Halfway through 2019 and both equity and bond markets have delivered outsized returns. As illustrated in the chart below based on data gathered by Raymond James, US stocks continue to lead, followed by international stocks. In fixed income, bonds – as measured by the Barclays Agg Index – posted their best quarter since 3Q of 2011 (up 3.1%)* which was due to a general decline in interest rates (the price of bonds increase as rates fall).
While we regularly review portfolios and check-in with Clients, this month I am reviewing our current list of investments and mutual fund/etf managers to determine their relative performance and overall success. Doing so on a regular basis allows us to continue working with those who are performing while placing other managers on watch lists, or if appropriate, removing them from portfolios altogether.
*Source: Raymond James Quarterly Market Review Q2 2019
Hard to believe that the 2020 Election season is already underway with more than 20 candidates jockeying for the democratic ticket. With election season comes questions about the impact on the markets and the economy. It seems reasonable to assume that, given the potential for a change in the White House, investors might be better off waiting until post-election night to make changes to their investment strategy. I’ve heard the following statement countless times in my career: “I think I’ll pull some funds out and sit tight until after the election.” History tells us that when it comes to market returns, it really doesn’t matter who is in the White House.
What does seem to matter is that our capitalist market system continues to work – meaning – companies continue to build widgets and provide services for consumers to consume. And with interest rates at these historically low levels, it’s hard to believe that businesses could struggle to create new technologies or build new factories, buildings, etc. It’s also hard to fathom that current rates are preventing folks from buying homes or cars or other goods. At last check, unemployment is at 3.6% – the lowest level since 1969*, inflation is tame, and wage growth is starting to increase. Despite this, many of the smart minds in finance anticipate the Federal Reserve will cut rates in the near future – a tool they could use to try to maintain and even possibly increase growth. Only time will tell, but it seems to me that a recession, while certainly possible, isn’t imminent.
*Source: Raymond James Quarterly Market Review Q2 2019
With summer comes the middle of the year, and a great opportunity to look back on your multiple to-do lists to track your progress. Our team at Raymond James recently published a few timely ideas for you to consider during the summer as we turn toward the second half of 2019:
Conduct a midyear checkup: Look back on your to-do list progress, make sure your retirement plan is on track, determine if your emergency fund is adequate, and establish a regular savings plan you can stick to each month.
Register with SSA.gov: Check your earnings history for accuracy and review your expected benefits. If you’re close to retirement age, discuss with your advisor when and how you should file to maximize your benefits.
Update your estate plan: Check the beneficiaries of your IRAs, insurance policies, trusts and any other accounts, and update information that is no longer relevant. Ensure your plan protects you and your family in the case of an unexpected event.
Assess insurance needs: Periodically review and update coverage to help ensure proper protection.
Adjust as life changes: Speak with your advisor about major life changes you’ve experienced and how your financial plan could be affected. These changes include marriages, births, deaths, divorces, a sudden windfall and more.
Plan a family meeting: Use the opportunity to talk about “big” things, like your philanthropic legacy, as well as simpler things – like the menu for the next holiday dinner.
Never stop learning: Websites like EdX and Coursera offer free online classes in a range of topics.
The opinions expressed above are those of Jeff DeLarme and are subject to change. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past Performance is no guarantee of future results. This wealth briefing has been written for educational purposes and is not a solicitation to invest or buy securities and does not constitute investment advice. Any data included or referenced has been sourced from what are believed to be reliable sources, but should not be relied upon. There is no assurance any of the trends mentioned will continue or forecasts will occur. Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. There is an inverse relationship between interest rate movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall and when interest rates fall, fixed income prices rise. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. It is not possible to invest directly in an index. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The MSCI ACWI (All Country World Index) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2007 the MSCI ACWI consisted of 48 country indices comprising 23 developed and 25 emerging market country indices. The developed market country indices included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. The emerging market country indices included are: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax issues, these matters should be discussed with the appropriate professional. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.