Asset Class Performance
It has not been a particular good week for stocks with the US broad market as represented by the S&P 500 down approximately -1.2%. That index is still positive on the year up approximately 2% after a historically strong 2017. The Dow Jones Industrial Average had a rougher go of the week down -2.8% and posting losses on 8 consecutive trading days. The Dow is not a particular good barometer of the overall market but it is newsworthy, and this week the big news was that GE, after 122 years in the index, is being replaced by drug-store Walgreens. You can read more here. International stock markets followed the downward trend in varying degrees. The US 10 year treasury note has a slightly higher yield (prices down) of 2.913% from last week.
A well put together financial plan will have a diversified portfolio that will contain a mixture of stocks, bonds and cash in percentages that reflect your risk profile. Volatility in the market as we have seen this week provides opportunity to the long-term investor.
I wanted to start something new because I think it will be helpful for everyone. In this section I will include a question that I have received from a client and my answer. If it is asked once than I know others have the same question.
What is the difference between “stocks” and “equities”?
There is no difference and the two words can be used interchangeably and both mean the ownership interest in a company. For example, “He owns 100 shares of stock in Amazon”. The financial industry is especially egregious at making simple things more complicated and this is a perfect example. I was asked this question as I was going through an Investment Policy Statement with a client and I used both words to describe the risk portion of the portfolio, but I am going to try to stick with 'stocks' only from now on.
If you would like a question covered in this section you can email me here.
I wrote a new article this week on how one should be proactive with tax issues that come up in your financial life. I was reminded to do this by a crazy story in the Boston Globe (An Inheritance damaged by delayed property taxes) about the confusion and problems that can arise concerning tax notices. Take some time to read the article and if you have questions let me know.
I also wanted to re-up an article I published at the beginning of the month on the impact of inflation on investment portfolios. I have been doing this long enough that I know you cannot predict inflation trends but you do need to be cognizant of the risk to a portfolio.
For next week I am working on a long-ish article on Health Savings Accounts and also something on Socially Responsible Investing. If you have a topic that you would like to see addressed just let me know.
What I read (or watched) this week
Morgan Housel is one of the best financial writers out there and he has a great article on lessons to be learned from the Theranos debacle (Theranos Lessons). For those that are not familiar Theranos was a Silicon Valley darling that claimed to be developing technology that would revolutionize blood testing. It did not go quite as planned and the founder and COO have been charged with fraud. There is also a book (Bad Blood: Secret and lies in a Silicon Valley start up) by the journalist who broke this story that is on my reading list.
Next up is an article for or about Millenials and that generations wealth prospects (America’s Millenials are Waking Up To A Grim Financial Future). Here is the scary graphic.
Visual Capitalist puts out some great stuff and their Chart of the Week is a graphic depicting the length and % return of bull markets. We are currently in what they refer to as the Post-Crisis Bull Run which began in 2009.
And lastly, here is the feel good video of the week because we sure can use it. This little girl’s name is Yoyoka and at 8 years old she absolutely kills it on Led Zeppelin’s ‘Good Times, Bad times”. Enjoy.
If you have questions or feedback, let’s talk. Enjoy your weekend.
Past performance is no guarantee of future results. Prices and performance have been obtained from what we believe are reliable sources but accuracy cannot be guaranteed. As always, financial advice is very specific to the individual so please contact us if you have questions or would like to discuss your situation further.