Take Control of Your Financial Life
Beating “the market” is not easy. Every year there are any number of studies published which tell us only (pick a number between 10% & 55%) of active managers beat the market in a given year. (Source: Morningstar, The Economist)
If you have the discipline and patience, however, there are three strategies which have been proven to outperform the market over longer periods of time. [Read more…] about 3 Investment Strategies That Beat the Market (Over the Long Term)
Much like the amiable doctor in the Robert Louis Stevenson novel, in the first half of 2015 domestic stocks were the understated yet dependable members of the investment world. [Read more…] about 2015 Q4 and Year in Review
We love predictions. We know they’re usually wrong, but we want them all the same. The media knows this and provides us with an almost unlimited supply, especially when it comes to the holy trinity of weather, sports, and the stock market. We will impatiently wait through the commercials for the 7 day forecast or to see ESPN trot out the next expert telling us which NFL teams are going to be in the Superbowl. And for the last few weeks, the financial media has given us all manner of experts making predictions about what the markets and economy are going to do in 2016. Of course, with last week’s market activity, some of them may be making revisions to their forecasts. [Read more…] about The Forecasting Game
For Thanksgiving this year, my family and I visited my parents in Florida. There were the usual Thursday morning holiday activities; catching up on family gossip and preparing enough food for a small army, all accompanied by the sound of marching bands from a TV tuned to the Macy’s Thanksgiving Day parade. In the midst of all this, my father asked me to follow him to the spare bedroom. [Read more…] about A Quick and Important Conversation with Your Family
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
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
(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
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