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Market Month: August 2018

The Markets (as of market close August 31, 2018)Stocks enjoyed a record-setting month in August as several of the benchmark indexes reached new all-time highs during the month. Of the benchmark indexes listed here, only the Global Dow lost value. Otherwise, indexes representing large caps, small caps, and tech stocks all posted noteworthy monthly gains. A strong employment situation, positive economic growth, and relatively stagnant inflation have contributed to investor confidence, despite ongoing global trade wars. Tech stocks soared in August, as the Nasdaq jumped almost 6.0% — its strongest August showing in 18 years. Following the Nasdaq was the Russell 2000, which gained over 4.0%. The large caps of both the Dow and S&P 500 also posted notable gains.By the close of trading on August 31, the price of crude oil (WTI) was $69.90 per barrel, up from the July 31 price of $68.43 per barrel. The national average retail regular gasoline price was $2.827 per gallon on August 27, down from the July 30 selling pri ...

Protecting Your Loved Ones with Life Insurance

How much life insurance do you need?Your life insurance needs will depend on a number of factors, including the size of your family, the nature of your financial obligations, your career stage, and your goals. For example, when you're young, you may not have a great need for life insurance. However, as you take on more responsibilities and your family grows, your need for life insurance increases.Here are some questions that can help you start thinking about the amount of life insurance you need:What immediate financial expenses (e.g., debt repayment, funeral expenses) would your family face upon your death?How much of your salary is devoted to current expenses and future needs?How long would your dependents need support if you were to die tomorrow?How much money would you want to leave for special situations upon your death, such as funding your children's education, gifts to charities, or an inheritance for your children? What other assets or insurance policies do you have? Types of life insurance policie ...

How Charity Can Benefit your Family and Society When it’s Time to Sell your Business

Originally published in the LA Business Journal An exit strategy for any business owner is just as important as the plan that keeps the business running and profitable. For closely-held businesses, deciding whether to sell and to whom is essential. There are also important considerations that have real and lasting financial and tax consequences, not only to the business but also to the business owner and his or her family. For California business owners, selling can trigger a significant taxable event, which can include as high as a 37.1% tax bill right off the top between federal and state taxes. That significant tax liability ultimately means less money to you and your family. The good news is that for those business owners who are charitably inclined and want to leave a lasting legacy, certain strategies can not only be beneficial to your family, but to society as well. When making a decision to possibly sell and entertain an offer of purchase, it’s important to understand that once an e ...

Where’s the Value?

From 1928–2017 the value premium in the US had a positive annualized return of approximately 3.5%. In seven of the last 10 calendar years, however, the value premium in the US has been negative. The value premium is the return difference between stocks with low relative prices (value) and stocks with high relative prices (growth). Computed as the return difference between the Fama/French US Value Research Index and the Fama/French US Growth Research Index. Fama/French indices provided by Ken French. This has prompted some investors to wonder if such an extended period of underperformance may be cause for concern. But are periods of underperformance in the value premium that unusual? We can look to history to help make sense of this question. SHORT-TERM RESULTS Exhibit 1 shows yearly observations of the US value premium going back to 1928. We can see the annual arithmetic average for the premium is close to 5%, but in any given year the premium has varied widely, sometimes experiencing ...

Market Month: July 2018

The Markets (as of market close July 31, 2018) Favorable economic indicators and encouraging corporate earnings reports helped propel stocks forward in July. Market growth has come despite trade wars between the United States and other trade partners, particularly China. Earlier in the month, the world's two largest economies imposed tariffs of $34 billion on each other's goods. Toward the end of July, there was hope of reopening negotiations between the United States and China in an attempt to diffuse the ongoing trade war. Domestically, the U.S. economy appears to be thriving. Over 210,000 new jobs were added in June, although wages have grown by only 2.7% over the last 12 months. Nevertheless, consumers are making more and spending more, while inflationary pressures on prices for goods and services remain in check Despite some periods of volatility, July proved to be a very good month for the benchmark indexes listed here. Led by the Dow, large caps, small caps, and tech stocks gained value o ...

Quarterly Market Review: April-June 2018

The Markets (as of market close June 29, 2018) The second quarter of the year can be called a lot of things, but boring isn't one of them. The potential for a trade war between the United States and China heated up in April as China responded to the threat of U.S. tariffs on Chinese imports by warning of the same magnitude of tariffs on American exports. Favorable corporate earnings reports helped calm some of the global economic angst investors may have felt. The indexes listed here ended the month ahead of their March closing values — but only barely. The Global Dow (1.16%) and the Russell 2000 (0.81%) posted the largest monthly gains, followed by marginal upticks in the S&P 500 (0.27%), the Dow (0.25%), and the Nasdaq (0.04%). Despite expanding trade tensions between the United States, China, Canada, Mexico, and the European Union, equities enjoyed a better month in May, riding surging energy stocks. For most of the month, oil prices hit multi-year highs before falling at the end of May ...

What are the Risks of Self-Directed Individual Retirement Accounts (IRAs)?

By Bill Dolan, Senior Portfolio Manager, California Wealth Management Originally published in the Sacramento Business Journal Investors are faced with many important decisions as we navigate a competitive and often confusing economic and business landscape. How we choose to allocate our resources (wealth) is the most important decision investors must make and largely the determinant of our success. Self-directed IRAs (Individual Retirement Accounts) offer investors the opportunity to allocate wealth to investments that are not available in IRAs where there is a regulated institutional trustee or custodian and this can be appealing to certain investors. Risk and reward are imbedded in investments, inherent to investing, and need to be assessed and understood in order to make sound investment choices. To be sure, the wide array of non-traditional investment options available in a self-directed IRA can be attractive to some investors. However, the very nature of “self-directed” leaves investors ...

Market Month: May 2018

The Markets (as of market close May 31, 2018) Despite a sell-off on the last day of the month, equities held enough of their gains to post mostly positive month-over-month returns. The Trump administration imposed tariffs on steel and aluminum imports on Canada, Mexico, and the European Union. And, just before scheduled trade talks with China were to resume, President Trump announced that he would proceed with tariffs on Chinese imports and limit Chinese investment in U.S. tech companies. Investors feared retaliation from impacted countries could lead to an all-out trade war. Early in the month, signs of rising inflation sent large caps down, while small caps and tech stocks climbed. However, stocks recovered following the Fed's decision to maintain the current interest rate range. Throughout the month, stocks rallied, then slipped back, amid trade war fears, a few mediocre corporate earnings reports, and fear of rising price inflation. Nevertheless, each of the indexes listed here posted monthly gains, w ...

Important Notice Regarding a Change in Your Money Market Option

The purpose of this notice is to inform you of changes we will be making to the current money market option we use for the cash balances associated with your account. In July 2014, the Securities and Exchange Commission approved new rules that alter certain features of U.S. money market funds. These changes include the possibility of the price per share fluctuating from its long-standing $1.00 per share value, having potential fees for redemption and the potential for not allowing redemptions under certain conditions. While these occurrences may not ever happen and/or be rare, we have continued to seek alternatives that avoid any of these potential factors for our clients. As you know, we are currently using the Federated Government Obligations Premier Money Market fund for the short-term investing of cash that has been received or deposited into your account pending further investment or distribution. Effective July 1, 2018 we are switching to the Insured Cash Sweep, a Promontory InterFinancial Netwo ...

Building and Preserving Your Company’s Legacy

Originally published in the Long Beach Business Journal. Written by Deborah L. Harrington, Vice President and Wealth Advisor for First Bank Wealth Management. Charles Antis, CEO of Antis Roofing, along with his crew, on top of a roof volunteering in support of his company’s "Give to Grow" culture. Values are important to all of us. We’re governed by them in our daily life, whether we recognize them or not; they guide our decision making. Values are a reflection of who we are, what’s important to us, and how we manage and define our purpose. When it comes to company values, it’s really not any different. Company values provide the framework that engages employees, clients, stakeholders, all of its audiences and, ultimately, shapes the company culture. Some companies choose to have two or three core values and some have but one core value that defines them. Consistent with all companies, however, is the fact that the company’s culture is the language of the business. Whe ...

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Disclosure

All First Bank blog information and content is strictly informational. It is not intended to be specific investment, tax, or legal advice. If you need detailed financial, investment, or tax advice, please contact a First Bank qualified professional. Please note, First Bank occasionally shares third-party content we find to be relevant and helpful to our audiences.