Weekly Market Notes – April 30, 2018

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For the Week of April 30, 2018

The Markets

Stocks were fairly flat Friday after the Commerce Department reported consumer spending in the first quarter grew at its weakest pace in five years, and the Labor Department reported wages increased at their fastest rate in 11 years.  On Friday, the S & P and the NASDAQ managed small gains, and the Dow fell. For the week, the Dow fell 0.62 to close at 24,311.19. The S&P closed unchanged to finish at 2,669.91, and the NASDAQ lost 0.37 percent to end the week at 7,119.80.

Returns Through 4/27/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -0.62 -1.03 18.59 13.26 13.30
NASDAQ Composite (PR) -0.37 3.13 17.70 12.06 16.77
S&P 500 (TR) 0.00 0.44 13.98 10.47 13.37
Barclays US Agg Bond (TR) 0.01 -2.29 -0.33 0.84 1.44
MSCI EAFE (TR) -0.25 0.65 14.32 4.40 6.19

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

Put It on the Card — Credit card debt in the U.S. was $1.03 trillion as of February 2018, its highest level ever. Credit card debt was $1.02 trillion in May 2008 (source: Federal Reserve, BTN Research).

Just a Few Have One — Only 23 percent of American workers (in both the public and the private sector) have a defined benefit pension plan (source: National Compensation Survey for 2017, BTN Research).

Three In-a-Row — The S&P 500, down on a total return basis in February and March this year, has been negative three or more consecutive months just three times in the last decade (source: BTN Research).

 

WEEKLY FOCUS – April 29 to May 5 Is Small Business Week

While many of us picture a typical small business as a family-owned restaurant, garage or specialty shop, any self-employed individual is a small-business owner. With technology and the internet enabling entrepreneurs to work from home and market products or services anywhere, it’s no wonder the number of self-employed is multiplying. Today, it’s 15 million in the U.S. alone. According to Freshbooks, a cloud accounting software company, that figure could triple – to 42 million – by 2020.

Retired entrepreneurs’ advantages: Retirees account for a growing percentage of these entrepreneurs. After all, they enjoy distinct advantages compared to other ages. Seniors have free time. Social Security payments and retirement savings reduce pressure to achieve a certain income in a set timeframe. Medicare removes the health insurance obstacle. And seniors have spent decades collecting contacts, building skills and increasing their knowledge.

Self-employment benefits retirees: On the flip side, self-employment offers several benefits for retirees. In addition to adding purpose and extra income, it affords unique opportunities to contribute to retirement funds. Take IRAs, for example. An individual over 50 and under 70½ who works for someone else can contribute $6,500 a year to a Traditional IRA. But a SEP IRA, a popular choice for sole proprietors with no employees, allows an entrepreneur to contribute the lesser of $55,000 or up to 25 percent of their net self-employment earnings until they reach 70½. (The limit on compensation factored is $275,000.)

Those over 70½ who still work for an employer can contribute $18,500 plus a $6,000 catch-up contribution to their employer’s 401(k) each year. But self-employed individuals with no additional employees (except a spouse) can contribute considerably more to a Solo 401(k).

With a Solo 401(k), a self-employed individual is considered both an employee and an employer. As an employee, an entrepreneur who is 50 or over can contribute $24,500 and as the employer, they can contribute another 25 percent of their net self-employment earnings up to $61,000, including the employee contribution. A spouse over 50 who earns income from the business can also contribute $61,000. And the entrepreneur can make pre- or post-tax (Roth) contributions and pick their own investments. Designated Roth Solo 401(k) accounts are subject to Required Minimum Distributions.

Whether you’re looking forward to or presently enjoying traditional retirement or launching a new enterprise, we can help you create a plan to support your vision for the future. Call today.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright April 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2105295.1

Weekly Market Notes – April 23, 2018

Weekly_Market_Notes

For the Week of April 23, 2018

The Markets

All three major indexes dropped Friday. Technology stocks led the decline, thanks to concern over upcoming earnings reports. A jump in U.S. bond yields also worried investors. For the week, the Dow gained 0.46 percent to close at 24,462.94. The S&P rose 0.54 percent to finish at 2,670.14, and the NASDAQ climbed 0.56 percent to end the week at 7,146.13.

Returns Through 4/20/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.46 -0.41 21.66 13.51 13.70
NASDAQ Composite (PR) 0.56 3.52 20.78 12.68 17.39
S&P 500 (TR) 0.54 0.44 15.59 10.62 13.76
Barclays US Agg Bond (TR) -0.62 -2.30 -0.54 0.82 1.48
MSCI EAFE (TR) 0.50 0.90 18.08 5.44 7.01

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

Finally, A New High — After adjusting numerical data from the past for the impact of inflation, the median household income in 2016 ($59,039) is the highest ever recorded in the United States, besting the previous record for median household income ($58,665) set in 1999 (source: Federal Reserve Bank of St. Louis, BTN Research).

Don’t Have It, Don’t Spend It — Just 47 percent of American workers report they do an excellent or very good job of living within a budget (source: Society of Actuaries, BTN Research).

Just Not Enough — Almost two out of every three American workers (65 percent) believe, even if they continue to work until age 65, they will not accumulate enough savings to meet their retirement needs (source: Transamerica Center for Retirement Studies, BTN Research).

 

WEEKLY FOCUS – Cancer Care Costs and Medicare

Cancer has long been one of the most costly medical conditions to treat, and chemotherapy and biologic drugs have grown increasingly expensive over the last decade. While typical cancer drugs can cost $10,000 per month, some run many times that. The single greatest risk for developing cancer is age. In fact, half of all cancer diagnoses occur at age 66 or above. So how does Medicare cover cancer treatments?

Part A covers hospital stays after the $1,340 deductible for each benefit period. Patients hospitalized longer than 60 days pay $335 coinsurance per day. After 90 days, it’s $670 a day. Once the lifetime reserve is passed, the patient pays all costs.

Because many chemotherapy drugs are administered in a clinic or treatment center, Part B usually covers 80 percent of the costs after a $183 deductible. If you have Medicare Parts A and B alone, there is no out-of-pocket maximum for these expenses.

Part D typically covers oral drugs that can’t be given through an IV – after a deductible that can’t exceed $405. Standard plans have either copayments or coinsurance charges and a coverage gap after $3,750 when patients pay higher percentages until they reach catastrophic coverage once prescriptions total $5,000. There is no maximum out-of-pocket under Part D.

Medicare beneficiaries with Parts A, B and D often purchase a Medigap supplement policy to limit out-of-pocket costs. Coverage varies from plan to plan. Over 90 percent of doctors accept regular Medicare, and providers who do are required to accept any Medigap plan. The best time to purchase a Medigap policy is during your six-month open enrollment period, which starts the first month you’re 65 and enrolled in Medicare Part B. At that time, you can purchase any policy sold in your state, even if you have health problems.

Other beneficiaries choose a Medicare Advantage plan, referred to as Part C, which combines Parts A and B and usually a drug plan. An HMO plan typically covers 80 percent of in-network costs and pays no out-of-network costs. PPO plans provide different levels of coverage and may include out-of-network coverage. Advantage plans have maximum out-of-pocket limits.

Planning for potential health care expenses has never been more important. Whether you’re retired or still working, we can help you find the best vehicles to put money aside for health care.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright April 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2097950.1

Weekly Market Notes – April 16, 2018

Weekly_Market_Notes

For the Week of April 16, 2018

The Markets

Geopolitical issues pushed stocks down Friday as Russian lawmakers talked of banning or restricting U.S. imports and prospects of a strike on Syria loomed. At the same time, reports of weak loan growth weighed on bank shares. Despite the day’s negative close, the three major indexes achieved weekly gains. For the week, the Dow rose 1.80 percent to close at 24,360.14. The S&P gained 2.04 percent to finish at 2,656.30, and the NASDAQ climbed 2.77 percent to end the week at 7,106.65.

Returns Through 4/13/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 1.80 -0.87 21.90 13.46 13.11
NASDAQ Composite (PR) 2.77 2.94 22.42 12.52 16.62
S&P 500 (TR) 2.04 -0.10 16.32 10.56 13.16
Barclays US Agg Bond (TR) -0.18 -1.69 0.04 1.07 1.62
MSCI EAFE (TR) 1.48 0.40 17.79 5.36 6.37

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

Demographic Shift — By 2035, the projected number of American seniors age 65 and older (78 million) will exceed the number of American children under the age of 18 (76.4 million) for the first time in U.S. history. (source: Census Bureau, BTN Research).

Twice as Much — Student loan debt, equal to $1.38 trillion as of Dec. 31, 2017, has doubled in just over eight years. Student loan debt was $690 billion as of Sept. 30, 2009 (source: Federal Reserve Bank of New York, BTN Research).

Time Flies — The S&P 500 bull market that began on March 9, 2009, is now in its 110th month. The average bull market for the stock index since 1950 (including the current bull) has lasted 62 months (source: BTN Research).

 

WEEKLY FOCUS – April Is Financial Literacy Month

A recent study by the National Bureau of Economic Research asked Americans over the age of 50 three basic financial questions. Only a third answered all three correctly. In another survey by The Programme for International Student Assessment, 44 percent of high-school students scored at the lowest levels of financial literacy. According to GOBankingRates, over 50 percent of Americans have less than $1,000 in savings.

Clearly, financial illiteracy is a growing problem that spans all generations. And in today’s inter-connected world, it creates huge costs for society at large, such as marital discord, higher taxes to create safety nets, unpaid debts and increased prices. Many experts point to financial illiteracy as a contributing factor to the recession of 2008.

At the same time, today’s conditions require greater financial responsibility to maintain a healthy economy and more preparedness to achieve financial security. Even moderate inflation with relatively flat wage growth and high tax burdens make saving challenging, while longer lifespans and rising healthcare costs make it all the more imperative.

Financial skills are rarely taught in school. They’re best taught – and caught – from parents and grandparents. Here are six basic areas to focus on:

  • Teach young people how debit and credit cards work, their differences and when it’s better to have one or the other.
  • Show them how to pay bills online through their bank or credit union’s service or a direct pay program through a creditor or service provider.
  • Help them ensure their lifestyle fits their income, that they understand what comes in, what goes out for bills, how to weigh wants and needs, and how much to allocate to savings and retirement accounts.
  • Demonstrate the impact of compounding interest on savings and the big benefits of starting young.
  • Teach them the importance of a healthy credit score and how to build one.
  • Explain how investing works and potential risks and rewards, so they can make informed decisions on their financial future.

If you’d like help educating a younger family member, give us a call. We can help you prepare them for a good financial life and fine-tune your own.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright April 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2090144.1

 

Weekly Market Notes – April 9, 2018

Weekly_Market_Notes

For the Week of April 9, 2018

The Markets

Wall Street stocks fell sharply Friday. Contributing factors included President Trump’s threat to slap additional tariffs on Chinese imports, the Federal Reserve chairman’s indication the central bank will probably keep raising interest rates this year and disappointing employment data. For the week, the Dow fell 0.67 percent to close at 23,932.76. The S&P lost 1.35 percent to finish at 2,604.47, and the NASDAQ dropped 2.11 percent to end the week at 6,915.11.

Returns Through 4/06/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -0.67 -2.62 18.53 13.00 13.18
NASDAQ Composite (PR) -2.11 0.17 17.62 12.04 16.63
S&P 500 (TR) -1.35 -2.10 12.63 10.05 13.22
Barclays US Agg Bond (TR) -0.05 -1.51 0.83 1.12 1.65
MSCI EAFE (TR) 0.47 -1.07 16.10 4.93 6.76

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

Brexit — The United Kingdom will leave the European Union at 11 p.m. London time on March 29, 2019. The vote that set Brexit in motion took place on June 23, 2016. In the two trading days following that vote, the S&P 500 fell 5.3 percent on a total return basis (source: BBC, BTN Research).

What Are Bond Buyers Telling Us? — The yield spread is the difference between the yields on the 10-year Treasury note and the two-year Treasury note. That spread fell to just 0.47 percentage points Thursday, March 29, 2018, i.e., 2.74 percent less 2.27 percent. The yield spread hasn’t been that low since Oct. 15, 2007 (source: BTN Research).

Retire With Debt — Only 38 percent of American retirees are debt free, i.e., 62 percent of American retirees have outstanding mortgage debt, credit card debt, auto loan debt or student loan debt (source: Society of Actuaries, BTN Research).

 

WEEKLY FOCUS – Reminder: Watch for Tax Fraud

You’re certainly aware of rapidly approaching tax day on Tuesday, April 17, but are you aware of the rampant scams during tax season? The most prevalent to watch for are IRS imposters and tax identity theft.

The goal of scammers is to uncover your personal information to file fake tax returns using your Social Security number, claiming your children as dependents or using a deceased person’s information to claim a tax refund. The IRS has issued a warning to taxpayers to ignore phone calls, texts or emails regarding your taxes. The IRS only connects with taxpayers through mailed letters.

Also beware of any communication asking for immediate payment or your personal information. The IRS will never ask for your debit or credit card information. If you aren’t sure if a communication you have received is legitimate, call the IRS at 800-829-1040 for verification.

On top of phony communications from IRS imposters, scammers can operate through a fake tax preparation service or by stealing your mail or tax returns. To help protect yourself at any time of the year, it’s important to:

  • Shred personal or financial documents
  • Never give out personal information unless you’ve verified the legitimacy of person asking and why they need the information

This tax season, be sure to check your refund status at www.irs.gov/refunds. Another resource is the IRS Identity Protection Specialized Unit. If you think you’re a victim of Tax ID Theft, call the IRS Identity Protection Specialized Unit, 800-908-4490, or visit www.irs.gov/identitytheft.

And of course, our office is always here to help with any of your financial needs. Call us with questions or to set up an appointment today.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright April 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2082459.1

Weekly Market Notes – April 2, 2018

Weekly_Market_Notes

For the Week of April 2, 2018

The Markets

Leading up to the holiday weekend, Wall Street ended a bad month and quarter with a broad rally as investors hunted for bargains on the recent sell-off. Although the NASDAQ closed the quarter up 2.3 percent, the Dow Jones and the S&P 500 broke their nine-quarter winning streak. For the week, the Dow gained 0.61 percent to close at 24,103.11. The S&P fell 0.08 percent to finish at 2,640.87, and the NASDAQ rose 1.03 percent to end the week at 7,063.44.

Returns Through 3/31/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.61 -1.96 19.39 13.48 13.32
NASDAQ Composite (PR) 1.03 2.33 19.50 12.96 16.67
S&P 500 (TR) -0.08 -0.76 13.99 10.78 13.31
Barclays US Agg Bond (TR) 0.52 -1.46 1.20 1.20 1.82
MSCI EAFE (TR) 1.03 -1.53 14.80 5.55 6.50

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

Stronger Dollar — While the Fed has been raising interest rates to keep our economy from overheating, the dollar has increased in value. From the Fed’s initial rate increase on Dec. 16, 2015, to last week’s sixth rate hike, the dollar has risen 13 percent against the euro (source: BTN Research).

A Lot in a Few — Just 2.2 percent of banks and savings institutions in the United States hold 83 percent of the deposits maintained in FDIC-insured institutions nationwide as of Dec. 31, 2017. There were 5,670 banks and savings institutions holding $17.4 trillion of deposits at the end of last year (source: FDIC, BTN Research).

Discretionary vs. Mandatory — Over the next decade (fiscal years 2019-2028), estimated discretionary spending by the U.S. government is $14.1 trillion, an amount that is dwarfed by the government’s $35.9 trillion of projected mandatory spending (source: Office of Management and Budget, BTN Research).

 

WEEKLY FOCUS – Use Social Media Safely

The ongoing Facebook data scandal (the result of a quiz developer illicitly passing along users’ personal information to a political data firm in the 2016 campaign) provides a powerful reminder to seriously weigh what and how we share on social media. Here are some practical tips to protect your information:

  • Always use complex passwords on your social media accounts and update them frequently.
  • When filling out a social media profile, leave personal details – such as your home address, phone number, birthday and email – blank.
  • Don’t accept friend requests from anyone you don’t know in the real world.
  • Secure your mobile devices with passcode or fingerprint protection.
  • Try not to visit your social media accounts on public wireless connections, which make it easier for others to see your sensitive data. Avoid accessing social media on public computers. And if you do, log out and clear your browsing history when you’re done.
  • Turn location tracking off on your social media channels. Turn off the GPS function on your smartphone camera if you plan to post images. Don’t post vacation photos until you return home.
  • Be cautious about clicking on links – even from friends – and completing quizzes and surveys.
  • Close old accounts you don’t use anymore and delete as much personal information as you can.
  • Check your security settings on your social media accounts regularly. They may revert to a less private default when updates occur.
  • Avoid signing into other apps using Facebook.
  • Make sure you have a quality security software installed on your devices.

In light of current Facebook concerns, you may want to review the data Facebook has on you. To do so, go to the dropdown arrow in the top right corner and click on Settings. This takes you to the General Account Settings page where you can click on “Download a copy of your Facebook data.” To verify/update your privacy settings, go to Settings/Privacy. To stop apps from sharing your data, go to Settings/Apps. For more on privacy, go to Facebook.com/help and select Privacy and Safety.

Just as you strive to protect your personal information on social media accounts, we’re committed to keeping your financial account information secure. And as always, we’re available to discuss any concerns you may have about your finances.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright April 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2074897.1

April 2018 Monthly Outlook – “Free Ride”

Well the 1st quarter of 2018 is over and what a wild ride it was.  It reminds me of the lyrics from an Edgar Winter song from the 1970’s  Free Ride – “The mountain is high, the valley is low, and you’re confused on which way to go.”

During the 1st quarter we saw the stock market hit an all-time high (the mountain), then plummet over 10% in less than two weeks (the valley), and since then bounce up and down (confused on which way to go).  Through it all, we broke a streak of 15 straight quarters (almost 4 years) with positive quarterly equity returns.

4.2.2018_MONTHLY_OUTLOOK_CHART_1

Economic activity, on the other hand, continued to remain positive.  GDP (gross domestic product) for the 4th quarter of 2017 finished at 2.9%, and over the last 3 quarters has averaged a tick over 3%.  While GDP is a backward-looking metric, leading economic indicators continue in an upward trend.  As such, I see no signs of a slowdown in the economy on the horizon.

4.2.2018_MONTHLY_OUTLOOK_CHART_2

April brings the start of 1st quarter 2018 corporate earnings.  I think this may be the catalyst to stabilize the stock market.  Corporate earnings are estimated to continue on a solid growth trend, and this earnings cycle will be the first which reflects the impact from tax reform.

I continue to favor stocks over bonds as stocks offer a better value, especially after the recent pullback in stock prices.  Also, stocks have some tailwinds that include:  1) solid global growth;

2) accelerating domestic activity; 3) capital spending improvement; 4) real household median incomes jumping with strong employment; and 5) inflation remaining below 2%.  Source: Tony Dwyer

In addition, April has been a positive month for stocks in 9 of the last 10 years. Going even further back, since 1950 the benchmark has posted an average 1.5 percent gain in April. Source: CNBC.com

As such, I see no need for any significant adjustment in our investment plan.  I am making some small adjustments between industries/sectors related to tax reform and the announced tariffs.

I hope you find this report helpful.  Please share it with anyone who you feel would benefit from the information.

 

April Calendar of Events   (comments and additions for future months are always welcome)

  • April is National Autism Awareness month.  Let’s all get educated on this issue and works towards acceptance and inclusion of people dealing with autism.
  • April is also National Financial Capability month.  We at Directional Wealth Management commit to equipping individuals to lead better financial lives through an integrated framework of educational resources, collaborative tools, and personal one-to-one advice.

 

April 10th                     Christian’s wife Maecy birthday

April 12 & 13th            We adopted our 4-legged children Coco (2010) and Buddy (2013)

April 17th                     Tax Day.  Remember to make those IRA or Roth contributions.

April 22nd                     Earth Day – let’s all recycle, turn out lights when we leave rooms, and do all we can for our environment

April 25th                     My daughter Satya’s birthday

April 25th                     Administrative Professionals day – remember your staff

 

Sources: Yardeni Research, Inc., Tony Dwyer, Raymond James & Assoc, CNBC.com

 

 

 

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

 

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

 

Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

 

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.