renewed investor interest in safe assets going into President’s Day weekend. The invasion does not necessarily impact corporate profits in the U.S. Therefore, a stock market drop due to the invasion could be viewed as a buying opportunity. For the week, the DJIA was down 1.9%, the S&P 500 was down 1.6%, and the Nasdaq was down 1.8%.

Trading remained volatile and inflation pressure remains. Amid supply-chain crisis and strong demand, January all-items producer price index was up 1.0% m-o-m and up 9.7% y-o-y. Consumer spending remains strong too. On Wednesday, January retail sales surprised with a 3.8% increase from December’s decline. And better than the 2.0% consensus estimate.

Also on Wednesday, U.S. Industrial production rose 1.4% following December’s decline. On Thursday, January housing starts slipped. Permits went the other way, rising to an above-consensus figure, suggesting that the spring building season may be strong. On Friday, existing home sales for January were also strong. Existing home sales were up 6.7% month-over-month, though down 2.3% year-over-year as available-homes inventory remains near record lows. Mortgage rates continued to rise, and new home construction fell 4.1% in January. Resulting from tight labor and materials but permits to build lifted to the highest levels since 2006.

Week Ahead – Sloppy Spring?

The current holiday-shortened data week kicks off today with the Case-Shiller home price index. Economists look for a 1.1% monthly gain. The Conference Board’s Consumer Confidence index expects a decline for February as inflation adds to consumers’ concerns. On Wednesday, the weekly mortgage application report expects to continue the downward trend. Rising interest rates are forcing more would-be homebuyers out of the market. Thursday brings the second (preliminary) estimate of 4Q21 GDP. The report expects the forecast to edge up to 7.0%. Thursday also brings January new home sales, which are expected at an 801,000. On Friday, U.S. durable goods orders and core capital goods orders are both forecast up 0.5% month-over-month. The industrial sector continues pushing out all the goods it can to reach high demand amid the supply chain crisis.

This week marked two years since the pre-COVID-19 market high and the stay-at-home trade may have finally run its course. Many pandemic favorites indicated slowing growth including Shopify, Etsy, and Roblox. Fun investment nugget, Hilton Worldwide is now outperforming Zoom Video Communications since the pre-pandemic market peak in February 2020. Year-to-date index performance; Dow down 6.2%, S&P down 8.8%, and Nasdaq down 13.4% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

Erie CO Financial Advisor; investments, wealth management, retirement income planning; Boulder, Broomfield, Louisville, Niwot, Windsor, Berthoud CO

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief January 31, 2022

U.S. equities rallied late in volatile trading as investors worried over Fed policy, rising interest rates, and high inflation. Investors may be looking for some relief after a bumpy January. This week kicks off another busy week of economic data. Three central bank meetings are on the calendar along with the monthly U.S. jobs report.

inflation

Last Week – Fed & Inflation

Despite wild intraday gyrations in the stock market last week, the S&P 500, the Nasdaq, and the Nasdaq 100 were all basically flat for the week. But at the end of it all, that was an improvement relative to recent weeks. The market saw a huge rally on Friday, with the S&P 500 soaring 2.4%, while both the Nasdaq and QQQs rocketed 3.1% higher. It was the largest daily gain for the “500” since June 2020 and the biggest jump for the other two indices since March 2021.

The stock market finally had a winning week, the first of the year, though January remains deeply in the loss column. Equities are under pressure from inflation, supply chain, Fed decisions, and Covid-19 restrictions. Last week was one of the busiest of the 4Q earnings season. Earnings were overshadowed by the GDP data, which in turn was overshadowed by the Fed meeting. Last Tuesday, the Case-Shiller Home Price index showed unrelenting home-price inflation, with prices up 1.2% month-over-month for November and up 18.3% year-over-year. December new home sales on Wednesday came in at an 811,000 SAAR, topping expectations for 760,000.

The Federal Reserve’s policy statement from last week plus Jerome Powell’s post-meeting press conference made it abundantly clear it is ready to start raising short-term interest rates in March. The futures market is now pricing in 5 rate hikes in 2022, 25 basis points each. Some believe there could be more. This would not be surprising as the Fed is behind the inflation fighting curve. The December Consumer Price Index rose 7% in 2021, the largest yearly increase since 1981.

Week Ahead

The current week mercifully says goodbye to January, which has been the worst opening month for stocks since 2009. On Tuesday, the ISM’s manufacturing PMI is forecast to signal continued expansion. But, at a consensus 57.5 reading for January, this series is likely below the 60 level that prevailed for almost all of 2021. This results from the given current realities of inflation, supply chain, and COVID.

On Tuesday, construction spending is forecast to rise 0.7% for December. The JOLTs job openings for December is forecast to remain north of 10 million. On Wednesday, ADP’s private payrolls report is expected to come in at 225,000 for January. This is down from the prior 807,000 for December. On Thursday, economists will watch initial unemployment claims for signs that Omicron impacts are receding; from a prior 260,000, economists are looking for as few as 230,000 new initial claims. On Friday, January nonfarm payrolls are forecast up by 200,000, in line with December’s 199,000 gain. Unemployment is expected to hold steady at 3.9%. And hourly wages are forecast up 5.2% year-over-year.

Earnings season is under way and announcements expected this week include Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., Exxon Mobil Corp, and many more. Year-to-date through Friday; the Dow is down 4.4%, S&P 500 down 7.0% and Nasdaq Composite down 12.0%.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief January 24, 2022

known

A new year, a new tune? So far that is the trend…

With all the speculation around what this year will bring, including the effects of inflation and an ongoing pandemic, whether markets will continue to soar, along with predicting when the Fed may raise interest rates (and how many times), a quote from the late Donald Rumsfeld, former U.S. Secretary of Defense, comes to mind:

“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.

The idea of known unknowns is helpful in forming your financial strategy. 

What do we know already (known knowns)? 

Are we conscious of what we are not exploring (unknown unknowns)? 

What about biases and unconscious decisions (unknown knowns)?

As this year unfolds and we move into a potentially volatile time in the economy, let’s work closely together, examining your goals and adjusting if needed as conditions change to keep you on track.

Here is a review of last week and what to look forward to this week…

Last Week

The Nasdaq fell 7.5% due to disappointing earnings results. The drop put the Nasdaq below its 200-day moving average for the first time since April 2020. The S&P 500 fell 5.5% and is off 8.25% from its early January highs. Every S&P 500 sector lost ground, with consumer discretionary, technology, and financials all down between 6-8%. Concerning inflation and corporate profits accelerated an overall risk off movement by investors.

Globally, anxieties rose over Russia making a move against Ukraine. In the U.S., a surprise drop into negative territory for January’s Empire State manufacturing survey revealed the economic damage that the omicron variant has done. Weekly jobless claims took an unexpected turn higher, totaling 286K as illness-related absences increased.

Reported housing data came in mixed as mortgage rates ticked up, reaching the highest levels since March 2020. New home construction ended 2021 on a positive note and annual housing starts were the highest since 2006. Homebuilder sentiment slipped slightly in January as lumber prices have soared back to near last summer’s highs, while existing home sales sank 4.6% in December on record low inventory. Overseas, China’s central bank moved to shore up a slowing economy hurt by the real estate sector, cutting several benchmark lending rates. China’s economy grew by 8.1% in 2021, below forecasts of 8.4%.

The Week Ahead

Investor sentiment has been pushed to levels not seen in a long time. The latest AAII survey showed bullish sentiment at 21%, an 18-month low, while bearish sentiment jumped to 47%, a 16-month high. Readings at those extremes may suggest an oversold market in the short term. However, this week is packed with potential big-impact announcements. The largest being the FOMC’s statement to be released mid-day Wednesday. Will Powell change his hawkish tone given recent risk-asset performance, or stay the course laid out in December? Reaction may be volatile either way.

Manufacturing and services PMIs, along with consumer confidence numbers, will precede the Fed’s account. Thursday brings the first look at Q4 GDP, where consensus forecasts have slowly come down and currently sit around 5.3%. Durable goods and pending home sales will also report on Thursday, and then Friday an inflation update lands with the Core PCE Price Index. And don’t forget earnings season is in full swing as 108 names in the S&P 500 are expected to report quarterly results.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Santa Rally & Make Merry This Season

Santa Rally

Santa Rally or not, we’ve been through a lot in 2021 – more quarantining, hybrid work environments, ups and downs in the economy, and political uncertainty. Chances are, you’ve been so busy adjusting to all the changes while also trying to hold onto family ties and traditions that you’ve had little time to relax and enjoy this special time of year. 

Well, now is your time. Take it. One of the most valuable things you can do in a busy season is to find moments of “me time.” Prioritizing wellness, including in your financial life, and taking time to set your strategy allows you to more generously show up for others and extend goodwill. I can help show you how. So, go ahead, start the timer. Carve out a few minutes for yourself today.

Last Week

Equities moved higher after risks that the Omicron COVID variant would slow down economic activity wanned. The S&P 500 and Nasdaq indexes posted gains over 3%, and Dow was up 4.05% for the week, as volatility fell. The S&P hit a new all-time high on Friday. Every S&P 500 sector was positive. Crude oil jumped nearly 9% to climb back above $70 per barrel. Consumer prices rose 6.8% Year-over-Year and 0.8% Month-over-Month in November. This was the fastest annual pace since 1982, and in-line with expectations. Consumer sentiment rose to 70.4 in December, still lower than a year ago due to higher household inflation expectations.

On the labor front, resignations declined by 4.7% in October. Openings moved back up to 11.03M, up 4.1% Month-over-Month and just below the all-time high. Weekly jobless claims sank to a multi-decade low of 184K. Paychecks and hours worked grew in Q3, but productivity slumped 5.2%, worse than initial reports.

Week Ahead – Santa Rally or Coal to Wrap up 2021

The last full week before the holiday season begins. Will the Santa Rally continue, or finish the year with a lump of coal? This week features four central bank meetings and a host of economic releases. On Wednesday, the FOMC may reveal an accelerated tapering timeline. Markets are already pricing in better than 50% odds of a rate hike by May 2022. More inflation figures are reported with U.S. PPI on Tuesday, followed by CPI from the UK and Canada the next day.

This week also brings the first look at manufacturing and services PMIs for December in the U.S. and Eurozone. China’s monthly data dump will include annual figures for retail sales and industrial production. Other events of note include U.S. retail sales, regional manufacturing updates from New York and Philadelphia, and Australia’s employment account. The week closes with UK retail sales and Germany’s business sentiment information.

Year-to-date index performance; Dow up 17.53%, S&P up 25.45%, and Nasdaq up 21.28% through the close on Friday.

Happy holidays, see you next year!

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Omicron Variant and the Impact on Markets

omicron variant

A volatile week sent U.S. equity indexes lower after a disappointing jobs report, dampening Fed comments, and negative Omicron variant news. December kicked off with some fireworks, and the rest of the month looks ready for more volatility as opposed to the seasonal Santa rally investors have come to expect. All three major indexes finished lower for the week; the Dow down 0.76%, S&P down 1.18%, and Nasdaq down 2.6%.

Last Week – Omicron Variant

The S&P 500 recorded its second consecutive weekly loss. The index finished the month of November down 0.83% after rising to record highs early in the month. Equity markets dropped on the announcement of the omicron variant. The variant originated in South Africa but has made its way to the U.S. The VIX volatility index spiked over 100% from an October low to the highest level seen since January of this year.

Fed chair Powell’s Senate testimony surprised markets by implying a potentially quicker path for tapering and eventually rate hikes. Even in the face of the omicron variant. Adding it’s probably time to stop using the word “transitory” to explain the recent surge in inflation. Powell also warned the omicron variant could slow the labor market’s recovery and increase supply chain disruption. The market is currently anticipating one rate hike by July 2022.

Job reports were mixed last week. U.S. private sector job growth was robust in November, with the ADP report coming in above estimates at 534K. On the other hand, the non-farm payroll report disappointed with only a 210K rise in November payrolls. This figure was less than half the estimate, despite the unemployment rate falling more than expected to 4.2%. The 4.2% mark is the lowest since February 2020. The U.S. economy has now recovered 83% of the jobs lost in March and April of 2020.

In other economic news, U.S. ISM Manufacturing PMI ticked up to 61.1 in November. The services PMI recorded another all-time high of 69.1 as strong demand was boosted by supply chain improvements. According to the Conference Board’s report, consumer confidence fell to a 9-month low on rising prices and pandemic concerns. Despite rising mortgage rates, pending home sales jumped 7.5% in October as buyers returned.

Week Ahead

This week the main U.S. events include Treasury auctions, which did not go well the last time around, and the JOLTS job openings report on Wednesday. CPI report comes out on Friday. The market is anticipating a blowout November CPI inflation rate to be announced in the week ahead. The median estimate of 6.7% growth would be the highest since 1982. On the international calendar, China headlines with inflation data and trade balance numbers. US investors will also continue to monitor exposure to China as pressure from Chinese regulators led Didi Global Inc. to make the decision to delist from the NYSE in favor of a Hong Kong listing. Year-to-date index performance; Dow up 12.98%, S&P up 20.83%, and Nasdaq up 17.05% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

New Infrastructure Plan and Rising Inflation Concerns

rising inflation

Rising inflation led Interest rates to rise along with commodities and cryptocurrencies. Hot inflation data sent interest rates higher and U.S. equities moderately lower. This week the focus shifts to how inflation and supply chain issues are affecting consumer spending and industrial production. All indexes finished slightly lower for the week ending Friday. The Dow down 0.56%, S&P down 0.27%, and Nasdaq down 0.68%.

Last Week – Rising Inflation

Treasury yields rose significantly over the course of the week with the infrastructure plan and rising inflation concerns. Federal Reserve Chairman Jerome Powell had said the previous week that the Fed would be patient about raising interest rates. However, those concerns were realized further on Wednesday as inflation (CPI) surged 0.9% Month-over-Month and 6.2% Year-over-Year. Estimates were 0.6% and 5.9%, respectively. The largest YoY jump since 1990.

Investors are not sure the Fed will be able to hold off a rate hike for as long. The chance of a rate hike by next June rose from 55% to 77% in one day, and yields soared. Yields rose materially again on Friday with the UM Consumer-Sentiment Index coming in at 66.8, the lowest since 2011. Americans’ expected inflation rate increased to 4.9% for the next year. Rising wages is also pressuring prices. According to the JOLTS report, 4.4 million Americans quit jobs in September.

After five straight weeks of gains, the S&P 500 Index posted a down week. The index has been positive all but two months in 2021, January and September. Six of 11 S&P 500 sectors fell last week. Treasury yields lifted across the curve, especially at the front end as traders continued to pull rate hike expectations forward. U.S. Core inflation ran at a 4.6% pace, pointing to concerns that inflation may be more persistent than policymakers think. Wholesale prices, as measured by the PPI, swelled 8.6% YoY.

Equities recovered some of their losses later in the week with information technology and materials rising the most. U.S. initial jobless claims of 267K were above the 260K expected, but lower than the previous week’s 269K. Claims have continued to decline since peaking in early April and are approaching pre-pandemic levels. Electric truck maker Rivian Automotive Inc., which IPO’d at $78 per share last week, jumped 66.60% through Friday. The company is now worth more than both Ford Motor Company and General Motors Company. Making it the largest US company without revenue. Johnson & Johnson announced the spin-off of its consumer health business, creating two separate companies.

Week Ahead

This week the focus shifts to how pandemic-related disruptions are affecting consumer spending and industrial production. In the U.S., the economic calendar kicks off with the Empire State Manufacturing Index today. October retail sales and industrial production numbers on Tuesday. Housing starts drop Wednesday, with the Philly Fed Manufacturing Index on Thursday. There are a number of speeches from FOMC members throughout the week. It is becoming clear that investors are in disagreement regarding both fiscal and monetary policy. The “transitory” argument is wearing thin. Across the pond, the Bank of England surprised markets last week by holding rates steady. UK CPI is expected to show further acceleration.

Earnings announcements expected this week include NVIDIA Corp, Walmart Inc., The Home Depot Inc., Cisco Systems Inc., Lowe’s Companies Inc., and more. Year-to-date index performance; Dow up 17.95%, S&P up 24.67%, and Nasdaq up 23.06% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Major Indexes Continue Higher

market indexes

Major indexes closed at all-time highs last week. U.S. equities reached new record highs after strong jobs data and the Federal Reserve’s expected tapering decision. Last week, the Dow finished up 1.43%, S&P 2.03%, and Nasdaq 3.08%.

Last Week – Major Indexes Reach New Highs

The S&P 500 Index returned 2.03% last week after closing Friday at all-time highs. Equities rallied on positive economic data and strong corporate earnings. Last week earnings season reached full swing after 183 names in the S&P 500 announced quarterly results. Every S&P 500 sector except healthcare and financials posted gains. For the second straight week, the S&P was led by the consumer discretionary sector. Basic materials and technology also advanced more than 3%.

The U.S. central bank would like to see further improvements in the labor market before raising interest rates. Mainly, in the participation rate, which is still below pre-Covid levels. The Federal Reserve announced they will start tapering or reducing their asset purchases per month. When questioned about interest rates, Federal Reserve Chairman Jerome Powell stated rate hikes could happened in the back half of next year, but the Federal Reserve will remain “data dependent” in their decisions. Regarding inflation, Powell and the Federal Reserve’s certainty in inflation being transitory continues to decrease as higher prices continue. Last week wrapped up with Friday’s stronger than expected jobs report. Friday’s Non-Farm Payroll report revealed 531K new jobs added in October, with the unemployment rate falling to 4.6%.

Wages have also risen 4.9% Year-over-Year. Earlier in the week the ADP account showed private payrolls rising 571K for October, and weekly unemployment claims dropped to 269K. In other economic news, the U.S. ISM Services PMI jumped to a record 66.7 in October, while manufacturing activity slowed to 60.8 from 61.1 on stretched supply chains. U.S. Q3 productivity growth fell 5%, the biggest quarterly drop since 1981, as unit labor costs leapt 8.3%. Overseas, the Bank of England surprised by holding rates steady on labor market concerns. Crude oil fell 2% even though OPEC decided not to raise production in the face of mounting pressure from the Biden administration. China’s October PMI slipped into contraction, and Chinese tech stocks remained under pressure from regulators.

This Week

Even with a robust jobs market, high inflation, and expectations of rate increases as soon as the second half of 2022, 10-year Treasury yields fell 10 basis points last week. The Fed did add a note of caution in its statement, particularly on inflation, and investors have been well prepared for the central bank’s bond buying reduction. Ultimately it reflects an uncertain environment which may continue to drive rate volatility in the near term.

The U.S. economic calendar is light but contains important updates, with PPI on Tuesday and CPI on Wednesday. China releases their inflation data late Tuesday, with producer prices expected to advance even further from last month’s 26-year highs. Other notable events include Australia’s employment numbers, preliminary Q3 GDP from the UK, and Eurozone sentiment and industrial production figures. The week finishes up with U.S. Jolts job openings and a preliminary consumer sentiment reading for November.

This week earnings season is winding down as 20 names in the S&P 500 are expected to report. Notable names expected to report include Berkshire Hathaway Inc., The Walt Disney Co., PayPal Inc., Johnson Controls Holdings. Year-to-date index performance; Dow up 18.7%, S&P up 25.06%, and Nasdaq up 23.9% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

How High Did Earnings Lift Indexes

earnings lift

The S&P 500 eclipsed 4600 for the first time thanks to the earnings lift. The S&P 500, Nasdaq Composite, and Dow Industrials indexes all reached record highs during the week. November kicks off with a busy and important week of data. Last week all indexes finished up. The Dow up 0.4%, S&P 1.35%, and Nasdaq 2.72%.

Last Week

U.S. equities drifted higher in the face of interest rate volatility and economic growth concerns. The S&P 500, Nasdaq Composite, and Dow Industrials indexes all reached record highs during the week. The Nasdaq managed to outperform despite disappointing earnings from Apple and Amazon. The U.S. yield curve experienced major flattening, as rate hike expectations are getting pulled forward due to high inflation. U.S. GDP grew at a 2% rate in Q3, below expectations of 2.8%. This puts additional pressure on longer-term rates as growth expectations revise lower. Consumer spending increased by only 1.6% after a 12% rise in Q2. Consumer confidence rebounded to 113.9 in October following three straight declines. The improvement was boosted by rising wages and a strong labor market. Jobless claims fell to another pandemic-era low of 281K.

The economy’s sore spot continues to be supply chain shortages, with durable goods orders dropping 0.4% in September after four straight monthly gains. New home sales surged to a 6-month high in September, but higher house prices and mortgage rates may dampen future demand. Pending home sales dropped unexpectedly. Interest rate movements were largely influenced by international developments, as the Bank of Canada struck a hawkish tone mid-week before GDP data showed likely Q3 underperformance. In Europe, ECB watchers expect a formal tapering announcement in December, as Eurozone inflation hit 4.1% in October on surging energy costs. Finally, German GDP rose 1.8% in Q3, missing expectations of 2.1% growth, and business sentiment worsened again in October on supply bottlenecks.

Earnings Review – Earnings Lift

Earnings season is in full swing with 279 of the companies in the S&P 500 having reported. 82% have beaten earnings expectations and 67% have beaten revenue expectations. The strongest results have come from Financials and Energy while Industrials have lagged. Supply chain issues have been a common
theme among companies reporting in several sectors. Mentions of “supply chain” in quarterly earnings calls were up 58% during the 2Q 2021 earnings season versus 4Q 2020. The current season is on track to be the highest in the 21st century. The largest companies in the S&P 500 reported last week. Tesla, Microsoft, and Alphabet all had stellar results providing an earnings lift. Amazon, Apple, and Facebook struggled in the prior quarter. Mark Zuckerberg doubled down on efforts to promote the metaverse. He also announced that Facebook, Inc. is changing its name to Meta Platforms, Inc., in December.

Week Ahead

November kicks off with a busy and important week of data. The FOMC meets mid-week, where the stage appears to be set for a long-anticipated tapering announcement. There is much to weigh, with a robust economy being checked by supply constraints. Inflation is exceeding its target by a wide margin. The improving but tight labor market that has yet to reach full employment. There are additional central bank policy updates from Australia and the UK on the calendar. Speaking of jobs, NFP lands Friday, preceded by the ADP report two days prior. Crude oil prices have stabilized the past few weeks, but remain near 7-year highs. Other events of note include employment numbers and PMI from Canada, and Eurozone retail sales and PMIs.

This week will include earnings results from oil stocks BP and Marathon Petroleum. Also reporting are video game makers Activision Blizzard, Electronic Arts, and Take-Two Interactive. News from the November Fed meeting is out on Wednesday. Year-to-date index performance; Dow up 17.03%, S&P up 22.61%, and Nasdaq up 20.25% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

School is Back In Session

school

Just like that, it’s back-to-school season. Tell me, where did the summer go?

As kids of all ages go back to school, with all of the apprehension and excitement that may bring in these turbulent times, it’s also a great reminder that in life, summer ends but the learning never does. We are always presented with challenges and opportunities to expand our knowledge and grow.

It appears, though, that Americans are slipping in that regard. According to recent Forbes survey, the U.S. is experiencing a steep decline in financial literacy in recent years – especially when dealing with more complex topics like inflation, financial risk, and mortgage rates.

How is your financial IQ? Are there some topics you could use some brushing up on?

The easiest way to fix any gap in knowledge is to ask a question. I can be a great resource for you, and we can discuss how your strategy is positioned to face these complex times. The market brief below gives current insight as well. Feel free to connect with me and keep the financial literacy conversation going to ensure your circle has the same potential for wealth and wellness.

Last Week

U.S. equities posted mixed results as volatility plummeted towards the lowest levels of the year. The Dow and S&P 500 indexes managed modest gains to once again close at record highs, while the Nasdaq Composite fell slightly. Fed officials commented that while the labor market still has room for improvement, inflation is already at levels that would justify interest rate hikes. U.S. job openings surged in June to a record 10.1 million, but businesses are still struggling to find qualified labor for the rebounding economy. Jobless claims fell to 375,000 and continuing claims dropped to a pandemic-era low of 2.8 million.

U.S. productivity grew less than expected at 2.3% for Q2, igniting stagflation fears. Sentiment numbers also disappointed, as small business optimism reversed in July to 99.7 from 102.5. The University of Michigan Consumer Sentiment also fell to 70.2 in early August, a 10-year low. Americans are more concerned about the economy, inflation, and the delta variant. Crude oil gained as the Biden administration pressured OPEC to increase output. For the week, the Dow finished up 0.94%, S&P up 0.75%, and Nasdaq down 0.07%.

This Week

Despite concerns about sentiment, market breadth, and seasonal weakness, stocks continue to climb the wall of worry. Many pundits are calling for a correction, but there seems to be lack of a legitimate catalyst to create that scenario. This week the economic calendar is rather light. Given recent economic data and a policy committee that is growing impatient on tapering, Fed Chair Powell’s town hall event today will be scrutinized along with the July FOMC meeting minutes on Wednesday.

The July U.S. Retail Sales report this morning showed a contraction based on slumping services spending. Where is all the school spending? Regional manufacturing updates came with the Empire State Index declining on Monday followed by the Philly Fed Index on Thursday. The U.S. calendar rounds out with industrial production numbers today and housing starts on Wednesday. Year-to-date index performance; Dow up 16.04%, S&P up 18.96%, and Nasdaq up 15.01% through the close on Friday.

Happy back-to-school week!

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Preparing for retirement emotionally

retirement emotionally

Retirement paves the way to a new and exciting chapter of our lives, emotionally too. This is the moment of relief when, for the first time ever, we now have ample time to travel the world, take up new hobbies, and scratch whatever itch we’ve been ignoring.

Yes, retirement should be exciting. But for many of us, the thought of leaving our jobs forever can be daunting. After all, our careers play an important role in shaping our identity. And to suddenly cut the cord means we have to find something else to fill the void.

This isn’t helped by the fact that the word ‘retirement’ can be quite limiting – when it’s anything but. All too often, people associate it with old age and the ‘pipe and slippers’ part of life. This is why the financial conversation is often limited to how much you might have to retire on. And that’s that.

But it’s not as simple as that anymore. Today’s typical 60 somethings are nothing like those of a generation ago.

A lot of this comes down to the fact that life expectancy in North America has been on the rise for some time now. A generation ago, men could expect to live up to their late sixties, and for women their mid-seventies. Since then, life expectancy has improved incrementally. The current life expectancy for North American men is 76 and women 85.

This means that for many retirees these days, retirement isn’t a wind-down phase, but a whole new beginning. This means that financially speaking, you might need to consider how to manage your retirement fund more strategically.

But how do you prepare for such a massive transition emotionally?

According to gerontologist Ken Dychtwald, it’s all about mindset. He advises people approaching retirement to do so as they would a career: His advice is to set goals, to visualize a ladder to climb, and to use these targets as motivation to move closer towards your next destination.

Unfortunately, the statistics show how detrimental it can be to find yourself without purpose and meaning at retirement: depression is prevalent in 22% of men and 28% of women at the age of 65 and over.

If you’re unsure of how to even begin to plan for retirement, then following some of the principles from Professor Dychtwald’s five phases of retirement could help you map out your journey.

Imagination (15 before retirement)

Being at least fifteen years away from finishing work for good, retirement might not seem like a priority. At this point, you’re more likely to be making sure that career aspirations are met, bills are paid, and your children are able to get through university.

But it’s important to think about your pension at this stage as it can help to ensure you have the financial stability to live life on our terms, post-retirement. This is where you can start to dream big and imagine the retirement you really want to have.

Anticipation (3 years from retirement)

Now you’re planning to turn retirement it into reality… this is where preparing emotionally is just as vital as preparing financially.

A great way to do this is by trying to develop a network of retirees whom you can trust for advice so they can share their experience of how they coped with the process.

Make a note of the goals you want to accomplish and what measures need to be put in place in order to achieve them.

Preparing (1 year before retirement)

The new beginning is near! Now’s the time to start developing concrete steps. Ask yourself what you’re going to do during the first week of retirement and what you plan on doing on a day-to-day basis.

Make a plan of what you want to achieve in the first six months and talk it through with your partner or loved ones. Visualizing the practicalities of this new phase will make it seem less daunting when it eventually arrives.

The liberation phase (first year of retirement)

Your working life is finally over! This is the stage when you’re likely to feel the most excited, relieved, and liberated. You can finally begin to explore new opportunities, travels, and hobbies.

Unfortunately, this honeymoon period will eventually fade, but remember, this is natural.

Dychtwald states the importance of staying physically active and maintaining strong social ties with people at this stage.

Reorientation (3 years into retirement)

This is the part where creating a legacy for the next generation can be top of mind. Whether that’s by sharing your knowledge and wisdom with others, or by thinking more carefully about the financial gifts you’re leaving children and grandchildren, this is an opportunity for you to decide what impact you want to leave on the world.

Hopefully, this is helpful in terms of thinking about retirement and a brand new beginning. Retirement isn’t the end of the road; dream big and don’t be afraid to chase after your deepest desires.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Could there be a link between investing and wellbeing?

wellbeing

Over the past few years, we’ve seen a huge shift in society’s attitude towards health and wellbeing. We’re now generally more aware of the importance of good mental health. Thankfully, there is now a greater number of options available for people looking for help.

From meditation apps to supportive techniques and advice on ‘self-care’. There are many different ways we can keep on top of our mental fitness. Almost in the same way as we can our physical fitness.

But there is another aspect of mental health that isn’t as widely discussed. That’s the link between wealth and happiness.

Money is of course top of the list when it comes to issues most people worry about.

Whether it’s regarding short-term finances or our long-term future, financial insecurity can cause serious anxiety and low self-esteem.

But even though it often seems tempting to ignore money worries, recent research suggests that tackling the issues head-on can actually make people feel better than not doing it at all.

And by this they mean something as simple as opening an investment account.

In Blackrock’s Global Investor Pulse, which each year asks what people think and feel about their financial health, they report that once people start investing, 43% feel happier about their financial future, 36% of people have a higher feeling of wellbeing and 19% feel less stressed.

The results say this is true regardless of wealth, age, gender or life stage. Even more encouraging is that new investors say the improvement in their mood is immediate.

For those of you who already have a financial plan, this may simply be interesting to note. I’d love to know if you feel you are happier as a result of knowing that you have a plan in place. And even more interesting would be whether – as the research suggests – this feeling was immediate.

But it may be more meaningful to people you know who aren’t currently investing their money. Currently 63% of British adults hold no market-based investments at all. The reasons range from finding it too difficult to understand and feeling as if ‘investing is just for experts’.

However, now might be as good as any to enter the market for the first time. And tiny steps can have a huge impact. Even investing small amounts of money can lead to a greater return. Versus just having it in a savings account where interest rates are at an all-time low.

If you think it would be helpful for me to talk to anyone in need of a financial second option, then please pass on my details – I’d be happy to give them a call. Afterall, the results also say that 76% of investors who use a financial adviser report having a positive sense of wellbeing, and who am I to argue with that?!

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Can a robot really help you financially?

robo advisor

We’re hearing a lot about robo advisors these days. Are they right for you?

The financial services industry is no stranger to developing new products and innovations. Years ago, it was different types of stocks and bonds, then mutual funds were launched. More recently, exchange-traded funds (“ETFs”) that mimic indexes were launched. These days, robo advice is a hot topic. While having features that are certainly attractive to some investors, robo advisors aren’t right for everyone.

But first, the “what?”

What are robo advisors?

The term “robo advisor” is actually a bit misleading. Advisors generally guide their clients through the financial planning process to help these individuals achieve their life goals.

Robo advisors are automated portfolio managers. They take a limited amount of information about a client and create a portfolio of holdings. These holdings usually include a basket of ETFs. Robo advisors require little human involvement once their algorithm has been set.


robo advisor

Pros and cons

Robo advisors are programmed to automatically buy and sell holdings based on a desired risk-return profile. As there is little human involvement or management, they tend to be cheaper to invest in than actively managed portfolios. They also tend to be “set-it-and-forget-it” solutions that require very little effort by individual investors.

These portfolios rise and fall according to market and macroeconomic conditions, they typically don’t make adjustments to reflect the market. Conversely, as your advisor I’ve gained a deeper understanding of your financial picture, including your long-term needs and goals. Our work together means that your portfolio is suited specifically to you. Not just to a lot of people who may simply be your age and have a similar amount of savings.

Example of robots investing versus humans investing

During periods of rising markets, robo advisors will tend to perform quite nicely. As they reflect the performance of the wider markets in which they invest.

That said, markets don’t always go up. When markets are falling, portfolios run by robo advisors will tend to drop to the same degree as their corresponding markets. Meanwhile, active portfolio managers tend to rebalance or otherwise adjust their funds to reduce the downside impact of this market weakness. Possibly even taking advantage of it. By doing so, these portfolio managers are able to negate the losses that could result from market weakness. Which is something robo advisors can’t do.

Robo advisors are also not equipped to provide all of the other services that an advisor can provide. Including access to tax and estate planning, lawyers, accountants and other professionals who can help me ensure you have a complete financial plan that truly reflects your short- and long-term needs.

Please feel free to reach out to me to learn more about the benefits of a human vs. robo advisor.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

How to Tame Market Volatility through Diversification

diversification

It’s that time of the year again. Whether it’s in person or virtually, the holidays are an opportunity for more conversations with loved ones. This year, let’s strive to put some positivity into our conversations. There is a lot to gripe about, but there’s more to look forward to.  And the more we talk, the better we plan, prepare, and progress. Discussing your financial strategies with loved ones can help reinforce them or pivot according to new circumstances. And I’m ready to hear you! Knowing what may have changed this year will help us become more successful in pursuing your financial goals.

One topic that is front of mind is how to diversify your portfolio. One way to help investors reach long-term financial goals is through an investment technique known as diversification. Diversification basically means spreading out your invested money across different investments types, industries, countries, etc. Diversification can smooth out volatility of your portfolio and potentially lead to stronger returns over the long term. Helping you take advantage of the benefits of diversification is a central part of my job as your advisor.

One guiding factor behind diversification is that not all investment categories perform well at the same time. As some are increasing in value, others may be decreasing. Market volatility is the movement of investment categories going up and down.

Maintaining a well-balanced portfolio

As your advisor, I help maximize returns and reduce the risks associated with market volatility. Essentially, your portfolio represents a collection of different investments that work in harmony to help you reach your goals. One way you can achieve portfolio diversification is to divide your investments among the major asset classes. Such classes include equities, fixed income and cash.

Asset classes – A range of risks and rewards

Each asset class comes with varying degrees of risk and return characteristics. Typically, each class performs differently in certain market environments. Here’s a quick summary of each.

  • Equities (e.g., stocks)
    Equities refer to buying stocks or shares of a business, making you a part owner. This means the investor is subject to stock appreciation when the company outperforms. But also subject to the risks of declining stock value if companies underperform.
  • Fixed income (e.g., bonds, Treasury bills)
    Fixed income investors lend capital in exchange for interest. Considered as creditors, bondholders often have a priority claim in case of company bankruptcy. This makes the investments less risky. Fixed income typically provides income at regular intervals.
  • Cash (e.g., money market funds, bank accounts)
    Cash investments provide low returns versus other asset classes, in the form of interest payments. These investments typically come with very low levels of risk.

Investment funds – One-stop diversification

I can also help achieve diversification through the use of investment funds; namely, mutual funds and exchange-traded funds (ETFs). These investment vehicles represent convenient and affordable ways to access a wide range of investments.

  • Mutual funds – These are made up of a pool of assets from many investors. Mutual funds are managed by a portfolio manager. The portfolio manager actively seeks to produce greater returns than a specific market benchmark, such as the S&P 500 Index. With the large scale of a mutual fund, you benefit from professional management and can get strong diversification by gaining access to investments that would normally be inaccessible or too expensive for most individuals.
  • ETFs – These are funds that track and seek to replicate the performance of select market indexes. ETFs represent a basket of securities based on the underlying index. This allows investors to gain broad diversification across entire markets, industries, regions or asset classes. ETFs are known to incur fewer administrative costs, therefore charging lower fees to investors.

Please feel free to contact me if you have questions on the terms discussed in this article, or on how your investment portfolio is diversified.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

How to Start Investing

How to start investing

So, you’ve landed your first “real” job! Now’s the perfect time to create your first investment plan and start investing.

First, let me congratulate you on getting through school and starting your first “real” job. You’ve worked hard to get here, and I’m sure there are many things you’ll want to spend your new paycheck on. An apartment of your own, some decent takeout (not from a student cafeteria), maybe a little traveling.

You should do those things, as long as they fit into your budget. You’ve earned a little breathing room. But now that you have some stability, you should also thinking about how to start investing for your future. Here are three ways to get the ball rolling.

1. Pay down debt

As a student, you may have accumulated a mix of debt, from student loans to credit cards. Create a debt-repayment plan that focuses on paying off your high-interest debt, like credit cards, first.

Student loans often carry lower interest rates, so these loans might not be your top priority. At the same time, many student loans require you to make a minimum monthly payment shortly after you graduate, and you only have so much time to repay the entire loan. You still need a loan-repayment plan to make sure you don’t default on these loans.

2. Build your emergency fund

Post-graduate life isn’t all sunshine and rainbows. Sometimes your air conditioner breaks down in the middle of a heat wave or your car dies on the way to a meeting. I suggest putting 10% of your paycheck into an emergency fund to cover unexpected expenses. The goal is to eventually have enough money in your emergency fund to cover three to six months’ worth of expenses, but it can take a while to get there.

Your emergency fund should be low risk and easy to access, like a regular savings account.

3. Think about retirement

This is the best time to take advantage of the power of compounding. If you start putting just $200 a month into a retirement savings account at age 25, and let it grow over the next 40 years at a 4% rate of return, you’ll have about $237,000 in that account when you turn 65.

Wait another 10 years to start investing the same amount at the same rate of return, and you’ll reach age 65 with about $140,000. That’s a big difference.

If your employer offers a 401(k), use it. With this tax-advantaged retirement account, you contribute pre-tax dollars directly from your paycheck. You employer will also match your contributions up to a certain percentage of your salary.

If you don’t have a 401(k), look into a traditional IRA (individual retirement account) or Roth IRA. With a traditional IRA, you’ll get a tax break on your contributions, while with a Roth IRA, you won’t pay federal taxes when you withdraw money in retirement. With both types of IRAs, you won’t pay taxes on any investment income you earn within the plan until you start making withdrawals.

Ready to start investing? Contact me today and we’ll work on creating your first investment plan.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

And the Winner of the Presidential Election is

Presidential Election

U.S. indices tumbled, registering their worst week since March, as investors shed equity exposure ahead of the U.S. Presidential election and as surging COVID-19 cases sparked fresh lock downs in Europe and the United States. We’ve said it before, and we’ll say it again: nail your shoes down. The week ahead is expected to produce roller coaster volatility. Investors will grapple with incoming election results and potential policy changes it may bring. All major indices were down last week, the Dow down 6.47%, S&P 5.62%, and Nasdaq 5.5%.

Last Week

U.S. indices tumbled sharply as investors shed equity exposure ahead of the U.S. Presidential election and as surging COVID-19 cases sparked fresh lock downs in Europe and the United States. Despite impressive earnings from large cap technology companies on Thursday, the indexes had their worst week since March. Each index fell 5-7%+ on the week and sent the volatility reading above 40 for the first time since June. Majority of the S&P 500 market cap reported earnings, over 85% of firms have beat on the bottom line.

For the most part, economic data bested expectations. Stronger durable goods orders, steady consumer confidence, and slumping unemployment claims pointed towards continued recovery. However, some housing market data took a breather. Gross domestic product grew at a 33.1% annualized rate for the third quarter, led by a recovery in consumer spending.

The Week Ahead

Increased volatility is expected as investors grapple with election results and potential policy changes. PredictIt currently puts Democratic candidate Biden’s chances at winning around 70%. Key swing states like Florida, Ohio, and North Carolina hint the race isn’t over. Analysts expect a Democratic victory to mean larger fiscal stimulus. However, Senate majority leader McConnell’s recent remarks suggest little impetus for a relief bill in a lame duck period. With COVID-19 reaching record levels, it’s no wonder recent volatility has spiked. Economic data will play second fiddle, but plenty of key reports emerge. Friday’s jobs report is expected to show steady employment growth and a further decline in the unemployment rate. On Thursday the FOMC meets and will release their latest policy statement, interestingly only 2 days after the election.

Longer-term, corporate fundamentals and normalization of the U.S. economy will likely be bigger drivers of return, in our view. It is widely believed that phase three results will be released in November from multiple vaccine candidates. This could be a big step in the right direction for a full reopen of the economy. Year-to-date index performance; Dow down 7.14%, S&P up 1.21%, and Nasdaq up 21.61% through the close on Friday. Have a safe week!

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.