Monthly Outlook: October 2020  It’s been a long summer as most of us muddle through an endless list of uncertainty and stress: coronavirus, recession, schools, work, travel, politics, and more. Of course, these issues all factor into markets and volatility, too. In 2020, US stocks first went up 5%, then down 33%, then up 58%, then down 9%. Would you believe that for the year, US stocks are now up just 5% after all this (that’s how the math works). That’s a lot of volatility and stress for a modest return. International stocks have had a similar wild ride in 2020, but they are down 5% YTD. Bonds, on the other hand, have had steady returns and are up about 6% YTD. Gold has delivered a gain of 24% YTD. Even with the volatility, our clients’ portfolios are doing well. Our iFolios 75 portfolios, for example, are up about 4% [...]

Monthly Outlook: September 2020  Can you imagine you’re Rip Van Winkle and you’ve been asleep all 2020? (If only!). Forgetting all the other “stuff” that will define 2020, think of it purely as an investor. If you had been asleep these past eight months and just awoke to look at your typical growth portfolio, you’d notice a small gain of about 5%, YTD. Ho hum, what’s the big deal? Instead, you’re probably very awake and have experienced the following: A mild start to the year, a global virus outbreak and pandemic with no cure yet, a stock market collapse of 33% followed by a surprising stock market recovery of 56% resulting in an 8% YTD gain, record high unemployment of about 11%, an official recession, school closures, restaurants that are operating at half-speed, and an upcoming US Presidential contest of stark contrasts. Considering all of these happenings, it’s remarkable that [...]

Monthly Outlook: August 2020  It was a good July for our investors, virus be damned. Stocks continued to rebound for a fourth month (remember the plunge in March) on hope and stimulus. The S&P500 is now back to positive for 2020, up 2.49% YTD. International stocks are following a similar pattern for 2020 (plunge and rebound) but are still down 2.69% YTD, unfortunately.  Bonds are plugging along, doing what bonds normally do. The Barclays Aggregate Bond Index is up 7.9% YTD. Short-term bonds are only up 4.3% YTD. We can thank plunging interest rates for the strong bond returns (bond prices go up when interest rates go down). The 10-year US Treasury bond rate has dropped from 1.92% on January 1st to 0.53% today. Wow. Although bonds have done well YTD, it’s hard to fathom how they continue their run when interest rates are near 0%, but we’ll see. Lastly, [...]

Monthly Outlook: July 2020  In early June, the NBER declared that the U.S. officially began a recession in February. That’s pretty obvious to anyone paying attention. The virus stopped the world economy in its tracks unlike any war or catastrophe ever has. The initial shock drove the stock market down 33% in March. Then, hope and stimulus helped to fuel a stock market rebound of 35% in April, May, and June. Today, stocks (S&P500) are just 9% lower than the peak in February. It’s hard to rationalize that the world is only 9% worse off today when compared to February, but that’s how stocks are priced. Let’s consider the facts: Unemployment has spiked to about 13%, a record high since the Great Recession levels of the 1930s. Corporate earnings of the S&P500 have already sagged from $139/share at 2019 year-end to $116/share by March 2020. Professional analysts expect earnings to [...]

Monthly Outlook: June 2020 Markets continue to yo-yo as the battle between health vs. economy rages on. In March, the coronavirus pandemic was new, unknown, and scary enough to convince the country to essentially shut down. The economy tanked as we stayed home to “flatten the curve” and save lives. Now, three months later, we still have no real treatment or cure and people are still dying. Today, the “economic crisis is killing me” crowd is louder and pushing harder to reopen America, virus and rising death toll be damned. We’ll probably know if the re-opening was prudent in a few weeks as we watch for a possible spike in virus-related deaths. It’s quite the gamble. Our job is not to deliberate the merits and ethics of the health vs. economy debate. We’ll just focus on the effects it’s having on the markets. Stocks tanked 35% in March on virus [...]

Monthly Outlook: May 2020 What is one to call a market that crashes 34% over four weeks then rallies 30% over the next four weeks? Crazy maybe, confused for sure. But that is what we see in stocks today. By the way, down 34% and up 30% does not equal down 4%. It equals down 14%, due to compounding. Clearly, the coronavirus pandemic and the related global economic shutdown should influence markets. Most businesses remain closed and employees are out of work (and their paycheck). Is a 15% discount to the pre-virus peak of two months ago an appropriate adjustment? We’ll discuss that more later. Let’s review market performance after the first four months of 2020. Bonds have gained 5.1%. Gold is up 11.2%. Cash is up a scant 0.3%. That is all the good news. On the other hand, U.S. stocks are down 10.4% and international stocks have lost [...]