Quarterly Stock Market Update

Ships in port influenced by trade war

Stock Market Update: 3rd Quarter 2019

By Jeff Headrick, Financial Planner

November, 2019.

 

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Stock Market Update

When we keep our emotions on the sideline, we tend to see the field as it truly is. Through the first three quarters of 2019, stocks and bonds for the most part have performed very well. Despite all the naysaying, despite the trade wars, despite historically low interest rates, this market just keeps on chugging.

The proof is in the pudding. You can’t fake it. “US stocks are over-valued and European stocks are favorable.” This is something I have been hearing for about five years, but for the most part it has proven to be incorrect. Perhaps it’s American innovation. Or, maybe the stock market is still running strong largely in part to our stable political system. No, that’s not an oxymoron. You only have to look to the continent of Africa, South America, or maybe even Europe to see that our political system is as good— and probably even more stable than just about any other continent.

A Few Highflyers

When you look at the S&P 500, it’s easy to see why the market is currently strong. A few of the most representative companies in the S&P are: 1) Microsoft 2) Amazon 3) Exxon 4) Johnson & Johnson 5) and Berkshire Hathaway. Despite what’s going on in the news leading up to the presidential election (click here for a great article on Presidential Elections and the Stock Market), these five companies are focused on one thing: making a profit.

Five S&P 500 Popular Stocksve

That’s the beauty of the stock market. It is designed around the capitalistic system for people whose main focus is making a profit and thereby driving up the share price. Other things that are happening are ancillary to that goal.

At Inspire Financial Planning, we believe in a well-diversified portfolio. Most of our clients have multiple asset classes that exist within every account. We believe that this is the best way to have a competitive return and still minimize downside losses when they occur.

However, within our well diversified portfolios there are always some few highflyers!

For example, Vanguard’s Large Cap Growth ETF VUG returned 24.94% through the third quarter of 2019. Likewise, Vanguard’s Small Cap ETF VB returned 17.82% during the same timeframe. So, both large caps and small caps performed well.

A Surprise or Two

What’s most surprising to me is that bonds have sprang to life so quickly. I would have expected this if equities had had another bad year, but that has not been the case.

Regardless, based on more Vanguard data, international bonds (BNDX) have returned 9.24%, intermediate-term bonds (BIV) have returned 10.29%, and long-term US long term government bonds (BLV) have returned 20.29% through September.

Things to Look Out For

With things going so well I think it’s still great to have a positive outlook. However, please keep in mind that there is an inverted yield curve in the mix as well as other global tensions that could change the market’s direction in a hurry.

One of the best ways to combat any market scenario is by using strategic asset allocation. We have relied heavily on this approach to asset management in the past, and we still believe this methodology will be useful going forward.

Related/Sources:

Vanguard Strategic Asset Allocation models as of September:  https://advisors.vanguard.com/iwe/pdf/FAMPPLA.pdf

How Presidential Elections Affect the Stock Market. By Anne Kate Smith

https://www.kiplinger.com/article/investing/T043-C008-S003-how-presidential-elections-affect-the-stock-market.html

Charts and graphs contained herein should not serve as the sole determining factor for making investment decisions. All hypothetical scenarios are for illustrative purposes only. Investment Advisory Services offered through AlphaStar Capital Management, LLC a SEC Registered Investment Adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

Diversification does not guarantee profit nor is it guaranteed to protect assets. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results.

 You cannot invest directly in an index. Consult your financial professional before making any investment decision. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Inspire Financial Planning and not necessarily those of AlphaStar Capital Management, LLC, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

Semi-Annual Stock Market Update

Stock Markets in General

To put it mildly, most asset classes have been on a tear for the first half of the year. When I look across the array of Vanguard equity ETFs in our portfolios, the worst performer is FTSE AW ex-US Small Cap (VSS). The return year-to date through June was 12.16% The highest performer was the Vanguard Growth (VUG) at 22.44%.

Vanguard year-to-date investment performance

Source: Vanguard

Wrestling our Fears

For all the chariots that are barreling down Wall Street in a positive way, there is also an awful lot of fear. It seems like no matter how well the markets are doing, there’s always a spoiler to take the fun out of making money over the long term.

China

I empathize with your concerns. The trade war with China creates a tension (and a lot of news), that is almost palpable. However, based on what I’ve seen, the U.S. cannot continue to roll on glassy eyed and lackadaisical without a more evenly dispersed trading policy with China.

This is going to cause some short-term pain, but I believe in the long run both sides will strike a deal that they can live with.

Inverted Yield Curve

Perhaps the biggest concern I have currently is the inverted yield curve. This happens when investors  are able to get a better return over the short term than over the long term as related to bonds. The majority of time that this happens, this has been a negative harbinger of things to come. However, yield curves are not as newsworthy as Trump tweets about China. So you may want to log out of your  Twitter or Facebook and go buy a copy of The Economist in order to get a better handle on the global economy.

Jeff Headrick at New York Stock Exchange

Author at New York Stock Exchange: July 2019.

Extracting the Positives

Now for the good news. Unemployment is very, very low. When more Americans are working, more Americans are spending money.

The U. S. is still the one of the best places on the world to invest. I have been a fan of the emerging market economies since as far back as 2004 or 2005. I used to teach financial workshops on China, Brazil, and India back Pre-Financial Crisis.

However, there is a soul to investing in U. S. companies that—in my opinion—is second to none. And while I know that eventually this will change, I believe this change to be a generation or two down the road.

Summary

From now until the presidential election on November 3rd, 2020, the news is only going to escalate. Maybe it’s time to insulate from some of the talk speak on the tube and hire a financial planner. It might do you a world of good. The time to prepare is always now.

Also, here is another article on how you can get started diversifying your 401(k)-- today. There is no time like the present! Above all, we recommend a long-term investment philosophy, spiked with a lot of reading and prayer. The first half of the year was great for investors, and it’s perfectly normal to stop and celebrate once in a while when things have been this good.

 

Related Blogs:

 

Your 401(k) and the Efficacy of Asset Allocation

Three Ways to Prepare for a Stock Market Crash

Disagreeing with Warren Buffet: An Argument for Bonds

 

Charts and graphs contained herein should not serve as the sole determining factor for making investment decisions. All hypothetical scenarios are for illustrative purposes only.Investment Advisory Services offered through AlphaStar Capital Management, LLC a SEC Registered Investment Adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

Diversification does not guarantee profit nor is it guaranteed to protect assets. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results.

You cannot invest directly in an index. Consult your financial professional before making any investment decision. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Inspire Financial Planning and not necessarily those of AlphaStar Capital Management, LLC, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

 


Q1 2019 Stock Market Update

Jan. 1st through March 31st, 2019.

Sky Scraper

 

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Vanguard ETF® Strategic Model Portfolios (March 2019)

State Street Global Advisors Chart Pack (April 2019)

An Explosive Quarter

As quickly as the market plunged south at the end of 2018, the market resurged just as rapidly from January through March of this year. Time will tell if this is sustainable, or whether the market is just coming up for one last gasp of air before it goes back down.

With things like inverted yield curves and trade wars amidst our discussions, this is a great time to evaluate the current status of your investment portfolio.

Market Research

Every 90 days we stop and do a deep dive into not only where the markets have been, but where we believe them to be headed. Two of the key pieces of material that we look at when conducting our research are provided for you above.

The State Street Global Advisors Chart Pack is an invaluable piece of information filled with dozens of pages of graphs and statistical data. You can also visit their website for some good educational videos that will walk you through some of the pages. Part of our process every quarter, is to do all of the above.

You will also see the Vanguard ETF® Strategic Model Portfolios link above. Depending on your personal tolerance for risk, you may compare your current portfolio structure to that of a Vanguard portfolio to see how well you’re doing. This piece of literature also contains a lot of statistical data, mainly performance related.

The Basics

In the first quarter of 2019, most stocks and bonds were up. There were some exceptions, but all in all you should have enjoyed your quarterly statement for Q1.

While there has been a lot of discussion about the inverted yield curve, there are also signs that show economic fundamentals to be holding on for the time being. Traditionally, it takes about 16 months to feel the full negative impact of an inverted yield curve. However, this is simply a rule of thumb, and we need to bear in mind that in the world of investments things don’t always turn out exactly like we plan.

Generally speaking, most organizations like State Street and Vanguard prefer international developed and international emerging equities over US stocks from an evaluation perspective. And while we appreciate this, it’s important to note that they have been leaning in this direction for a while now only to get thwarted by US stocks.

It is our opinion, that there is more to be gained then lost in the current global stock market. Therefore, this is an appropriate time to examine where you are at with your allocations, and make sure that you are poised both for growth and for a bit of rocky road ahead.

Worthy of Note

 Major Asset Class Performance - Of all twelve major asset classes analyzed by State Street, all of them have positive gains for the first quarter. However, it is worthy of note that four asset classes have losses for the rolling twelve months ending in March. International developed, international emerging, commodities, and gold were down for the previous 12 months.

Cross-Asset Volatility - Looking across multiple asset classes, volatility was better than at the end of 2018.

Investor Confidence - While the market rebounded during the first quarter, investor confidence did not rebound with the same vigor.

Global Economy - Global economic sentiment stabilized somewhat in the first quarter with signs of recovery in China, but overall sentiment remains negative.

Flow Trends - While equity ETFs took in $15 billion for the second consecutive month (March and April), fixed-income funds attracted nearly double those cash flows.

Brexit- Implied volatility and tail risk have increased in European equities as Brexit uncertainty arose. However, the increase is less significant than previous peaks. We thought this was very interesting and shows how things tend to settle over extended periods of time.

Brexit Impact over time

Diversification Update

The ultimate goal of diversification is to increase return while decreasing risk. In general, most of our clients with long-term time horizons have a greater exposure to equities. The closer they get to retirement they tend to become more risk averse.

We’ve always believed that one of the best ways to maintain wealth is to avoid precipitous losses. Therefore, we are ardent believers of an optimally diversified global portfolio. We even disagree with Warren Buffett when it comes to the topic.

Compare Your Portfolio to Vanguards ETF Strategic Model Portfolios

Below are the Vanguard ETF (exchange traded fund) individual results based on asset class. Vanguard models call for six equity asset classes, five fixed-income asset classes, and cash. In total that’s eleven asset classes that represent what we consider to be an optimal level of diversification. How does this compare to your portfolio’s diversification level?

Stocks

During our last quarterly market update, all equity classes were down for the previous year. By the end of the first quarter of this year all US equities were in positive territory for the preceding rolling twelve. What a difference ninety days can make.

Rolling 12 month asset class investment performance

We did see some statistics regarding large equity outflows for January, which turned out to be a very poor move. If you hung on in January, you should feel confident that you did not lock in any losses like some did.

Bonds

I am in love with bonds. I have been since about 2008. I was able to see first-hand that year how owning a quality mix of diversified bonds can elevate your diversification plays. After years of downright dreary bond returns, bonds are springing to life.

Here are how a few fixed-income asset classes compare over a one-year and a five- year timeline. Note for the first time in a long time one- year bond returns are higher than the preceding five- year average.

Graph depicting 1 year and 5 year bond returns

This concludes our quarterly stock market update.

 

For more insight on diversifying in general, please refer to these related posts.

Your 401(k) and the Efficacy of Asset Allocation

Bear Market on the Horizon: How Does a Financial Advisor Prepare?

Three Ways to Prepare for a Stock Market Crash

Four Principles of the Successful Investor

Stock Market Deja Vu

Thank you for reading our quarterly stock market update. We hope you found it useful. If we can help you in anyway, please let us know.

We can be reached at (910)448-1450, or you can click here if you’d like to schedule an initial conversation.

Investment Advisory Services offered through AlphaStar Capital Management, LLC a SEC Registered Investment Adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Diversification does not guarantee profit nor is it guaranteed to protect assets. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results.

You cannot invest directly in an index. Consult your financial professional before making any investment decision. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors. These are the views of Inspire Financial Planning and not necessarily those of AlphaStar Capital Management, LLC, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

Q4 2018: Quarterly Stock Market Update

Our quarterly stock market update looks back on 2018. We base our research on data from Vanguard and State Street Global Advisors, among others.

2018 Dow and S&P 500 Graph

Notice the NASDAQ index in red, and the S&P 500 index in blue. Source: Yahoo Finance

2018 A Tough Year

The world’s stock markets closed the fourth quarter in the red for the most part. US large caps were down -4%, US small caps were down -20%, and foreign developed stocks were down about -14%.

One Bright Spot

The international bond market ex-US produced a respectable +3%. Another reason we feel diversification across multiple stock and bond asset classes pays over the long term.

The Barclays US Aggregate Bond Index was finished the year at break even. See the State Street Global Advisors SPDR ETFs Chart Pack for reference. We have found this guide to be a tremendous resource.

While 2019 may prove to be a better year, our outlook for the year will fall somewhere in between neutral and positive.

Worthy of Note

  • Previous Highs -- Market peaks in January and September were not sustainable, giving way to more losses as the year unfolded.

 

  • Asset Class Performance -- in December, US equities had their worst monthly performance since 2009, narrowing their lead over developed ex-US and emerging markets for 2018

 

  • Flow Trends -- Fixed income ETFs posted their second highest monthly inflows of all time in December fueled by high quality bond exposures

 

  • Cross-Asset Volatility -- Implied volatility continues moving higher across major assets, with US equity volatility jumping to its highest level since 2015

 

  • Investor Confidence -- Turmoil in global markets continues to dent investor confidence, as the investor confidence index reached its lowest level ever

 

  • Global Economy -- After somewhat synchronized economic growth in 2017, global economic sentiment headed south in 2018. Global manufacturing activity slowed down in Q4, as China entered contraction territory

Quarterly Diversification Update 

The ultimate goal of diversification is to increase return while decreasing risk. In a 100% equity (stock) portfolio, this lofty goal may be more attainable than a portfolio which holds fixed-income (bonds).

In general, most of our clients with long time horizons have a deeper exposure to equities. The closer they get to retirement, they tend to become more risk averse. We’ve always believed that one of the best ways to maintain wealth is to avoid precipitous losses. Therefore, we are ardent believers of an optimally diversified global portfolio.

Compare Your Portfolio to Vanguard’s ETF Strategic Model Portfolios

Feel free to visit this page periodically to gain perspective on global markets. To accompany this update please also see the Vanguard ETF Strategic Model Portfolios. Below are the Vanguard ETF (exchange traded fund) individual results based on asset class. Vanguard’s models call for six equity asset classes, five fixed-income asset classes, and cash. In total, that’s eleven asset classes that represent what we consider to be an optimal level of diversification. How does this compare to your portfolio’s diversification levels?

 

2019 ETF Graph

Source: Vanguard ETF Strategic Model Portfolios – CRSP

Stocks

While the US did not have a good year in equities, we did much better than the rest of the world according to the results shown above. Of all the ETFs shown, the FTSE AW ex-US small-cap ETF suffered the most with a loss of -18%.

Bonds

Bonds, for the most part, held their own. Short-term bonds, mortgage-backed securities, and international bonds in particular all had positive gains.

At IFP, we believe these models are well suited for investors who like to diversify in stocks as well as bonds. If you are not a fan of Vanguard and passive investing, you may want to look at our Russell Investments or our Betashield portfolios which offer a slightly more active approach. We can be reached at (910) 448-1450, or you can email Jeff Headrick at jeff@inspirefp.net with any questions you may have.

For more insight on diversifying in general, refer to these related posts.

Your 401(k) and the Efficacy of Asset Allocation

Bear Market on the Horizon: How Does a Financial Advisor Prepare?

Three Ways to Prepare for a Stock Market Crash

Four Principles of the Successful Investor

Stock Market Deja Vu

Thank you for reading our quarterly stock market update. We hope you found it useful. If we can help you in anyway, please let us know.

We can be reached at (910)448-1450, or you can click here if you’d like to schedule an initial conversation.

Investment Advisory Services offered through AlphaStar Capital Management, LLC a SEC Registered Investment Adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

 

Diversification does not guarantee profit nor is it guaranteed to protect assets. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results.

 

You cannot invest directly in an index. Consult your financial professional before making any investment decision. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

 

These are the views of Inspire Financial Planning and not necessarily those of AlphaStar Capital Management, LLC, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

Graph displaying stock market update

Q4 2018: Quarterly Stock Market Update

Our quarterly stock market update looks back on 2018. We base our research on data from Vanguard and State Street Global Advisors, among others.

2018 Dow and S&P 500 Graph

Notice the NASDAQ index in red, and the S&P 500 index in blue. Source: Yahoo Finance

2018 A Tough Year

The world’s stock markets closed the fourth quarter in the red for the most part. US large caps were down -4%, US small caps were down -20%, and foreign developed stocks were down about -14%.

One Bright Spot

The international bond market ex-US produced a respectable +3%. Another reason we feel diversification across multiple stock and bond asset classes pays over the long term.

The Barclays US Aggregate Bond Index was finished the year at break even. See the State Street Global Advisors SPDR ETFs Chart Pack for reference. We have found this guide to be a tremendous resource.

While 2019 may prove to be a better year, our outlook for the year will fall somewhere in between neutral and positive.

Worthy of Note

  • Previous Highs -- Market peaks in January and September were not sustainable, giving way to more losses as the year unfolded.

 

  • Asset Class Performance -- in December, US equities had their worst monthly performance since 2009, narrowing their lead over developed ex-US and emerging markets for 2018

 

  • Flow Trends -- Fixed income ETFs posted their second highest monthly inflows of all time in December fueled by high quality bond exposures

 

  • Cross-Asset Volatility -- Implied volatility continues moving higher across major assets, with US equity volatility jumping to its highest level since 2015

 

  • Investor Confidence -- Turmoil in global markets continues to dent investor confidence, as the investor confidence index reached its lowest level ever

 

  • Global Economy -- After somewhat synchronized economic growth in 2017, global economic sentiment headed south in 2018. Global manufacturing activity slowed down in Q4, as China entered contraction territory

Quarterly Diversification Update 

The ultimate goal of diversification is to increase return while decreasing risk. In a 100% equity (stock) portfolio, this lofty goal may be more attainable than a portfolio which holds fixed-income (bonds).

In general, most of our clients with long time horizons have a deeper exposure to equities. The closer they get to retirement, they tend to become more risk averse. We’ve always believed that one of the best ways to maintain wealth is to avoid precipitous losses. Therefore, we are ardent believers of an optimally diversified global portfolio.

Compare Your Portfolio to Vanguard’s ETF Strategic Model Portfolios

Feel free to visit this page periodically to gain perspective on global markets. To accompany this update please also see the Vanguard ETF Strategic Model Portfolios. Below are the Vanguard ETF (exchange traded fund) individual results based on asset class. Vanguard’s models call for six equity asset classes, five fixed-income asset classes, and cash. In total, that’s eleven asset classes that represent what we consider to be an optimal level of diversification. How does this compare to your portfolio’s diversification levels?

 

2019 ETF Graph

Source: Vanguard ETF Strategic Model Portfolios – CRSP

Stocks

While the US did not have a good year in equities, we did much better than the rest of the world according to the results shown above. Of all the ETFs shown, the FTSE AW ex-US small-cap ETF suffered the most with a loss of -18%.

Bonds

Bonds, for the most part, held their own. Short-term bonds, mortgage-backed securities, and international bonds in particular all had positive gains.

At IFP, we believe these models are well suited for investors who like to diversify in stocks as well as bonds. If you are not a fan of Vanguard and passive investing, you may want to look at our Russell Investments or our Betashield portfolios which offer a slightly more active approach. We can be reached at (910) 448-1450, or you can email Jeff Headrick at jeff@inspirefp.net with any questions you may have.

For more insight on diversifying in general, refer to these related posts.

Your 401(k) and the Efficacy of Asset Allocation

Bear Market on the Horizon: How Does a Financial Advisor Prepare?

Three Ways to Prepare for a Stock Market Crash

Four Principles of the Successful Investor

Stock Market Deja Vu

Thank you for reading our quarterly stock market update. We hope you found it useful. If we can help you in anyway, please let us know.

We can be reached at (910)448-1450, or you can click here if you’d like to schedule an initial conversation.

Investment Advisory Services offered through AlphaStar Capital Management, LLC a SEC Registered Investment Adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

 

Diversification does not guarantee profit nor is it guaranteed to protect assets. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results.

 

You cannot invest directly in an index. Consult your financial professional before making any investment decision. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

 

These are the views of Inspire Financial Planning and not necessarily those of AlphaStar Capital Management, LLC, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

Q3 2018: Quarterly Stock Market Update

We would like to revise our last update. The S&P 500 Index was incorrectly listed as +0.6 through June in the last stock market update. The correct number was +2.6%.

Our quarterly stock market update encapsulates the stock market over the previous three quarters, January 1, 2018 through September 31, 2018.

The market sprang to life in the 3rd quarter. The S&P 500 Index rose to +10.6% through September of 2018. Bloomberg Barclays US Aggregate Bond Index was still lagging at -1.6% through the same time frame. See the State Street Chart Global Advisors SPDR® ETFs Chart Pack for reference. We have found this guide to be a tremendous resource regarding past stock market performance as a whole.

The Russell 2000 Small Cap Index was up +11.5%.

Worthy of note:

  • Asset Class Performance — US equities outshined the rest of the world year to date, while high yield outperformed investment grade in the fixed income market.

 

  • Treasury Positions: Traders have never been more bearish on long-and-intermediate term Treasuries than ever before, driven by ballooning budget deficit and tighter monetary policy.

 

  • Sector Trends — Analysts are bullish on Energy, Health Care and Materials, but expect the least upside potential in Health Care.

 

  • Growth vs. Value — As the out-performance of growth over value is approaching the level seen in 2000, growth valuations appear stretched relative to value.

 

  • Cross-Asset Volatility — All asset classes, except high yield bonds, saw higher implied volatility compared to the beginning of this year.

Quarterly Diversification Update 

If everything always moved in the same direction at the same speed, there would be no need for diversification. However, this is not the case. So, every quarter we stop an examine how several individual asset classes have performed.

We recommend all of our clients and prospective clients visit our stock market update periodically to gain perspective on the global markets. To accompany this update please also see the Vanguard ETF Strategic Model Portfolios.

stock market update displaying multiple asset classes

Source: Vanguard ETF strategic model portfolios – CRSP

Please note the following observations:

Stocks (Equities)

Notice in the Vanguard models that the Vanguard US Growth ETF (VUG) finished the quarter +15.50%. Contrasting that considerably was the Vanguard FTSE Emerging Markets (VWO) that was down -8.91%. Even in a strong quarter for US stocks, the rest of the world wasn’t feeling so spry.

Bonds (Fixed-Income)

The Vanguard fixed-income basket was lethargic as it has been for some time. The top bond performer was the Vanguard Total International Bond (BNDX) which was up +1.07%. The worst performer in fixed-income was the Vanguard Long-Term Bond which was down -5.47% for the year thus far.

At IFP, we believe these models are well suited for investors who like to diversify in stocks as well as bonds. If you are not a fan of Vanguard and passive investing, you may want to look at our Russell Investments or our Betashield portfolios which offer a slightly more active approach. We can be reached at (910) 448-1450, or you can email Jeff Headrick at jeff@inspirefp.net with any questions you may have.

For more insight on diversifying in general, refer to either of these two recent blog posts.

  1. Three Ways to Prepare for a Stock Market Crash
  2. Disagreeing with Warren Buffet: An Argument for Bonds

Thank you for reading our quarterly stock market update. We hope you found it of useful. If we can help you in anyway, please let us know.

We can be reached at (910)448-1450, or you can click here if you’d like to schedule an initial conversation. We look forward the hearing from you!

Investment Advisory Services offered through AlphaStar Capital Management, LLC a SEC Registered Investment Adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

 

Diversification does not guarantee profit nor is it guaranteed to protect assets. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

 

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. You cannot invest directly in an index. Consult your financial professional before making any investment decision. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

 

These are the views of Inspire Financial Planning and not necessarily those of AlphaStar Capital Management, LLC, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

Q2 2018: Quarterly Stock Market Review (Through June. 30, 2018)

Our quarterly stock market review is encapsulated with stock market data over the previous two quarters (2018).

The market has been relatively flat for the year. The S&P 500 Index was at +0.6% through June of 2018. Bloomberg Barclays US Aggregate Bond Index was at -1.6% through the same time frame. See the State Street Chart Global Advisors SPDR® ETFs Chart Pack for reference. This is also a tremendous resource for gaining some broad perspective on the market as a whole.

Semi-Annual Diversification Update 

Click here for the Vanguard ETF Strategic Model Portfolio performance through June 2018. This is a great guide especially if you are presently allocated in one of these models.

Please note the following observation:

While the markets in general have been flat over the first six months of the year, there are some points of interest to be explored.

Note in the Vanguard models that the Vanguard US Growth ETF (VUG) finished the mid-year point at +7.16. Most other equity asset classes were in the negative.

Most of the Vanguard Bond ETFs were also in the negative, with the exception of the Total International Bond Index (BNDX) that ended the same time period at +1.15%. The worst performer in the bond asset classes was the Vanguard Long-Term Bond (BLV) that was down -5.06%.

At IFP, we believe these models are well suited for investors who like to diversify in stocks as well as bonds. For more insight on diversifying in general, refer to either of these two recent blog posts.

  1. Three Ways to Prepare for a Stock Market Crash
  2. Disagreeing with Warren Buffet: An Argument for Bonds

Thank you for reading our quarterly stock market update. We hope you found it of use! If we can help you in anyway, please let us know! We can be reached at (910)448-1450, or you can click here if you’d like to schedule an initial conversation. We look forward the hearing from you!

Investment Advisory Services offered through AlphaStar Capital Management, LLC a SEC Registered Investment Adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

 

Diversification does not guarantee profit nor is it guaranteed to protect assets. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. You cannot invest directly in an index. Consult your financial professional before making any investment decision. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

 

These are the views of Inspire Financial Planning and not necessarily those of AlphaStar Capital Management, LLC, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.