The Economy Is Strong, Are You Taking Advantage?

on June 19, 2018 Comments Off on The Economy Is Strong, Are You Taking Advantage?

Do you attempt to take advantage of opportunity? Most of us do. It’s how we can move from where we are to where we want to be. Do you view our current investment picture as an opportunity?

Coming out of our recession, the US economy is strong and continues to grow.  There is currently no anticipation of a recession in the US. While growth has not been at a significant pace, a 2% annual growth in the US adds over $350 billion in growth which is more than the total economy of many countries including Austria, Finland and Denmark.

This means that there are investment opportunities locally as well as a buoying of international markets. To make sure your investments and assets are being managed accordingly, it’s important to make sure you are taking a comprehensive look.

If you’re not sure if you’re positioned to take advantage of the growth of the US economy, then let’s talk.

CLICK HERE TO CONTACT COURAGE MILLER

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Jase TeamThe Economy Is Strong, Are You Taking Advantage?

How To Weather The Next Market Correction

on May 8, 2018 Comments Off on How To Weather The Next Market Correction

We generally get lulled into a steady and comfortable growth in the markets for a period of time with very limited market volatility and when the market corrects, we are not prepared. Market corrections are not only expected, but you should be comfortable with them occurring more frequently.

It is the volatile times in the markets when courage to maintain your investments is rewarded. Those most hurt are investors that are driven into irrational decisions to join in the panic and sell after the market has already moved so significantly. Strong portfolio construction and investing with a clear perspective that it is for the long term will prove beneficial. Here are some specific aspects to consider in markets and portfolio construction:

Length of correction

When a 10% correction occurs, it can take 3 months or more to see the markets recover to pre-correction levels. A 20% correction occurs less frequently but can be expected every several years. Because of the magnitude of a 20% correction, it can take a year or longer to have full recovery, but they have always recovered.

Corporate Valuation

The stock market is an auction, and unlike a traditional auction, the price is based on the foreseeable future value for the business. Unfortunately, if there is concern that a company will be less profitable in the near term, their market price is negatively impacted. While this does not mean the company will be closing its doors, the near term view pushes their price down. It is the near term valuations that drive market volatility. Remember to remain focused on the long term.

Economy

The US economy is strong and continues to grow.  There is currently no anticipation of a recession in the US. While growth has not been at a significant pace, a 2% annual growth in the US adds over $350 billion in growth which is more than the total economy of many countries including Austria, Finland and Denmark.

Portfolio Construction

Your portfolio should be allocated across a number of asset classes with the goal of producing a consistent long term rate of return. A global allocation blends investments from around the world with diversification into many individual investments within each asset class. We believe the portfolio should include an emphasis on the largest companies in the world. It is difficult to imagine why Apple, Google, Sony, Volkswagen, Samsung, Coca-cola, Pepsi, etc. do not make sense to own for the long term. Additionally, the diversification prevents any single company from negatively affect the performance of the total portfolio.

Interest Rates

With interest rates at tremendously low levels, we believe that you should be cautious in the average maturity to protect against rising interest rates.  The FED has been raising rates recently and there has been discussion about increasing inflationary pressures which would indicate additional increases in rates.

A prudent approach to portfolio construction and focus on long term investing is the best process to follow. To learn more, contact our team. We’re here to help!

CLICK HERE TO CONTACT US

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Jase TeamHow To Weather The Next Market Correction

Is now the time to sell your investments?

on January 22, 2016 Comments Off on Is now the time to sell your investments?

Nooo!!!  It is inevitable that the market volatility causes people to question the investments they hold and whether or not to sell them to “protect” their capital.  I thought it would be helpful to step back and review what the “market” really is and what it is not.  I believe the conclusion provides a clearer picture of what to do during significant market volatility.

Whenever volatility increases and we see markets decline, the emotional side of investing takes control.  Our inherent fear of the unknown outcome can drive us to irrational decisions that have a far greater impact on our long term portfolio growth.

It is never easy to see your portfolio balance fall.  We are driven to protect it in any way possible, because we seem to expect the worst which may be driven by the media and their attention on the worst case scenarios.  It is important to look past the noise and think about what the underlying companies in your portfolio mean.  The reality is that the stock market is nothing more than an auction trying to place a value on companies that are traded between investors.  Well, for most of us, trading is not our goal of investing.  The goal of investing in equities is to purchase companies that over the long term are going to grow and become more valuable as well as potentially pay us dividends as an owner of the company.   When we look at the list of companies owned in a portfolio invested through mutual funds or ETFs, it is hard to imagine that the majority of the companies will not survive and thrive after the volatility fades.  There may be some near term impacts in revenues or profits as a result of near term economic impacts, but once things stabilize, the revenues and profits will return and valuations will rebound giving growth to company values.

The typical process in markets is to be overvalued or undervalued.  Nothing ever seems to hold course at a steady value because the value is derived from near term shifts in revenue and earnings.  It is also impacted by the emotion of investors and their current sentiment.  When sentiment is extremely negative, it has historically been a strong indicator that markets are bottoming and a turnaround will unfold.  With the current market volatility, do not make the irrational decision to sell your investments due to the short term fears.  The best approach is to maintain a diversified portfolio and stay the course in these turbulent times.  In addition to being rewarded in the future for your steadfastness, you will continue to receive dividends from your investments which are extremely meaningful to the growth of you investments over time.  If you are investing in a retirement plan, continue to make your contributions and take advantage of the lower prices to purchase into the investments.

Here is an interview with Jack Bogle the founder of the Vanguard Group on CNBC sharing his perspective to ‘Stay the course’ during market volatility.

Also, take a look at this slide from JP Morgan’s Guide to the Market that shows over the past 6 years we have seen other corrections with subsequent recoveries.

JP Morgan Market Volatility - Investments recover after market corrections

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Jeffrey MillerIs now the time to sell your investments?