How Worried Should Investors be About Inflation?
Since the beginning of 2021, inflation has increased significantly, driven largely by supply and demand changes caused by the Covid pandemic. Last week, the Labor Department reported a 6.8% year over year increase in the Consumer Price Index, the highest in thirty-nine years. Investors are justifiably concerned about the potential impact of inflation on portfolio […]
A Better Way to Think About Stock Valuations
“Stocks are expensive, what should we do?“ With stock markets continuing to make all-time highs on a regular basis following a 112.6%[1] gain off the March 23, 2020, COVID-19 lows, there’s a fair amount of “stocks are expensive, what should we do” discussion. The implicit concern expressed here is that if markets are expensive, there […]
Will FAANG Stocks Continue their Dominant Outperformance?
Much has been made of the recent performance of large U.S. technology stocks. In particular, the performance of the FAANG[1] stocks has captured the imagination of many investors. To frame the discussion, let us look at how FAANG stocks have performed compared to standard benchmarks over the recent past. Over the prior year ending October […]
The S&P 500 is at Record Levels…Five Key Takeaways for Investors
On February 19th, 2020, the S&P 500 index closed at 3,386.15. That marked the highpoint before the COVID-19 pandemic and subsequent global economic collapse drove the U.S. stock market down 33% in a little over a month. On August 18th, 2020, amid the continuing twin global disasters, the S&P 500 set a new record high. […]
Independent Investment Advisor Firms and the Paycheck Protection Program – Fifth Set’s View
As the U.S. and rest of the world continues to struggle with the global COVID-19 pandemic, the Paycheck Protection Program (PPP), a federal loan program designed to help small businesses in the U.S., has created a conundrum within the independent Registered Investment Advisor (RIA) community. A quick summary of the PPP program. As part of […]
“In Investing, You Get What You Don’t Pay For”
That was the title of a keynote address given by Vanguard founder John Bogle in February 2005. For Bogle, a prominent evangelist of low-cost investing, the premise, simply stated, was that investment expenses directly erode investor returns. Investor Returns = Market Returns – Expenses Market returns are going to be what they are going to […]
“The Market” has Recovered its Coronavirus Losses, but Most Stocks are Down Year-To-Date
How we, as investors, define “the market” can obscure actual investment experiences. To illustrate, look at the following four measures of 2020 year-to-date returns through June 16th. S&P 500 (Large U.S. Stocks): -2.4% Russell 3000 (Broad U.S. Stocks) -2.8% Russell 3000 median stock: -17.6% FAANG[1] (equal-weighted portfolio): 23.9% Two common measures of U.S. stock performance, […]
Great Stock Market, Horrendous Economy, What is Happening Here?
From March 24th, 2020 through May 26th, 2020, the stock market, as measured by the S&P 500, returned 36%. That is not typo. Over the same period of time, we have seen a torrent of terrible economic news. For example, on April 24th, the Congressional Budget Office (CBO) released updated economic forecasts that included the following:
Coronavirus Pandemic – A Reality Check on Life and Disability Insurance
The Coronavirus outbreak is a difficult yet eye-opening experience, and a reality check for our financial health. It is a reminder that it does not matter how well life appears to be going, bad events might happen, and that is why risk management is always important. For personal wealth management purposes, good risk management in […]
Coronavirus Pandemic Market Meltdown: Shouldn’t the Market be Lower Than It Is?
From February 20th, 2020 through March 23rd, 2020, the S&P 500 plummeted 34%. Concerns about the human and economic impact of the Coronavirus drove stock prices to down at a historic pace. Since then, in the U.S., we have seen tens of thousands lose their lives, millions of jobs lost and business activity ground to […]