investment strategy

Markets Reach All-Time Highs

jim Financial advisor, Investing, Market Brief, Market Commentary, Market Outlook, Market Review, Retirement Planning, Stock Market, wealth management , , , , , , , ,
all-time highs

The S&P 500 and Nasdaq Composite Indexes closed at all-time highs after the Fed Chair reassured markets. Equity indexes rallied as investors weighed the tragic events in Afghanistan against more transparency from the Fed’s monetary policy timeline. The Nasdaq rose nearly 3% and the Dow and S&P 500 added 1-1.5%.

Last Week All-Time Highs

U.S. equity indexes rallied as investors weighed the tragic events in Afghanistan against more transparency from the Fed. Crude oil rebounded with an 11%+ jump, and gold prices rose modestly. Treasury yields held their weekly gains. The U.S. dollar dropped after Fed Chair Powell calmed markets with his comments on inflation and tapering. PCE Core Price Index data show annual price increases at a 30-year high of 3.6%. However, Powell reiterated that higher prices are not broad-based. Surge-price categories are moderating, and that both wages and long-term expectations do not suggest “excessive inflation”. Powell affirmed that asset purchase tapering is likely to begin later this year. (Tapering is the central bank’s plan to start gradually reducing bond purchases by the end of the year.) He also said that interest rate hikes aren’t on the table until the more stringent maximum employment test is met.

In other U.S. economic news, August Flash PMIs showed continued expansion. However, this reading is at a slower pace than July and slightly below expectations. Existing home sales rose 2% in July. All the annual gains in homes priced above $500K, while new home sales ticked up 1% in July. Durable goods orders for July fell 0.1% Month-over-month. These numbers did exceed forecasts, while the second Q2 GDP estimate came in slightly higher at 6.6%. Corporate profits increased at a 9.2% quarterly rate to a record $2.8 trillion, supported by historically tight credit spreads. Overseas, Germany’s August PMIs fell from July but remained solidly in expansion as Q2 GDP grew more than expected at 1.6%. Finally, minutes from the ECB’s latest policy meeting showed some concern of understating inflation risks that may or may not be durable.

Week Ahead

Based on the market’s reaction to Powell’s Jackson Hole speech, investors seem to feel they have more clarity around the Fed’s intended path and can avoid another “taper tantrum”. Geopolitical tensions and coronavirus variants may affect economic growth or dent consumer sentiment. Powell made it clear how strong the link is between jobs and potential rate hikes, and this week will bring several updates on the labor front, with the ADP report on
Wednesday followed by non-farm payroll report on Friday.

China’s Manufacturing PMI arrives Monday, where the government continues regulatory crackdowns that keep Chinese stocks under pressure. Tuesday is busy with German employment numbers, Canadian and Australian GDP updates, and U.S. consumer confidence. Oil’s recent volatility will focus traders on Wednesday’s OPEC meetings. Global growth concerns have eased somewhat, and increased crude production is expected. Lastly, U.S. ISM manufacturing and services PMIs are anticipated to fall Month-over-Month while remaining firmly in growth mode.

Year-to-date index performance; Dow up 15.84%, S&P 500 up 20.06%, and Nasdaq up 17.39% through the close on Friday.

Let’s connect 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 Volatility: Keep Calm and Carry On

jim Financial advisor, Investing, retirement, Retirement Planning, wealth management, wealth planning strategies , , , , ,
keep calm

I don’t know about you, but this isn’t exactly how I thought we’d be approaching autumn. The Delta variant is causing some of us to pivot and alter plans once again. Amid reports of extreme weather as seasons change along with up and down markets, I’ve decided that I’m heading for much higher ground. Are you with me?

The fact is, storms of life come – often quickly and unexpectedly. And while we can’t stop the storms, we can do our best to prepare for and weather them until they pass. Destruction and loss will cause added stress, and that’s not the best environment in which to make decisions. The optimum time to prepare is now, before the next storm hits, focusing on what we can control and the best route upward. 

Markets naturally go up and down. Over the long run we all know they go up a lot more than they go down. But in these times of market volatility it can be stressful on all of us. The key to managing stress from fluctuations in the market is to ignore noise.

We create portfolio’s based on the clients long term goals. This way clients don’t need to worry about occasional market dips which newspapers and other media tend to sensationalize. Investing is about long term returns not short term ratings.

In fact stocks are actually on sale, so now could be a good time to go shopping. Although significant market dips can be attention-grabbing, they can also present a buying opportunity. If you have any questions about your strategy in light of recent events, let’s talk.

Please let me know if you want to discuss anything at all, from this weeks’ market news to specifics about the portfolio we have implemented.

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.

Summer Tug of War Drags On

jim Financial advisor, Investing, Market Brief, Market Commentary, Market Outlook, Market Review, Retirement Planning, Stock Market , , , , , , , ,
tug of war

U.S. equities survived a tumultuous week largely intact. Investors weighed mixed earnings reports, inflation figures, and rising COVID-19 cases attributed to the Delta variant. Labor market headlines will remain in focus after the Fed’s comments, and with jobless claims stubbornly stuck at the 400,000 level, investors will welcome additional data this week with the U.S. ADP employment report on Wednesday, followed by the monthly non-farm payrolls report on Friday.

Last Week

U.S. equities survived a tumultuous week largely intact. Investors weighed mixed earnings reports, inflation figures, and rising COVID-19 cases attributed to the Delta variant. The Nasdaq slipped 1% after Amazon’s first EPS miss in 3 years. The Dow and S&P 500 finished slightly lower. The S&P 500
Equal-Weight Index gained ground as value outperformed growth. U.S. Treasury yields fell after the Federal Reserve indicated it is in no hurry to tighten monetary policy.

The Fed’s accommodative stance sent the dollar tumbling, lifting gold prices and sending crude oil higher by 2%. Fed Chair Powell also indicated that asset purchase tapering would likely be tied to labor market improvements as opposed to consumer price data. The U.S. GDP report highlighted how much the economy is struggling to readjust to the new normal. Second quarter growth accelerated by a robust 6.5%, but well below estimates of 8.4%. Some sectors continue to be held back by supply constraints, while others stress to recover from the pandemic.

U.S. home prices continue to break records, but new home sales stumbled in June, dropping 6.6%. Pending sales of existing homes dropped 1.9%. Consumer confidence remained high, as the Conference board’s index improved for a 6th straight month in July. U.S. durable goods saw continued growth in June, but the 0.8% increase fell short of the 2.1% expected. Chicago PMI surged to 73.4 in July, just shy of a record high. Inflation persisted in June, with the Core PCE Price Index rising 3.5% YoY, the biggest move since 1991. Finally, Chinese stocks remained under pressure as the SEC has stopped processing U.S. IPO registrations of Chinese companies while it considers new disclosures.

Week Ahead – Tug of War continues…

Labor market headlines will remain in focus after the Fed’s comments, and with jobless claims stubbornly stuck at the 400,000 level, investors will welcome additional data this week. The U.S. ADP employment report comes out on Wednesday, followed by the monthly non-farm payrolls report on Friday. U.S. ISM PMIs will also refresh, with services on Wednesday. Two more global central bank meetings await. The RBA may reverse its recent tapering plans amid continued lockdowns in Australia, while the BOE will consider hot inflation figures and a surprise drop in new UK coronavirus cases. Although many of the big names have already reported, Q2 earnings season is only halfway over. S&P 500 Y/Y revenues are up a record 21% and earnings up 86%, expectations for Q3 and Q4 are building.

Year-to-date index performance; Dow up 14.14%, S&P up 17.02%, and Nasdaq up 13.85% through the close last 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.

Financial Review – Why now is still a good time

jim Financial advisor, Financial Review, investment strategy, Retirement Planning, wealth management, wealth planning strategies , , , ,
financial review

Isn’t it funny how quickly we adapt? Who would have thought that video conferencing would have become such an important part of life. And in fact a lifeline for many? It’s helped friends and families to keep in touch and enabled businesses to keep running during tough times. It’s certainly provided me with a helpful way of staying connected and providing financial review to clients.

Now, at the click of a button, I can invite you to a meeting from your home. I can make it interactive by sharing our screens to show you documents and charts. Of course, these meetings also save time because we’re not having to travel to see each other. Not to mention servicing clients in different states.

But the ‘Zoom revolution’ has also brought with it a new phenomenon. The phrase ‘Zoom fatigue’ describes the feeling of drain after too many virtual meetings. Psychologists explain that the added pressure of being seen on screen is what adds to this feeling of exhaustion. The strain of having to actively show through a small screen that we’re interested and alert can be tiring.

It’s certainly true that face-to-face meetings are much more relaxed. It’s an altogether more natural experience. There’s an emotional connection that happens without thinking about it. It’s easier to sense when someone needs to pause and reflect, and there are more comfortable silences. There’s also less chance of us talking over one another.

That’s why I’ll always advocate face-to-face interaction – and why I’m looking forward to seeing you again one day soon hopefully! But in the meantime, I want you to feel confident that your review meetings and catch ups – whether on the phone or via video – will still be just as effective as in person.

I understand what an uncertain and worrying time it will be for many and that now more than ever you’ll want to talk to someone in a relaxed a way as possible.

As part of your financial review, I’ll listen to your concerns and provide you with feedback and solutions based on your individual needs and priorities. I’ll also make every effort to make things clear and simple.

Last week wrapped up Financial Literacy Month. I hope you were able to learn a few new things and apply them to your strategy. One of my goals in sharing information is to engage you with useful content so you are in the best position to grow your wealth – and maybe even have a little fun. Ask yourself these three questions to reveal how financially literate you are:

  1. Are you in control of your spending? Examining your money habits and creating a budget puts you in the driver’s seat toward smart money management.
  2. Are you saving for your future? Do you live within your means and are you investing in yourself first and foremost? If you need more info about how to best do this, ask me.
  3. Are you confident in reaching your current financial goals? Listen to your gut, and act accordingly.

If you answered yes to all three of these questions, you’re in good shape. But if you said no, don’t worry. Many people have had to reevaluate their priorities over the past year. I can help get you on the right track. I’ll also invite you to participate comfortably in the conversation and ask me any number of questions – I really mean it when I say there’s no such thing as a silly question!

I hope this provides reassurance that now is still a good time for a financial review. By re-setting your financial strategy at this point, I can put recent market performance and your longer-term financial goals into context. It will also give you the chance to pause, reflect and resettle your mind.

I look forward to speaking to you.

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

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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.