Tag Archives: Interest rates

POCKETBOOK Week Ending Oct. 20, 2018

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  • Caution Ahead

When it comes to taking our short term investing clues from talking heads, no matter what’s happening in the market for every one whose head nods up and down another shakes theirs side to side.

So in this world of nobody knows for sure what’s going to happen day-to-day, if you were to take a step back and look out over the past few months some basic clues do show their heads and ought not be overlooked.

For openers, don’t discount the fact that the major indices are and have been losing ground since reaching new all-time highs in August and September.  Or, that the Fed has increased interest rates three times thus far this year with one more increase expected in December. Both represent ouches of sorts for equities.

As a result, Jeremy Siegel, professor of finance at Wharton, who typically wears a bull’s cap, is now waving a yellow caution flag to investors with respect to  the markets performances through this year and in 2019.

Re a rising interest rate environment, Cresset Wealth Advisors Jack Ablin said: “ It is going to put some headwind on risk-taking which of course has enjoyed “only-child’ stature for the last 10 years.”

Through in the fact that America’s national debt has balooned,  things on Wall Street aren’t as rosey as some heads would like us to believe.

That said, with  caution in the wind, look out five or 10 years from now, and if we haven’t accidentially blown ourselves up or been invaded by aliens who don’t care about money or investing, interest rates and the major equity indices ought to be higher than they currently are. Perhaps.

 

  • Market Quick Glance

Round and around and around she goes and where she stops nobody knows.

Depending upon the time of day or the day of the week you decide to check in on what’s happening in the markets, the performance results found could either be pleasing or confounding.

Below are the weekly and 1-year index performance results for the four major indices—DJIA, S&P 500, NASDAQ and the Russell 2000— including the dates each reached new highs. Data is according to CNBC.com and based on prices at the close of business on Friday, Oct. 19, 2018.

DJIA 2.93% YTD up a tad from previous week’s return of 2.51%.

  • 1 yr Rtn 9.85% down again from the previous week 10.94 %

Most recent DJIA a new ALL-TIME CLOSING HIGH was reached on Oct.3, 2018 of 26,951.81. The previous high was reached on Sept. 21, 2018 of 26,796.16.

 

-S&P 500 3.52 % YTD up a hair from last week’s 3.50%

  • 1 yr. Rtn 8.03% down from last week’s 8.48%

The S&P 500 reached a BRAND NEW CLOSING ALL-TIME HIGH on Sept. 21, 2018 of 2,940.91. The previous closing high was reached on August 29, 2018 of 2,916.50.

 

-NASDAQ 7.90% YTD down from last week’s 8.60%

  • 1yr Rtn 12.78% down from last week’s 13.74%

Nasdaq reached a BRAND NEW 52-week CLOSING HIGH on August 30, 2018 of 8,1333.30. The previous high was reached on August 24, 2018 of 7,949.71.

 

-Russell 2000 0.43% YTD down from last week’s 0.73% (it was over 10% two weeks ago)

  • 1yr Rtn 2.65% down from last week’s 2.76%

The Russell 2000 reached a BRAND NEW 52-week ALL-TIME HIGH on August 31, 2018 of 1,742.09. The previous high was reached on August 24, 2018 of 1,726.97.

 

-Mutual funds

The market moved up a bit and that positive move was reflected within the mutual fund world.

At the close of business on Thursday, Oct. 18,2018, the average total return for funds that fall under the U.S. Diversified Equity Funds heading was 2.36%, according to Lipper. That’s higher than the 1.13% average return posted one week prior.

While the average performance of the U.S. Diversified Equity Funds was above water, that’s not been the case for the other types of equity funds that Lipper tracks.

So even though y-t-d numbers have improved slightly, the following broad categories of funds have y-t-d average performances that are still underwater.

Below is a comparison of the 10/18 total returns from the previous week’s numbers:

-Sector Equity Funds, on 10/18 enjoyed an average return of -1.59, and improved from the previous week of -2.51%

-World Equity Funds, an average return of -9.30, a bit of an improvement from the prior week’s return of -9.73%

-Mixed Asset Funds, -1.61% is an improvement from the prior week’s return of -2.11%

-Domestic L-T Fixed Income Funds, now- 0.67% is an improvement from prior week’s average return of -0.80%

-World Income Funds, -4.41% is an improvement from the prior week’s average return of-4.86%.

Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

 

  • City Opportunities

If San Francisco and New York City are your kind of cities, a report of Glassdoor shows they don’t necessarily offer the best prospects for jobs—and we all know that the cost of living in either can be astronomical.

On the other hand, Glassdoor results show that it’s the smaller cities where work can be found. Add to that the bonus of a lower cost of living it all the makes smaller cities worth looking into.

In case you’re interested, here are the top five cities in Glassdoor’s list of the 25 best cities for jobs in 2018:

  1. Pittsburgh, PA
  2. Louis, MO
  3. Indianapolis, IN
  4. Cincinnati, OH
  5. Hartford, CT

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POCKETBOOK: Week ending March 17, 2018

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  • Ever hear of “crowding out”? Time to learn about it.

Trump’s tax cuts may have made million- and billionaires happy, even some workerbees may think it’s a terrific deal, but in reality the move will prove to be hugely costly to most Americans.

Why? Because somebody has to pay for those cuts.

A recent New York Times story reported that one of the results of the tax cuts is that in this fiscal year, the Treasury Department will likely  have to borrow $955 billion from investors. That’s a lot and big increase from last year.

If you’re a believer in debt, and think doing business as a big debtor is a great deal— as President Trump does, did, and has throughout this real estate business deals– a government that continues to accumulate debt isn’t an efficiently run government. Or, one anyone can or should be proud of. And is a vulnerable government.

Bottom line here is that as our debt grows so does our responsibility to pay it. Meaning, interest rates have to go up to cover those debt costs, and, it becomes more expensive for a company or an individual to borrow money translating to life costing more for everyone.

“Crowding out”, according to that same article is when “large-scale government borrowing sucks up the supply of available capital, driving up financing costs for just about everyone else.

 

  • Market Quick Glance

Once again the numbers tell their weekly story of what goes up can come down.

It was Nasdaq where the weekly numbers showed best as it moved upward while the three other indices fell.

Below are the weekly and 1-year index performance results for four major indices— including the dates each reached new highs—according to CNBC.com based on prices at the close of business on Friday, March 16, 2018.

DJIA 0.92% YTD down a hunk from the previous week’s 2.49%

  • 1 yr Rtn 19.16% down from the previous week’s 21.21%

Most recent DJIA all-time high was reached on January 26, 2018 of 26,616.71. The previous high was reached January 18, 2018 was 26,153.42.

 

-S&P 500 2.93% YTD down a hunk from last week’s 4.22%

  • 1 yr Rtn 15.56 % down from last week’s 17.83%

The S&P 500 reached its most recent all-time high on January 26, 2018 of 2,872.87. The previous high was reached on January 19, 2018 of 2810.33.

 

-NASDAQ 8.38% YTD up from last week’s 5.13%

  • 1yr Rtn 26.80% down from last week’s 28.99%

Nasdaq reached a brand new all-time high on March 13, 2018 of 7,637.27. The previous high was reached on March 9, 2018 of 7,560.81.

 

-Russell 2000 3.29% YTD down from last week’s 4.01%

  • 1yr Rtn 14.43% down from last week’s 16.98%

 

The Russell 2000 reached an all-time high on January 24, of 1,615.52. The previous high was reached on January 16, 2018 of 1,604.02.

 

-Mutual funds

At the close of business on Thursday, March 15, 2018 the average fund that falls under the broad U.S. Diversified Equity Funds heading had a year-to-date return of 2.70%. That’s up from the previous week’s average return of 0.57%.

Once again, Large-Cap Growth Funds lead this pack’s performance with an average year-to-date return of 8.19% —one week before that figure was 5.50%.

Behind it came Multi-Cap Growth Funds at 7.54% (the week before it was 4.49%). Then, a switch up from last week’s Mid-Cap Growth Funds, 6.18%, to Small-Cap Growth Funds at 6.38%.

Under the Sector Equity Funds heading Science & Technology Funds and Global Science/Technology Funds lead the way with average returns in each category of over 12%, year-to-date.

Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

  • CDs are looking kinda sorta good

Over the past few weeks ads in my local paper have been advertising CD rates of 2% and higher. That’s enough of a jump from the 1.10% kinds of returns to make short-term fixed income investors take notice. Particularly when the stock market is in its ninth year of a bull market and volatility is enough to cause one’s blood pressure to rise during daily and weekly market sessions.

Before biting, however, make sure to read the small print. For example, a recent ad from FCB, Florida Community Bank, offered a 2.15% APY, good through March 30,2018. To take advantage of it you’ve got to have $10,000 in “new funds” and be willing to lock those 10 Gs for 19 months.

Another ad from First Republic Bank offered a 20-month CD at the rate of 2.00%APY for a “limited time” with a minimum investment of $10,000.

Seeing yields in the 2’s is nice. But if you’re someone who thinks about annual returns, as in 12-months, make sure to read the small print in these offerings because you’d be locking up your money for at least 19 months. That’s more than a year and a half and makes the reality of these advertised 2% returns a bit of a tease.

As always, investor beware, read the small print and realize that rates could be going up before you know it.

 

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