Welcome to the August edition of The Wealth Chronicle.
21 Key Stats For Tracking Your Financial Health
In our experience, people often find themselves overwhelmed by their financial numbers. It is hard work juggling all the different account, incomes, taxes, debts and savings — especially as the assets accumulate over the years.
Our special report “21 Key Stats for Tracking Your Financial Health” can give you tighter control and peace of mind in how you manage your assets (and liabilities). Focusing on the right numbers can lead to better decisions about personal expenses, credit, investments, and retirement.
Please follow this link to see which stats are working the best for you:The 21 Key Statistics to Financial Health. And of course you can talk to me anytime about your financial health.
This special report can help you:
* Position your cash for emergency expenses and income disruptions
|Yes, No, Maybe|
|Where do you believe the market is headed? I get that question often, yet it’s a hard one to answer.
Long term, stocks are an integral part of most portfolios, and the historical data bear this out. But many people who ask me for my opinion want to know the market’s direction over a much shorter period. You know, what’s going to happen after the U.K.’s Brexit vote? Or how will stocks perform before and after the election? I understand the inquiry. As a financial advisor I have my fingers on the pulse of the market, the economy, and there is this expectation that we have some sort of inside information. Although I did not expect what happened in Europe to have a lasting impact at home, admittedly, I was surprised by the sharp bounce in stocks and subsequent all-time highs in the Dow Jones Industrials and the broader-based S&P 500 Index. In some respects, the political earthquake in the U.K. shook up our markets for just two days before cooler heads prevailed and shares began an upward ascent.
While I have reiterated in the past that I have no magic crystal ball (and let me remind you, neither does anyone else), my approach leans heavily on diversification and eschews market timing.
An all-time high-how should I react?
Given the abundance of caution in the economy and the high level of negative sentiment that abounds, I’m hearing the latter versus the former. But, again, I caution against market timing.
Again, by itself, a new high isn’t a reason to go to cash. What I do counsel is to avoid emotionally based decisions. In my experience, they rarely work. When fear is high, some investors become uncomfortable with the equity allocation in their portfolio. This may even occur during a garden-variety correction that lops around 10% off the major indexes. If this is the case, we may need to revisit your asset allocation, especially if your tolerance for risk has changed. In addition, changes in your personal situation may warrant updates to your financial plan. If that’s the case, let’s talk.
A look behind the rally
Meanwhile, let’s not discount the positive impact from strong corporate buybacks of shares. Over the last 12 months ended March 31, S&P 500 companies shelled out a record $589.4 billion to repurchase shares of their own stock, according to S&P Dow Jones Indexes.
Finally, a cautious Fed has been a plus for equities simply because low interest rates create less competition for stocks. If we were in a recession and profits were sliding, low rates would likely do little to support equities, in my view. But again, the economy is expanding, albeit modestly.
What’s an investor to do?
As I’ve mentioned in previous newsletters, we will eventually enter a recession, and recessions have historically brought about a downturn in stocks. I don’t know when it will happen, but it will. It’s an inevitable byproduct of a free market economy.
While declines in the major averages that exceed 20% can be unnerving, they have always run their course historically, setting the stage for another upward cycle that takes shares to new highs.
I hope you’ve found this review to be educational and helpful. As I always emphasize, it is my job to assist you. Thank you very much for the trust and confidence you’ve placed in me.
|Staying Invested Through the Bad Times|
|Investors may be tempted to time the markets after major events, like June’s Brexit or the weakened Chinese economy of August 2015. But they will find that staying invested is the safer choice.
World events can directly impact market performance, as evidenced by the -3.6% drop in the Russell 1000 Index the day after the Brexit referendum was passed in June 2016, or its -4% fall on news of the Chinese currency devaluation in August 2015. But such market downturns are followed by quick and unpredictable reversals, making it very difficult for an investor to get out high and buy in low.
Here’s what investing $10,000 for the long haul looks like from July 2006 to July 2016. Investors who missed the 10 best market days because they pulled out their money at various times cut their earnings in half. (On the other hand, if an investor timed the market correctly so as to miss even one of the worst-performing days during those 10 years, then she would have doubled her portfolio returns.)
Open Enrollment, the period of time when employees of companies and organizations may make changes to their elected fringe benefit options, such as health insurance will be soon upon us. Below is a checklist of things to think about as it approaches. HSA’s and FSA’s are two great benefits that if available you should consider whether they make sense.
Although much of the presidential campaign’s focus has been on the differences in personality and temperament between Democratic presidential nominee Hillary Clinton and Republican nominee Donald Trump, there also is a stark divide on tax policy. This month, each of the candidates laid out their economic plans, including tax changes. Here are some of the highlights as summarized by InvestmentNews
Brand Warfare – An interesting graphic that shows the consolidation in the consumer good industry. A handful of companies control almost all of the brands we use.
Please contact me regarding any of the articles above, or if you would like to discuss your personal or business finances