Newsletter
Menu

Newsletter

Why Staying the Course with a Long-Term Investment Strategy is Important

CHARLES CLAVER, VP/WEALTH MANAGEMENT ADVISOR AND INFINEX REPRESENTATIVE FIRST BANK WEALTH MANAGEMENT With the recent market volatility, investors are increasingly anxious when reviewing their portfolios, along with the seemingly endless barrage of unsettling news around the globe, interest rate hikes, and gridlock in Washington. After a decade of market growth, the sub-prime meltdown of February of 2009, when the stock market was down around 50% from its high, seems a distant, but still painful, memory. Market volatility, periodic corrections, and even recessions, are normal parts of the financial cycle. With these being the case, having a wealth management advisor is critical in maintaining a disciplined, balanced, and long- term view of the markets in order to successfully achieve your financial and wealth goals. The financial markets are still a main investment avenue for most Americans. The good news is that the capital markets have rewarded long-term investors. The markets represent capitalism a ...

Alternative Investments and the Role They Play in Portfolio Construction

By Bill Dolan, Senior Portfolio Manager In the wealth management industry, we define alternative investments as any investment asset, other than stocks, bonds, or cash. So, obviously, this is a pretty broad category and can often mean different things to different people. Let’s take real estate, for example. Since real estate is not stocks, bonds or cash, it is classified as an alternative investment in our industry, but to many people, real estate is even more familiar than stocks or bonds and, therefore, seems every bit as traditional. However, for purposes of our discussion, we will stick with the framework of stocks, bonds, cash, and everything else, or alternatives. Some other examples of investments that fall into the alternative investment category are private equity, hedge funds, precious metals, commodities, and private debt. With the recent turbulence that we are seeing in the markets, it’s consequential to consider the role alternative investments can play in a portfolio tha ...

Market Month: April 2018

The Markets (as of market close April 30, 2018) April was marked by the impending tariff war between the United States and China. Tensions between the world's two largest economies certainly affected stocks both home and abroad. Escalating strife in Syria posed an additional reason for investors to be concerned. However, surging energy stocks lifted the market as crude oil prices approached $70 per barrel for the first time in almost three years. Talks between North and South Korea also helped ease investor tensions. By the close of April, the dollar reached its highest level since January, while yields on 10-year Treasuries approached 3.0% for the first time since 2014 — signs that the world views U.S. economic growth as on the rise. With all of the upheaval during the month — both positive and negative — it's no wonder that equities essentially closed April about where they began the month. Each of the benchmark indexes listed here posted meager positive monthly gains over th ...

Holding Equities for the Long Term: Time vs. Timing

Legendary investor Warren Buffett is famous for his long-term perspective. He has said that he likes to make investments he would be comfortable holding even if the market shut down for 10 years. Investing with an eye to the long term is particularly important with stocks. Historically, equities have typically outperformed bonds, cash, and inflation, though past performance is no guarantee of future results and those returns also have involved higher volatility. It can be challenging to have Buffett-like patience during periods such as 2000-2002, when the stock market fell for 3 years in a row, or 2008, which was the worst year for the Standard & Poor's 500* since the Depression era. Times like those can frazzle the nerves of any investor, even the pros. With stocks, having an investing strategy is only half the battle; the other half is being able to stick to it. Just what is long term? Your own definition of "long term" is most important, and will depend in part on your individ ...

Quarterly Market Review: January-March 2018

The Markets (as of market close March 29, 2018) The first quarter of 2018 began as the fourth quarter of 2017 ended: with strong market gains. The Nasdaq led the way by the end of January, posting a monthly increase of almost 7.40%, followed by the large caps of the Dow (5.79%) and the S&P 500 (5.62%). The employment sector remained strong, with 239,000 new jobs added in January and average hourly earnings climbing 0.3%. Consumer prices rose 0.5% in January, while personal income increased 0.4%. The trade gap continued to widen, which has proven to be a focal point of the current administration. Nevertheless, consumer confidence in the economy increased in January with expectations for continued strengthening in the coming months. Volatility returned to the stock market in February, with each of the benchmark indexes listed here posting notable losses from the prior month. Nasdaq, while down, fared better than the large caps of both the S&P 500 and the Dow. Investor concerns over rising inflatio ...

Now and Then

By Dave Goetsch Dave Goetsch, Executive Producer of The Big Bang Theory, reflects on his investment experience in the recent market downturn and contrasts his new perspective with memories of the 2008-2009 financial crisis. Photo Credit Dimensional Fund Advisors LP Seeing all the recent headlines about the sudden downturn in the stock market has transported me back to February of 2009, when I was close to despair. It’s striking how different I feel now. In February 2009, the stock market was down around 50% from its high, and everyone seemed to feel like the sky was falling. I was familiar with this state of panic because my relationship to the financial markets was that I didn’t trust them. They were always going up and down in ways no one could predict, and I couldn’t trust those folks who said that they could anticipate what was going to happen. So when the market went down, I went down with it—sinking into a depression, knowing there was nothing I could do. Wh ...

Recent Market Volatility

February 2018 After a period of relative calm in the markets, in recent days the increase in volatility in the stock market has resulted in renewed anxiety for many investors. From February 1–5, the US market (as measured by the Russell 3000 Index) fell almost 6%, resulting in many investors wondering what the future holds and if they should make changes to their portfolios.1  While it may be difficult to remain calm during a substantial market decline, it is important to remember that volatility is a normal part of investing. Additionally, for long-term investors, reacting emotionally to volatile markets may be more detrimental to portfolio performance than the drawdown itself. INTRA-YEAR DECLINES Exhibit 1 shows calendar year returns for the US stock market since 1979, as well as the largest intra-year declines that occurred during a given year. During this period, the average intra-year decline was about 14%. About half of the years observed had declines of more than 10%, and around a t ...

Market Month: February 2018

The Markets (as of market close February 28, 2018) Despite some positive economic signs, rising consumer confidence, and favorable corporate earnings reports, February marked the end of the 10-month winning streak for the benchmark indexes listed here. Concerns over rising inflation and interest rates triggered a notable sell-off early in the month and pushed volatility to the forefront. Although the indexes listed here recovered much of their early February losses to close the month ahead of their 2017 closing values (with the exception of the Russell 2000), stocks did not maintain the pace set last year into January. New Fed chair Jerome Powell's bullish assessment of the economy last week pushed the yields on 10-year Treasuries to their highest rates in several years (bond yields rise as prices fall), giving investors more reason to believe multiple interest rate hikes are in the offing for 2018. The month started slowly as the Dow dropped over 4.0%, while the Nasdaq, S&P 500, Russell 2000, a ...

Market Month: January 2018

The Markets (as of market close January 31, 2018) Equities pulled back off of their record-setting gains at the end of January, but not enough to forestall a month of significant gains. January provided several noteworthy storylines for investors to consider. Unemployment remained low as the number of available job openings continued to recede, possibly signaling a push for higher wages. Fourth-quarter corporate earnings were relatively strong. The president's first State of the Union address preached optimism and called for bipartisan cooperation on major economic and international issues. The government shut down for a few days before approving a stopgap budget resolution through early February. Some American workers saw a modest bump in pay, courtesy of the Tax Cuts and Jobs Act legislation passed in December. And Janet Yellen's final meeting as chair of the Federal Reserve saw the Committee maintain interest rates at their year-end level. The month started on a strong note as the Dow soared ...

Have You Checked Your Retirement Plan Lately?

It's generally a good idea to review your employer-sponsored retirement savings plan at least once each year and when major life changes occur. If you haven't given your plan a thorough review within the last 12 months, now may be a good time to do so. Have you experienced any life changes? Since your last retirement plan review, have you experienced any major life changes? For example, did you get married or divorced, buy or sell a house, have a baby, or send a child to college? Perhaps you or your spouse changed jobs, received a promotion, or left the workforce entirely. Has someone in your family experienced a change in health? Or maybe you inherited a sum of money that has had a material impact on your net worth. Any of these situations can affect both your current and future financial situation and should be considered as you review your retirement savings needs. In addition, your annual review is a good time to examine the beneficiary designations on your plan account to make sure th ...

Archive

 

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.