August 15, 2017

September is right around the corner, which means it's back-to-school time.  No doubt that any parent with a child under the age of 18 is scrambling around, helping their kids pick up the necessary materials they need for a successful year.  Just imagine the slate of courses primed for your child or grandchild: social studies, math, biology, art, personal finance...wait, what?  No personal finance class, you say?  

June 30, 2017

Snapchat has been in the headlines recently.  At first, they were the darling of the initial public offering (IPO) space, with investors clamoring for a chance to purchase the company stock.  The first act of that play ended on a high note: on the day of their IPO, March 2, 2017, the stock price finished up 44%, rising from an issuing price of $17 per share to later close at $24.48.  Not a bad way to send the audience off to intermission.

Then came Act 2.  

June 30, 2017

We continually try to share information so our clients understand why we do what we do. Why we build diversified portfolios, or why we sell some equities when the stock market is going up and everyone feels euphoric, and buy them when the market drops and everyone is cowering in fear. Why we encourage those in the marketplace to work a little longer and why we encourage those who are retired to spend just a little less.

Source: Direxion Funds

June 30, 2017

By the numbers…....

• The personal savings rate in the US was 5.9% as of 3/31/17. The personal savings rate in the US was 1.9% as of 7/31/05, a record low in the country.

• Of the 3.14 million high school graduates in 2016, 2.19 million began college in the fall of 2016 (i.e. 70% of high school graduates went to college).

• Just 1% of Americans are responsible for 21% of healthcare expenditures in the US. Just 20% of Americans are responsible for 82% of healthcare expenditures in the US.

May 15, 2017

You may recall reading about the VIX Index in this space, which many view as a type of fear gauge for Wall Street.  According to a recent article in the New York Times¹, for the first time in more than 10 years, it dipped below 10, which means investors don’t anticipate an imminent market decline. (The historical average of the VIX is around 20.)  With the market near record highs, and the VIX near record lows, contrarians must be licking their lips in anticipation of the windfall they think they’ll make. Their logic: everyone is happy, so nothing good can come next. But contrarians are not always right; they just tend to take the opposing view.

Source: Direxion Funds

May 15, 2017

By the numbers…....

• The last time that the S&P 500 was up on a total return basis for the 1^st quarter yet finished down for the full calendar year was 2002. (The S&P 500 gained 6.1% on a total return basis in Q1 2017.)

• The 75-year average growth rate of the US economy (i.e. Gross Domestic Product, or GDP) is +3.3% per year. However, the actual growth rate of the US economy has reached +3.3% or greater in only 2 of the last 16 calendar years.

By Stanley F. Ehrlich

March 31, 2017

The ongoing debate between actively managed and passively managed mutual funds has picked up steam recently. Actively managed funds are mutual funds with an investment team that seeks to buy the ‘best’ stocks for their portfolio. I have an image of the chief investment officer standing on a desk in the middle of that fund’s trading floor screaming: “Buy only winners; sell all the losers. Your bonuses depend on it!” (Maybe I need to watch the movie Wall Street to see if they actually do that.)

March 31, 2017

The market’s recent gains since the presidential election have led some investors to conclude that we must be approaching a market bubble. Mark Hulbert, writing in Barron’s¹, says “Not so fast.”  A recent academic paper² defines a bubble “as a price increase of at least 100% over a two-year period followed within the subsequent two years by a drop of at least 40%.” By that definition, there have only been two bubbles in our history: the market that peaked in 1929, and the dot-com bubble that peaked in 2000.

Source: Direxion Funds

By the numbers…....

• Total credit card debt in the US dropped in January 2017 to $996 billion, the first month-over-month decrease since February 2016. The peak in credit card debt was $1.022 trillion in April 2008.

• Since 1950, there have been 58 different 10-year periods (i.e., the 10 years from 1950-1959, 1951-1960, etc.). The S&P 500 produced an average annual total return of less than +7% during 15 of the 58 decade-long periods (26% of the time). 19 of the 58 periods (33% of the time) resulted in an average annual total return of at least +14%.

By John Zeltmann

March 6, 2017

All too often, wildly swinging stock markets get a bum rap. They deprive watchful investors of sleep, prompt front-page photos of a panicked New York Stock Exchange trader, and force even the most diligent investors to consider reducing their exposure to equities.