As humans, it’s difficult for us to admit failure. Nowhere is this more evident than when looking at investments. I can’t count the number of times I’ve heard someone tell me that they don’t want to sell a poor performing investment until it gets back to even. Selling an investment at a loss doesn’t always mean you’re giving up on it. And, in taxable portfolios, it can be a sound tax planning strategy. [Read more…] about Take the Loss and Save Money
Q3 2015 Market Update
In a Nutshell
Like students invading our college town after a summer away, volatility abruptly returned in August. After commenting last quarter that the market had not strayed more than 3.5% from where it began this year, U.S. stocks dropped 12.5% from their May peak to their August lows and drove the VIX, an index that measures market volatility, to levels not seen since 2011. International stocks fared worse, with emerging markets taking the brunt of the damage.
High quality corporate and Treasury bonds, normally a safe haven during market drops, provided some help during the quarter, up a few percent. High Yield bonds, more closely tied to the stock market, fell in sympathy with stocks.
Commodities also suffered losses during the quarter. Gold, normally considered a safe alternative when other markets are in turmoil, continued its multi-year slide. One bright spot was commercial real estate, which bucked the negative trend and finished positive for the quarter.
It is often said that markets climb a wall of worry and currently there seems to be plenty to cause concern. Although the Federal Reserve has not begun raising interest rates yet, it’s only a matter of time before they begin doing so. Then there is continuing concern about the slowing Chinese economy and that it could drag the rest of the global economy down with it. And some investors are worried that the drop in company profits this year may not be temporary.
On the positive side, energy prices are down and consumers are keeping the U.S. economy stable by taking those savings at the pump and spending more in other areas. Auto sales and home building, two key economic drivers, continue to be strong. And the stock market will enter its 6 month seasonally strong period in November.
As always, we continue to pay attention to the markets and how our client portfolios are positioned. [Read more…] about Q3 2015 Market Update
My Grandparents, Investment Gurus
(An article based on this post was featured in the Nov/Dec 2015 issue of New River Valley Magazine.)
Everything I needed to know about managing investment portfolios, I learned from my grandparents. As I don’t think either of them ever bought a stock, bond or mutual fund it took me several years to come to this realization.
You see, Sam and Annie were farmers. [Read more…] about My Grandparents, Investment Gurus
Q2 2015 Market Update
In a Nutshell
The second quarter was a yawner overall for the U.S. stock market. With all the concerns about rising interest rates, Greece, and more recently China, this year has been one of the least volatile on record. Through the end of June, the S&P 500 has not closed more than 3.5% above or below where it started in January. This is a first for the history of this index, which spans more than 50 years (Source: Bespoke Investment Group).
Bonds had a more difficult time of it this past quarter with all the major indexes posting a loss. Expectations of a rate hike by the Federal Reserve later this year pushed bond yields up and when yields go up, prices usually go down.
Because bonds lost ground, the classic balanced portfolio of 60% large company stocks and 40% high quality bonds was down this quarter. If rates continue to rise, the bond portion of the portfolio, which has acted as a mainsail in a steady breeze and provided positive performance, may turn into an anchor.
More excitement was found in commodities and real estate. Although with real estate, down almost 11% this quarter, it wasn’t the kind of ride most investors want. Oil and agricultural products were the big positive drivers of commodities. [Read more…] about Q2 2015 Market Update
A Hidden Gem For Long Term Care Information
“OK Mom, talk to you soon. Love you.” Kelly hung up the phone and walked out of the kitchen into the family room where her husband, John, was watching the game.
“Did you overhear any of my conversation with Mom?” she asked, “I’m starting to worry”.
“You know me better than that, the Hokies are on”, he replied. If John was watching his beloved football team, the house could be burning down around him and he wouldn’t notice until the TV melted. If he was only that passionate about her, Kelly thought. No, this was not the time to start that again. There was a more important topic to discuss. [Read more…] about A Hidden Gem For Long Term Care Information
Trouble Being Productive in the Summer? So Does the Market
Summer is here and so our thoughts turn to other pursuits. If you’re lucky enough to have a window office, it can be hard to focus on work when on the other side of the glass is one of those perfect days that cause us to daydream about being on the golf course, by the water, or in the garden. [Read more…] about Trouble Being Productive in the Summer? So Does the Market
Save Money When Making Gifts
Your adult child is just starting out on their own and you want to give them $10,000. Also, your church has just started a building fund and you want to donate $10,000 to it as well. You have $10,000 in cash and 10,000 worth of stock that you paid $5,000 for years ago. Should you give the cash to your child and the stock to the church? Cash to the church and stock to your child? Does it make any difference?
From a financial standpoint, there is a right and wrong way to make a gift. Make it the right way and, aside from the cost of the gift, you could save a significant amount of money. Make it the wrong way, and well… [Read more…] about Save Money When Making Gifts