Making Sense of Markets Q1 2016

Source: Morningstar Direct 2016. US Stock Market represented by: S&P 500 Index. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. All investments involve risk, including loss of principal. http://www.cnbc.com/2016/01/07/soros-its-the-2008-crisis-all-over-again.html, http://www.cnbc.com/2016/01/15/prepare-for-stocks-to-fall-another-10-larry-fink.html http://www.cnbc.com/2016/02/05/citi-world-economy-trapped-in-death-spiral.html http://www.telegraph.co.uk/business/2016/02/11/rbs-cries-sell-everything-as-deflationary-crisis-nears/ http://www.cnbc.com/2016/03/31/tom-lee-when-and-why-i-expect-new-stock-records.html http://www.cnbc.com/2016/01/01/expect-less-and-buy-antacid-2016-investment-forecasts.html

Source: Morningstar Direct 2016. US Stock Market represented by: S&P 500 Index. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. All investments involve risk, including loss of principal. http://www.cnbc.com/2016/01/07/soros-its-the-2008-crisis-all-over-again.html, http://www.cnbc.com/2016/01/15/prepare-for-stocks-to-fall-another-10-larry-fink.html
http://www.cnbc.com/2016/02/05/citi-world-economy-trapped-in-death-spiral.html
http://www.telegraph.co.uk/business/2016/02/11/rbs-cries-sell-everything-as-deflationary-crisis-nears/
http://www.cnbc.com/2016/03/31/tom-lee-when-and-why-i-expect-new-stock-records.html
ttp://www.cnbc.com/2016/01/01/expect-less-and-buy-antacid-2016-investment-forecasts.html

Every quarter has its fair share of alarmist media headlines. Yet Q1 2016 may have taken the cake with a pronouncement from the Royal Bank of Scotland on February 11 urging investors to “Sell Everything!” It also happens that February 11 was the low point for the quarter and the market has rallied by double digits since that day.
 
The stock market experience was similar around the globe, with many markets falling by more than 10%. Yet, we’ve historically experienced a 10% decline at some point during every calendar year. So this 10% decline on the S&P was notable only because it came so rapidly at the start of the year. Once it recovered, sentiment followed, and by the end of the quarter we had pundits predicting all time market highs were right around the corner. Continue reading

Your Website — What It Should (and Shouldn’t) Be

Blog_Website_DelwinMany web development companies and marketing specialists suggest that you fill your website with articles and blog posts so that it will rank better in search engines. And by ranking well in searches your website will generate leads from “cold” prospects.
 
Although this tactic used to work, it often fails these days, because you’re going head to head with content providers such as Forbes and Investopedia. It’s much harder to come out near the top in search results these days.
 
In fact, putting content on your website for the sake of search engine optimization may have a negative impact on your most valuable visitor — the referred visitor.
Continue reading

The Best Time to Invest

Screen Shot 2016-04-19 at 8.47.47 AMWhat are your clients worried about today? U.S. Presidential elections? The price of gas? Global markets? The Mid East? The Far East? The Fed? Volatility clusters?
 
As a confident, knowledgeable Advisor, you know that there is always something for investors to worry about. Fortunately, you are able to step back, take a longer-term perspective and ignore the noise. Right? Right? Continue reading

Volatility Clustering FAQ

  1. What is volatility? Volatility is the rate at which the price of a security moves up and down. Volatility is a type of risk found in financial instruments.
  2.  

  3. How do you measure volatility? There are many ways to measure volatility, including measures of standard deviation, frequency of “large” day-to-day swings or frequency of large daily high-over-low ratios. All of these are direct measures of an instrument’s past volatility. A measure of forward looking or expected volatility of a stock market index can be found by using the VIX Index or also known as the fear gauge.
  4. Continue reading

Insights on the DOL Fiduciary Rule

Blog_DOL_RulesAfter six years of proposals and over 40 years since an actual change, the Department of Labor’s new fiduciary rule is finally here. While we work to schedule a more in-depth webinar on the 1,000-page regulation, here are some key elements to digest.
 

The rule’s structure consists of three core concepts:

  1. Expanding the definition of who is a fiduciary: any individual receiving compensation for making investment recommendations that are individualized or specifically directed to a particular plan sponsor running a retirement plan, plan participant, or IRA owner
  2. Continue reading

Investment Committee Briefing – Q1 2016

Source: VIX Index data is from Yahoo Finance. Aug 1, 2015 to Mar 31, 2016. VIX range of 15%-18% highlighted. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio.

Source: VIX Index data is from Yahoo Finance. Aug 1, 2015 to Mar 31, 2016. VIX range of 15%-18% highlighted. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio.

The broad market closed out the first quarter of 2016 slightly higher than when it started the year, but along the way, many investors experienced a fairly wild ride.
 
Early in January, U.S. stock markets nosedived, with the S&P 500 index falling about -10.3%. This decline technically qualified as a Market Correction (a decline of 10% or more, peak-to-trough).
 
The most prominent factors behind this decline included:
 
 

  • A sharp drop in the global price of oil
  • Continued economic slowdowns in Emerging Markets, especially China
  • Uncertainty around the next Fed rate hike — when, how much, how would it be justified
  • Global Central Bank policy divergence — U.S. Fed tightening while Japanese and many European Central Banks continued their massive easing
  • Extraordinary political polarization and anxiety over the U.S. Presidential Elections

Few of these factors are systemic or even particularly long term, but together they made many investors cautious, even nervous…at least for a few weeks.
Continue reading

Starting to Slip

Blog_SlipHave you ever had a conversation with someone who repeatedly asks you the same question or who tells you a story they just told you a few minutes earlier? Most of us have. Common as it is, it can still be awkward and, the first time it happens, incredibly easy to justify away. Whether you have experienced this with a friend, colleague, family member or even a client, the real trick is recognizing when it has become a problem.
 
For me this is a topic near and dear to my heart as my mother-in-law is in the throes of Alzheimer’s now. What started as forgetfulness and stories on repeat has now become an emotional and financial family roller coaster that’s impacting three generations. Knowing the emotional toll really cannot be alleviated, I often think about whether or not our experience would be any easier had we done some planning in advance of the illness settling in. I wonder if her advisor had pointed out a behavioral shift in spending and we acknowledged it all at the start, if we would be in a better position. Seems like a pretty easy “yes” … but then I wonder how prepared her advisor was for it too. Continue reading