2nd Quarter 2017 Capital Market Review

Q2-2017 Quaterly Market ReviewThe 2nd quarter of 2017 continued the streak of new highs in equity markets.  While this bull market has already lasted longer than most; investors still seem to be overly cautious, expecting a pullback at any moment.  However, this nervousness is likely the reason the pullback has not happened. The longer the nervousness continues, the longer the market can run.  Aiding the uptrend continues to be improving corporate earnings, low unemployment, low interest rates, low inflation, and a much improved consumer balance sheet. Continue reading

Q4 2016 Capital Markets Review

2016 Q4 Capital Market ReturnsThe 4th quarter of 2016 was another remarkable quarter. For the second time in 2016, the market was upended by an unexpected election result. In the biggest surprise since the Brexit vote, Donald Trump was elected President of the United States. The market reaction was as strong as it was unexpected. Large U.S. companies (S&P 500 index) rose 3.82% for the quarter, while small companies (Russell 2000 index) appreciated 8.83%. The bond market was equally shaken with the BBgBarc US Aggregate Bond index down -2.98% and conversely the yield on the 10-year treasury increased from 1.61% to 2.45% during the quarter. Outside the U.S. saw a different reaction with foreign developed markets (MSCI EAFE index) down -0.71% and emerging markets (MSCI EM index) down -4.16% for the quarter. Continue reading

President Trump!

presidential electionRonald Reagan, Jesse Ventura, Arnold Schwarzenegger, and Al Franken are all former entertainers who made big splashes in their first run for public office.  But never has that first run landed someone in the White House!  Not since Dwight Eisenhower has a President been elected having never held elective office.

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Is it time to break up with your fund manager?

Fund Manager BreakupBy now you probably know that your duty to look after your investments does not end after the initial due diligence of selecting an investment manager. Manager selection is a crucial first step, but that is really only the beginning. You must establish a process to prudently monitor your investments with quantifiable criteria that will systematically generate a review of underperforming investments. Common reasons to replace an investment might include the investment manager retiring, the investment taking excessive risk, or the investment’s performance lagging the benchmark. However, sometimes after a thorough review of your investment it could make sense to retain it instead of replacing it. Let’s look at some of the reasons to not break up with or fire your investment manager. Continue reading

All indexes are the same, right?

All Indexes Are the Same, Right?For the past decade or so, index funds have become all the rage from academia, to Middle America, to the corporate boardroom. Index funds are designed to replicate the performance of an underlying index by buying all (or substantially all) the securities in that index. There are dozens of index providers such as S&P, Dow Jones, Morningstar, Russell, CRSP, and MSCI. Index mutual fund companies pick one of these index providers to build their index funds around. However, some investors are surprised to discover that all indexes with the same mandate don’t necessarily perform the same. Continue reading

Q2 2016 Capital Markets Update

We experienced a very quiet, low-volatility market for the first two months and 3 weeks of the 2nd quarter.  Then the Brexit happened!

For most of the quarter, equity investors continued the trend of climbing the wall of worry.  The quarter saw concerns over the job market (only 38,000 jobs created in May[1]), no growth in corporate earnings (for the 4th consecutive quarter), uncertainty over future Federal Reserve rate hikes, and anticipation of the British referendum over whether to stay in the European Union.  But in the midst of all these concerns equity markets slowly climbed higher.  It was not until June 24, when the surprise result came out of Britain to leave the EU, that the markets received a jolt of volatility. Continue reading

Fourth Quarter 2015 Capital Markets Update

Equity markets remained volatile during 2015’s 4th quarter, moving substantially higher to erase the significant losses from Q3. While most of the economic conditions were unchanged from the prior quarter, markets flipped to the “glass-half-full” mindset. Continue reading

Changing View of Retirement Can Benefit Workers and Employers

A recent Merrill Lynch survey found that 72% of pre-retirees older than 50 said that their ideal retirement would include continuing to work in some form. As I interact with individuals who are nearing retirement, we frequently discuss what they plan to do with the next 20 or 30 years of their life. After hundreds of these conversations, my common refrain has become: “It is not enough to retire from something; you must retire to something.” Sometimes preparing for the financial part of retirement is a cake walk compared to getting ready for the non-financial parts. Also the fact that many people are living longer and healthier lives has led to a changing view of retirement. Continue reading

The Third Phase of Life during Retirement: No, No, No

Do you act the same today as you did 20-30 years ago?  Do you live the same lifestyle and spend the same amount of money at age 50, as you did at age 25?  If these questions seem ridiculous, why would you expect anything different from your retirement years?  When you think about retirement, and even when you are calculating the needed size of your nest egg, you may only be focusing on that first stage of retirement.  Continue reading

The Second Phase of Life during Retirement: Slow, Slow, Slow

There are three different and distinct phases in retirement.  Initially, you will find yourself in the go, go, go phase.  You might call the second phase slow, slow, slow, later followed by the no, no, no phase. This post will focus on the second phase of retirement life, the slow, slow, slow phase (for more information on the active phase of retirement read our post on the go, go, go phase). Continue reading