News & Insights

Market Review – Q2 2018

by Financial Alternatives on 7/27/2018

  • Looking at broad market indices, the US outperformed non-US developed and emerging markets during the second quarter.
  • Almost all currencies depreciated vs. the US dollar.
  • The Bloomberg Commodity Index Total Return gained 0.40% during the second quarter.
  • US real estate investment trusts outperformed non-US REITs in US dollar terms.

posted in InvestingNewsletters

Investing Newsletter – Jul 2018

by Financial Alternatives on 7/27/2018

  • Last year International Developed Stocks and International Emerging Stocks outperformed US Large Stocks.
  • Year-to-date US Stocks are outperforming International Stocks.
  • For the 10 year period from 2000–2009 the S&P 500 lost -9.10%. International investments logged significant gains during this period.
  • Maintaining a globally diversified portfolio can help to smooth out the returns of a portfolio concentrated in US stocks.
  • It is next to impossible to successfully time moves between US and international investments in an effort to always be in the highest returning markets.
  • It is better to remain globally diversified and disciplined in rebalancing your portfolio back to its predetermined allocation.
  • Vanguard is forecasting lower returns over the next 10 years.

posted in InvestingNewsletters

Market Review Q1 2018: Sailing with the Tides

by Jim Freeman, CFP® on 5/16/2018

Embarking on a financial plan is like sailing around the world. The voyage won’t always go to plan, and there will be rough seas. But the odds of reaching your destination increase greatly if you are prepared, flexible, patient, and well-advised.

A mistake many inexperienced sailors make is not having a plan at all. They embark without a clear sense of their destination. And once they do decide, they often find themselves lost at sea in the wrong boat with inadequate provisions.

Likewise, in planning an investment journey, you need to decide on your goal. A first step might be to consider whether the goal is realistic and achievable. For instance, while you may long to retire in the south of France, you may not be prepared to sacrifice your needs today to satisfy that distant desire.

Once you are set on a realistic destination, you need to ensure you have the right portfolio to get you there. Have you planned for multiple contingencies? What degree of “bad weather” can your plan withstand along the way?

Key to a successful voyage is a good navigator. A trusted advisor is like that, regularly taking coordinates and making adjustments, if necessary. If your circumstances change, the advisor may suggest you replot your course.

As with the weather at sea, markets can be unpredictable. A sudden squall can whip up waves of volatility, tides can shift, and strong currents can threaten to blow you off course. Like a seasoned sailor, an experienced advisor will work with the conditions. Once the storm passes, you can pick up speed again. Just as a sturdy vessel will help you withstand most conditions at sea, a well-diversified portfolio can act as a bulwark against the sometimes tempestuous conditions in markets.

Circumnavigating the globe is not exciting every day. Patience is required with local customs and paperwork as you pull into different ports. Likewise, a lack of attention to costs and taxes is the enemy of many a long-term financial plan.

Distractions can also send investors, like sailors, off course. In the face of “hot” investment trends, it takes discipline not to veer from your chosen plan. Like the sirens of Greek mythology, media pundits can also be diverting, tempting you to change tack and act on news that is already priced in to markets.

A lack of flexibility is another impediment to a successful investment journey. If it doesn’t look as though you’ll make your destination in time, you may have to extend your voyage, take a different route to get there, or even moderate your goal.

The important point is that you become comfortable with the idea that uncertainty is inherent to the investment journey, just as it is with any sea voyage. That is why preparation and planning are so critical. While you can’t control every outcome, you can be prepared for the range of possibilities and understand that you have clear choices if things don’t go according to plan.

If you can’t live with the volatility, you can change your plan. If the goal looks unachievable, you can lower your sights. If it doesn’t look as if you’ll arrive on time, you can extend your journey.

Of course, not everyone’s journey is the same. Neither is everyone’s destination. We take different routes to different places, and we meet a range of challenges and opportunities along the way. But for all of us, it’s critical that we are prepared for our journeys in the right vessel, keep our destinations in mind, stick with the plans, and have a trusted navigator to chart our courses and keep us on target.

 

Adapted from “Sailing with the Tides,” Outside the Flags by Jim Parker, March 2018.

Past performance is no guarantee of future results. There is no guarantee an investing strategy will be successful. Diversification does not eliminate the risk of market loss. All expressions of opinion are subject to change.

This article is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services. Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission.

posted in Investing

Market Review – Q1 2018

by Financial Alternatives on 4/25/2018

  • Looking at broad market indices, emerging markets outperformed developed markets, including the US, in the first quarter.
  • Non-US real estate investment trusts outperformed US REITs in the first quarter.
  • Interest rates increased in the US during the first quarter.
  • The yield on the 10-year Treasury note increased to 2.74%.

posted in InvestingNewsletters

Planning Newsletter – Apr 2018

by Financial Alternatives on 4/25/2018

  • The amount you can pass without owing estate taxes essentially doubled as of January 1st thanks to the recently passed Tax Cuts and Jobs Act of 2017.
  • This estate tax provision will expire at the end of 2025.
  • Estate plans based on prior tax law should be re-evaluated to ensure your intentions match the current law.
  • Older estate plans may ultimately cost your beneficiaries more in taxes and/or unnecessary recordkeeping requirements.

posted in NewslettersPlanning

Market Review – Q4 2017

by Financial Alternatives on 2/8/2018

  • Looking at broad market indices, emerging markets outperformed US and non-US developed markets during the quarter.
  • Small caps outperformed large caps in non-US developed markets and emerging markets but underperformed in the US.
  • The Bloomberg Commodity Index Total Return gained 4.71% in the fourth quarter, bringing the 2017 total annual return to 1.70%.
  • Article: What Should Investors Make of Bitcoin (cryptocurrency) Mania?

posted in InvestingNewsletters

Investing Newsletter – Jan 2018

by Financial Alternatives on 2/8/2018

  • 2017 was an exceptional year for globally diversified investors.
  • The US Shiller CAPE 10 year PE ratio is reaching historic levels indicating that the US stock market may be overvalued.
  • Vanguard’s US fair-value CAPE measurement that adjusts for inflation and interest rates indicates a less overvalued US market.
  • International Developed and Emerging Market Shiller CAPE 10 year PE ratios are less elevated which may indicate higher future long term returns for these markets versus US markets.
  • Valuation measurements such as the Shiller CAPE 10 PE ratio tell us nothing about when to expect the next market correction or bear market.
  • Rational investors should expect lower returns in the foreseeable future.
  • After significant gains in 2017, investors should consider rebalancing their portfolios especially if they are concerned about elevated stock market valuations.

posted in InvestingNewsletters

Market Review – Q3 2017

by Financial Alternatives on 10/13/2017

  • Emerging markets outperformed developed markets, including the US, during the quarter.
  • In US dollar terms, developed markets outperformed US equity indices but underperformed emerging markets indices during the quarter.
  • The Bloomberg Commodity Index Total Return gained 2.52% during the third quarter.
  • Interest rates increased slightly across the US fixed income market for the quarter, but total returns still remained positive for most investment grade indices.

posted in InvestingNewsletters

Planning Newsletter – Oct 2017

by Financial Alternatives on 10/13/2017

Tax Reform or Not

  • The recent tax proposal would significantly change income taxes, but there are many important provisions that have not been specified.
  • The most noteworthy part of the proposal is a full repeal of the estate tax.
  • Due to the makeup of Congress and the expected costs of the tax proposal, some sort of compromise will be required to push any changes through.

Remembering the Last Crisis

  • The 10 year anniversary of a record S&P 500 high point is upon us, with several other crisis period anniversaries like the Lehman bankruptcy coming in succeeding months.
  • Reflecting on your experience back then and looking at the recoveries of other financial crises can help prepare you for the next one.
  • A key part of a good long-term investing experience is being able to stay with your investment philosophy, even during tough times.

posted in NewslettersPlanning

Market Review – Q2 2017

by Financial Alternatives on 7/13/2017

  • The broad US equity market posted positive returns for the quarter but underperformed both non-US developed and emerging markets.
  • In US dollar terms, developed markets outperformed the US equity market and had similar performance to emerging markets indices during the quarter.
  • The Bloomberg Commodity Index Total Return declined 3.00% during the second quarter.
  • Non-US real estate investment trusts outperformed US REITs.

posted in InvestingNewsletters

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Posts are general in nature and do not constitute the rendering of legal, investment, accounting or other professional advice.