June 08, 2020
Ending on June 3rd, the S&P 500 had the biggest 50-day rally in its history, gaining 37.7% over that period, and the NASDAQ Composite Index set a new all-time high on June 7th. As of the date of this letter, every stock in the S&P 500 is up over the last 10 weeks. S&P 500 valuations are the highest in nearly 20 years, as investors apparently think corporate profitability will dramatically increase relatively soon. The most common question we are receiving from clients is whether this rally can be sustained.READ MORE
March 13, 2020
First, and most importantly, we hope you are doing well and staying safe.
The longest bull market in the history of US equities came to an end this week as the S&P 500 fell more than 20% from its peak in breathtaking speed. As of yesterday’s market close, the S&P 500 is down 26.3% from that peak and 22.9% YTD. Small- and mid-cap stocks once again underperformed the S&P 500, and international equities also swooned. Risky credit such as corporate high yield and emerging market debt also suffered significant losses, but not to the extent of equity market losses. READ MORE
February 25, 2020
In the last several days, fears about the Coronavirus spreading have resulted in a “risk off” environment in financial markets: equity markets globally have lost value and US Treasury prices have risen. As of the time of this letter, on February 25th, the S&P 500 is down 7.2% from its peak , the MSCI Emerging Market Equity Index is down 8.00% from its recent high, and the yield on the 30-year US Treasury Bond is at an historic low of 1.79% (bond yields move in the opposite direction from price).READ MORE
Will the definition of what it means to be an accredited investor change in the near future? In December of 2019, the SEC voted to propose an amendment that would allow a greater number of individuals and institutions to qualify as accredited investors—increasing the eligible participation within private markets. Financial Advisors IQ reached out to Managing Shareholder and Team Lead, Kevin Fitzwilson, to gauge his thoughts on the proposed change. Read Kevin’s response in their article here.
Best wishes for a happy, healthy, and prosperous New Year. As 2020 begins, we wanted to provide you with: (1) a 2019 financial market review, (2) a snapshot of where we are currently, and (3) some thoughts going forward. READ MORE
Most likely you are asking the same question we are. What is going on in Washington? And how and when does it end? We clearly have an acrimonious situation in Congress that has caused a government shutdown. Coupled with the looming debt ceiling deadline of October 17th, this state of affairs is creating mounting uncertainty and great angst for investors. It must be remembered this is a political problem and most likely not an economic problem. Most economists forecast a shutdown that gets resolved within 30 days will impact 4th quarter GDP by just 0.1-0.2% and have no ongoing negative impact. In fact, our best guess is that GDP growth over the next two years will be relatively steady around the 2% level. This is certainly not robust growth but better than most developed economies.READ MORE
September 2013 marks the five-year anniversary of the financial market collapse in 2008; we have certainly come a long way in those five years. With the S&P 500 and the Dow eclipsing all-time highs and interest rates having stayed low for the longest stretch in 50 years, most investors have already received quite a benefit from the fount of cheap money. Since September 2008, a meaningful economic recovery has taken place. Look at the results since the equity markets bottomed out in March of 2009:READ MORE
In this low interest rate environment, income-minded investors, who have some tolerance for risk may find dividend-paying stocks attractive. In fact, nearly 40% of S&P 500 companies have dividend yields above the 10-year US Treasury bond yield.
The appeal of dividend-paying stocks is easy to understand as they can provide investors with regular income regardless of market conditions. In addition, many dividend paying companies increase their dividends over time thereby creating a growing cash flow over time versus the fixed coupons of bonds. It is important to note, however, that equities typically exhibit a higher volatility of returns than bonds, and the underlying company may choose to increase, decrease, and/or eliminate the dividend at any time. Regardless, we consider dividend paying equities an important part of a well-diversified income-generating portfolio.READ MORE
On June 26, 2013, the US Supreme Court ruled Section 3 of the Federal Defense of Marriage Act (DOMA) was unconstitutional as it violates the equal protection clause of the Fifth Amendment of the US Constitution as applied to persons of the same sex who reside in states that recognize same-sex marriages.
This decision entitles same-sex married couples many federal tax related benefits. These benefits will have an impact on their income tax filing status, estate and gift tax planning, employee benefits, and ability to inherit social security benefits, among others.READ MORE